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+The Scottish Parliament was established by section 1 of the Scotland Act 1998. It was opened on 1 July 1999. Section 29(1) of the Act provides: An Act of the Scottish Parliament is not law so far as any provision of the Act is outside the legislative competence of the Parliament. This provision lies at the heart of the scheme of devolution to which the Act gives effect. Section 29 has to be read together with Schedule 4 which protects certain enactments from modification, and then with section 30 and Schedule 5 which defines reserved matters. These are matters reserved to the UK Parliament, and which are therefore excluded from the legislative competence of the Scottish Parliament. The area of competence that is identified by this group of provisions forms the basis for a series of sections that are designed to ensure that the Scottish Parliament confines itself to the defined areas of competence: section 31 (scrutiny of Bills before introduction), section 32 (the responsibility of the Presiding Officer), section 33 (reference of Bills to the Judicial Committee now the UK Supreme Court for scrutiny), section 35 (the power of the Secretary of State to intervene in certain cases) and sections 98 to 103 and Schedule 6 (post enactment adjudication of issues about legislative competence by the courts). The White Paper, Scotlands Parliament, Cm 3658 (1997), para 4.3, contrasted this scheme of devolution with that which had been laid down by the Scotland Act 1978, which was repealed because less than 40 per cent of the persons entitled to vote in the referendum which was required by section 85 of that Act voted in favour of it. Under that Act legislative competence was to be transferred to the Scottish Assembly in specifically defined particular groups, further defined by reference to a long list of existing statutes. That scheme, which would have required frequent updating by the UK Parliament, was seen to be incompatible with the aim that the White Paper expressed of ensuring maximum clarity and stability. While the scheme in the 1998 Act may not strike one as a model of clarity, it does appear so far to have achieved the aim of stability. Of course, harmony between the governments at Westminster and Holyrood until the May 2007 elections to the Scottish Parliament contributed to this process, as did frequent use of legislative consent motions (also known as Sewel motions, named after Lord Sewel, Parliamentary Under Secretary of State for Scotland during the passage of the Scotland Act 1998) passed by the Scottish Parliament agreeing that the UK Parliament might pass legislation on a devolved issue extending to Scotland. But it is a remarkable fact that the myriad of devolution issues that have come before the courts for determination since May 1999 have been devoted almost exclusively to the exercise of functions in criminal cases by the Lord Advocate. Logan v Harrower [2008] HCJAC 61, 2008 SLT 1049 was the first case that brought the extent of the legislative competence of the Scottish Parliament under judicial scrutiny on grounds other than compliance with Convention rights. As in the case of the appeals that are now before this court, it arose of out of a prosecution for contraventions of section 103(1)(b) of the Road Traffic Act 1988. There was no appeal against the appeal courts determination to the Judicial Committee. The question whether an Act of the Scottish Parliament is within the legislative competence of the Parliament is a devolution issue: Schedule 6, para 1(a). So it is for the courts to decide whether an Act which is challenged is within or outside competence. But the judicial function in this regard has been carefully structured. It is not for the judges to say whether legislation on any particular issue is better made by the Scottish Parliament at Holyrood or by the UK Parliament at Westminster. How that issue is to be determined has already been addressed by the legislators. It must be decided according to particular rules that the Scotland Act 1998 has laid down. But those rules, just like any other rules, have to be interpreted. That is the courts function. It is for the court to say what the rules mean and how, in a case such as this, they must be applied in order to resolve the issue whether the measure in question was within competence. These proceedings Section 33 of and Part I of Schedule 2 to the Road Traffic Offenders Act 1988 provide that the offence of driving while disqualified under section 103(1)(b) of the Road Traffic Act 1988 may be prosecuted in Scotland either summarily or on indictment. As originally enacted, the maximum punishment for that offence if prosecuted summarily in Scotland was six months or the statutory maximum fine or both. If it was prosecuted on indictment in Scotland the maximum sentence was twelve months or a fine or both. By section 45 of the Criminal Proceedings etc (Reform) (Scotland) Act 2007, the provisions of which I shall examine in more detail later, the Scottish Parliament increased to twelve months the maximum sentence that might be imposed for this offence under the 1998 Act by the sheriff sitting summarily. That section came into force on 10 December 2007: the Criminal Proceedings etc (Reform) (Scotland) Act 2007 (Commencement No 2 and Transitional Provisions and Savings) Order 2007 (SSI 2007/479). Sean Martin was charged on summary complaint at Oban with a co accused named Rodney Cuthill. The complaint contained fourteen charges, of which charges 1, 2, 8 and 9 were directed against Martin. In charges 1 and 8 it was alleged that he drove a motor vehicle on a road while disqualified, contrary to section 103(1)(b) of the Road Traffic Act 1988, and that he committed those offences while on bail. On 14 December 2007 he pled guilty to charges 1 and 8 and to the other two charges. On 17 December 2007 he was sentenced to 12 months imprisonment on charges 1 and 8, of which four months was attributed to the fact that he committed the offences while on bail. On 12 March 2008 he presented a Bill of Suspension to the High Court of Justiciary in which he sought suspension of the sentence of imprisonment on the ground that the relevant provisions of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 were beyond the legislative competence of the Scottish Parliament. On 28 March 2008 he was granted interim liberation pending the determination of his Bill of Suspension. Ross Miller was charged on summary complaint at Stirling. The complaint contained three charges. In charge 1 it was alleged that he drove a motor vehicle on a road while disqualified, contrary to section 103(1)(b) of the Road Traffic Act 1988. On 24 April 2008 he pled guilty to charge 1 and to one of the other charges and was remanded in custody. On 14 May 2008 he was sentenced to seven months imprisonment on charge 1, back dated to 24 April 2008. On 20 June 2008 he presented a Bill of Suspension to the High Court of Justiciary in which he sought suspension of the sentence of imprisonment on the same grounds as Martin. He applied for interim liberation, but on 3 July 2008 he withdrew that application. Unlike Martin, he has now served his sentence. The two Bills of Suspension came before the appeal court for a hearing on 6 January 2009. Devolution minutes identifying the devolution issue in these proceedings had also been lodged. The court saw no reason for distinguishing these cases from its previous decision in Logan v Harrower, in which it held that the increase in the sentencing power of the sheriff sitting summarily by section 45 of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 was within the legislative competence of the Scottish Parliament. As nothing had been said to suggest that that decision was wrong, it refused to pass the Bills. It also refused the devolution minutes. On 30 January and 24 February 2009 respectively it granted the appellants leave to appeal to this court. As this narrative shows, the only reasoned decision on this issue by the appeal court is to be found in Logan v Harrower. In para 24 of that case, Lord Nimmo Smith, delivering the opinion of the court, said: We agree with the advocate depute that, in the present case, the purpose of the provision is to make Scots criminal law with regard to penalties, procedure and jurisdiction in the sheriff court apply consistently to both common law offences and statutory offences. As provided by para 3 in part I of Schedule 4 to the Scotland Act, the modifications made by section 45 of the 2007 Act to the reading of Part I of Schedule 2 to the Road Traffic Offenders Act 1988 are merely incidental to, or consequential on, the more general aspect of the provision, which relates generally to the powers of the sheriff in relation to statutory offences, whatever their origin; and the modifications do not have a greater effect upon reserved matters than is necessary to give effect to the purpose of the provision in section 45. The legislative competence rules The scheme of devolution of legislative power which the Scotland Act 1998 sets out recognises that it was not possible, if a workable system was to be created, for reserved and devolved areas to be divided into precisely defined, watertight compartments. Some degree of overlap was inevitable, for the reasons explained by Lord Rodger in his discussion of the division of responsibility on matters of policy; see paras [73] and [74]. This is a familiar phenomenon in the case of federal systems such as those in Canada and Australia, where legislative competence is divided between the Dominion and the Provinces or the Commonwealth and the States. In Prafulla Kumar Mukherjee v Bank of Commerce Ltd, Khulna (1947) LR 74 Indian Appeals 23 the Judicial Committee rejected the argument that the principles which obtain in Canada and Australia had no application in India. Lord Porter gave this explanation at p 42: It is not possible to make so clean a cut between the powers of various legislatures: they are bound to overlap from time to time. The rule that was evolved by the Judicial Committee was to examine the statute that was impugned to ascertain its pith and substance, or its true nature and character, to determine whether it was legislation with respect to matters that were in the prohibited or permitted sphere. The phrase pith and substance was first used by Lord Watson in Union Colliery Co of British Columbia Ltd v Bryden [1899] AC 580, 587. The phrase true nature and character was first used in Russell v The Queen (1882) 7 App Cas 829, 839 840. The principles that these phrases embody are sometimes referred to, by a word that went out of fashion in mediaeval times, as the respection doctrine. In Prafulla Kumar Mukherjee v Bank of Commerce Ltd, Khulna having referred to the rule and found that it applied to Indian as well as Dominion legislation, Lord Porter went on to say this at p 43: No doubt experience of past difficulties has made the provisions of the Indian Act more exact in some particulars . But the overlapping of subject matter is not avoided by substituting three lists for two, or even by arranging for a hierarchy of jurisdictions. Subjects must still overlap, and where they do the question must be asked what in pith and substance is the effect of the enactment of which complaint is made, and in what list is its true nature and character to be found. If these questions could not be asked, much beneficent legislation would be stifled at birth, and many of the subjects entrusted to provincial legislation could never effectively be dealt with. The same point had already been made by Lord Atkin in Gallagher v Lynn [1937] AC 863, which was an appeal from Northern Ireland. Section 4 of the Government of Ireland Act 1920 provided that the Parliament of Northern Ireland had power to make laws for the peace, order and good government of Northern Ireland, but not to make laws in respect of, among other things, trade with any place out of Northern Ireland. He held that an Act regulating the supply of milk in Northern Ireland which imposed controls on every person who within Northern Ireland sold or exposed for sale milk, whether produced within or without the territory of Northern Ireland, was a law for the peace, order and good government of Northern Ireland in respect of precautions taken to secured the health of its inhabitants, not a law in respect of trade. At p 870, explaining what was meant by the pith and substance doctrine, he said: If, on the view of the statute as a whole, you find that the substance of the legislation is within the express powers, then it is not invalidated if incidentally it affects matters which are outside the authorized field. The legislation must not under the guise of dealing with one matter in fact encroach upon the forbidden field. Nor are you to look only at the object of the legislator. An Act may have a perfectly lawful object, eg to promote the health of the inhabitants, but may seek to achieve that object by invalid methods, eg a direct prohibition of any trade with a foreign country. The rule that was evolved and applied in these cases, among others, provides the background to the scheme that is now to be found in the Scotland Act. It was referred to at the committee stage in the House of Lords by Lord Sewel: Hansard HL Debates (21 July 1998), vol 592, col 818 et seq. The scheme seeks to give effect to the rule. Lord Sewel, recognising that a degree of trespass into reserved areas was inevitable, said that it was intended that any argument as to whether a provision in an Act of the Scottish Parliament relates to a reserved matter must be decided by reference to its pith and substance or its purpose and if its purpose is a devolved one it is not to be outside legislative competence merely because it affects a reserved matter: col 819. The question whether that aim has been achieved must be determined by examining the provisions of the Scotland Act in which the scheme is laid out. While the phrase pith and substance was used while these provisions were being debated, it does not appear in any of them. The idea has informed the statutory language, and the rules to which the court must give effect are those laid down by the statute. As to what they mean, the Scotland Act provides its own dictionary. Section 29, which must now be quoted in full, provides as follows: (1) An Act of the Scottish Parliament is not law so far as any provision of the Act is outside the legislative competence of the Parliament. (2) A provision is outside that competence so far as any of the following paragraphs apply (a) it would form part of the law of a country or territory other than Scotland, or confer or remove functions exercisable otherwise than in or as regards Scotland, (b) it relates to reserved matters, (c) it is in breach of the restrictions in Schedule 4, (d) it is incompatible with any of the Convention rights or with Community law, (e) it would remove the Lord Advocate from his position as head of the systems of criminal prosecution and investigation of deaths in Scotland. (3) For the purposes of this section, the question whether a provision of an Act of the Scottish Parliament relates to a reserved matter is to be determined, subject to subsection (4), by reference to the purpose of the provision, having regard (among other things) to its effect in all the circumstances. (4) A provision which (a) would otherwise not relate to reserved matters, but (b) makes modifications of Scots private law, or Scots criminal law, as it applies to reserved matters, is to be treated as relating to reserved matters unless the purpose of the provision is to make the law in question apply consistently to reserved matters and otherwise. The paragraphs of section 29(2) that require to be examined in this case are paras (b) and (c). The first question is whether section 45 of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 relates to a reserved matter. Reserved matters are the matters reserved to Westminster by section 30(1) of the Scotland Act, which gives effect to the list of matters in Schedule 5. Para 1 of Part II of Schedule 5 provides that the matters to which any of the sections in the Part apply are reserved matters for the purposes of the Act. Head E Transport lists among the subject matter of section E1, which applies to Road Transport, the following: (d) the Road Traffic Act 1988 and the Road Traffic Offenders Act 1988. Section 45 of the 2007 Act does not refer expressly to any of the provisions of the Road Traffic Act 1988 or the Road Traffic Offenders Act 1988. But, as it applies to offences under enactments passed before the 2007 Act generally, it must be taken to refer to them by implication. Their subject matter is a reserved matter. The question whether a provision relates to a reserved matter in terms of section 29(2)(b) is to be determined by reference to the purpose of the provision, applying the rule set out in section 29(3). This rule lays down the primary test of what is meant by purpose. But it is necessary to have regard also to section 29(4) which deals with a special category of overlap between reserved matters and matters which are not reserved that is in point in this case. This is because section 126(5) of the Scotland Act provides that references in the Act to Scots criminal law include criminal offences, jurisdiction, evidence, procedure and penalties and the treatment of offenders, and because section 45 of the 2007 Act deals with what the head note to Part 3 of that Act refers to as penalties. The list of reserved matters has been drawn up by reference to different aspects of executive or governmental responsibility. But the spheres of activity embraced by Scots private law and Scots criminal law, which are not reserved, do not respect those boundaries. They extend across all of them. The regulation of both devolved matters and reserved matters within Scotland is likely to involve questions of Scots private law and Scots criminal law. Section 29(4) does not apply if, applying the test laid down by section 29(2), the provision in question has already been found otherwise to relate to a reserved matter. That is the effect of para (a) of this subsection. It does apply, however, if it makes modifications of Scots private law or Scots criminal law as it applies to reserved matters: para (b). Here too the boundary between what is reserved and what is not reserved is to be determined by applying a purpose test. The key word here is consistently. If the purpose is to make the relevant rule of Scots criminal law apply consistently to reserved matters and otherwise, it will pass the test. The provision will not then fall to be treated as relating to a reserved matter, and thus outside the legislative competence, because it is caught by section 29(2)(b). The question whether the provision is in breach of any of the restrictions in Schedule 4 must also be addressed in this case. The paragraphs in that Schedule that need to be considered are paras 2 and 3, which so far as relevant provide as follows: 2 (1) An Act of the Scottish Parliament cannot modify, or confer power by subordinate legislation to modify, the law on reserved matters. (2) In this paragraph, the law on reserved matters means (a) any enactment the subject matter of which is a reserved matter and which is comprised in an Act of Parliament or subordinate legislation under an Act of Parliament, and (b) any rule of law which is not contained in an enactment and the subject matter of which is a reserved matter, and in this sub paragraph Act of Parliament does not include this Act. (3) Sub paragraph (1) applies in relation to a rule of Scots private law or Scots criminal law (whether or not contained in an enactment) only to the extent to that the rule in question is special to a reserved matter 3 (1) Paragraph 2 does not apply to modifications which (a) are incidental to, or consequential on, provision made (whether by virtue of the Act in question or another enactment) which does not relate to reserved matters, and (b) do not have a greater effect on reserved matters than is necessary to give effect to the purpose of the provision. (2) In determining for the purposes of sub paragraph (1)(b) what is necessary to give effect to the purpose of a provision, any power to make laws other than the power of the Parliament is to be disregarded. There is obviously some duplication between section 29 and the provisions of this Schedule. At first sight, paragraph 2(1) declares what the reader already knows, having studied section 29(4). But, in contrast to section 29(4) which deals with the question whether a provision relates to a reserved matter, para 2(1) refers to the law on reserved matters. The meaning of this expression is set out in para 2(2)(a). The starting point is that the law on reserved matters as a whole is protected from modification by the Scottish Parliament. This appears to withdraw the protection that is given by section 29(4) to modifications of a rule of Scots private law or Scots criminal law as it applies to reserved matters whose purpose was to make the law apply consistently to reserved matters and otherwise. But paragraph 2(1) is itself qualified by the opening words of paragraph 2(3). The words is special to a reserved matter are the key words in this subparagraph. The contrast which they suggest is between a rule of Scots criminal law which is special to a reserved matter on the one hand and one which is general in its application on the other because it extends to both reserved matters and matters which have not been reserved. There is a strong family likeness between the two tests, as Lord Walker says: see para [54]. But a modification which survives the test in section 29(4) will have to pass the tests in Schedule 4: section 29(2)(c). If it passes the test in paragraph 2(3), paragraph 2(1) will not apply. It will have no need of the protection that is given by paragraph 3 to modifications that fall within the scope of that paragraph. This analysis shows that the questions which lie at the heart of this case are: (1) whether the purpose of section 45 was to make a modification to Scots criminal law as defined in section 126(5); (2) if so, whether its purpose was to make the law apply consistently to reserved matters and otherwise; and (3) if it passes those tests, whether the rule that it sought to modify was special to a reserved matter within the meaning of paragraph 2(3) of Schedule 4. Section 45 of the 2007 Act Section 45 of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 is one of a group of sections dealing with sentencing powers which appear in Part 3 of the Act under the heading Penalties. Two sections require to be noticed in addition to section 45. First there is section 43, which deals with common law offences. It amends section 5 of the Criminal Procedure (Scotland) Act 1995, which deals with the sheriffs summary jurisdiction and powers, in two respects: in section 5(2)(d), the power to impose imprisonment is raised from any period not exceeding three months to twelve; and section 5(3) is repealed. Secondly, there is section 44, which increases the maximum sentence of imprisonment for a list of particular summary only statutory offences which had attracted a maximum sentence in excess of the previous common law maximum but were below the new maximum of twelve months for offences dealt with summarily. Section 45 is headed Other statutory offences. It is not necessary for the purposes of this case to quote it in full. The provisions that are relevant provide as follows: (1) The maximum term of imprisonment to which a person is liable on summary conviction of a relevant offence is, by virtue of this subsection, 12 months. (2) Accordingly, the specification of a maximum period of imprisonment in every relevant penalty provision is, in relation to any relevant offence to which it applies, to be read subject to subsection (1). (3) Without prejudice to subsections (1) and (2), the Scottish Ministers may by order amend the specification of a maximum term of imprisonment in a relevant penalty provision so as to specify, in relation to the relevant offence to which it applies, that the maximum term of imprisonment to which a person is liable on summary conviction is 12 months. (6) In this section, a relevant offence is an offence under a relevant enactment or instrument which is (a) triable either on indictment or summary complaint, and (b) punishable on summary conviction with a maximum term of imprisonment of less than 12 months. (7) In this section a relevant enactment is an Act passed before this Act It is common ground that the Road Traffic Offenders Act 1988 is a relevant enactment and that a contravention of section 103(1)(b) of the Road Traffic Act 1988 is a relevant offence for the purposes of this section. What was the purpose of section 45? Section 29(3) of the Scotland Act provides that, when consideration is being given to the purpose of the provision, regard is to be had to its effect in all the circumstances. One of the circumstances to which it is proper to have regard is the situation before the provision was enacted, which it was designed to address. Reports to and papers issued by the Scottish Ministers prior to the introduction of the Bill, explanatory notes to the Bill, the policy memorandum that accompanied it and statements by Ministers during the proceedings in the Scottish Parliament may all be taken into account in this assessment. The sentencing powers of the sheriff, sitting as a court of summary jurisdiction, are regulated by statute. Section 7(5) of the Criminal Procedure (Scotland) Act 1995 provides that a stipendiary magistrate shall have the summary criminal jurisdiction and powers of a sheriff. Prior to the commencement of the Criminal Proceedings etc (Reform) (Scotland) Act 2007, section 5(2) of the 1995 Act provided inter alia as follows: The sheriff shall, without prejudice to any other or wider powers conferred by statute, have power on convicting any person of a common law offence . (d) to impose imprisonment, for any period not exceeding three months. Section 5(3) of the 1995 Act provided that the maximum sentence for a second or subsequent offence involving violence or dishonesty was six months. The effect of these provisions was that the power of the sheriff or stipendiary magistrate to impose a sentence of imprisonment was limited to a maximum of three months in the case of common law crimes (except in the case of certain types of repeat offences) and, in the case of statutory offences, to the maximum laid down by the relevant statute. In the case of a contravention of section 103(1)(b) of the Road Traffic Act 1988, section 33 of and Part I of Schedule 2 to the Road Traffic Offenders Act 1988 provided that the maximum if the offence was prosecuted summarily in Scotland was six months. In November 2001 the Minister of Justice appointed a committee under Sheriff Principal John McInnes QC to review the provision of summary justice in Scotland, including the structures and procedures of the sheriff courts and the district courts as they related to summary business and the inter relation between the two levels of court, and to make recommendations for the more efficient and effective delivery of summary justice in Scotland. In the report which it presented to Ministers in January 2004 the Summary Justice Review Committee identified a need to relieve pressure on the higher courts. This implied a need to move cases from the High Court of Justiciary to the sheriff and jury court, and in turn a need to move cases from the sheriff and jury court to summary procedure. In para 7.87 of its report it recommended that, to equip summary judges with the disposals that would be necessary to deal with cases that would be heard summarily in the future, the criminal jurisdiction of judges sitting summarily should be increased to a maximum of twelve months detention or imprisonment or a 20,000 fine. Having consulted on this recommendation among other proposals, the Scottish Ministers decided to accept it. In March 2005 the Minister for Justice published Smarter Justice, Safer Communities Summary Justice Reform Next Steps (Scottish Executive, March 2005). In para 4.10 reference was made to the recommendations that the Committee had made which were designed to promote case handling at a more appropriate level: Recognising the pressures on the solemn system, the Committee recommended that the sentencing powers of a sheriff sitting without a jury should be raised to one year in custody or a fine of 20,000, enabling the transfer of the least serious solemn business to the summary courts In para 4.50 it was stated that it was proposed to implement the reports recommendations in relation to the custodial sentencing powers of sheriffs sitting summarily. The Criminal Proceedings etc (Reform) (Scotland) Bill was introduced into the Scottish Parliament in February 2006. In para 186 of the explanatory notes to the Bill it was said of section 35 (which became section 45 when the Bill was passed) that it brought the maximum summary prison sentences for certain statutory offences into line with the new maximum sentence for common law offences set out in what is now section 43 of the Act. In the Policy Memorandum which accompanied the Bill it was stated in para 6 that the Bill made provision in eight main policy areas, including: increases in the criminal sentencing powers of the summary courts, ensuring that those courts can deal with an appropriate range of cases in terms of both severity and caseload, and do so more quickly than is currently the case. In para 206 it was stated that the Executive believed that professional sheriffs should be able to deal with a wider range of cases under summary procedure than they were currently entitled to, including some that would attract a higher penalty. The theme that is apparent from these earlier documents was picked up by the Justice 1 Committee in its report on the general principles of the Bill: Justice 1, 10th Report 2006, Stage 1 Report on Criminal Proceedings etc (Reform) (Scotland) Bill, 5th July 2006. In para 293 of its report the Committee said that one of the principal drivers for the reforms proposed by the Bill was that justice should be dispensed at the appropriate level and that this meant, among other things, the granting of significantly increased sentencing powers to sheriffs sitting without a jury. In para 294 it said that it broadly accepted that there was merit in some cases being dealt with at lower levels of the judicial system than was the case at present. Introducing the stage 1 debate in the Parliament on 14 September 2006, the Minister for Justice said that the Bill made a number of changes to the detailed law of criminal procedure, that each of these changes played its part in speeding up the system as a whole, that the Bill would ensure that increased sentencing powers for sheriffs would ease the pressure on the higher courts and that the bill was to be regarded as part of the executives wider work to reform the summary justice system: Scottish Parliament Official Report, cols 27664 6. In my opinion this material shows conclusively that the purpose of section 45 of the 2007 Act was to contribute to the reform of the summary justice system by reducing pressure on the higher courts. An increase in the sentencing powers of sheriffs when they were dealing with statutory offences was seen as a necessary of this process. The jurisdiction of the sheriff sitting summarily is defined by reference to the penalties that the sheriff can impose. These are pre eminently matters of Scots criminal law: see section 126(5). As it was to a rule of Scots criminal law that the provision was directed, I would hold that it does not relate to a reserved matter within the meaning of section 29(2)(b). Was it to make the law apply consistently? Section 45 of the 2007 Act forms part of a group of sections, all directed to a reform or modification of the sentencing powers of the sheriff sitting summarily. The leading provision is section 43, which increased the maximum sentence for common law offences from three (or, in the case of some repeat offences, six) months to twelve months. It is obvious however that to have left the matter there would have led to an imbalance in the system between how common law offences were to be dealt with on the one hand and how statutory offences were to be dealt with on the other. The reform that this would have achieved would have been incomplete and confusing. To achieve its object it had to be extended across the board to statutory offences as well. To draw a line between statutory offences relating to reserved matters and those relating to matters that were not reserved would have been even more confusing. When they were dealing with an offence created by a United Kingdom statute, prosecutors and sheriffs would have had to check in each case whether they were on the right side of the line. Statutory offences of all kind form a large part of the diet of the summary courts. To achieve a complete and worthwhile reform of the summary justice system a modification of the sentencing power across the whole range of statutory offences was required. In my opinion the purpose of the modification in section 45 must be taken to have been to make the law relating to the increased sentencing power of the sheriff sitting summarily apply consistently to reserved matters and otherwise. I would hold that section 45 is not to be treated as relating to a reserved matter under section 29(4). Is the rule special to a reserved matter? The question that must now be addressed is that set out in para 2(3) of Schedule 4: is the rule of Scots criminal law that the Act seeks to modify special to a reserved matter? To answer it, one must first identify the rule of Scots criminal law that is being modified. Then one must ask whether that rule is special to a reserved matter. Identifying the rule is a crucial step towards reaching the right answer to the question whether the modification that is proposed is within the competence of the Scottish Parliament or must be dealt with at Westminster. I agree with Lord Rodger that, unlike section 29(3) and (4), para 2 of the Schedule concentrates on the rule of law that is being modified by the enactment and makes no mention of the purpose of the modification: see para [122]. But the purpose of the enactment may nevertheless be referred to in order to identify the rule of law that is being modified. I think that it is clear that any modification of the maximum punishment that can be imposed for the offences that the road traffic legislation has created must be held to be a matter for the United Kingdom Parliament at Westminster. The rule of Scots law as to the maximum term of imprisonment that can be imposed would fall to be treated as a rule that was special to a reserved matter. So would any other limits on the extent of the penalties or as to the scope of offences that the Road Traffic legislation lays down. The Calman Report, Serving Scotland Better: Scotland and the United Kingdom in the 21st Century, June 2009, considered in paras 5.167 181 certain aspects of road traffic regulation including drink driving limits and speed limits. As the authors of the report were right to recognise, under the current legislation any alteration to those limits that might be thought to be acceptable in Scotland would not be within the legislative competence of the Scottish Parliament. Some concern was expressed during the progress of the Bill as to whether this reform might lead to what was referred to as sentence drift a tendency on the part of sheriffs to impose higher sentences for these offences than they would previously have regarded as appropriate. But it is plain that this was not what the reform was intended to do, and there is no evidence that this has in fact happened. So I do not think that it would right to say that the purpose of section 45 was to achieve an overall increase in the sentences that sheriffs were imposing. Had that been the purpose, it would have gone some way to identifying the rule of law that was being modified. As it is, the rule cannot be identified by that route. Section 33 of and Part I of Schedule 2 to the Road Traffic Offenders Act 1988 provide that the maximum sentence of imprisonment for the offence under section 103(1)(b) of the Road Traffic Act 1988 if prosecuted summarily in Scotland is six months and that it is twelve months if prosecuted in Scotland on indictment. They contain, in effect, two rules of Scots criminal law. One is a rule as to the overall maximum sentence, which is twelve months imprisonment. That, plainly, is a rule which is special to the Road Traffic Acts and it is a reserved matter. The other is a rule about Scots criminal jurisdiction and procedure, which is not reserved. It is that rule which determines the procedure under which the maximum sentence can be imposed. The purpose of the modification that section 45 makes is to enable more statutory offences to be prosecuted summarily. The maximum sentence of imprisonment for the offence if prosecuted in Scotland remains twelve months. The modification relates to the procedure which determines whether the sheriff has jurisdiction to impose the maximum sentence. It extends the power that is given to him when he is sitting summarily. It seems to me therefore that the rule of Scots law that is being modified is the rule of procedure, not the rule of Scots law as to the maximum sentence for the offence. The rule of procedure is a rule that applies generally to the way cases are dealt with in the sheriff court. It is not special to the Road Traffic Offenders Act 1988. The purpose of para 2(3) of Schedule 4 to the 1998 Act, as I understand it, is to avoid the fragmentation of rules of Scots criminal law which are of general application into some parts which are within the Scottish Parliaments competence and some parts which are not. It is, of course, the case that the difference between the maximum sentence that could be imposed by a sheriff sitting summarily and that which could be imposed by him in solemn proceedings was prescribed in Schedule 2 to the Road Traffic Offenders Act 1988. But in doing so the Schedule was basing itself on a distinction between two forms of Scots criminal procedure which apply generally. I think that it was within the competence of the Scottish Parliament to extend its general reform of that procedure to the forms of procedure referred in this and other statutes that deal with reserved matters, otherwise fragmentation would occur. I am not confident that it helps to reason by way of examples. Each case must be taken on its own merits. In case of doubt, the words to the extent only suggest that a generous application of para 2(3) which favours competence is to be preferred, as opposed to one which applies it narrowly. And the key to the decision in this case lies in identifying the rule in question, which is achieved by examining the purpose of the provision which is under scrutiny. One could, of course, say that Schedule 2 contains two maximum sentences, one for summary proceedings and the other for proceedings on indictment, and that as both are reserved matters it was not open to the Scottish Parliament to alter either of them. But that, in my opinion, would be to carry the process of analysis too far. The word special indicates that, in cases such as this where the decision depends on the exercise of judgment, the purpose of the provision may be the best guide. So, in agreement with Lord Walker and Lord Brown and respectful disagreement with Lord Rodger and Lord Kerr, I would hold that section 45 was not directed to a rule which was special to a reserved matter within the meaning of para 2(3) of Schedule 4, that para 2(1) of the Schedule does not apply, that it survives scrutiny under section 29(2)(c) and there is no need to refer to para 3. Had it been necessary to refer to para 3, I would have held that section 45 of the 2007 Act was not saved by it. On this point I disagree with the appeal court in Logan v Harrower. A decision as to the procedure under which a sentence of more than six months could be imposed was not a modification of an incidental or consequential nature. It was an important change in the procedure which one would expect to see set out in the body of the enactment, not in a schedule of the kind that generally deals with matters that are merely incidental or consequential on provisions found elsewhere in the enactment. Section 104 of the Scotland Act enables Her Majesty in Council or a Minister of the Crown, with the consent of both Houses of the United Kingdom Parliament, to make such provision as is considered necessary or expedient in consequence of any provision made by or under any Act of the Scottish Parliament. As the explanatory notes to that section point out, the power to make provision consequential on legislation under paragraph 3 of Schedule 4 is very limited. Among other things, it does not enable the Scottish Parliament to legislate otherwise than as a matter of Scots law. It does not have power under that provision to make any consequential provisions that require to take effect elsewhere in the United Kingdom. Examples of the use that is made of the power under section 104 are to be found in the Adults with Incapacity (Scotland) Act 2000 (Consequential Modifications) (England, Wales and Northern Ireland) Order 2005 (SI 2005/1790) and the Police, Public Order and Criminal Justice (Scotland) Act 2006 (Consequential Provisions and Modifications) Order 2007 (SI 2007/1098). There are many others. Lord Rodger in para [81] has mentioned some of them. The use of section 104 is not confined to cross border matters. The power was used in connection with the reforms introduced by the 2007 Act to make the powers to impose sanctions under the Road Traffic Offenders Act 1988 available in the justice of the peace courts that were to be established under the 2007 Act, and to make the same powers available in the district courts during the phased introduction of the justice of the peace courts: see the Criminal Proceedings etc (Reform) (Scotland) Act 2007 (Powers of District and JP Courts) Order 2007 (SI 2007/3480). I agree with Lord Rodger that the scheme for adjusting the sheriffs summary criminal jurisdiction in relation to statutory offences could have been dealt with in this way, had this been thought to be necessary. But the modification that was required in their case was to a procedural route that was already available for dealing with these offences in the sheriff court. For the reasons that I have given I consider that the judgment that was made that the modification was within the legislative competence of the Scottish Parliament was correct, and that the use of the section 104 power was not necessary. Conclusion The result of this analysis is that section 45 of the 2007 Act survives scrutiny. Endorsing what the appeal court decided in Logan v Harrower but differing from it as to the reason why the section is not in breach of the restrictions in Schedule 4, I would hold that the provision is within the legislative competence of the Scottish Parliament. I would therefore dismiss these appeals. Bearing in mind that the appellant Martin who is on interim liberation has not yet served the sentence that the sheriff imposed on him, I would remit both cases to the appeal court for any further orders that may be required. Had I been in favour of allowing the appeals I would have made an order under section 102(2)(a) of the 1998 Act removing the retrospective effect of the decision that, so far as it purports to modify the penalty provision for a contravention of section 103(1)(b) of the Road Traffic Act 1988 in Part I of Schedule 2 to the Road Traffic Offenders Act 1988, section 45(2) of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 is outside the competence of the Scottish Parliament. I would also have made an order under section 103(2)(b) suspending its effect for two months to allow the defect to be corrected as it seems to me that, in a case of this kind, these two orders go hand in hand. LORD WALKER The Scotland Act 1998 is on any view a monumental piece of constitutional legislation. Parliament established the Scottish Parliament and the Scottish Executive and undertook the challenging task of defining the legislative competence of the Scottish Parliament, while itself continuing as the sovereign legislature of the United Kingdom. That task is different from defining the division of legislative power between one federal legislature and several provincial or state legislatures (as in Canada or Australia, whose constitutional difficulties the Judicial Committee of the Privy Council used to wrestle with, often to the dissatisfaction of those dominions). The doctrine of pith and substance mentioned by Lord Hope in his judgment is probably more apt to apply to the construction of constitutions of that type. But both have to face the difficulty of defining (necessarily in fairly general and abstract terms) permitted or prohibited areas of legislative activity. The difficulties (viewed from the perspective of Northern Ireland) are discussed in Harry Calverts Constitutional Law in Northern Ireland, which, though written as long ago as 1968, still provides a very helpful commentary. It shows how different forms of words have come to be recognised as indicating a more or less proximate (or direct, or crucial) connection between a proposed enactment and an area of legislative activity. Calvert quotes (from an unidentified source), at pp 180 181, the argument of the Attorney General for Northern Ireland when Lynn v Gallagher [1937] AC 863 was before the House of Lords: The crux of this whole legislation lies in three words, the words in respect of used in section 4(1) of the Government of Ireland Act, 1920. These three words are the apt words to indicate the true subject matter of an enactment but they are not, we submit, the apt words to indicate merely the results of an enactment. They are possibly rather stronger than a word such as concerning, and than the phrase in relation to, but they certainly must have a different meaning, unless they may be construed contrary to the general use of language, from the word affecting. In the British North America Act the words used are in relation to and these words in respect of do not occur in it. We submit that these words in respect of are no weaker than the words there used. Calvert also quotes, at p 179, Higgins J in McArthur Ltd v Queensland (1920) 28 CLR 530, 565: We have to determine in each case what is the subject of the legislation what subject is the Act with respect to what it effects not what things or operations it may indirectly affect. These background matters must have been in the mind of those who undertook the drafting of the Scotland Act (and in particular the provisions directly relevant to these appeals). But in the Scotland Act Parliament has gone further, and has used more finely modulated language, in trying to explain its legislative purpose as regards reserved matters. The Court has to consider two groups of provisions, each of which has a particular nexus with reserved matters as defined in Schedule 5 of the Act. The first group of provisions consists of section 29(2)(b) as explained and qualified by subsections (3) and (4). The second group consists of section 29(2)(c) and Schedule 4, paras 2 and 3. All these provisions are set out in Lord Hopes judgment (paras 16 and 20) and I need not repeat them. But it is worth considering the manner in which reserved matters are defined in Schedule 5 (to which both groups of provisions are linked). Schedule 5, Part I, contains general reservations: the constitution, political parties, foreign affairs, public service, defence and treason. Part II then contains specific reservations under eleven heads (themselves elaborately subdivided and made subject to exceptions). Although termed specific, some of these are expressed in general terms. For instance, Head A1, Fiscal, economic and monetary policy, is as follows: Fiscal, economic and monetary policy, including the issue and circulation of money, taxes and excise duties, government borrowing and lending, control over United Kingdom public expenditure, the exchange rate and the Bank of England. Exception Local taxes to fund local authority expenditure (for example, council tax and non domestic rates). Many of the specific reservations in Part II are expressed as the subject matter of a particular statute (or part of a statute). For example Head E.1, Road Transport, includes The subject matter of . (d) the Road Traffic Act 1988 and the Road Traffic Offenders Act 1988 (subject to an exception for a few sections of the Road Traffic Act 1988). The use of the expression subject matter has been described (in an unsigned editorial in (1998) 19 Statute Law Review v) as an elegant drafting device but as having potential difficulties. So I come back to the first group of provisions, consisting of subsection (2)(b) of section 29 as explained and qualified by subsections (3) and (4). Its structure appears reasonably straightforward. Section 29(2)(b) prohibits legislation by the Scottish Parliament which relates to reserved matters. That is an expression which is familiar in this sort of context, indicating more than a loose or consequential connection, and the language of section 29(3), referring to a provisions purpose and effect, reinforces that. Section 29(4) adds to the reach of section 29(2) (as is clear from section 29(4)(a)) as regards modifications of Scots private law, or Scots criminal law, as it applies to reserved matters. Scots private law and Scots criminal law are widely defined in section 126 (4) and (5). Paragraph 29(4)s default position is restrictive: the modification is to be treated as relating to reserved matters unless the purpose of the provision is to make the law in question apply consistently to reserved matters and otherwise. Here the law in question must mean the relevant rule of Scots private law or Scots criminal law. The second group of provisions consists of section 29(2)(c) and Schedule 4, paras 2 and 3. Para 2(1) contains a general prohibition on modification (including amendment or repeal) of the law on reserved matters, that composite expression being defined in sub paragraph (2) by reference to the subject matter of an enactment or non statutory rule. So reading Schedule 4, para 2(1) and (2) together with Schedule 5, Part II, Head E1(d), we see that (if those provisions stood alone) an Act of the Scottish Parliament could not modify the Road Traffic Offenders Act 1988, because the subject matter of that Act is a reserved matter. As I understand it the Court is agreed (although not for identical reasons) that the legislation now in point, section 45 of the Criminal Proceedings etc (Reform)(Scotland) Act 2007, does not infringe section 29(2)(b) of the Scotland Act. The Court is however divided as to the effect of section 29(2)(c). Lord Rodger and Lord Kerr take the view that section 45 of the 2007 Act infringes section 29(2)(c) and Schedule 4, para 2 (being special to a reserved matter for the purposes of para 2(3) and not being saved by para 3, relating to incidental or consequential modifications). I agree that para 3 is not in point. The crucial provision is para 2(3). But it is important, in my view, to try and see it as part of a rational and coherent scheme defining the legislative competence of the Scottish Parliament. That is easier said than done, as the division within the Court indicates. When I first studied this second group of provisions I got the impression that they replicated, but in different language, the effect of what I have called the first group of provisions, and that it was hard to discern the legislative scheme or purpose underlying this. I still have difficulty with this. But I think the answer may be that section 29(2) is dealing comprehensively with the scope of any new legislation enacted by the Scottish Parliament, whereas Schedule 4 is (as its heading indicates) concerned with the protection of some existing legislation (or some non statutory rule of law) which has a reserved matter as its subject matter. However the statute book is already so heavily burdened that almost any new legislation is likely to modify existing legislation, and in Scotland a lot of new legislation will have the effect of modifying Scots private law or Scots criminal law. So in most cases both groups of provisions will be in point. Section 29(4) is concerned with a provision which makes a modification to Scots private law or Scots criminal law as it applies to reserved matters; in that case it is necessary to enquire whether its purpose is to make the law in question apply consistently to reserved matters and otherwise (that is, to non reserved matters). Schedule 4, para 2(3) is concerned with the modification of a rule of Scots private law or Scots criminal law to the extent that the rule in question is special to a reserved matter. There is to my mind an obvious degree of affinity between these two enactments, in that a provision intended to produce consistency in a rules application across the board (that is, to reserved matters and non reserved matters alike) is unlikely to apply to a rule which is special to a reserved matter. Special is to be contrasted with general and a measure intended to produce consistency across the board is general by its very nature. The two statutory tests are not identical (if Parliament had intended them to be identical it would no doubt have used the same words in each). Nevertheless they have a strong family likeness, and it would be rather surprising if a provision came within the legislative competence of the Scottish Parliament under section 29(4) but failed on the test in Schedule 4, paragraph 2(3). In applying each test it is necessary to identify the rule of Scots criminal law which is to be modified. It is to be found in sections 9 and 33 of, and Schedule 2 to, the Road Traffic Offenders Act 1988, so far as they apply to an either way offence under section 103(1)(b) of the Road Traffic Act 1988 committed in Scotland. These provisions are part of Scots criminal law, and they relate (almost by definition, having regard to the wording of Head E1(d)) to a reserved matter. It is also necessary to identify the purpose of the provision which makes the modification, that is section 45 of the 2007 Act. Its purpose was (as Lord Hope says in his judgment, para [31]) to contribute to the reform of the summary justice system by reducing pressure on the higher courts. An increase in the sentencing powers of sheriffs when they were dealing with statutory offences was seen as a necessary of this process. Similarly in Lord Rodgers view (para [105]) it was to introduce a novel, general, provision for determining the maximum term which a sheriff, sitting as a court of summary jurisdiction, could impose by way of imprisonment in respect of either way statutory offences which had previously attracted a maximum sentence of less than 12 months imprisonment. Lord Rodger gives a very similar explanation of the purpose of section 45 in para [113] of his judgment. In my opinion this statutory purpose includes achieving consistency in the sheriffs sentencing powers, on summary conviction, as between reserved and non reserved matters. Lord Rodger accepts this in para [116] of his judgment, but reaches a different conclusion on the similar point (not, I accept, exactly the same point) arising under Schedule 4, paragraph 2(3). I would accept that on my interpretation both section 29(4) and Schedule 4, para 2(3) may produce some difficult borderline cases, and some results which might appear anomalous. Perhaps they would do so on any interpretation, since in the Scotland Act Parliament was attempting to define legislative competence across the whole broad expanse of what are now regarded as the concerns of government. But (with great respect to the contrary views of Lord Rodger and Lord Kerr) I do not see this as a difficult borderline case. The relevant rule of Scots criminal law to be modified is not that driving while disqualified is a criminal offence, nor that it is a criminal offence punishable by imprisonment, nor that the maximum term of imprisonment is 12 months. All that has been enacted by the Westminster Parliament, and is left untouched. The rule to be modified is whether (and if so to what degree) the option of summary trial before the sheriff should reduce the maximum sentence that can be passed. That is to my mind a general matter relating to the Scottish system of criminal justice, and is not something special to the reserved matter of road transport. For these reasons, and for the fuller reasons in the judgment of Lord Hope, while respecting the closely argued contrary views of the minority, I agree with Lord Hope and Lord Brown that the appeals should be dismissed and the cases remitted to the Appeal Court for any further orders that may be required. LORD BROWN Section 33 of and Part 1 of Schedule 2 to the Road Traffic Offenders Act 1988 (the RTOA), as originally enacted, provided that the offence of driving while disqualified (the offence) under section 103(1)(b) of the Road Traffic Act 1988 (the RTA) could be prosecuted in Scotland either summarily or on indictment; if summarily, the maximum punishment was six months imprisonment (and/or a fine); if on indictment, twelve months (and/or a fine). The RTOA and the RTA are reserved matters. By section 45 of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 (the 2007 Act) the Scottish Parliament purported to increase from six months to twelve months the maximum sentence that could be imposed for the offence by the sheriff sitting summarily. (Although immaterial to this appeal, it may be noted that in England and Wales the offence was, and remains, triable summarily only and subject to a maximum sentence of six months imprisonment.) The sole issue for determination on this devolution appeal is whether section 45 of the 2007 Act was within the Scottish Parliaments legislative competence within the meaning of section 29 of the Scotland Act 1998 (the 1998 Act). Section 29 has already been set out in full by other members of the Court and I need not repeat it. So too the relevant paragraphs of Schedule 4 to the 1998 Act (referred to in section 29(2)(c)). Before coming to the single point on which the Court is divided it is worth noting the following basic matters. First, that section 45 of the 2007 Act, the enactment impugned, did not increase the maximum penalty available for the offence in Scotland: that remained at twelve months imprisonment; what changed was that the sheriff could impose this maximum sentence no less when sitting as a court of summary jurisdiction than as a court of solemn jurisdiction. Secondly, that the essential purpose of section 45 (indeed, of sections 43 to 49 of the 2007 Act as a whole) was not to increase the penalties imposed by the Scottish courts but rather, by enlarging the sheriffs summary sentencing powers, to reallocate business within the court system to have more cases tried summarily instead of by a jury, summary trials generally being simpler, faster and cheaper than jury trials. Thirdly, that had the 2007 Act, directed as it was to reallocating court business in this way and to standardising the sheriffs summary sentencing powers for the future, not included within its provisions modification of the RTOA and the RTA in the way described, it would have created a striking contrast between the sheriffs summary powers when dealing with reserved matters and those available to him in other cases. Of course, as Lord Rodger points out, any such anomaly or inconsistency could if necessary be cured by resort to section 104 of the 1998 Act. But was that the only lawful means of achieving the desired consistency in this case? That is the question. I understand all of us to agree that section 45 does not fall foul of section 29(2)(b) of the 1998 Act. It does not relate to a reserved matter having regard to section 29(3) and is not to be deemed to relate to reserved matters by virtue of section 29(4). On this latter point, in common with Lord Hope, I regard section 45 as making modifications of Scots criminal law as it applies to reserved matters but as doing so for the purpose of making Scots criminal law (as to the allocation of court business) apply consistently. What critically divides the Court is the question raised under section 29(2)(c): as to whether section 45 is in breach of the restrictions in Schedule 4. I do not pretend to find paragraphs 2 and 3 of Schedule 4 entirely easy to follow and naturally I recognise the force of Lord Rodgers reasoning. For my part, however, I remain unpersuaded that section 45 modifies the law on reserved matters within the meaning of paragraph 2(1), given that (by virtue of paragraph 2(3)) paragraph 2(1) applies in relation to a rule of Scots criminal law only to the extent that the rule is special to a reserved matter (which I do not regard the unamended 6 months limits of the sheriffs summary jurisdiction to be). Even, however, were I persuaded that section 45 is to be regarded as modifying the law on reserved matters within the meaning of paragraph 2, I would conclude here that paragraph 2 is then disapplied by paragraph 3 since such modification is to be seen merely as incidental to a provision being made (for reallocation of court business and the standardisation of the sheriffs summary sentencing powers) in relation to unreserved matters and has no greater effect on reserved matters than is necessary to give effect to such purpose. Given that the Scottish Parliament is plainly intended to regulate the Scottish legal system I am disinclined to find a construction of Schedule 4 which would require the Scottish Parliament, when modifying that system, to invoke Westminsters help to do no more than dot the is and cross the ts of the necessary consequences. I too, therefore, would dismiss these appeals. LORD RODGER Does an enactment of the Scottish Parliament relate to reserved matters? Does it modify a rule of Scots criminal law that is special to a reserved matter? These are the key questions in the present appeals. The answers depend on the interpretation of section 29(2)(b) and (c) of the Scotland Act 1998 (the 1998 Act), along with paras 2 and 3 of Part I of Schedule 4 to the Act. Viewed in isolation, para 2, in particular, can appear to use impenetrable language to erect an arbitrary restriction on the Parliaments powers. Matters become clearer, however, when the provisions are seen in their setting in life. A useful starting point is the situation before 1999. Policy responsibility before devolution Until devolution took effect, leaving aside the fluctuating position of Northern Ireland, the central government of the United Kingdom was carried on by a single executive and a single Parliament. The executive was responsible for, and could determine, all areas of policy for the entire United Kingdom. Similarly, Parliament could legislate to give effect to the chosen policy in all parts of the United Kingdom. In practice, Parliament did not always insist on the law being uniform throughout the United Kingdom. To take only the most obvious example, Parliament did not intervene to impose uniformity on the private or criminal laws of England and Scotland. Instead, when legislation was to apply in both jurisdictions, where necessary, it included provisions that were tailored to fit the underlying law of both systems. So, for instance, the Rehabilitation of Offenders Act 1974 had to take account of differences in the two systems of criminal procedure. Sometimes, even if Parliament was legislating for England and Wales only, for example, the legislation could not be effective unless some provisions were made to extend to Scotland and vice versa. To take another obvious example, aspects of the legislation on detained patients in the Mental Health Act 1983 and the Mental Health (Scotland) Act 1984 had a cross border dimension and would have been unworkable if various provisions of the English Act had not extended to Scotland and various provisions of the Scottish Act had not extended to England. When the legislation was being prepared, officials and, if necessary, ministers in the various departments, including the Scottish Office, would discuss the proposals and try to iron out any difficulties. Even where there was no particular cross border dimension, legislation proposed by one department might have an impact on matters for which another department was responsible. Proposed legislation on, say, education might have an impact on employment; legislation on care in the community might raise law and order questions; legislation on transport might affect the environment; legislation on planning might affect trade and industry. And so on. More particularly, to be effective, legislation on a matter for which one department had responsibility might require that a piece of legislation falling within another departments sphere of responsibility should be amended. So, when a policy was being worked up and incorporated into a Bill, while one department would take the lead, very frequently officials and ministers from a number of departments would be involved. Suppose, for instance, the Home Office and the Scottish Office had proposed legislation to adjust the jurisdiction of the courts by increasing the sentencing powers of summary courts in both England and Wales and in Scotland. Suppose also that, in order to be effective, the reforming legislation would have had to modify the penalty provisions for offences in various Acts, such as the Road Traffic Offenders Act 1988 (the RTOA). In that event, officials of the lead departments would have consulted officials and ministers from all the departments, including the Department of Transport, having responsibility for the Acts which it was proposed should be modified. Sometimes the impact of the proposed legislation on a different area would be relatively insignificant perhaps involving little more than updating statutory references or bringing the language of existing legislation into conformity with the language of the proposed legislation. In such cases the main task of the other departments might well be to help the lead department and the Bill team by identifying provisions that would require to be modified in this way. But sometimes the impact would be more significant and would trench on issues of policy. Then there could well be differences of opinion among the departments concerned as to the best way forward. If officials could not resolve them, the disputed issues could be taken for decision to the appropriate cabinet committee and ultimately, if necessary, to the full cabinet or to the Prime Minister. The result would be a Bill which made all the necessary amendments, whatever the subject matter of the legislation being amended and irrespective of the department which had responsibility for that subject. Policy responsibility after devolution In the 1998 Act and the corresponding Acts for Wales and Northern Ireland, Parliament devolved legislative and executive authority in varying degrees. The powers of the Scottish Parliament are to be found in sections 28 and 29 of the 1998 Act. Section 28(1) of the 1998 Act provides that, subject to section 29, the Scottish Parliament may make laws. In terms of section 29(1), an Act of the Scottish Parliament is not law so far as any of its provisions is outside the legislative competence of the Parliament. Under section 29(2) a provision is outside that competence in various circumstances in particular, if, (b), it relates to reserved matters or, (c), it is in breach of the restrictions in Schedule 4. Leaving aside certain matters where powers are shared (section 56), it is immediately obvious that the overall scheme was to devolve power to the Scottish Executive and Scottish Parliament, but to except certain reserved matters, which are identified in Schedule 5 to the 1998 Act. All other matters are devolved matters although that term is not used since the Act concentrates on identifying the matters lying outside the competence of the Scottish Parliament and Scottish Executive. So far as these reserved matters are concerned, policy responsibility in respect of Scotland remains with the United Kingdom government and the United Kingdom Parliament retains the sole responsibility for legislating on them. The purpose of a provision and its validity It is convenient at this stage to notice that, under section 29(3) of the 1998 Act, the question whether a provision of an Act of the Scottish Parliament relates to a reserved matter and so is outside the competence of the Parliament under section 29(2)(b) is to be determined by reference to the purpose of the provision. Sometimes the clearest indication of the purpose of a provision will be found in a report which gave rise to the legislation or in a report of one of the committees of the Parliament. But very often the purpose of a provision will be clear from its context in the Act in question. For example, the subject matter of the Carriage of Goods by Sea Act 1992 is a reserved matter: para 1 and Section E3 of Part II of Schedule 5 to the 1998 Act. Obviously, therefore, if the Scottish Parliament purported to pass a Carriage of Goods by Sea (Scotland) Act with the sole purpose of repealing the 1992 Act in Scots law, its purpose would relate to a reserved matter and so its provisions would be outside the competence of the Parliament by virtue of section 29(2)(b). In practice, such a clear example would be unlikely to get past the legal advisers to the Scottish Parliament. In real life the problem is likely to arise in more complex situations. But assume, for example, that the purpose of an Act is to increase the sentencing powers of the lower courts in Scotland so as to allow them to deal with more serious cases. The purpose of the Act plainly relates to a devolved, rather than a reserved, matter. So its provisions will not be outside the competence of the Scottish Parliament by reason of section 29(2)(b). Does it follow that all of its provisions are automatically within the competence of the Scottish Parliament? By no means. For example, any provision which was incompatible with rights under the European Convention on Human Rights or with Community law would be outside competence by reason of section 29(2)(d) even if that provision was designed to help achieve the purpose of increasing the sentencing powers of the lower courts in Scotland. Similarly, any provision which was in breach of the restrictions in Schedule 4 to the 1998 Act would be outside competence again, even though the provision was designed to help achieve the purpose of increasing the sentencing powers of the lower courts in Scotland. Quite simply, therefore, even if the purpose of an Act is within the competence of the Scottish Parliament in terms of section 29(2)(b) of the 1998 Act, the Parliament cannot achieve that purpose by enacting provisions which are beyond its competence for one of the reasons listed in the other paragraphs of that subsection. As Lord Atkin put it in Gallagher v Lynn [1937] AC 863, 870, an Act may have a perfectly lawful object but may seek to achieve that object by invalid methods. In other words, the fact that a provision may have a lawful (devolved) purpose does not validate the provision if, for some other reason, it is outside the competence of the Parliament. So, in particular, the mere fact that the purpose of a provision is to increase the sentencing powers of the sheriff, sitting as a court of summary jurisdiction, will not validate it if the provision is outside the competence of the Parliament because it purports to modify a rule of Scots criminal law that is special to a reserved matter: section 29(2)(c) of, and para 2 of Part I of Schedule 4 to, the 1998 Act. Section 104 orders The fact that the powers of the Scottish Parliament are subject to these limitations means that there is now a stark contrast between the position in England and Scotland. For England, one executive and one Parliament continue to have the necessary powers to determine policy in all subject areas and to put it into effect by legislation. For Scotland, however, the necessary powers are divided between two executives and two legislatures. Even though the legislative arrangements for Scotland have changed in this way, the nature of the problems to be tackled by legislation has not changed. So, for example, some measures, like mental health legislation, which are devolved matters, still have a cross border dimension. Similarly, proposed legislation in one field, which happens now to be devolved, may require substantial amendment to legislation in another field, which happens now to be reserved. In these situations the Scottish Parliament will not have all the powers that are needed to make a fully effective reform. So its legislation can take the matter only so far. If it is to be fully effective, the legislation passed by the Scottish Parliament will require to be topped up by legislation of the United Kingdom Parliament dealing with any aspects which are beyond its competence. The need to provide for such situations was foreseen by those who drafted the 1998 Act. Section 104, which is designed to be used when they arise, is therefore a key element of the scheme for devolution. It contains a tailor made mechanism for using the powers of the United Kingdom Parliament to supplement legislation of the Scottish Parliament, without the need for full scale legislation by Parliament: (1) Subordinate legislation may make such provision as the person making the legislation considers necessary or expedient in consequence of any provision made by or under any Act of the Scottish Parliament or made by legislation mentioned in subsection (2). (2) The legislation is subordinate legislation under an Act of Parliament made by a member of the Scottish Executive, a Scottish public authority with mixed functions or no reserved functions, or any other person (not being a Minister of the Crown) if the function of making the legislation is exercisable within devolved competence. Of course, the Scottish Parliament and Scottish Executive cannot compel a Minister of the Crown to exercise the power under section 104. The intention underlying section 104 and indeed the whole scheme of devolution is, however, that the redistribution of powers should not impair but improve the government of the United Kingdom as a whole. It proceeds on the basis that both administrations can be expected to co operate appropriately. In particular, it presupposes that the United Kingdom ministers and Parliament will not be indifferent to the effectiveness of legislation passed by the Scottish Parliament. Not surprisingly, therefore, since devolution, ministers have made more than 40 orders under section 104. Some of the section 104 orders have concerned matters with a cross border aspect. When legislating for England and Wales, Parliament can, of course, still include any provisions which require to extend to Scotland in order to make the legislation effective though, doubtless, only after discussion with the Scottish Executive and their officials. But, as already noted, it is outside the competence of the Scottish Parliament to make any provision that would form part of the law of England and Wales: section 29(1) and (2)(a) of the 1998 Act. So the Scottish Parliament cannot make any changes to English law which may be needed in order to make its legislation on the devolved matter effective. Section 104 comes to the rescue. For instance, following the enactment of the Mental Health (Care and Treatment) (Scotland) Act 2003 by the Scottish Parliament, a Scotland Office minister used his power under section 104 of the 1998 Act to make the Mental Health (Care and Treatment) (Scotland) Act 2003 (Consequential Provisions) Order 2005 (No 2078; S 9), amending the law of, inter alia, England and Wales in order to facilitate the removal of detained patients from Scotland to England or Wales. But section 104 may also be needed in cases where proposed changes in the law on one subject require changes in the law on another subject. Given the large measure of devolution in matters such as justice, education and health, many of the subjects that are likely to be affected by legislation of the Scottish Parliament will fall within the sphere of responsibility of the Scottish Executive. If the proposed amendments to existing legislation are uncontroversial, then officials can deal with them. If there are disputes on significant matters of policy between, say, the education and criminal justice directorates, it will be for the Scottish Ministers and their officials to thrash them out and incorporate the agreed policy into legislation for the consideration of the Parliament. Again, whatever the principal subject matter of an Act may be, it can be expected to include the necessary amendments to all the relevant legislation on other devolved matters. After, as before, devolution, however, legislation on a subject which is now a reserved matter is liable to have an impact on a subject which is now devolved. For example, legislation on asylum seekers (a reserved matter) might have an impact on the legislation relating to accommodation for homeless persons (a devolved matter). Given the continuing power of Parliament to legislate for Scotland (section 28(7)), there would be no difficulty in incorporating all the necessary changes into the legislation on asylum seekers presumably, after the Home Office had discussed the proposals with the Scottish Executive, just as, formerly, the Home Office would have discussed them with the Scottish Office. The converse situation is where the Scottish Executive and Parliament wish to legislate on a matter which has implications for what is now a reserved matter. If, in the days before devolution, effective legislation could often only be prepared and introduced once policy issues in a number of discrete areas had been hammered out, the position must be the same after devolution. Likewise, if different departments were the guardians of policy on different matters before devolution, the same must apply after devolution the difference being that the Scottish Ministers and their directorates are now responsible for policy on devolved matters, the United Kingdom government and its departments for policy on the other (reserved) matters. Under section 54 of the 1998 Act, the competence of Scottish ministers is, of course, modelled on the competence of the Scottish Parliament. Suppose, for instance, that the Scottish Executive wanted to introduce legislation changing the system of accommodation for homeless persons in Scotland, but the reform would involve modifying provisions in a (reserved) Act on asylum seekers. If similar legislation had been proposed by the Scottish Office before devolution, the Scottish Office and the Home Office would have discussed the relevant policy issues. Eventually, the government as a whole would have reached a view on them and this view would have been reflected in the resulting legislation if any. Obviously, after devolution, exactly the same policy issues would present themselves. By devolving power over Scottish housing policy to the Scottish Executive and the Scottish Parliament, Parliament cannot have intended to remove from the United Kingdom government the power to take all the necessary decisions on asylum matters. So, in principle, the position after devolution must remain the same as before. If the Home Office and the United Kingdom Parliament were content with the proposed changes to the legislation on asylum seekers, there would be no difficulty: they could be made by order under section 104 of the 1998 Act. One example of such an order dealing with a reserved matter is the Housing (Scotland) Act 2006 (Consequential Provisions) Order 2008 (No 1889), article 6 of which amends the list of disqualifying offices in Part 3 of Schedule 1 to the House of Commons Disqualification Act 1975. Another example is more immediately relevant to the Criminal Proceedings etc (Reform) (Scotland) Act 2007 (the 2007 Act) which gives rise to these appeals. The Criminal Proceedings etc (Reform) (Scotland) Act 2007 (Powers of District and JP Courts) Order 2007 (No 3480; S 7) repeals or amends provisions of the RTOA. I return to this order briefly at para 151 below. On the other hand, if agreement could not be reached and proposed Scottish housing legislation would involve changes to legislation on asylum seekers which the United Kingdom government regarded as unacceptable, it would have to be either dropped or modified. This would not be to single out Scottish housing legislation exactly the same would apply to any similar proposal from the ministry with responsibility for housing in England. The only difference is that, for England, the dispute would have to be settled by ministers and departments within the United Kingdom government, whereas, for Scotland, it would have to be settled between a minister and department in Westminster and a minister and directorate in Edinburgh or, ultimately, between the United Kingdom government and the Scottish Executive. If, therefore, the Scottish Parliament persisted in legislating on the matter, despite the United Kingdom governments opposition, one would expect to find that the relevant provisions affecting asylum seekers would be outside its competence and so not law. By no means all encroachments by the Scottish Parliament into the territory of reserved matters are going to be dramatic or unacceptable. As already explained, legislation on a devolved matter is quite likely to entail some change in a reserved matter. Section 29(2)(c) recognises this reality. It proceeds on the basis that, even when the legislation of the Scottish Parliament does not relate to a reserved matter and so must relate to a devolved matter the legislative package, as a whole, may require to have some impact on the law on reserved matters, if it is to be effective. Section 29(2)(c) and Schedule 4 are designed to show how far, in this respect, the Scottish Parliament can go by itself. Consistently with the general structure of the Act, these provisions prescribe what modifications of the law on reserved matters lie outside the competence of the Scottish Parliament since they would truly be a matter for the consideration of the United Kingdom government and Parliament. If a proposed reform includes aspects which fall outside the competence of the Scottish Parliament in this way, that does not mean that the reform cannot go ahead: if the United Kingdom government and Parliament are content, these aspects can be addressed by an appropriate order under section 104. Incidental or consequential modifications I shall have to look at paras 2 and 3 of Part I of Schedule 4 to the 1998 Act in more detail in due course, but it is convenient to notice one aspect at this stage. As in pre devolution days, a piece of legislation on what is now a devolved matter may require essentially minor and technical modifications to the law on what are now reserved matters. Obviously, the Scottish Parliament should be able to make these modifications for itself. And para 3(1) of Part I of Schedule 4 makes it clear that it can provided that the modifications do not go further than is necessary. Referring back to the restriction imposed by para 2, para 3(1) provides: Paragraph 2 does not apply to modifications which (a) are incidental to, or consequential on, provision made (whether by virtue of the Act in question or another enactment) which does not relate to reserved matters, and (b) do not have a greater effect on reserved matters than is necessary to give effect to the purpose of the provision. The paragraph refers to modifications which are incidental to, or consequential on, provision made . which does not relate to reserved matters. The adjectives suggest the kinds of relatively minor modifications which are often to be found in schedules, rather than cluttering up the body of a traditional United Kingdom statute. The wording of a form to be used in making an application or carrying out a transaction is an example of the kind of incidental matter which is usually consigned to a schedule. As mentioned already at para 72 above, typical consequential amendments are concerned to modernise the language of an existing provision or to update legislative references. Amendments of this kind are also usually found in a schedule to an Act. Precisely because they raise no separate issue of principle, amendments of these kinds can be safely stowed away in a schedule, which is unlikely to be debated in any detail, if at all. If the legislature approves the main provisions, then it must equally approve these technical and mechanical changes which are needed to give effect to the main provisions. Similarly, it is easy to see that a modification of that kind to the law on a reserved matter, following on from legislation on a devolved matter, would be unlikely to raise any issue of principle to which the relevant United Kingdom minister or Parliament would object. So the Scottish Parliament can deal with it. That is what para 3(1) provides. In the unlikely event that a problem arose, the Secretary of State could make an order under section 35(1)(b) of the 1998 Act prohibiting the Presiding Officer from submitting the Bill for Royal Assent. With that rather lengthy introduction, I can now turn to examine the particular problem which gives rise to these appeals. The problem in these appeals Put briefly, section 45 of the 2007 Act purports to provide inter alia that a person convicted on summary complaint of a contravention of section 103(1)(b) of the Road Traffic Act 1988 (the RTA) is liable to a maximum term of imprisonment of 12 months rather than of 6 months, as originally provided in section 33 of, and Part I of Schedule 2 to, the RTOA. The effect of para 1 and Section E1 of Part II of Schedule 5 to the 1998 Act is that the RTOA is a reserved matter. So the enactment that comprises section 33 of, and Part I of Schedule 2 to, that Act is the law on a reserved matter. The appellants maintain that, to the extent that it purported to modify the maximum term of imprisonment on summary conviction laid down by the RTOA, section 45 was special to this reserved matter and so outside the competence of the Scottish Parliament by reason of section 29(2)(c) of, and para 2 of Part I of Schedule 4 to, the 1998 Act. It is therefore not law. It follows, they say, that the maximum term of imprisonment on summary conviction of a contravention of section 103(1)(b) of the RTA remains 6 months. If so, the terms of imprisonment, of over 6 months, imposed on the appellants for their respective contraventions of section 103(1)(b) of the RTA, were incompetent and the bills of suspension must be passed and the sentences quashed. The same point came before the criminal appeal court (Lord Nimmo Smith, Lord Eassie and Lord Wheatley) in Logan v Harrower 2008 SLT 1049. The court held that section 45 of the 2007 Act was within the competence of the Parliament. In the present cases the appeal court simply followed that decision and, without issuing any written judgment, refused to pass the bills of suspension. Summary jurisdiction before the 2007 Act Before looking in detail at the provisions of the 1998 Act, it is necessary to examine the position on summary jurisdiction before section 45 of the 2007 Act was brought into force on 10 December 2007. Following the enactment of the Criminal Procedure (Scotland) Act 1995 (the 1995 Act), the only provision dealing with the summary jurisdiction and powers of the sheriff to impose a sentence of imprisonment was section 5 of that Act. By section 5(1) the sheriff, sitting as a court of summary jurisdiction, was to continue to have all the jurisdiction and powers exercisable by him at the commencement of the Act. Section 5(2) then provided that, without prejudice to any other or wider powers conferred by statute, on convicting any person of a common law offence, the sheriff was to have power, (d), to impose imprisonment, for any term not exceeding 3 months. By subsection (3), in the case of a second or subsequent conviction of an offence inferring dishonest appropriation of property (or attempt) or of an offence inferring personal violence, the sheriff was to have power to impose a term of imprisonment not exceeding 6 months. Since this was the only general provision dealing with the extent of the sheriffs summary powers of imprisonment, under the 1995 Act there was no general provision of any kind in Scottish criminal procedure which prescribed the maximum term of imprisonment which a sheriff, sitting as a court of summary jurisdiction, could impose where someone was convicted of a statutory offence. The limit depended on what the legislature had provided for the particular offence. So, if you wanted, for example, to know the maximum sentence of imprisonment available on a conviction, on summary complaint, under the Knives Act 1997 you would look at sections 1(5)(a) and 2(2)(a) of that Act. Similarly, for a summary conviction of a contravention of section 103(1)(b) of the RTA, you would look in Part I of Schedule 2 to the RTOA. Often you would find that the maximum penalty on summary conviction was 3 or 6 months. But, even as long ago as 1871, section 7 of the Prevention of Crime Act permitted the sheriff to impose 12 months imprisonment on summary conviction of an offence against the Act. And, if you looked at section 25 of, and Schedule 4 to, the Misuse of Drugs Act 1971 today, you would see that the maximum sentence on summary conviction of various offences is 12 months imprisonment. In 2004 the Summary Justice Review Committee chaired by Sheriff Principal McInnes QC recommended that, in order to relieve pressure on the courts of solemn jurisdiction, the criminal jurisdiction of judges sitting summarily should be increased: they should be able to impose a maximum sentence of 12 months imprisonment or detention and a maximum fine of 20,000. The first group of sections in Part 3 of the 2007 Act (sections 43 to 49) was designed to give effect to a slightly modified version of the Committees recommendation. Sections 43 to 45 dealt with the recommendation on imprisonment for the sheriff court. Section 46 dealt with the justice of the peace court, while sections 47 and 48 were designed to increase the maximum available fine to 10,000, rather than 20,000, as contemplated by the Committee. Section 49 dealt with compensation orders. The intention behind the relevant provisions of the 2007 Act therefore was that sheriffs sitting as a court of summary jurisdiction should be able to deal with more serious contraventions of the common law and statute law not that they should impose higher sentences for the same conduct. The anticipated benefits of the reform were thought to outweigh the admitted risk that the effect of increasing the sentences which the summary courts could impose would be an undesirable upward drift in the level of sentences. The appeal court has the necessary powers to check any such tendency in an appropriate case. The reform as carried out by the 2007 Act So far as imprisonment is concerned, the reform was effected by three separate provisions. The first, section 43, dealt with the power of imprisonment for common law offences. Most common law offences, such as assault, are triable either on summary complaint or on indictment. For these cases the reform was effected simply by substituting 12 months for 3 months in section 5(2)(d) of the 1995 Act. So now the maximum penalty for all common law offences is 12 months. Section 5(3), being no longer needed, was repealed. No common law offence falls within the area of reserved matters and so no issue as to legislative competence arises. The second provision was in section 44, which deals with certain specified offences that can be tried only on summary complaint. Again, the maximum term of imprisonment is increased to 12 months. The reform was effected by amending the penalty provisions in the individual statutes creating the offences. Since none of the offences falls within the area of reserved matters, again no issue as to legislative competence arises. Section 45 completed the scheme by dealing with statutory offences which are triable either on indictment or on summary complaint (either way offences) and which are punishable on summary conviction with a maximum term of imprisonment of less than 12 months (subsection (6)). Section 45(1) and (2) provide: (1) The maximum term of imprisonment to which a person is liable on summary conviction of a relevant offence is, by virtue of this subsection, 12 months. (2) Accordingly, the specification of a maximum period of imprisonment in every relevant penalty provision is, in relation to any relevant offence to which it applies, to be read subject to subsection (1). By section 45(2) the specification of a maximum period of imprisonment in any relevant penalty provision in any Act passed before the 2007 Act is to be read subject to section 45(1). In short, section 45 was intended to introduce a novel, general, provision for determining the maximum term which a sheriff, sitting as a court of summary jurisdiction, could impose by way of imprisonment in respect of either way statutory offences which had previously attracted a maximum sentence of less than 12 months imprisonment. In all such cases the sheriff is now to be able to impose a maximum sentence of 12 months imprisonment. In order to achieve its purpose, section 45 had to do two things. First, it had to make provision for the maximum term of imprisonment to which a person is liable on summary conviction of a relevant offence to be 12 months. That is what subsection (1) does. But, by itself, that provision would not have worked or, at the very least, would have left the position unclear. By the very terms of subsection (6)(b), section 45 applies only to offences where the statutory maximum term of imprisonment on summary complaint has already been fixed at less than 12 months. In other words, if it is to work, section 45 must also, secondly, increase the previous maximum term of imprisonment for the offences in question when tried on summary complaint. So the new rule in section 45(1) has to be made to prevail over, and to supersede, any penalty provision providing for a lower maximum term of imprisonment on summary conviction of any either way offence in any relevant enactment. That is what subsection (2) is designed to do. The present case shows subsection (2) in action. Section 33 of the RTOA provides: (1) Where a person is convicted of an offence against a provision of the Traffic Acts specified in column 1 of Part I of Schedule 2 to this Act or regulations made under any such provision, the maximum punishment by way of fine or imprisonment which may be imposed on him is that shown in column 4 against the offence and (where appropriate) the circumstances or the mode of trial there specified. (2) Any reference in column 4 of that Part to a period of years or months is to be construed as a reference to a term of imprisonment of that duration. (6) (5) (b) Summarily, in Scotland. (c) On indictment, in Scotland. (7) (4) Punishment Disqualification Endorsement Penalty points The table below sets out the entry relating to contraventions of section 103(1)(b) of the RTA in Part I of Schedule 2 to the RTOA: (3) (2) (1) Provision General Mode of creating nature of prosecution offence offence Offences under the Road Traffic Act 1988 RTA Driving (a) Summarily, (a) 6 months Discretionary. Obligatory. 6 in England and or level 5 on section while 103(1)(b) disqualified. Wales. the standard scale or both. (b) 6 months or the statutory maximum or both. (c) 12 months or a fine or both. Taking section 33 and the table together leaving the 2007 Act on one side on a summary conviction of a contravention of section 103(1)(b) of the RTA in Scotland, the maximum punishment by way of imprisonment which may be imposed on the offender is 6 months. A contravention of section 103(1)(b) of the RTA is a relevant offence in terms of section 45(6) of the 2007 Act. Similarly, section 33 of, and Part I of Schedule 2 to, the RTOA constitute a relevant penalty provision in terms of section 45(7) of the 2007 Act. So, by virtue of section 45(2), the specification of a maximum period of imprisonment of 6 months on summary conviction in column 4 of Part I of Schedule 2 is to be read subject to section 45(1) of the 2007 Act. In other words, the relevant entry in column 4 of the Schedule is to be read subject to the requirement that the maximum term of imprisonment on summary conviction of any relevant offence (including a contravention of section 103(1)(b) of the RTA) is to be 12 months. Section 45(3) of the 2007 Act gives the Scottish Ministers power by order actually to amend the specification of a maximum term of imprisonment in a relevant penalty provision. But the Court was told that the Ministers had not exercised that power in respect of Part I of Schedule 2 to the RTOA. An order amending the figure in column 4 of the Schedule from 6 to 12 would make the position clearer for anyone consulting it. But it would not change the substance. If section 45 was within the competence of the Scottish Parliament in this regard, section 45(1) prevails over the Schedule and provides that the maximum term of imprisonment for someone convicted on summary complaint of a contravention of section 103(1)(b) of the RTA is 12 months. Therefore, even if section 45 does not technically amend the figure in column 4 of the Schedule, it certainly purports to supersede, and thereby modify, the law comprising section 33 of the RTOA and the relevant entry in the Schedule. Similarly, it purports to supersede and modify all the other comparable penalty provisions which prescribe the maximum term of imprisonment that can be imposed, on summary conviction, for either way offences in statutes dealing with reserved matters. In short, section 45 purports to modify, inter alia, the maximum term of imprisonment to which someone is liable on summary conviction of a contravention of section 103(1)(b) of the RTA by increasing it from 6 months to 12 months. The issue in the appeals is whether, in so far as it purports to make this modification of the provisions of the RTOA, section 45 of the 2007 Act is outside the competence of the Scottish Parliament in any of the ways specified in section 29(2) of the 1998 Act. In fact, the parties are agreed that the only relevant limits are those in section 29(2)(b) and (c). Therefore, the Court has to decide whether section 45 of the 2007 Act falls foul of the limits in section 29(2)(b) and (c) and para 2 of Part I of Schedule 4. It is convenient to start with section 29(2)(b). Is section 45 beyond the competence of the Scottish Parliament because it relates to a reserved matter? In para 75 above, I have given a hypothetical example of an Act of the Scottish Parliament whose purpose would obviously relate to a reserved matter. The Act would therefore be outside its competence. Sometimes, of course, the purpose of a provision may be obscure. And, even when it is not obscure, people may describe the purpose in slightly different ways. But, having regard to its background and its context, I would identify the purpose of section 45 of the 2007 Act as being to adjust the jurisdiction of the Scottish courts by making 12 months the maximum term of imprisonment to which a person is liable on summary conviction of any either way statutory offence. For the sake of brevity, I shall refer to this purpose as being to increase the sheriffs summary sentencing powers. The jurisdiction and sentencing powers of the Scottish courts are not reserved matters. So the purpose of the section can on no view be said to relate to reserved matters. This is so, even though, in order to achieve its purpose, as part of the scheme for adjusting the jurisdiction of the Scottish courts, the section does undoubtedly purport to affect reserved matters, viz, by modifying the relevant penalty provision in the RTOA and, as the advocate depute accepted, by modifying penalty provisions for either way offences in any other statutes falling within the scope of the reserved matters in Schedule 5 to the 1998 Act. An example would be the maximum term of imprisonment on summary conviction of a corrupt practice under section 168(1)(b) of the Representation of the People Act 1983. Section 29(4) of the 1998 Act has also to be considered, however, since it contemplates the possibility that a provision whose purpose does not otherwise relate to a reserved matter may nevertheless be treated as relating to a reserved matter and so fall outside the competence of the Scottish Parliament. Subsection (4) applies to a provision which makes modifications of Scots private law, or Scots criminal law, as it applies to reserved matters. So the subsection would apply only if section 45 could be said to make a modification to Scots criminal law as it applies to reserved matters. The advocate depute argued that subsection (4) did not apply to a case like the present because it was restricted to cases where the provision in question applied only to reserved matters. Although no such qualification appears in the wording, he submitted that it was implicit since, if a provision applied to both reserved and devolved matters, its purpose would, inevitably, be to make the law apply consistently to reserved matters and otherwise. I accept that, where a provision applies to both reserved and devolved matters, its effect may be to make the law apply consistently to both. But its purpose may be different. It is possible, for example, to conceive of a situation where the purpose of a provision was actually to make a modification in relation to the criminal law applying to a particular reserved matter, but the provision was made to apply, incidentally, to devolved matters. Section 29(4) must be apt to catch a case of that kind. That said, I am very doubtful whether subsection (4) applies in this case. The words of the subsection obviously cover a case where some general provision of Scots private or criminal law applies to reserved matters. For example, it would cover modifications to the general law on limitation as it applied to actions relating to some reserved matter; or modifications to, say, the general law of criminal procedure as it applied to an accuseds trial, on summary complaint or on indictment, for some offence constituting a reserved matter. In such cases the provision modifies the law applying to the reserved matter; it does not modify the reserved matter itself. But Parliament provides that, subject to the unless clause, it is none the less to be treated as relating to the reserved matter. In the present case, by contrast, section 45 actually modifies the reserved matter or, rather, the law on the reserved matter viz, the penal provision in Part I of Schedule 2 to the RTOA. In my view section 29(4) is not designed to cover a provision of this kind. Therefore, as far as section 29(2)(b) is concerned, the position is regulated by section 29(3). Even if this were considered to be too narrow a construction of section 29(4) of the 1998 Act, section 45 of the 2007 Act would still not fall to be treated as relating to the reserved matter of the RTOA. A provision which makes modifications of Scots criminal law, as it applies to reserved matters, is to be treated as relating to reserved matters unless the purpose of the provision is to make the law apply consistently to reserved matters and otherwise. The phrase, the purpose of the provision, must refer to the same purpose in both subsection (3) and subsection (4). Part of the purpose of section 45 as described in para 112 above is indeed to make the law on the sheriffs power to imprison apply consistently to all either way statutory offences, whether constituting reserved matters in terms of Schedule 5 or not. So section 45 is not to be treated as relating to a reserved matter under section 29(4). In effect, the unless clause in section 29(4) allows the Scottish Parliament to make a general reform of Scottish private or criminal law, even though it modifies the law which applies to reserved matters. Again, this is not surprising since the United Kingdom Parliaments legislation on particular topics has always been framed and operated against the background of the general private and criminal law as it applies in the various jurisdictions from time to time. Equally, any reform of the general law has to take account of all the matters to which it actually applies. In agreement with all of your Lordships, I am therefore satisfied that section 45 of the 2007 Act is not outside the competence of the Scottish Parliament by reason of relating to a reserved matter. The question then arises: even though the purpose of section 45 is one that the Scottish Parliament can legitimately pursue, is the section nevertheless to some extent outside its competence because it is in breach of a restriction in para 2 of Part I of Schedule 4 to the 1998 Act? This question has to be addressed in stages. Does section 45 modify the law on a reserved matter? As already explained, under section 29(2)(c) of the 1998 Act, section 45 will be outside the competence of the Scottish Parliament so far as it breaches any of the restrictions in Schedule 4 to the 1998 Act. The relevant paragraphs for present purposes are paras 2 and 3. Paragraph 2 provides: (1) An Act of the Scottish Parliament cannot modify, or confer power by subordinate legislation to modify, the law on reserved matters. (2) In this paragraph, the law on reserved matters means (a) any enactment the subject matter of which is a reserved matter and which is comprised in an Act of Parliament or subordinate legislation under an Act of Parliament, and (b) any rule of law which is not contained in an enactment and the subject matter of which is a reserved matter, and in this sub paragraph Act of Parliament does not include this Act. (3) Sub paragraph (1) applies in relation to a rule of Scots private law or Scots criminal law (whether or not contained in an enactment) only to the extent that the rule in question is special to a reserved matter or the subject matter of the rule is (a) interest on sums due in respect of taxes or excise duties and refunds of such taxes or duties, or (b) the obligations, in relation to occupational or personal pension schemes, of the trustees or managers. At first sight, para 2(1) appears to impose a very drastic limit on the competence of the Scottish Parliament: an Act of the Parliament cannot modify (which includes amending or repealing section 126(1)) the law on reserved matters. If that were all that para 2 said, then it would prevent the Scottish Parliament from ever touching legislation on reserved matters even if the purpose of the provision related to a devolved matter. In effect, it would make section 29(2)(b) superfluous. But para 2(1) is actually qualified by para 2(3) and does not apply to modifications falling within the scope of para 3. Section 29(3) and (4) focus on the provision which is being enacted and on its purpose. By contrast, para 2 of Part I of Schedule 4 focuses on the rule of law that is being modified by the enactment and makes no mention whatever of the purpose of the modification. Paragraph 2(2)(a) defines the law on reserved matters as any enactment the subject matter of which is a reserved matter and which is comprised in an Act of Parliament or subordinate legislation under an Act of Parliament. As explained in para 95 above, the effect of para 1 and Section E1 of Part II of Schedule 5 to the 1998 Act is that the subject matter of the RTOA is a reserved matter. So the enactment comprising section 33 of, and the relevant entry in Part I of Schedule 2 to, that Act is part of the law on this reserved matter. This conclusion supports my earlier conclusion that these provisions are not provisions of Scots criminal law, as it applies to reserved matters in terms of section 29(4)(b). A provision cannot be both the law on a reserved matter and the law as it applies to the self same reserved matter. As I have already explained at para 110 above, section 45 of the 2007 Act undoubtedly purports to supersede and modify the enactment in section 33 of, and the relevant entry in Part I of Schedule 2 to, the RTOA. Therefore the power of the Scottish Parliament to enact section 45 for reserved statutes depends on whether the restriction in para 2(1) of Part I of Schedule 4 to the 1998 Act applies to the modification made by section 45. Does section 45 fall within para 3(1) of Part I of Schedule 4? In Logan v Harrower 2008 SLT 1049, 1054, at para 24, giving the opinion of the appeal court, Lord Nimmo Smith said this: While we were not fully addressed on the extent to which recourse may legitimately be had to extra statutory materials as an aid to the construction of a statutory provision such as section 45, in order to discover whether its purpose is such as to bring it within the proviso to section 29(4), it appears to us to be legitimate to have regard to the passages in the Policy Memorandum and Explanatory Notes, quoted above, which contain express statements about its purpose. From these it may be taken, as the advocate depute submitted, that the purpose and of the provision in section 45 of the 2007 Act is to increase generally the criminal sentencing powers of the sheriff, sitting as a court of summary jurisdiction, and that the provision, construed in this light, fulfils this purpose. We agree with the advocate depute that, in the present case, the purpose of the provision is to make Scots criminal law with regard to penalties, procedure and jurisdiction in the sheriff court apply consistently to both common law offences and statutory offences. As provided by paragraph 3 in Part I of Schedule 4 to the Scotland Act, the modifications made by section 45 of the 2007 Act to the reading of Part I of Schedule 2 to RTOA 1988 are merely incidental to, or consequential on, the more general aspect of the provision, which relates generally to the powers of the sheriff in relation to statutory offences, whatever their origin; and the modifications do not have a greater effect upon reserved matters than is necessary to give effect to the purpose of the provision in section 45. Lord Nimmo Smith had already explained, at para 22 of the courts opinion, that the argument before the court had centred on section 29(4) of the 1998 Act. And para 23 and the first three sentences of para 24 contain the reasoning by which the court concluded that section 45 of the 2007 Act was not to be treated as relating to reserved matters by reason of section 29(4). In the final sentence of para 24 the appeal court moved on to consider whether, nevertheless, section 45 was in breach of the restriction in para 2(1) of Part I of Schedule 4 to the 1998 Act. The court held that it was not on the view that the modifications made by section 45 of the 2007 Act to the reading of Part I of Schedule 2 to the RTOA are merely incidental to, or consequential on, the more general aspect of the provision, which relates generally to the powers of the sheriff in relation to statutory offences, whatever their origin. The appeal court had in mind para 3(1) of Part I of Schedule 4 which is set out in para 91 above. In other words, the court held that the modifications made by section 45 were incidental to, or consequential on, provision made which did not relate to reserved matters. So the prohibition in para 2(1) did not apply to those modifications. In my view the reasoning is unsound. I have already indicated, at paras 91 93 above, that para 3(1) appears to be intended to cover the kinds of minor modifications which are obviously necessary to give effect to a piece of devolved legislation, but which raise no separate issue of principle. Indeed the amendments to the RTOA replacing references to the district court with references to the justice of the peace court in para 7 of the Schedule to the 2007 Act are as good an example as any of minor consequential amendments to the law on reserved matters which para 3(1) of Part I of Schedule 4 to the 1998 Act permits the Scottish Parliament to make. In fact, para 444 of the Explanatory Notes says that Paragraph 7 is consequential upon the establishment of JP courts and inserts references to that court in place of the district court. But the modifications made by section 45 of the 2007 Act are of a completely different character and the draftsman clearly thought so, since they are effected not in the Schedule but by a separate section in the body of the Act. Section 45 is one of three sections (the others being 43 and 44) which combine to alter the jurisdiction of the sheriff sitting as a court of summary jurisdiction. None of the sections can be regarded as incidental to, or consequential on, another: they are all independent and deal with distinct aspects of the situation. Needless to say, the relevant paragraphs of the Explanatory Notes do not suggest that section 45 is to be regarded as merely consequential or incidental. Moreover, section 45 applies to any penalty provision in a relevant enactment which, by subsection (7), covers any Act passed before the 2007 Act. These are the words which bring in, for example, the RTOA. So the modifications of the law on reserved matters made by section 45 are effected by exactly the same words as the modifications of the law on devolved matters. Both sets of modifications play an equivalent part in the overall scheme the modifications to reserved penalty provisions are of no less importance than the modifications to devolved penalty provisions. Neither can be regarded as incidental to, or consequential on, the other. Despite this, in Logan v Harrower the appeal court considered that the modifications to the law in Part I of Schedule 2 to the RTOA were merely incidental to, or consequential on, the more general aspect of the provision, which relates generally to the powers of the sheriff in relation to statutory offences, whatever their origin. The reasoning is not easy to follow. It is enough, however, to observe that neither section 45 nor any other provision in the 2007 Act actually has any separate more general aspect relating generally to the powers of the sheriff in relation to statutory offences. So there is no separate devolved provision of that kind and, more particularly, no separate provision made which does not relate to reserved matters in relation to which the modifications to the RTOA made by section 45 could ever be regarded as incidental or consequential. For these reasons, like Lord Hope, I am satisfied that para 3(1) of Part I of Schedule 4 to the 1998 Act does not have the effect of preventing para 2 from applying to section 45 of the 2007 Act. It is therefore necessary to look at the qualification to para 2(1) which is to be found in para 2(3), and which the appeal court did not consider in Logan v Harrower because of their conclusion on para 3(1). Is the rule of law in the RTOA special to a reserved matter under para 2(3)? Unquestionably, section 33 of the RTOA and the relevant entry in Part I of Schedule 2 comprise a rule of Scots criminal law to the effect that, on a summary conviction of a contravention of section 103(1)(b) of the RTA, the maximum punishment by way of imprisonment which may be imposed on the offender is 6 months. That is the rule which section 45 purports to modify. Paragraph 2(1) of Part I of Schedule 4 prevents the Scottish Parliament from modifying a rule of Scots criminal law only to the extent that the rule is special to a reserved matter. So the Court has to decide whether this rule is special to a reserved matter. The advocate depute argued that the rule is not special to this reserved matter or indeed to any other reserved matter: the rule simply prescribes a maximum penalty of 6 months imprisonment for a conviction on summary complaint and that is a penalty that is found in many statutes, on both reserved and devolved matters. To be special, the penalty would have to be one that was not prescribed for an infringement of any statute dealing with a devolved matter. In theory, for instance, it would have applied if the unique penalty for an infringement of section 103(1)(b) of the RTA had been per impossibile say, whipping. Then, because that was a penalty which was found only within the sphere of reserved matters, the Scottish Parliament would be prevented from modifying it. It is fair, however, to say that the advocate depute was unable to point to any actual rule of Scottish criminal law or procedure to which, on his preferred construction, para 2(1) would apply. Although I was initially attracted by the advocate deputes argument, it cannot be right, since, on his construction, the limit makes no sense whatever. Why should the Scottish Parliaments power to modify an enactment whose subject matter is a reserved matter depend on whether there happens to be some comparable enactment dealing with a completely different devolved matter? More particularly, why should the Scottish Parliament be entitled to modify the maximum term of 6 months imprisonment on summary conviction of a contravention of section 103(1)(b) of the RTA in Part I of Schedule 2 to the RTOA simply because there happen to be a number of either way offences in the devolved area where the maximum term of imprisonment on summary conviction is also 6 months? Of course, the Parliament can alter the penalty provision for those offences because it is its business to make such amendments where appropriate. But that is, of itself, no reason why it should become the Scottish Parliaments business for whatever purpose to modify the penalty provision which Parliament has deliberately chosen to enact for a specific offence for which Parliament retains responsibility. The general point can be illustrated by reference to limitation periods. As Mr Johnston QC points out, in Prescription and Limitation (1999), Appendix II, p 371, the Prescription and Limitation (Scotland) Act 1973 (the 1973 Act) does not say that its provisions are not to apply where other enactments establish a prescriptive or limitation period for specific rights or remedies. Nevertheless, as he goes on to say, on general principles of statutory construction, it can be assumed that an enactment of a special nature takes precedence over an enactment of a general nature: the 1973 Act is therefore displaced by more specific provision in other enactments. Mr Johnston then gives a useful table listing a range of enactments which contain their own specific limitation periods. By contrast, there are many statutes which provide for civil liability but do not contain any separate, specific, provision on limitation of proceedings brought for their breach. For example, a breach of a duty under the Provision and Use of Work Equipment Regulations 1998 (No 2306) is actionable: section 42 of the Health and Safety Act 1974. But there is no special rule of law on the limitation of proceedings for such a breach: the general rule of law in the 1973 Act applies. Therefore, if the Scottish Parliament chose to alter that general rule in the 1973 Act, it could do so and the new period would apply to actions for breach of the Regulations. This is so, even though Part I of the Health and Safety Act is a reserved matter: para 1 and Section H2 of Part II of Schedule 5 to the 1998 Act. Many statutes do make special provision on limitation, however. For example, under section 568(5) of the Companies Act 2006, an action for loss suffered because of a contravention of the pre emption provision in a companys articles must be brought within 2 years. That is unquestionably the law on a reserved matter as defined in para 2(2) of Part I of Schedule 4 to the 1998 Act. It is surely unthinkable that, even as part of an exercise to tidy up the Scots law of limitation of actions, the Scottish Parliament would be able to alter that period, which is special in the sense that, instead of relying on the general law of limitation, Parliament has deliberately selected 2 years as being appropriate for proceedings of that particular kind. Leaving aside any other possible difficulties, if the Scottish Parliament could change the period, the result would be to introduce a difference between English and Scots law in an area where Parliament, legislating after devolution, must have considered that the same special rule should continue to apply in both jurisdictions. Equally surely, the power of the Scottish Parliament to alter the period in section 568(5) of the Companies Act could not be affected because, if you rooted around in the statute book, you could find that, under section 5 of the Limitations of Actions and Costs Act 1842, the limitation period for actions brought under local and personal Acts (which would, usually at least, concern devolved matters) happened also to be 2 years. Likewise, it would be irrational to conclude that, if the Scottish Parliament were to repeal or amend section 5 of the 1842 Act so that it no longer provided for a period of 2 years, this would somehow simultaneously remove a power which the Parliament had hitherto enjoyed to amend the limitation period under section 568(5) of the Companies Act 2006. Quite simply, the two enactments have nothing to do with one another. Conversely and reverting to penalties it would be absurd to hold that the Scottish Parliament could not modify a penalty provision so long as it was special to, in the sense of unique to, a reserved matter, but could give itself the power to do so by enacting the same penalty for a devolved matter. Besides being absurd, this would offend against the principle that the limits on the competence of the Scottish Parliament are fixed by the 1998 Act and cannot be altered except by new legislation by Parliament or by Order in Council under section 30(2). What, then, do the critical words mean? In my view, a statutory rule of law is special to a reserved matter if it has been specially, specifically, enacted to apply to the reserved matter in question as opposed to being a general rule of Scots private or criminal law which applies to, inter alia, a reserved matter. Only general rules whose subject matter is listed in sub paras (a) to (e) of para 2(3), as amended, are protected from modification. If interpreted in this way, para 2(3) means that para 2(1) prevents the Scottish Parliament from modifying any enactment which must be taken to reflect the conscious choice of Parliament to make special provision for the particular circumstances, rather than to rely on some general provision of Scottish private or criminal law. Whether or not to modify such an enactment involves questions of policy which must be left for the consideration of the United Kingdom government and Parliament which are responsible for the matter. On this interpretation, paras 2(1) and (3) place a comprehensible limit on what the Scottish Parliament can do. I return to the particular problem in these appeals. Suppose that, instead of increasing the maximum term of imprisonment available on summary conviction of a contravention of section 103(1)(b) of the RTA from 6 to 12 months, the Scottish Parliament had chosen to reduce it to 3 months perhaps as part of a general package of reductions in sentences designed to save money by cutting expenditure on criminal justice. The purpose of the legislation would plainly relate to a devolved matter. Nevertheless, the Scottish Parliament could not achieve that purpose by modifying the RTOA in that way because the maximum term of imprisonment on summary conviction of the offence had been specially chosen by Parliament. The modification would therefore be outside the competence of the Scottish Parliament by virtue of para 2 of Part I of Schedule 4. And it would rightly be outside competence because it would inevitably involve significant road traffic policy issues which, under the 1998 Act, it would be for the United Kingdom government (more particularly, the Secretary of State for Transport) and Parliament to evaluate. For instance, would it be acceptable if the average sentence for driving while disqualified fell because prosecutors were reluctant to mount the more complicated and time consuming sheriff and jury trials necessary to attract a prison sentence of more than 3 months? Would the potential cost cutting advantages of the policy outweigh this possible disadvantage? Mutatis mutandis, the Secretary of State for Transport and the United Kingdom government as a whole would have to consider these issues if the Ministry of Justice made an equivalent proposal for England and Wales. If they ultimately agreed, Parliament would be asked to legislate to amend the RTOA. In the case of Scotland, if the United Kingdom government and Parliament were content, the necessary changes could be made by a section 104 order. If a reduction in the maximum term of imprisonment on summary conviction would be outside the competence of the Scottish Parliament in this way, the same must apply to an increase. For these reasons I conclude that the rule of Scots criminal law prescribing the maximum term of imprisonment for a summary conviction of a contravention of section 103(1)(b) of the RTA, in Part I of Schedule 2 to the RTOA, is special to that reserved matter, in the sense that Parliament has chosen it specifically for that offence. So, by virtue of para 2(1) of Part I of Schedule 4 to the 1998 Act, the Scottish Parliament has no power to modify it. A majority of your Lordships have reached the opposite view. At para 34 of his judgment, Lord Hope accepts that, when considering para 2 of Part I of Schedule 4, the starting point is identifying the rule of Scots criminal law that is being modified. Then one must ask whether that rule is special to a reserved matter. Naturally, I agree. Lord Hope takes the view that the purpose of the enactment may be referred to in order to identify the rule of law that is being modified. I see no room for that approach in this case. Here, the purpose of the enactment is clear and undisputed: to increase the sheriffs summary sentencing powers. If, however, you want to know which rules of Scottish criminal law the enactment is modifying in order to achieve that purpose, you simply have to look at the perfectly clear terms of section 45 and apply them to the penal provisions in question. I agree with Lord Hope when he says, at paras 35 and 37, that the rule of Scots law as to the maximum term of imprisonment that can be imposed i e the maximum period of 12 months on indictment, set out in the relevant part of column 4 of the Schedule falls to be treated as a rule that is special to a reserved matter. I have explained my reasons for taking that view. These cannot, of course, be Lord Hopes reasons. But he gives no explanation for his view beyond the assertion that it plainly, is a rule which is special to the Road Traffic Acts and it is a reserved matter. In para 39 Lord Hope considers that it would be to carry the process of analysis too far to say that the Schedule contains two maximum sentences, one for summary proceedings and the other for proceedings on indictment. But that is precisely what Parliament does say in section 33(1) of the RTOA read together with the relevant entry in the Schedule (referring to the maximum punishment by way of imprisonment and giving different figures depending on the mode of trial). Lord Hope also thinks that it would be carrying the process of analysis too far to say that both of these maximum sentences are special. Apparently this is because such a decision depends on an exercise of judgment in which the purpose of the provision (here, section 45) may be the best guide. But, as the cross headings show, para 2 of Part I of Schedule 4 is designed to protect the law on reserved matters from modification. It is therefore necessary to identify which rules of Scots criminal law are to be regarded as special to a reserved matter in terms of para 2(3) and so protected from modification. Since, ex hypothesi, these rules cannot be modified, they cannot be identified by reference to the purpose of a provision which purports to modify them. In the end, therefore, all we know is that, for some unstated reason, the maximum sentence which can be imposed on conviction of a contravention of section 103(1)(b) of the RTA in a prosecution on indictment is a rule which is special to the Road Traffic Acts, but the maximum sentence which can be imposed for the same offence in a summary prosecution is not. In para 59 of his judgment Lord Walker identifies what the relevant rule of Scots criminal law to be modified is not: it is not that driving while disqualified is a criminal offence (agreed), nor that it is a criminal offence punishable by imprisonment (agreed), nor that the maximum term of imprisonment is 12 months (also agreed, since, again, this must be a reference to the maximum term of imprisonment in a prosecution on indictment). The inference seems to be that these rules might indeed be special to a reserved matter and beyond the reach of the Scottish Parliament. As Lord Walker says, however, all these rules have been left untouched. You then eagerly wait to hear about the rule that has not been left untouched: that the maximum term of imprisonment is 6 months in a summary prosecution. But you wait in vain. Instead, the rule to be modified turns out to be whether (and if so to what degree) the option of summary trial before the sheriff should reduce the maximum sentence that can be passed. With great respect, that does not really look much like a rule of Scots criminal law. But, whatever the description, it is actually the product of the two specific rules of Scots criminal law as to the maximum term of imprisonment for a contravention of section 103(1)(b) of the RTA in summary and indictment proceedings respectively. That product can itself be modified only by modifying either or both of these specific rules. By enacting section 45, the Scottish Parliament purported to modify the rule that the maximum term of imprisonment for this offence in summary proceedings is 6 months. The unavoidable question is whether that rule is special to a reserved matter in terms of para 2(3) of Part I of Schedule 4 to the 1998 Act. But that question is neither posed nor answered. Having bowed politely in the general direction of the argument, Lord Brown rests his conclusion on simple assertion. Until now, judges, lawyers and law students have had to try to work out what Parliament meant by a rule of Scots criminal law that is special to a reserved matter. That is, on any view, a difficult enough problem. Now, however, they must also try to work out what the Supreme Court means by these words. It is a new and intriguing mystery. Conclusion In my view, so far as it relates to the penalty provision in the RTOA relating to contraventions of section 103(1)(b) of the RTA, section 45 was outside the competence of the Scottish Parliament. There was, of course, nothing to prevent the Scottish Parliament from increasing the maximum term of imprisonment which a sheriff, sitting as a court of summary jurisdiction, could impose. That is what section 45(1) does and, by itself, the provision is unobjectionable since it merely deals with the jurisdiction of the sheriff. But any increase in jurisdiction brought about by section 45(1) would remain subject to all the penalty provisions in statutes which stipulate a lower maximum term of imprisonment on summary conviction. So subsection (2) was introduced in order to modify all those provisions. Modification of penal provisions in statutes falling within the devolved sphere causes no difficulty. But, for the reasons I have explained, modifying a specific penal provision in a statute within the reserved area is outside competence essentially, because it involves making a significant change to law which Parliament has decided is to be its own responsibility. Of course, it is true that the purpose of section 45 is to increase the sheriffs summary sentencing powers. That is why section 45 does not relate to reserved matters and so is not beyond the competence of the Scottish Parliament by virtue of section 29(2)(b). But a purpose of increasing the summary sentencing powers of sheriffs or other lower court judges is not a passport that entitles the Scottish Parliament to disregard the prohibitions in the other paragraphs of section 29(2) and to sweep aside any provision of the RTOA which stands in its way. The competent end does not justify the use of means which are beyond competence. If evidence to support that simple proposition were needed, it is to be found in the Criminal Proceedings etc (Reform) (Scotland) Act 2007 (Powers of District and JP Courts) Order 2007, which was made under section 104 of the 1998 Act shortly before the 2007 Act came into force. The order was not mentioned by counsel on either side. Its purpose was, first, to repeal the provisions of the RTOA which prevented the district court (and its successor, the justice of the peace court) from imposing the penalty of disqualification for traffic offences, and then to amend section 34 so as to include the district court (and, hence, the justice of the peace court) among the courts with the power to impose that penalty for such offences. Even though these changes were clearly part of the overall scheme in the 2007 Act, to allow the lower courts to hear more serious cases by increasing their sentencing powers, it was recognised that the section 104 order was needed to carry out this particular aspect of the scheme. By contrast, the minor consequential amendment to section 248C(1) of the 1995 Act, relating to the disqualification power for other offences, was made by section 80 of, and para 26 of the Schedule to, the 2007 Act. In order to achieve another part of the scheme to adjust the jurisdiction of the Scottish courts by increasing the sentencing powers of the lower courts, section 45 of the 2007 Act purports to modify, inter alia, the enactment relating to contraventions of section 103(1)(b) of the RTA in Part I of Schedule 2 to the (reserved) RTOA. As a result, the maximum term of imprisonment that can be imposed for that offence by a court of summary jurisdiction in Scotland is intended to be twice what can be imposed by the equivalent court in England. Of course, it is not essential that the two jurisdictions should march exactly in step on this matter as is plain from the availability of indictment proceedings with a maximum sentence of 12 months imprisonment in Scotland, but not in England. But that is a disparity which Parliament chose to introduce. Whether a further disparity between the jurisdictions should indeed be introduced is precisely the kind of issue like the issue as to whether the district court or justice of the peace court, rather than just the sheriff court, should have power to disqualify for road traffic offences which the 1998 Act intends that Parliament should decide. This need cause no difficulty for the Scottish Executives scheme to adjust the jurisdiction of the Scottish courts by increasing the sentencing powers of sheriffs in summary cases if the United Kingdom government and Parliament are content that the maximum available term of imprisonment for this offence on summary conviction should be increased in this way. Provided the draft is approved by both Houses of Parliament, the appropriate order can be made under section 104 of the 1998 Act: sections 114 and 115 and paras 2 and 3 of Schedule 7. This is indeed precisely the kind of situation for which section 104 was designed. Applying section 101 of the 1998 Act, I would therefore hold that the definition of relevant penalty provision in section 45(7) of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 does not include a provision of a relevant enactment or instrument which is special to a reserved matter within the meaning of para 2(3) of Part I of Schedule 4 to the Scotland Act 1998. It follows that section 45 does not modify the maximum term of imprisonment of 6 months on summary conviction of a contravention of section 103(1)(b) of the Road Traffic Act 1988 in column 4 of Part I of Schedule 2 to the Road Traffic Offenders Act 1988. I would accordingly allow the appeals, pass the bills of suspension, quash the sentence imposed by the sheriff court in each case for the contravention of section 103(1)(b) of the Road Traffic Act 1988 and remit to the appeal court to proceed as accords. LORD KERR The legislative competence of the Scottish Parliament is self evidently a subject of fundamental importance. As the appeals in these cases amply demonstrate, however, it is impossible to devise a comprehensive charter which, for every conceivable situation, infallibly prescribes the limits of that legislatures enacting power. This, it seems to me, is the inevitable consequence of the transfer by the United Kingdom government of some or even many powers to a devolved administration while retaining or, as it is more usually put, reserving, certain other matters to Parliament in Westminster. Whether a particular Act of the Scottish Parliament falls within its legislative competence will, for the most part therefore, depend on a consideration of the particular provisions of the enactment in question. The quest will usually begin with section 29 of the Scotland Act 1998. It stipulates (in subsection (1)) that any provision of an Act of the Scottish Parliament is not law so far as it is outside the legislative competence of the Parliament. Subsection (2) (b) states that a provision is outside the competence of the Scottish Parliament if it relates to reserved matters. The issue as to whether a provision does so relate is to be determined in accordance with subsection (3) which, so far as is material, provides: the question whether a provision of an Act of the Scottish Parliament relates to a reserved matter is to be determined, subject to subsection (4), by reference to the purpose of the provision, having regard (among other things) to its effect in all the circumstances. Subsection (3) has a number of component parts, each of which deserves careful consideration. The first is that which specifies that it is subject to subsection (4). This latter subsection (to which I shall turn presently) is a deeming provision designed to expand the category of cases in which a change in the law is to be considered to relate to reserved matters because it modifies Scots private or criminal law as it applies to reserved matters. The need to enlarge the group in this way appears to me to clearly indicate that the construction to be placed on the expression relates to reserved matters must be suitably restrained. If, in every instance where a provision of the Scottish Parliament touched on a reserved matter, it was to be considered to relate to a reserved matter, subsection (4) would not be needed. The phrase needs a more careful and restricted application, therefore. Guidance as to the extent of the restriction is provided by the next component part of section 29 (3). The resolution of the question whether a particular provision relates to a reserved matter is to be determined by reference to the purpose of the provision. One is immediately thereby drawn to an examination of the objective of the legislation and of the particular provision within it. Before dealing with the result of that examination, it is useful to note the next component part of subsection (3). It is to the effect that the determination (by reference to its purpose) whether an Act of the Scottish Parliament relates to a reserved matter is to be conducted having regard to (among other things) its effect in all the circumstances. It seems to me obvious that the way in which the subsection is structured signifies that the effect of the provision is subordinate to its purpose in the inquiry as to whether it relates to a reserved matter. Indeed, the assessment of the effect of the provision is directly linked to the search for its purpose. This is unsurprising. As Lord Brown pointed out in the course of argument, one will customarily expect that the purpose of a particular provision is to bring about a desired effect. The other things, apart from the effect of the provision, which are to be taken into account in ascertaining its purpose are not specified in subsection (3). Mr Brown on behalf of the appellant, Mr Miller, accepted (sensibly and correctly, in my view) that these would include statements by those responsible for the legislation which purported to identify the reasons for its enactment. The genesis of the legislation under challenge here is the report of the Committee appointed in November 2001 to review summary justice in Scotland under the chairmanship of Sheriff Principal John McInnes QC. The formal remit of the Committee was stated to be: To review the provision of summary justice in Scotland, including the structures and procedures of the sheriff courts and district courts as they relate to summary business and the inter relation between the two levels of court, and to make recommendations for the more efficient and effective delivery of summary justice in Scotland. In paragraph 9 of its summary of recommendations the Committee recorded its proposal that the criminal jurisdiction for judges in summary cases should be a maximum 12 months detention or imprisonment and a 20,000 fine. The reasons for this particular recommendation are discussed throughout the report. In paragraph 7.72 on page 78 at paragraph (iv) it is explained that the view of the majority of the Committee was that there was a need to relieve pressure on the higher courts. This required the lower courts to take on more serious cases. Consequently, some increase in sentencing powers for the judges in those courts was required. The Committee recognised that recommending an increase in the sentencing powers of the courts of summary jurisdiction could give rise to what is described in the report as sentence drift, that is a tendency to increase the normal sentencing range because of the availability of the increase in the statutory maxima. It made clear its express disavowal of any intention to bring about sentence drift in paragraph 7.89 of the report where the following appears: In proposing an increase in sentencing powers, we are clear that we do not intend any uplift of the going rate for all offences, but rather we wish to extend the range of offences that can appropriately be dealt with in the summary courts. The Ministerial response to the McInnes recommendations was contained in a report entitled, Smarter Justice, Safer Communities Summary Justice Reform published in March 2005. In paragraph 4.10 the Scottish Executive signalled its acceptance of the proposal that there be an increase in the sentencing powers of a sheriff sitting without a jury in summary proceedings, stating that this form of proceeding was generally simpler and faster than trials in a solemn court. The report also acknowledged the concern that there might be upward sentence drift but recorded the Committees finding that there was no evidence that this was linked to an increase of sentencing powers in summary proceedings (para 4.51). The Bill which was to give effect to the recommendations of the McInnes Committee (among other matters), the Criminal Proceedings etc. (Reform) (Scotland) Bill, was introduced to the Scottish Parliament on 27 February 2006. Clause 35, which became section 45 of the enacted legislation, dealt with certain statutory offences (including driving whilst disqualified) and provided for a new maximum term of imprisonment of twelve months to which a person summarily convicted of such an offence would be liable. The Bill was considered by the Justice 1 Committee of the Scottish Parliament on 19 April 2006. In answer to a question from a member of the Justice Committee concerning the possibility of an increase in the prison population because of the enlarged sentencing powers of the sheriff courts in summary proceedings, Noel Rehfisch of the Scottish Executive Justice Department said this, at Scottish Parliament Official Report, cols 2838 2839: it is clear that the intention of the changes is not to be more punitive in respect of any particular offence. For example, for any statutory offence that can be tried only summarily at present, the sentencing limit will not change. The increase to 12 months is about providing headroom in the summary system to deal with slightly more serious cases that, in the view of the McInnes Committee which ministers accepted could relevantly, competently and capably be dealt with in the sheriff summary court. On two occasions in recent years there have been increases in the maximum sentencing level in the sheriff solemn courts. The same sheriffs, albeit with a jury, are responsible for determining sentences in those cases. To date, there is no evidence that those increases have led to what might popularly be described as sentence drift. We are confident that the judiciary will continue to consider individual cases on their merits. The measures are about having the appropriate level of business in certain sectors of the system. These comments were reflected in the 10th report of the Justice 1 Committee published on 5 July 2006. At paragraph 135 of the report the following appears: In oral evidence Executive officials stated that these provisions are about seeking some form of business redistribution to ensure that every level of the system deals with the business that it ought to deal with and managing that as effectively as possible. Indeed, in the Policy Memorandum [containing the Executives comments on the provisions of the Bill], the Executive refers to its policy of creating a flexible court capacity to ensure that cases can be dealt with quickly and at the appropriate level. and at paragraph 136: The Executives expectation is that this redistribution of cases would represent a downward shift of around 500 to 550 cases per year from sheriff and jury to sheriff summary procedure. The Executive has also stated that the provisions in the Bill are not designed to be more punitive in relation to any particular offences. The Scottish Prison Service referred in oral evidence to its view that it does not expect the Bill to have a significant impact on the prison population. It appears to me from all this material that the purpose of section 45 of the 2007 Act is unmistakably clear. As the advocate depute submitted, it is to effect a reallocation of business within the court structure. The means by which this is achieved is an increase in the sentencing powers available to sheriffs sitting in their summary jurisdiction. The greater maximum penalty is not an end in itself nor is it intended that that the going rate for relevant offences should be increased. This is merely the mechanism by which the quite different purpose of providing for a more expeditious dispatch of business can be achieved. This conclusion is reinforced by the consideration that defendants charged with relevant offences are not exposed to a greater penalty in the summary proceedings than they formerly faced if prosecuted for the same offences on indictment. In this context, I should say that I consider that the analogy which the appellants sought to draw with the decision of the Divisional Court in Northern Ireland in the case of Reg (Hume) v Londonderry Justices [1972] N. I. 91 is misconceived. In that case the Parliament of Northern Ireland, in exercise of its powers under section 4 of the Government of Ireland Act 1920 to make laws for the peace, order and good government of Northern Ireland, had purported (by a regulation made in a statutory rule and order by the Minister of Home Affairs) to authorise certain members of Her Majestys forces to require an assembly of persons to disperse if a breach of the peace was apprehended. The Divisional Court held that the regulation was made in breach of section 4 (3) of the 1920 Act which forbade the making of laws by the Northern Ireland Parliament in respect of Her Majestys forces. It had been argued on behalf of the respondent that the pith and substance of the regulation was the peace, order and good government of Northern Ireland and that the conferring of powers on members of the armed forces was merely incidental. This argument was rejected, Lowry LCJ observing (at page 111) that both the object and the method of achieving it must be valid. Since the method in that case had been expressly forbidden, the regulation could not be rescued from its invalidity because it was for a permitted object. By contrast, in the present case the method (enlargement of the sentencing powers in sheriff summary proceedings) of achieving the object (the more efficient and expeditious prosecution of offences) is not expressly forbidden. For these reasons, and for the reasons more fully given by Lord Hope and Lord Rodger, I am therefore satisfied that section 45 of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 does not relate to reserved matters within the meaning to be ascribed to that condition in section 29 (2) (b) of the Scotland Act 1998. I turn to briefly consider section 29 (4). It provides: (4) A provision which (a) would otherwise not relate to reserved matters, but (b) makes modifications of Scots private law, or Scots criminal law, as it applies to reserved matters, is to be treated as relating to reserved matters unless the purpose of the provision is to make the law in question apply consistently to reserved matters and otherwise. As I have already observed, this is a deeming provision which expands the category of cases in which a change in the law is to be considered to relate to reserved matters, although not so relating for the purposes of section 29 (3). Modifications of Scots private or criminal law are to be treated as relating to reserved matters subject to two important qualifications. The first of these is that such modifications are confined to the law as it applies to reserved matters. The advocate depute argued that section 45 of the 2007 Act modified Scots criminal law generally and on that account could not be said to apply solely to reserved matters. It appears to me, however, that this first qualification is not designed to exclude from the ambit of section 29 (4) modifications that relate to both reserved and devolved matters. It was suggested in argument that the purpose of the provision was to prevent the Scottish legislature from targeting reserved matters. This may well be correct but that objective is likely to be severely curtailed if a measure of the Scottish Parliament applying to reserved and devolved measures which were unrelated to each other was exempt from the reach of section 29 (4) and it appears to me that this must be the logical conclusion of the advocate deputes argument. A final determination of this issue is not, in my opinion, strictly necessary, however, because it is quite clear that the impugned legislation comes squarely within the second qualification in section 29 (4). A provision, the purpose of which is to make the law apply consistently to reserved matters and otherwise, is not caught by the subsection. It is unquestionably clear that section 45 of the 2007 Act has that precise purpose and for that reason it does not come within section 29 (4). The final and, to my mind, most troubling issue arises from section 29 (2) (c) of the 1998 Act. It states that a provision is outside the competence of the Scottish Parliament if it is in breach of the restrictions in Schedule 4 to the Act. Paragraph 2 of that Schedule contains the following material provisions: (1) An Act of the Scottish Parliament cannot modify, or confer power by subordinate legislation to modify, the law on reserved matters. (2) In this paragraph, the law on reserved matters means (a) any enactment the subject matter of which is a reserved matter and which is comprised in an Act of Parliament or subordinate legislation under an Act of Parliament, and (b) any rule of law which is not contained in an enactment and the subject matter of which is a reserved matter, and in this sub paragraph Act of Parliament does not include this Act. (3) Sub paragraph (1) applies in relation to a rule of Scots private law or Scots criminal law (whether or not contained in an enactment) only to the extent that the rule in question is special to a reserved matter . Section 45 of the 2007 Act self evidently relates to a rule of Scottish criminal law. Is the rule special to a reserved matter? Lord Hope has concluded that the rule is not special to a reserved matter because it does not increase the penalty that can be imposed in respect of the offence but has merely changed the procedural route by which the enlarged penalty can be imposed. It is concerned with a rule of procedure that applies generally to prosecutions for offences in the sheriff court. On this analysis, section 45 is not to be regarded as directed to a rule which is special to a reserved matter. By contrast, Lord Rodger considers that a statutory rule is special to a reserved matter if it has been enacted in order to apply specifically to the rule in question. I have not found it easy to reach a view as to which of these competing and persuasively argued positions is to be preferred. It is clear that paragraph 2 (3) contemplates an ambit or scope of application for a particular rule beyond its possible impact on reserved matters. It is only on the extent to which the application of the rule is special to reserved matters that the denial of legislative competence is engaged. In this context, special to may be regarded as connoting having a specific effect on reserved matters. Where an act of the Scottish Parliament seeks to modify a rule of Scots law which has an effect on reserved matters that act will be outside the legislative competence of the Scottish Parliament. But where the rule of Scots law being modified is not special to reserved matters, Parliaments legislative power remains intact. Viewing the effect of the provision in this way, I have concluded that where an act of the Scottish Parliament modifies a statutory rule which has a specific effect on a reserved matter it comes within the prohibition contained in paragraph 2 (1) of Schedule 4 to the 1998 Act. I therefore agree with Lord Rodger that section 45 is caught by that paragraph. The question then arises whether the section can be saved by recourse to paragraph 3 of Schedule 4 to the 1998 Act which provides: (1) Paragraph 2 does not apply to modifications which are incidental to, or consequential on, provision made (whether by virtue of the Act in question or another enactment) which does not relate to reserved matters, and do not have greater effect on reserved matters than is necessary to give effect to the purpose of the provision. Both Lord Hope and Lord Rodger have concluded that a statutory provision that alters the sentencing power of the sheriff court sitting in its summary jurisdiction cannot be regarded as coming within this provision. Although I was initially attracted by the notion that the increase in sentencing powers was incidental to a provision being made for the reallocation of court business, I have come to the view that this cannot be right. The increase in sentencing powers is the provision concerned. It is not incidental to another permissible statutory rule. It cannot be saved by paragraph 3, therefore. In the result, I agree with Lord Rodger that this appeal should be allowed.
+This appeal arises out of the payment of value added tax which was not due, because the supplies in question were exempt from VAT under the relevant EU directive. At the time of the payment, however, the supplies were treated as taxable by the UKs VAT legislation, which had incorrectly transposed the directive, and were mistakenly believed to be taxable by the customer who paid an amount charged in respect of the tax, the supplier who received that amount, and the Commissioners to whom the supplier accounted for the tax. As the corollary of the supplies being believed to be taxable, the supplier and the Commissioners also believed that the supplier was entitled to deduct from the tax chargeable on its supplies to customers the tax which it had itself paid on taxable supplies received for the purposes of its business. It therefore accounted to the Commissioners for the tax chargeable on its supplies during each accounting period on the basis that it could deduct and retain the amount of the tax which it had paid to its own suppliers, and it paid the Commissioners only the remaining surplus, if any. In that situation, does the customer have a common law claim against the Commissioners for restitution, or is he confined to a claim against the supplier? If he has a claim against the Commissioners, is it for the entire amount which he paid to the supplier, or only for the amount, if any, which the Commissioners received from the supplier? Does it make a difference if any claim for restitution by the supplier against the Commissioners is time barred? Does it make a difference if there is a statutory scheme under which the customer can obtain reimbursement of the amount which the supplier paid to the Commissioners, but not of any amount which was retained by the supplier? Furthermore, if the statutory scheme has the effect of excluding a common law claim by the customer against the Commissioners, is that compatible with EU law? These are the principal issues which the court has to decide. The factual background The claimants are investment trust companies (ITCs). They are closed ended investment funds constituted as limited companies: that is to say, the companies were established with a fixed number of issued shares and a term date when the company would be wound up and the assets distributed to the shareholders. They have now reached their term dates and are in winding up. The claims of three of the ITCs (the Lead Claimants) have been taken forward as lead claims while the others are stayed to await the outcome of these proceedings. The Lead Claimants are Kleinwort Overseas Investment Trust plc, F&C Income Growth Investment Trust plc, and M&G Recovery Investment Trust plc. They will be referred to respectively as the Kleinwort Trust, the F&C Trust and the M&G Trust. Between 1992 and 2002 the Lead Claimants received supplies of investment management services from their investment managers (the Managers). Those were respectively Kleinwort Benson Investment Management Ltd, F&C Asset Management Ltd and M&G Investment Management Ltd. Their services were rendered under contracts which provided for the Managers to be paid fees plus VAT if applicable (or words to similar effect). Under the provisions of the UK VAT legislation then in force, those services, unlike the other investment management services provided by the Managers, did not qualify for exemption. The Managers therefore charged VAT on the supplies of their services. The VAT charges were separately identified on the VAT invoices issued to the Lead Claimants, and the Lead Claimants paid the amounts charged. The Managers were obliged to account to the Commissioners for the VAT due in respect of their chargeable supplies during each accounting period. It is relevant to note that the obligation to account for tax arises whether or not tax is charged on the supply or paid by the customer: it is the supplier, rather than the customer, who is under a liability to the Commissioners, and it is the supply, rather than payment by the customer, which triggers the suppliers liability. The customers liability to pay an amount in respect of the tax rests upon contract. The Managers obligation to account for the tax due did not, however, mean that they were obliged to pay the Commissioners the whole of, or indeed any part of, the sums they received from the Lead Claimants. Under general principles of VAT law, they were entitled to deduct from the tax chargeable in respect of any taxable supplies they had made, known as output tax, the tax chargeable in respect of any taxable supplies which they had received for the purpose of their business of making taxable supplies, known as input tax. It therefore followed from the legislative treatment of the services supplied to the Lead Claimants as taxable, that the Managers were understood to be entitled to pay to the Commissioners only the surplus of their output tax over their input tax, and to retain the balance of the output tax in their own hands. If the input tax exceeded the output tax, they were entitled to a credit, which could be paid by the Commissioners or carried forward to later accounting periods. Thus, for example, if a Manager made taxable supplies to an ITC, and the VAT chargeable on those supplies was 100, then the Manager was bound to account to the Commissioners for 100. If the Manager had purchased taxable supplies during the relevant period on which the VAT was 25, the Manager was entitled to credit for that 25, and was required to pay the Commissioners only the balance of 75. It was also possible for an ITC to be registered for VAT (if it invested in securities outside the EU), and in that event to recover, as input tax, some of the VAT which it had paid to its Manager. The F&C Trust and the M&G Trust made no such supplies, but the Kleinwort Trust did, and recovered 58.4% of the VAT charged by its Manager (that being the percentage of its portfolio which was invested outside the EU). Its claim against the Commissioners has therefore been adjusted to take account of the sums which it has already recovered as input tax: rather than claiming every 100 which it paid to its Manager in respect of VAT, it claims 41.60, being the difference between the 100 and the 58.40 which it recovered as input tax. The essential pattern was therefore as follows: 1. The Managers supplied investment management services to the Lead Claimants under contracts providing for the payment of fees plus VAT if applicable. 2. The Managers charged the Lead Claimants VAT on the supply of those services, and included the VAT charges on the invoices which they issued to the Lead Claimants. 3. The Lead Claimants paid the invoices. They might or might not be able to recover some of the VAT as input tax. 4. The Managers made periodic VAT returns in which they: accounted for the VAT chargeable on their supplies of (i) investment management services as output tax; (ii) deducted as input tax the VAT which they had paid to third parties for supplies received in the course of their business; and (iii) paid the difference between their output tax and input tax to the Commissioners. It transpired that the supplies of the investment management services were exempt from VAT under article 13B(d)(6) of the Sixth VAT Directive (77/388/EEC). That was established by the European Court of Justice in JP Morgan Fleming Claverhouse Investment Trust plc v Revenue and Customs Comrs (Case C 363/05) [2007] ECR 1 5517. Although the UK failed to transpose article 13B(d)(6) correctly into national legislation until 1 October 2008, it had direct effect at all material times. It is therefore common ground between the parties that the Lead Claimants paid the Managers the amounts they did in respect of VAT, and that the Managers accounted for VAT to the Commissioners, under a mistake of law. The Managers claims against the Commissioners In early 2004, when the Claverhouse litigation began and was publicised, the Managers of the F&C Trust and the M&G Trust made claims to the Commissioners under section 80 of the Value Added Tax Act 1994 for refunds in respect of VAT accounting periods from 2001 to 2004. It will be necessary to return to section 80, the material provisions of which are set out in para 75 below. Claims were not made in relation to earlier accounting periods because of the three year limitation period imposed by section 80(4). For the same reason, no claim was made by the Managers of the Kleinwort Trust, which had gone into winding up in 1998. Following the Claverhouse judgment, the Commissioners allowed the claims and repaid the relevant amounts (as will be explained shortly) to the Managers, with interest. In accordance with section 80, and regulations made pursuant to section 80A, the Commissioners required the Managers to enter into approved reimbursement arrangements with the Lead Claimants, so that the refunded VAT and interest were passed on by the Managers to them. Subsequently, the decision of the House of Lords in Fleming (trading as Bodycraft) v Revenue and Customs Comrs [2008] UKHL 2; [2008] 1 WLR 195 established that the retrospective manner in which the three year limitation period had been introduced (by an amendment to the 1994 Act, effected by the Finance Act 1997, which reduced the previous period) was incompatible with EU law, and that the time bar had to be disapplied in respect of rights which had accrued before it came into effect on 4 December 1996. The Managers then made further claims in respect of accounting periods ending before that date. These claims were again allowed, with interest, and the appropriate repayments were made to the Managers, who in turn passed them on to the Lead Claimants. As a result of these arrangements, the Lead Claimants were refunded the VAT which they had paid to the Managers, subject to two exceptions. First, the Managers were unable to make claims in respect of accounting periods ending on or after 4 December 1996 which were time barred under section 80(4). In practice, that meant that claims could not be made by the Managers of the Kleinwort Trust in relation to accounting periods ending between 4 December 1996 and 20 March 1998, when the Kleinwort Trust went into liquidation. The corresponding periods in relation to the F&C Trust and the M&G Trust ended on 6 and 1 April 2001 respectively. Those periods have been referred to in these proceedings as the dead periods. It is common ground that the limitation period in section 80(4) is compatible with EU law. Secondly, the amounts repaid to the Managers were calculated on the basis that, under section 80(2A), it was necessary to set against the output tax for which they had accounted, the amount of the input tax which they had deducted. It is a matter of agreement that that was the correct approach to the application of section 80. In the illustrative example given in para 6 above, that means that the Managers were entitled to repayment of the 75 which they had paid to the Commissioners, but not of the 25 which they had retained in their own hands. It is a matter of agreement that, although the Managers were only entitled under section 80 to reimbursement of the notional 75, the Commissioners could have made the refunds conditional on the Managers undertaking to repay to the Lead Claimants the full amount which they had been mistakenly charged (ie, the notional 100). It is agreed that the Commissioners did not do so because they accepted the Managers assertion that, if they had known that the input tax was non deductible, they would have passed on that cost to the Lead Claimants by charging a higher price for their services. In the present proceedings, however, it is accepted that that assertion was erroneous: had the true position been known, the Managers would not have sought to increase the price of their services to the Lead Claimants. Instead, as Henderson J found after trial, they would have absorbed the input tax as a business expense. In the event, the notional 25 was later refunded to the Kleinwort Trust and the F&C Trust by their respective Managers, but it was not refunded to the M&G Trust. The proceedings below The ITCs brought proceedings against the Commissioners in which they sought payment of the amounts which had been paid by them to their managers, to the extent that they had not been recovered under the statutory scheme established by section 80 or otherwise: in other words, the amounts which the managers could not claim because any claim would be time barred, and the amounts which the managers had not paid to the Commissioners but had retained and set against input tax (unless those amounts had been refunded to the ITC in question by its manager). The ITCs claims were based on unjust enrichment, or alternatively on EU law. The claims of the Lead Claimants proceeded to a trial on liability. After trial, the judge held [2012] EWHC 458 (Ch): 1. That, using the notional figures referred to above, the Commissioners had been enriched in the full amount of 100, even if only 75 was paid to them by a Manager after deducting 25 in respect of input tax paid to its own suppliers. In the judges view, although the 25 was not paid to the Commissioners, it was nevertheless used by the Commissioners to give the Managers a credit for that input tax. 2. That the Commissioners were enriched at the expense of the Lead Claimants because, in economic terms, the person at whose expense the VAT was paid was the customer. The enrichment was also unjust. 3. That a cause of action in unjust enrichment was, however, excluded under domestic law by section 80(7) of the 1994 Act, which protects the Commissioners from liability other than as provided in that section. 4. That the Lead Claimants had a directly effective right to repayment against the Commissioners under EU law, which required a remedy to be made available in respect of the full notional 100, not merely the 75. 5. That EU law did not, on the other hand, require national law to give the Lead Claimants any remedy in respect of amounts falling within the scope of the time bar imposed by section 80(4). Any EU based claims would be subject (in effect) to the same limitation period. In a subsequent judgment [2013] EWHC 665 (Ch), which had been deferred pending the decision of this court in Test Claimants in the FII Group Litigation v Revenue and Customs Comrs [2012] UKSC 19; [2012] 2 AC 337, and the judgment of the Court of Justice in Littlewoods Retail Ltd v Revenue and Customs Comrs (Case C 591/10) [2012] STC 1714, the judge further held that the Lead Claimants had no Woolwich claim under English law for unlawfully levied tax (ie a claim based on the principle established in Woolwich Equitable Building Society v Inland Revenue Comrs [1993] AC 70), and that EU law required section 80(7) to be disapplied, so as to permit a mistake based restitutionary claim. It is unnecessary to consider the Woolwich issue further, as the point has not been pursued in the present appeal. In the light of these conclusions, the judge gave judgment for the M&G Trust in respect of the notional 25 (defined as the difference between the amounts paid by the M&G Trust to its Manager as VAT and the amount of the refunds it received from its Manager, and also as equalling the input tax brought into account by its Manager) for periods outside the dead period, and dismissed the claims in relation to the dead periods (the dead period in relation to each claimant being the period for which its Manager was unable, for reasons of limitation, to make a claim under section 80). The Lead Claimants appealed against the first judgment on the grounds that the judge was wrong to conclude (i) that a cause of action in unjust enrichment against the Commissioners was excluded by section 80(7) of the 1994 Act, and (ii) that the Lead Claimants had no claim under EU law to VAT paid in respect of the dead periods. The Commissioners also appealed against the first judgment on the ground that the judge was wrong to conclude that the M&G Trust had a directly effective EU law right to recover from the Commissioners the 25 element of its claim for accounting periods outside the dead period, and they appealed against the second judgment on the ground that the judge had erred in holding that section 80(7) was to be disapplied. The Court of Appeal (Moore Bick, Patten and Beatson LJJ) [2015] EWCA Civ 82 allowed both parties appeals. It held: 1. That the judge had been right to conclude that the Lead Claimants had a direct cause of action in unjust enrichment against the Commissioners for VAT paid under a mistake of law. 2. That he had been wrong to treat this cause of action as excluded by section 80(7). 3. That he had been wrong to conclude that the notional 25 retained by the Managers represented the discharge of any subsisting obligation to refund that amount on the part of the Commissioners, and that, accordingly, the Commissioners could not have been enriched by more than the notional 75 for any of the accounting periods in question. Any domestic claim in unjust enrichment for the notional 25 lay against the Managers alone. 4. That the Lead Claimants had no direct claim against the Commissioners for the notional 25 under EU law, given the claim they had in that amount against the Managers. The Court of Appeal therefore allowed the Lead Claimants appeal, to the extent of the notional 75 paid in respect of dead periods, and allowed the Commissioners appeal in respect of the notional 25. In this appeal by the Commissioners against the decision of the Court of Appeal (in respect of the notional 75 paid in respect of dead periods), and cross appeal by the Lead Claimants (in respect of the notional 25), there are three key questions. First, did the Lead Claimants have a common law claim against the Commissioners in principle, subject to any statutory exclusion of such a claim? Secondly, if so, did section 80 of the 1994 Act bar such a claim? Thirdly, if the Lead Claimants have no claim against the Commissioners, either because no such claim is recognised at common law or because a common law claim is barred by section 80, is that compatible with EU law? The common law claim The Lead Claimants argue that customers who pay undue VAT charged by their supplier have a claim against the Commissioners based on unjust enrichment, unless such a claim is excluded by statute. The first question is whether that is correct. If not, that in itself provides an answer to the claims made in these proceedings, subject to any issue arising under EU law. In answering the question, both parties followed the approach adopted by Lord Steyn in Banque Financire de la Cit v Parc (Battersea) Ltd [1999] 1 AC 221, 227, and asked: (a) Has the defendant been benefited, in the sense of being enriched? (b) Was the enrichment at the claimants expense? (c) Was the enrichment unjust? (d) Are there any defences? Were the Commissioners enriched? There is no dispute that the Commissioners were enriched to the extent of the notional 75. What is in dispute is whether they were also enriched to the extent of the notional 25 which they did not receive. The judge held that they were. Although the 25 was not paid to the Commissioners by the Managers, it enriched the Commissioners, in his view, by being set against the input tax which the Commissioners would otherwise have been obliged to pay or credit to the Managers: that is to say, the tax which the Managers had paid on the goods and services supplied to them for the purposes of their business of supplying investment services. The Court of Appeal considered this reasoning to be fallacious on the basis that if the supply of services by the Managers was not taxable, then the Managers had no right to deduct as input tax the VAT which they had paid to their own suppliers. The Managers retained the notional 25 in satisfaction of what the court regarded as a purported obligation, on the part of the Commissioners, which never existed. The Commissioners did not, therefore, benefit from the Lead Claimants payment of the notional 25. An order compelling them to pay that amount to the Lead Claimants would not reverse an enrichment but leave them worse off, having received 75 and made restitution of 100. Any claim to restitution of the 25 should therefore have been directed against the Managers. In this appeal, counsel for the Lead Claimants argued that when the 25 was paid to the Managers, the position under the applicable UK legislation was that the Managers were entitled to deduct their input tax in satisfaction of an obligation owed to them by the Commissioners. They continued to be entitled to account to the Commissioners for VAT, notwithstanding that it was not lawfully due under EU law, and therefore remained entitled to claim reimbursement in respect of input tax, until the position under UK law was changed: Becker v Finanzamt Mnster Innenstadt (Case C 8/81) [1982] ECR 53; VDP Dental Laboratory NV v Staatsecretaris van Financin (Joined Cases C 144/13, C 154/13 and C 160/13) [2015] STC 1133. The Court of Justice had rejected the argument that a domestic levy which was incompatible with EU law was to be treated as having never existed: Ministero delle Finanze v IN CO GE90 Srl (Joined Cases C 10/97 to C 22/97) [1998] ECR I 6307. I am unable to accept this argument. The case of Ministero delle Finanze v IN CO GE90 Srl merely establishes that national legislation which is incompatible with EU law, although inapplicable in so far as it is incompatible, is not a nullity for all purposes. The case concerned claims for the repayment of a charge which had been levied under Italian legislation which was inconsistent with EU law. A preliminary issue before the national court was whether the claims fell within its jurisdiction: an issue which turned on whether they were of a fiscal or a civil nature. The question which troubled the national court was whether, in deciding that issue, it should treat the national legislation as set aside in its entirety, or whether it could have regard to the legislation for the purpose of characterising the nature of the relationship between the parties at the time when the contested amounts were paid. The Court of Justice held that, subject to compliance with the principles of non discrimination and effectiveness, the detailed rules which applied for the repayment of a charge, and the classification for that purpose of the legal relationship established when the charge was levied, were matters to be determined under national law (para 26). The cases of Becker and VDP Dental Laboratory are more directly in point. In the former case, VAT had been levied under domestic law in respect of services which were exempt under the relevant directive, and an issue was raised as to the consequences of granting the exemption retrospectively after the mistake was discovered. In the course of its judgment, the Court of Justice stated that, by availing themselves of an exemption from VAT, persons entitled to the exemption necessarily waived the right to claim a deduction in respect of input tax (para 44). An analogous conclusion was reached in the VDP Dental Laboratory case, where an exemption provided for under national law was incompatible with the relevant VAT directive. The court held that the taxable person was not entitled both to benefit from the exemption and to exercise the right to deduct input tax (para 40). It follows from these authorities that the Managers could not both claim reimbursement of the output tax which they had paid to the Commissioners, under section 80 of the 1994 Act, on the basis that their supplies were exempt from VAT, and simultaneously assert an entitlement to retain the amounts which they had deducted as input tax, on the basis that their supplies were taxable. The Commissioners were not, therefore, enriched by the Managers retention of the notional 25, and the Managers have, in principle, no defence to a claim by the Lead Claimants for the restitution of that amount. That conclusion is as one would expect. The Lead Claimants claim to restitution against the Commissioners proceeds on the basis that the supplies which they received from the Managers were exempt from VAT. That being so, it would be surprising if they could present that claim, in relation to the measure of restitution, on a basis which was predicated on the supplies being taxable. notional 75. Was the enrichment at the Lead Claimants expense? There is no doubt that, in economic terms, the Commissioners were enriched at the expense of the Lead Claimants. On the mistaken premise that the supplies were taxable, the Lead Claimants were charged tax by the Managers, and paid it to them in accordance with their contract. On the same premise, the Managers were obliged to account to the Commissioners for the tax chargeable on their supplies, and to pay them the output tax in respect of each accounting period, after deducting their input tax. The net result of the mistake was that the Lead Claimants were worse off by the amount of the Managers output tax, and the Commissioners were better off to the extent that that amount exceeded the Managers input tax. It follows that the Commissioners enrichment was only to the extent of the As the judge noted, however, no payment was made by the Lead Claimants to the Commissioners. Nor were the Managers simply a conduit or, in legal terms, an agent for payment by the Lead Claimants to the Commissioners. The Lead Claimants owed no money to the Commissioners. Furthermore, the payment of the tax element of the invoices submitted by the Managers to the Lead Claimants was not the cause of the payment of tax by the Managers to the Commissioners: as explained earlier, the Managers were liable to account for tax to the Commissioners once they had supplied the relevant services. As the judge found, it could not be said that the tax would not have been paid but for the payments by the Lead Claimants to the Managers. In these circumstances, it was argued, the Lead Claimants remedy lay against the Managers, as the recipients of the mistaken payments which they had made, leaving it to the Managers to recover from the Commissioners any amount which they had mistakenly paid to them in accordance with the legislation. After considering the limited guidance provided by the modern English authorities, and English academic opinion, the judge concluded that, as a general rule, a defendant was legally enriched at the expense of the person from whom the benefit in question was directly received. There were, however, exceptions to that general rule. Without attempting to be exhaustive, he listed a number of relevant criteria for identifying such exceptions, which he derived from the authorities: put shortly, the need for a close causal connection between the payment (or other provision of a benefit) by the claimant and the enrichment of the defendant, the need to avoid the risk of double recovery, the need to avoid conflict with contracts between the parties, and the need to distinguish between unjust enrichment and compensation or damages. Applying that approach, he regarded the present case as exceptional. First, to allow the Lead Claimants to recover from the Commissioners would not, in his view, involve any risk of double recovery, as any claim against the Managers would face a cast iron defence of change of position, since they had accounted to the Commissioners for the entirety of the tax and retained no benefit for themselves (this reasoning mistakenly presumed that the Managers were entitled to retain the notional 25, as deductible input tax, and that the notional 75 was irrecoverable by the Managers from the Commissioners). Secondly, it would not undermine or conflict with the contract between the Lead Claimants and the Managers, which had provided for the payment of VAT if applicable. Thirdly, notwithstanding the absence of a strict causal connection between the payments by the Lead Claimants and the enrichment of the Commissioners, the nexus created by the VAT system between the consumer and the Commissioners could, in his view, hardly be closer or stronger as a matter of commercial reality. In that regard, the judge referred at para 49 to the statements of the Court of Justice in Elida Gibbs Ltd v Customs and Excise Comrs (Case C 317/94) [1996] ECR I 5339; [1997] QB 499, that the basic principle of the VAT system is that it is intended to tax only the final consumer (para 19), and that the taxable persons collect the tax on behalf of the tax authorities and account for it to them (para 22). In his view, cases concerned with subrogation showed that the at the expense of requirement could be satisfied by reference to the underlying commercial reality of a transaction (para 72). By the time this case came before the Court of Appeal, the approach adopted by the judge had already been approved by that court in three decisions: Menelaou v Bank of Cyprus UK Ltd [2013] EWCA Civ 1960, [2014] 1 WLR 854; TFL Management Services Ltd v Lloyds TSB Bank plc [2013] EWCA Civ 1415, [2014] 1 WLR 2006; and Relfo Ltd v Varsani (No 2) [2014] EWCA Civ 360; [2015] BCLC 14. It was also endorsed by the Court of Appeal in the present case. The court noted that the judge had been mistaken in thinking that the Managers would have a defence to a direct claim by the Lead Claimants, so far as the notional 25 was concerned. It nevertheless agreed with his conclusion that, in the context of VAT, the final consumer who paid the tax had a sufficient economic connection with the Commissioners to be able to say that they had been enriched at his expense when the tax ought never to have been imposed on the services which were supplied. General discussion Decisions concerning the question whether an enrichment was at the expense of the claimant demonstrate uncertainty as to the approach which should be adopted. Such tests as have been suggested have been too vague to provide clarity. For example, in Menelaou v Bank of Cyprus UK Ltd [2015] UKSC 66; [2016] AC 176, Lord Clarke of Stone cum Ebony said at para 27, with the agreement of Lord Neuberger of Abbotsbury, Lord Kerr of Tonaghmore and Lord Wilson, that the question in each case is whether there is a sufficient causal connection, in the sense of a sufficient nexus or link, between the loss to the bank and the benefit received by the defendant. This leaves unanswered the critical question, namely, what connection, nexus or link is sufficient? The same can be said of Arden LJs statement in Relfo that there must be a sufficient link (para 95), Floyd LJs reference in the same case to proximity (para 110), and the Court of Appeals finding in the present case that there was a sufficient economic connection (para 67). It would be unwise to attempt in this appeal to arrive at a definitive statement of the circumstances in which the enrichment of a defendant can be said to be at the expense of the claimant. Nevertheless, in view of the uncertainty which has resulted from the use of vague and generalised language, this court has a responsibility to establish more precise criteria. Some observations of a general nature should therefore be made, before turning to the specific context in which the issue arises in the present case. It should be said at the outset that these observations are concerned only with personal claims, and not with proprietary claims. First, it is important, when dealing with personal claims based on unjust enrichment, to bear in mind what was said by Lord Goff of Chieveley in Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548, 578, when rejecting a submission that, when dealing with a claim to restitution based on unjust enrichment, it was for the court to consider the question of injustice or unfairness on broad grounds, and that it should deny recovery if it thought that it would be unjust or unfair to hold the defendant liable: The recovery of money in restitution is not, as a general rule, a matter of discretion for the court. A claim to recover money at common law is made as a matter of right; and even though the underlying principle of recovery is the principle of unjust enrichment, nevertheless, where recovery is denied, it is denied on the basis of legal principle. As Lord Steyn remarked in Banque Financire, unjust enrichment ranks next to contract and tort as part of the law of obligations (p 227). A claim based on unjust enrichment does not create a judicial licence to meet the perceived requirements of fairness on a case by case basis: legal rights arising from unjust enrichment should be determined by rules of law which are ascertainable and consistently applied. Without going as far as Scrutton LJ, who described the legacy of Moses v Macferlan (1760) 2 Burr 1005 as a history of well meaning sloppiness of thought (Holt v Markham [1923] 1 KB 504, 513), McLachlin J rightly cautioned against the tendency to view the action for unjust enrichment as a device for doing whatever may seem fair between the parties: Peter v Beblow (1993) 1 SCR 980, 988. Secondly, the adoption of the concept of unjust enrichment in the modern law, as a unifying principle underlying a number of different types of claim, does not provide the courts with a tabula rasa, entitling them to disregard or distinguish all authorities pre dating Lipkin Gorman. The point is illustrated by the judgment of Floyd LJ in TFL, where the decision in Ruabon Steamship Co Ltd v London Assurance [1900] AC 6 was put to one side on the basis that the House of Lords was not looking at the case through the eyes of the modern law of unjust enrichment (para 39). Although judicial reasoning based on modern theories of unjust enrichment is in some respects relatively novel, there are centuries worth of relevant authorities, whose value should not be underestimated. The wisdom of our predecessors is a valuable resource, and the doctrine of precedent continues to apply. The courts should not be reinventing the wheel. Thirdly, as the judge observed in the present case, in remarks with which Lord Clarke expressed agreement in Menelaou (para 19), Lord Steyns four questions are no more than broad headings for ease of exposition. They are intended to ensure a structured approach to the analysis of unjust enrichment, by identifying the essential elements in broad terms. If they are not separately considered and answered, there is a risk that courts will resort to an unstructured approach driven by perceptions of fairness, with consequent uncertainty and unpredictability. At the same time, the questions are not themselves legal tests, but are signposts towards areas of inquiry involving a number of distinct legal requirements. In particular, the words at the expense of do not express a legal test; and a test cannot be derived by exegesis of those words, as if they were the words of a statute. The structured approach provided by the four questions does not, therefore, dispense with the necessity for a careful legal analysis of individual cases. In carrying out that analysis, it is important to have at the forefront of ones mind the purpose of the law of unjust enrichment. As was recognised in Menelaou (para 23), it is designed to correct normatively defective transfers of value, usually by restoring the parties to their pre transfer positions. It reflects an Aristotelian conception of justice as the restoration of a balance or equilibrium which has been disrupted. That is why restitution is usually the appropriate remedy. The nature of the various legal requirements indicated by the at the expense of question follows from that principle of corrective justice. They are designed to ensure that there has been a transfer of value, of a kind which may have been normatively defective: that is to say, defective in a way which is recognised by the law of unjust enrichment (for example, because of a failure of the basis on which the benefit was conferred). The expression transfer of value is, however, also too general to serve as a legal test. More precisely, it means in the first place that the defendant has received a benefit from the claimant. But that is not in itself enough. The reversal of unjust enrichment, usually by a restitutionary remedy, is premised on the claimants also having suffered a loss through his provision of the benefit. This was recognised in Menelaou, as was noted in para 37 above. It was explained more fully by Lord Clyde in Banque Financire, citing a maxim of Pomponius: My Lords, the basis for the appellants claim is to be found in the principle of unjust enrichment, a principle more fully expressed in the Latin formulation, nemo debet locupletari aliena jactura [no one should be enriched by anothers loss] . Without attempting any comprehensive analysis, it seems to me that the principle requires at least that the plaintiff should have sustained a loss through the provision of something for the benefit of some other person with no intention of making a gift, that the defendant should have received some form of enrichment, and that the enrichment has come about because of the loss. (p 237) It should be emphasised that there need not be a loss in the same sense as in the law of damages: restitution is not a compensatory remedy. For that reason, some commentators have preferred to use different terms, referring for example to a subtraction from, or diminution in, the claimants wealth, or simply to a transfer of value. But the word loss is used in the authorities, and it is perfectly apposite, provided it is understood that it does not bear the same meaning as in the law of damages. The loss to the claimant may, for example, be incurred through the gratuitous provision of services which could otherwise have been provided for reward, where there was no intention of donation. In such a situation, the claimant has given up something of economic value through the provision of the benefit, and has in that sense incurred a loss. Direct and indirect provision of a benefit Situations in which the defendant has received a benefit from the claimant, and the claimant has incurred a loss through the provision of that benefit, usually arise where the parties have dealt directly with one another, or with one anothers property. Common examples are the gratuitous payment of money, or provision of goods or services, by the claimant to the defendant, where there was no intention of donation. In such a situation, if the enrichment of the defendant is unjust if, in other words, the transfer of value is defective in a sense recognised by the law of unjust enrichment then the claimant is prima facie entitled to have the enrichment reversed. There are, however, situations in which the parties have not dealt directly with one another, or with one anothers property, but in which the defendant has nevertheless received a benefit from the claimant, and the claimant has incurred a loss through the provision of that benefit. These are generally situations in which the difference from the direct provision of a benefit by the claimant to the defendant is more apparent than real. One such situation is where the agent of one of the parties is interposed between them. In that situation, the agent is the proxy of his principal, by virtue of the law of agency. The series of transactions between the claimant and the agent, and between the agent and the defendant, is therefore legally equivalent to a transaction directly between the claimant and the defendant. Similarly, where the right to restitution is assigned, as in Equuscorp Pty Ltd v Haxton [2012] HCA 7; 246 CLR 498; 86 AJLR 296, the claimant stands in the shoes of the assignor, and is therefore treated as if he had been a party to the relevant transaction, and the defendants enrichment had been directly at his expense. Another situation is where, as in Relfo, an intervening transaction is found to be a sham (para 121). Since the sham is created precisely in order to conceal the connection between the claimant and the defendant, it is disregarded when deciding whether the latter was enriched at the formers expense. So, in Relfo, Gloster and Floyd LJJ described the arrangements in question as being equivalent to a direct payment (paras 103 and 115). There have also been cases, discussed below, in which a set of co ordinated transactions has been treated as forming a single scheme or transaction for the purpose of the at the expense of inquiry, on the basis that to consider each individual transaction separately would be unrealistic. There are also situations where the defendant receives property from a third party into which the claimant can trace an interest. Since the property is, in law, the equivalent of the claimants property, the defendant is therefore treated as if he had received the claimants property. A different type of situation is typified by the case where the claimant discharges a debt owed by the defendant to a third party. Although it is the third party creditor who receives the payment from the claimant, the defendant is directly enriched, since the payment discharges his debt: the enrichment is not the payment which the third party receives, but the discharge which the defendant receives. Where the transfer of value is defective, and the enrichment is consequently unjust, the law reverses it, as far as possible, by subrogating the claimant to the rights formerly held by the third party (as was explained, for example, by Walton J in Burston Finance Ltd v Speirway Ltd [1974] 1 WLR 1648, 1652). There are many variations on the type of situation where equitable subrogation is an appropriate remedy to reverse or prevent unjust enrichment. The remedy differs from restitution, in that it does not have the effect of restoring the parties to their pre transfer positions, but it is the most practicable means of reversing or preventing unjust enrichment in the types of situation where it is appropriate. It has often been suggested that there is a general rule, possibly subject to exceptions, that the claimant must have directly provided a benefit to the defendant. The situations discussed in the two preceding paragraphs can be reconciled with such a rule, if it is understood as encompassing a number of situations which, for the purposes of the rule, the law treats as equivalent to a direct transfer, in the sense that there is no substantive or real difference. So understood, the suggested rule is helpful. It may nevertheless require refinement to accommodate other apparent exceptions, and it would be unwise at this stage of the laws development to exclude the possibility of genuine exceptions, or to rule out other possible approaches. Where, on the other hand, the defendant has not received a benefit directly from the claimant, no question of agency arises, and the benefit does not consist of property in which the claimant has or can trace an interest, it is generally difficult to maintain that the defendant has been enriched at the claimants expense. The point is illustrated by the case of MacDonald Dickens & Macklin v Costello [2011] EWCA Civ 930; [2012] QB 244, where the provision of services to a company was held not to enrich its directors and shareholders. It is also illustrated by the example, discussed in Relfo, of a claimant who makes a mistaken payment to a third party, who in consequence makes a gift to the defendant out of property in which the claimant has no interest, and into which he is unable to trace. As Arden and Floyd LJJ recognised (paras 78 and 114), the claimant does not have a claim in unjust enrichment against the defendant. The claimant suffers a loss through making the payment to the third party, who is unjustly enriched at his expense. A claim in unjust enrichment therefore lies against the third party (subject to any defences available). But no claim of a personal nature lies at the instance of the claimant against the defendant: the claimant has not incurred any loss through the making of the gift. Incidental benefits As explained earlier, the at the expense of requirement is not satisfied merely by the direct receipt of a benefit. The claimant must also incur a loss through the provision of the benefit. As Lord Clyde put it in Banque Financire, in the passage cited at para 44 above, the plaintiff should have sustained a loss through the provision of something for the benefit of some other person. That requirement will not normally be satisfied where the provision of the benefit was merely an incidental or collateral result of his expenditure. (In practice, situations where the defendant has received a benefit merely as an incidental consequence of the claimants pursuit of some other objective are also often situations in which the enrichment of the defendant is not in any event unjust.) In such a situation, the claimant may have received the consideration for which he bargained as the counterpart of his own expenditure, and in that event will not usually have suffered any loss. Even if he has incurred a loss, it will not normally have arisen through his provision of something for the benefit of the defendant, since the benefit received by the defendant will have been merely incidental or collateral to the reason why the expenditure was incurred. A but for causal connection between the claimants being worse off and the defendants being better off is not, therefore, sufficient in itself to constitute a transfer of value. The need for the claimant to suffer a loss through the provision of something for the benefit of the defendant is illustrated by the Ruabon case, which concerned a ship which had been damaged during a voyage covered by a policy of marine insurance. She was put into dry dock for repairs at the expense of the insurers. The owners took advantage of her being in dry dock to have her surveyed for the purpose of renewing her Lloyds classification. There was no consequent increase in dock expenses. Even if the insurers might be regarded as having provided a benefit to the owners (by enabling them to have the vessel surveyed without themselves incurring the expense of putting her into dry dock), the insurers incurred no loss through the provision of that benefit: their expenses were not increased, and they received the consideration for which they had paid. The insurers claim for a contribution towards their expenses, on the basis that the owners had benefited from it, was rejected. Lord Macnaghten put the point in a nutshell: there is no principle of law which requires that a person should contribute to an outlay merely because he has derived a material benefit from it (p 15). The Earl of Halsbury LC, in a speech with which the other members of the Committee agreed, emphasised the fact that the owners were strangers to the exercise undertaken by the insurers, and the absence in those circumstances of any reason why, in justice, they should contribute towards its cost: [T]his is the first time in which it has been sought to advance that principle [of contribution] where there is nothing in common between the two persons, except that one person has taken advantage of something that another person has done, there being no contract between them, there being no obligation by which each of them is bound, and the duty to contribute is alleged to arise only on some general principle of justice, that a man ought not to get an advantage unless he pays for it. So that if a man were to cut down a wood which obscured his neighbour's prospect and gave him a better view, he ought upon this principle to be compelled to contribute to cutting down the wood. (p 12) The Lord Chancellors example did not involve anything which might have been argued to be an unjust factor, but the position would scarcely be different if it had: if, for example, the man had cut down the wood in the mistaken belief that the trees were diseased. Another illustration of the need for a loss to be incurred through the provision of the benefit, also cited to the Court of Appeal in the TFL case, is the case of Edinburgh and District Tramways Co Ltd v Courtenay 1909 SC 99. It concerned a contract between a tramway company and an advertising firm, under which the firm paid a rental for the right to display advertising on the tramcars. It was up to the firm to provide the boards around the upper deck of the tramcars, on which the advertisements were displayed. The tramway company subsequently constructed new tramcars with decency boards already supplied, saving the advertising firm the expense of fitting its own. The tramway companys claim against the advertising firm for the cost of fitting the decency boards was rejected, on the ground that the tramway company had not incurred any loss through the provision of the benefit. Lord President Dunedin observed that there are certain marks or notes of the situation in which recompense is due, and I think that one mark or note is that the person who claims recompense must have lost something (pp 105 106). The Lord President also emphasised that the company had been acting for its own purposes. Referring to earlier authorities, he remarked that in the case at hand you have the same element that went to the decision of some of these eases, that the thing done was as much for the benefit of the man who did it as for that of the other person (p 106). The Lord President illustrated his opinion with an illuminating example: One man heats his house, and his neighbour gets a great deal of benefit. It is absurd to suppose that the person who has heated his house can go to his neighbour and say Give me so much for my coal bill, because you have been warmed by what I have done, and I did not intend to give you a present of it. (p 105) The importance of identifying a loss arising through the provision of a benefit is also illustrated by the case of TFL, where a claim based on unjust enrichment was brought by a company, A, against a defendant, B, in order to recover the costs which A had incurred in earlier legal proceedings. Those proceedings had been brought by A in order to recover a debt from a third party, C, and had been successfully defended on the ground that the debt was due, not to A, but to B. After B recovered the debt, A brought proceedings against B on the basis that A had conferred a benefit on it by bringing the earlier proceedings and thereby clarifying Bs right to recover the debt. Since A had done so under an erroneous understanding of its rights, it argued that B had therefore been unjustly enriched at its expense. The Court of Appeal, by a majority (Sir Stanley Burnton dissenting), held that the claim could not be summarily dismissed. The court had understandable difficulty in identifying the benefit which had supposedly been conferred by A on B (para 50), and accepted that the benefit, whatever it consists of, had not been directly provided by A to B (para 54). It appears to have considered that a causal link between As payment of the costs of the proceedings and an indirect benefit to B was nevertheless arguably sufficient (para 64). The fact that A had been acting in its own interests was considered to be no answer (para 67). The court could hardly have reached the same conclusion if, when considering the at the expense of question, it had focused on the need to identify a transfer of value from the claimant to the defendant. A had not provided any benefit directly to B. At best, B had received an incidental benefit as the result of As pursuit of its own interests. The facts of the case, so far as the at the expense of question is concerned, were not materially distinguishable from those of Lord Dunedins example of the householder whose heating warms his neighbours house. Furthermore, As erroneous understanding of its legal rights did not in any event bear on the justice of Bs incidentally benefiting from the clarification of the legal position: one might cite Pollock CBs rhetorical question in Taylor v Laird (1856) 25 LJ Ex 329, 332, One cleans anothers shoes; what can the other do but put them on? A had received the legal services it had bargained for when it incurred the expense (and, if it also had to meet its opponents costs, that was a risk inherent in litigation, which it voluntarily assumed). Even bearing in mind that the Court of Appeal was dealing with a strike out application, the majority of the court were wrong in not summarily dismissing the claim. It is interesting to note that similar claims were rejected long ago in Scotland, on the basis that the litigant had been pursuing his own interests. More, in his Notes to Stairs Institutions (1832), states: a person who, for his own benefit, carries on an expensive law suit, which, in the result, establishes some point as beneficial to other neighbouring proprietors as to himself, can make no claim against them for any part of the expense incurred by him. And Lord Stair, in the text, states the case of a person who reduces [sets aside] a right as void, and thereby lets in the claims of third parties, which are ultimately preferred to his own, yet he says, that as he was doing his own business, not theirs, he can claim no share from them of his expenses. (p liv) Humes Lectures (1786 1822) are to the same effect, stating in relation to the person who brings an action: Now, though it should so happen, (as very often it must,) that he settles some point of law, in the decision of this lawsuit of his, and thus does a service to a number of other persons, whose property, or concerns, are in the like situation; yet still the cost of this lawsuit is his peculiar and exclusive concern. He can recover no part of it from his neighbours, or any of them, for whose benefit he probably never would have stirred in the matter. (Vol III, p 167, citing the unreported case of Ferguson v Smyth, 18 November 1802, SC Old Sess Pap, vol 437, No 30.) Economic reality Nor is the at the expense of requirement satisfied by a connection between the parties respective benefit and loss merely as a matter of economic or commercial reality. Economic reality is not only a somewhat fuzzy concept, as Moses LJ described it in Menelaou [2014] 1 WLR 854, para 62, but one which is difficult to apply with any rigour or certainty in this context, or consistently with the purpose of restitution on the ground of unjust enrichment. An inquiry into where the economic burden of an unjust enrichment has fallen is liable to be a very complex undertaking, especially where there is a chain of suppliers and consumers. The supplier who passes on a tax or other charge by increasing the price of his goods or services might be thought to have shifted the economic burden, but his increased prices may have an adverse impact upon his sales, and accordingly upon the profitability of his operations. Furthermore, in a situation where numerous factors affect the prices which he charges, it may be far from easy to decide to what extent the economic burden of the tax has been reflected in the price charged. Deciding whether the economic burden of an unjust enrichment has been passed on has been described as virtually unascertainable (Hanover Shoe Inc v United Shoe Machinery Corpn (1968) 392 US 481, 493) and a near impossibility (British Columbia v Canadian Forest Products Ltd [2004] 2 SCR 74, para 205). These points have been made repeatedly in other jurisdictions, when considering a defence of passing on: that is to say, a defence based on the proposition that the economic burden of an unjustified enrichment was borne not by the claimant but by a third party: see, for example, Commissioner of State Revenue (Victoria) v Royal Insurance Australia Ltd (1994) 182 CLR 51; 126 ALR 1; Kingstreet Investments Ltd v New Brunswick (Finance) Ltd [2007] 1 SCR 3; and the Opinions of Advocate General Mancini in Amministrazione delle Finanze dello Stato v SpA San Giorgio (Case 199/82) [1983] ECR 3595 (San Giorgio) and of Advocate General Geelhoed in Commission of the European Communities v Italian Republic (Case C 129/00) [2003] ECR I 14637. A more fundamental difficulty with an approach based on economic reality arises from the fact that the purpose of restitution is not to compensate for loss, but to reverse the defective transfer. Looking to see who has suffered an economic loss is therefore not, in principle, the correct way of identifying the appropriate claimant. Indeed, even in tort law, which is concerned with compensation for loss, the court is not concerned with where the economic burden of the tort may ultimately have fallen as a matter of economic reality. Co ordinated transactions There are, on the other hand, cases in which the court has referred to reality in a different sense. These are cases in which, for the purpose of answering the at the expense of question, the court has treated a set of related transactions, operating in a co ordinated way, as forming a single scheme or transaction, on the basis that to answer the question by considering each of the individual transactions separately would be unrealistic. The case of Banque Financire, as explained in some of the judgments, is an example. The claimant had entered into a refinancing arrangement involving the loan of a sum of money to the manager of a holding company, which he in turn lent to a subsidiary of that company so that it could discharge a debt secured by a first ranking security. The purpose of interposing the manager between the claimant and the first subsidiary was to avoid a requirement to make a public disclosure of the loan, which would have applied if the claimant had lent the money directly to the first subsidiary. The claimant paid the money directly to the subsidiarys creditor, so discharging the debt. It was conceded that this enriched the defendant, which was another subsidiary of the holding company, since it promoted the ranking of its own security, with the consequence that it was the only creditor of the first subsidiary which was likely to be repaid. This was contrary to the understanding on which the claimant had advanced the loan, namely that it would be repaid in priority to all intra group debts. The House of Lords held that this would unjustly enrich the defendant, and therefore subrogated the claimant to the discharged security, as against the defendant, so as to prevent the unjust enrichment. One of the questions considered by the House of Lords was whether the enrichment was at the expense of the claimant, when the claimant had made the loan to the manager of the holding company, who had then made a further loan to the first subsidiary, rather than the claimant lending directly to the first subsidiary. Two different analyses were put forward. Lord Steyn proceeded on the basis that the interposition of the loan to the manager was no more than a formal act designed to allow the transaction to proceed . To allow [it] to alter the substance of the transaction would be pure formalism (p 227). Lord Clyde similarly stated that the arrangement with the manager did not prevent recognition of the reality of the granting of the funds by [the claimant] to [the holder of the first ranking security] (p 238). That was also the view of Lord Hutton (the reality was that the [defendant] was enriched at the expense of [the claimant]: p 239). Lord Hoffmann, with whom Lord Steyn, Lord Griffiths and Lord Clyde agreed, put forward another analysis, namely that the claimants money could be traced into the discharge of the debt secured by the first ranking security (p 235). On both analyses, the House of Lords treated the situation as one where the defendant had directly received a benefit from the claimant, since on one analysis it was in reality the claimant which had discharged the first ranking security and thereby promoted the defendants security, and on the other analysis it was the claimants money which had done so. The case of Menelaou provides another illustration. The case concerned the sale of a property owned by the defendants parents, and the use of part of the proceeds to purchase another property in her name, as a gift. The claimant bank held a charge over the first property to secure the parents borrowings, and agreed to the discharge of the security in return for a fresh charge over the second property. It instructed solicitors to deal with the discharge of the security over the first property and to obtain a charge over the second property. The solicitors sent the bank a charge over the second property, purportedly executed by the defendant, and the bank authorised the discharge of the security over the first property. In the event, the second charge was defective, as a result of the solicitors negligence. The defendant had agreed to the purchase of the second property in her name, but was unaware of her parents agreement with the bank that there should be a charge. The solicitors admitted liability to the bank for its losses, subject to credit being given for any sums which the bank might recover from the defendant. Lord Carnwath analysed the case in terms of the law of equity rather than unjust enrichment. He considered that the moneys held by the solicitors following the sale of the first property, and used to purchase the second property, were held on a Quistclose type trust for the bank (Quistclose Investments Ltd v Rolls Razor Ltd [1970] AC 567). On that footing, it followed that the bank was subrogated to the lien of the unpaid vendor of the second property, so as to give it an equitable interest in the property. In other words, the vendor had a lien over the property, to secure his right to payment of the purchase price, as long as he remained unpaid. The bank, on discharging the parents obligation to pay the vendor, became entitled in equity to the benefit of that lien (or, strictly analysed, to a new lien to secure its own right to repayment) by subrogation. The other members of the court held that the bank should be subrogated to the unpaid vendors lien on the basis of unjust enrichment, since it had mistakenly authorised the use of the proceeds of sale of the first property (which it could otherwise have required to be applied to discharge the debt owed to itself) to purchase the second property, thereby providing the defendant with a benefit at its expense. Lord Clarke proceeded on the basis that the two arrangements, namely the sale of [the first property] and the purchase of [the second property], were not separate but part of one scheme, which involved the bank throughout (para 25). Lord Neuberger agreed, observing that it is appropriate not merely to consider the purchase of, and charge over, [the second property] as a single composite transaction, applying the approach to property purchases involving a charge which was adopted in Abbey National Building Society v Cann [1991] 1 AC 56, but that it was also appropriate in the present case to treat the sale of [the first property] and the purchase of [the second property] as one scheme, at least for present purposes (para 67). Lord Kerr and Lord Wilson agreed with both judgments in relation to this issue. On that basis, Lord Clarke considered that the conclusion that there had been a transfer of value between the bank and the defendant gave effect to the reality of the transaction, notwithstanding the absence of a direct payment by the former to the latter (para 33). Lord Neuberger agreed, stating: [T]here was in reality a single transaction, and it was from that transaction that [the defendant] directly benefitted, even though the benefit was effected at the direction of the Menelaou parents. The benefit to [the defendant] was direct because it arose as the immediate and inevitable result of the very transaction to which she was party and which gave rise to the unjust enrichment. (para 73) At the expense of in the present case Turning to the issue raised in the present case, the only English authority cited in argument which contains a discussion of the at the expense of question in relation to taxation is the decision of the Court of Appeal in Kleinwort Benson Ltd v Birmingham City Council [1997] QB 380. The case concerned a claim by a bank for restitution of money which it had paid to a local authority under a void swap transaction. The bank had also entered into hedging arrangements with a third party which protected it against loss. In considering whether English law recognised a defence of passing on, the Court of Appeal discussed the requirement that the defendants enrichment should be at the expense of the claimant. Evans LJ, delivering the leading judgment with which Saville LJ agreed, referred to a range of authority and academic writing from other jurisdictions, including two authorities concerned with taxes paid under a mistake: the decision of the United States Federal Court of Appeals for the Second Circuit in 123 East Fifty Fourth Street Inc v United States (1946) 157 F 2d 68, and the decision of the High Court of Australia in Commissioner of State Revenue (Victoria) v Royal Insurance Australia Ltd. He noted that the cases raised a question, akin to agency, which is whether the taxpayer should be regarded as having collected tax from his customers on behalf of the taxing authority, and that it had been said by Learned Hand J in the 123 East Fifty Fourth Street case that any tax recovered by the taxpayer would be held by him as a fiduciary for his customers. Similarly, in the Royal Insurance case it had been said that if it was established that the plaintiff had charged its policy holders the tax as a separate item, it would be entitled to recover the money from the tax authority but would then hold it as a constructive trustee. In the event, however, Evans LJ found the taxation cases of little assistance, since on the facts of the case no question of a constructive trust or of any obligation to account to customers could arise (p 391). Morritt LJ, with whose judgment Saville LJ also agreed, emphasised that the plaintiff was legally and beneficially entitled to the money it paid to the authority, and that the case was not one in which the claimant held the money claimed as a bare trustee or tax collector such as, arguably, in the 123 East Fifty Fourth Street case (p 400). It has not been argued in the present appeal that the Managers held the amounts paid to them by the Lead Claimants in respect of VAT as agents or trustees or in any other fiduciary capacity. In the circumstances, it is unnecessary to consider the American and Australian authorities in any detail. The dissenting opinion of Learned Hand J in the 123 East Fifty Fourth Street case was concerned with a simpler situation than the present case, where the supplier of services collected sales tax from his customers, as a separately identifiable amount paid for the purpose of meeting the tax, and then remitted the whole of that amount to the tax authority. The same was true in the case of Wayne County Produce Co v Duffy Mott Co (1927) 244 NY 351, where Cardozo CJ adopted a similar approach. The reasoning in these cases was approved by Mason CJ in the Royal Insurance case, in an opinion in which the other members of the court did not join, but he distinguished the case before him on the basis that the amount collected was not paid separately from the price of the services supplied. In considering these authorities, it is necessary not only to bear in mind the differences from the facts of the present case, but also to remember that American and Australian law adopt a broader approach to constructive trusts than English law. In particular, one of the essential requisites for a trust in English law is that there must be identifiable trust property (or its traceable proceeds) in the hands of the recipient which is not available to him as part of his general assets: see Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669, 705. In the present case, the contracts between the Managers and the Lead Claimants provided for the Managers to be paid fees plus VAT if applicable (or words to similar effect). The contractual obligation of the Lead Claimants was therefore to pay the fees plus whatever sum, if any, was necessary in order to meet the VAT chargeable on the supply in question. This was reflected in the invoices issued by the Managers, which drew a distinction between their fees, on the one hand, and the VAT due on their fees, on the other hand. There is, however, no evidence that the Managers were expected to keep the amounts paid to them by the Lead Claimants in respect of VAT separate from their other funds: on the face of things, they were entitled to treat them as part of their general assets. It follows that in paying those amounts to the Managers, the Lead Claimants must be taken to have intended to part with any interest in the money, rather than to have impressed it with a special purpose trust. Furthermore, since the Managers were not aware of any mistake prior to making payment to the Commissioners, their conscience cannot have been affected so as to render them trustees: see Westdeutsche at p 709. In these circumstances, the right to the restitution of money paid under the contract as the result of a mistake gives rise, like the contract itself, to purely personal obligations. Returning, then, to the question whether the unjust enrichment of the Commissioners was at the expense of the Lead Claimants, and focusing on whether there was a transfer of value from the Lead Claimants to the Commissioners, the answer is in the negative. There was a transfer of value, comprising the notional 100, from the Lead Claimants to the Managers, under the contract between them. It was defective, because it was made in performance of a contractual obligation which was mistakenly believed to be owed. There was a subsequent transfer of value, comprising the notional 75, from the Managers to the Commissioners. It was also defective, because it was made in compliance with a statutory obligation which was inapplicable because it was incompatible with EU law. These two transfers cannot be collapsed into a single transfer of value from the Lead Claimants to the Commissioners. That follows from a number of considerations. First, the Lead Claimants do not challenge the judges rejection of a connection between the payments made by the Lead Claimants and the payments received by the Commissioners based on agency. The intervention of the Managers cannot therefore be disregarded on the basis that they were in law the proxy of one of the other parties. Secondly, since the payments made by the Lead Claimants formed part of the Managers general assets, to do with as they pleased, it is impossible to trace those payments into the payments subsequently made by the Managers to the Commissioners, and so to regard the Commissioners as having benefited from the receipt of property in which the Lead Claimants had an interest. Thirdly, the fact that there were two separate transactions first, between the Claimants and the Managers, and secondly between the Managers and the Commissioners is not in this context something which can be disregarded. In particular, there is no question of the transactions being a sham or involving an artificial step, or of their comprising a single scheme. The first transfer did not even bring about the second transfer as a matter of causation: the judges rejection of a but for causal connection between the two transfers is not challenged. The Lead Claimants rely on a connection established by commercial or economic reality. But, for the reasons already explained, the fact that, as a matter of economic or commercial reality, the Lead Claimants bore the cost of the undue tax paid by the Managers to the Commissioners does not in itself entitle them to restitution from the Commissioners. It follows that the Lead Claimants did not in principle have any right to restitution against the Commissioners. They did, on the other hand, have a right to restitution against the Managers. That right was to restitution of the entire amount paid in respect of VAT, ie the notional 100. The Managers did not in principle have a change of position defence in respect of the notional 75 which they paid to the Commissioners, since that change of position was reversible under section 80 of the 1994 Act, as I shall shortly explain. Nor did they have a change of position defence in respect of the notional 25 which they retained. Steyns questions. Section 80 of the 1994 Act In order to determine the issues arising in relation to EU law, it is necessary next to consider the effect of section 80 of the 1994 Act. The section has undergone amendment on a number of occasions. The version in force at the time when the Managers made their claims, and also applicable at the time when the present actions were brought by the Lead Claimants, was in the following terms, so far as material: In the circumstances, it is unnecessary to consider the remainder of Lord Credit for, or repayment of, overstated or overpaid VAT (1) Where a person (a) has accounted to the Commissioners for VAT for a prescribed accounting period (whenever ended), and (b) in doing so, has brought into account as output tax an amount that was not output tax due, the Commissioners shall be liable to credit the person with that amount. (lA) Where the Commissioners (a) have assessed a person to VAT for a prescribed accounting period (whenever ended), and (b) tax an amount that was not output tax due, in doing so, have brought into account as output they shall be liable to credit the person with that amount. (lB) Where a person has for a prescribed accounting period (whenever ended) paid to the Commissioners an amount by way of VAT that was not VAT due to them, otherwise than as a result of (a) brought into account as output tax, or (b) 26 not being brought into account, an amount of input tax allowable under section an amount that was not output tax due being the Commissioners shall be liable to repay to that person the amount so paid. (2) The Commissioners shall only be liable to credit or repay an amount under this section on a claim being made for the purpose. (2A) Where (a) as a result of a claim under this section by virtue of subsection (1) or (lA) above an amount falls to be credited to a person, and after setting any sums against it under or by (b) virtue of this Act, some or all of that amount remains to his credit, the Commissioners shall be liable to pay (or repay) to him so much of that amount as so remains. (3) It shall be a defence, in relation to a claim under this section by virtue of subsection (1) or (lA) above, that the crediting of an amount would unjustly enrich the claimant. (4) The Commissioners shall not be liable on a claim under this section (a) (1) or (1A) above, or (b) (1B) above, to repay an amount to a person under subsection to credit an amount to a person under subsection if the claim is made more than three years after the relevant date [ie the end of the prescribed accounting period]. (7) Except as provided by this section, the Commissioners shall not be liable to credit or repay any amount accounted for or paid to them by way of VAT that was not VAT due to them. Section 80 is supplemented by section 80A, introduced by section 46(2) of the Finance Act 1997 and subsequently amended, which enables the Commissioners to make regulations providing for reimbursement arrangements to be disregarded for the purposes of section 80(3) except where they contain such provision, and are supported by such undertakings, as may be required by the regulations. The relevant regulations are contained in Part VA of the Value Added Tax Regulations 1995 (SI 1995/2518), as amended. They provide for reimbursement arrangements, defined by regulation 43A as arrangements for the purposes of a claim under section 80 which (a) are made by a claimant for the purpose of securing that he is not unjustly enriched by the crediting of any amount in pursuance of the claim, and (b) provide for the reimbursement of persons (consumers) who have, for practical purposes, borne the whole or any part of the original amount brought into account as output tax that was not output tax due. The regulations go on to require the claimant under section 80 to give undertakings to the Commissioners that he will apply the whole of the amount credited, and any interest on that amount, to the reimbursement of identified consumers whom he has reimbursed or intends to reimburse. It is common ground that, for persons who have accounted to the Commissioners for VAT that was not due, section 80 and the associated regulations provide a code for the recovery of VAT which is exhaustive and excludes other remedies such as a common law claim based on unjust enrichment. It is also common ground that the ITCs could never have made a claim under section 80, since they did not pay or account for any of the VAT in question to the Commissioners. The first issue in dispute is whether the effect of section 80 is to exclude a common law claim by the ITCs, assuming, contrary to my earlier conclusion, that such a claim might otherwise be brought. The argument for the Lead Claimants is based primarily on the structure and wording of section 80. They point out that subsections (1) to (6) are concerned with the crediting or repayment of undue VAT to the supplier, not the consumer. In subsection (7), the words credit or repay echo the language of earlier subsections, where they can plainly refer only to the repayment or crediting of the supplier. They submit that subsection (7) is similarly concerned with the supplier. Only a supplier of goods or services can account for an amount to the Commissioners, and only a supplier can be credited with an amount by them. Similarly, only a supplier can be repaid by the Commissioners, since only he has paid them in the first place. Section 80(7) is thus designed only to exclude claims, otherwise than under the section, by persons who have a claim under the section. That argument was accepted by the Court of Appeal. On behalf of the Commissioners, it is argued that the word repay is capable of applying to any payment back by the Commissioners of VAT which they have received. From their perspective, there is a repayment if the VAT is refunded, whether to the supplier or to someone else. Furthermore, it is argued, it would be strange if section 80(7) barred a restitutionary claim by the supplier, but left the suppliers customer in a better position. Moreover, it is argued, section 80 establishes a statutory scheme for the restitution of VAT which was not due, which by necessary implication excludes non statutory restitutionary claims. The argument seeks to draw support from the decision of the Court of Appeal in Monro v Revenue and Customs Comrs [2008] EWCA Civ 306; [2009] Ch 69, where a common law claim was held to be excluded by a statutory scheme for the recovery of tax, since it would be inconsistent with the purpose of the scheme. In agreement with the judge, I find the textual arguments inconclusive, when considered by themselves. The word repay is capable of bearing a wider meaning than the one for which the claimants contend, but could also be construed more narrowly. A purposive construction of the provision points more clearly to the correct conclusion. In that regard, section 80(3) and (4) are particularly important. Under section 80(3), the Commissioners have a statutory defence to a claim under section 80 a claim which, it is agreed, can only be made by a supplier where crediting the supplier would unjustly enrich him. The possibility of unjust enrichment (in a non technical sense) arises because the supplier normally recovers from his customers the output tax for which he accounts to the Commissioners. The subsection therefore creates a statutory defence of passing on. Section 80A, and the 1995 Regulations, then create a scheme under which the defence is disapplied where reimbursement arrangements are made with the purpose of ensuring that the payment to the supplier is used to reimburse the consumers who have borne the economic burden of the tax. Sections 80 and 80A, together with the 1995 Regulations, thus create a scheme which enables consumers who have been wrongly charged VAT to obtain reimbursement. The consumers are able to recover the VAT which they were wrongly charged, to the extent that it was remitted by the supplier to the Commissioners, through the medium of the suppliers claim under section 80. Although the consumers remedy is indirect, it can generally be expected to be effective: if the supplier is otherwise reluctant to make a claim, the consumers have a direct claim against him, as explained below. Subject to the question of time bar, these arrangements therefore remove any need there might otherwise be, in most circumstances, for the consumer to have a direct remedy against the Commissioners. It will be necessary at a later point to return to the question whether there may nevertheless be some circumstances in which a direct remedy is required by EU law. Section 80(4) lays down a limitation period for claims under the section which is shorter than the period of six years, with extensions in the event of mistake, which would apply to a common law claim in unjust enrichment under section 32(1)(c) of the Limitation Act 1980 (and which also applied under section 80(4) until its amendment by the Finance Act 1997). A statutory claim by the supplier must therefore be brought within a shorter and more certain period of time. The evident aim is to protect public finances against the risk of a liability to repay tax emerging more than three years after the tax was received. It would be inconsistent with that intention for there to be a potentially far longer period within which non statutory claims might be brought against the Commissioners by the suppliers customers. In the light, therefore, of section 80(3) and (4) in particular, Parliament cannot sensibly be taken to have intended, when it created this scheme for the reimbursement of suppliers (with provision for them in turn to reimburse their customers), subject to strict time limits, that it should exist concurrently with non statutory liabilities towards suppliers and their customers which were potentially wider in scope and were subject to a longer and less certain limitation period. Such an intention would be inconsistent with the rationale of the statutory scheme. In these circumstances, on the hypothesis that non statutory claims by consumers might otherwise lie against the Commissioners in circumstances falling within the scope of section 80, subsection (7) must be construed as excluding such claims. The Court of Appeal considered that that approach, which the judge accepted, presupposed that Parliament had in mind that restitutionary claims might be brought by consumers, and legislated with the intention of excluding such claims. As they pointed out, however, Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349, which established that money paid under a mistake of law might be recoverable, had not been decided when the 1994 Act was enacted. In their view, that background pointed away from a legislative intent to restrict claims for the recovery of overpaid VAT to the machinery provided by section 80. I find this reasoning unpersuasive. The fact that Parliament will not have had in mind a particular common law right to payment when enacting a legislative scheme for recovery does not preclude the common law right being excluded by that scheme: R (Child Poverty Action Group) v Secretary of State for Work and Pensions [2010] UKSC 54; [2011] 2 AC 15. The absence of a recognised right to recover money paid under a mistake of law, at the time when section 80 was enacted, did not exclude the possibility of restitutionary claims by consumers, since there were other established grounds on which restitution might be sought, including payment under a mistake of fact. Moreover, the Lead Claimants argument proves too much: if section 80(7) was not intended to exclude common law claims based on mistake of law, because no such cause of action was recognised when the legislation was enacted, then a common law claim by the Managers would not be excluded either; but it is common ground that section 80(7) is effective to exclude any common law claim by the Managers. More fundamentally, the determining factor in the present case is that the scheme created by section 80 is inconsistent with the existence of a concurrent non statutory liability on the part of the Commissioners to make restitution to consumers. In the absence of section 80(7), one would therefore conclude that section 80 impliedly excluded such liability (assuming that it might otherwise exist). Given the existence of an express exclusion in section 80(7) which is capable of covering such liability, it is unnecessary to rely on implication: one can construe section 80(7) as having the same exclusionary effect. It follows that section 80 bars claims by the consumers who ultimately bear the burden of VAT. It nevertheless enables them to be reimbursed, subject to a limitation period designed to avoid the disruption of public finances. Compatibility with EU law Section 80 must have been intended to be compliant with EU law, since it is concerned with the recovery of VAT, which is a tax imposed by EU law. Indeed, a report by the Law Commission indicates that section 80 was framed to accord closely with European Community law: Restitution: Mistakes of Law and Ultra Vires Public Authority Receipts and Payments, Law Com No 227 (1994) para 14.19. The present case raises the question whether the system of reimbursement established by section 80 has achieved that objective. There is a well established principle of EU law that a member state is in principle required to repay taxes levied in breach of EU law, and an equally well established exception whereby repayment can be refused where it would entail unjust enrichment of the taxable person because the burden of the tax has been passed on: see San Giorgio, paras 12 13. In the latter situation, however, the Court of Justice has held that the person to whom the tax was passed on should have a right to recover the sums unduly paid, so as to offset the consequences of the taxs incompatibility with EU law by neutralising the economic burden which the tax has imposed on the operator who has actually borne it: Danfoss A/S v Skatteministeriet (Case C 94/10) [2011] ECR I 9963, paras 23 and 25. It is for the domestic legal system of each member state to lay down the conditions under which claims may be made, subject to observance of the principles of equivalence and effectiveness: Danfoss, para 24. These general principles apply to the reimbursement of improperly invoiced VAT: Reemtsa Cigarettenfabriken GmbH v Ministero delle Finanze (Case C 35/05) [2007] ECR I 2425. Reasonable limitation periods are compatible with the principle of effectiveness, and the limitation period applicable to claims under section 80 of the 1994 Act has specifically been held to be reasonable: Marks & Spencer plc v Customs and Excise Comrs (Case C 62/00) [2003] QB 866, para 35. The court has accepted that, in principle, a system under which only the supplier is entitled to seek reimbursement of VAT from the tax authorities, and the consumer can seek restitution from the supplier, meets the requirements of EU law: Reemtsma, para 39. The court added one caveat: [I]f reimbursement of the VAT becomes impossible or excessively difficult, in particular in the case of the insolvency of the supplier, those principles may require that the recipient of the services to be able to address his application for reimbursement to the tax authorities directly. (Reemtsma, para 41). This approach has been applied and restated in later cases. In the Danfoss case, the Court of Justice put the matter in this way: 27. It follows that a member state may, in principle, oppose a claim for the reimbursement of a duty unduly paid made by the final consumer to whom that duty has been passed on, on the ground that it is not that consumer who has paid the duty to the tax authorities, provided that the consumer who, in the final analysis, bears the burden of that duty is able, on the basis of national law, to bring a civil action against the taxable person for recovery of the sums unduly paid. 28. However, if reimbursement by the taxable person were to prove impossible or excessively difficult in particular, in the case of the insolvency of that person the principle of effectiveness requires that the purchaser be able to bring his claim for reimbursement against the tax authorities directly and that, to that end, the member state must provide the necessary instruments and detailed procedural rules. In these passages, the insolvency of the taxable person is given as an example of circumstances where reimbursement by that person might prove impossible or excessively difficult, and where the principle of effectiveness would therefore be infringed. It is the most likely example to arise in practice, but it cannot be treated as necessarily exhaustive. The governing principle of effectiveness means that the purchaser must, in principle (and subject to procedural rules which are compatible with the principle of effectiveness, such as reasonable limitation periods), be able to recover from the member state where reimbursement by the taxable person would be impossible or excessively difficult. In the present case, the Lead Claimants had a common law right to restitution of the amounts mistakenly paid to the Managers, whose enforcement was neither impossible nor excessively difficult. The Managers had a statutory right to recover the notional 75 from the Commissioners, under arrangements which ensured that it was passed on to the Lead Claimants. The Managers retained the remaining 25 and were not insolvent. They were therefore in a position to refund it to the Lead Claimants. The only amounts which the Lead Claimants could not recover were the amounts which they had paid during the dead periods, to the extent that those amounts had been paid by the Managers to the Commissioners: that is to say, the notional 75 whose recovery from the Commissioners was time barred under section 80(4) of the 1994 Act. Although a claim by the Lead Claimants against the Managers in respect of the dead periods would not have been time barred, because of the more generous limitation period allowed by section 32(1)(c) of the Limitation Act 1980, the Managers would have a defence of change of position, since the amounts which they paid to the Commissioners during those periods were irrecoverable. The inability of the Lead Claimants to recover those sums is not, however, incompatible with EU law: as explained earlier, it is conceded that the three year limitation period imposed by section 80(4) of the 1994 Act is compatible with EU law. In these circumstances, the inability of the Lead Claimants to pursue a direct claim for restitution against the Commissioners is not incompatible with EU law. That follows from the application of well established principles of EU law. There is therefore no need for any reference to the Court of Justice. Nor is it necessary or appropriate to consider what the position would be in a hypothetical case where the supplier was insolvent: the court has heard no submissions, and has no information before it, as to how reimbursement arrangements under section 80 might operate in that situation. Conclusion For these reasons I would allow the Commissioners appeal and dismiss the Lead Claimants cross appeal.
+This appeal raises a short point under Part VII of the Housing Act 1996. The 1996 Act contains a set of provisions dealing with the obligations for housing authorities to those found to be homeless or threatened with homelessness. They were originally enacted in the Housing (Homeless Persons) Act 1977. Although there have been significant amendments, the general structure of the provisions has remained largely unaltered, as has the underlying principle that a home is somewhere which can accommodate a family together. Thus in Din (Taj) v Wandsworth London Borough Council [1983] AC 657, Lord Fraser said: One of the main purposes of that Act was to secure that, when accommodation is provided for homeless persons by the housing authority, it should be made available for all the members of his family together and to end the practice which had previously been common under which adult members of a homeless family were accommodated in a hostels while children were taken into care and the family thus split up . (p 668 D G) That principle is clearly established in the first two sections. Homelessness is defined by section 175(1) as follows: (1) A person is homeless if he has no accommodation available for his occupation, in the United Kingdom or elsewhere, which he (a) is entitled to occupy by virtue of an interest in it or by virtue of an order of court, (b) has an express or implied licence to occupy, or (c) occupies as a residence by virtue of any enactment or rule of law giving him the right to remain in occupation or restricting the right of another person to recover possession (2) . (3) A person shall not be treated as having accommodation unless it is accommodation which it would be reasonable for him to continue to occupy. By section 176: Accommodation shall be regarded as available for a persons occupation only if it is available for occupation by him together with (a) any other person who normally resides with him as a member of his family, or (b) any other person who might reasonably be expected to reside with him. References in this Part to securing that accommodation is available for a persons occupation shall be construed accordingly. Thus what I shall call the extended meaning of available for his occupation, as defined by section 176, runs through the whole of Part VII of the 1996 Act. It is relevant not only in establishing whether a person is homeless under section 175, but also for setting the authoritys duty towards him if so found, including both their interim duty to provide accommodation pending a decision (section 188(1)), and (as in the present case) their final duty to someone found to be in a priority need and not intentionally homeless (section 193(2)). By contrast, no specific standard of accommodation has been laid down by Parliament. As Lord Brightman said in R v Hillingdon LBC ex p. Puhlhofer [1986] AC 484, discussing the 1977 Act: In this situation, Parliament plainly, and wisely, placed no qualifying adjective before the word accommodation in section 1 or section 4 of the Act, and none is to be implied. The word appropriate or reasonable is not to be imported. Nor is accommodation not accommodation because it might in certain circumstances be unfit for habitation for the purposes of Part II of the Housing Act 1957 or might involve overcrowding within the meaning of Part IV. Those particular statutory criteria are not to be imported into the Homeless Persons Act for any purpose. What is properly to be regarded as accommodation is a question of fact to be decided by the local authority. There are no rules. Clearly some places in which a person might choose or be constrained to live could not properly be regarded as accommodation at all . What the local authority have to consider, in reaching a decision whether a person is homeless for the purposes of the Act, is whether he has what can properly be described as accommodation within the ordinary meaning of that word in the English language. (p 517 E G) He added that, while the statutory definition of overcrowding had no relevance, overcrowding was not necessarily a factor to be disregarded altogether: accommodation must, by definition, be capable of accommodating. If, therefore, a place is properly capable of being regarded as accommodation from an objective standpoint, but is so small a space that it is incapable of accommodating the applicant together with other persons who normally reside with him as members of his family, then on the facts of such a case the applicant would be homeless because he would have no accommodation in any relevant sense. (pp 517 H 518 A) Some of Lord Brightmans assumptions about the intentions of Parliament seem to have been falsified shortly afterwards. Section 14 of the Housing and Planning Act 1986 introduced a requirement to disregard accommodation which it is not reasonable for him to continue to occupy (see now section 175(3) of the 1996 Act, quoted above). It also introduced a requirement that accommodation provided by the authority should be suitable (see now section 206(1) of the 1996 Act). In determining suitability the authority were required to have regard to the statutory provisions covering housing standards (see now section 210 of the 1996 Act). To that extent it mitigated the apparent harshness of the test laid down by the House of Lords in Puhlhofer. However it did not alter the definition of accommodation as such, nor detract from the authority of what Lord Brightman said about that word taken on its own. The issue in this case, in short, is to what extent (if at all) the extended meaning of the expression available for his occupation in the 1996 Act implies a requirement that the family be accommodated not only together, but in a single unit of accommodation. Factual background The facts are sufficiently summarised in the agreed statement of facts and issues: On 3 June 2004, the Appellants, the London Borough of Camden (the Council) accepted a full duty to secure that suitable accommodation was available for occupation by the Respondent, Ms Sharif, under s.193(2), Housing Act 1996. The Council accepted that Ms Sharifs father, Mr Sharif Ali, a man in his 60s with some health problems, and her sister, Zainab Sharif (aged 14), lived with Ms Sharif and were therefore part of her household. Accordingly Ms Sharifs father and sister are entitled to be accommodated with Ms Sharif under the said housing duty. Ms Sharif and her household were initially accommodated by the Council in hostel accommodation but, in 2004, they were accommodated also under s.193(2) at 83 Lopen Road, London N18 1PT (a 3 bedroom house) under a private sector leasing scheme. On 6 November 2009, still by way of accommodation under section 193(2), the Council asked Ms Sharif and the household to move to two units (nos. 125 and 132) on the same floor of Englands Lane Residence, London NW3, a hostel used by the Council to accommodate homeless applicants. Each unit comprised a single bed sitting room with cooking facilities, plus bathroom/w.c. The two units were separated by a few yards. no. 125 can accommodate two single people; no. 132 is suitable for one. It was envisaged that Ms Sharif and her sister would sleep in no. 125 and their father in no. 132. Ms Sharif refused the offer as unsuitable, because it comprised two separate units; due to her fathers medical condition they needed to be able to live as a family in the same unit. On 23 December 2009 the council confirmed that the offer was considered suitable, although not an ideal living arrangement, and that accordingly their housing obligation to her had come to an end (see section 193(5) of the 1996 Act). Ms Sharif requested a review of the decision on suitability, again mainly on the grounds of her fathers ill health and the need to provide care for him. It does not seem to have been suggested that lack of communal facilities as such was an issue. On 16 February 2010 the council upheld their decision. The review decision contained a detailed consideration of the facts, including the medical advice received by the Council, which in some respects differed from assertions made on behalf of Ms Sharif. In particular, the reviewing officer was not persuaded that the distance between the two units was a significant problem: I am not persuaded that your client would experience any significant difficulties in attending her father in a separate flat which your client agrees herself was only a few yards away. Walking from one flat to another and cleaning on her fathers behalf when necessary would not in my view have been any more challenging than cleaning a three bedroom house and walking up and down the stairs in the house. I am therefore not persuaded that the accommodation offered to your client was unsuitable as it would be more onerous caring for her sister and father in two separate flats. At this stage the sole issue was that of suitability; it was not suggested that accommodation in two units was as a matter of law incapable of satisfying the statutory requirement. Ms Sharif appealed to the London Central County Court on various points of law (both procedural and substantive), as she was entitled to do by virtue of section 204 of the 1996 Act. The present issue was raised for the first time by an amendment to the original grounds of appeal in the following terms: On a proper construction of section 176 Housing Act 1996 it is not lawful for the authority to purport to discharge its duty to secure accommodation for the appellant under Part VII of the Housing Act by providing separate accommodation for her father being a person who normally resides with her as part of her family. The appeal was dismissed on 24 June 2010 by HH Judge Mitchell. He took note in particular of a judgment of Scott Baker J in R v Ealing London Borough Council ex parte Surdonja [1999] 1 ALL ER 566. In that case the family were housed in two hostels approximately a mile apart. Noting that the council were obliged to provide accommodation available not only for the claimant but also for his family, the judge had said: In my judgment the obligation is not discharged by providing split accommodation in separate dwellings. It is the policy of the law that families should be kept together; they should be able to live together as a unit. I can well see that the obligation could be discharged by, for example, separate rooms in the same hotel, but not I think in two entirely separate hostels up to a mile apart. (p 571). HH Judge Mitchell saw this as indicating Scott Baker Js view that the obligation could be fulfilled by offering split accommodation within the same building. He saw that as consistent with the statutory language which required the provision of suitable accommodation, not necessarily accommodation suitable from the perspective of the claimant. That decision was reversed by the Court of Appeal (Jacob, Wilson and Etherton LJJ) [2011] PTSR 1695. Etherton LJ, who had granted permission to appeal, also gave the only substantive judgment. His essential reasoning is encapsulated in the following passage: 17 The accommodation offered by Camden to the applicant comprised two self contained flats, on the same floor of the building, but a short distance apart, one of which was offered for occupation by the applicant and her sister and the other by her father. On any ordinary use of language, that was not the provision of accommodation which the applicant and her father were to occupy together with one another. They would be living close by each other, but separate from one another. No one could reasonably describe them, in such circumstances, as living together with one another. That ordinary meaning of the legislative language is reflected in the wording of section 176(a) which refers to a person who normally resides with the applicant. It seems reasonable to suppose that concepts of occupation by the applicant together with another, and residence of the applicant with that other, were intended by Parliament to have a similar meaning. It cannot be said, on any ordinary use of language, that persons living in separate self contained flats, however close, and not sharing any communal area, are residing together. (emphasis added) He considered and rejected a number of submissions made on behalf of the council, which it is unnecessary to repeat in detail. In relation to the judgment in Surdonja, Etherton LJ commented, in para 36, that the reference to separate rooms in the same hotel was quite different from occupation of separate self contained residential units with no sharing of any living areas. He added: 38. I recognise, without hesitation, the enormous difficulties faced by housing authorities in attempting to discharge their housing duties, including those under Part VII of the 1996 Act. Their shortage of housing stock and limited resources and the scale of the problem of homelessness are well known to be acute. It is obvious that anything which constrains the ability of the authorities to exercise discretion in the management and application of those limited resources and stock will increase the practical difficulties in discharging their duties. The policy underlying the provisions of Part VII is, however, a matter for Parliament to determine. That policy is to be ascertained in the usual way by a proper interpretation of the statutory language. It is well established and common ground that the policy underlying section 176 of the 1996 Act is to keep families together. The natural meaning of the language used in section 176 is that the policy is to be achieved by the provision of accommodation in which the applicant can reside together with those members of the applicants family who normally reside with the applicant, and not by the provision of two or more separate self contained units of accommodation without any sharing of communal living areas. To strain the clear language of section 176 in order to enable housing authorities to have greater latitude in the management of their limited resources, by reducing the issue solely to one of suitability in the authoritys view (subject to Wednesbury principles), would be wrong in principle, as a judicial modification of Parliaments policy. (para 38) The issues in the appeal Mr Arden QC for the council submits that Etherton LJs construction of the statute went beyond what the words justified and would impose an unwarranted burden on the authority. He accepted that one of the social purposes behind the statute was to ensure that families could be kept together. However, that did not necessarily mean in one unit. The correct question to ask was whether the accommodation, even if not in a single unit, was sufficiently proximate to fulfil that social purpose. In other words, could the family be described as living together even if accommodated in what was technically more than one unit of accommodation? That interpretation was consistent with the history of the legislation and in particular the judgment of Lord Brightman in Puhlhofer. The council was particularly concerned at the suggestion that the statutory requirement could only be satisfied by the provision of communal living areas. Such a requirement would be novel to housing law generally, and there was no proper basis for importing it into this Part of the Act. Mr Arden referred also to the decision of the House of Lords in Uratemp Ventures Ltd v Collins [2002] AC 301, relating to the definition of a dwelling house let as a separate dwelling in section 1 of the Housing Act 1988. It was there held that a single room, even without cooking facilities could constitute a dwelling house as defined in the 1988 Act. Lord Millett said: In both ordinary and literary usage, residential accommodation is a dwelling if it is the occupiers home But his home is not the less his home because he does not cook there but prefers to eat out or bring in ready cooked meals. (para 31). By analogy, he submitted, neither the word accommodation nor the expression living together can in themselves be read as containing any implication as to the nature of the facilities to be provided. For the respondent, Ms Lieven QC supports the judgment of the Court of Appeal. She accepts that Etherton LJ may have gone too far in suggesting that there need to be communal living areas. However she supports his essential reasoning, based on the ordinary use of language. The accommodation must be available for living together. That implies there must at least be somewhere in the accommodation where living together can take place. The test is objective rather than subjective. It is an issue of law on which, at least where the primary facts are not in issue, the court is able to substitute its view for that of the authority. The layout must be such as to facilitate normal family life for those within the scope of the section. That will normally imply a single unit of accommodation, but she accepts that it may be possible to accommodate a family in two rooms in a hostel, provided there is a space where some degree of shared family life can take place, even if that is limited to some shared cooking facilities. Discussion This is a short point which does not permit of much elaboration. Etherton LJ relied on what he considered to be the ordinary meaning of the statutory language. In my respectful view, the ordinary meaning does not support that interpretation. The word accommodation in itself is neutral. It is not in its ordinary sense to be equated with unit of accommodation. It is no abuse of language to speak of a family being accommodated in two adjoining flats. The limitation, if any, must therefore be found in the words available for occupation together with the other members of his family. The statutory test will be satisfied by a single unit of accommodation in which a family can live together. But it may also be satisfied by two units of accommodation if they are so located that they enable the family to live together in practical terms. In the end, as Mr Arden submits, this comes down to an issue of fact, or of factual judgment, for the authority. Short of irrationality it is unlikely to raise any issue of law for the court. This legal issue had not been addressed in terms by the Review Officer, because it had not been raised in that form. However, it is reasonably clear how it would have been answered, since the issue of suitability was clearly treated as including the needs of the family as a unit. The main obstacle to family living which had been raised was the problem of caring for the father in a separate unit. That was considered and discounted by the officer. He thought the two flats were sufficiently close for the problem of communication to be no greater than in a house on two levels. Ms Lievens submissions seem like an echo of those of counsel for the unsuccessful appellant in Puhlhofer, who submitted that: in order to constitute accommodation the premises must be such as to enable the family unit to reside and carry on the ordinary operations of daily life there . (p 505B). Any such qualification was rejected by the House. That remains the position, save to the extent that it is implicit in the requirements of suitability or reasonableness, introduced in 1986. But those points are not, or are no longer, in issue in the present case. Further, Ms Lievens interpretation would produce surprising results. It is to be remembered that the statutory definition of overcrowding is not relevant to the definition of accommodation available for occupation, although it is now relevant to suitability. Under the Puhlhofer test, a family might be properly accommodated within a single unit even though seriously overcrowded by normal standards. But on Ms Leivens submission, the authority would not have been able to improve its position by offering it an additional unit next door. It also has to be remembered that the same definition applies to the temporary accommodation to be provided while a decision is made on the merits of the claim. It would be odd and potentially onerous if, even while the authority were simply considering the merits of the claimants position, they were unable to house the family in two adjoining units even on a temporary basis. Furthermore, if as seems to be accepted, the observations of Scott Baker J in Surdonja were correct, it is hard to see why two rooms on different floors of a hotel or hostel would satisfy the council's duty, but two adjacent flats would not. The presence of locked doors between adjacent flats also cannot be critical as rooms in a hotel or hostel would normally have their own lock. As to Ms Lievens suggestion that shared cooking facilities might be sufficient, I accept that the observations of Lord Millett in Uratemp (quoted above) may not be of much relevance to what is needed to accommodate a family living together, as opposed to a single person. In this case there were cooking facilities in both flats. In practice no doubt they would be shared, particularly if as was suggested the father had limited ability safely to cook for himself. It would be very odd if removal of a cooker from one flat, so as to leave no option but shared use, would convert what would otherwise be inadequate provision of accommodation into a valid discharge of the authoritys duties. Of the other cases to which we were referred, I would mention only one: Langford Property Co Ltd v Goldrich [1949] 1 KB 511. The issue under the Rent Acts was whether two self contained flats let together could constitute a separate dwelling house. The facts were described in the judgment of Somervell LJ. The premises consisted of two flats in a single block, which had previously been separately let. They were on the same floor but not next to each other. The tenant had taken these two flats as a home for himself and some relatives . his father, mother and a married sister. He made no structural alterations (p 521). It was held that they could be treated as constituting together a dwelling house. The Lord Justice said: In my opinion if the facts justify such a finding, two flats or, indeed, so far as I can see, two houses, could be let as a separate dwelling house within the meaning of the definition. What happened here was that the tenant wished to accommodate in his home these relatives to whom I have referred, and he wanted more accommodation than could be found or conveniently found in one flat. He therefore took the two flats and made those two flats his home. [Counsel] suggested at one time that there might be some absurdity, if, say, a man took under a single lease (which does not seem very probable) two flats in widely separated districts; but that case can be dealt with when it arises. (p 517) Care is always needed in drawing parallels between definitions in different statutory codes. However I find this passage helpful in relation to the ordinary use of language in a closely analogous context. Somervell LJ saw no difficulty in describing the two flats as accommodation, in which the family were able to make their home. He distinguished the position where the flats are in widely separated districts. This approach is very similar to that of Scott Baker J in the passage I have cited. Submissions were made to us, on the one hand, as to the serious problems authorities would face in meeting their statutory duties, if the Court of Appeals judgment were upheld; and, on the other, as to the risks of allowing authorities too free a hand in the way in which they can accommodate families. I find it unnecessary to comment in detail on either aspect. Although the problems of housing authorities, particularly in urban areas, are well known, there is no specific evidence to support a submission that this particular requirement would pose unacceptable problems. Mr Arden rightly accepted that, if the law was as the Court of Appeal said it was, the authority will have to comply. In relation to the second point, I would emphasise the narrowness of the present decision. It does not give authorities a free hand. It is still a fundamental objective of the Act to ensure that families can live together in the true sense. Accommodation, whether in one unit or two, is not suitable unless it enables that objective to be achieved. I would therefore allow the appeal and restore the judges order. LORD HOPE I too would allow the appeal for the reasons given by Lord Carnwath. We are all agreed that the test which section 176 of the Housing Act 1996 lays down will be satisfied by a single unit of accommodation in which a family can live together. The question is whether the words available for occupation by him together with the other persons referred to can only be so satisfied. Do they permit the local authority to accommodate the family in more than one unit of accommodation, so long as it can be said that the units are close enough for them to live together? The words resides with and reside with that follow the phrase I have just quoted serve to emphasise that the accommodation that the test refers to must be such as to enable them all to live together as a family. But the test does not go further than that. It does not say that it can only be met by the provision of a single unit. Parliament has plainly and wisely, if I may adopt Lord Brightmans phrase in R v Hillingdon LBC, Ex p Puhlhofer [1986] AC 484 at 517, refrained from inserting any qualifying words of that kind. In this situation the question whether the test has been met must be a question for the local authority. There are, nevertheless, two yardsticks that can be applied. The first is what must be taken to be the ordinary meaning of the words that the test uses. The second is the practical one, which follows on the first. Can it be said, in a practical sense, that all the members of the family are living together, although more than one unit is required to accommodate them? The provision of separate units is not, of course, ideal. Some measure of inconvenience is bound to result if a single unit cannot be found. But Parliament has recognised, by refraining from laying down strict rules, that the situations that may confront the local authority will vary from case to case and that it would be unreasonable to prescribe one solution that must be adopted in all cases. The test is not there to be exploited. It must be applied reasonably and proportionately. So long as that is done, the aim of the test will have been satisfied. LADY HALE I agree that this appeal should be allowed, for the reasons given by Lord Carnwath. I understand that this will seem very harsh to a family who had been housed since 2004 in a three bed roomed house under a private sector leasing scheme and were then expected to accept much less spacious accommodation. But the suitability of that accommodation is no longer in issue. The only issue is whether it is available for Ms Sharif to occupy together with her father and her younger sister. If one accepts that it is open to a local authority to accommodate members of a family in separate rooms in the same hostel or hotel, sharing cooking and/or bathroom facilities with others, then one must accept that it is possible to accommodate them in separate small flats like these, provided that the flats are close enough together to enable them to eat and share time together as a family. There are passages in the judgment of Etherton LJ which appear to suggest that members of a family are only accommodated together if they have some shared communal living space, in the sense of a shared living room. That would, of course, be ideal. And, as was pointed out in Birmingham City Council v Ali; Moran v Manchester City Council [2009] UKSC 36, [2009] 1 WLR 1506, what is suitable for a family to occupy in the short term may not be suitable for them to occupy for a longer period. But we are not concerned with suitability here. To require some communal living space is to impose a standard which is too high to expect local authorities to meet across the whole range of statutory provisions to which the together with criterion applies, including the interim duty in section 188 of the 1996 Act. Many of the hotels and hostels currently used to accommodate homeless people do not have a communal living room. It is not surprising, therefore, that Mr Arden, on behalf of the local authority, was particularly concerned about this aspect of the Court of Appeals judgment. No doubt many of us would wish that there were a much larger supply of affordable housing to enable homeless families to be accommodated in the way which we would ideally wish them to be accommodated. But there is not and the law does not require local authorities to meet a minimum standard which in practice it would be impossible for many of them to provide. LORD KERR (dissenting) A home is where a family lives together. The family unit may comprise many generations or it may consist of merely two people. But at its heart and foundation lies the family home where its members share experiences and live their lives together. This is why the notion of providing accommodation for a family to live as a single unit, not dispersed or living apart, occupies such a central place in the homelessness legislation of the last century. The Housing Act 1996 imposes a duty to provide accommodation which is available to be occupied by one person together with members of his or her family. The legislation clearly contemplates that the accommodation should be provided to an individual. But it is also intended that the accommodation provided to that person should be capable of housing all the members of that persons family together. That idea is buttressed by the requirement in section 176 of joint occupation. Accommodation is only to be regarded as available for occupation if it is available for occupation by the person to whom it is provided together with any person who normally resides with him as a member of his family. There is nothing in the legislation which suggests or implies that the statutory duty will be fulfilled by providing accommodation which, taken in combination with other accommodation, is capable of housing together all the members of the family. Nor does the legislation authorise the provision of different units of accommodation which a family, if well disposed to do so, can use on different occasions for shared family activities. If living together as a family is to mean anything, it must mean living as a distinct entity in a single unit of accommodation. Ms Lieven QC was right to submit that the language of section 176 calls for focus on the accommodation, not on the use to which a particular family might put it. The accommodation must be of a character that will allow all members of the family to live together within it. She was also right that section 176 imposes an objective requirement, namely, that the accommodation is, as a matter of fact, capable of occupation by the members of the family together. Togetherness in this context connotes a combination of people into a condition of unity. There must be a single unit of accommodation to provide for that condition. The appellant suggested that the local authority may exercise a judgment as to whether a series of units are suitable to permit members of the same family to live in a condition of sufficient proximity so that they can function as a family unit. (One may observe, as an aside, that sufficient proximity is quite different as a concept, and may be diametrically different in practice, from living together.) The appellant advanced this argument by seeking to assimilate the duty under section 176 with other Part 7 duties. This is misconceived. Ms Lieven was again right in her submission that other Part 7 duties, where they involve an element of discretion, are expressly provided with that facility in the language of the Act. The duty under section 176 is quite different. It is an obligation to provide accommodation, the physical dimensions of which are sufficient to allow it to be occupied by the person to whom it is made available together with the members of his or her family. Some limited judgment may be exercised by the local authority in discharging that duty but that judgment is geared to the essentially factual exercise of deciding if the accommodation meets those physical requirements. It has been said that Etherton LJ went too far in suggesting that a feature of the accommodation, to meet the requirements of section 176, had to be the provision of a communal space where family activities could be enjoyed and shared. I rather think that Etherton LJ, in his reference to a communal space, was emphasising the lack of such a feature as an indication of the incapacity of the accommodation offered to meet the statutory requirements rather than identifying it as an invariably indispensable requirement. In any event, this does not affect the principal issue. This is that there should be physical accommodation capable of being occupied as a single unit by the person for whom it is provided together with the members of his or her family. It is of course desirable that such a unit should have a communal space where family activities could be enjoyed but I do not consider that this is something which the statute affirmatively requires. Much was made by the appellant of the considerable constraints that would be placed on local authorities if they were required to house families in single units and were not afforded the opportunity to exercise judgment as to their accommodation in different units. No evidence was provided to support these (to my mind, at least) somewhat unlikely claims. No suggestion was made that any local authority had accommodated families in this way on any widespread basis in the past. Notably, there is nothing in the Code of Guidance: Homelessness Code of Guidance for Local Authorities (2006) which recommends the practice. But if the opportunity is available to house families in different living units, there is every reason to suppose that local authorities, with the pressures that are placed on them to meet housing need, will, perfectly understandably, seek to exploit that opportunity to the fullest extent. There is therefore a real risk that one of the principal purposes of the legislation (that of bringing and keeping families together) will be, if not undermined, at least put under considerable strain. I would dismiss the appeal.
+These proceedings arise out of the admitted and continuing failure by the United Kingdom since 2010 to secure compliance in certain zones with the limits for nitrogen dioxide levels set by European law, under Directive 2008/50/EC. The legal and factual background is set out in the judgment of this court dated 1 May 2013 [2013] UKSC 25, and need not be repeated. For the reasons given in that judgment, the court referred certain questions to the Court of Justice of the European Union (CJEU). That court has now answered those questions in a judgment dated 14 November 2014 (Case C 404/13). It remains to consider what further orders if any should be made in the light of those answers. Central to the referred questions were the interpretation of, and relationship between, three provisions of the Directive: articles 13, 22 and 23. Article 13 laid down limit values for the protection of human health, and provided that in respect of nitrogen dioxide, the limit values specified in annex XI may not be exceeded from the dates specified therein, the relevant date being 1 January 2010. Article 22 provided a procedure for the postponement of the compliance date for not more than five years in certain circumstances and subject to specified conditions. Article 23 imposed a general duty on member states to prepare air quality plans for areas where the limit values were not met. By the second paragraph of article 23(1), in cases where the attainment deadline (was) already expired, the air quality plans were required to set out appropriate measures, so that the exceedance period can be kept as short as possible. The required contents of air quality plans prepared under article 23 were laid down by annex XV section A. In addition, where an application for an extension of the deadline was made under article 22, the plan was to be supplemented by the information listed in annex XV section B. The additional requirements were, first, information concerning the status of implementation of 14 listed Directives, not all directly relevant to nitrogen dioxide emissions (para 2), and, secondly, information on all air pollution abatement measures that have been considered at appropriate local, regional or national level for implementation in connection with the attainment of air quality objectives, including five specified categories of measures, such as for example: (d) measures to limit transport emissions through traffic planning and management (including congestion pricing, differentiated parking fees or other economic incentives; establishing low emission zones); (para 3) When making the reference, this court determined to make a declaration of the breach of article 13, notwithstanding its admission by the Government. Differing in this respect from the Court of Appeal, this court thought it appropriate to do so, both as a formal statement of the legal position, and also to make clear that, regardless of arguments about articles 22 and 23 of the Directive, the way is open to immediate enforcement action at national or European level. The referred questions and the CJEUs response The questions referred by this court were as follows: (1) Where, under the Air Quality Directive (2008/50/EC) (the Directive), in a given zone or agglomeration conformity with the limit values for nitrogen dioxide was not achieved by the deadline of 1 January 2010 specified in annex XI of the Directive, is a member state obliged pursuant to the Directive and/or article 4 TEU to seek postponement of the deadline in accordance with article 22 of the Directive? (2) If so, in what circumstances (if any) may a member state be relieved of that obligation? (3) To what extent (if at all) are the obligations of a member state which has failed to comply with article 13 affected by article 23 (in particular its second paragraph)? (4) In the event of non compliance with articles 13 or 22, what (if any) remedies must a national court provide as a matter of European law in order to comply with article 30 of the Directive and/or article 4 or 19 TEU? The CJEU, for reasons it did not clearly explain, decided to reformulate the first two questions: By its first and second questions, which it is appropriate to consider together, the referring court asks, in essence, (i) whether article 22 of Directive 2008/50 must be interpreted as meaning that, where conformity with the limit values for nitrogen dioxide laid down in annex XI to that Directive cannot be achieved in a given zone or agglomeration of a member state by 1 January 2010, the date specified in annex XI, that State is, in order to be able to postpone that deadline for a maximum of five years, obliged to make an application for postponement in accordance with article 22(1) of Directive 2008/50 and (ii) whether, if that is the case, the State may nevertheless be relieved of that obligation in certain circumstances. (para 24, emphasis added) As will be seen, the reformulation of the first two questions, in particular by the inclusion of the emphasised words, has introduced a degree of ambiguity which it had been hoped to avoid in the original formulation. This has had the unfortunate effect of enabling each party to claim success on the issue. Fortunately, for reasons I will explain, it is unnecessary to making a final ruling on this difference, or to make a further reference for that purpose. The courts answers to the three questions as so reformulated were: 1. Article 22(1) of Directive 2008/50/EC of the European Parliament and of the Council of 21 May 2008 on ambient air quality and cleaner air for Europe must be interpreted as meaning that, in order to be able to postpone by a maximum of five years the deadline specified by the Directive for achieving conformity with the limit values for nitrogen dioxide specified in annex XI thereto, a member state is required to make an application for postponement and to establish an air quality plan when it is objectively apparent, having regard to existing data, and notwithstanding the implementation by that member state of appropriate pollution abatement measures, that conformity with those values cannot be achieved in a given zone or agglomeration by the specified deadline. Directive 2008/50 does not contain any exception to the obligation flowing from article 22(1). 2. Where it is apparent that conformity with the limit values for nitrogen dioxide established in annex XI to Directive 2008/50 cannot be achieved in a given zone or agglomeration of a member state by 1 January 2010, the date specified in that annex, and that member state has not applied for postponement of that deadline under article 22(1) of Directive 2008/50, the fact that an air quality plan which complies with the second subparagraph of article 23(1) of the Directive has been drawn up, does not, in itself, permit the view to be taken that that member state has nevertheless met its obligations under article 13 of the Directive. 3. Where a member state has failed to comply with the requirements of the second subparagraph of article 13(1) of Directive 2008/50 and has not applied for a postponement of the deadline as provided for by article 22 of the Directive, it is for the national court having jurisdiction, should a case be brought before it, to take, with regard to the national authority, any necessary measure, such as an order in the appropriate terms, so that the authority establishes the plan required by the Directive in accordance with the conditions laid down by the latter. The parties have made written and oral submissions on the appropriate response to the CJEU decision. In summary, Mr Jaffey for ClientEarth invites the court: i) to confirm, in accordance with their interpretation of the CJEU judgment, that the article 22 time extension procedure was mandatory, and to quash the existing air quality plan which was prepared under an error of law in that respect; ii) to direct the production within three months of a new air quality plan under article 23(1) demonstrating how the exceedance period will be kept as short as possible, and complying with the additional and stricter requirements of annex XV section B. In response Miss Smith for the Secretary of State submits that the correct interpretation of the CJEU decision is that the article 22 procedure was not mandatory, and that, given the stated intention of the Secretary of State to prepare updated plans by the end of the year, no further relief is necessary or appropriate. The Commissions submissions to the CJEU There was no Advocate Generals opinion in this case to provide background to the courts characteristically sparse reasoning. However, the European Commission had presented detailed Observations, which help to fill the gap. Their submission contains a valuable discussion of the legal and factual background to the relevant provisions of the Directive and their objectives, before giving the Commissions proposed responses to the referred questions. They give a much clearer answer to the first two questions than the court ostensibly in favour of the Government, but in terms which may be regarded as making it a somewhat Pyrrhic victory in its practical consequences. Their answers to the third and fourth questions are in substance the same as those given by the court, in essence for the same reasons albeit more fully stated. The Commission explained that the limit values for nitrogen dioxide were previously defined in Directive 99/30/EC in April 1999, which also fixed the date for compliance at 1 January 2010. In that respect the 2008 Directive made no change. However, a review in 2005 had shown that compliance would be problematic for a significant number of states. In recognition of this, the 2008 Directive introduced, in article 22, the possibility of an application for an extension of up to five years, subject to a number of substantive requirements and procedural safeguards (para 22), and subject to approval and supervision by the Commission. Although the choice of measures was left to member states, annex XV section B lays down a new requirement for a very detailed scientific examination and consideration of all available measures, and entailing a degree of effort by a member state to demonstrate that it will introduce and implement the most appropriate measures to tackle the anticipated delay in compliance (para 25). Article 22 was thus conceived as derogation, albeit one subject to significant procedural and substantive requirements and safeguards (para 27). Where a member had not applied for derogation for particular zones, but the limits were exceeded, then article 13 was breached and article 23 applied. The Commission pointed out that in such cases, the state would have been already bound to take all necessary measures to secure compliance by January 2010, and would have had 11 years (from 1999) to do so: In the Commission's view, therefore, the second subparagraph of article 23(1) must be seen as an emergency mechanism that applies where there is already a serious breach of Union law that results in grave dangers to human health. In that regard, it must also be seen as a specific implementation of article 4(3) TEU, where a member state is already in breach of Union law and is already bound to remedy that breach. (para 34) In the Commissions view, article 22 was the only lawful solution offered by the legislator to member states facing a problem of compliance (para 37). They stressed the key point that air quality plans produced under article 22 have to meet the stricter conditions laid down by annex XV section B: If a member state could circumvent such conditions by using article 23 instead of article 22 in situations where exceedances were predictable, this would result in a kind of self service derogation (derogation la carte) and in an erosion in oversight, enforcement and in the standard of legal protection of public health that would be contrary to both the structure and the spirit of the Directive. (para 39) Commenting on the compliance situation in the United Kingdom, the Commission observed that there appeared to have been a choice of less expensive and intrusive measures than those that would be required to put an end to a string of continuous breaches of the limit values. The plans submitted showed that for the relevant zones the UK only expects compliance to be achieved for each zone between 2015 and 2020 or even between 2020 and 2025 (London) (para 43). In answer to the first two questions, the Commission expressed the view that the article 22 procedure was not mandatory, but was foreseen as an optional derogation for member states to obligations that already existed (para 48). The consequence was that the United Kingdom was not obliged, in terms of TEU article 4(3), to apply for a derogation; but rather it was obliged to adopt all necessary measures to put an end to the infringement of article 13 as soon as possible. The infringement for article 13 resulted, not from its decision not to apply for a derogation, but from its failure to adopt adequate measures to achieve compliance by January 2010 (para 53). With regard to the third question (the relationship between articles 13 and 23), the Commission emphasised that, if the state chose not to apply for derogation under article 22, it remained under a mandatory obligation under article 23 to prepare air quality plans showing measures appropriate to keep the exceedance period as short as possible. Noting the emergency character of plans drawn up under the second subparagraph, it commented on the relevance of annex XV section B: The obligation in the second subparagraph of article 23(1), in the case of exceedances for which a derogation has not been granted, requires member states to achieve a very precise result compliance with the limit values for nitrogen dioxide in the shortest possible period of time. In other words, the Directive requires the member state to bring the infringement of article 13 to as swift an end as possible by adopting measures that would be appropriate for the specific zone or agglomeration and that would most swiftly and concretely tackle the specific problems in that area. These measures, as opposed to the ones referred to in annex XV section B, will have to tackle any problems in concreto, for each zone (para 62) In other words, the obligation under article 23(1) was not less onerous than annex XV section B, but more specific. As the Commission observed: It would be perverse if article 23(1) were treated as requiring a lesser effort from member states than article 22. (paras 64) The Commission also noted ClientEarths concerns that the plans submitted by the United Kingdom were simply not ambitious enough to address the problem in as short a time as possible (para 65). This view seemed to be confirmed by Mitting Js observation in the High Court that a mandatory order would impose upon taxpayers and individuals a heavy burden of expenditure which would require difficult political choices to be made. The Commission noted the European courts rejection of similar arguments of impossibility in a line of cases under the air quality Directives, beginning with (Case C 68/11) Commission v Italy (19 December 2012); and, by analogy, in an earlier series of cases relating to the bathing water Directive, beginning with (Case C 56/90) Commission v United Kingdom [1993] ECR I 4109. The Commission observed: In each of these cases, the court found no obstacle to rely on annual bathing water reports to declare failures, finding unfounded any arguments as to difficulties faced by member states. (para 79) In line with these observations, the Commissions answer to the third question was that, where a member state finds itself in breach of article 13, it may either request and obtain a derogation under article 22, or comply with article 23(1) by preparing plans to bring the breach to an end as soon as possible: That is to say that the air quality plan must foresee effective, proportionate and scientifically feasible measures to address the specific emissions problems in the relevant zone as swiftly as possible, subject to judicial review by the domestic courts. A failure by a member state to do so would result in the infringement also [of] article 23(1) of the Directive, alongside article 4(3) TEU. (para 84) With regard to the fourth question (the duty of the national court), the Commission noted that the United Kingdoms claim that it was not possible to achieve earlier compliance had not yet been tested in the national court. It regarded this as a particularly serious question where there was an established breach of article 13 resulting in a clear and grave hazard to human health (para 87). It reviewed the authorities on the right of individuals to invoke Directives before national courts, and the duty of the latter to provide appropriate remedies for their breach. It was the duty of national courts to ensure that those directly concerned by a violation of article 13 were in a position to require the competent authorities either to seek and obtain a derogation under article 22, or, if they chose not to do so, to adopt and communicate to the Commission air quality plans, compliant with article 23(1), so as to deal with the specific problems in the relevant zones as swiftly as possible (para 113). Non compliance the present position Before discussing the proposed responses to the CJEU decision, it is appropriate to record the present position in respect of compliance with the Directive, as summarised in the frank and helpful evidence of Jane Barton on behalf of the Secretary of State. The latest information, published in July 2014, shows a significant deterioration since the case was last before the court (and as compared to the information considered in the Commissions submission): In July 2014, the UK Government published updated projections for concentrations and expected dates for compliance with the annual mean limit values in the Air Quality Directive. These projections showed that compliance would be achieved later than previously projected. The previous projections for NO2 published in September 2011 show 27 zones compliant by 2015, 42 zones compliant by 2020 and all 43 zones compliant by 2025. The updated projections up to 2030 show five out of 43 zones compliant by 2015, 15 zones by 2020, 38 by 2025 and 40 by 2030. The remaining three zones would not be compliant by 2030 (Greater London Urban Area, West Midlands Urban Area and West Yorkshire Urban Area). It is fair to add that the failures of compliance are not confined to the United Kingdom. Analysis of 2013 air quality compliance data reported by member states indicated that 17 member states reported exceedances of the hourly mean limit value. One of the reasons for the worsening position is said to be failure of the European vehicle emission standards for diesel vehicles to deliver the expected emission reductions of oxides of nitrogen. Ms Barton explains: The main reason for this is that the real world emission performance of a vehicle has turned out to be quite different to how the vehicle performs on the regulatory test cycle. Vehicles are emitting more NOx than predicted during real world operation. This disparity has meant the expected reductions from the introduction of stricter euro emission standards have not materialised. In fact, as is recognised in the new Clean Air Programme for Europe, average real world NOx emissions from Euro 5 diesel cars type approved since 2009 now exceed those of Euro I cars type approved in 1992. She adds that this is a problem which cannot easily be addressed by individual member states, since they cannot unilaterally set stricter vehicle emission standards than those set at EU level. The European Commission, with the support of the UK Government, has made a proposal to introduce a new test procedure from 2017 to assess NOx emissions of light duty diesel vehicles under real world driving conditions. Even if some aspects of the problem may be affected by matters beyond the control of individual states, this has not led to any loosening of the limit values set by the Directive, which remain legally binding. In February 2014, the Commission launched a formal infringement proceeding against the UK for failure to meet the nitrogen dioxide limit values. It is not clear why for the moment only the UK has been selected for such action. It may have been triggered by the declaration made by this court in 2013, which was referred to in the Commissions press release, and the detailed consideration given by the Commission in connection with the CJEU case. Without sight of the correspondence with the Commission (which is said to be confidential), it is not possible to comment on the scope of that action or its likely timing and outcome. However, as is clear from the answer to the fourth question, any enforcement action taken by the Commission does not detract from the responsibility of the domestic courts for enforcement of the Directive within this country. It is in any event accepted by the Secretary of State that the air quality plans which were before the court in 2011 will need to be revised to take account of the new information, and of new measures to address the problems. It is intended that these should be submitted to the European Commission, following consultation, by the end of this year. It is estimated that on average around 80% of nitrogen dioxide emissions at sites exceeding the EU limit values come from transport, so that developing effective transport measures is regarded as a key priority for work and investment. According to Ms Barton, the Government has since 2011 committed over 2 billion in measures to reduce transport emissions. Other initiatives are being developed at local level. One example is what she describes as a game changing proposal by the Mayor of London, published on 27 October 2014, for an Ultra Low Emission Zone (ULEZ) in central London from 2020. One of the issues for consideration in the appeal is whether these proposals should be taken on trust, or should be subject to some measure of court enforcement. Discussion These proceedings were commenced in July 2011, shortly following the publication in June of air quality plans for consultation under article 23, which included an indication of the zones for which the Secretary of State did not intend to apply under article 22 because compliance within the extended time limit was considered impossible. At that time the possibility of an effective application under article 22 for a postponement to January 2015 remained a live issue, at least in theory. It is understandable therefore that the focus of the claim was on that article. Unfortunately, the time taken by the proceedings, including the reference to the CJEU, has meant that article 22, with one possible exception, is of no practical significance. An extension to January 2015, the maximum allowed under that article, is of no use to the Secretary of State. Indeed, it may have been in anticipation of this position that the CJEU felt able to avoid a direct answer. The possible exception relates to the requirements of annex XV section B, which would apply to a plan produced under article 22, but not, in terms, under article 23. However, the difference is more apparent than real. The purpose of the listed requirements under article 22 appears closely related to the procedure envisaged by the article, which involves approval and supervision by the Commission. As the Commission explained, the requirements of article 23(1) are no less onerous, but may be more specific than those under article 22. They are also subject to judicial review by the national court, which is able where necessary to impose such detailed requirements as are appropriate to secure effective compliance at the earliest opportunity. A formulaic recitation of steps taken under the long list of Directives in paragraph 2 of section B may be of little practical value. Mr Jaffey realistically limited his claim to paragraph 3 of section B, which he described as a checklist of measures which had to be considered in order to demonstrate compliance with either article. I agree with that approach, but do not regard it as necessary to spell it out in an order of the court. In those circumstances I need comment only briefly on the courts answer to the first two questions. As already noted, the problem with the courts reformulation was that it introduced ambiguity in both question and answer. The court did not say whether the state was or was not obliged to make the application; but simply that it was obliged to so in order to be able to postpone the deadline specified by the Directive . This formulation appeared to start from the assumption that the state was seeking to extend the deadline, and to leave open the question whether it was obliged to do so. On the other hand, the concluding statement that Directive 2008/50 does not contain any exception to the obligation flowing from article 22(1) might be thought to imply an unqualified obligation in all circumstances. Before this court, both counsel have bravely attempted their own linguistic analysis of the reasoning to persuade us that the answer is clearer than it seems at first sight. I am unpersuaded by either. Understandably neither party wanted us to make a new reference, although that might be difficult to avoid if it were really necessary for us to reach a determination of the issues before us. If I were required to decide the issue for myself, I would see considerable force in the reasoning of the Commission, which treats article 22 as an optional derogation, but makes clear that failure to apply, far from strengthening the position of the state, rather reinforces its essential obligation to act urgently under article 23(1), in order to remedy a real and continuing danger to public health as soon as possible. For the reasons I have given I find it unnecessary to reach a concluded view. The remaining issue, which follows from the answers to the third and fourth questions, is what if any orders the court should now make in order to compel compliance. In the High Court, Mitting J considered that compliance was a matter for the Commission: If a state would otherwise be in breach of its obligations under article 13 and wishes to postpone the time for compliance with that obligation, then the machinery provided by article 22(1) is available to it, but it is not obliged to use that machinery. It can, as the United Kingdom Government has done, simply admit its breach and leave it to the Commission to take whatever action the Commission thinks right by way of enforcement under article 258 of the Treaty on the Functioning of the European Union. (para 12) The Court of Appeal adopted the same view. That position is clearly untenable in the light of the CJEUs answer to the fourth question. That makes clear that, regardless of any action taken by the Commission, enforcement is the responsibility of the national courts. Notwithstanding that clear statement, Miss Smith initially submitted that, in the absence of any allegation or finding that the 2011 plans were as such affected by error of law (apart from the interpretation of article 22), there is no basis for an order to quash them, nor in consequence for a mandatory order to replace them. I have no hesitation in rejecting this submission. The critical breach is of article 13, not of article 22 or 23, which are supplementary in nature. The CJEU judgment, supported by the Commissions observations, leaves no doubt as to the seriousness of the breach, which has been continuing for more than five years, nor as to the responsibility of the national court for securing compliance. As the CJEU commented at para 31: Member states must take all the measures necessary to secure compliance with that requirement [in article 13(1)] and cannot consider that the power to postpone the deadline, which they are afforded by article 22(1) of Directive 2008/50, allows them to defer, as they wish, implementation of those measures. Furthermore, during the five years of breach the prospects of early compliance have become worse, not better. It is rightly accepted by the Secretary of State that new measures have to be considered and a new plan prepared. In those circumstances, we clearly have jurisdiction to make an order. Further, without doubting the good faith of the Secretary of States intentions, we would in my view be failing in our duty if we simply accepted her assurances without any legal underpinning. It may be said that such additional relief was not spelled out in the original application for judicial review. But the delay and the consequent change of circumstances are not the fault of the claimant. That is at most a pleading point which cannot debar the claimant from seeking the appropriate remedy in the circumstances as they now are, nor relieve the court of its own responsibility in the public interest to provide it. In normal circumstances, where a responsible public authority is in admitted breach of a legal obligation, but is willing to take appropriate steps to comply, the court may think it right to accept a suitable undertaking, rather than impose a mandatory order. However, Miss Smith candidly accepts that this course is not open to her, given the restrictions imposed on Government business during the current election period. The court can also take notice of the fact that formation of a new Government following the election may take a little time. The new Government, whatever its political complexion, should be left in no doubt as to the need for immediate action to address this issue. The only realistic way to achieve this is a mandatory order requiring new plans complying with article 23(1) to be prepared within a defined timetable. Although Mr Jaffey initially pressed for a shorter period than that proposed by the Secretary of State, he made clear that his principal objective was to secure a commitment to production of compliant plans within a definite and realistic timetable, supported by a court order. In the circumstances, I regard the timetable proposed by the Secretary of State as realistic. There should in any event be liberty to either party to apply to the Administrative Court for variation if required by changes in circumstances. Finally, I should mention a further important issue which we have not been called upon to determine as part of these proceedings, but which may well arise in connection with the new plans. This concerns the interpretation of the words as short as possible in article 23(1). The judgments of the European court noted by the Commission (para 17 above), in particular the Italian case (relating to the precursor of article 13 itself) indicate that the scope for arguing impossibility on practical or economic grounds is very limited. Miss Smith sought to distinguish the Italian case, on the grounds that it related to article 13, not article 23. Mr Jaffey objects that this argument takes insufficient account of the direct relationship between the two articles, as underlined by both the Commission and the CJEU. If this remains an issue in relation to the new air quality plans, when they are published for consultation, it may call for resolution by the court at an early stage to avoid further delay in the completion of compliant plans. That is a further factor which makes it desirable that the new plans should be prepared under a timetable approved by the court, with liberty to apply for the determination of such issues as and when they arise in the course of the production of the plan, without the need for the expense and delay of new proceedings. For these reasons, I would allow the appeal. In addition to the declaration already made, I would make a mandatory order requiring the Secretary of State to prepare new air quality plans under article 23(1), in accordance with a defined timetable, to end with delivery of the revised plans to the Commission not later than 31 December 2015. There should be provision for liberty to apply to the Administrative Court for variation of the timetable, or for determination of any other legal issues which may arise between the present parties in the course of preparation of the plans. The parties should seek to agree the terms of the order, or submit proposed drafts with supporting submissions within two weeks of the handing down of this judgment. Easter Term [2013] UKSC 25 On appeal from: [2012] EWCA Civ 897 JUDGMENT R (on the application of ClientEarth) (Appellant) v The Secretary of State for the Environment, Food and Rural Affairs (Respondent) Lord Hope, Deputy President before Lord Mance Lord Clarke Lord Sumption Lord Carnwath 1 May 2013 Heard on 7 March 2013 JUDGMENT GIVEN ON Appellant Dinah Rose QC Emma Dixon Ben Jaffey (Instructed by Client Earth) Respondent Kassie Smith (Instructed by Treasury Solicitors) LORD CARNWATH, DELIVERING THE JUDGMENT OF THE COURT 1. This is the judgment of the court, giving reasons for making a reference to the Court of Justice of the European Union (CJEU). The court has also decided that, on the basis of concessions made on behalf of the respondent, the appellant is entitled to a declaration that the United Kingdom is in breach of its obligations to comply with the nitrogen dioxide limits provided for in Article 13 of Directive 2008/50/EC (the Air Quality Directive). Decisions on the extent of other relief (if any) will have to await the determination of the CJEU on the questions referred. In these circumstances the judgment does no more than set out the factual and legal context of the dispute, and the issues of European law which now arise (as a basis in due course for a reference in compliance with the recommendations of the CJEU: 6 November 2012 C 338/1). Background 2. Nitrogen dioxide is a gas formed by combustion at high temperatures. Road traffic and domestic heating are the main sources of nitrogen dioxide in most urban areas in the UK. The Air Quality Directive imposes limit values for levels of nitrogen dioxide in outdoor air throughout the UK. These limits are based on scientific assessments of the risks to human health associated with exposure to nitrogen dioxide. These risks are described in the agreed statement of facts and issues: At concentrations exceeding the hourly limit value, nitrogen dioxide is associated with human health effects. Short term heightened concentrations of nitrogen dioxide are associated with increased numbers of hospital admissions and deaths. At elevated concentrations, nitrogen dioxide can irritate the eyes, nose, throat and lungs and lead to coughing, shortness of breath, tiredness and nausea. Long term exposure may affect lung function and cause respiratory symptoms. Nitrogen dioxide, along with ammonia, also contributes to the formation of microscopic airborne particles, one of the many components of particulate matter (PM10 and PM2.5) which have been calculated to have an effect equivalent to 29,000 premature deaths each year in the UK. It is currently unclear which components or characteristics of particulate matter lead to these health impacts. European Air Quality Legislation 3. The current EU legislative framework governing air quality has its origins in the Air Quality Framework Directive of September 1996 (96/62/EC) (the Framework Directive). The general aim of the directive, as stated in article 1, was to define the basic principles of a common strategy to: define and establish objectives for ambient air quality in the Community designed to avoid, prevent or reduce harmful effects on human health and the environment as a whole, assess the ambient air quality in Member States on the basis of common methods and criteria, obtain adequate information on ambient air quality and ensure that it is made available to the public, inter alia by means of alert thresholds, maintain ambient air quality where it is good and improve it in other cases. 4. Article 2 contained the key definitions which have been carried into the later directives, including: 'limit value` shall mean a level fixed on the basis of scientific knowledge, with the aim of avoiding, preventing or reducing harmful effects on human health and/or the environment as a whole, to be attained within a given period and not to be exceeded once attained; 'target value` shall mean a level fixed with the aim of avoiding more long term harmful effects on human health and/or the environment as a whole, to be attained where possible over a given period; 'margin of tolerance` shall mean the percentage of the limit value by which this value may be exceeded subject to the conditions laid down in this Directive; 5. A zone was defined as a part of their territory delimited by the Member States, and an agglomeration was defined as; a zone with a population concentration in excess of 250 000 inhabitants or, where the population concentration is 250 000 inhabitants or less, a population density per km which for the Member States justifies the need for ambient air quality to be assessed and managed. 6. By article 4(1) the Commission was required to submit proposals on the setting of limit values for various atmospheric pollutants, one being nitrogen dioxide. They were required to take account of the factors listed in Annex II, which included economic and technical feasibility. Article 7(1) required member states to take the necessary measures to ensure compliance with the limit values. By article 7(3) they were required to draw up action plans indicating the measures to be taken in the short term where there is a risk of the limit values being exceeded. Such plans may, depending on the individual case provide for measures to control and, where necessary, suspend activities, including motor vehicle traffic, which contribute to the limit values being exceeded. 7. Article 8 headed Measures applicable in zones where levels are higher than the limit value provided: 1. Member States shall draw up a list of zones and agglomerations in which the levels of one or more pollutants are higher than the limit value plus the margin of tolerance 3. In the zones and agglomerations referred to in paragraph 1, Member States shall take measures to ensure that a plan or programme is prepared or implemented for attaining the limit value within the specific time limit. The said plan or programme, which must be made available to the public, shall incorporate at least the information listed in Annex IV. 8. Article 11 contained detailed provisions for information to be given to the Commission about areas of non compliance and progress in dealing with it. In particular, member states were required to send to the Commission the plans or programmes referred to in Article 8(3) no later than two years after the end of the year during which the levels were observed (art 11(1)(a)(iii)). 9. A further Directive 1999/30/EC (the First Daughter Directive) contained the detail of the limit values, margins of tolerance, and deadlines for compliance for the various pollutants. Annex II set two types of limit values for nitrogen dioxide, an hourly limit value (a maximum of 18 hours in a calendar year in which hourly mean concentrations can exceed 200 micrograms g/m3) and an annual mean limit value (mean concentrations must not exceed 40 g/m3 averaged over a year). The deadline for achieving both limit values was 1 January 2010. It is to be noted that for some other pollutants (sulphur dioxide and particulates) an earlier date was set (1 January 2005). 10. The 2008 Air Quality Directive was a consolidating and amending measure. As paragraph (3) of the preamble explained, the earlier directives need to be substantially revised in order to incorporate the latest health and scientific developments and the experience of the Member States. In the interests of clarity, simplification and administrative efficiency it is therefore appropriate that those five acts be replaced by a single Directive and, where appropriate, by implementing measures. The Framework Directive and the First Daughter Directive were repealed (Article 31), but the same limit values, margin of tolerances, and deadlines were reproduced in annex XI of the new directive. 11. Article 13 provides: Limit values and alert thresholds for the protection of human health 1. Member States shall ensure that, throughout their zones and agglomerations, levels of sulphur dioxide, PM10, lead, and carbon monoxide in ambient air do not exceed the limit values laid down in Annex XI. In respect of nitrogen dioxide and benzene, the limit values specified in Annex XI may not be exceeded from the dates specified therein. The margins of tolerance laid down in Annex XI shall apply in accordance with Article 22(3) and Article 23(1) The difference between the first and second paragraphs of article 13 appears to reflect the fact that the former relates to limits which, unlike those for nitrogen dioxide, had already come into effect at the time of the directive. The absolute terms of the obligation under article 13 may be contrasted, for example, with article 16 which requires all necessary measures not entailing disproportionate costs to achieve the target value set for concentrations of PM2.5. 12. Of direct relevance to the present appeal are articles 22 and 23. They come in different chapters: the former in chapter III (Ambient and Air Quality Management, the latter in chapter IV (Plans). The relevant parts are as follows: Article 22 Postponement of attainment deadlines and exemption from the obligation to apply certain limit values 1. Where, in a given zone or agglomeration, conformity with the limit values for nitrogen dioxide or benzene cannot be achieved by the deadlines specified in Annex XI, a Member State may postpone those deadlines by a maximum of five years for that particular zone or agglomeration, on condition that an air quality plan is established in accordance with Article 23 for the zone or agglomeration to which the postponement would apply; such air quality plan shall be supplemented by the information listed in Section B of Annex XV related to the pollutants concerned and shall demonstrate how conformity will be achieved with the limit values before the new deadline. 3. Where a Member State applies paragraphs 1 or 2, it shall ensure that the limit value for each pollutant is not exceeded by more than the maximum margin of tolerance specified in Annex XI for each of the pollutants concerned. 4. Member States shall notify the Commission where, in their view, paragraphs 1 or 2 are applicable, and shall communicate the air quality plan referred to in paragraph 1 including all relevant information necessary for the Commission to assess whether or not the relevant conditions are satisfied. In its assessment, the Commission shall take into account estimated effects on ambient air quality in the Member States, at present and in the future, of measures that have been taken by the Member States as well as estimated effects on ambient air quality of current Community measures and planned Community measures to be proposed by the Commission. Where the Commission has raised no objections within nine months of receipt of that notification, the relevant conditions for the application of paragraphs 1 or 2 shall be deemed to be satisfied. If objections are raised, the Commission may require Member States to adjust or provide new air quality plans. Article 23 Air quality plans 1. Where, in given zones or agglomerations, the levels of pollutants in ambient air exceed any limit value or target value, plus any relevant margin of tolerance in each case, Member States shall ensure that air quality plans are established for those zones and agglomerations in order to achieve the related limit value or target value specified in Annexes XI and XIV. In the event of exceedances of those limit values for which the attainment deadline is already expired, the air quality plans shall set out appropriate measures, so that the exceedance period can be kept as short as possible. The air quality plans may additionally include specific measures aiming at the protection of sensitive population groups, including children. Those air quality plans shall incorporate at least the information listed in Section A of Annex XV and may include measures pursuant to Article 24. Those plans shall be communicated to the Commission without delay, but no later than two years after the end of the year the first exceedance was observed 13. Annex XV section A lists categories of information to be included in air quality plans generally (generally reproducing the categories in Annex IV of the Framework Directive); section B sets out additional information to be provided under article 22(1), including information on all air pollution abatement measures that have been considered for implementation in connection with the attainment of air quality objectives, under specified headings. The headings include, for example (a) reduction of emissions from stationary sources by ensuring that polluting small and medium sized stationary combustion sources (including for biomass) are fitted with emission control equipment or replaced; (b) reduction of emissions from vehicles through retrofitting with emission control equipment. The use of economic incentives to accelerate take up should be considered; (h) where appropriate, measures to protect the health of children or other sensitive groups. 14. The term air quality plan was new to this directive, but not the content of article 23. The correlation table (annex XVII) indicates that article 23 and annex XV section A were designed to reproduce with amendments the effect of article 8(1) (4), and annex IV of the Framework Directive, where the corresponding term was measures. The time limit of two years, in the third paragraph, corresponds to that set by article 11(1)(a)(iii) for submission of plans under article 9(3). 15. By contrast, article 22 and annex XV section B were new. The purpose was explained by paragraph (16) of the preamble: (16) For zones and agglomerations where conditions are particularly difficult, it should be possible to postpone the deadline for compliance with the air quality limit values in cases where, notwithstanding the implementation of appropriate pollution abatement measures, acute compliance problems exist in specific zones and agglomerations. Any postponement for a given zone or agglomeration should be accompanied by a comprehensive plan to be assessed by the Commission to ensure compliance by the revised deadline. The availability of necessary Community measures reflecting the chosen ambition level in the Thematic Strategy on air pollution to reduce emissions at source will be important for an effective emission reduction by the timeframe established in this Directive for compliance with the limit values and should be taken into account when assessing requests to postpone deadlines for compliance. 16. A Commission communication relating to notifications under article 22 was issued on 26 June 2008. It noted that a majority of member states had not attained the limit values for PM10 even though they had become mandatory on 1 January 2005. Current assessments indicated that a similar situation might arise in 2010 when limit values for nitrogen dioxide would become mandatory (para 3). The notification procedure was described as follows: The initial notifications are expected principally to concern PM10, for which the potential extensions will end three years after the entry into force of the Directive, i.e. on 11 June 2011. In view of the existing levels of non compliance with the limit values for PM10, it is important to submit notifications as soon as possible after the Directive enters into force for zones and agglomerations where Member States consider that the conditions are met. When preparing the notifications, care must, however, be taken to ensure that the data necessary to demonstrate compliance with the conditions are complete. 9. As regards nitrogen dioxide and benzene, the limit values may not be exceeded from 1 January 2010 at the latest. Where the conditions are met, the deadline for achieving compliance may be postponed until such time as is necessary for achieving compliance with the limit values, but at maximum until 2015. The aim must be to keep the postponement period as short as possible. If an exceedance of the limit values for nitrogen dioxide or benzene occurs for the first time only in 2011 or later, postponing the deadline is no longer possible. In those cases, the second subparagraph of Article 23(1) of the new Directive will apply. Air Quality Plans in the United Kingdom 17. For the purposes of assessing and managing air quality, the UK is divided into 43 zones and agglomerations. 40 of these zones and agglomerations were in breach of one or more of the limit values for nitrogen dioxide in 2010. 18. On 20 December 2010, in response to a letter before action from ClientEarth, the Secretary of State indicated that air quality plans were being drawn up for Greater London and all other non compliant zones and agglomerations as part of the time extension notification process under article 22. It was said that these plans would demonstrate how compliance would be achieved in these areas by 2015. However, when draft air quality plans were published on 9 June 2011 for the purposes of public consultation, the proposals indicated that in 17 zones and agglomerations, including Greater London, compliance was expected to be achieved after 2015. 19. The UK Overview Document stated (referring to projections shown in Table 1): The table shows that of the 40 zones with exceedances in 2010, compliance may be achieved by 2015 in 23 zones, 16 zones are expected to achieve compliance between 2015 and 2020 and that compliance in the London zone is currently expected to be achieved before 2025 (para 1.3). 20. On 19 September 2011, the Secretary of State published an analysis of responses to the consultation. It stated, in response to comments that the plans did not meet the requirements for a time extension under Article 22: The Introduction to the UK Overview document makes clear that the European Commission advised Member States to also submit air quality plans for zones where full compliance is projected after 2015. As set out in paragraph 1.1 of the UK Overview document, the UK will be submitting plans with a view to postponement of the compliance date to 2015 where attainment by this date is projected. Plans for zones where full compliance is currently expected after that date will also be submitted to the Commission under Article 23 on the basis that they set out actions to keep the exceedances period as short as possible. 21. Final plans were submitted to the Commission on 22 September 2011, including applications for time extensions under Article 22 in 24 cases supported by plans showing how the limit values would be met by 1 January 2015 at the latest. In the remaining 16 cases, no application has been made under Article 22 for a time extension, but air quality plans were prepared projecting compliance between 2015 and 2025. 22. In a decision dated 25 June 2012, the European Commission raised objections to 12 of the 24 applications for time extensions, unconditionally approved nine applications, and approved three subject to certain conditions being fulfilled. It made no comment on the zones for which compliance by 2015 had not been shown. 23. A letter from the Commission (EU Pilot) dated 19 June 2012 referred to multiple complaints concerning the UKs compliance with PM10 and NO2 limit values in the Air Quality Directive, including its failure to request time extensions for 17 zones, in which the NO2 limits were exceeded. The letter commented: The Commission has noted your confirmation that these zones have indeed not applied under Article 22 of the Directive and is considering how to address this issue under its wider enforcement strategy for the Directive. At this point, the Commission would like to draw your attention to the obligation of setting out appropriate measures, so that the exceedance period can be kept as short as possible, as provided by Article 23 for all zones and agglomerations where an exceedance is taking place and no time extension has been requested under Article 22. 24. Another letter from the Commission (Directorate General Environment) to ClientEarth dated 29 June 2012 commented on their own complaint of non compliance: We will await the outcome of your appeal to the United Kingdom's Supreme Court in R (ClientEarth) vs Secretary of State for the Environment, Food and Rural Affairs and your further update on the situation to decide how best to proceed with this matter given that it now appears clear that numerous Air Quality Plans, including the plan for London, were not communicated to the Commission under Article 22 of Directive 2008/50/EC as was originally thought The Commission would have some considerable concerns if Article 23 of the Directive were seen to be a way of allowing Member States to circumvent the requirements of Article 22 of the Directive. Article 22 of the Directive was introduced in order to afford Member States additional time for compliance for up to a maximum of 5 years, on condition that an air quality plan is established in accordance with Article 23 and communicated to the Commission for assessment. It is only under these conditions that Member States can be afforded additional time for compliance and Article 23 itself cannot be relied upon to further extend this clearly prescribed and limited time extension clause. As explained, our normal policy is to stay or close complainant files where the issue in question is before the national courts so as to allow national proceedings to run their course before deciding whether or not to instigate our own infringement proceedings under Article 258 of the Treaty on the Functioning of the European Union (TFEU): The national courts are the key authority in Member States tasked with the interpretation and implementation of EU law. The fact that the Commission has powers to bring its own infringement proceedings against Member States under Article 258 TFEU should not mean that individuals cannot plead these obligations before a national court as has been recognised by the Court of Justice as long ago as 1963 (Van Gend en Loos judgment [1963] ECR 1). As the Court already recognised in that case, a restriction of the guarantees against an infringement by Member States to the procedures under Article 258 TFEU would remove all direct legal protection of the individual rights of their nationals. The Court concluded that the vigilance of individuals concerned to protect their rights amounted to an effective supervision in addition to the supervision entrusted by Article 258 TFEU to the Commission. The proceedings 25. The present proceedings for judicial review had been commenced on 28 July 2011. The claimants sought (i) a declaration that the draft nitrogen dioxide air quality plans do not comply with the requirements of EU law; and (ii) a mandatory order requiring the Secretary of State to (a) revise the draft air quality plans to ensure that they all demonstrate how conformity with the nitrogen dioxide limit values will be achieved as soon as possible and by 1 January 2015 at the latest, and (b) publish the revised draft air quality plans as public consultation documents, giving a reasonable timeframe for response. By amendment, the Appellant also sought a declaration that the United Kingdom is in breach of its obligations to comply with the nitrogen dioxide limits provided for in Article 13 of Directive 2008/50/EC. The proceedings 26. The claim was heard by Mitting J on 13 December 2011. He dismissed the claim (R (ClientEarth) v Secretary of State for the Environment, Food and Rural Affairs [2011] EWHC 3623 (Admin)). He held that article 22 was discretionary. He declined in any event to grant a mandatory order: such a mandatory order, like the imposition of an obligation on the Government to submit a plan under Article 22 to bring the United Kingdom within limit values by 1 January 2015, would raise serious political and economic questions which are not for this court. It is clear from all I have seen that any practical requirement on the United Kingdom to achieve limit values in its major agglomerations, in particular in London, would impose upon taxpayers and individuals a heavy burden of expenditure which would require difficult political choices to be made. It would be likely to have a significant economic impact. The courts have traditionally been wary of entering this area of political debate for good reason. (para 15) He also declined to make a declaration: A declaration will serve no purpose other than to make clear that which is already conceded. The means of enforcing Article 13 lie elsewhere in the hands of the Commission under article 258 of the Treaty on the Functioning of the European Union, and if referred to it, the Court of Justice of the European Union under Article 260. Those remedies are sufficient to deal with the mischief at which the 2008 Directive is aimed. (para 16) 27. The appeal was dismissed by the Court of Appeal on 30 May 2012 ([2012] EWCA Civ 897). Laws LJ, giving the only substantive judgment, agreed with Mitting J that article 22 was discretionary. In those circumstances, he declined to consider the issue of a mandatory order which he regarded as moot. Of the judges reasons for refusing a declaration he said: it seems to me that he was, with respect, plainly right and the contrary is not contended. His judgment speaks as a declaration. No substantive issue of effective judicial protection arises from his refusal to grant a formal declaration. (paras 22 23) 28. Permission to appeal to the Supreme Court was granted by the court on 19 December 2012. The submissions of the parties (in summary) ClientEarth 29. ClientEarth does not accept that the UK has considered or put in place all practical measures to ensure compliance by 2015. 30. In any event, article 22 is a mandatory procedure which applied to any member state which remained in breach of the relevant limit value at 1 January 2010. That is confirmed by article 22(4): where in the view of a member state paragraph 1 is applicable, the state shall notify the Commission and communicate the required air quality plan. Paragraph 1 is applicable where in a given zone or agglomeration, conformity with the limit values for nitrogen dioxide or benzene cannot be achieved by the deadlines specified 31. Article 23 does no more than preserve the system already in place under the previous directive. It is not an alternative procedure for a state which is in breach of the limit value, nor a means by which it can avoid the more stringent controls set out in annex XV(B) or the maximum margins of tolerance set by article 22(3). 32. The lower court erred in disregarding the responsibility of the domestic courts to provide an effective remedy for the admitted breach of article 13 (see eg Joined Cases C 444/09 and C 456/09 Gavieiro Gavieiro and Iglesias Torres ([2010] ECR I 0000, paras 72, 75). Neither practical difficulties nor the expense of compliance can be relied on as defences (see eg Case C 390/07 Commission v UK [2009] ECR I 00214, para 121; Case C 68/11 Commission v Italy paras 41, 59 60). The Secretary of State 33. The Secretary of State accepts that the UK is in breach of article 13 in relation to certain zones, and that for certain zones it has not produced plans showing conformity by 2015; but asserts that for those zones compliance within that timetable is not realistically possible, due to circumstances out of its control and unforeseen in 2008. These problems are shared with other states. In many cases the Commission has rejected plans submitted under article 22 because the notifications have failed to fulfil the condition of demonstrating compliance by 2015. 34. Article 22 is not mandatory, as indicated by the use of the word may in article 22(1). An air quality plan demonstrating compliance by 1 January 2015 is only required if a member state is applying under Article 22 for postponement of the deadline. Further, postponement can only properly be sought if the state is able to demonstrate how conformity will be achieved by the new deadline. 35. Where postponement is not sought, the state is at immediate risk of infraction proceedings, but remains subject to a continuing duty, under the second paragraph of article 23, to maintain plans setting out appropriate measures so that the exceedance period can be kept as short as possible. That paragraph (which was not in the earlier Directives) envisages, and provides for, the situation in which a Member State has failed to comply with the relevant limit values by the relevant deadline. The refusal of discretionary relief by the courts below was consistent with EU principles, both of effective judicial protection, which leave to domestic systems the procedural conditions governing actions for the protection of the rights under Community law (Case 33/76 Rewe Zentralfinanz eG and Rewe Zentral AG v Landwirtschaftskammer fr das Saarland [1976] ECR 1989 at 5); and of sincere co operation, in cases of unforeseeable difficulties which make it absolutely impossible to carry out obligations imposed Community law (see Case C 217/88 Commission v Federal Republic of Germany [1990] ECR I 2879 at 33). The courts preliminary conclusion The court is satisfied that it should grant the declaration sought, the relevant breach of article 13 having been clearly established. The fact that the breach has been conceded is not, in the courts view, a sufficient reason for declining to grant a declaration, where there are no other discretionary bars to the grant of relief. Such an order is appropriate both as a formal statement of the legal position, and also to make clear that, regardless of arguments about the effect of articles 22 and 23, the way is open to immediate enforcement action at national or European level. The other issues raise difficult issues of European law, the determination of which in the view of the court, requires the guidance of the CJEU, and on which accordingly as the final national court we are obliged to make a reference. Taking note of the draft questions provided by the appellants, and subject to any further submissions of the parties, the following questions appear appropriate: i) Where in a given zone or agglomeration conformity with the limit values for nitrogen dioxide cannot be achieved by the deadline of 1 January 2010 specified in annex XI of Directive 2008/50/EC (the Directive), is a Member State obliged pursuant to the Directive and/or article 4 TEU to seek postponement of the deadline in accordance with article 22 of the Directive? ii) If so, in what circumstances (if any) may a Member State be relieved of that obligation? iii) If the answer to (i) is no, to what extent (if at all) are the obligations of a Member State which has failed to comply with article 13, and has not made an application under article 22, affected by article 23 (in particular its second paragraph)? iv) In the event of non compliance with article 13, and in the absence of an application under article 22, what (if any) remedies must a national court provide as a matter of European law in order to comply with article 30 of the Directive and/or article 4 or 19 TEU? The parties are accordingly requested to submit to the court (if possible in agreed form) their proposals for any revisions to the questions to be referred to the CJEU, together with brief summaries of their respective submissions as to the answers to those questions. These should be submitted within 4 weeks of this judgment.
+This appeal was heard by this Panel on 10 and 11 February 2010. On 14 April 2010, while we were still considering our decision upon it, we were asked to consider applications for permission to appeal in two other cases in which foreign national prisoners had been detained pending their deportation after completing their sentences of imprisonment. Walumba Lumba, a citizen of the Democratic Republic of Congo, sought permission to appeal from a decision of the Court of Appeal [2010] EWCA Civ 111, [2010] 1 WLR 2168, dismissing his appeal from a decision of Collins J [2008] EWHC 2090 (Admin) on his claim for judicial review to refuse him a declaration that his detention by the Secretary of State for the Home Department was unlawful, for a mandatory order for his release and for damages. Mr Lumba together with Kadian Mighty, a citizen of Jamaica, also sought permission to appeal against the Court of Appeals decision dismissing their appeals from a decision of Davis J [2008] EWHC 3166 (Admin) to dismiss their claims for judicial review of the Secretary of States decision to detain them prior to their deportation and for damages for unlawful detention. We decided to give permission to appeal in both cases, and a direction was given that the appeals should be heard by a panel of nine Justices. As there was plainly a close relationship between the issues raised in those cases and this, we decided to withhold delivery of our judgments in this case until after the decision of nine Justices in the cases of Mr Lumba and Mr Mighty had been given. Following the delivery of the judgment of their cases in R (Lumba) v Secretary of State for the Home Department [2011] UKSC 12, [2011] 2 WLR 671 on 11 March 2011 the parties were invited to make written submissions in light of that judgment. Having received and considered their submissions, we are now in a position to give our judgment in this case. The appellant is a national of Zimbabwe. He entered the United Kingdom with leave as a visitor and was then given leave to remain for one year as a student. But he overstayed his leave and, following his conviction for several criminal offences, he was sentenced to a period of imprisonment. The Secretary of State decided that he should be deported. On 8 March 2006 he was detained pending the making of a deportation order. He remained in detention for 27 months until 13 June 2008 when he was released on bail by the Asylum and Immigration Tribunal. On 12 November 2007 while still detained he sought judicial review by means of a mandatory order for his immediate release, a declaration that he was unlawfully detained and damages. On 25 January 2008 Munby J granted a declaration that the appellant had been detained unlawfully for various distinct periods amounting to about 19 months and he gave directions for the assessment of damages: [2008] EWHC 98 (Admin). But he declined to make an order for his release. The Secretary of State appealed against the declaration. The appellant appealed against the refusal of an order for his release, but he was later granted bail and that appeal was not proceeded with. On 6 November 2008 the Court of Appeal (Laws, Keene and Longmore LJJ) allowed the Secretary of States appeal, holding that the appellants detention had been lawful throughout. It remitted a new point which had been raised about the legality of the appellants detention during periods when Munby J held that he was lawfully detained for determination by the High Court: [2008] EWCA Civ 1204, [2009] 1 WLR 1527. The appellant now appeals to this court against the decision by the Court of Appeal that he is not entitled to damages for false imprisonment. Anonymity The appellant has been referred to hitherto in these proceedings as SK (Zimbabwe). Mr Tam QC for the respondent invited the court to maintain the order for the appellants anonymity in accordance with the practice for asylum cases recognised by the Court of Appeal. He suggested that references in the appellants application for asylum might expose him to risk if he were to be returned to Zimbabwe. Mr Husain for the appellant on the other hand did not ask for the order to be maintained. He did not suggest that there were any reasons for concern in his case. He said that he adopted a position of neutrality on this issue. There is no doubt that the court has power to make an anonymity order to restrain publication of a person named in its proceedings. In an extreme case, where he or his family are in peril of their lives or safety, this may help to secure his rights under articles 2 and 3 of the European Convention on Human Rights: In re Guardian News and Media Ltd [2010] UKSC 1, [2010] 2 WLR 325, para 26. Those are the rights that are most likely to be relevant if he is seeking asylum. It may also be made to secure that other persons, such as the press, show respect for his private and family life under article 8 of the Convention. But in such cases the persons article 8 rights must be balanced against the article 10 rights of the press and the general public interest in his being identified: In re Guardian News and Media Ltd, para 76. As the decision in that case shows, however, much will depend on the circumstances of each case. It is no longer the case that all asylum seekers as a class are entitled to anonymity in this Court. The making of such an order has to be justified. I am not persuaded that an order for the appellants anonymity is justified in this case. It must be recognised, of course, that lifting the order for his anonymity is not entirely without risk. It is rarely possible to predict with complete confidence what risks a failed asylum seeker will face when he is returned to his home country. But the position that the asylum seeker himself adopts will always be an important factor. He is likely to be in the best position to assess the risks and to say whether or not he needs anonymity for his protection. His counsel, Mr Husain, is very experienced in these matters and well able to form a sound judgment as to whether this is necessary or desirable. I would have expected him to inform the court if there were any grounds at all for wishing to preserve the appellants anonymity. Had he done so I would, of course, have given a good deal of weight to his submissions. As it is, in view of the position that he has adopted on the appellants behalf, I am not persuaded that there is anything to prevent his being identified in this case. I would set aside the anonymity order, and name the appellant as Shepherd Masimba Kambadzi. The appellants case The context for the appellants claim of damages for false imprisonment is provided by the provisions for the regulation of entry and stay in the United Kingdom which are set out in Part 1 of the Immigration Act 1971, as amended. His case, put very simply, is that the discretionary power to detain that is vested in the Secretary of State by paragraphs 2(2) and (3) of Schedule 3 to the 1971 Act was not exercised throughout his period of detention in the way it should have been according to the published policy, that for periods when his detention was not reviewed in accordance with the policy it was not authorised and that he is entitled to damages for false imprisonment because his continued detention was unlawful during those periods. A description of the statutory background and the system which, according to his own policy, the Secretary of State had undertaken to operate provides the starting point for an examination of this argument. The facts of this case are best understood in the light of that background. The statutory background Section 4 of the 1971 Act provides that the power to give or refuse leave to enter the United Kingdom shall be exercised by immigration officers and that the power to give leave to remain in the United Kingdom, or to vary any leave, shall be exercised by the Secretary of State. Section 3(5) renders a person who is not a British citizen liable to deportation if the Secretary of State deems his deportation to be conducive to the public good. Section 4 gives effect to Schedule 2, paragraph 1(3) of which provides: In the exercise of their functions under this Act immigration officers shall act in accordance with such instructions (not inconsistent with the immigration rules) as may be given them by the Secretary of State. Section 5(3) of the 1971 Act gives effect to Schedule 3 with respect to the removal from the United Kingdom of persons against whom deportation orders are in force and the detention and control of persons in connection with deportation. Paragraph 2 of Schedule 3 appears under the heading Detention or control pending deportation. It provides in subparagraphs (2) and (3): (2) Where notice has been given to a person in accordance with regulations under section 105 of the Nationality, Immigration and Asylum Act 2002 (notice of decision) of a decision to make a deportation order against him, and he is not a detained person in pursuance of the sentence or order of a court, he may be detained under the authority of the Secretary of State pending the making of the deportation order. (3) Where a deportation order is in force against any person, he may be detained under the authority of the Secretary of State pending his removal or departure from the United Kingdom and if already detained by virtue of sub paragraph (1) or (2) above when the order is made, shall continue to be detained unless he is released on bail or the Secretary of State directs otherwise. [emphasis added] At first sight, the effect of paragraph 2(3) of the Schedule is that, once notice has been given of a decision to make a deportation order against him, the person may lawfully be detained until he is removed or departs. But, as Munby J observed in para 9 of his judgment, the powers conferred by those paragraphs are not unfettered. In R v Governor of Durham Prison, Ex p Hardial Singh [1984] 1 WLR 704, 706 Woolf J said: Although the power which is given to the Secretary of State in paragraph 2 to detain individuals is not subject to any express limitation of time, I am quite satisfied that it is subject to limitations. First of all, it can only authorise detention if the individual is being detained pending his removal. It cannot be used for any other purpose. Secondly, as the power is given in order to enable the machinery of deportation to be carried out, I regard the power of detention as being impliedly limited to a period which is reasonably necessary for that purpose. The period which is reasonable will depend upon the circumstances of the particular case. What is more, if there is a situation where it is apparent to the Secretary of State that he is not going to be able to operate the machinery provided in the Act for removing persons who are intended to be deported within a reasonable period, it seems to me that it would be wrong for the Secretary of State to exercise his power of detention. In addition, I would regard it as implicit that the Secretary of State should exercise all reasonable expedition to ensure that the steps are taken which will be necessary to ensure the removal of the individual within a reasonable time. This statement was referred to with approval in Tan Te Lam v Superintendent of Tai A Chau Detention Centre [1997] AC 97. Lord Browne Wilkinson said of the power to detain pending removal in the Hong Kong Ordinance at p 111A D: Their Lordships have no doubt that in conferring such a power to interfere with individual liberty, the legislature intended that such power could only be exercised reasonably and that accordingly it was implicitly so limited. The principles enunciated by Woolf J in the Hardial Singh case [1984] 1 WLR 704 are statements of the limitations on a statutory power of detention pending removal. In the absence of contrary indications in the statute which confers the power to detain pending removal their Lordships agree with the principles stated by Woolf J. In A v Secretary of State for the Home Department [2004] UKHL 56, [2005] 2 AC 68, para 8 Lord Bingham of Cornhill said that Woolf Js guidance in Hardial Singh had never been questioned. In R (I) v Secretary of State for the Home Department [2002] EWCA Civ 888, [2003] INLR 196, para 46, Dyson LJ said that counsel had correctly submitted that the following four principles (the Hardial Singh principles) emerge from it: (i) The Secretary of State must intend to deport the person and can only use the power to detain for that purpose; (ii) The deportee may only be detained for a period that is reasonable in all the circumstances; (iii) If, before the expiry of the reasonable period, it becomes apparent that the Secretary of State will not be able to effect deportation within that reasonable period, he should not seek to exercise the power of detention; (iv) The Secretary of State should act with reasonable diligence and expedition to effect removal. It was common ground in R (Lumba) v Secretary of State for the Home Department [2011] 2 WLR 671 that in this passage the effect of Woolf Js judgment was correctly summarised and it was approved as an accurate statement of the relevant principles: see, eg, paras 171 174. As Lady Hale said at para 199, the detention must be for the statutory purposes of making or implementing a deportation order and for no other purpose. The cases were reviewed by Lord Brown of Eaton under Heywood in R (Khadir) v Secretary of State for the Home Department [2005] UKHL 39, [2006] 1 AC 207, where the power to detain was exercised under Schedule 2 in the context of removing those refused leave to enter. Lord Brown said that, while it went without saying that the longer the delay in effecting someones removal the more difficult it becomes to justify the continued detention meanwhile, that was by no means to say that he does not remain liable to detention: para 31. In para 33 he said: To my mind the Hardial Singh line of cases says everything about the exercise of the power to detain (when it properly can be exercised and when it cannot); nothing about its existence. This case is about the way in which the power to detain can properly be exercised, but it raises issues about the existence of the power too. Does the Secretary of States failure to comply with his published policy for regular reviews to monitor changing circumstances deprive him of his executive power to continue to detain the detainee? Or does his power continue until a review shows that continued detention is no longer appropriate? I think that an examination of the Hardial Singh principles may help to resolve these questions, as they give rise to the need for these reviews. But it is clear that the appellant cannot succeed in his claim by relying solely on those principles. Mr Husain for the appellant submits that, while the Secretary of States decision to detain was lawful at its inception, it could become unlawful with the passage of time. There was no challenge to the judges findings that throughout the period that the appellant was detained the Hardial Singh principles were complied with. In the Court of Appeal Laws LJ said that the judge was entitled to be so satisfied: [2009] 1 WLR 1527, para 36. But Mr Husains case is that the matter does not rest there. He says that the Secretary of States published policy also regulates the existence of the power to continue detention, and that it must be followed in the absence of good reason not to do so. The published policy Before I come to the published policy I should mention that the Secretary of State was given power by the Immigration and Asylum Act 1999 to make rules for the regulation and management of detention centres. Rule 9 of the Detention Centre Rules 2001 (SI 2001/238) provides: (1) Every detained person will be provided, by the Secretary of State, with written reasons for his detention at the time of his initial decision, and thereafter monthly. (2) The Secretary of State shall, within a reasonable time following any request to do so by a detained person, provide that person with an update on the progress of any relevant matter relating to him. Rule 9(3) sets out a list of relevant matters for the purposes of that paragraph. In the Court of Appeal, para 45, Keene LJ said that it was clearly implicit in the rule that the Secretary of State has to reconsider the justification for detention, month by month, in the light of changing circumstances. At para 46 he said: The need for such regular reviews stems from the necessity for the Secretary of State to monitor changing circumstances in a given case lest his power to detain, on the principles set out in Ex p Hardial Singh [1984] 1 WLR 704, no longer exists. Even if the power still exists, he has a discretion to exercise which he must also keep under review. The importance of the detainee receiving regular statements of the reason why he is still detained is self evident: he needs to be in a position to know whether he can properly challenge the Secretary of States decision in the courts by way of an application for habeas corpus or judicial review or whether he can apply for bail on a meaningful basis. So the requirements imposed by rule 9 cannot be treated lightly, especially when one is dealing with administrative detention which deprives a person of his liberty without a court order. I agree with these observations, but I would prefer to apply them to the system of review that is set out in the policy rather than to the system required by rule 9(1). This is because it seems to me that the 2001 Rules are concerned with the regulation and management of detention centres, not with the way the discretion to detain is exercised. This is what the explanatory note says, and I think that Keene LJ was right to conclude in para 47 that rule 9(1) is not concerned with limiting the Secretary of States power to detain. In any event the appellant was detained in prison conditions to which the Rules do not apply for the first 14 months of the period of his detention. It was not until April 2007 that he was moved to a detention centre and the Rules applied to his case. I come then to the Secretary of States policy. It is to be found in a document issued by the Home Office called the Operations Enforcement Manual. Various versions of this manual have been existence since at least 2001. Mr Tam informed the Court that it was safe to proceed on the basis that the version used in these proceedings, which was downloaded in 2007, was the one that was in circulation while the appellant was being held in detention. Chapter 38 of the manual is entitled Detention and Temporary Release. It is here that the published policies regulating the exercise of the Secretary of States discretion, in accordance with the Hardial Singh principles, are set out. Paragraph 38.1, headed Policy refers to the 1998 White Paper Fairer, Faster and Firmer: a Modern Approach to Immigration and Asylum (1998) (Cm 4018) in which it was said there was a presumption in favour of temporary admission or release and that detention would most usually be appropriate to effect removal, initially to establish a persons identity or basis of claim or where there is reason to believe that the person will fail to comply with any conditions attached to the grant of temporary admission or release. It refers also to the 2002 White Paper Secure Borders, Safe Haven: Integration with Diversity in Modern Britain (2002) (Cm 5687) in which the principles stated in the 1998 White Paper were reiterated. These criteria are said to represent the Governments stated policy on the use of detention. There then follows this important acknowledgement of the significance of the policy in public law: To be lawful, detention must not only be based on one of the statutory powers and accord with the limitations implied by domestic and Strasbourg case law but must also accord with this stated policy. [emphasis added] Under the sub heading Use of Detention these words appear: In all cases detention must be used sparingly, and for the shortest period necessary. Paragraph 38.3 is headed Factors influencing a decision to detain (excluding pre decision fast track cases). It contains the following instructions: 1. There is a presumption in favour of temporary admission or temporary release. 2. There must be strong grounds for believing that a person will not comply with conditions of temporary admission or temporary release for detention to be justified. 3. All reasonable alternatives to detention must be considered before detention is authorised. 4. Once detention has been authorised it must be kept under close review to ensure that it continues to be justified. 5. Each case must be considered on its individual merits. Various factors which must be taken into account when considering the need for initial or continued detention are then set out. They include, among other things, the likelihood of the person being removed and, if so, after what timescale; whether there is any history of previous absconding or of failure to comply with conditions of temporary release or bail; and whether there is a previous history of complying with the requirements of immigration control. Paragraph 38.5 is headed Levels of authority for detention. It states: Although the power in law to detain an illegal entrant rests with the [immigration officer], or the relevant non warranted immigration caseworker under the authority of the Secretary of State, in practice, an officer of at least [Chief Immigration Officer] rank, or a senior caseworker, must give authority. Detention must then be reviewed at regular intervals (see 38.8). Paragraph 38.5.2 states that the decision as to whether a person subject to deportation action should be detained under Immigration Act powers is taken by a senior caseworker in the Criminal Casework Directorate. Paragraph 38.6 is headed Detention Forms. The opening sentence states: The Government stated in the 1998 White Paper that written reasons for detention should be given in all cases at the time of detention and thereafter at monthly intervals. [emphasis in the original] The authority to detain is known as Form IS91. Paragraph 38.6.1, which is headed Form IS91RA Risk Assessment, states: Once it has been identified that the person is one who should be detained, consideration should be given as to what, if any, level of risk that person may present whilst in detention. [Immigration officers] should undertake the checks detailed on form IS91RA part A Risk Factors (in advance, as far as possible, in a planned operation/visit when it is anticipated detention will be required. Paragraph 38.6.2, which is headed Form IS9I Authority to Detain, states that once the Detainee Escorting and Population Management Unit has decided on the location for detention they will forward a form to the detaining office detailing the detention location and the assessment of risk, which is attached to form IS91 and served on the detaining agent. If there is an alteration in risk factors a new form IS91 is issued. Paragraph 38.8 is headed Detention Reviews. It is on its provisions that the appellants argument that from time to time during the period of his detention he was detained unlawfully depends. It identifies the grade of officer by whom initial detention must be authorised. It then states: Continued detention in all cases of persons in sole detention under Immigration Act powers must be subject to administrative review at regular intervals. At each review robust and formally documented consideration should be given to the removability of the detainee. A formal and documented review of detention should be made after 24 hours by an Inspector and thereafter, as directed, at the 7, 14, 21 and 28 day points. At the 14 day stage, or if circumstances change between weekly reviews an Inspector must conduct the review. In [the Criminal Casework Directorate] an [higher executive officer] reviews detention up to 2 months. [A senior executive officer/Her Majestys inspector] reviews detention up to 4 months, the Assistant Director/Grade 7 up to 8 months, the Deputy Director up to 11 months and the Director up to 12 months and over. [emphasis in the original] The facts The appellant arrived in this country on 30 October 2002 as a visitor with six months leave to enter. On 9 May 2003 he applied for leave to remain for two years as a student. He was granted leave for one year until 30 April 2004. After that date he remained here without leave. On 9 December 2005 he was convicted on two counts of common assault and one count of sexual assault on a female. He was sentenced to 12 months imprisonment and ordered to be registered as a sex offender for five years. The judge did not recommend deportation. But on 7 March 2006, the day before he was due to be released from prison after serving six months of his sentence including time spent on remand, the Secretary of State decided to make a deportation order against him. He was detained under paragraph 2(2) of Schedule 3 to the 1971 Act and remained in custody at HMP Woodhill. On 24 March 2006 the appellant claimed asylum. On 11 April 2006 he asked the Secretary of State to move him from the prison to a detention centre, but his request was ignored. On 18 April 2006 the Citizens Advice Bureau wrote two letters to the Secretary of State on his behalf. In one it requested his urgent transfer to a detention centre. In the other it appealed against the notice of decision to make a deportation order. On 20 April 2006 and again on 3 May 2006 the Citizens Advice Bureau wrote to the Secretary of State on the appellants behalf contending that his continued detention was unlawful. Munby J said in para 19(xvi) that these letters were clearly relying upon the Hardial Singh principles, but they went unanswered. On 17 May 2006 the appellant, who had now been moved to HMP Lincoln, applied for bail. His application was refused on 19 May 2006. He applied for bail again on 15 September 2006. On 19 September 2006 the Secretary of State refused his application for asylum. Two days later, on 21 September 2006, the Asylum and Immigration Appeals Tribunal heard his appeals against the decision to deport, the refusal of asylum and a refusal to grant him relief on human rights grounds. The tribunal refused bail, having noted that he had previously committed an offence under the Bail Act 1976. On 4 October 2006 the Tribunal issued its decision dismissing all three appeals. It stated that the appellant, believing that he had a poor case in resisting deportation, had sought to bolster his prospects of success by inventing a false claim and that the Secretary of State was right to conclude that his deportation was necessary as the offences which he had committed were serious and he had been assessed as presenting a medium risk of sexual or violent offending upon his release. On 4 May 2007 he was moved from HMP Lincoln to Campsfield Immigration Removal Centre. On 6 July 2007, following a hearing for the reconsideration of his appeals that had been ordered in January 2007, the tribunal refused his appeals following reconsideration. On 24 August 2007 a deportation order was made and served on the appellant. As the appellant is a national of Zimbabwe, it is to Zimbabwe that the Secretary of State proposes to deport him. But two years previously on 4 August 2005 Collins J ordered by consent that removal of 30 Zimbabweans be suspended pending resolution of the issue in a test case, and the enforced return of failed Zimbabwean asylum seekers was suspended by the Secretary of State. The position as at the date of the hearing of this appeal was that no enforced returns of Zimbabwean failed asylum seekers had taken place since that date. By a letter dated 8 March 2006 the appellant was informed that he was to be detained and that his detention would be reviewed on a regular basis. If the reviews had been carried out in accordance with the policy set out in paragraph 38.8 of the manual they would have occurred on 10 March 2006 (after 24 hours), 16 March 2006 (7 days), 23 March 2006 (14 days), 30 March 2006 (21 days) and 6 April 2006 (28 days). They would have been carried out thereafter at monthly intervals. As to the monthly reviews, the paragraph 38.8 provides that the first two monthly reviews must be carried out by a Higher Executive Officer, the next two by a Senior Executive Officer or one of Her Majestys Inspectors, the next four by an Assistant Director or Grade 7 civil servant, the next three by a Deputy Director and, in the case of the monthly reviews in the second year of detention, by a Director. By the date of the hearing before Munby J the appellant had been entitled to 22 monthly reviews of the lawfulness of his detention in addition to the initial five reviews in the first month. In the event he had had only 10 reviews up to the date of the hearing. Of these, only six were conducted by officials of the required seniority. Of these, two were disavowed by the Secretary of State as flawed by material errors of fact. The details of the Secretary of States failure to carry out reviews at the required frequency and by the appropriate persons are set in the judgment of Munby J at paras 43 51 and 124 127 and in paras 11 13 of the judgment of the Court of Appeal. The judge described the picture that emerged from his analysis of the Secretary of States file as deeply disturbing and profoundly shocking. The Secretary of State has acknowledged that reviews should have been carried out. He has not sought to justify or excuse in any way their absence in the appellants case. He also accepts that these failures cannot be extenuated by the appellants own bad character or his previous conduct. It is now known, following disclosures that were made prior to the hearing of R (WL) Congo v Secretary of State for the Home Department [2010] EWCA Civ 111, [2010] 1 WLR 2168 by the Court of Appeal, that from April 2006 to September 2008 the Home Office applied an unpublished detention policy to all foreign national prisoners following the completion of their prison sentences pending their deportation. This followed the revelation on 25 April 2006 that during the past seven years over 1,000 such prisoners had been released from prison on completion of their sentences without being considered for deportation or deported. Illegal migrants and paedophiles, a toxic mix. The tabloids will go bananas. The words of a contemporary diarist, Chris Mullin, Decline and Fall (2010), p 94, capture the atmosphere of disaster that was engendered among ministers by this announcement. A few days later Charles Clarke was removed from his post and was replaced on 4 May 2006 as Home Secretary by Dr John Reid. A practice of blanket detention was then instituted with a ruthless determination that precluded consideration of the merits of any individual case and was wholly at odds with the presumption in the published policy in favour of temporary admission or temporary release. It remained in place until November 2007 when it was replaced by another unpublished policy which permitted release only in exceptional circumstances. It was not until 9 September 2008 that a revised detention policy was published. This course of events may explain the Secretary of States failure to carry out reviews at the required frequency and by the appropriate persons in the appellants case. But his case has been conducted throughout so far on the basis that the policy that was being applied to him was the published policy. The new issues that he has raised in light of these disclosures are presently stayed for determination by the High Court: see Laws LJ [2009] 1 WLR 1527, paras 42 44. The issues Munby J held that the appellant was unlawfully detained for the periods which he specified by reason of the Secretary of States failures to carry out the reviews required by rule 9(1) and the manual. The basis for that finding is to be found in the following passage in his judgment [2008] EWHC 98 (Admin), para 68: Integral to the scheme endorsed by Parliament in its approval of rule 9(1) of the Detention Centre Rules 2001, and integral to the policy laid down by the Secretary of State in paragraph 38.8 of the Operations Enforcement Manual, is the principle that someone is not to be detained beyond a certain period without there being a review undertaken at regular intervals and moreover, as required by the Secretary of States policy, a review undertaken at increasing high levels of seniority within the Home Office as the period of detention grows. Those reviews are fundamental to the propriety of the continuing detention, they are required in order to ensure that the continuing detention can still be justified in the light of current, and perhaps, changed circumstances, and they are, in my judgment, a necessary prerequisite to the continuing legality of the detention. In para 122 he said that, to the extent that the appellants detention had been unlawful as a matter of domestic law it had also, by parity of reasoning, been unlawful by virtue of section 6 of the Human Rights Act 1998, and that there was nothing in the circumstances of his case to give him a remedy under section 6 where there would not be a remedy under domestic law. So in practical terms the claim under article 5 of the Convention added nothing. In the Court of Appeal Laws LJ said that the issue was one of statutory construction: [2009] 1 WLR 1527, para 21. Ex p Hardial Singh showed that paragraph 2(2) of Schedule 3 to the 1971 Act was subject to implied limitations. The question, as he saw it, was whether a further limitation was to be found such that on a proper construction of paragraph 2(2) the power was subject to compliance with the rule and the manual: para 23. Summarising his conclusions, with which the other members of the court agreed, he said that compliance with the rules and the manual as such was not a condition precedent to a lawful decision pursuant to paragraph 2(2): para 25. The statute did not make it so, nor did the common law or the Convention. The Hardial Singh principles had to be complied with, but this was subject to control by the courts, principally by way of judicial review. In that event the particular context would be the vindication of those principles, but in this case it was plain that the appellant was held in compliance with them throughout the period of his detention. Mr Husain accepted that the Hardial Singh principles had throughout been complied with. On the other hand there had been repeated failures to comply with the system of review set out in the manual. Paragraph 38.8 of the manual states that continued detention in all cases under Immigration Act powers must be subject to administrative review at regular intervals. These reviews were essential to the continued legality of the exercise by the Secretary of State of his discretion to detain. He accepted that not all public law errors or policy defaults will render detention unlawful. The question will always be whether the error is sufficiently linked to the decision to detain or to continue detention. In this case the reviews required by the policy must be seen as the authority on which continued legality of the detention rests. He accepted that if his case were to succeed at common law his case under article 5 would not add anything. But in case it were necessary to address this argument he submitted that the appellant was entitled to the implied protections prescribed by article 5(1)(f). There had been a clear breach of national procedural rules because the Secretary of State had failed to comply with the rules and with the published policy, which he was required to follow unless there were good reasons not to do so. This was irrespective of whether the requirements that had been breached were conditions precedent to the exercise of the power to detain. As to the effect of the decision in Lumba, Mr Husain submitted that it was now clear that it was not a defence for the Secretary of State to show that the detention complied with the Hardial Singh principles and the requirements of the statute. Nor was it a defence for him to show that had the public law error not been committed the detainee would have been detained in any event. The serial failure to conduct the proper detention reviews was a material public law error, as it was essential to the legality of a temporarily unlimited and otherwise unchecked power to continue detention. The initial detention authority by the Secretary of States executive order was to be contrasted with orders to detain by a court. The reviews were an important safeguard. The failure to conduct them amounted, on the facts of this case, to an abuse of the power to detain. For the Secretary of State Mr Tam accepted that the Hardial Singh principles imposed implied limits on the exercise of the powers of detention that were set out in the statute. But he submitted that there was no provision or rule that limited the Secretary of States authority to detain in any other way. Things had not been done, probably in violation of his duty in public law, for which legal remedies might have been available. But the claim in this case was a very specific one. The question was not whether there had been a breach of the law. The appellant was seeking damages for false imprisonment. There was no basis for such a claim, as the detention was at all times within the original authority to detain under the powers that were to be found in the statute. That would have been plain from the documents that were available in his case had his continued detention had been challenged by judicial review. In the light of the judgments in Lumba, the central question for the court was whether each relevant breach of the procedural requirement to review detention was material in public law terms, that is to say whether it bore on and was relevant to the decision to detain. There was a difference between a requirement that was procedural only and a failure to apply a substantive rule which was capable of affecting the decision to detain or not to detain. A pure omission to review detention at the times specified by the policy was not material, at least in a case such as this where, had the review been carried out, the application of the substantive rules would have resulted in a decision to continue detention. But he accepted that if that submission was rejected, an omission to make a new decision by way of a detention review which was material in the Lumba sense must inevitably have the effect that the next period of detention was not authorised and the tort of false imprisonment was made out. The common law remedy The issue as to whether the appellant is entitled to damages, as focussed by these arguments, is a narrow one. It is common ground that the appellant was lawfully detained at the outset, as his detention was with a view to the making of a deportation order. There was a serious breakdown thereafter in the system of reviews mandated by the manual. But it is also common ground, as the judge found, that the Hardial Singh principles were complied with throughout the entire period. As Mr Tam points out, the continued detention could at all times have been justified by the Secretary of State had he been faced with an application for judicial review. Until 24 August 2007, when the deportation order was made and served on the appellant, the appellant was being detained under paragraph 2(2) pending the making of a deportation order. From that date onwards he was being detained under paragraph 2(3) because he had not been released on bail and the Secretary of State had not directed otherwise. On the other hand Mr Tam accepts that the breakdown in the system was a breach of a duty owed by the Secretary of State to the appellant in public law. The appellant could have obtained a mandatory order at any time requiring the reviews to be carried out if he had asked for this. The focus of attention therefore is on the authority to detain. Is the review essential to the legality of the continued detention? Or is it a sufficient answer to the claim for damages for the Secretary of State to say that, unless and until he directed otherwise, the authority to detain is there throughout in terms of the statute? I have not found this an easy question to answer. I do not accept the Court of Appeals view that the question is one of statutory construction. We are dealing in this case with what the Secretary of State agrees are public law duties which are not set out in the statute. Of course it is for the courts, not the Secretary of State, to say what the effect of the statements in the manual actually is. But there is a substantial body of authority to the effect that under domestic public law the Secretary of State is generally obliged to follow his published detention policy. In R (Saadi) v Secretary of State for the Home Department [2001] EWCA Civ 1512, [2002] 1 WLR 356, para 7, Lord Phillips of Worth Matravers MR, delivering the judgment of the court, said that lawful exercise of statutory powers can be restricted, according to established principles of public law, by government policy and the legitimate expectation to which such policy gives rise. In Nadarajah v Secretary of State for the Home Department [2003] EWCA Civ 1768, [2004] INLR 139, para 54 the Master of the Rolls, again delivering the judgment of the court, said: Our domestic law comprehends both the provisions of Schedule 2 to the Immigration Act 1971 and the Secretary of States published policy, which, under principles of public law, he is obliged to follow. In D v Home Office (Bail for Immigration Detainees intervening) [2005] EWCA Civ 38, [2006] 1 WLR 1003, para 132 Brooke LJ said that what the law requires is that the policies for administrative detention are published and that immigration officers do not stray outside the four corners of those policies when taking decisions in individual cases. Wade and Forsyth, Administrative Law 10th ed, (2009), pp 315 316 states that the principle that policy must be consistently applied is not in doubt and that the courts now expect government departments to honour their statements of policy. Policy is not law, so it may be departed from if a good reason can be shown. But it has not been suggested that there was a good reason for the failure of officials of the required seniority to review the detention in this case and to do so in accordance with the prescribed timetable. Mr Husain submitted that the effect of the statements in the manual was not just to create a legitimate expectation that the reviews would be carried out. He said that, as the discretion to detain under the statute had to be exercised reasonably according to the Hardial Singh principles, the authority for continued detention was dependent on decisions taken each time it was reviewed. Moreover an unlawful detention was not rendered lawful because there were circumstances that might have made it lawful. He sought support for that proposition in Clarke LJs observation in Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662, 666, that the detention in that case was unlawful because it was not reviewed until some event occurred to make it lawful. But that was a case where the plaintiff was detained under the Police and Criminal Evidence Act 1984, section 34(1) of which provided that a person arrested for an offence shall not be kept in detention except in accordance with the provisions of Part IV of the Act. Section 40, which was in Part IV, required reviews of the detention of person police custody at stated intervals. It was clear, as Clarke LJ said in the passage at p 666 that Mr Husain referred to, that the plaintiff was not being detained in accordance with the relevant provisions of the Act. As Mr Husain pointed out, the Secretary of State accepts that where the authorising statute provides that a particular procedural step is a precondition to the legality of the detention a failure to carry out the required step means that the detention is unlawful and entitles the detainee to damages for false imprisonment. That is what was decided in Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662. But that case, as Mr Tam put it, was all about the statute. The situation in this case is quite different, as there is no mention of the need for reviews in relevant paragraphs in the authorising statute. I agree with both Laws LJ in the Court of Appeal, para 25, and Lord Brown (see para 100, below), that Roberts provides little, if any, assistance on the effect of the Secretary of States failure to comply with his published policy. On the other hand the appellants argument that where the published policy is departed from the detention is unlawful finds some support in Nadarajah v Secretary of State for the Home Department [2004] INLR 139. Two appeals were before the court in that case. The appellants had both been detained on the ground that their removal from the United Kingdom was imminent. The Secretary of States published policy was not to treat removal as imminent once proceedings which challenged the right to remove had been initiated. It was also the policy of the immigration service when considering the imminence of removal to disregard information from those acting for asylum seekers that proceedings were about to be initiated. But this policy had not been made public and it was held that the Secretary of State could not rely on it. In para 54 the Master of the Rolls, Lord Phillips of Worth Matravers, said that he was obliged to follow his published policy. Asking itself the question whether the appellants detention had been lawful, the court held that it was not. In para 68, referring to Nadarajahs case, Lord Phillips said: The only basis upon which the Immigration Service could treat his removal as imminent was by applying that aspect of the Secretary of States policy which had not been made public, namely that no regard would be paid to an intimation that judicial review proceedings would be instituted. The Secretary of State cannot rely upon this aspect of his policy as rendering lawful that which was, on the face of it, at odds with his policy, as made public. In other words, it was unlawful for him to depart from his published policy unless there were good reasons for doing so. In para 72, referring to the case of the other appellant, he said that his detention was unlawful for the same reason as Nadarajahs detention was unlawful. In consequence of that decision he was entitled to damages: see para 15. In Mohammed Holgate v Duke [1984] AC 437, 443, Lord Diplock said that the Wednesbury principles are applicable not only in proceedings for judicial review but also for the purpose of founding a cause of action at common law for trespass by false imprisonment. It may be that not every public law error will justify resort to the common law remedy in every case. But I do not think that it is necessary to show that there was bad faith or that the discretion was exercised for an improper purpose in the present context. Where there is an executive discretion to detain someone without limit of time, the right to liberty demands that the cause of action should be available if the discretion has not been lawfully exercised. In R v Deputy Governor of Parkhurst Prison, Ex p Hague [1992] 1 AC 58 Lord Bridge of Harwich said that the tort of false imprisonment has two ingredients: the fact of imprisonment and the absence of lawful authority to justify it. The requirements of the 1971 Act and Hardial Singh principles are not the only applicable law with which the Secretary of State must comply. Nadarajahs case shows that lawful authority for an executive power of detention may also be absent when there is a departure from the executives published policy. As Lord Brown points out, the published policy in Nadarajahs case entitled the detainee to release because it narrowed the grounds on which the power of detention was exercisable: para 107, below. In this case the policy was different because it was concerned not with the grounds for detention but with procedure. All it did was to provide that the detention would be reviewed by designated officers at regular intervals. Of course I agree with him that the policies are different. But I do not think that this difference means that Nadarajah offers no assistance in this case. On the contrary, it seems to me to indicate that a failure by the executive to adhere to its published policy without good reason can amount to an abuse of power which renders the detention itself unlawful. I use this expression to describe a breach of public law which bears directly on the discretionary power that the executive is purporting to exercise. The importance of the principle that the executive must act within the law was emphasised by Lord Bingham in his seminal Sir David Williams lecture, The Rule of Law [2007] CLJ 67, 72, when he said: The broader and more loosely textured a discretion is, whether conferred on an official or a judge, the greater the scope for subjectivity and hence for arbitrariness, which is the antithesis of the rule of law. This sub rule requires that a discretion should ordinarily be narrowly defined and its exercise capable of reasoned justification. That is a proposition which can be applied to this case. The published policy narrowed the power of executive detention by requiring that it be reviewed regularly. This was necessary to meet the objection that, unless it was implemented in accordance with a published policy, the power of executive detention was being applied in a manner that was arbitrary. So it was an abuse of the power for the detainee to be detained without his detention being reviewed at regular intervals. Applying the test proposed by Lord Dyson in Lumba, it was an error which bore on and was relevant to the decision to detain throughout the period when the reviews should have been carried out: [2011] 2 WLR 671, para 68. The authorities relied on by the Secretary of State Mr Tam referred to a series of cases where detention was held not to be unlawful despite errors of public law. In R v Deputy Governor of Parkhurst Prison, Ex p Hague [1992] 1 AC 58 the appellant Hague had been segregated under a procedure which was not lawful which it was claimed amounted to false imprisonment, and another prisoner named Weldon claimed that he had been falsely imprisoned and battered by certain prison officers. Those claims were rejected, in short because the sentence of imprisonment provided lawful authority for the prisoners detention, that this could not be read as subject to any implied term with respect to the prison rules and that an otherwise lawful detention was not rendered unlawful by the conditions of detention. Mr Tam said that it was authority for the view that a public law error made in relation to a persons detention may entitle the person to seek judicial review but does not necessarily give rise to a remedy in damages. I would not quarrel with that proposition, but it begs the question whether the present case is one where a remedy in damages is available. Cullen v Chief Constable of the Royal Ulster Constabulary [2003] UKHL 39, [2003] 1 WLR 1763 was a case about the right of access to a solicitor. The appellant was arrested under section 14(1)(b) of the Prevention of Terrorism (Temporary Provisions) Act 1982. He asked to see a solicitor but his right to do so was deferred while he was in police custody. In contravention of the relevant statute the deferral was made before the appellant requested access and he was not given the reasons for delaying access. He claimed damages for false imprisonment. Lord Hutton said in para 48 that he saw no substance in this submission as he had been lawfully arrested and after his arrest was lawfully detained under the provisions of the statute. The premature authorisation and the breach of the requirement for reasons to be given did not render the detention unlawful. Lord Millett said in para 61 that compliance was not a condition of lawful detention. This decision indicates that the critical question is likely to be whether breaches of this kind undermine the lawful authority for the detention. On the view that was taken of the statute that applied in that case, they did not. The facts of this case, which concerns the Secretary of States discretion to maintain detention in accordance with his published policy, are quite different. In R (Saadi) v Secretary of State for the Home Department [2002] UKHL 41, [2002] 1 WLR 3131, which was concerned with the lawfulness of detention under paragraphs 2(1) and 16(1) of Schedule 2 to the 1971 Act, Lord Slynn of Hadley said at para 48 that the Secretary of States giving of no or wrong reasons did not affect the legality of the detention. Mr Tam said that no hint was given in that case that this failure gave rise to a problem as to its legality. But Collins J said that it was not argued in that case that the muddle about reasons rendered the decision to detain unlawful: [2001] EWCA Civ 1512, [2002] 1 WLR 356, para 16. Nor was the effect of a failure to review in issue. In R (Munjaz) v Mersey Care NHS Trust [2003] EWCA Civ 1036, [2004] QB 395 two psychiatric patients challenged the lawfulness of the policy on seclusion that was applied in their respective hospitals. Referring to what was decided in R v Deputy Governor of Parkhurst Prison, Ex p Hague [1992] 1 AC 58, Hale LJ said that a person who had been deprived of his liberty in pursuance of a lawful power to detain cannot through the medium of a tort of false imprisonment complain about the conditions in which he is detained, at least by those who are lawfully detaining him: para 49. There had been a breach of the statutory code of practice, but this did not amount to false imprisonment: para 82. Mr Tam said that these observations supported his argument. But he accepts that Hague, Cullen and Munjaz were not concerned with the question whether the person concerned should be detained at all, but only with the conditions of detention (Hague and Munjaz) or the ancillary matter of legal advice while in detention (Cullen). It should also be noted that in Munjaz, para 77, Hale LJ said that if an individual decision has been taken unlawfully in public law terms and results in actions which are tortious if taken without lawful excuse, then tortious remedies will be available. The context is different, of course. And the claim for a remedy under the tort of false imprisonment was rejected. But her observation is entirely consistent with what was said in Nadarajah v Secretary of State for the Home Department: see para 39, above. The question as to the lawfulness of continued detention was directly in issue in R (Walker) v Secretary of State for Justice (Parole Board intervening) [2009] UKHL 22, [2010] 1 AC 553. That case arose out of the Secretary of States failure to provide the systems and resources that prisoners serving indeterminate sentences for public protection needed to demonstrate to the Parole Board by the time of the expiry of their tariff periods that it was not longer necessary for the protection of the public for them to remain in detention. There was a breach of the Secretary of States public law duty to provide these facilities. But, as I noted in para 5, counsel for the prisoners accepted that they were unable to challenge the legality of the warrant which authorised their continued detention. That provides the context for the passage in the speech of Lord Brown of Eaton under Heywood in paras 36 and 37 on which Mr Tam relies, where he said: 36. It is one thing to say as indeed is now undisputed that the Secretary of State was in breach (even systemic breach) of his public law duty to provide such courses as would enable IPP prisoners to demonstrate their safety for release and, to some extent at least, course enabling them to reduce the risk they pose, duties inherent in the legislation (the legislations underlying premise as Laws LJ described it [2008] 1 All ER 138, paras 24, 50); quite another to say that such breach of duty results in detention being unlawful. I respectfully agree with the Court of Appeal that it does not. 37. The remedy for such breach of public law duty indeed the only remedy, inadequate in certain respects it may be is declaratory relief condemning the Secretary of States failures and indicating that he is obliged to do more Past failures do not sound in damages In my own speech in Walker, para 6, I said that in terms of the statute the detention was lawful until the Parole board gave a direction for the prisoners release. The default position was that until the direction was given the protection of the public required that the prisoner should be confined. I do not think that Lord Browns observations can be applied to the different statutory regime that we are concerned with it this case. I agree with him that Walker is no more helpful to the respondents case than Roberts is to the appellant: para 104, below. For the same reason I do not think that the decision in Dunn v Parole Board [2008] EWCA Civ 374, [2009] 1 WLR 728, where the Court of Appeal applied the same approach where the Parole Board had failed to conduct a timely review and the appellant remained in detention as authorised by the statute, is of any assistance in this case. Discussion I cannot find in these authorities anything that requires us to hold that the claim for damages for false imprisonment is untenable or which points conclusively in the other direction. I would start therefore with principle that must lie at the heart of any discussion as to whether a persons detention can be justified. The liberty of the subject can be interfered with only upon grounds that the court will uphold as lawful: R v Governor of Brockhill Prison, Ex p Evans (No 2) [2001] 2 AC 19, 35; see also Tam Te Lam v Superintendent of Tai A Chau Detention Centre [1997] AC 97, per Lord Browne Wilkinson at p 111B. In Ex p Evans (No 2), p 42, Lord Hobhouse of Woodborough said: Imprisonment involves the infringement of a legally protected right and therefore must be justified. If it cannot be lawfully justified, it is no defence for the defendant to say that he believed that he could justify it. We are dealing in this case with the power of executive detention under the 1971 Act. It depends on the exercise of a discretion, not on a warrant for detention issued by any court. That is why the manner of its exercise was so carefully qualified by Woolf J in Hardial Singh. The power to detain must be exercised reasonably and in a manner which is not arbitrary. If it is not, the detention cannot be lawfully justified. The initial decision to detain will be held to be lawful if it is made under the authority of the Secretary of State pending the making of a deportation order. But it cannot be asserted, in the light of what was said in Hardial Singh, that the initial decision renders continued and indefinite detention lawful until the deportation order is made whatever the circumstances. Nor can it be said that it has that effect after the deportation order is made pending the persons removal from the United Kingdom when the person is being detained under paragraph 2(3). The authority that stems from the initial decision is not unqualified. The question then is what is to be made of the Secretary of States public law duty to give effect to his published policy. In my opinion the answer to that question will always be fact sensitive. In this case we are dealing with an executive act which interferes with personal liberty. So one must ask whether the published policy is sufficiently closely related to the authority to detain to provide a further qualification of the discretion that he has under the statute. Unlike the 2001 Rules, chapter 38 of the manual is concerned with the lawfulness of the detention. That is made clear in the opening paragraphs: see para 18, above. It has been designed to give practical effect to the Hardial Singh principles to meet the requirement that, to be lawful, the measures taken must be transparent and not arbitrary. It contains a set of instructions with which officials are expected to comply: see Schedule 2 to the 1971 Act, para 1(3). As I see it, the principles and the instructions in the manual go hand in hand. As Munby J said in para 68, the reviews are fundamental to the propriety of continued detention. The instructions are the means by which, in accordance with his published policy, the Secretary of State gives effect to the principles. They are not only commendable; they are necessary. The relationship of the review to the exercise of the authority is very close. They too go hand in hand. If the system works as it should, authorisation for continued detention is to be found in the decision taken at each review. References to the authority to detain in the forms that were issued in the appellants case illustrate this point. Form IS 151F, which is headed Monthly Progress Report to Detainees, concludes at the top of page 3 of 3 with the words Authority to maintain detention given, on which the officers comments are invited and beneath which his decision is recorded. The discretion to continue detention must, of course, be exercised in accordance with the principles. But it must also be exercised in accordance with the policy stated in the manual. The timetable which paragraph 38.8 sets out is an essential part of the process. These are limitations on the way the discretion may be exercised. Following the guidance that Nadarajah v Secretary of State for the Home Department [2004] INLR 139 provides (see paras 39 and 40, above), I would hold that if they are breached without good reason continued detention is unlawful. In principle it must follow that tortious remedies will be available, including the remedy of damages. There remains however the question of causation: what if the Secretary of State is able to show that, despite the failure to give effect to the policy, continued detention was nevertheless compatible with the Hardial Singh principles? Is it an answer for the Secretary of State to say that, as he could have authorised continued detention had lawful procedures been followed, no tort was committed? Is there room in such a situation for an award of damages? These questions are brought into sharp focus in this case. Mr Husain accepts that the Secretary of State would have been able to justify the need for the appellants detention under the Hardial Singh principles at all times had he been required to do so. But in Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662, 667, Clarke LJ said that it was nothing to the point to say that the detention would have been lawful if a review had been carried out or that there were grounds which would have justified detention. The statutory requirement with which he was dealing in that case existed in order to ensure that members of the public were not detained except in certain defined circumstances. In all other circumstances, he said, every member of the public is entitled to his liberty. I would apply that reasoning to this case. It is true that the reviews were not required by the statute. But there was a public law duty to give effect to the provisions about reviews in the manual. If the reviews were not carried out unless for good reason, which is not suggested in this case continued detention was not authorised by the initial decision to detain. It is no defence for the Secretary of State to say that there were good grounds for detaining the appellant anyway. Unless the authority to detain was renewed under the powers conferred by the statute he was entitled to his liberty. The decision in Lumba leads inevitably to this conclusion. As for the question of damages, the decision on this point in Lumba was that the appellants were entitled to no more than nominal damages as their detention was at all times justifiable. But this cannot be assumed to be so in every case, and in this case the facts have still to be established. So I would not foreclose entirely the possibility that the appellant in this case is entitled to more than a purely nominal award. The public law duty exists for the protection of everyone, from the most undeserving to the most vulnerable. The detention of children, those suffering from physical or mental illness and those who have been traumatised by torture are perhaps the most obvious examples. Paragraph 38.8 states that children are reviewed on a regular basis to ensure that the decision to detain is based on the current circumstances of the case and that detention remains appropriate. This sentence makes explicit in the case of children what must be taken to be the purpose of the reviews in all cases. The difference is that the system provides for more frequent reviews in the case of children. In any event, false imprisonment is a trespass against the person which is actionable without proof of special damage: Murray v Ministry of Defence [1988] 1 WLR 692, 701 702, per Lord Griffiths; Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662, 666 669, per Lord Clarke. There may well be issues as to quantum in cases of that kind. As Smith LJ said in Iqbal v Prison Officers Association [2009] EWCA Civ 1312, [2010] QB 732, para 83, an award of damages for false imprisonment is based on normal compensatory principles: see also Langley v Liverpool City Council [2005] EWCA Civ 1173, [2006] 1 WLR 375, para 70. It may be that the conclusion in this case will be that an award of nominal damages is all that is needed to recognise that the appellants fundamental rights have been breached. But that does not affect the issue of principle. I would hold therefore that the appellant is entitled to the remedy he seeks at common law. There will, of course, have to be an inquiry as to the quantum of damages if the amount is not agreed. Article 5 The appellants alternative claim is that he has an enforceable right to compensation under article 5(5) of the Convention. He maintains that his detention did not satisfy the requirements of article 5(1)(f). It was not lawful, and it was not in accordance with a procedure prescribed by law. He relies on what the Grand Chamber said in Saadi v United Kingdom (2008) 47 EHRR 17, para 74, and in A v United Kingdom (2009) 49 EHRR 29; Application No 3455/05, 19 February 2009, para 164 as to what was needed to avoid the detention being branded as arbitrary. The protections referred to in these passages are, as Mr Husain points out, redolent of the Hardial Singh principles. It is agreed on both sides that the article 5 claim adds nothing to the claim at common law if that claim succeeds: see R (I) v Secretary of State for the Home Department [2003] INLR 196, per Simon Brown LJ at para 8; R (Munjaz) v Mersey Care NHS Trust [2004] 2 QB 395, per Hale LJ at para 70. Indeed there are reasons for thinking that the Hardial Singh principles are in some respects more favourable to detainees than Strasbourg requires, as Lord Brown indicates: see para 94, below; Chahal v United Kingdom (1996) 23 EHRR 413, para 112; Saadi v United Kingdom, para 72. So, as I would hold that the appellant succeeds on his common law claim, I propose to say no more about this alternative, except to note that article 5(5) gives a right to compensation where there has been a contravention of any of the provisions of the article. This would have provided the appellant with a remedy if, although there was a breach of the public law duty to conduct reviews, he was not entitled to claim damages at common law for false imprisonment. As it is, for the reasons I have given, I consider that he is entitled to that remedy and at least to nominal damages. Conclusion For these reasons, and for those given by Lady Hale and Lord Kerr with which I am in full agreement, I would allow the appeal. I would restore the declaration that was made by Munby J that the appellants detention by the Secretary of State was unlawful for the periods stated by him, except for a period of one month beginning on 6 December 2007 when the only defect in the decision to continue detention was that the review was carried out by an official of the wrong grade: see R (Lumba v Secretary of State for the Home Department [2011] 2 WLR 671, para 68 per Lord Dyson. I would also restore his orders as to the assessment, if the parties are not agreed, of the quantum of damages. LADY HALE Mr Shepherd Kambadzi may not be a very nice person. He is certainly not a very good person. He has overstayed his welcome in this country for many years. He has abused our hospitality by committing assaults and sexual assault. It is not surprising that the Home Secretary wishes to deport him. But in R (Roberts) v Parole Board [2005] UKHL 45, [2005] 2 AC 738, para 84, Lord Steyn quoted the well known remark of Justice Frankfurter in United States v Rabinowitz (1950) 339 US 56, p 69, that It is a fair summary of history to say that the safeguards of liberty have frequently been forged in controversies involving not very nice people. Lord Steyn continued: Even the most wicked of men are entitled to justice at the hands of the state. And I doubt whether Mr Kambadzi is the most wicked of men. He had come to the end of the time he was due to serve as a result of his crimes. He may even have been expecting to be released from prison on 8 March 2006. If so, it must have come as a cruel shock when he was kept in prison (indeed for many months in the same prison where he had been serving his sentence), because the Home Secretary had decided to make a deportation order against him and at the same time to exercise the power to authorise his detention under paragraph 2(2) of Schedule 3 to the Immigration Act 1971. This gives the Secretary of State an apparently open ended power to authorise the detention of a person who has been served with a notice of intention to deport pending the making of the deportation order. The order was in fact made more than a year later, after which Mr Kambadzi was detained under paragraph 2(3) of the Schedule, which again gives an apparently open ended power to authorise detention pending his removal or departure from the United Kingdom. No court had ordered or authorised or approved this detention. The trial judge who sentenced Mr Kambadzi for his crimes had not even recommended it. A Government official decided to lock him up, on the face of it until a Government official decided to take the next step. But no one suggests that paragraph 2 of Schedule 3 gives the Government an unlimited power to authorise a persons indefinite detention without trial. Everyone knows that there are limits. Everyone also knows that if those limits are exceeded, the detention becomes unlawful. Everyone also knows that a person who is unlawfully detained is entitled, not only to be released, but to claim compensation for having been unlawfully detained. The person responsible for the unlawful detention is liable even if he acted in good faith and without any negligence: see R v Governor of Brockhill Prison, Ex p Evans (No 2) [2001] 2 AC 19 (compare the statutory protection given to those who detain mentally disordered or incapacitated people under the Mental Health Act 1983 or the Mental Capacity Act 2005: see s 139(1) and Schedule A1, para 3 respectively). All this is Hornbook law. The only question, therefore, is what the limits are to the Home Secretarys powers. In particular, are there procedural as well as substantive limits? The substantive limits were established as long ago as 1983, in the powerful extempore judgment of Woolf J in R v Governor of Durham Prison, Ex p Hardial Singh [1984] 1 WLR 704, and approved by the Privy Council in Tan Te Lam v Superintendent of the Tai A Chau Detention Centre [1997] AC 97. The detention has to be pending the deportation order or the removal, as the case may be, and cannot therefore be imposed for any other purpose. If it becomes clear that the purpose cannot be carried out, the detention becomes unlawful. In Tan Te Lam, above, the detention of these particular Vietnamese boat people became unlawful once it was clear that the Vietnamese Government did not regard them as Vietnamese nationals and would not have them back. It was also held in Hardial Singh that the Secretary of State cannot detain a person for longer than is reasonable in all the circumstances. This can depend upon the reasons for the delay. The Secretary of State has to exercise all reasonable expedition to ensure that the steps are taken which will be necessary to ensure the removal of the individual within a reasonable time: Hardial Singh, at p 706F. If the Secretary of State is dragging his feet, then the period may become unreasonable. But if the detainee is unjustifiably stringing things out, for example by launching an obviously bogus asylum claim, it will not. In this case, Munby J held that the Home Secretary did indeed intend to deport Mr Kambadzi and that this was still a possibility. He had been detained for a very long time (22 months by the time that Munby J decided the case in January 2008). But for most of that time he had been pursuing a claim for asylum, which was clearly bogus, through all possible appellate routes. Thereafter he could not be deported because the Home Secretary had temporarily suspended removals to Zimbabwe. But there remained some prospect of achieving this. Hence the detention was substantively justified in accordance with the Hardial Singh principles. But Munby J held that the detention had, for much of those 22 months, been unlawful because of the failure of the Secretary of States officials to conduct the regular reviews laid down in his own Operations Enforcement Manual. No one doubts that the failure to conduct these reviews was unlawful, and that the Secretary of State could have been obliged by judicial review proceedings to comply with his stated policy, unless he had a good reason not to do so in the individual case: see the Court of Appeals judgment in this case at [2009] EWCA Civ 1204, [2009] 1 WLR 1527, para 25. The issue is whether that unlawful failure has also rendered the detention unlawful. The Manual seemed to think that it did. It stated that the purpose of the reviews was to ensure that the detention continued to be justified: see para 38.3.4. Further than that, it declared, at para 38.1: To be lawful, detention must not only be based on one of the statutory powers and accord with the limitations implied by domestic and Strasbourg case law but must also accord with this stated policy. The Court of Appeal took the same view in Nadarajah v Secretary of State for the Home Department [2003] EWCA Civ 1768, [2004] INLR 139. At para 54, Lord Phillips stated that: Our domestic law comprehends both the provisions of Schedule 2 to the Immigration Act 1971 and the Secretary of States published policy, which, under principles of public law, he is obliged to follow. The failure to follow that published policy rendered the detentions unlawful in that case. The policy which was in question there related to the considerations that the Secretary of State would take into account in deciding to detain. It went further than the bare bones of the Hardial Singh principles. Nadarajah was a case principally brought under article 5 of the European Convention on Human Rights. The question, therefore, was whether the detention was lawful in the sense that it complied with the Convention standards of legality. It is not surprising that the Court held that, to be lawful, a decision to detain had to comply, not only with the statute, but also with the Secretary of States published policy. But it is also not surprising that the majority of this Court has now held, in R (Lumba and Mighty) v Secretary of State for the Home Department [2011] UKSC 12; [2011] 2 WLR 671, that a failure to comply with the Secretary of States published policy may also render detention unlawful for the purpose of the tort of false imprisonment. While accepting that not every failure to comply with a published policy will render the detention unlawful, I remain of the view that the breach of public law duty must be material to the decision to detain and not to some other aspect of the detention and it must be capable of affecting the result which is not the same as saying that the result would have been different had there been no breach (see the Lumba case, para 207). The question remains, however, whether a material breach of a public law duty to conduct regular reviews that is, a procedural obligation has the same consequence as a material breach of a public law duty to detain only if certain criteria are fulfilled. For the sake of the argument before this Court, we have to assume that the case falls into the former category breach of a procedural obligation even though the co incidence of timing and the evidence of the secret policy which emerged in Lumba might suggest that the real reason why the reviews were not conducted as required by the policy was that they would be a waste of time all these people were going to be detained under the new and secret criteria in any event. But might there be a distinction between the substantive limitations on the power to detain and the procedural requirements for exercising it? Sometimes a statute puts the effect of a failure to follow procedural requirements beyond doubt. The Police and Criminal Evidence Act 1984, section 34(1), states that A person . shall not be kept in police detention except in accordance with the provisions of this Part of this Act; those provisions require regular reviews; failure to conduct those reviews on time renders detention beyond the time when they should have been conducted unlawful: see Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662, CA. Sometimes a statute does not say in so many words that failing to comply with one of its procedural requirements will render the resulting detention unlawful, but the courts will construe the statute to mean that it does. An example is the prohibition in the Mental Health Act 1983, section 11(4)(a), of making an application for compulsory admission to hospital if the patients nearest relative objects: Re S C (Mental Patient: Habeas Corpus) [1996] QB 599, CA. In these cases, it is irrelevant that the person concerned could have been lawfully detained had the correct procedures been followed. Sometimes, however, the court will conclude that the lawfulness of detention does not depend upon the fulfilment of a particular statutory requirement. For example, in R (D) v Secretary of State for the Home Department [2006] EWHC 980 (Admin), it was common ground that failing to comply with the requirement in the (Immigration) Detention Centre Rules 2001 SI 2001/238 that immigration detainees be given a medical examination within 24 hours of arrival did not render the detention unlawful unless the detainees could show that it would have led to their earlier release. In short, there are some procedural requirements, failure to comply with which renders the detention unlawful irrespective of whether or not the substantive grounds for detention exist, and some procedural requirements, failure to follow which does not have this effect. If the requirement is laid down in legislation, it will be a matter of statutory construction into which category it falls. A clear distinction can be drawn between a requirement which goes to whether or not a person is detained and a requirement which goes to the conditions under which a person is detained. If the grounds exist for detaining a person in a mental hospital, for example, and the procedures have been properly followed, it is not unlawful to detain him in conditions of greater security than are in fact required by the nature and degree of his mental disorder. The same analysis applies to requirements which are imposed, not by statute, but by the common law. There are some procedural requirements which go to the legality of the detention itself and some which do not. The common law imposed a requirement that an arrested person be told, at the time, the real reason why he was being arrested. It did so for the very good reason that the arrested person had to know whether or not he was entitled to resist arrest. Mr Leachinsky was told that he was being arrested under the Liverpool Corporation Act 1921, but this Act gave the police officers no power to arrest him without a warrant. They did have power to arrest him on reasonable suspicion of having committed a felony. But, as they had not told him this, his detention was unlawful and he was entitled to damages for false imprisonment: see Christie v Leachinsky [1947] AC 573. As Lord Simonds put it, at p 592, if a man is to be deprived of his freedom he is entitled to know the reason why. It is not statute, but the common law, indeed the rule of law itself, which imposes upon the Secretary of State the duty to comply with his own stated policy, unless he has a good reason to depart from it in the particular case at the particular time. Some parts of the policy in question are not directly concerned with the justification and procedure for the detention and have more to do with its quality or conditions. But the whole point of the regular reviews is to ensure that the detention is lawful. That is not surprising. It was held in Tan Te Lam, above, that the substantive limits on the power to detain were jurisdictional facts, so the Secretary of State has to be in a position to prove these if need be. He will not be able to do so unless he has kept the case under review. He himself has decided how often this needs to be done. Unless and until he changes his mind, the detainees are entitled to hold him to that. Just as Mr Leachinskys detention was unlawful even though there were in fact good grounds for arresting him, the detainees detention is unlawful during the periods when it has not been reviewed in accordance with the policy, irrespective of whether or not the review would have led to their release. In my view, Munby J was right to hold that the reviews were fundamental to the propriety of the continuing detention and a necessary prerequisite to the continuing legality of the detention: see [2008] EWHC 98 (Admin), para 68. It follows also, from the decision in Lumba, that the fact if it be a fact that had the requisite reviews been held, the decision would have been the same makes no difference. However, the result of any review, had it been held, cannot be irrelevant to the quantum of damages to which the detainee may be entitled. False imprisonment is a trespass to the person and therefore actionable per se, without proof of loss or damage. But that does not affect the principle that the defendant is only liable to pay substantial damages for the loss and damage which his wrongful act has caused. The amount of compensation to which a person is entitled must be affected by whether he would have suffered the loss and damage had things been done as they should have been done. A differently constituted majority in Lumba has now clearly rejected the view, taken by some members of the Court, that deliberate breaches of constitutional rights might attract a conventional sum in vindicatory damages even if the officials conduct were not so egregious as to attract exemplary or punitive damages. That view has, of course, to be respected. I have reached these conclusions without reference to the Strasbourg case law under article 5 of the European Convention on Human Rights. I did initially think that article 5 might supply the answer to what, on any view, is not an easy question. Article 5 lays down an exhaustive list of the circumstances in which a person may be deprived of his liberty. These include, in article 5(1)(f), the lawful arrest or detention of a person against whom action is being taken with a view to deportation or extradition. The requirement of lawfulness is not limited to complying with the substantive and procedural provisions of the domestic law. The Convention itself imports extra requirements in order to ensure that the detention is not arbitrary. Some of these are procedural. Thus the detention of persons of unsound mind under article 5(1)(e), even if formally authorised, must be regularly reviewed in order to ensure that the criteria for detention still exist: see X v United Kingdom (1982) 4 EHRR 118. A principle of domestic law which allows people to be de facto detained without any formality at all contravenes article 5(1)(e) (as well as article 5(4)) even though the criteria for detention do exist: see HL v United Kingdom (2005) 40 EHRR 761. The Strasbourg court has not yet (so far as we are aware) addressed the procedural protection which may be required in order to prevent detention by the executive under article 5(1)(f) becoming arbitrary. The notion of arbitrariness for the purpose of article 5(1)(f) is, however, different from the notion of arbitrariness for the purpose of article 5(1)(b), (d) and (e). It does not require that the detention be necessary in order to achieve the stated aim: see Chahal v United Kingdom (1997) 23 EHRR 413; Saadi v United Kingdom (2008) 47 EHRR 427. But in Chahal, the Court did endorse the Hardial Singh principles, which incorporate a reasonable time limit on the detention. It is not impossible, therefore, that the Court would also impose a requirement for regular reviews. But it cannot be assumed that it would do so, or that it would expect these to be as rigorous as those which the Secretary of State has imposed upon himself. Thus, while the article 5 jurisprudence does not detract from the conclusions reached on domestic law, it does not add anything to them. For those reasons, I would allow the appeal and make the order proposed by Lord Hope, although I would not hold out much hope that Mr Kambadzi will be entitled to more than a nominal sum in damages. My reasons for reaching this conclusion are, I believe, no different from those of Lord Hope and Lord Kerr. But because the Court is so narrowly divided, I thought it necessary to reason the matter through for myself. The decision in Lumba has confirmed and strengthened me in these conclusions, although I acknowledge that, as this case was presented to us, the departure from published departmental policy was of a different kind from the departure in that case. Nevertheless, it was so obvious and so persistent and so directly related to the decision to continue to detain that it was clearly material in the Lumba sense. Whether in reality it was a Lumba case is not for this Court to decide. LORD KERR I agree with Lord Hope that this appeal should be allowed for the reasons that he has given. I also agree that the anonymity order should be set aside. As Lord Hope has said, it may be safely assumed that an asylum seeker will be alive to the risks that disclosure of his identity will entail and his stance on the question of anonymity, especially if he expresses no desire that it be maintained, will be of importance in striking the balance between avoiding unnecessary risks to the asylum seekers safety and the principle of open justice. The critical question in this appeal is whether compliance with the duty to review underpins the legality of the detention. It is accepted that there is a duty to review. It is further accepted that this duty had not been complied with. Does that make the detention unlawful? The respondent says that it does not, arguing that the situation encountered here is not comparable to that which demands compliance with a statutory obligation on which the condition of lawfulness of the detention depends. It is suggested that a failure to observe a public law duty should not render unlawful a hitherto lawful detention because there can be no sufficient nexus between such a failure and the lawfulness of the detention. One can acknowledge the initial appeal of the respondents argument. If a statute prescribes certain conditions that must be met in order that a person may be lawfully held in detention, where one of those conditions remains unfulfilled, the detention may be regarded as automatically unlawful. By contrast, the failure to fulfil a duty owed at public law will not necessarily render invalid a detention made on foot of a valid authorisation. The essential question must be whether there is an adequate connection between compliance with the duty and the lawfulness of the detention. The respondents argument proceeds on the premise that there can never be such a close link. The appellants case is that it depends on the circumstances some public law duties are so closely linked to the continued legality of the detention that a failure to comply with them transforms it from a condition of lawfulness to one which is unlawful. The case can be approached in a relatively simplistic way. The appellant has a legal entitlement to have the justification for his detention reviewed. This is not disputed. Likewise it is not challenged that where there has been a violation of that right, the appellant must have a remedy. Is that remedy to be confined to a declaration and/or an injunction? And if he is entitled to these forms of relief, why should he not be entitled to maintain an action for damages for false imprisonment? Given that what is at stake is the appellants liberty; that there is a presumption in favour of his release; that scrupulous adherence to the review standards is clearly contemplated in the language of the policy document; and that, plainly, these are considered to be vital safeguards of the detainees interests, I can discern no reason in principle to restrict the availability of all remedies that the law will conventionally afford for unlawful detention. On the contrary, it appears to me that access to the full panoply of such remedies is required in order that those fundamental interests are afforded proper protection. Another way of approaching the questions that arise on the appeal is to ask whether the initial authority to detain could be regarded as comprehensive of the issues which are germane to the continued lawfulness of detention. Quite clearly, detention which is lawful initially can be transformed to a condition of illegality see R v Governor of Durham Prison Ex p Hardial Singh [1984] 1 WLR 704. In his argument to this court on behalf of the Secretary of State, Mr Tam QC has asserted that where the detention is initially lawful, it cannot become unlawful, absent an undermining of the initial authority to detain. But there was no undermining of the initial authority in that sense in Hardial Singh yet the initially lawful detention became unlawful. That transformation occurred by a means other than by operation of an express statutory pre condition or by the extinction of the initial authority to detain. In Hardial Singh it was held that there were implicit limitations on the statutory power to continue to detain. If, for instance, the original purpose of detention viz to deport became incapable of fulfilment, the detainee could no longer be lawfully held. Why should implicit limitations in the form of an effective review of the continuing justification for detention not be recognised in the present case? Where someone is detained beyond the immediate post detention period, there may be two aspects to the question whether his detention is lawful. First there must be an initial valid authorisation; secondly, there must be compliance with such public law duties as touch directly on the question of whether he should continue to be detained. That proposition can perhaps be best exemplified in the context of a review of the justification of the reasons for continued detention by considering the purpose of that review. One starts with the unexceptionable proposition that it would be indisputably unlawful to hold someone in detention if there was no justification for it. Since, self evidently, an original justification for detention may prove, in light of events and circumstances that occur subsequently, to no longer obtain, periodic review of the justification for continued detention is required. The purpose of the review is to determine whether there are still good grounds to continue to hold the person in detention. If the review discloses that there are no such grounds, continued detention is unquestionably illegal. A person detained after it had been shown that there was no good reason for his continued detention would undoubtedly have the right to claim compensation for false imprisonment. As Lord Hope has said, support for the proposition that a departure from published policy as to detention will render it unlawful is to be found in R (Nadarajah) v Secretary of State for the Home Department [2004] INLR 139. Lord Brown has sought to distinguish that case from the present appeal on the basis that in Nadarajah the grounds on which the power of executive detention could be exercised had been narrowed but that no such narrowing of powers occurred here. But if the published policy in Nadarajah narrowed the grounds on which someone could be lawfully detained, why should the same consequence not accrue in the present case? In Nadarajah the stated policy was to release those whose removal was not imminent. Here it is to the effect that persons will only be detained if there is continuing justification for it, as verified by a prescribed system of review. Lord Brown suggests that in Nadarajah the detainee was entitled to release and in the present case that the appellant was entitled 'merely' to be reviewed for release. I respectfully disagree that such a distinction can be drawn. The essence of the appellant's entitlement was that he would be released unless continued justification for his detention existed. The review was the means by which the existence of the justification was to be established. It is not comprehensive of the detainee's entitlement. As in Nadarajah the appellant in the present case is entitled to be released in accordance with the terms of the relevant policy, if justification for his continued detention no longer obtains. What if no review takes place? If it is illegal to hold a person in detention where it has been established that there are no good grounds for doing so, can it be lawful to hold someone without examining whether such grounds continue to exist? In my view it cannot. Since it has been recognised that, in cases such as the appellants, periodic review is necessary in order to vouch the continued justification for detention, where that review does not take place, the detention can no longer be considered justified. The justification for continued detention cannot be said to exist and, absent such justification, the detention is unlawful. Likewise, in my opinion, where the review does take place but does not partake of the quality or character required to justify the continuance of detention, it becomes unlawful and gives rise to a right to claim false imprisonment. I believe that Munby J was right in his characterisation of the system of review as being integral to the lawfulness of the detention (para 68 of his judgment). It was not only so stated in the policy document, this concept pervades the entire approach of government to this type of detention. I accept, of course, that the Executive cannot make law and that the policy document should not be construed as a statute but it is not irrelevant that the Home Secretary made an unequivocal statement that failure to comply with the policy would be a breach of the law. This surely provides the foundation for a finding that the requirement of review is intimately connected to the continuing lawfulness of the detention and that it therefore constitutes an implicit limitation on the statutory power to detain. The majority in R (Lumba and Mighty) v Secretary of State for the Home Department [2011] UKSC 12; [2011] 2 WLR 671, has held that causation is not a necessary ingredient for liability. In that case the argument on behalf of the detained persons was put in this way: a public law error that bears directly on the decision to detain will mean that the authority for detention is ultra vires and unlawful, and will sound in false imprisonment. That argument was accepted by the majority of the court in Lumba. The public law error in the present case bore directly on the decision to detain in that it was made without the necessary review of the justification for detention. As the majority in Lumba also held, however, causation is relevant to the question of the recoverability of damages. For the reasons that I gave in my judgment in that case, I consider that if it can be shown that the claimant would not have been released if a proper review had been carried out, this must have an impact on the quantum of compensation and that nominal damages only will be recoverable. LORD BROWN (with whom Lord Rodger agrees) Does a failure to comply with a published policy periodically to review the exercise of a statutory power of executive detention constitute not merely the breach of a public law duty but in addition the tort of false imprisonment? Does it, in other words, undermine the lawfulness of continuing detention? That essentially is the issue before the Court on this appeal. Lord Hopes judgment contains a very full account of the facts, the arguments and the authorities relevant to this appeal so that my own judgment can be correspondingly short. The Immigration Act 1971, as amended, (the 1971 Act) provides (by paragraphs 2(2) and (3) of Schedule 3) that, in a case like this, once notice of intention to deport has been given, the Secretary of State may detain the person pending the making of the deportation order (paragraph 2(2)) and, once the deportation order has been made, the detainee shall continue to be detained [pending his removal or departure] unless he is released on bail or the Secretary of State directs otherwise (paragraph 2(3)). One suspects that when these provisions were enacted nearly 40 years ago Parliament envisaged the deportation process taking place within a comparatively short timescale, perhaps months at most. As it is, however, the process regularly stretches to years and not infrequently the position arises where, for one reason or another, it proves impossible for a considerable time to deport anyone to a particular country because of conditions there. In the past this has been true at various times of Somalia, of Afghanistan, of Iraq, and of Kosovo. Since 2005 it has also been true of Zimbabwe which is why this appellant, although given notice of an intention to deport him on 8 March 2006, and made subject to a deportation order on 24 August 2007, remains in this country to this day. More particularly, this is the background to his detention under Schedule 3 to the 1971 Act (following completion of a prison sentence) from 8 March 2006 to 13 June 2008 when, after 27 months of Schedule 3 detention, he was finally released on bail. That the Secretary of States power to detain people under paragraph 2 of Schedule 3 (the paragraph 2 power as for convenience I shall call it) is not unlimited is plain and undisputed. This was first established by Woolf J in R v Governor of Durham Prison Ex p Hardial Singh [1984] 1 WLR 704, approved by the Privy Council in Tan Te Lam v Superintendent of Tai A Chau Detention Centre [1997] AC 97 and subsequently distilled by Dyson LJ in R (I) v Secretary of State for the Home Department) [2003] INLR 196, para 46 into four propositions (which, again for convenience, I shall call the Hardial Singh principles), as follows: (i) The Secretary of State must intend to deport the person and can only use the power to detain for that purpose. (ii) The deportee may only be detained for a period that is reasonable in all the circumstances. (iii) If, before the expiry of the reasonable period, it becomes apparent that the Secretary of State will not be able to effect deportation within that reasonable period, he should not seek to exercise the power of detention. (iv) The Secretary of State should act with reasonable diligence and expedition to effect removal. Although suggested by the appellant to be broadly similar to the protections implied by the ECtHR into article 5(1)(f) of the Convention to ensure proportionality and guard against arbitrariness, to my mind the Hardial Singh principles, certainly as applied in a succession of later cases, are in fact more favourable to detainees than Strasbourg requires. In particular Strasbourg has consistently stated that there is no requirement that the detention be reasonably considered necessary, for example to prevent the person concerned from committing an offence or fleeing (para 72 of the Grand Chambers judgment in Saadi v UK (2008) 47 EHRR 427, following Chahal v UK (1996) 23 EHRR 413, para 112). Domestic case law, by contrast, holds that with regard to the second Hardial Singh principle the deportee may only be detained for a period that is reasonable in all circumstances [t]he likelihood or otherwise of the detainee absconding and/or re offending [is] an obviously relevant circumstance (my judgment in I at para 29, echoed by Dyson LJ at paras 48 and 49). I may note at this point that, notwithstanding that the full width of the Hardial Singh principles was clearly recognised by Munby J in the present case (paras 79 120), his conclusion was that none of them had been breached at any time, a conclusion unchallenged in the Court of Appeal. It follows that not merely was the appellant in a formal sense a person liable to be detained under the third Schedule (in the same way that the unsuccessful appellant in R (Khadir) v Secretary of State for the Home Department [2006] 1 AC 207 was held liable to detention and thus eligible for temporary admission under the second Schedule even though it might well have been unreasonable and in breach of the Hardial Singh principles actually to have detained him); here the appellant was liable to be detained in the fuller sense that throughout the period of his detention it would have been a lawful and reasonable exercise of the paragraph 2 power actually to detain him. On what basis, then, is it said that the appellants detention was unlawful so as to give rise to a claim for damages for false imprisonment? The argument revolves around the Secretary of States published policy: chapter 38 of the Departments Operations Enforcement Manual (the OEM) under the heading Detention and Temporary Release. The policy (at 38.3) includes a presumption in favour of temporary admission or temporary release, provides that [t]here must be strong grounds for believing that a person will not comply with conditions of temporary admission or temporary release for detention to be justified and that [a]ll reasonable alternatives to detention must be considered before detention is authorised, and dictates that [o]nce detention has been authorised, it must be kept under close review to ensure that it continues to be justified. Paragraph 38.8 then specifies how both the initial detention and any continued detention thereafter are to be authorised and kept under review, expressly providing both for the frequency and for the level of seniority of the reviews required. In the event, as Munby J recorded (para 48), although entitled (by the date of the first instance hearing) to no fewer than 22 monthly reviews of the lawfulness of his detention, the appellant had had the benefit of only ten reviews, of which only six were conducted by officials of the requisite seniority, and of those six, two had had to be disavowed as fatally flawed. Paragraph 38.1 of the policy, headed General, states: To be lawful, detention must not only be based on one of the statutory powers and accord with the limitations implied by domestic and Strasbourg case law but must also accord with this stated policy. In a sense the question now before us is quite simply: is that statement accurate? Munby J in effect held that it was, not only as to the substantive requirements to justify continuing detention but as to the review requirements also. At para 68 of his judgment, having referred to rule 9(1) of the Detention Centre Rules (which, like Lord Hope, I think to be of only peripheral relevance) he continued: [I]ntegral to the policy laid down by the Secretary of State in paragraph 38.8 of the Operations Enforcement Manual, is the principle that someone is not to be detained beyond a certain period without there being a review undertaken at regular intervals and moreover, as required by the Secretary of States policy, a review undertaken at increasingly high levels of seniority within the Home Office as the period of detention grows longer. Those reviews are fundamental to the propriety of the continuing detention, they are required in order to ensure that the continuing detention can still be justified in the light of current, and perhaps changed, circumstances, and they are, in my judgment, a necessary prerequisite to the continuing legality of the detention. That paragraph identifies the critical question: is the holding of the reviews required by the OEM a necessary prerequisite to the continuing legality of the detention? In addressing this question it is convenient first to distinguish the present case from certain other authorities strongly relied upon by the respective parties. The appellant (supported by the Intervener) seeks to pray in aid the Court of Appeals decision in Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662. The case turned on the proper construction of Part IV of the Police and Criminal Evidence Act 1984 (the Part containing each of the sections to which I now refer). The detainee, following arrest, was initially kept in police detention pursuant to section 37. Section 40(1) provided that: Reviews of the detention of each person in police detention in connection with the investigation of an offence shall be carried out periodically in accordance with the following provisions of this section. Section 40(3)(a) provided that the first review shall be not later than six hours after the detention was first authorised. Central to the decision that, no such review within six hours having taken place, the detainees continued detention (until the point two hours, twenty minutes later when his detention was reviewed) had been unlawful (notwithstanding that had he been reviewed at the six hour point he clearly would still have been detained), was section 34(1) which provided that: A person arrested for an offence shall not be kept in police detention except in accordance with the provisions of this Part of this Act. Munby J appears to have thought Roberts strongly supportive of the appellants case. Laws LJ, giving the leading judgment in the Court of Appeal, thought otherwise. As he pointed out ([2009] 1 WLR 1527, para 25): [T]he requirement of periodic review, on the proper construction of the statute, had to be satisfied as a condition precedent to the legality of the suspects detention. It was made so by the express terms of section 34(1). But there is no analogue to section 34(1) of PACE to be found in paragraph 2(2) of Schedule 3 to the Immigration Act 1971. There is no reference in the sub paragraph, express or implied, to the Rules or the manual or to any Rules that might be made under powers in the Immigration Act or to any manual, or instructions, that might be issued by the Secretary of State. I cannot see how compliance with the letter of the Rules or manual could be said to be a sine qua non of a lawful exercise of the power to detain unless paragraph 2(2) (or other main legislation) made it so. But it does not. I agree with Laws LJ that Roberts provides little if any assistance to the appellant here. The respondent for his part seeks to rely on R (Walker) v Secretary of State for Justice (Parole Board intervening) [2010] 1 AC 553 in support of his argument that a failure in the review process does not undermine the legality of (the unreviewed) continuing detention. Walker was concerned with a number of appeals by IPP prisoners justifiably complaining of the Secretary of States systemic failures to provide the necessary resources and systems to enable such prisoners to demonstrate to the Parole Board that they could safely be released. The Divisional Court held in one of the cases, R (Wells) Parole Board [2008] 1 All ER 138, para 47: To the extent that the prisoner remains incarcerated after tariff expiry without any current and effective assessment of the danger he does or does not pose, his detention cannot in reason be justified. It is therefore unlawful. The Court of Appeal and the House of Lords disagreed. As I put it (at paras 36 37): It is one thing to say as, indeed, is now undisputed that the Secretary of State was in breach (even systemic breach) of his public law duty to provide such courses as would enable IPP prisoners to demonstrate their safety for release and, to some extent at least, courses enabling them to reduce the risk they pose, duties inherent in the legislation (the legislations underlying premise [as it was described in the court below]); quite another to say that such breach of duty results in detention being unlawful. I respectfully agree with the Court of Appeal that it does not. The remedy for such breach of public law duty indeed the only remedy, inadequate though in certain respects it may be is declaratory relief condemning the Secretary of States failures and indicating that he is obliged to do more. By the same token, submits Mr Tam QC, the undisputed (and here too systemic) breaches of the Secretary of States public law duty to review, consistently with his published policy, the justifiability of the appellants (and doubtless very many other detainees) continuing detention, although (as in Walker) deeply to be regretted and strongly to be condemned, does not result in the unreviewed detention being unlawful. To my mind, however, Walker is no more helpful to the respondents case than Roberts is to the appellants. Again, as in Walker, the primary legislation made the position clear: IPP prisoners were expressly made subject to the statutory requirement (under section 28 of the Crime (Sentences) Act 1997) that they were not to be released until the Parole Board was satisfied that their continuing confinement was no longer necessary for the protection of the public. In the same way that Schedule 3 to the 1971 Act contains no analogue to section 34(1) of PACE, so too it contains no analogue to section 28 of the 1997 Act. Laws LJ below identified (at para 21) the essential question here to be: What is the reach [of the paragraph 2 power] and characterised it as a question of statutory construction. At paragraph 35 he summarised his conclusions upon the question as follows: (i) Compliance with the Rules and manual as such is not a condition precedent to a lawful detention pursuant to paragraph 2(2). Statute does not make it so (contrast section 34(1) of PACE, and the Roberts case [1999] 1 WLR 662). Nor does the common law, or the law of the Convention. (ii) Avoidance of the vice of arbitrary detention by use of the power conferred by paragraph 2(2) requires that in every case the Hardial Singh principles should be complied with. (iii) It is elementary that the power exercised, being an act of the executive, is subject to the control of the courts, principally by way of judicial review. So much is also required by Convention article 5(4). The focus of judicial supervision in the particular context is upon the vindication of the Hardial Singh principles. (iv) In the event of a legal challenge to any particular case the Secretary of State must be in a position to demonstrate by evidence that those principles have been and are being fulfilled. However the law does not prescribe the form of such evidence. Compliance with the Rules and the manual would be an effective and practical means of doing so. It is anyway the Secretary of States duty so to comply. It is firmly to be expected that hereafter that will be conscientiously done. Mr Raza Husains attack upon that paragraph centres upon the proposition that, following the initial exercise of the paragraph 2 power, the Secretary of State has a continuing discretion whether to maintain the detention and is under a duty to exercise that discretion regularly in accordance with the published policy. So much Mr Tam accepts and, indeed, he further accepts that every failure to review a detention by the specified time or by the specified level of decision maker constitutes a breach of the Secretary of States public law duty. Of course, as Mr Husain recognises, not all breaches of public law duties arising in the context of detention would render its continuation unlawful see, for example, Cullen v Chief Constable of the Royal Ulster Constabulary [2003] 1 WLR 1763. The key question, he submits, is whether the breach is sufficiently closely linked to the detention decision. Here, he contends, it plainly was. The authority (Roberts aside) upon which Mr Husain principally relies is the decision of the Court of Appeal in R (Nadarajah) v Secretary of State for the Home Department [2004] INLR 139 (a report dealing also with Amirthanathans appeal I shall call them respectively N and A). That case too concerned the Secretary of States detention policy under chapter 38 of the OEM but not, as here, the review provisions rather the statement that one of the reasons for detaining an asylum seeker is that his removal from the UK is imminent. What was not part of the published policy and so was not publicly known was the Departments further policy, when considering the imminence of removal, to disregard information from those acting for asylum seekers that proceedings were about to be instituted, however credible that information might be. Ns solicitors had given notice of his intention to seek judicial review of the Secretary of States decision to certify his case as manifestly unfounded. As solicitors similarly had notified his intention to exercise his right of appeal against the Secretary of States rejection of his Human Rights Act claim to remain. The detentions of both on the ground that their removal was imminent were held unlawful. It was, said the Court of Appeal (at para 68), at odds with [the Secretary of States] policy, as made public. Additionally, in As case, it was clear that he had in fact been kept detained so as to facilitate the obtaining of the documentation needed for his removal. This too was at odds with the Secretary of States policy, as made public (para 72). I confess that for a time I was persuaded by the appellants argument and thought it supported by the authority of Nadarajah. In the end, however, I have reached the contrary view. Nadarajah now seems to me clearly distinguishable. Not because, as the Court of Appeal noted in that case at para 69, had Ns solicitor been aware of the Secretary of States unpublished policy she would have instituted judicial review proceedings earlier, so that the departure from the published policy was in fact causative of Ns continued detention. Rather Nadarajah is distinguishable because it is one thing, as there, to adopt a published policy which in substance narrows the grounds on which an executive power of detention is exercisable (the stated policy there being to release those whose removal was not imminent); quite another, as here, to have a policy and programme for review which dictates only the procedure whereby detention will regularly be reviewed. In the former case, under the published policy the detainee was entitled to release; in the latter case, he was not he was entitled merely to be reviewed for release. Naturally, upon the intended reviews, the detainee would be released if, as a matter of substance, his continuing detention were found no longer justifiable according to the published policy. The difference, however, seems to me crucial. In the one case a breach of policy renders continuing detention unlawful. In the other it does not. Lady Hale, at para 72 of her judgment, suggests an analogy between the present case and Christie v Leachinsky [1947] AC 573 which established the common law requirement that an arrested person be told, at the time, the reason for his arrest. For my part I find the suggestion unpersuasive. As Lady Hale herself observes, the requirement was imposed for the very good reason that the arrested person had to know whether or not he was entitled to resist arrest. Lord Simonds put it thus (p591): it is the corollary of the right of every citizen to be thus free from arrest [unless, that is, someone has the right to arrest him] that he should be entitled to resist arrest unless that arrest is lawful. How can these rights be reconciled with the proposition that he may be arrested without knowing why he is arrested? and a little later (p.592): . the subject is entitled to know why he is deprived of his freedom, if only in order that he may, without a moments delay, take such steps as will enable him to regain it. No such consideration arises or could arise in the present content. Their Lordships in Christie v Leachinsky would, I think, be astonished at the suggestion that any failure to give effect to a self imposed requirement for periodic review of the continuing detention of those awaiting deportation similarly renders that detention unlawful. I fear that they would be scarcely less surprised by the further suggestion (at para 77 of Lady Hales judgment) that, assuming such detention to be unlawful, it is to be compensated by no more than a nominal sum in damages. Indeed it seems to me that that very suggestion illustrates the ineptness of the proposed analogy between the two cases in the first place. The majoritys proposed solution to this case would quite simply devalue the whole concept of false imprisonment. Nothing that I have said should be taken to depreciate the desirability and importance of reviews under chapter 38 nor to excuse the Departments lamentable failures to conduct them, certainly in the appellants case and very probably in a host of others. As the courts below rightly observed, these matters go to the liberty of the subject and the picture which emerges is deeply disturbing, indeed profoundly shocking (Munby J, para 137). One obvious consequence of such serial failures is that it creates a substantially greater risk of detainees bringing successful proceedings for breach of the Hardial Singh principles (or, indeed, assuming they are still more favourable to detainees, the Secretary of States published policy statements going to the substantive criteria for release, as in Nadarajah itself) principles and statements to which the reviews are intended and likely to give effect. And, of course, as the Hardial Singh line of authority (and, indeed, Nadarajah) clearly establishes, a successful claim on these grounds carries with it a right to damages for false imprisonment, a right to damages, moreover, which, unlike that arising upon a failure to review such as envisaged by the majority (and, indeed, such as arose in Roberts see p669H), would naturally be untroubled by any question of causation. I recognise, of course, that, on this approach, it is only in cases where the detainee can show that he should have been released that the respondent will be required to pay, financially, for failures in the review process. Where, as here, all that can be shown is a series of public law breaches failures to comply with his own published policy as to reviews the only remedy, as in Walker, is by way of declaratory relief. Unsatisfactory though in one way this is, to treat a failure in the review process (perhaps merely a review held a day late or by someone of insufficient seniority and perhaps in respect of an obviously dangerous detainee) as of itself giving rise (as in Roberts) to a claim for false imprisonment would to my mind be unsatisfactory too. There may well be altogether too many people (above all children and other likewise vulnerable people) locked up awaiting deportation. Plainly a wise Secretary of State would instigate and operate a practicable and robust system for minimising the use made of the paragraph 2 power. As it is, like any other public body failing to comply with their published policy, he commits a breach of his public law duty, always a regrettable state of affairs. That said, however, a detainee, once properly detained, in my opinion remains lawfully imprisoned unless and until released on bail or by the Secretary of States direction or he establishes an entitlement to release pursuant to the Hardial Singh principles or other substantive policy statements governing how the Secretary of State will exercise his paragraph 2 power. This appellant could establish no such entitlement. In my judgment he remained lawfully imprisoned until he was bailed. It will be noted that I have not hitherto referred to article 5(1)(f) of the Convention save only to observe (at para 94) that domestic law is in fact more favourable to detainees awaiting deportation than Strasbourg requires. Since it now appears that this is to be a minority judgment, I need say no more than that there is nothing in the existing Strasbourg jurisprudence which would warrant a conclusion that a failure to give effect to the Secretary of States self imposed requirement for detention reviews would result in unlawful detention under the Convention irrespective of whether it constitutes false imprisonment under the common law. (I do not think I am in disagreement with the majority as to this see, for example, para 76 of Lady Hales judgment.) Nor, of course, is there any question here of a breach of article 5(4) of the Convention: the requirements of that provision are amply satisfied by the detainees right to seek bail or, indeed, judicial review. I would dismiss this appeal. The above (paras 90 113) is the judgment I wrote before an enlarged court of nine of us in November 2010 heard, and subsequently, on 23 March 2011, gave judgment in, R (Lumba and Mighty) v Secretary of State for the Home Department [2011] UKSC 12; [2011] 2 WLR 671 (Lumba). Given that a majority of the court (6:3) held that the particular public law breaches committed by the Secretary of State there resulted in the appellants being falsely imprisoned albeit a differently constituted majority (also 6:3) held that they can recover no more than nominal damages should I (must I) now change my judgment and agree with the majority that Mr Kambadzi too was falsely imprisoned? I have concluded not: it by no means follows from the majority view on liability in Lumba that there is liability here too and to my mind it would be still more undesirable to find liability established here than the minority of us thought it to be in Lumba itself. That the two cases are different is plain enough. As Lord Dyson observed in para 61 of his lead judgment: A somewhat similar problem arose in R (SK Zimbabwe) v Secretary of State for the Home Department In that case the unlawfulness lay in the failure of the Secretary of State to comply with her policy which prescribed the procedural requirements for reviews of FNPs who are already in detention. The present case concerns the substantive requirements for the initial detention of FNPs as well as their continued detention. Lady Hale too (para 198) recognised that on the issue of liability Lumba is a stronger case than is still before the court in SK (Zimbabwe) because the illegality alleged (and now admitted) went to the criteria for detention rather than to the procedure for authorising it. Although, obviously, the court in Lumba was not required to consider the consequences in terms of liability of a public law failure to comply with the Secretary of States self imposed requirements for the review of continuing detention, there appear to me a number of passages in the judgments of those holding liability to be established there, strongly suggesting that they might well have taken a very different view in the present case. This is perhaps plainest at paras 193 and 194 of Lord Walkers judgment: It is a big step to extend the [Anisminic] principle to a claim for damages for false imprisonment, where a defendant may have his professional reputation at stake and may not enjoy the procedural protections which attend judicial review (strict time limits, and the discretionary nature of the remedy granted). I would prefer a more demanding test, that in a case where an extant statutory power to detain has been wrongly used there would be a private law claim only if the misuse amounted to an abuse of power (including but not limited to cases of misfeasance or other conscious misuse of power). 194 However, it is in my opinion unnecessary to decide the point in these appeals because the conduct of officials, including some senior officials, of the Home Office between April 2006 and September 2008 amounted to a serious abuse of power. Lord Dyson SCJ has . described in restrained language how senior officials were well aware of the risk (indeed the likelihood) of challenge and decided to run the risk, (including the proposal to let immigration judges take any hit), and how further damaging facts were disclosed by stages, some before Davis J, some before the Court of Appeal and some only in this court. Wherever the line is to be drawn (if, as I think, a line does need to be drawn between public law errors in detention policies which do or do not give rise to an action for false imprisonment) these appeals must in my view fall on the wrong side of the line from the Secretary of States point of view. Given that a line is to be drawn between public law errors amounting to the sort of serious misconduct which Lord Walker was clearly intending to denote by his use of the expression abuse of power and other public law errors which do not give rise to actions for false imprisonment, it is very far from obvious that Lord Walker would regard the failures in the review process here as an abuse of power. Lord Collins too, having referred (at para 220) to the Home Offices deliberate decision . to continue an unlawful policy and to the cynical nature of its approach generally in these cases, expressed himself (at para 221) satisfied that the serious breach of public law in this case has the result that the detention of the appellants was unlawful (emphasis added). Even Lord Dyson (para 68) expressly accepted that: It is not every breach of public law that is sufficient to give rise to a cause of action in false imprisonment. In the present context, the breach of public law must bear on and be relevant to the decision to detain. Thus, for example, the decision to detain made by an official of a different grade from that specified in a detention policy would not found a claim in false imprisonment. It seems clear, therefore, that Lord Dyson would have rejected Mr Kambadzis case at least in respect of the four monthly reviews carried out by officials of the wrong grade although, I acknowledge, it is unclear what conclusion he would have reached with regard to the twelve omitted reviews. Of course, the three of us who dissented on liability in Lumba would by definition conclude that Mr Kambadzi must fail on liability in the present case. As for why, liability in Lumba notwithstanding, it would be wrong to find false imprisonment established here too, let me illustrate what seems to me the absurdity of such conclusion by the example I gave (at para 357) in Lumba: it would result in a detainee whose detention is reviewed every second month instead of monthly as the published policy dictates, alternat[ing] yo yo like between lawful detention and false imprisonment. To hold that false imprisonment is the consequence of a failure to comply with the substantive requirements for the initial detention of FNPs as well as their continued detention (Lord Dyson at para 61, quoted above) is one thing; to hold that the same consequence follows a failure to comply with the procedural requirements for reviews of FNPs who are already in detention (ibid) is quite another and to my mind a step altogether too far. I therefore remain of the view, the authority of Lumba notwithstanding, that this appeal should be dismissed. On the issue of anonymity I agree with Lord Hope. As was recently established by the Courts comprehensive and authoritative judgment given by Lord Rodger in In re Guardian News and Media Ltd [2010] 2 AC 697, the general rule is that parties to proceedings are named and that an anonymity order has to be justified. In my opinion there is no justification for such an order here and, indeed, Mr Husain on behalf of the appellant suggests none and seeks no such order. There may, of course, be good reason in certain asylum cases for maintaining the asylum seekers anonymity notwithstanding that his claim fails: the very fact of his having made a claim, albeit unsuccessful, could on occasion tip the balance and give rise to a genuine fear of persecution or article 3 ill treatment where previously none existed. Doubtless in any such case counsel, certainly counsel as expert and experienced as Mr Husain, would duly seek the necessary anonymity order. Given, however, that this appellants asylum claim was clearly bogus, it is unsurprising that no such application was made here and it is to my mind inconceivable that the appellants known involvement in these proceedings could give rise to any bona fide further asylum claim.
+These two appeals raise questions of some significance arising out of the interrelationship of the statutory schemes relating to the protection of employees pensions and to corporate insolvency. The background to the two appeals is, in very summary terms, as follows: i. Many UK registered members of the Lehman group of companies, and all the UK registered members of the Nortel group of companies, have gone into insolvent administration; (a) One of those Lehman group companies entered into service ii. contracts with, and ran a pension scheme for the benefit of, employees who worked for other group members; (b) The Nortel group included a company which had a pension scheme, and which was insufficiently resourced to fund that scheme; iii. The pension scheme (the Scheme) in each case was a final salary scheme, which appears to be, and to have been for some time, in substantial deficit; iv. The Pensions Regulator subsequently initiated machinery under the Pensions Act 2004 to require certain other group members (the Target companies) to provide financial support for the Scheme; vs That machinery has been held up so it can be decided whether the liability under such a requirement would rank (a) as an expense of the Target companies administrations, (b) pari passu with the Target companies other unsecured creditors, or (c) as neither; vi. Under option (a) the liability would rank ahead of the unsecured creditors, and may well be paid in full; under option (b) it would rank equally with those creditors; under option (c) it would rank behind them, and would probably be worthless; vii. Briggs J and the Court of Appeal (in a judgment given by Lloyd LJ) concluded that option (b) was not open to them, and preferred option (a) to option (c); viii. The issue now comes before the Supreme Court. This judgment starts by explaining the relevant statutory provisions relating to pensions, which are mostly in the Pensions Act 2004 (the 2004 Act), in a description largely based on the exposition in the judgment of Briggs J, [2010] EWHC 3010 (Ch), [2011] Bus LR 766, paras 7 41. It then deals with the statutory provisions and rules relating to insolvency, in the Insolvency Act 1986 (the 1986 Act) and the Insolvency Rules 1986 (SI 1986/1925) (the Insolvency Rules), largely drawing on what Lloyd LJ said in the Court of Appeal, [2011] EWCA Civ 1124, [2012] Bus LR 818, paras 20 23 and 39. Next, it will explain the facts, in a summary reflecting what Briggs J said at paras 47 54 of his judgment. After a short discussion, the judgment will then turn to consider whether the liabilities in the present cases would rank pari passu with the unsecured creditors of the Target companies. It will then consider whether those liabilities rank as expenses of the administration. Finally, it will address the power of the court under the 1986 Act and the Insolvency Rules to vary the priority of the liabilities. The relevant statutory provisions relating to pensions In order to protect employees from the adverse consequences of an under funded occupational pension scheme, (i) the Social Security Act 1990 introduced a statutory debt regime by amending the Social Security and Pensions Act 1975, and (ii) the Pensions Act 1995 (the 1995 Act) introduced a minimum funding requirement regime. These were perceived to be inadequate in some respects, and the 2004 Act introduced a financial support direction (FSD) regime. The regimes under these Acts were introduced against the backdrop of European Directives, which require member states to take measures to protect the interests of employees or ex employees in relation to pension rights in the event of their employers insolvency. Section 75 of the 1995 Act Although it is the FSD regime under the 2004 Act which is of central importance on these appeals, section 75 of the 1995 Act is highly relevant. It provides that upon the happening of various events, which include an insolvency event, an amount equivalent to any shortfall in the assets of an occupational pension scheme (a scheme) as against its liabilities, which exists immediately prior to the relevant event, is to be a debt, known as a section 75 debt, due from the employer to the trustees of the scheme (the trustees). Under the section as originally drafted, an insolvency event was limited to the employer going into insolvent liquidation, but the 2004 Act extended the expression to include going into administration. In this judgment I shall similarly use the expression to cover going into administration or going into insolvent liquidation. Section 75(8) provides that a section 75 debt is not to be regarded as a preferential debt for the purposes of the 1986 Act. Section 75(4A) states that a section 75 debt is to be taken, for the purposes of an employers insolvency, to arise immediately before the occurrence of the insolvency event. The 2004 Act: the Regulator and the PPF The 2004 Act introduced both the Pensions Regulator (the Regulator) and the Pension Protection Fund (the PPF). The Regulator is a body corporate established by section 1, and, by section 4, it is given wide regulatory functions. When exercising any of those functions, the Regulator is required by section 100 to have regard to: 2(a) the interests of the generality of the members of the scheme to which the exercise of the function relates, and (b) the interests of such persons as appear to the Regulator to be directly affected by the exercise. Section 5(1) defines the Regulators main objectives, which include protecting the benefits of members of schemes, and reducing the risk of compensation having to be paid by the PPF. The PPF is financed from levies upon schemes. It operates by assuming the assets and liabilities of a deficient scheme, and then paying its members compensation at a prescribed rate (generally less than the full rate promised under the relevant scheme), using the industry wide levies for the purposes of meeting the shortfall between the deficient schemes assets and the prescribed level of compensation. The 2004 Act: the FSD regime and FSDs It was perceived that the creation of the PPF might encourage some employers to arrange their affairs so as to throw the burden of pension scheme deficiencies upon the PPF, which would unfairly burden other schemes by increasing the amount of the levies. An example of such an arrangement is where a group of companies uses a single company (a service company) to employ people who then work for other group companies. In such a case, the employees pension rights could be regarded as unfairly prejudiced if, by comparison with the resources of other group companies, the service company had very limited resources to meet a section 75 debt. The FSD regime was designed to mitigate such problems. In a nutshell, it enables the Regulator in specified circumstances (i) to impose, by the issue of a FSD to some or all of the other group companies (known as targets), an obligation to provide reasonable financial support to the under funded scheme of the service company or insufficiently resourced employer, and (ii) to deal with non compliance with that obligation by imposing, through a Contribution Notice (a CN), a specific monetary liability payable by a target to the trustees. The detailed provisions of the FSD regime are contained in sections 43 to 51 of the 2004 Act, and in the Pensions Regulator (Financial Support Directions etc) Regulations 2005 (SI 2005/2188) (the FSD Regulations). Section 43 is of central importance. Subsection (1) explains that the FSD regime extends to all occupational pension schemes other than money purchase schemes and certain other prescribed schemes. Section 43(2) contains the so called employer condition, and provides as follows: The Regulator may issue a [FSD] in relation to such a scheme if the Regulator is of the opinion that the employer in relation to the scheme (a) is a service company, or (b) is insufficiently resourced, at a time determined by the Regulator which falls within subsection (9) (the relevant time). Section 43(9) and the FSD Regulations define the relevant time as any time within a period of two years before the date of the determination of the Regulator to issue the FSD in question. It is known as the look back date. Service company is defined in section 44(2) as being a company within a group of companies which, by reference to its turnover, can be seen to be principally engaged in providing the services of its employees to other member companies in the group. Section 44(3) to (5) and the FSD Regulations explain that an employer is insufficiently resourced if two tests are satisfied. The first is that the value of its resources is less than 50% of the estimated section 75 debt in relation to a scheme, the amount of the shortfall being the relevant deficit. Secondly (limiting the situation to those involving companies), there must be a company which has (or two or more companies which between them have) resources not less than the relevant deficit, and which is (or are), inter alia, a company which is (or companies which are) connected with, or an associate of the employer (section 43(6)(c)). The 2004 Act and the FSD Regulations contain detailed provisions as to the manner in which a persons resources are to be assessed. Whereas the resources of an employer are incapable of being defined as having a negative value, the resources of persons associated or connected with the employer may be so defined. The formula for determining whether the insufficiently resourced condition is satisfied is known as the rich man/poor man test. The employer condition operates entirely by reference to the look back date chosen by the Regulator, rather than at the time when the FSD is issued (the issue date). Accordingly, the fact that, as at the date the FSD is issued, an employer may have ceased to be a service company, or the rich man/poor man test is not met, would not preclude a FSD. As to the target, section 43(4) provides that a FSD in relation to a scheme may be issued to one or more persons, but subsection (5)(a) limits the issue of a FSD to persons falling within subsection (6) at the relevant time (i.e. the look back date). Section 43(6)(a) and (c) respectively limit that class to the employer itself and, for present purposes, to a person who is connected with or an associate of the employer at the look back date. It is therefore irrelevant that, by the issue date, one or more targets which had the requisite net worth to satisfy the rich man part of the rich man/poor man test as at the look back date may no longer be solvent. Further, section 43(5)(a) does not limit the range of potential targets to those which satisfy the rich man part of the rich man / poor man test at the look back date. Section 43(5)(b) states that a FSD can only be issued to a particular target if the Regulator is of the opinion that it is reasonable to impose the requirements of the direction on that person; this is often called the reasonableness condition. Section 43(3) states that a FSD should: [require] the person or persons to whom it is issued to secure (a) that financial support for the scheme is put in place within the period specified in the direction, (b) that thereafter that financial support or other financial support remains in place while the scheme is in existence, and (c) that the Regulator is notified in writing of prescribed events in respect of the financial support as soon as reasonably practicable after the event occurs. Prescribed events include an insolvency event affecting the employer and any target, and any failure to comply with the requirements of the FSD. Section 45(1) and (2) define financial support as one or more of the following arrangements: (a) an arrangement whereby all the members of the group are jointly and severally liable for the whole or part of the employers pension liabilities in relation to the scheme; (b) [a legally binding] arrangement whereby a company which meets [certain] requirements and is the holding company of the group is liable for the whole or part of the employers pension liabilities in relation to the scheme; (c) an arrangement which meets [certain] requirements and whereby additional financial resources are provided to the scheme ; (d) such other arrangements as may be prescribed. Subsection 45(3) states that the Regulator may only approve any arrangement if satisfied that it is reasonable in the circumstances. Subsection 45(4) explains that the employers pension liabilities include, but are not limited to, the employers section 75 debt. A FSD will not itself either contain or be accompanied by a specification of what would constitute reasonable arrangements. It will simply require that the target secures that financial support for the scheme is put in place. It is for the target (alone or in conjunction with other targets) to propose reasonable arrangements for written approval by the Regulator. What the FSD must specify, pursuant to subsection 43(3)(a), is the period within which financial support for the scheme is to be put in place. By contrast, the period during which that support is to remain in place is, by reference to subsections 43(3)(b) and (10), the whole of the period until the scheme is wound up. Section 43(7) provides that, when deciding whether it is reasonable to impose the requirements of a FSD, the Regulator is to have regard to such matters as the Regulator considers relevant including, where relevant, the following matters: (a) the relationship which the person has or has had with the employer (including whether the person has or has had control of the employer ), (b) in the case of a person falling within [section 43(6)(c)], the value of any benefits received by that person from the employer, (c) any connection or involvement which the person has or has had with the scheme, (d) the financial circumstances of the person, . The FSD regime is capable of applying to almost any company within a group which has a service company, or a potentially insufficiently resourced employing company, with a potentially under funded scheme. Accordingly, the consequential contingent liabilities it creates could undermine the financial stability of potential targets. Section 46(2) attempts to mitigate this problem by providing for applications to the Regulator to determine that: (a) the employer in relation to the scheme would not be a service company for the purposes of section 43, (b) the employer in relation to the scheme would not be insufficiently resourced for the purposes of that section, or (c) it would not be reasonable to impose the requirements of a financial support direction, in relation to the scheme, on the applicant. Once issued, such a clearance statement binds the Regulator in relation to the power to issue a FSD unless there has been a relevant change of circumstances from those described in the application. The 2004 Act: the FSD regime and CNs The Regulator can issue a CN where there has been non compliance with a FSD. Whereas a single FSD can be issued in relation to a scheme (albeit to one or more targets), CNs are only to be issued on a target by target basis. Thus, section 47(4)(d) expressly contemplates that a CN may be issued to one target, where others have proposed arrangements in response to a FSD which have received the Regulator's approval. Section 47(3) imposes a reasonableness condition upon the issue of a CN to a particular target. Potentially relevant considerations are listed in subsection (4). In addition to those listed in section 43(7) in relation to FSDs, there are two further considerations, namely: (a) whether the person has taken reasonable steps to secure compliance with the financial support direction [and] (d) the relationship which the person has or has had with the parties to any arrangements put in place in accordance with the direction (including, where any of those parties is a company within the meaning of subsection (11) of section 435 of the Insolvency Act 1986, whether the person has or has had control of that company within the meaning of subsection (10) of that section). By contrast with a FSD, a CN is required to be specific as to the amount payable by the target. By section 47(2) the notice must state that the target is under a liability to pay the scheme trustees or managers a specified sum. By section 48, that sum is to be either the whole or a specified part of the amount which the Regulator estimates to be the amount of the section 75 debt at the time of non compliance with the FSD section 75 debt (if by then crystallised) or (if not crystallised) the Regulators estimate of what such debt would be if it had crystallised at that date. Section 49(3) provides that [t]he sum specified in the notice is to be treated as a debt due from the person to the trustees or managers of the scheme. Provision is also made for the Regulator (or, in specified circumstances, the Board of the PPF) to exercise any powers of the trustees or managers to recover the debt. CNs can be issued to two or more targets, and to create joint and several liability for a specified amount. Section 50 enables the Regulator to restrain the trustees or managers of the scheme from pursuing recovery of the section 75 debt while, at the same time, a CN is being enforced. Section 50(6) ensures that any payments under a CN are treated as reducing the amount of the section 75 debt. Finally, section 50(9) enables the Regulator to reduce the amount specified in a CN where, for example, there have in the meantime been payments of part of the section 75 debt. The 2004 Act: Procedure The 2004 Act and the FSD Regulations lay down a fairly elaborate procedural code for the implementation of functions of the Regulator, including the FSD regime. The functions of the Regulator are divided between regulatory functions, which are exercisable by its executive arm, and reserved regulatory functions, which must be exercised by its Determinations Panel (the DP). Decisions to issue a FSD and a CN are reserved functions, whereas the decision whether to give written approval to proposed arrangements under section 45 is not. Although the Regulator has a degree of discretion as to its procedure, in relation to the FSD regime it must comply with what is called in section 96 the standard procedure, which involves, as a minimum: 2(a) the giving of notice to such persons as it appears to the Regulator would be directly affected by the regulatory action under consideration (a warning notice), (b) those persons to have an opportunity to make representations, (c) the consideration of any such representations and the determination whether to take the regulatory action under consideration, (d) the giving of notice of the determination to such persons as appear to the Regulator to be directly affected by it (a determination notice), (e) the determination notice to contain details of the right of referral to the Tribunal . The issue of a FSD and a CN must each be subject to this procedure. The Tribunal is now the Upper Tribunal (Tax and Chancery Chamber), from which an appeal lies to the Court of Appeal. By section 103(4) the Tribunal must, on a reference, determine what (if any) is the appropriate action for the Regulator to take in relation to the matter referred to it. The Tribunal must therefore approach the issue before it afresh rather than by way of reviewing the decision of the Regulator or the DP. It is worth briefly summarising the timescale involved in these procedures. Before implementing the standard procedure, the Regulator must identify a pension fund which appears to be at risk, and investigate whether the conditions for the implementation of the FSD regime are satisfied; it must then address all matters relevant to the exercise, including the reasonableness condition for the issue of a FSD to each potential target. The ensuing standard procedure potentially involves six stages at which the target and others can make representations, namely (i) after a warning notice, (ii) following a determination (before the Tribunal), (iii) following a FSD, (iv) after a warning notice that a CN may be issued, (v) upon a determination that it should be issued (before the Tribunal), (vi) even after the issue of a CN, an adjustment may be asked for in the light of payments by others. At every stage, the Regulator or the Tribunal is required to have regard to the interests of the target as a person directly affected. The Insolvency legislation Administration and liquidation For present purposes, there are two relevant types of corporate insolvency procedure, administration and liquidation. Liquidation, or winding up, has always been a feature of company law, and it can be invoked whether or not a company is insolvent, although insolvent liquidations are more common. Administration was first introduced by the 1986 Act. At that time, it did not allow for distributions to creditors of the company within the administration. If the administration did not succeed in rescuing the company, it was expected that a winding up would follow, and the available assets would be distributed to creditors within the liquidation. The Enterprise Act 2002 (the 2002 Act) rendered it possible for assets to be distributed to creditors by administrators, so that a winding up can be avoided. (Conversely, a company which is in liquidation may now come out of it and go into administration.) There may be companies which go into liquidation without having been in administration, but most of those companies with which the present cases are concerned (apart from one which is not insolvent) are in administration, and may or may not eventually go into liquidation (and two of the Lehman group companies are neither in administration nor in liquidation). In general, the unsecured debts of a company after an insolvency event are payable pari passu to the relevant creditors, who claim payment by proving for their debts. There has to be a cut off date to determine the class of creditors who are to participate in the distribution of the company's available net assets. As the law stood as regards the companies with which these appeals are concerned, the cut off date for claims in a liquidation is the date on which the company goes into liquidation, whether or not the liquidation was immediately preceded by an administration. The cut off date for claims in an administration is the date on which the company entered administration. Under this regime, if an administration is followed immediately by a liquidation, the debts provable in the liquidation would include any which arise during the administration, although debts provable in the administration would be limited to those arising before the administration. Before turning to the relevant statutory provisions, two points may be worth noting in passing. First, the position described in para 35 above has now changed. The cut off date for claims in a liquidation, which follows an administration started after 5 April 2010, is the date when the administration began. The same issue as arises in these appeals can still arise. However, there will no longer be an artificial distinction between the positions where the company proceeds from administration to winding up and where it does not. The change will tend to increase the importance of the dispute as to the correct treatment for insolvency purposes of the liabilities arising under a FSD or a CN. Secondly, in relation to the companies in the present cases, it is common ground that if a liability of such a company arises during the administration, and a winding up were to follow later, that liability can be the subject of proof in the liquidation. The relevant provisions of the 1986 Act and the Insolvency Rules In a liquidation of a company and in an administration (where there is no question of trying to save the company or its business), the effect of insolvency legislation (currently the 1986 Act and the Insolvency Rules, and, in particular, sections 107, 115, 143, 175, 176ZA, and 189 of, and paras 65 and 99 of Schedule B1 to, the 1986 Act, and rules 2.67, 2.88, 4.181 and 4.218 of the Insolvency Rules), as interpreted and extended by the courts, is that the order of priority for payment out of the companys assets is, in summary terms, as follows: (1) Fixed charge creditors; (2) Expenses of the insolvency proceedings; (3) Preferential creditors; (4) Floating charge creditors; (5) Unsecured provable debts; (6) Statutory interest; (7) Non provable liabilities; and (8) Shareholders. So far as expenses of an insolvency are concerned, rule 12.2 of the Insolvency Rules (rule 12.2) states that: (1) All fees, costs, charges and other expenses incurred in the course of winding up, administration or bankruptcy proceedings are to be regarded as expenses of the winding up or the administration or, as the case may be, of the bankruptcy. As to expenses in a liquidation, rule 4.218 (rule 4.218) provides: (1) All fees, costs, charges and other expenses incurred in the course of the liquidation are to be regarded as expenses of the liquidation. (3) [T]he expenses are payable in the following order of priority (a) expenses properly chargeable or incurred by the official receiver or the liquidator in preserving, realising or getting in any of the assets of the company or otherwise in the preparation or conduct of any legal proceedings . or in the preparation or conduct of any negotiations; (e) the cost of any security provided by a liquidator; (m) any necessary disbursements by the liquidator in the course of his administration ; (n) the remuneration or emoluments of any person who has been employed by the liquidator to perform any services for the company ; (o) the remuneration of the liquidator ; (p) the amount of any corporation tax on chargeable gains accruing on the realisation of any asset of the company; (r) any other expenses properly chargeable by the liquidator in carrying out his functions in the liquidation. The equivalent provision in relation to the expenses of an administration is rule 2.67(1) (rule 2.67(1)), which states that The expenses of the administration are payable in the following order of priority, namely, (a) expenses properly incurred by the administrator in performing his functions in the administration of the company; (b) the cost of any security provided by the administrator in accordance with the Act or the Rules; (d) any amount payable to a person employed to assist in the preparation of a statement of affairs .; (f) any necessary disbursements by the administrator in the course of the administration ; (g) the remuneration or emoluments of any person who has been employed by the administrator to perform any services for the company .; (h) the remuneration of the administrator ; (j) the amount of any corporation tax on chargeable gains accruing on the realisation of any asset of the company . Where the assets of the company are insufficient to meet the totality of the expenses, rule 2.67(2) and (3) gives the court power to make an order as to the payment out of the assets of the expenses incurred in the administration in such order of priority as the court thinks just. Turning to unsecured debts and liabilities which are not expenses or preferential debts, rules 4.181 and rule 2.69 of the Insolvency Rules apply to liquidations and administrations respectively, and make it clear that, in so far as they are provable, they rank equally and, if there is insufficient money to meet them all, that they are to be abate[d] in equal proportions among themselves. In relation to what constitutes a provable debt, rule 12.3 of the Insolvency Rules in its form which applies to the instant administrations (rule 12.3) is headed Provable debts, and it provides as follows: (1) Subject as follows, in administration, winding up and bankruptcy, all claims by creditors are provable as debts against the company , whether they are present or future, certain or contingent, ascertained or sounding only in damages. (3) Nothing in this Rule prejudices any enactment or rule of law under which a particular kind of debt is not provable, whether on grounds of public policy or otherwise. Rule 13.12 of the Insolvency Rules (rule 13.12) is of critical importance on these appeals and it states: (1) Debt in relation to the winding up of a company, means. any of the following (a) any debt or liability to which the company is subject at the date on which the company went into liquidation; (b) any debt or liability to which the company may become subject after that date by reason of any obligation incurred before that date; (2) For the purposes of any provision of the Act or the Rules about winding up, any liability in tort is a debt provable in the winding up, if either (a) the cause of action has accrued at the date on which the company went into liquidation; or (b) all the elements necessary to establish the cause of action exist at that date except for actionable damage. (3) For the purposes of references in any provision of the Act or the Rules about winding up to a debt or liability, it is immaterial whether the debt or liability is present or future, whether it is certain or contingent, or whether its amount is fixed or liquidated, or is capable of being ascertained by fixed rules or as a matter of opinion . (4) except in so far as the context otherwise requires, liability means (subject to paragraph (3) above) a liability to pay money or money's worth, including any liability under an enactment, any liability for breach of trust, any liability in contract, tort or bailment, and any liability arising out of an obligation to make restitution. (5) This Rule shall apply where a company is in administration and shall be read as if references to winding up were references to administration. The relevant facts The Lehman group The Lehman group was a very substantial international financial concern which notoriously collapsed on 15 September 2008. The main London based group companies in the group were placed into administration that day, and I will refer to the administrators as the Lehman Administrators. The ultimate parent company of the Lehman group is Lehman Brothers Holdings Inc. (LBHI), a company incorporated in Delaware USA, which commenced Chapter 11 bankruptcy proceedings in September 2008, and emerged from them in March 2013. The main UK operating company is Lehman Brothers International (Europe) (LBIE), an unlimited company. The principal Lehman employer company within the UK, providing employees on secondment for most of the group's European activities, based in London, is Lehman Brothers Limited (LBL). When LBL went into administration on 15 September 2008, it crystallised a section 75 debt in relation to the Lehman Brothers Pension Scheme of approximately 120m. LBL is a shareholder in LBIE, and therefore liable without limit for LBIEs liabilities. Both LBIE and Lehman Brothers Europe Limited (LBEL), the other main London operating company, are subsidiaries of Lehman Brothers Holdings plc (LBH), which is itself wholly owned by Lehman Brothers UK Holdings Limited (LBUKH), which is in turn an indirect subsidiary of LBHI. Shortly after the Lehman group crash, the Regulator began investigations, with the consent of the Lehman Administrators, into the Lehman companies pursuant to notices under section 72 of the 2004 Act. Warning notices were issued to a number of Lehman group companies on or after 24 May 2010 on the ground that LBL was a service company, and the other requirements of section 43 of the 2004 Act were satisfied. There was then an oral hearing in September 2010 before the DP (at which the Lehman Administrators solicitors attended to observe, but made no submissions). A determination was then made by the DP on 13 September 2010 that a FSD should be issued against six Target companies, namely LBHI, LBIE, LBEL, LBH, LBUKH and Lehman Brothers Asset Management (Europe) Limited, which is no longer part of the Lehman group and is now called Neuberger Newman Europe Limited. The FSD process in relation to the Lehman companies is now stayed until after the outcome of these applications. The Nortel Group Prior to its collapse in January 2009, the Nortel group carried on a very substantial international telecommunications, computer network and software business. Its ultimate parent company is Nortel Networks Corporation (NNC) based in Canada. Its main Canadian operating company was Nortel Networks Limited (NNL) and its substantial USA business was headed by Nortel Networks Inc. (NNI), a direct subsidiary of NNL. The group's principal operating company in the UK was Nortel Networks UK Limited (NNUK) which is also a direct subsidiary of NNL. Since June 2000 it is principal Nortel employer in relation to the Nortel Networks UK Pension Plan (the Nortel Scheme). NNUK had a number of subsidiaries incorporated in various European countries. In addition, the European business was also carried on by certain European subsidiaries of NNL, including the applicants Nortel Networks SA, Nortel Networks France SAS and Nortel Networks (Ireland) Limited. At the time of the group's collapse in January 2009, NNUKs section 75 debt crystallised in an amount of about 2.1bn. Upon the group's collapse, NNC and NNL sought protection under Canadian bankruptcy law to facilitate the reorganisation of the group for the benefit of its creditors. On the same day NNI was placed into Chapter 11 bankruptcy in the United States, whilst NNUK, fifteen of its subsidiaries and the three European subsidiaries of NNL referred to above were placed into administration in England. The English administrators of the nineteen Nortel companies (the Nortel Administrators) have cooperated with other Nortel group office holders worldwide, in the process of selling the Nortel groups businesses along business rather than corporate demarcation lines and total global realisations of approximately US$7.5bn have been made. The Regulator's investigations into the Nortel Scheme began in early 2009, with the benefit of information provided by the Nortel Administrators. A warning notice was issued on 11 January 2010 to twenty nine Target companies in the Nortel group, on the basis that NNUK was insufficiently resourced and the other requirements of section 43 of the 2004 Act were satisfied. Representatives of the Nortel Administrators were present as observers, but did not make any representations at the oral hearing before the DP on 2 June 2010. After that hearing, the DP issued a determination notice on 25 June 2010 deciding that a FSD should be issued to the applicant Nortel companies, together with certain other Target companies. Following a reference to the Tribunal by the applicant Nortel companies and certain other of the Target companies, the automatic stay of the FSD process means that no FSD has yet been issued to those referring Target companies. The Tribunal proceedings have been informally stayed pending the outcome of these applications. Overview The issue in both appeals is how the administrators of a target should treat the targets potential liability under the FSD regime (and in due course the liability under a CN) in a case where the FSD is not issued until after the target has gone into administration. The courts below both held that the potential liability constituted an expense of the administration, falling within category (2) as described in para 39 above, so that it took priority over the normal run of unsecured creditors and even over the preferential creditors. Four possibilities have been canvassed before us. The first is that the courts below were right. The second is that the potential liability is an ordinary provable unsecured debt, ranking pari passu with other unsecured debts falling within category (5). The third possibility is that it is not a provable debt within rule 13.12, and therefore it falls within category (7). The fourth possibility is that, if the third is correct, then the court could and should direct the administrators to treat the potential FSD liability more favourably. Counsel representing the various parties very sensibly divided up the issues between them, so as to ensure that there was no repetition, and it is right to record the courts gratitude for the way the appeals were argued. Both Briggs J and the Court of Appeal felt constrained by a consistent line of authority, of which the most recent is R (Steele) v Birmingham City Council [2006] 1 WLR 2380, from holding that the potential liability as a result of a FSD issued after the commencement of an insolvent administration or liquidation (which I will refer to as an insolvency event) could constitute a provable debt within rule 12.3, although it appears that they would have so held if they had felt able to do so (see eg Briggs Js reluctance at para 191 of his judgment). They also considered that the effect of the House of Lords decision in In re Toshoku Finance UK plc [2002] 1 WLR 671 was that the potential liability was to be treated as an expense of the administration. Before this court, it was common ground that the potential liability under a FSD could not be both a provable debt and an expense of the administration, but there was discussion as to which should be considered first. In some cases, a liability which would otherwise be a provable debt can be, on special facts, an expense of the administration or liquidation (as in In re ABC Coupler and Engineering Co Ltd (No 3) [1970] 1 WLR 702), which may seem to suggest that the expense issue should be considered first. However, in the light of the common ground in this case, it appears to me that it is appropriate to consider the provable debt issue first, although it would be wrong not to address the expense question as well. Before I turn to examine in detail the arguments on the two issues, it is right to say that, at any rate on the face of it, the sensible and fair answer would appear to be that the potential liability of a target, under a FSD issued after an insolvency event, and in particular the liability under a CN issued thereafter, should be treated as a provable debt. There seems no particular sense in the rights of the pension scheme trustees to receive a sum which the legislature considers they should be entitled to receive having any greater or any lesser priority than the rights of any other unsecured creditor. It is common ground that if a CN had been issued in respect of a company before an insolvency event, it would give rise to a provable debt, and the courts below considered that, if a CN were issued after an insolvency event, it would give rise to a provable debt if it was based on a FSD issued before the insolvency event. It appears somewhat arbitrary that the characterisation and treatment of the liability under the FSD regime should turn on when the FSD or CN happens to have been issued, if it is based on a state of affairs which existed before the insolvency event. The notion that the potential liability under the FSD regime should be a provable debt if the FSD is issued after the administration or liquidation is supported by the fact any section 75 debt would itself be a provable debt, and not a preferential debt, in any insolvent liquidation or administration of an employer. That is clear from the provisions summarised in para 7 above. It would be strange if the employer companys statutory obligation to make good a shortfall in its employees pension scheme ranked lower in its insolvency than the more indirect statutory obligation of a target to make that deficiency good ranked in the targets insolvency. Indeed, it would be somewhat surprising if there was any significant difference in the treatment of the two types of obligation, in the light of the interrelationship between the FSD regime and the section 75 debt as evidenced for instance by section 50(6) of the 2004 Act. If the decisions below were correct, it would also mean that the legislature had given the Regulator a significantly valuable and somewhat arbitrary power, in what may (in the light of what is said in para 63 below) be an admittedly rare case in practice. Where the Regulator is proposing to issue a FSD in respect of a company not yet in administration or liquidation, it would be well advised to wait for the insolvency event, if the decisions below are right, because the amount recoverable under a subsequent CN would inevitably be greater than under a CN issued following a FSD issued before the insolvency event. The liability under the FSD regime could be said to be some sort of indirect liability for past wages of employees, as pensions are often treated as deferred pay. However, quite apart from the fact that that argument involves a considerable stretch (not least because the liability is not that of the employer or former employer), it would prove too much. If the potential liability under consideration in these appeals counted as expenses, they would rank ahead of past wages and holiday pay, which have preferential status ie they would fall within category (3), not (5), in para 39 above. It also seems unlikely that it can have been intended that liability under the FSD regime could rank behind provable debts. One would have expected that FSDs and CNs would normally be issued in respect of insolvent companies (that certainly appears to have been the invariable experience so far); accordingly, it would mean that, save in very unusual cases, nothing would be paid in respect of most FSDs issued after an insolvency event. Further, it would be a relatively unusual case where a FSD, let alone a CN, was issued before an insolvency event. As Briggs J said, the investigations, steps and opportunity for representations, required by the 2004 Act, as summarised in para 34 above, are such that a FSD would rarely be issued for many months after the Regulator is first aware of a possible problem, and the time before a CN could be issued could easily be much more than a year. With those preliminary observations, I turn to consider whether the liability under a FSD issued after a target has gone into administration or liquidation (ie after an insolvency event) is (i) a provable debt, or (ii) an expense of the administration/ liquidation, and (iii) if it is neither, whether the court can require the administrator or liquidator to treat it as if it was. Is the liability under a FSD issued after an administration a provable debt? In the light of the reference in rule 13.12(4) to any liability under an enactment, it appears clear that a liability under a CN, which on any view imposes a duty on the target to pay a sum of money, would be capable of giving rise to a liability. The question, therefore, is whether the potential liability under a FSD which was issued after an insolvency event is capable of being a liability falling within the ambit of rule 13.12(1). The definition of provable debt in rule 12.3 is strikingly wide, particularly when the rule is read together with rule 13.12, which defines debt. It is therefore unsurprisingly not in issue that the consequences for a target of, or at least following, the issuing of a FSD constitute a liability within the meaning of rule 13.12. However, where a FSD is issued after the target goes into administration or liquidation, the argument which has to be addressed is whether any potential liability thereby created falls within rule 13.12(1), because, if it does not, then it cannot constitute a debt for the purposes of the rule, and therefore cannot be a provable debt for the purposes of rule 12.3. The primary argument advanced in support of the contention that the potential liability under a FSD notice issued after the insolvency event gives rise to a provable debt was based on the contention that it would be a liability to which the company may become subject after [the insolvency event] by reason of any obligation incurred before that date within rule 13.12(1)(b). However, it was also argued that, in the light of the very wide ambit of rule 13.12(3) and its reference to future, contingent and matter of opinion, the potential liability would fall within rule 13.12(1)(a), as the potential liability was, as at the date of the insolvency event, a liability to which the company is subject. Does the potential liability fall within rule 13.12(1)(a)? It is convenient first to deal with the argument that potential liability under a FSD issued against a company after the start of its administration or liquidation gives rise to a liability which falls under rule 13.12(1)(a). This argument is based on the simple proposition that the risk of being issued with a FSD is a contingent liability, and is therefore a liability for the purposes of rule 13.12(1)(a) as a result of rule 13.12(3). If this argument was right, it would avoid the possible problem thrown up by the closing ten words of rule 13.12(1)(b). The argument would be easy to understand were it not for rule 13.12(1)(b). Para (b) of rule 13.12(1) contains a limitation, in that it provides that, if a company in liquidation or administration becomes subject to a liability after the date of the insolvency event, then that liability can only be treated as a debt under that paragraph if it arises by reason of any obligation incurred before that date. If para (a) of rule 13.12(1) could apply to a liability which arises after the insolvency event, then it would not only render para (b) otiose, but it would also effectively override this limitation. In other words, the very limitation which rule 13.12(1)(a) is being invoked to avoid represents the reason why rule 13.12(1)(a) cannot be invoked. It is fair to say that it is somewhat ironic to invoke para (b) to limit the ambit of para (a), when it would appear that the purpose of para (b) is to extend the ambit of para (a). However, the provisions of the Insolvency Rules, and of each rule of those Rules, have to be read in a sensible and coherent way, and one has to read paras (a) and (b) so that they work together. I agree with the view expressed by David Richards J in In re T & N Ltd [2006] 1 WLR 1728, para 115, that para (a) is concerned with liabilities to which the company is subject at the date of the insolvency event, whereas para (b) is directed to those liabilities to which it may become subject subsequent to that date, and that there is no overlap between these two categories. Accordingly, if there is a debt or liability in this case, it cannot fall within para (a): the issue is whether it falls within para (b). Does the potential liability fall within Rule 13.12(1)(b)? There is no doubt that the liability which is imposed on a target on the issuing of a FSD after the commencement of its administration or liquidation is a liability for the purposes of rule 13.12(1)(b), as it is a liability under an enactment within rule 13.12(4). The question is, however, whether it can be said to be a liability which arose by reason of any obligation incurred before the insolvency event. In these cases, a Target companys liability under the FSD scheme arises because it was a member of a group of companies, which, to put it very loosely, fell within the scope of the regime (as the group included a company which had a pension scheme, and that company was a service company, or insufficiently resourced). In order for the liability in issue to fall within rule 13.12(1)(b), therefore, the fact that the Target company was a member of such a group must amount to a sufficient obligation incurred within the meaning of that rule, before the target went into administration. Timing is no problem in the present cases, because each of the Target companies in the Lehman and Nortel groups were members of a group which fell within the scope of the regime, as I have used that expression, well before they went into administration. That issue thus centres on the meaning of the word obligation in rule 13.12(1)(b). The meaning of the word obligation will, of course, depend on its context. However, perhaps more than many words, obligation can have a number of different meanings or nuances. In many contexts, it has the same meaning as liability, but it clearly cannot have such a meaning here. Indeed, in the context of rule 13.12, it must imply a more inchoate, or imprecise, meaning than liability, as the liability is what can be proved for, whereas the obligation is the anterior source of that liability. Where a liability arises after the insolvency event as a result of a contract entered into by a company, there is no real problem. The contract, in so far as it imposes any actual or contingent liabilities on the company, can fairly be said to impose the incurred obligation. Accordingly, in such a case the question whether the liability falls within para (b) will depend on whether the contract was entered into before or after the insolvency event. Where the liability arises other than under a contract, the position is not necessarily so straightforward. There can be no doubt but that an arrangement other than a contractual one can give rise to an obligation for the purposes of para (b). That seems to follow from rule 13.12(4). As Lord Hoffmann said, (albeit in a slightly different context) in relation to contingent liabilities arising on a liquidation, in Secretary of State for Trade and Industry v Frid [2004] 2 AC 506, para 19, [h]ow those debts arose whether by contract, statute or tort, voluntarily or by compulsion is not material. However, the mere fact that a company could become under a liability pursuant to a provision in a statute which was in force before the insolvency event, cannot mean that, where the liability arises after the insolvency event, it falls within rule 13.12(1)(b). It would be dangerous to try and suggest a universally applicable formula, given the many different statutory and other liabilities and obligations which could exist. However, I would suggest that, at least normally, in order for a company to have incurred a relevant obligation under rule 13.12(1)(b), it must have taken, or been subjected to, some step or combination of steps which (a) had some legal effect (such as putting it under some legal duty or into some legal relationship), and which (b) resulted in it being vulnerable to the specific liability in question, such that there would be a real prospect of that liability being incurred. If these two requirements are satisfied, it is also, I think, relevant to consider (c) whether it would be consistent with the regime under which the liability is imposed to conclude that the step or combination of steps gave rise to an obligation under rule 13.12(1)(b). When deciding whether a particular state of affairs or relationship is sufficient to amount to the incur[ring] of an obligation, by reason of which the liability arose, considerable assistance can, I think, be gained from the majority decision in Winter v Inland Revenue Commissioners, In re Sutherland (decd) [1963] AC 235. That case was concerned with whether an arrangement was within the expression contingent liabilities in section 50 of the Finance Act 1940. As Lord Reid explained at p 247, at the relevant date, the position of the company was that, by applying for and accepting allowances in respect of these ships, it had become bound by the statute to pay tax under a balancing charge when it ceased to use these ships in its trade, if the moneys which it received for them exceeded any expenditure on them which was still unallowed. contingent liability as at the relevant date. Lord Reid said this at p 248: [I]f an Act says I must pay tax if I trade and make a profit, I am not before I begin trading under a contingent liability to pay tax in the event of my starting trading. In neither case have I committed myself to anything. But if I agree by contract to accept allowances on the footing that I will pay a sum if I later sell something above a certain price I have committed myself and I come under a contingent liability to pay in that event. In those circumstances, the majority concluded that the obligation was a Reference to a passage in Lord Hodsons dissenting speech highlights the effect of this reasoning. At p 257, he said that he thought that the risk of attracting liability is not enough and the argument involves a misconception of what is meant by contingent liabilities in their context, and went on to point out that [t]here may be no day of reckoning; the ships may never be sold; if there is a sale there may be a balancing allowance not a balancing charge. This contrast is also highlighted by what Lord Guest (who agreed with Lord Reid) said at p 264: The claim for initial allowances for what has been described as depreciation is the voluntary choice of the taxpayer, but, once he has obtained such allowances, he is automatically involved by the operation of law in the payment of balancing charges, if the assets are parted with at a price greater than the written down value in the circumstances defined in section 292 of the Income Tax Act, 1952 It is true that in Sutherland, the House of Lords was concerned with the meaning of contingent liabilities in the context of estate duty, whereas these appeals are concerned with the meaning of obligation from which a contingent liability derives in insolvency legislation. It was suggested that the reasoning of Lord Reid should not, therefore, be relied on here. I do not agree. Lord Reid gave a characteristically illuminating and authoritative analysis of an issue of principle. It appears to me that the issue of (i) what is a contingent liability and (ii) what is an obligation by reason of which a contingent liability arises, are closely related. In Sutherland the House had to decide whether what a company had done was sufficient, in Lord Reids words, to have committed [it]self to a contingent liability. As I see it, that is much the same thing as having incurred an obligation from which a contingent liability may arise, for the purposes of rule 13.12(1)(b). I note that the approach to contingent liabilities adopted in Sutherland was considered helpful in two cases concerned with insolvency law decided by judges experienced in the field Pennycuick J In re SBA Properties Ltd [1967] 1 WLR 799, 802D 803E, and David Richards J in In re T & N Ltd, [2006] 1 WLR 1728, paras 48 61. In the latter case, the judge pointed out at para 61 that the case before him was, as these cases are, in one important respect a stronger case than Sutherland, because the majority did not regard as decisive that the liability to pay the balancing charges would arise only as a result of the company's own choice to sell the ships. In this case there is no question of volition. The reasoning of Lord Reid, and of Lord Guest, in Sutherland self evidently supports the argument that the potential FSD regime liabilities in the present cases fall within rule 13.12(1)(b), even where the FSD is not issued until after the relevant insolvency event. More specifically, if one asks whether those potential liabilities of the Target companies in these two appeals satisfy the requirements suggested in para 77 above, it appears to me that the answer is yes. As to the first requirement, on the date they went into administration, each of the Target companies had become a member of a group of companies, and had been such a member for the whole of the preceding two years the crucial look back period under the 2004 Act. Membership of a group of companies is undoubtedly a significant relationship in terms of law: it carries with it many legal rights and obligations in revenue, company and common law. As to the second requirement, by the date they went into administration, the group concerned included either a service company with a pension scheme, or an insufficiently resourced company with a pension scheme, and that had been the position for more than two years. Accordingly, the Target companies were precisely the type of entities who were intended to be rendered liable under the FSD regime. Given that the group in each case was in very serious financial difficulties at the time the Target companies went into administration, this point is particularly telling. In other words, the Target companies were not in the sunlight, free of the FSD regime, but were well inside the penumbra of the regime, even though they were not in the full shadow of the receipt of a FSD, let alone in the darkness of the receipt of a CN. So far as the third requirement is concerned, I would simply refer back to the points made in paras 58 63 above. The earlier authorities I should refer to the authorities which the Court of Appeal and Briggs J understandably held bound them to reach a contrary conclusion. Those authorities were mostly concerned with individual bankruptcy rather than corporate insolvency. However, the meaning of the expression debt in the two regimes is very similar: rule 12.3 applies to both, and section 382 of the 1986 Act has a very similar definition of provable debt for bankruptcies as rule 13.12 has for liquidations. In a number of cases, it has been held that, where an order for costs was made against a person after an insolvency process had been instituted against him, his liability for costs did not arise from an obligation which had arisen before issue of the bankruptcy proceedings, even though the costs order was made in proceedings which had been started before that insolvency process had begun see for instance In re Bluck, Ex p Bluck (1887) 57 LT 419, In re British Gold Fields of West Africa [1899] 2 Ch 7, In re A Debtor (No 68 of 1911) [1911] 2 KB 652, and In re Pitchford [1924] 2 Ch 260. In my view, by becoming a party to legal proceedings in this jurisdiction, a person is brought within a system governed by rules of court, which carry with them the potential for being rendered legally liable for costs, subject of course to the discretion of the court. An order for costs made against a company in liquidation, made in proceedings begun before it went into liquidation, is therefore provable as a contingent liability under rule 13.12(1)(b), as the liability for those costs will have arisen by reason of the obligation which the company incurred when it became party to the proceedings. I have little concern about overruling those earlier decisions, although they are long standing. First, the judgments are very short of any reasoning, and consist of little but assertion. Secondly, they were decided at a time when the legislature and the courts were less anxious than currently for an insolvency to clear all the liabilities of a bankrupt (as they were all concerned with individual insolvencies). Although most of the provisions of rule 13.12 and section 382 can be found in section 30(3), (4) and (8) of the Bankruptcy Act 1914, over the past three hundred years, the legislature has progressively widened the definition of provable debts and narrowed the class of non provable liabilities to quote from the written case of Mr Phillips QC who relied on those cases. Thirdly, those cases are impossible to reconcile logically with the earlier case of In re Smith, Ex p Edwards (1886) 3 Morrell 179, where, on identical facts (save that it was an arbitration rather than litigation) it was held that an order for costs did give rise to a provable debt. Fourthly, the unsatisfactory nature of those decisions can be seen from the way in which the Court of Appeal sought to evade their consequence in Day v Haine [2008] ICR 1102, a case which I consider to have been rightly decided. For the same reasons, I consider that the decisions of the Court of Appeal in Glenister v Rowe [2000] Ch 76 and Steele [2006] 1 WLR 2380 were wrongly decided, although I can see how it might be said that they were justified on the basis of stare decisis. The reasoning of Arden LJ in the latter case at paras 21 23 is instructive, because, as she says, the previous authorities in relation to provable debts suggested a narrower meaning of contingent liability than was adopted by the majority in Sutherland. That observation neatly illustrates why they were wrongly decided. The Report of the Review Committee on Insolvency Law and Practice (the Cork Report, 1982, Cmnd 8558), para 1289, described it as a basic principle of the law of insolvency that every debt or liability capable of being expressed in money terms should be eligible for proof so that the insolvency administration should deal comprehensively with, and in one way or another discharge, all such debts and liabilities. The notion that all possible liabilities within reason should be provable helps achieve equal justice to all creditors and potential creditors in any insolvency, and, in bankruptcy proceedings, helps ensure that the former bankrupt can in due course start afresh. Indeed, that seems to have been the approach of the courts in the 19th century before the somewhat aberrant decisions referred to in para 88 above. Thus, in Ex p Llynvi Coal and Iron Co; In re Hide (1871) LR 7 Ch App 28, 32, James LJ described one of the main aims of the bankruptcy regime as to enable the bankrupt to be a freed man freed not only from debts, but from contracts, liabilities, engagements and contingencies of every kind. If that was true in 1871, it is all the more true following the passing of the 1986 and 2002 Acts, and as illustrated by the amendment to rule 13.12(2) effected following the decision in In re T & N Ltd [2006] 1 WLR 1728, so as to extend the rights of potential tort claimants to prove. It was suggested that para (m) was included in rule 4.218(3) on the assumption that cases such as those mentioned in para 88 above were rightly decided. That may be so. But, even if it is, the fact that a rule has been drafted on the basis that a decision of the Court of Appeal was right does not mean that this court should uphold the decision if satisfied that it was wrong. Conclusion on the provable debt issue I would accordingly dismiss these appeals to the extent of holding that the administrators are bound to meet the liabilities of the Target companies under the FSD regime, but allow the appeals to the extent of holding that these liabilities are to be treated as provable debts. I have had the opportunity of reading in draft the judgment of Lord Sumption on this issue and I agree with it. His reference to Carron Iron Co Proprietors v Maclaren (1855) HL Cas 416 and In re Oriental Inland Steam Co (1873 4) LR 9 Ch App 557 appears to me to be very much in point. I have also found assistance in the careful judgment of Lord Drummond Young in the Outer House in In re Thomas v Burton, liquidator of Ben Line Steamers Ltd [2010] CSOH 174; 2011 SLT 535. Is the liability under a FSD issued after an insolvency event a liquidation expense? Given that the potential FSD liability in each of these cases is a debt falling within rule 13.12(1)(b), and therefore a provable debt within rule 12.3, and the acceptance on all sides that it would not therefore be an expense, it is strictly unnecessary to consider this question. However, it should be addressed as it was fully debated, and the point is of some potential importance, as I do not entirely agree with the courts below as to the effect of the reasoning and decision of the House of Lords in In re Toshoku Finance UK plc [2002] 1 WLR 671. The question which would arise if the potential liability under the FSD regime did not give rise to a provable debt under rule 13.12 where the FSD is issued after the relevant insolvency event, is whether the liability would be within the expression charges and other expenses incurred in the course of the administration within rule 12.2, and, more particularly, within the expression any necessary disbursements by the administrator in the course of the administration, within rule 2.67(1)(f) the equivalent provision in a liquidation being rule 4.218(3)(m). The word necessary in rule 2.67(1)(f) carries with it a legal obligation to pay (or, possibly, in exceptional cases, a moral obligation to pay, as to which see the next section of this judgment). However, that is somewhat circular, as it leaves open the very question which has to be decided, namely whether the liability in question which has been imposed on the company is one which the administrator must pay. Further, a liability may arise during an administration without falling within rule 2.67(1)(f), without being in the course of the administration. In Davidson v Robb [1918] AC 304, 321, Lord Dunedin explained that in the course of his employment had a more limited meaning than during the period of his employment and connoted something which is part of his service namely work or the natural incidents connected with the class of work, a view echoed by Lord Russell in Alderman v Great Western Railway Co [1937] AC 454, 459. While it would be dangerous to treat any formulation as an absolute rule, it seems to me, at any rate subject to closer examination of the authorities and counter arguments, a disbursement falls within rule 2.67(1)(f) if it arises out of something done in the administration (normally by the administrator or on the administrators behalf), or if it is imposed by a statute whose terms render it clear that the liability to make the disbursement falls on an administrator as part of the administration either because of the nature of the liability or because of the terms of the statute. Thus, if an administrator, on behalf of the company, enters into a transaction which gives rise to tax, or starts (or adopts) proceedings which give rise to a liability for costs, that tax or those costs would fall within the rule, as they arise from his actions as administrator during the administration. This conclusion is consistent with the authorities on liquidations see eg In re Beni Felkai Mining Co Ltd [1934] 1 Ch 406, In re Mesco Properties Ltd [1979] 1 WLR 558, affirmed [1980] 1 WLR 96 (tax), In re Trent & Humber Shipbuilding Co; Bailey & Leethams Case (1869) LR 8 Eq 94 and In re Wenborn & Co [1905] 1 Ch 413 (costs). An area in which liquidators have been held liable to meet a statutorily imposed liability is that of property taxes ie business and domestic rates and community charge see, for instance, In re International Marine Hydropathic Co (1884) 28 Ch D 470, In re National Arms & Ammunition Co (1885) 28 Ch D 474, In re Blazer Fire Lighter Ltd [1895] 1 Ch 402, and more recently Exeter City Council v Bairstow [2007] Bus LR 813. The explanations in the judgments in those cases of the basis on which a liquidator has been held liable for rates and (in Kentish Homes) for community charge as an expense of the liquidation, are not entirely consistent. Sometimes it was said to be because the liquidator is retaining the property in question for the benefit of the winding up see eg per Baggallay LJ in Marine Hydropathic at 471 and Fry LJ in National Arms at 481. However, it was also said that the rates should count as an expense on the ground that, because the liquidator remained in rateable occupation of the property in question, the rates for the period should rank as an expense of the liquidation see eg per Bowen LJ in National Arms at 480 and 482, and Vaughan Williams J in Blazer at 406 7. The latter rationale seems to me to represent the current state of the law see per Lord Hoffmann in Toshoku at para 34 and per David Richards J in Exeter at paras 15 19. In my view, therefore, the fact that the liability for rates falling due after an insolvency event on property retained by the liquidator ranks as an expense of the liquidation, is based on the proposition that, as a matter of interpretation, the rating (and community charge) legislation imposes such a liability on the liquidator (and the same logic must apply in an administration). This is consistent with the fact that liability for rates (and community charge), arises from day to day, and the liability is treated as an expense only in respect of the companys occupation of property during the liquidation. This conclusion derives a degree of support from the fact that, in the context of a liquidation, it is always open to a liquidator to disclaim onerous property (under sections 178 182 of the 1986 Act) and, if he chooses not to do so, it would presumably be as a result of a conscious decision to retain the property for the benefit of the creditors. An administrator cannot disclaim property, but there is force in the point that the rating authorities should not be worse off because a company opts for administration rather than liquidation, given that the normal reason for preferring administration to liquidation is to seek a better outcome for creditors and/or shareholders of the company see para 3(1) of Schedule B1 to the 1986 Act. Adopting the approach I have suggested, it appears to me that a potential liability under a FSD or a liability under a CN does not fall within the scope of expenses of an administration within rule 12.2 or rule 2.67(1)(f). First, there is no question of such a liability resulting from any act or decision taken by or on behalf of the administrator or any act or decision taken during the administration. The liability self evidently arises out of events which occurred before the insolvency event. Secondly, I do not consider that the terms of the 2004 Act, properly interpreted, mean that a liability under a CN would be an expense of the administration, if it was not a provable debt under rule 13.12. It is true that the effect of a CN under section 49(3) of the 2004 Act is that it gives rise to a debt payable by the target once it is issued, but it does not seem to me that that can be sufficient to render the payment of the debt a necessary disbursement by the administrator in the course of the administration. The mere fact that an event occurs during the administration of a company which a statute provides gives rise to a debt on the part of the company cannot, of itself, be enough to render payment of the debt an expense of the administration. It would be a debt payable during the period of the administration, but it would not be part of the administration, or a payment which was one of the natural incidents connected with the administration, to use the language of Lord Dunedin in Davidson. In my view, something more would be required, either from the wording of the 2004 Act or from the nature of the liabilities which it imposes, before a CN issued after the targets insolvency event could be held to be an expense of the administration or liquidation. The 2004 Act and the FSD Regulations are silent on the issue of the status of the liability under the FSD regime where the target has suffered or suffers an insolvency event. It is therefore necessary to consider whether there is any indication that can be gathered from the 2004 Act, its aims and procedures, that it was intended that such a liability should rank as an expense of the targets administration or liquidation, if it does not give rise to a provable debt. For the reasons given in paras 59 62 above, it would be remarkable if a liability under a CN issued to a target pursuant to a FSD issued after the target suffered an insolvency event had priority over the targets other unsecured creditors, when a CN, based on precisely the same facts, would not have such priority if it was issued pursuant to a FSD issued notice issued before the insolvency event. I accept that it would be curious if a FSD issued after an insolvency event was significantly less effective than one issued before that event, and indeed that it would be unlikely to result in any sum being paid as explained in para 63 above. However, the notion that liability pursuant to a FSD issued after the target had suffered an insolvency event ranks behind the targets provable debts, is, to my mind, less surprising than the notion that it should rank ahead of them. First, I consider that the balance of anomalies, as discussed in paras 59 63 above, is such that the former appears a much less unlikely outcome. Secondly, as a general proposition, once the facts giving rise to a right to raise a claim (in these cases, by issuing a FSD) exist, it would be very unusual for the beneficiary of the right to be better off as a result of a delay in raising the claim, but it would be far from surprising if the beneficiary were worse off as a result of such a delay. The reason that the courts below reached a different conclusion is best explained by quoting a passage, from the first instance judgment, which the Court of Appeal (in paras 99 101 of Lloyd LJs judgment) expressly approved. At [2011] Bus LR 766, para 146, Briggs J said that Lord Hoffmanns speech in Toshoku established as a general rule that: [W]here by statute Parliament imposes a financial liability which is not a provable debt on a company in an insolvency process then, unless it constitutes an expense under any other sub paragraph in the twin expenses regimes for liquidation and administration, it will constitute a necessary disbursement of the liquidator or administrator. That is the general rule, whether the statute expressly refers to companies in an insolvency process as being subject to the liability, or whether the statute achieves the same result by using a criterion for liability which is insolvency neutral. Any other conclusion would in my judgment attribute an excessive weight to the linguistic method by which different legislation achieved the same result, namely that the statutory obligation in question is a liability of a company in an insolvency process. While it is fair to say that some observations of Lord Hoffmann in Toshoku, if read on their own, may appear to support that general rule, I consider that Briggs Js summary amounts to an incorrect statement of the law. In my view, the general guidance given by Lord Hoffmann in Toshoku is to be found in para 46, where he said that the question of whether [any particular] liabilities should be imposed upon companies in liquidation is a legislative decision which will depend upon the particular liability in question. In a case, such as the present, where (i) the statutory liability is one which could have been imposed before or after liquidation, (ii) the liability does not give rise to a provable debt (as is being assumed for present purposes) and (iii) the statute is completely silent as to how the liability should be treated if it is imposed after an insolvency event, the liability can only be an expense of the liquidation or administration if the nature of the liability is such that it must reasonably have been intended by the legislature that it should rank ahead of provable debts. It would be wrong to suggest that this is a test which may not need to be refined in future cases, but it appears to me to be supported by the facts and arguments raised on these appeals. I do not consider that Toshoku takes matters any further in the present case. Lord Hoffmann explained in para 2 that the liability in Toshoku arose from a statutory provision which stated that: a company is chargeable to corporation tax on profits arising in the winding up of the company. It may be assessed in respect of an accounting period deemed to commence on the liquidation date , and the liquidator is the proper officer liable to pay the tax . [Other relevant statutory requirements were that] profits must be computed on an accruals basis [and] the computation must be made on the assumption that every amount payable under the relationship will be paid in full as it becomes due. In other words, unlike the present cases, Toshoku concerned a tax liability which was imposed on a liquidator, as opposed to the company, and it was a tax which only applied (in specified circumstances) to a company which had gone into liquidation. As Lord Hoffmann said at para 30, [t]here would be little point in a statute which specifically imposed liabilities upon a company in liquidation if they were payable only in the rare case in which it emerged with all other creditors having been paid. Even in such a case, I consider that it would be appropriate for a court to consider whether the legislature intended the liabilities concerned to rank as an expense, but the point made by Lord Hoffmann would clearly be a very powerful factor as to why it should. I therefore would conclude that, if the liability in these cases did not rank as a provable debt, it would not count as an expense of the administration. Does the court have a residual discretion? If I had taken a different view on the provable debt issue, an alternative argument to that just discussed was that the court has the power to direct the administrator of a Target company to accord to the potential liability under the FSD regime a higher ranking than it would be given under the 1986 Act and the Insolvency Rules. In other words, that the court could order the administrator to treat the potential FSD liability as a provable debt (category 5 in para 39 above) even though the effect of the legislation is that it should rank lower (namely category 7). At any rate at first sight, it would be extraordinary if a court, which had decided that a liability did not fall within the definition of provable debts in rule 13.12, could nonetheless go on to decide that it was to be so treated, in the absence of any specific statutory power to do so. Such a course would appear to be wrong in principle, because it would involve a judge effectively overruling the lawful provisions of a statute or statutory instrument. It would also be highly problematic in practice because it would throw many liquidations and administrations into confusion: the law would be uncertain, and many creditors who felt that the statutory ranking caused them unfair prejudice would make applications to the court. If further reasons were required for this conclusion, they may be found in rule 2.67 and in Toshoku. Rule 2.67(2) and (3), referred to in para 42 above, show that, where the Insolvency Rules wish to give the court the ability to change the priority rules, they say so. In the course of his speech in Toshoku at para 38, Lord Hoffmann referred to the proposition whether debts should count as expenses of the liquidation is a matter for the discretion of the court and held that there was no such discretion and disapproved Sir Donald Nicholls V Cs comments in In re Kentish Homes Ltd [1993] BCLC 1375. As Lord Hoffmann made clear in para 41, how a particular liability was to be ranked depended solely on the proper interpretation of the Insolvency Rules. The justification for a contrary view was based on three paragraphs of Schedule B1 to the 1986 Act (Schedule B1), and a number of decisions where the court has ordered a liquidator to take a particular action. Para 13 of Schedule 1 entitles an administrator to make any payment which is necessary or incidental to the performance of his functions. I do not see how that can entitle him, let alone the court to direct him, to treat an unprovable debt as a provable debt (unless, conceivably, there was resulting benefit which would redound for the benefit of the proving creditors, although even then it would be problematic). It can scarcely be said to be incidental or necessary to a persons statutorily prescribed functions to do something inconsistent with those functions. Para 65(3) of Schedule B1 precludes an administrator from paying a creditor who is neither secured nor preferential without the sanction of the court. I cannot see how this provision can be properly interpreted as giving the court a roving commission to change the statutory priorities in a particular case simply because it does not like the consequences of those priorities. It was no doubt intended to apply where the payment in question is necessary or desirable to achieve one of the administrators statutory functions under paragraph 3 of Schedule B1 to the 1986 Act (eg the companys survival or a more advantageous realisation of the companys assets). Para 74 of Schedule B1 entitles a creditor to apply to the court if it considers that the administrator proposes to act in a way which would unfairly prejudice it. This cannot, in my view, apply to a case where the administrator is proposing to do that which the legislation requires him to do. It applies where the administrator is exercising a power, or discretion, most obviously carrying on the companys business in a certain way or selling off an asset of the company, or not performing an obligation, such as paying off creditors in the order mandated by the legislation. Again, it cannot have sensibly been intended to give the court a roving commission to vary the clear statutory ranking of liabilities as summarised in para 39 above. As to the common law, there are a number of cases, starting with In re Condon Ex p James (1874) LR 9 Ch App 609, in which a principle has been developed and applied to the effect that where it would be unfair for a trustee in bankruptcy to take full advantage of his legal rights as such, the court will order him not to do so, to quote Walton J in In re Clark (a bankrupt) [1975] 1 WLR 559, 563. The same point was made by Slade LJ in In re TH Knitwear (Wholesale) Ltd [1988] Ch 275, 287, quoting Slater J in In re Wigzall, Ex p Hart [1921] 2 KB 835, at 845: where a bankrupts estate is being administered under the supervision of a court, that court has a discretionary jurisdiction to disregard legal right, which should be exercised wherever the enforcement of legal right would be contrary to natural justice. The principle obviously applies to administrators and liquidators see In re Lune Metal Products Ltd [2007] 2 Bus LR 589, para 34. However, none of these cases begins to justify the contention that an administrator can be ordered to change the ranking of a particular debt simply because the statutory ranking appears unattractive in this case because it means that a particular debt is ranked lower than other unsecured debts because (as I am assuming) it is not provable according to the statutory formula. Indeed, observations in Lune Metal, paras 35 38, tend to support the notion that the court cannot sanction a course which would be outside an administrators statutory powers. It is right to mention that the court has sanctioned an otherwise unauthorised payment where a company in administration wishes to avoid the cost of going into compulsory liquidation. In such cases, which include In re UCT (UK) Ltd [2001] 1 WLR 436 and Lune Metal, the terms on which the administrators are discharged includes a direction which ensures that the preferential creditors are in no worse a position than if there had been a compulsory liquidation. However, those cases provide no assistance to the argument that the court can direct a FSD regime liability to be promoted ahead of its statutory ranking, as (i) the direction benefits the creditors with provable debts, (ii) the direction is tied to the discharge of the administrators, not the performance of their on going functions, and (iii) the direction does not involve any conflict with statutory ranking of claims, and in particular, it does not harm the interests of the creditors with provable debts: on the contrary, they benefit from the direction. In the present cases, I understand the attraction of the argument that the court should order the administrators of the Target companies to treat the potential FSD liabilities as provable debts (if they are not so provable): otherwise, they may be valueless. However, I come back to the point that, if the effect of the Insolvency Rules is that the liabilities are not provable debts, there is no basis for the court deciding that they are. It would be wrong for the courts to override the statutory ranking, especially given it would cause significant prejudice to others (in this case the creditors with provable debts). That is particularly true as the liabilities are statutory, so that the legislature could have dealt with their status in a liquidation or administration (as indeed it did in relation to a section 75 debt). The argument to the contrary also relied on the fact that the liability of a target under the FSD regime would have been a provable debt if the FSD had been issued before the insolvency event. That is undoubtedly an argument in favour of the liability where the FSD is issued after an insolvency event being a provable debt, as mentioned above. However, if the liability is not a provable debt in such circumstances, the argument does not support the contention that the administrator can be required to treat it as if it were. As already mentioned, the mere fact that the court does not think it fair that a particular statutory liability should not rank as a provable liability under the relevant statutory provisions is not enough to justify a decision to alter the effect of those provisions. The point can be taken a little further. The decision of the courts below, that the liability in these cases was an expense of the administration and not a provable debt, was unattractive for the reasons given in paras 59 62 above. It seems to me that, if, as is suggested by the argument I am considering, the courts had had power to do so, they should have gone on to hold that it would nonetheless direct the administrators to treat the liability as a provable debt. Such a direction would not merely have been a surprising one, but it would have been one which flew in the face of Lord Hoffmanns observations at paras 38 41 in Toshoku, disapproving In re Kentish Homes Ltd [1993] BCLC 1375. Conclusion I would accordingly allow these appeals to the extent of declaring that a Target companys liability under the FSD regime, arising pursuant to a FSD issued after the company has gone into administration, ranks as a provable debt of the company, and does not rank as an expense of the administration. LORD SUMPTION (with whom Lord Mance and Lord Clarke agree) I agree with the order proposed by Lord Neuberger and with his reasons. I add a few observations of my own on a point which might be regarded as a matter of wholly abstract jurisprudence if it were not fundamental to the analysis of the effect of this particular scheme. The critical question is what constitutes an obligation incurred for the purpose of rule 13.12(1)(b) of the Insolvency Rules 1986. The context shows it means a legal rule applying before the date when the company goes into liquidation which may, contingently on some future event, give rise to a debt or liability arising after that date. But it cannot extend to every legal rule which may on any contingency have that effect. Otherwise every debt or liability would be provable irrespective of the date when it accrued, unless the law changed after the company went into liquidation. Since the scheme depends on there being a common date as at which the fund falls to be valued and distributed pari passu, that cannot be right. Some limitation must be read into sub paragraph (b). But what limitation? The paradigm case of an obligation within the sub paragraph is a contract which was already in existence before the company went into liquidation. It is implicit in the argument of those who contend on this appeal that there is no provable debt, in this case that contract is not just the paradigm case but the only one. Yet when one asks what it is about a contract that qualifies it as a relevant source of obligation, the answer must be that where a subsisting contract gives rise to a contingent debt or liability, a legal relationship between the company and the creditor exists from the moment that the contract is made and before the contingency occurs. The judgment of Lord Reid in In re Sutherland (decd) [1963] AC 235 was concerned with a very different statutory scheme, but his analysis is nevertheless illuminating because it makes precisely this point at pp 247 8: It is said that where there is a contract there is an existing obligation even if you must await events to see if anything ever becomes payable, but that there is no comparable obligation in a case like the present. But there appears to me to be a close similarity. To take the first stage, if I see a watch in a shop window and think of buying it, I am not under a contingent liability to pay the price: similarly, if an Act says I must pay tax if I trade and make a profit I am not before I begin trading under a contingent liability to pay tax in the event of my starting trading. In neither case have I committed myself to anything. But if I agree by contract to accept allowances on the footing that I will pay a sum if I later sell something above a certain price I have committed myself and I come under a contingent liability to pay in that event. Contract is not the only legal basis on which a contingent obligation of this kind may arise. A statute may also give rise to one. A good example is the substantive obligation which English law has always held to be owed by a debtor under a foreign judgment. It is the basis of the common law action to enforce it. Another is the obligation of a creditor arising from the statutory scheme of distribution in an English insolvency, not to seek by litigation in a foreign court a priority inconsistent with that scheme: see Carron Iron Co Proprietors v Maclaren (1855) HL Cas 416, 440 per Lord Cranworth LC, In re Oriental Inland Team Co (1873 4) LR 9 Ch App 557, and in the United States Cole v Cunningham (1882) 133 US 107. In both of these examples, a legal relationship is created between the debtor and other persons, albeit without contract. In the first, it is the legal relationship with the judgment creditor arising from the fact that the judgment debtor was subject to the jurisdiction of the foreign court, whether by virtue of residence or submission. In the second, it is the legal relationship of the creditor with the debtor company and with other creditors arising from the statutory scheme of distribution. If the mandatory provisions of a statute may create a legal relationship between the company and a creditor (or potential creditor) giving rise to a provable debt, then there is no reason why it should not do so contingently upon some future event. In In re Sutherland decd [1963] AC 235 the companys liability for balancing charges by way of recoupment of capital allowances, which the majority held should be taken into account when valuing its assets, did not exist at the valuation date because at that date it was still contingent upon a future sale of those assets. It was nevertheless a relevant contingent liability for valuation purposes, because at the valuation date there was a legal relationship between the companies and the Crown arising from the statutory scheme which made capital allowances subject to balancing charges in the contingency of a sale. In Secretary of State for Trade and Industry v Frid [2004] 2 AC 506 the Secretary of State was subrogated by statute to the claims of employees to compensatory notice pay and redundancy payments. The liability of the company to meet those claims did not arise until the employees were dismissed, which was after the company went into liquidation. But the obligation existed before, because the statutory scheme superimposed upon the contract of employment created the legal relationship which made the compensatory notice pay and the redundancy payments due. Lord Hoffmann, with whom the rest of the committee agreed, said at paras 17, 19: if the Secretary of State had agreed by contract before the insolvency date to guarantee any future liability of the company to pay compensatory notice pay or make redundancy payments to employees under the 1996 Act, the contract of guarantee would have created a contingent liability on the part of the company to reimburse the Secretary of State which was a debt at the insolvency date and became capable of set off when the employees were afterwards paid. The next question is whether it makes a difference that the contingent liability existed by virtue of a statute rather than a contract and, not being consensual, that it involved no direct contract or other relationship with the employees or the company. If a statutory origin does not prevent set off in the case of debts due and payable at the insolvency date, I do not see why it should make any difference that the statute creates a contingent liability which exists before the insolvency date but falls due for payment and is paid afterwards. In the Victoria case of Lofthouse v Commissioner of Taxation [2001] 164 FLR 106, the statute conferred upon the Commissioner an indemnity against the directors of a company if tax payments under the Australian equivalent of PAYE were subsequently held repayable as insolvent transactions (in effect, preferences). The indemnity was contingent upon the tax being determined to be repayable after the employer had gone into liquidation, but the statutory scheme created the relevant legal relationship between the directors and the Commissioner as soon as the tax payments were made by the company. They were therefore provable as contingent debts in the insolvency of the directors. Warren J observed at p 118: The potential liability of the third parties in this proceeding is a contingent liability within the meaning of s 82(1) of the Act because the potential liability arose from an obligation pursuant to an indemnity. Furthermore, all the objective circumstances giving rise to the potential for the invocation of the chose in action represented by the right to indemnity had transpired prior to the third parties entering into their composition under Pt X of the Bankruptcy Act. given after the commencement of the insolvency was not provable as a contingent debt, even if the litigation was in progress when the company went into liquidation. The case law begins with In re Bluck Ex p Bluck (1887) 57 LT 419, and continues with In re British Gold Fields of West Africa [1899] 2 Ch 7, In re A Debtor (No 68 of 1911) [1911] 2 KB 652, In re Pitchford [1924] 2 Ch 260, Glenister v Rowe [2000] Ch 76. The reasoning of these cases has recently been applied to other claims said to represent contingent liabilities: see R (Steele) v Birmingham City Council [2006] 1 WLR 2380. There are a number of problems about these cases. One of them, as it seems to me, is the absence of any real attempt to analyse the effect of the statutory scheme in creating an obligation to meet a liability contingently on some specified event. In the earlier cases, this can perhaps be regarded as the legacy of the older principle which admitted only contractual debts to proof. But that consideration cannot explain the more recent decisions. In my view they were wrongly decided. In the costs cases, I consider that those who engage in litigation whether as claimant or defendant, submit themselves to a statutory scheme which gives rise to a relationship between them governed by rules of court. They are liable under those rules to be made to pay costs contingently on the outcome and on the exercise of the courts discretion. An order for costs made in proceedings which were begun before the judgment debtor went into liquidation is in my view provable as a contingent liability, as indeed it has been held to be in the case of arbitration proceedings: In re Smith, Ex p Edwards (1886) 3 Morrell 179. In both cases, the order for costs is made against some one who is subject to a scheme of rules under which that is a contingent outcome. The fact that in one case the submission is contractual while in the other it is not, cannot make any difference under the modern scheme of insolvency law under which all liabilities arising from the state of affairs which obtains at the time when the company went into liquidation are in principle provable. Of course, an order for costs like many other contingencies to which a debt or liability may arise, depends on the exercise of a discretion and may never be made. But that does not make it special. It is not a condition of the right to prove for a debt or liability which is contingent at the date when the company went into liquidation that the contingency should be bound to occur or that its occurrence should be determined by absolute rather than discretionary factors. In the present case, the Court of Appeal considered itself to be bound by a line of cases in which it was held that a liability for costs arising from a judgment
+This appeal raises two important questions, one procedural and the other substantive, arising out of the decision of a planning inspector under the Planning (Listed Buildings and Conservation Areas) Act 1990 (the Listed Buildings Act). It concerns the correct treatment of a pair of early 18th century lead urns (or finials), attributed to the Flemish sculptor John van Nost, each resting on a limestone pedestal of a slightly later date. The two vases, together in each case with its plinth, were described in the judgments below as the items. I shall do the same. There is no doubt as to their artistic significance, which led to them being sold at auction in 2009 for 55,000. There is however a dispute as to whether they were properly treated as buildings under that legislation; but also a prior question as to whether such a dispute could and should have been addressed by the planning inspector in the proceedings before him. Factual background The items were originally at Wrest Park in Bedfordshire, owned by the first Duke of Kent. According to the 2009 auction particulars Wrest Park was one of the grandest and most admired gardens established in England in the first part of the 18th century. Apparently, a large plan of the garden by John Roque in 1735 showed the items flanking the entrance to the gardens. They remained at Wrest Park until 1939, when it was sold by the then owner, Mr J G Murray, who took various items of statuary, including these items, with him to Coles Park, Buntingford in Hertfordshire. In 1954 55, following the death of Mr Murray, his estate was left to a trust, with his grandson, Major R P G Dill, as a lifetime beneficiary. In 1955 56, under Major Dill, Coles Park was sold and he took the items with him to the Dower House, Buntingford. Major Dill sold the Dower House in 1962, when he moved to Badgers Farm, Idlicote, Warwickshire, again taking the items with him. In 1973 he sold Badgers Farm and moved to Idlicote House. He again took the items with him and placed them on either side of a path in the gardens which had served as the front drive to the house since the 1820s. No alteration was made to the garden design to accommodate the items, which were free standing. The piers were not attached to the ground and the urns were not attached to the piers. In 1966 Idlicote House had been designated a Grade II listed building. In June 1986 the items were themselves added to the list under section 54 of the Town and Country Planning Act 1971. Each was described as follows in both of the list entries: Pier surmounted by urn C18. Limestone and lead. Square pier with panelled sides, moulded stone plinth and chamfered cornices. Lead urn is decorated with high relief cherubs heads and flame finial. The listing decision and paperwork on which it was based have not been found despite enquiries. Although notice of the listing was required to be given to the owner or occupier by the local planning authority, there appears to be no extant record of such a notice. However, in January1987 (six months after listing the delay has not been explained) the items were entered on the local land charges register. The present owner, Mr Marcus Dill, acquired the house and the items in 1993. He was not aware of the listing of the items, and does not understand that his father, Major Dill, was aware of it. In 2009 he removed and arranged for sale of the items at auction. English Heritage was notified in advance and was sent the auction catalogue (as a potential purchaser) but did not respond. It is understood that they have since been removed from the United Kingdom. As to the physical qualities of the items, and the method of removal, I take the following (which I do not understand to be contentious) from Mr Dills statement in the planning appeal: The piers consist of limestone pedestals of a slab rather than solid construction. Consequently they were not especially heavy. Together a pier and finial was 274cm high . At Idlicote House the pedestals were resting on concrete slabs which were on the ground. They were not fixed to the slabs. The finials were also sitting on the pedestals without any attachment. The top of the piers can be removed. When they were taken from Idlicote House the finials and the top of the piers were lifted together and then the remaining part of each pier lifted. The items were lifted onto a Hiab lorry by its crane. Procedural history In 2014 the local planning authority became aware that the items had been removed and began correspondence with Mr Dill. On 29 April 2015 they wrote to Mr Dill informing him that listed building consent had been required for their removal and threatening formal action. On 17 June 2015 Mr Dill made a retrospective application for listed building consent. This was refused by the local planning authority on 11 February 2016. In response to consultation on the application, Historic England had advised that the grounds for listing these structures were the same as for any listing, that is their special architectural and historic interest. They observed that: Many garden items (as well as structures such as buildings relocated in open air museums), including statues and urns have been listed after they have been moved because they still qualify under that definition. On 26 April 2016, the local planning authority issued a listed building enforcement notice requiring the reinstatement of the items at Idlicote House. Mr Dill appealed to the Secretary of State against the refusal of listed building consent and the enforcement notice on several grounds, including that the items were not buildings. The appeals were considered together by a planning inspector appointed by the Secretary of State, who gave his decision dismissing the appeals in a letter dated 19 January 2017. He took the view, in summary, that the status of the items as buildings was established by the listing; that he could not reconsider that issue; and, that issues of property law or the so called Skerritts tests of size, permanence and degree of annexation (see below) were irrelevant. The view that the status of the item as a building was not open to challenge was upheld by Singh J in the High Court ([2017] EWHC 2378 (Admin)) and by the Court of Appeal ([2018] EWCA Civ 2619; [2019] PTSR 1214). In the leading judgment, Hickinbottom LJ (with the agreement of McCombe and Coulson LJJ) held: In my view, the wording of the relevant provisions in the Listed Buildings Act make clear that it was the intention of the statute that, for the purposes of applications for listed building consent and enforcement (and appeals from the same), being on the list is determinative of the status of the subject matter as a listed building, the protection given by the Act deriving from that status. (para 33) He thought that view was supported by the statutory background, and was not displaced by any of the authorities relied on by Mr Harwood QC for Mr Dill. That conclusion made it unnecessary to consider the separate grounds relating to the correct test for categorisation of such items as buildings (paras 46 50). McCombe LJ (para 61), concurring, noted the possible conflict with the view expressed by him at first instance in Chambers v Guildford Borough Council [2008] EWHC 826 (QB); [2008] JPL 1459, but agreed with Hickinbottom LJ (para 38) that the real issue in that case was different. Two issues are agreed as arising before the Supreme Court, in short: i) Whether an inspector considering an appeal under section 20 or section 39 of the Listed Buildings Act can consider whether or not something on that list is a building. ii) (In so far as this issue arises) what criteria are relevant in determining whether an item appearing in its own right in the statutory list is a building for this purpose: whether concepts of property law (the extent and purpose of a structures annexation), or the criteria set out in Skerritts of Nottingham Ltd v Secretary of State for the Environment, Transport and Regions (No 2) [2000] JPL 1025 (size, permanence and degree of annexation). Legislation The current statutory provisions are contained in the Listed Buildings Act. They are subject to minor variations in the same form as enacted in the Town and Country Planning Act 1968, and repeated in subsequent consolidations. For present purposes it is sufficient to refer to the current Act. Section 1(1) requires the Secretary of State to compile lists of buildings of special architectural or historic interest. Section 1(5) provides: In this Act listed building means a building which is for the time being included in a list compiled or approved by the Secretary of State under this section; and for the purposes of this Act a) any object or structure fixed to the building; b) any object or structure within the curtilage of the building which, although not fixed to the building, forms part of the land and has done so since before 1 July 1948, shall be treated as part of the building. Subsection (5A) enables the list to indicate that particular objects or structures mentioned in subsection (5)(a) or (b) are not to be treated as part of the building for the purposes of this Act; or that any part or feature of the building is not of special architectural or historic interest. In this judgment I shall refer to the second part of subsection (5) (and for the purposes of ) as the extended definition. I shall refer to objects or structures within paragraph (b) as curtilage structures. The word building is not separately defined in this Act. By section 91(2), except where the context otherwise requires, it has the same meaning as in section 336 of the Town and Country Planning Act 1990 which provides: Building includes any structure or erection, and any part of a building, as so defined, but does not include plant or machinery comprised in a building. Section 7 provides that no person shall execute or cause to be executed any works for the demolition of a listed building or for its alteration or extension in any manner which would affect its character as a building of special architectural or historic interest, unless the works are authorised under section 8. By section 9(1), if a person contravenes section 7, he shall be guilty of an offence. Section 8 provides for listed building consent to be granted by a local planning authority or the Secretary of State, and section 10 makes provision for the making of applications for such consent. Section 16(1) provides that the local planning authority or the Secretary of State may grant or refuse an application for listed building consent and, if they grant consent, may do so subject to conditions. By section 16(2), in considering whether to grant consent, the local planning authority or the Secretary of State: shall have special regard to the desirability of preserving the building or its setting or any features of special architectural or historic interest which it possesses. Section 20(1)(a) confers the right to appeal to the Secretary of State against a refusal of consent by a local planning authority. By section 21(3): The notice of appeal may include as the ground or one of the grounds of the appeal a claim that the building is not of special architectural or historic interest and ought to be removed from any list compiled or approved by the Secretary of State under section 1. By section 22(1), on an appeal the Secretary of State may deal with the application as if it had been made to him in the first instance, and may exercise his power under section 1 to amend any list compiled under section 1 by removing from it the building to which the appeal relates. Section 20 appeals may be determined by a person appointed by the Secretary of State (in other words a planning inspector) who has the same powers as the Secretary of State. Section 62 provides: (1) Except as provided by section 63, the validity of [a decision on an appeal under section 20] shall not be questioned in any legal proceedings whatsoever. Section 63(1) provides for a challenge by way of application to the High Court on legal grounds. Section 38 confers a power on a local planning authority to issue listed building enforcement notices. Section 39(1) provides for an appeal from such a notice to the Secretary of State on any of the following grounds (so far as potentially relevant to this appeal): (a) interest; (b) section 9(1) have not occurred; that the building is not of special architectural or historic that the matters alleged to constitute a contravention of Section 41(6): that those matters (if they occurred) do not constitute (c) such a contravention; (d) ; (e) that listed building consent ought to be granted for the works, or that any relevant condition of such consent which has been granted ought to be discharged, or different conditions substituted; On the determination of an appeal the Secretary of State may (a) grant listed building consent for the works to which the listed building enforcement notice relates or for part only of those works; (b) ; (c) if he thinks fit, exercise his power under section 1 to amend any list compiled or approved under that section by removing from it the building to which the appeal relates. Section 64 provides: The validity of a listed building enforcement notice shall not, except by way of an appeal under section 39, be questioned in any proceedings whatsoever on any of the grounds on which such an appeal may be brought. Section 65 gives a right to appeal to the High Court on legal grounds against a decision of the Secretary of State or inspector on an enforcement appeal under section 39. The first issue is designation as a listed building conclusive? Without disrespect to the courts below, I can deal with the first issue relatively shortly. The principles are not in doubt. As Mr David Elvin QC for the Secretary of State rightly accepts (in the words of his written submissions, citing Boddington v British Transport Police [1999] 2 AC 143): The issue of statutory construction is subject to the rule of law that individuals affected by legal measures should have a fair opportunity to challenge these measures and to vindicate their right in court proceedings, and there is a strong presumption that Parliament will not legislate to prevent individuals from doing so. The same principle is reflected in the European Convention on Human Rights article 6, under which an individual must have a clear, practical opportunity to challenge an act that is an interference with his rights: Bellet v France CE:ECHR:1995:1204JUD002380594, para 36. However, as Mr Elvin also correctly submits, that principle needs to be read in the context of the particular statutory scheme in question (citing Lord Hoffmann in R v Wicks [1998] AC 92, 117B). In the present scheme, he submits, identification as a building is not one of the matters that can be questioned through the statutory appeal route; but the right to challenge the validity of the listing by judicial review provides the fair opportunity required by the principle. Wicks is of particular relevance because it arose under the parallel enforcement provisions for breach of planning control. It concerned a prosecution for failure to comply with an enforcement notice for breach of planning control under the Town and Country Planning Acts. The relevant statute had a provision (in similar terms to section 64 of the Listed Buildings Act: see para 19 above) excluding challenges to the validity of an enforcement notice other than by the statutory appeal procedure. It was held that on a proper construction of the relevant provisions all that was required to be proved in the criminal proceedings for breach of an enforcement notice was that the enforcement notice issued by the local planning authority was formally valid, and that it was not open to the defendant to raise other public law challenges to its validity, such as bad faith, bias or procedural impropriety (residual grounds), by way of defence to the charge. In my view that authority if anything supports the appellants case. There was no issue but that the enforcement appeal could encompass every aspect of the planning case. As Lord Hoffmann said (p 122D): I do not think that in practice hardship will be caused by requiring the residual grounds to be raised in judicial review proceedings. The statutory grounds of appeal are so wide that they include every aspect of the merits of the decision to serve an enforcement notice. The residual grounds will in practice be needed only for the rare case in which enforcement is objectively justifiable but the decision that service of the notice is expedient is vitiated by some impropriety. As Keene J said in the Court of Appeal, the owner has been served with the notice and knows that he has to challenge it or comply with it. His position is quite different from that of a person who has contravened a byelaw, who may not have heard of the byelaw until he contravened it. (Emphasis added) If in that context fairness requires that the grounds of appeal should extend to every aspect of the merits of the enforcement action in planning cases, it is hard to see why it should be any different in the context of a listed building enforcement notice. In particular, as will appear from the cases considered later in this judgment, whether a particular structure constitutes a building, and its erection a building operation, is an issue which may undoubtedly be raised in the context of a planning enforcement appeal. As those cases show, it may raise difficult issues of factual judgement, which are much more appropriate for a planning inspector than for the High Court in judicial review. No convincing reason was offered as to why the question whether something qualifies as a building should be treated in a different way in the listed building context. One advantage of allowing these issues to be dealt with through the planning appeal route is that it enables the inspectorate, with appropriate legal advice, to develop workable criteria on a case by case basis. Mr Elvin points to the desirability of certainty as to the identification of listed buildings, which may have to be considered as material considerations in various statutory contexts. He cites for example Lord Hope of Craighead in City of Edinburgh Council v Secretary of State for Scotland [1997] 1 WLR 1447: The Act assumes, in regard to the statutory procedures, that the question whether or not the building is a listed building can be determined simply by inspecting the list which the Secretary of State has prepared. That of course is correct as a general proposition, but it says nothing about the circumstances in which a listing may be questioned. Similar uncertainty attaches to the possibility of a successful appeal (under ground (a)) on the grounds of lack of special interest. Against the desirability of certainty, is the fact that (unlike breach of planning control) contravention of listed building control is a criminal offence, whether or not an enforcement notice is served. In that context the starting point must be the presumption that the accused should be able to raise any grounds relating to the lawfulness of the proceedings on which the prosecution is based (see eg R v Wicks at p 106 per Lord Nicholls of Birkenhead). Furthermore, Mr Elvins argument overlooks the form of the statutory definition of listed building. A listed building means a building which is included in [the] list . Thus there are two essential elements: it must be both a building and it must be included in [the] list . If it is not in truth a building at all, there is nothing to say that mere inclusion in the list will make it so. Section 7 prohibits the demolition of a listed building, and section 9(1) makes contravention of section 7 a criminal offence. There is nothing to prevent the accused arguing that the item on the list is not a building and so not within the definition. Short of a specific provision that the listing is to be treated as conclusive for such purposes, there is no reason to displace the ordinary presumption that the accused may raise any relevant defence. Notably there is no equivalent to the exclusivity provision of section 64. If that is the case under section 9, then the same approach applies to the grounds of appeal under section 39. Under section 39(1)(c) the appellant can argue that the the matters alleged to constitute a contravention of section 9(1) do not constitute such a contravention. If there would be no contravention of section 9(1), because the relevant item is not a building, there is no reason why the same point cannot be taken under section 39. If that ground is made out on the facts, the Secretary of State has power to deal with the matter by removing it from the list. There might be a theoretical question whether this would operate retrospectively, so as to preclude any further action based on the original listing. However, I do not see that as a practical problem, given that there would be an authoritative decision by the Secretary of State to cancel the listing, specifically on the grounds that the items were not properly categorised as buildings. That would carry with it the clear implication that they should never have been listed in the first place, and should be sufficient in practice (if not in law) to protect the owner against any further proceedings. Accordingly, I would allow the appeal on the first issue. In principle (subject to consideration of the second issue), this means that the enforcement appeal must be remitted to the Secretary of State for redetermination. I am conscious that there is before us also an appeal in respect of the application for listed building consent. Although this may in theory raise different legal issues, I do not understand them to have any practical consequences in this case which cannot be dealt with in the context of the enforcement appeal. Subject to any submissions to the contrary, it should be possible to leave that aspect to be dealt with so far as necessary by agreement between the parties. The second issue were they buildings? On one view, if the appeal has to be remitted to the Secretary of State in any event, it might be better to leave the second issue for consideration at that level. However, there is in my view a need for more general guidance as to the legal principles in play. This case has revealed a disturbing lack of clarity about the criteria which have been adopted by the relevant authorities, not only in this instance but more generally, in determining whether free standing items such as these are regarded as qualifying for listing protection, whether as curtilage structures, or as separate buildings as in this case. Even now, in spite of the issue having been raised by Mr Dill in 2015, and after a planning appeal and three court hearings, he has had no official explanation of the criteria by which it was determined that these items qualified as buildings. It is useful to begin by looking at the wide variety of items which may fall to be considered, before going on to look at the development of the relevant legislation, and case law, and its application to different categories, including the items in issue in this case. Garden and Park Structures A good idea of the significance and variety of structures under potential consideration for listing purposes is given by a publication by Historic England Garden and Park Structures Listing Selection Guide (December 2017). This is one of 20 listing selection guides issued by Historic England, which has adapted and updated the selection guides originally issued by English Heritage in 2011. The Garden and Park Structures guide overlaps with other listing selection guides, including those for commemorative structures and for street furniture (including items such as fountains). The introduction explains its purpose: This selection guide is devoted to individual built structures found in gardens and parks, rather than the designed landscapes themselves All designed landscapes are likely to contain buildings and other hard landscaping features such as balustraded terraces that will often make a positive contribution to the overall character of the place. This selection guide helps identify which structures meet the test of special interest for listing. (p 1) The following pages contain a fascinating historical survey of the role of such structures in designed landscapes, parks and gardens since medieval times. It makes clear the extraordinary variety of objects or structures apparently considered for listing, by no means limited to features such as balustraded terraces. I take three examples: i) Wrest Park itself, as it was in the 19th century (p 5), is given as an example of reversion to the severely formal fashions of the 17th and earlier 18th centuries: with terraces, balustrades, vases, basins and fountains, elaborate steps and gateways, seats, summerhouses, and statuary. Some of these latter features, it is said, were industrially produced, moulded from terracotta, Coade stone, or cast iron. A photograph shows the restored parterre at Wrest Park, with formal planting and some large classical statues, which appear to be an intrinsic part of the design. We were informed by Mr Elvin that these are not fixed in place other than by their own weight, and are separately listed as buildings in their own right. On the same page, the guide also refers to raised terraces, which were sometimes decorated with elaborate flower urns. At p 10 the guide refers to statuary, urns and other features such as sundials and astronomical devices which adorned formal gardens; and at p 11 it states that even when these have been moved from elsewhere, pre 1850 examples will generally merit designation. ii) A more recent item is shown by a photograph of Henry Moores Reclining Woman (1947), at Dartington Hall, a large stone sculpture resting on a substantial stone base, said to be listed Grade II (p 7). iii) Perhaps the most unusual example is the group of 27 life size Crystal Palace dinosaurs (listed Grade I), survivors from an exceptional High Victorian pleasure ground created in the early 1850s, [which] show the singularity park features could sometimes attain. (p 18) Although the guide gives much useful information about the assessment of the historic interest of such objects and uses the word structures to describe them, it contains no discussion of the criteria by which they are to be treated as buildings within the statutory definition, nor in particular whether they are thought to qualify in their own right, or under the extended definition. I will return to this issue in the next section of this judgment. In considering the correct legal and policy approach to such garden and park structures, it is also important to bear in mind the limited protection available for the gardens and parks themselves. It was not until 1983 that there was any statutory recognition of the need to identify and safeguard historic gardens. Section 8C of the Historic Buildings and Ancient Monuments Act 1953, introduced by paragraph 10 of Schedule 4 of the National Heritage Act 1983, provided for the preparation by English Heritage of a register of gardens and other land situated in England and appearing to them to be of special historic interest. No doubt for practical reasons, there is no statutory protection for the garden layout itself nor any restriction on works within a registered garden, but being on the register may be required to be taken into account as a material factor in a range of planning decisions. There is no protection for garden and park structures as part of a registered garden as such. If the garden is attached to a listed building, they may be protected as curtilage structures, under the extended definition, but as part of the listed building, not of the garden. Identifying a building legislation and case law As has been seen, although listed building control has a long history, dating back before the Town and Country Planning Act 1947, the provisions were substantially recast in the Town and Country Planning Act 1968. (There is a detailed history in Shimizu (UK) Ltd v Westminster City Council [1997] 1 WLR 168, 175 per Lord Hope. That case itself was concerned with a relatively narrow issue relating to the scope of demolition and is of no direct assistance in this case.) Protection is given to buildings as defined. For this purpose, as already noted, the statute adopts the ordinary planning definition of building as including a structure or erection. The one significant variation comes in the extended definition, that is the provision that certain objects or structures are to be treated as part of the building, if they are either fixed to the building or within the curtilage of the building and form[ing] part of the land (subject, since 1986, to an exception for those placed since July 1948). It is important to note that the extended definition does not result in the item in question becoming a listed building in its own right; it merely results in its being treated as part of the building to which it is attached, or in whose curtilage it stands. That is to be distinguished from the circumstances in which a garden object or structure may qualify for listing as a building in its own right. Unfortunately, this critical distinction is blurred in the other official guidance to which we were referred. That is a Department for Digital, Culture, Media and Sport publication Principles of Selection for Listed Buildings (November 2018). This states: For the purposes of listing, a building includes any structure or erection and a listed building includes any object or structure: (a) fixed to it; or (b) within its curtilage which, although not fixed to it, forms part of the land and has done so since before 1 July 1948, unless the list entry expressly excludes such things. In some cases, such as for works of art or sculptures, it will be necessary to consider the degree and purpose of annexation to the land or building to determine whether it may be listed under the 1990 Act. (para 6) This acknowledges (rightly as will be seen) the relevance of the degree and purpose of annexation in considering whether a work of art or sculpture forms part of the land under the extended definition. But the second sentence might be taken to confuse that issue, relevant to whether the sculpture is to be treated as part of a building already on the list, with the distinct question whether the sculpture itself may be listed under the 1990 Act as a separate entry. This depends upon whether the sculpture constitutes a building, in the sense of being a structure or erection within the statutory definition, in relation to which the degree and purpose of annexation to the land may be relevant factors but are not necessarily conclusive. In what follows it will be convenient to consider first the application of the extended definition to free standing objects such as sculptures, before considering the criteria by which they might be treated as buildings in their own right. Garden objects or structures under the extended definition The extended definition, first introduced in the Town and Country Planning Act 1968, seems to have been designed to clarify the position following the case of Corthorn Land and Timber Co Ltd v Minister of Housing and Local Government (1966) 17 P & CR 210. Corthorn concerned a building preservation order made under section 30(1) of the Town and Country Planning Act 1962, prohibiting the removal from a listed building of various portrait panels, wooden panels, a large wood carving of the Crowning with Thorns, and a large wooden equestrian figure of St George and the Dragon. The issue was whether they were part of the listed building. In deciding that they were, Russell LJ applied a property law approach, saying: It is not, in my judgment, open to serious doubt that these items were all fixed and annexed in their places as part of the overall and permanent architectural scheme and intended in every sense to be annexed to the freehold (p 217) In Debenhams plc v Westminster City Council [1987] AC 396, 408 409 Lord Mackay of Clashfern confirmed that the word fixed in the extended definition was to have the same connotation as in the law of fixtures so that any object or structure fixed to a building should be treated as part of it, thereby put[ting] beyond question the matter that was decided by Russell LJ in the Corthorn case . Corthorn was not concerned with objects or structures within the curtilage of a listed building. We were not referred to any contemporary information as to the derivation of that part of the extended definition in the 1968 Act. It can be assumed to have been a recognition of the important part often played by such objects in the overall architectural composition or setting of a listed building, even though the architectural quality of the curtilage structure itself is not part of the test. The requirement that they should form part of the land is clearly designed to tie this part of the definition, like the first part, to real property concepts under the common law. It is not known what if any assumptions would have been made in 1968 about how the common law would treat statues or other ornamental objects resting only by their own weight. Reliance may have been placed on the then current edition of Megarry & Wade, The Law of Real Property, 3rd ed (1966) which stated: Statues, figures, vases and stone garden seats have been held to become part of the land because they are essentially part of the design of the house and grounds, even though standing by their own weight. This was supported by a footnote reference to DEyncourt v Gregory (1866) LR 3 Eq 382, but with a cautionary note: the authority of this decision is not great; see De Falbe [1901] 1 Ch 523, at 531, 532. Some years after the 1968 Act the treatment of such objects in real property law was considered by the Court of Appeal in Berkley v Poulett [1977] 1 EGLR 86. The dispute was about certain pictures and other objects which, it was said, should pass as fixtures on the sale of a house. The disputed items included a statue and sundial in the garden. The court was agreed that the sundial was a chattel, but there was disagreement as to the sculpture. Scarman LJ, in the leading judgment (pp 88 89), with which Stamp LJ in substance agreed (p 96), explained that, following Leigh v Taylor [1902] AC 157: The answer today to the question whether objects which were originally chattels have become fixtures, that is to say part of the freehold, depends upon the application of two tests: (1) the method and degree of annexation; (2) the object and purpose of the annexation. Having discussed the principles and the other objects in dispute, he turned to the statute and sundial. The latter was a small object which had been detached from its pedestal many years earlier and thus ceased to be part of the realty. Of the statue he said: The statue was heavy. It weighed 10 cwt and stood 5 ft 7 in high on its plinth. There is an issue as to whether it was cemented into the plinth or rested on its own weight. The question is not decisive, for, even if it was attached by a cement bond, it was (as events proved) easily removable. However, upon the balance of probability, I agree with the Vice Chancellor in thinking it was not attached. The best argument for the statue being a fixture was its careful siting in the West Lawn so as to form an integral part of the architectural design of the west elevation of the house. The design point is a good one so far as it goes: it explains the siting of the plinth, which undoubtedly was a fixture. But what was put upon the plinth was very much a matter for the taste of the occupier of the house for the time being. We know that at one time the object on the plinth had been a sundial. At the time of the sale it was this statue of a Greek athlete. The plinths position was architecturally important: it ensured that whatever stood on it would be correctly positioned. But the object it carried could be whatever appealed to the occupier for the time being. Sundial or statue it did not matter to the design, so long as it was in the right place a result ensured by the plinth which was firmly fixed into the ground. Being, as I think, unattached, the statue was, prima facie, not a fixture, but, even if it were attached, the application of the second test would lead to the same conclusion. Goff LJ took a different view of the statue (p 90) which had been placed at a focal point in the grounds, not for better enjoyment as a chattel but for the permanent enhancement of the beauty of the grounds, a case where resting upon its own bulk was a sufficient annexation. On that point he regarded DEyncourt v Gregory (1866) LR 3 Eq 382 as still authoritative, not overlooking the criticisms in In re De Falbe [1901] 1 Ch 523, which in his view related to the inferences drawn from the facts, rather than the principle that a thing may be a fixture because it is part of the architectural design. As I read the judgments the difference was not as to the principle, but as to its application to the particular facts. This view accords with the current 9th edition of Megarry & Wade, (2019) para 22.010, which repeats the relevant passage from the earlier editions, with the same case references, but adds: the principle that an object resting on its own weight can be a fixture if it is part of the overall design of the property has been approved: Berkley v Poulett [1977] 1 EGLR 86 at 89. Although that is not a precise formulation, it follows in my view that a statue or other ornamental object, which is neither physically attached to the land, nor directly related to the design of the relevant listed building and its setting, cannot be treated as a curtilage structure and so part of the building within the extended definition. Further confirmation of that approach can be found in a much more recent judgment of the High Court. It was held that a Henry Moore bronze sculpture Draped Seated Women, weighing 1,500 kg and resting on a plinth, which in 1962 had been placed by the London County Council in a new housing estate, under its policy of promoting works of art in public places, remained a chattel rather than part of the land (Tower Hamlets London Borough Council v Bromley London Borough Council [2015] EWHC 1954 (Ch); [2015] LGR 622). The judge (Norris J) noted as material that the sculpture was an entire object in itself, resting by its own weight on the ground, and able to be removed without damage, and that it did not form part of an integral design of that estate (para 17). Garden objects or structures as buildings object or structure may qualify as a listed building in its own right. Both sides have referred to the so called Skerritts test, that is a three fold test which involved considering size, permanence and degree of physical attachment. That formulation was derived from the judgment of Schiemann LJ in the Court of Appeal in Skerritts of Nottingham Ltd v Secretary of State for the Environment, Transport and the Regions (No 2) [2000] JPL 1025, para 39. It can in I turn to the criteria which might be relevant in determining whether such an turn be traced back through the leading planning case on the definition of building in the planning statutes (Barvis Ltd v Secretary of State for the Environment (1971) 22 P & CR 710, DC), and to the judgment of Jenkins J in a rating case Cardiff Rating Authority v Guest Keen Baldwins Iron and Steel Co Ltd [1949] 1 KB 385. The Cardiff case was concerned with a different expression (plant in the nature of, a building or structure) in a different statutory context. In Barvis and Skerritts, however, the decisions turned on whether the item in question qualified as a building for the purpose of the definition in the relevant planning statute, which is the same definition (now contained in section 336 of the Town and Country Planning Act 1990) which applies for the purposes of the Listed Buildings Act. They refer to the Cardiff case for that purpose. The meaning of building was relevant to deciding whether the operations in issue qualified as building operations, as part of the statutory definition of development. The Cardiff case is relevant principally for a passage in the judgment of Jenkins J (pp 402 403) from which the three fold test was later derived. In addressing the question whether certain apparatus was or was in the nature of a building or structure, he said (as quoted by Bridge J in giving the leading judgment in Barvis (1971) 22 P & CR 710, 716): The general range of things in view consists of things built or constructed. I think, in addition to coming within this general range, the things in question must, in relation to the hereditament, answer the description of buildings or structures, or, at all events, be in the nature of buildings or structures. That suggests built or constructed things of substantial size: I think of such size that they either have been in fact, or would normally be, built or constructed on the hereditament as opposed to being brought on to the hereditament ready made. It further suggests some degree of permanence in relation to the hereditament, ie, things which once installed on the hereditament would normally remain in situ and only be removed by a process amounting to pulling down or taking to pieces. I do not, however, mean to suggest that size is necessarily a conclusive test in all cases, or that a thing is necessarily removed from the category of buildings or structures or things in the nature of buildings or structures, because by some feat of engineering or navigation it is brought to the hereditament in one piece. The question whether a thing is or is not physically attached to the hereditament is, I think, certainly a relevant consideration, but I cannot regard the fact that it is not so attached as being in any way conclusive against its being a building or structure or in the nature of a building or structure. Nor can I regard the fact that a thing has a limited degree of motion in use, either in relation to the hereditament or as between different parts of itself, necessarily prevents it from being a structure or in the nature of a structure, if it otherwise possesses the characteristics of such. As Bridge J held in Barvis at pp 716 717, in a judgment with which Lord Parker CJ and Widgery LJ agreed, if one substitutes throughout that passage the phrase structure or erection for the phrase structure or in the nature of a structure, this guidance is fully applicable to the considerations which govern the application of the definition in the Town and Country Planning Act 1962 (ie in section 221 of that Act, now re enacted as section 336 of the 1990 Act). Barvis was concerned with alleged development comprising the laying of a length of steel track and the mounting thereon of a moveable tower crane some 89 feet in height. The court upheld the Secretary of States view (disagreeing with the planning inspector) that it involved a building operation. Bridge J, giving the leading judgment, cautioned against reliance on the application of tests from real property law as to what amount to fixtures, rather than focusing on the statutory definition in the Act. He asked himself if the crane when erected was a building as defined, and said that if it was: I should want a great deal of persuading that the erection of it had not amounted to a building or other operation. Building includes any structure or erection. If, as a matter of impression, one looks objectively at this enormous crane, it seems to me impossible to say that it did not amount to a structure or erection. He found nothing in the statutory context to displace that impression: I would be very surprised if the planning legislation did not give to a planning authority the opportunity to control this kind of operation, and, in my judgment, this crane was not the less a structure or erection by reason of its limited degree of mobility on its rails on the site, nor by reason of the circumstance that at some future date, uncertain when it was erected, the appellants contemplated that it would be dismantled and the rails and beams broken out of their concrete beds and that it would be transported in pieces to other sites where it would be re erected for use in contract work. (pp 715 716) That view was confirmed by reference to the passage cited above from the judgment of Jenkins J in the Cardiff case. Bridge J distinguished a previous planning case, Cheshire County Council v Woodward [1962] 2 QB 126, DC, in which it was held that the Minister of Housing and Local Government had not erred in finding that the placing on a site of a mobile hopper and a mobile conveyancer, some 16 to 20 feet high, did not amount to development. Skerritts itself is of importance, both because it was the first time that the issue was considered at Court of Appeal level, and also because the three fold test derived from the Cardiff case was treated as of general application in the planning context. It is also useful as an illustration of how the planning inspector was able to treat those tests as workable guidance in a very different factual situation from that considered in the earlier cases. In the definition of building, Parliament has used the general concepts of erection and structure, rather than more precise and specific terms, and these are applicable across a very wide range of cases. Therefore, the application of the definition requires an evaluative judgment to be made. The Court of Appeal confirmed that where the relevant decision maker, in that case the inspector, directs himself by reference to Barvis and the guidance in the Cardiff case and arrives at a rationally defensible conclusion, his decision on the application of the statutory definition will be upheld as lawful. The case itself related to a marquee erected in the grounds of a hotel, and retained on site between February and October each year. On appeal against an enforcement notice, the inspector had concluded that it was to be regarded as a building for planning purposes and that its erection was a building operation requiring planning permission. In respect of its size and method of assembly he said: The marquee is a substantial object which is about 40m long, including the additions, and some 17m wide and the ridge height is around 5m There is no direct evidence before me of the assembly method or period, but from my inspection, I consider that it took several days with a number of erectors and amounted to a sizable and protracted event. I imagine that its dismantling follows much the same process. It is assembled on site, not delivered ready made. I do not regard its considerable bulk to be de minimis in relation to planning controls. It was sitting on square metal plates which are spiked to the soil beneath and appeared to be held in place by its own considerable weight, the internal bracing and the ground spikes. The timber floor was supported by metal ground beams resting on the land. He concluded: I conclude that, as a matter fact and degree, the marquee, due to its ample dimensions, its permanent rather than fleeting character and the secure nature of its anchorage, is a structure which is to be regarded as a building for planning purposes The main issue in the Court of Appeal was whether the marquee had a sufficient degree of permanence to qualify as a building. The court held that the inspector had been entitled to arrive at the conclusion that he did. None of these cases is of direct assistance in deciding how to categorise an object of artistic significance in the listed building context. It is notable that in both Barvis and Skerritts there was a clear move away from real property analogies. That seems to me correct. As has been seen, real property concepts are relevant to the extended definition, but there is nothing to import them into the basic definition of building. Skerritts provides clear authority at Court of Appeal level for the three fold test, albeit imprecise, of size, permanence and degree of physical attachment. No preferable alternative has been suggested in this court. Given that the same definition of building is adopted in the Listed Building Act, it is difficult to see any reason in principle why the same test should not apply. On the other hand, notwithstanding the apparent width of the statutory definition, the mere fact that something had been erected on land was not sufficient to make it a building. Skerritts is a good illustration of the practical application of the relevant tests, and in particular of the importance of the method of erection (a sizable and protracted event It is assembled on site, not delivered ready made). In addition to the fact that installation occurred by erection, the degree of permanence of the location of the item on the site was significant. In the listed building context that need for something akin to a building operation when the structure is installed can be seen as the counterpart to the reference to works for the demolition as the relevant contravening act under section 7 of the Listed Buildings Act, which clearly envisages some form of dismantling (ie pulling down or taking to pieces in the words of Jenkins J in the Cardiff case) when the item is removed from the site. It is also important to keep in mind the purpose of listed building control, which is to identify and protect buildings of special architectural or historic interest. It is not enough that an object may be of special artistic or historic interest in itself; the special interest must be linked to its status as a building. That is implicit in the reference to architectural interest. But it is relevant in my view also to the concept of historic interest. The historic interest must be found not merely in the object as such, but in its erection in a particular place. For completeness I should note that no assistance is to be gained from another case mentioned by the inspector: R (Judge) v First Secretary of State [2005] EWHC 887 (Admin); [2006] JPL 996. The inspector cited Sullivan Js statement (para 17) that the treatment of items as a matter of property law was wholly irrelevant. But that was said in relation to the quite different question whether the dismantled components of something which had unquestionably been a listed building could, by the process of dismantling, become chattels rather than buildings and thereby lose their statutory protection as such. Not surprisingly the court rejected that interpretation as wholly incompatible with the purpose of the legislation. It throws no light on the present issue. At this point, it may be useful to consider how the Skerritts criteria might apply to the various forms of garden structure identified in the guide discussed in the previous section. In doing so I emphasise that we have not heard any detailed submissions on these matters. Nor were we shown any commentary which was critical of the existing guides from the Department for Digital, Culture, Media & Sport and Historic England. Taking the three examples selected above from the Historic England guide (para 31), the latter two are readily understandable. Even if the Dartington statue is resting by its own weight, the plinth appears as a substantial built structure, and together they appear to form an integral design for the site in which it is placed. Similarly, the Crystal Palace dinosaurs, having regard to their relative size and permanence (whether or not physically attached to the land) could reasonably have been seen as buildings in their own right. But the first of the examples is more debatable. It is hard to see how it could be appropriate to include without discrimination items such as vases, basins seats, . and statuary, without any indication of how they might be brought within any part of the definition, whether as separate buildings or as curtilage structures under the extended definition. In particular, most ordinary forms of garden vases or seats would be unlikely to have become part of the land in real property terms, nor would they naturally be regarded as buildings under any of the tests considered above. The present case I return finally to the two items at issue in this case. It is not, as I understand it, suggested that they would have qualified for protection as curtilage structures within the extended definition. I agree. It seems clear that, whatever might have been the position had they remained in Wrest Park, the vases and their piers did not fall to be treated as part of the listed building of Idlicote House. Not only had they had been placed on the land after July 1948, but also, being freely movable, there is no suggestion that they were related in any relevant way to the design of that particular listed building and its setting. The applicable real property tests were not satisfied. How then might they fare under the Skerritts criteria: size, permanence and degree of physical attachment? Again in the absence of full submissions anything we say can only be provisional. There are arguments both ways. On the one hand, it can be said, they comprised a set of elements which had to be assembled together (a structure), required a small crane to move them and to assemble them (as an erection), and were intended to occupy a stable and near permanent position in situ (with greater permanence than the marquee in Skerritts). On the other hand, they are not particularly large, compared for example with the items considered in the three planning cases. It may also be relevant that the vases themselves, which are the real focus of the special interest, are physically separate. If they had been resting on the ground, rather than a plinth, I doubt if it would have occurred to anyone that they might qualify as buildings. Relevant also is the apparent ease of their installation and removal (as compared for example to the works in Skerritts). These are issues which can only be satisfactorily investigated and determined in the context of a renewed appeal. Conclusion The second agreed issue asks us simply to determine whether the Skerritts criteria for identifying a building are also relevant in the listed building context. For the reasons given above I would answer that question in the affirmative. As indicated above, I do not think it is possible or appropriate for us to reach a concluded view on how those tests should be applied in this case. Not only do we not have a full view of the facts, but the issue also involves questions of factual evaluation which are best dealt with by a planning inspector in the context of a renewed appeal. I would in any event urge those responsible on the part of the Secretary of State to consider the criticisms I have made about the lack of reliable guidance in the existing publications on this subject. I understand that this will be deeply frustrating for Mr Dill. There is as I understand it no suggestion that he acted other than in good faith in disposing of items which he believed to be his own disposable property, and had been so treated by his family for several decades. Since this problem was first drawn to his attention by the local authority in April 2015 he has been attempting to obtain a clear ruling on that issue. On the view I have taken, that opportunity has been wrongly denied to him for five years. Even if his appeal were ultimately to fail, the practicability of restoring the vases to their previous location in the grounds of Idlicote House is uncertain. Accordingly, this courts formal order for remittal should not prevent the respondents from giving serious consideration to whether in all the circumstances it is fair to Mr Dill or expedient in the public interest to pursue this particular enforcement process any further.
+These appeals concern requests made for the surrender under Part 1 of the Extradition Act 2003 of three persons wanted to serve sentences imposed upon their conviction in other member states of the European Union. The requests relating to the appellants Mindaugas Bucnys (Bucnys) and Marius Sakalis (Sakalis) come from the Ministry of Justice of the Republic of Lithuania. The third request, relating to the respondent Dimitri Lavrov (Lavrov), comes from the Ministry of Justice of the Republic of Estonia. The Ministries made the requests in the form of European arrest warrants intended to meet the requirements of Council Framework Decision 2002/584/JHA on the European arrest warrant and surrender procedures between member states of the European Union (the Framework Decision). Within the United Kingdom, Part 1 of the Extradition Act 2003 was enacted to give effect to the same requirements. Under section 2(7) of the 2003 Act the requests were, after receipt in this country, certified by the Serious Organised Crime Agency (SOCA), the designated authority under section 2(9), as Part 1 warrants issued by a judicial authority of a category 1 territory having the function of issuing arrest warrants. The questions of principle raised by the present appeals are whether the requests are open to challenge on the basis that (i) they were not the product of a judicial decision by a judicial authority within the terms of the Framework Decision and/or of Part 1 of the United Kingdom Extradition Act 2003, and (ii) the Ministries making them did not have the function of issuing domestic arrest warrants and were incorrectly certified by SOCA under section 2(7) of the 2003 Act. If a challenge is open on either or both of these bases, the third question is (iii) whether the challenge is on the evidence well founded in the case of either or both of the Ministries. The Administrative Court (Aikens LJ and Globe J) on 12 December 2012 answered the first question in the affirmative and the second in the negative: [2013] 1 All ER 1220. As to the third, it concluded that a ministry of justice would under European law be regarded as a judicial authority for the purposes of issuing a conviction warrant if it was sufficiently independent of the executive for the purposes of making that judicial decision (para 98); it held further that the antecedent process, in the form of a request for the issue of a European arrest warrant coming from the court responsible for the conviction, was relevant, and that, in the light of these considerations, the requests made by the Ministry of Justice of Lithuania in the cases of Bucnys and Sakalis were valid, while the request made by the Ministry of Justice of Estonia in the case of Lavrov was invalid. Bucnys and Sakalis now appeal, while the Estonian Ministry appeals in the case of Lavrov. The bases of the requests The request in respect of Bucnys results from his conviction for six housebreaking and one fraud offences, for which a total sentence of 5 years 4 months was passed on 29 February 2007. He was released conditionally by the Alytus Region District Courts order on 12 September 2008, but on 20 February 2010 the Vilnius City 1st District Court quashed his conditional release for failure to abide by the condition, requiring him to serve a further period of 1 year 7 months 28 days. The request for his surrender was expressed to be based on this court order dated 20 February 2010. Since preparing this judgment, the court has been informed by those instructed by Bucnys that he has died, presumably since the hearing. The issue raised remains of general importance, and this judgment records the Courts conclusions on it. Sakalis is wanted as a result of his conviction of a series of serious sexual assaults, including buggery, inflicted on the same victim on 28 October 2006. A sentence of 4 years was imposed by the Vilnius City 1st District Court on 25 January 2008, and his appeal was dismissed in his absence by the Vilnius County Court on 24 December 2008. Sakalis absconded before serving any part of this sentence. The request for his surrender was issued by the Minister of Justice signing as representative of the Ministry of Justice. Lavrov is wanted as a result of murder of an invalid paranoid schizophrenic in the nursing home where Lavrov worked as a medical orderly. He was sentenced to 13 years imprisonment on 23 March 2001, released on parole on 14 July 2008 with an obligation to fulfil supervision requirements. He was recalled to prison by the Viru County Court on 2 December 2009 for failure to fulfil such requirements, meaning that he would have to serve a further 4 years 2 months and 25 days in prison, but he absconded. On 9 February 2010 the Viru County Court issued an arrest warrant. On 10 February 2011, it sent a request to the Ministry of Justice to issue a warrant, leading to the Head of the Ministrys International Cooperation Unit issuing the request in issue dated 31 May 2011, expressed to be on the basis of the warrant dated 9 February 2010. Extradition Act 2003 and Framework Decision of Schedule 13 to, the Police and Justice Act 2006, reads: Section 2 of the 2003 Act, as amended by section 42 of, and paragraph 1(1) Part 1 warrant and certificate (1) This section applies if the designated authority receives a Part 1 warrant in respect of a person. (2) A Part 1 warrant is an arrest warrant which is issued by a judicial authority of a category 1 territory and which contains (a) . , or (b) the statement referred to in subsection (5) and the information referred to in subsection (6) . (5) The statement is one that (a) the person in respect of whom the Part 1 warrant is issued has been convicted of an offence specified in the warrant by a court in the category 1 territory, and (b) the Part 1 warrant is issued with a view to his arrest and extradition to the category 1 territory for the purpose of being sentenced for the offence or of serving a sentence of imprisonment or another form of detention imposed in respect of the offence. (6) The information is (a) particulars of the person's identity; (b) particulars of the conviction; (c) particulars of any other warrant issued in the category 1 territory for the person's arrest in respect of the offence; (d) particulars of the sentence which may be imposed under the law of the category 1 territory in respect of the offence, if the person has not been sentenced for the offence; (e) particulars of the sentence which has been imposed under the law of the category 1 territory in respect of the offence, if the person has been sentenced for the offence. (7) The designated authority may issue a certificate under this section if it believes that the authority which issued the Part 1 warrant has the function of issuing arrest warrants in the category 1 territory. (8) A certificate under this section must certify that the authority which issued the Part 1 warrant has the function of issuing arrest warrants in the category 1 territory. (9) The designated authority is the authority designated for the purposes of this Part by order made by the Secretary of State. The Framework Decision was a third pillar measure agreed between member states under Title VI of the Treaty on European Union (TEU) in its pre Lisbon Treaty form. The heading of Title VI is Provisions on Police and Judicial Cooperation in Criminal Matters. The Framework Decision was expressed to be made with regard to the TEU and in particular Article 31(a) and (b) [sic] and Article 34(2)(b) thereof. Article 31(1)(a) and (b) are for present purposes relevant: 31(1). Common action on judicial cooperation in criminal matters shall include: (a) facilitating and accelerating cooperation between competent ministries and judicial or equivalent authorities of the member states, including, where appropriate, cooperation through Eurojust, in relation to proceedings and the enforcement of decisions; (b) facilitating extradition between member states; . The Framework Decision starts with recitals, stating inter alia: (5) The objective set for the Union to become an area of freedom, security and justice leads to abolishing extradition between member states and replacing it by a system of surrender between judicial authorities. Further, the introduction of a new simplified system of surrender of sentenced or suspected persons for the purposes of execution or prosecution of criminal sentences makes it possible to remove the complexity and potential for delay inherent in the present extradition procedures. Traditional cooperation relations which have prevailed up till now between member states should be replaced by a system of free movement of judicial decisions in criminal matters, covering both pre sentence and final decisions, within an area of freedom, security and justice. (6) The European arrest warrant provided for in this Framework Decision is the first concrete measure in the field of criminal law implementing the principle of mutual recognition which the European Council referred to as the cornerstone of judicial cooperation. (8) Decisions on the execution of the European arrest warrant must be subject to sufficient controls, which means that a judicial authority of the member state where the requested person has been arrested will have to take the decision on his or her surrender. (9) The role of central authorities in the execution of a European arrest warrant must be limited to practical and administrative assistance. The text of the Framework Decision provides: GENERAL PRINCIPLES Article 1 Definition of the European arrest warrant and obligation to execute it 1. The European arrest warrant is a judicial decision issued by a member state with a view to the arrest and surrender by another member state of a requested person, for the purposes of conducting a criminal prosecution or executing a custodial sentence or detention order. 2. Member states shall execute any European arrest warrant on the basis of the principle of mutual recognition and in accordance with the provisions of this Framework Decision. 3. This Framework Decision shall not have the effect of modifying the obligation to respect fundamental rights and fundamental legal principles as enshrined in Article 6 of the Treaty on European Union. Article 6 Determination of the competent judicial authorities 1. The issuing judicial authority shall be the judicial authority of the issuing member state which is competent to issue a European arrest warrant by virtue of the law of that State. 2. The executing judicial authority shall be the judicial authority of the executing member state which is competent to execute the European arrest warrant by virtue of the law of that state. 3. Each member state shall inform the General Secretariat of the Council of the competent judicial authority under its law. Article 7 Recourse to the central authority 1. Each member state may designate a central authority or, when its legal system so provides, more than one central authority to assist the competent judicial authorities. 2. A member state may, if it is necessary as a result of the organisation of its internal judicial system, make its central authority(ies) responsible for the administrative transmission and reception of European arrest warrants as well as for all other official correspondence relating thereto. Member state wishing to make use of the possibilities referred to in this article shall communicate to the General Secretariat of the Council information relating to the designated central authority or central authorities. These indications shall be binding upon all the authorities of the issuing member state. Article 8 Content and form of the European arrest warrant 1. The European arrest warrant shall contain the following information set out in accordance with the form contained in the Annex: (a) the identity and nationality of the requested person; (b) the name, address, telephone and fax numbers and e mail address of the issuing judicial authority; (c) evidence of an enforceable judgment, an arrest warrant or any other enforceable judicial decision having the same effect, coming within the scope of articles 1 and 2; (d) the nature and legal classification of the offence, particularly in respect of article 2; (e) a description of the circumstances in which the offence was committed, including the time, place and degree of participation in the offence by the requested person; (f) the penalty imposed, if there is a final judgment, or the prescribed scale of penalties for the offence under the law of the issuing member state; (g) if possible, other consequences of the offence. SURRENDER PROCEDURE Article 9 Transmission of a European arrest warrant 1. When the location of the requested person is known, the issuing judicial authority may transmit the European arrest warrant directly to the executing judicial authority. 2. The issuing judicial authority may, in any event, decide to issue an alert for the requested person in the Schengen Information System (SIS). 3. Such an alert shall be effected in accordance with the provisions of article 95 of the Convention of 19 June 1990 implementing the Schengen Agreement of 14 June 1985 on the gradual abolition of controls at common borders. An alert in the Schengen Information System shall be equivalent to a European arrest warrant accompanied by the information set out in article 8(1). For a transitional period, until the SIS is capable of transmitting all the information described in article 8, the alert shall be equivalent to a European arrest warrant pending the receipt of the original in due and proper form by the executing judicial authority. Status of designation under article 6 and of SOCA certification under section 2(7) The first two questions identified in paragraph 3 above are inter related. Part 1 of the 2003 Act was enacted to give effect to the United Kingdoms international obligations contained in the Framework Decision. By its decision in Assange [2012] 2 AC 471 this court underlined the strength of the presumption that it did so fully and effectively. The Ministries submit that article 6 of the Framework Decision was intended to leave it to each member state to define its own judicial authority or authorities for the purposes of the Framework Decision, as best suited it; the information given by each state to the General Secretariat of the Council of the competent judicial authority under its law should be taken as conclusive, pursuant to the same spirit of mutual trust as underlies the Framework Decision itself; and section 2(7) of the 2003 Act must be taken as having been intended to involve a simple check by SOCA of the information received by the Secretariat, leading to a certificate issued by SOCA which must itself be taken as binding on the question whether the Part 1 warrant was issued by a competent judicial authority for the purposes of the 2003 Act. In a number of domestic authorities, the Ministries analysis has been accepted: Enander v Governor of Brixton Prison [2006] 1 CMLR 999, where Openshaw J thought that any further inquiry would be attended with considerable practical difficulty, it would be fraught with uncertainty, and would deprive the Act of its efficacy and cannot, in my judgment, have been intended by Parliament (para 30), Goatley v HM Advocate 2008 JC 1 and Harmatos v Office of the King's Prosecutor in Dendermonde, Belgium [2011] EWHC 1598 (Admin). In more recent authorities, a different attitude has been taken. At first instance in Assange [2011] EWHC 2849 (Admin), para 17, Sir John Thomas P, giving the judgment of the Divisional Court of the Queens Bench Division thought that: it is clear that in the present state of development of the common area for justice, mutual confidence in the common area for justice and the operation of the EAW will not be advanced unless the courts of the executing state scrutinise requests for surrender under the EAW with the intensity required by the circumstances of each case. Later, he said: 46. Although the approach in Enander is one that will ordinarily apply, the designation under article 6 does not, in our view, always compel the recognition by another member state as conclusive, if the authority is self evidently not a judicial authority within the meaning of that broad term in the Framework Decision. It is of some interest to note in the light of our observation at para 37 on the status of a Ministry of Justice that in 2007 the Commissioner for Justice and Home Affairs in the Report on the Evaluation of the Transposition of the Framework Decision stated that the designation by some states directly or indirectly of the Ministry of Justice as a judicial authority was contrary to the terms of the Framework Decision. However there appear to have no instances where the Commission has taken action in respect of a body that should not have been designated as a judicial authority. 47. For example, if a warrant was issued by a Ministry of Justice which the member state had designated as an authority under article 6, it would not, in our view, be a valid EAW under the Framework Decision. The principles of mutual recognition and mutual confidence which underpin the common area for justice would not require the recognition of such a warrant, as it would self evidently not have been issued by a body which, on principles universally accepted in Europe, was judicial. In our view a national judge within the European Union is bound to uphold the principles of mutual recognition and mutual confidence for the reasons we have given at para 17; public confidence in the EAW would only be undermined by the recognition of an EAW issued by a Ministry of Justice in contradistinction to an EAW issued by a judge or prosecutor. 48. It was accepted by Miss Montgomery QC (who appeared for the prosecutor) that if circumstances arose where it could be said that the person issuing the EAW was not a judicial authority, the designating certificate issued by SOCA would not be conclusive. It would have to be challenged by judicial review. She was right to accept that the certificate was not conclusive, as under section 2(8) of the 2003 Act the function entrusted to SOCA is to certify that the issuing authority has the function of issuing EAWs. It does not certify that it is a judicial authority. In Dhar v National Office of the Public Prosecution Service, The Netherlands [2012] EWHC 697 (Admin), King J pursued the same theme, saying: 38. True it is that the certificate must be certifying that the issuing authority has been designated by the law of the requesting state as the competent judicial authority for the purpose of issuing such warrants and that the requesting state has given notice to this effect to the General Secretariat of the European council pursuant to article 6(3) of the Framework Decision, but this is not the same in my judgment as certifying that such designated authority is as a matter of fact a judicial authority within the meaning of section 2(2). 39. Hence in my judgment it must be open, the grant of the certificate under section 2(7) notwithstanding, to this appellant to raise on this appeal (as he could have done before the District Judge) the issue whether the warrant was an invalid Part 1 warrant on the grounds that the purported issuing authority was not a judicial authority within the meaning of section 2(2) of the Act. When Assange was before the Supreme Court [2012] 2 AC 471, Miss Montgomery initially maintained the attitude she had taken in the Administrative Court, but in a late change of stance she aligned herself with the Lord Advocate for Scotlands written intervention advancing the same case as the present Ministries. In the event, the majority decision on other points made it unnecessary to decide this point: see per Lord Phillips of Worth Matravers at paras 81 82. However, Lord Kerr of Tonaghmore and I expressed views obiter that article 6 did not mean that any authority about which information was given to the Council Secretariat was ipso facto judicial (paras 105 and 238). Mr Knowles QC for the Ministries of Justice on the present appeal submits that, although Lord Phillips said that he was leaving the point open, he had in effect answered it in reasoning with which other members of the majority concurred. Mr Knowles points out that Miss Montgomerys wider submission in Assange was that, although judicial authority had a broad and autonomous meaning, this meaning describes any person or body authorised to play a part in the judicial process (Lord Phillips judgment, para 5); and that at para 76 Lord Phillips concluded that the issuing judicial authority bears the wider meaning for which Miss Montgomery contends and embraces the Prosecutor in the present case. Mr Knowless submission reads more into these passages in Assange than can be justified. By authorised to play a part in the judicial process must have been meant more than simply authorised to issue a European arrest warrant domestically and designated to the Secretariat under article 6(3). Otherwise, there would be no autonomous content at all. Even if one takes the sens vague of autorit judiciare which Lord Phillips approved in paras 18 and 65, this does not make an unlimited (only a wider) range of authorities eligible to be regarded as judicial. Such authorities must be at the least authorities qui appartient la justice, par opp[osition] legislative et administrative. Further, and most importantly, it is clear that the ratio of Assange was and is confined to the status of public prosecutor, and that other members of the majority cannot be taken as necessarily having agreed with all that Lord Phillips said on a number of points: see eg Lord Walker of Gestingthorpe at para 91, Lord Brown of Eaton under Heywood at para 95, Lord Kerr generally and Lord Dyson at paras 155 to 159 and 171. Finally, in the present case, the Administrative Court also disagreed with Enander [2006] 1 CMLR 999 and Harmatos [2011] EWHC 1598 (Admin) in so far as they stated that any certificate issued by SOCA under section 2(7) was conclusive or could only be challenged by judicial review, and preferred the views expressed on this aspect by King J in Dhar and by Lord Kerr and myself in Assange. Status and interpretation of Framework Decision For reasons explained in this Court in Assange [2012] 2 AC 471, paras 208 217, the Framework Decision falls outside the scope of the European Communities Act 1972. It is true, as Aikens LJ observed in para 48 of his judgment in this case, that this makes inapplicable the provision in section 3 of the 1972 Act imposing a duty on domestic courts to treat any question as to the meaning of any European Treaty or any European Union instrument as a question of law to be determined in accordance with the principles laid down by the European Court of Justice. But, viewing the Framework Decision as an international measure having direct effect only at an international level, the United Kingdom must still have contemplated that it would be interpreted uniformly and according to accepted European legal principles. When applying the common law presumption that Part 1 of the 2003 Act gives effect to the United Kingdoms international obligations fully and consistently (Assange, paras 201 and 204 206), I would therefore think it appropriate to have regard to European legal principles in interpreting the Framework Decision. Ultimately, however, this is not a point which I see as critical to these appeals. The recitals to the Framework Decision emphasise the importance being attached to the replacement of traditional cooperation relations by a system of surrender between judicial authorities and of free movement of judicial decisions. Article 1 emphasises at its outset that a European arrest warrant is a judicial decision, while article 6 states that the issuing [or the executing] judicial authority shall be the judicial authority of the issuing [or executing] member state which is competent to issue a [or execute the] European arrest warrant by virtue of the law of that state. Under European law, if a matter is left expressly to national law, then that must be the basic approach. In contrast, if there is no reference to national law at all, then a concept may well fall to be given an autonomous meaning: see eg Criminal Proceedings against Kozlowski (Case C 66/08) [2009] QB 307, paras 42 43 and Criminal Proceedings against Mantello (Case 261/09) [2010] ECR I 11477, para 38. But even concepts the meaning of which is left to national law may require to be construed as subject to limitations deriving from general European legal principles: see eg Eman v College van burgemeester en wethouders van Den Haag (Case C 300/04) [2007] All ER (EC) 486. As a matter of construction, the provision in article 6(3) that each member state shall inform the Secretariat of the competent judicial authority under its law cannot in my view be read as making such information unchallengeable and binding all other member states to accept any authority whatever as judicial which any member state chooses to designate and nominate as such. In the light of the recitals and articles 1 and 6(1) and (2), the proper view of article 6(3) may well be that it does no more than address the question which judicial authority is competent. But, even if that is wrong, its language is too unspecific to remove from all scrutiny the question whether the authority nominated really does fulfil the express purpose of the Framework Decision to replace the traditional executive liaison with a new system of judicial cooperation between judicial authorities by virtue of judicial decisions. The Framework Decision must be viewed in the light of Title VI under which it was made. The pre Lisbon Treaty on European Union operated largely on a traditional, inter governmental basis. But it provided a structure of objectives, principles, powers and procedures within which individual measures such as the Framework Decision fell to be agreed and operated. The Framework Decision is a subsidiary measure, which must be interpreted subject to the general objectives and principles of and powers conferred by that Treaty: see Edward and Lane, European Union Law, 3rd ed (2013), paras 6.23 6.24. It is relevant that Title VI not only provides for judicial cooperation, but that the language of article 31(1)(a) one of the express jurisdictional bases of the Framework Decision (see para 9 above) expressly distinguishes between competent ministries and judicial or equivalent authorities. It is in my view implausible to suggest that, under the law of the European Union, the concept judicial in Title VI has no autonomous content whatever. If that is so, then the concept in the Framework Decision cannot give member states carte blanche to agree that each of them could put whatever meaning they chose upon the concept for the purposes of that measure. Further, even if the boundaries of judicial are under Title VI to be regarded as potentially limitless according to the nature and context of the powers being exercised, it by no means follows that the concept has equal width in the context of a specific measure like the Framework Decision. In this context, it does not to my mind advance the argument far to say that member states must be taken to trust each other, or that the Framework Decision was designed (as it clearly was) to eliminate delay and complexity (Dabas v High Court of Justice in Madrid, Spain [2007] UKHL 6, [2007] 2 AC 31, para 53, per Lord Hope of Craighead). The Framework Decision was agreed between member states. But, in a sensitive area which could involve the surrender of a member states own citizens, it was only agreed on the fundamental premise that the relevant decisions would be taken by and the relevant trust existed between judicial authorities. As Sir John Thomas observed, public confidence would not be advanced if this meant whatever individual member states chose it to mean. In a measure designed to do away with executive involvement, it is also unlikely that European law would leave it to the executive to identify whatever authority it chose as judicial. Even Lord Phillips sens vague interpretation of judicial authority distinguishes between an authority belonging to the system of justice, as opposed to the legislature or administration; and the distinction cannot be elided by accepting that any authority given the function of issuing a European arrest warrant must ex hypothesi be judicial. Section 2(7) of the 2003 Act Section 2(7) of the 2003 Act does not take the Ministries further. First, if the case advanced by Bucnys, Sakalis and Lavrov is right, then section 2(7) does not reflect article 6. Rather, it represents an additional safeguard, of the sort which Lord Hope in Office of the Kings Prosecutor, Brussels v Cando Armas [2006] 2 AC 1, para 24 contemplated that Parliament might have included. The safeguard would require any judicial authority requesting surrender to be an authority with general authority to issue domestic arrest warrants. But, second, if that is wrong, then the certificate contemplated by section 2(7) is not concerned with the question whether an authority is judicial. The certificate is to state that the authority which issued the Part 1 warrant has the function of issuing arrest warrants in the issuing territory. Under section 2(2): A part 1 warrant is an arrest warrant which is issued by a judicial authority of the issuing territory. The certificate therefore assumes, but does not certify, that the issuing authority is judicial. If (as I consider) judicial is in the context of the Framework Decision a concept with autonomous content, then sections 2(2) and 2(7) must clearly be read (as they can be) as preserving and reflecting its autonomous meaning. How restricted the boundaries are of that autonomous meaning is a different matter. Bearing in mind the diversity within member states of judicial systems and arrangements, they may be quite relaxed. The Assange case witnesses to this. I will return to this aspect, after considering the second ground of challenge to the requests for surrender. Meaning of section 2(7) The second ground of challenge is that the Ministries of Justice of Lithuania and Estonia did not have the function of issuing domestic, as opposed to European, arrest warrants within their respective states and SOCAs certificates under section 2(7) were as a result invalid. The issue of a certificate under section 2(7) is a critical stage in the execution within the United Kingdom of a European arrest warrant. Without it there can be no arrest under section 3 and the person whose surrender is sought cannot be brought before the appropriate judge under section 4. Where a provisional arrest occurs under section 5, the certificate under section 2(7) must be produced to the judge within 48 hours, or such extended period as the judge may grant. Failing this, the person whose surrender is sought will have to be discharged under section 6. In the case law to date, it appears to have been assumed that the certificate contemplated by section 2(7) is a certificate relating to the function of issuing European arrest (or Part 1) warrants. But Mr James Lewis QC for Bucnys and Sakalis has made a powerful contrary submission, which Mr Alun Jones QC for Lavrov adopts. Mr Lewis points out that the drafters of the Act have been careful to use the concept Part 1 warrant when it first appears in any section, referring thereafter where appropriate simply to the warrant: see eg sections 2(3) and (5), 6(4) and 7(1) and (2). Yet in section 2(7) the drafters used the generic arrest warrants, when they could have used specific wording like such warrants or such a warrant. Further, as the House of Lords held in Louca v Public Prosecutor, Bielefeld, Germany [2009] UKSC 4, [2009] 1 WLR 2550, the words any other warrant in section 2(4) do refer to any domestic arrest warrant that may exist. On the other hand, section 2(2) makes clear that a Part 1 warrant is a type of arrest warrant, there were strong contextual reasons for the conclusion in Louca and it is possible that the drafters did not use the phrase such warrants in section 2(7) because other member states do not have Part 1 warrants; rather they issue European arrest warrants or some other nationally expressed equivalent, when giving effect to the Framework Decision. Mr Lewis responds to this last point by noting that, if the drafters had had in mind the authority which had the function under domestic law of issuing European arrest warrants and was so designated under article 6(3), they could easily have made this clear by substituting for the last 18 words of section 2(7) words such as has been designated to the Secretariat of the Council of Ministers under article 6(3) of the Framework Decision as having the function of issuing European arrest warrants in the category 1 territory. If section 2(7) were intended as a safeguard, it would have odd features. First, it would require SOCA to investigate overseas practice, rather than look at the information given to the Secretariat under article 6(3) of the Framework Decision. Second, it would mean that SOCA should refuse a certificate in respect of any request coming from a state which chose to assign competence to issue European arrest warrants to a specialist or different (perhaps a higher) judicial body than that responsible for domestic arrest warrants. It is true that in the present certificates SOCA certified, inter alia, that the Part 1 warrants issued by the Ministries of Justice were issued by a judicial authority, with the function of issuing arrest warrants. But it was no part of their statutory function to purport to certify the judicial nature of the issuers, and their doing so can have had no effect in law if the authority certified was not truly judicial within the meaning of the Framework Decision and Act. Mr Lewis submits that a conclusive indication as to the nature of the function of issuing arrest warrants to which section 2(7) refers is provided by section 212. Section 212 deals with alerts issued at the request of an authority of a category 1 territory under article 95 of the Convention implementing the Schengen Agreement of 14 June 1985 (OJ L 239, p 19). The history of section 212 is described in para 258 of my judgment in Assange [2012] 2 AC 471. Article 95 reads: 95.1. Data on persons wanted for arrest for extradition purposes shall be entered at the request of the judicial authority of the requesting contracting party. 2. Before issuing an alert, the contracting party shall check whether the arrest is authorised under the national law of the requested contracting parties. If the contracting party issuing the alert has any doubts, it must consult the other contracting parties concerned. The contracting party issuing the alert shall send the requested contracting parties by the quickest means possible both the alert and the following essential information relating to the case: (a) the authority which issued the request for arrest; (b) whether there is an arrest warrant or other document having the same legal effect, or an enforceable judgment; (c) the nature and legal classification of the offence; (d) a description of the circumstances in which the offence was committed, including the time, place and the degree of participation in the offence by the person for whom the alert has been issued; (e) in so far as is possible, the consequences of the offence. The Schengen alert system thus operates through data entered at the request of a domestic judicial authority, but sent by one contracting state to another. To give continuing effect to this system, section 212 of the 2003 Act, as amended by section 68 of the Policing and Crime Act 2009, provided (originally on a temporary, but in the event on a continuing basis) that, where an article 95 alert is issued, then (2) The reference in section 2(2) to an arrest warrant issued by a judicial authority of a category 1 territory is to be read: (a) as if it were a reference to the alert issued at the request of the authority, and (b) as if the alert included any information sent with it which relates to the case. (3) In consequence of subsection (2), this Act has effect with these modifications (a) in sections 2(7) and (8) . for authority which issued the Part 1 warrant substitute authority at the request of which the alert was issued; . The effect of section 212 is thus that sections 2(7) and (8) must, in the context of article 95 Schengen alerts be read: (7) The designated authority may issue a certificate under this section if it believes that the authority at the request of which the alert was issued has the function of issuing arrest warrants in the category 1 territory. (8) A certificate under this section must certify that the authority at the request of which the alert was issued has the function of issuing arrest warrants in the category 1 territory. When certifying under section 212, SOCA must be intended to focus on the question whether the domestic judicial authority at the request of which the data were put on the Schengen system in the overseas state had the function of issuing domestic arrest warrants. This shows, Mr Lewis submits, that the very same words used in their original unmodified form in section 2(7) and (8) must also focus on the function of issuing domestic arrest warrants. In my view, that does not follow. When section 212 is in play, there is only one possible judicial authority in play, that is the overseas judicial authority at whose instance the Schengen alert is entered on the system and which is distinct from the contracting state by which the alert is communicated to the United Kingdom. It is natural that any certificate required should look at the status and functions of that overseas domestic judicial authority. When section 212 is not in play, the directly relevant judicial authority is the authority which issues the European arrest warrant. The status and functions of the authority issuing any domestic warrant (if any) are of subsidiary interest, even though the existence of any such domestic warrant will need to be noted in the European arrest warrant under article 8(1)(c) of the Framework Decision and section 2(4)(b) of the 2003 Act, as decided in Louca [2009] 1 WLR 2550. It is therefore possible for the same phrase to point in different directions in these two different contexts. To treat section 212 as altering what would otherwise be the appropriate meaning to put on section 2(7) and (8) would, in my view, be to treat the tail as wagging the dog. Mr Lewis seeks to rely on Parliamentary material under the principle in Pepper v Hart [1993] AC 593. That involves showing that the provision is ambiguous or obscure and that there are ministerial statements which, viewed in the context of the Parliamentary material as a whole, provide a clear answer as to its meaning. I do not consider that these conditions are met. I doubt whether section 2(7) is even sufficiently ambiguous or obscure to justify looking at Parliamentary material on this point. Assuming that it is, it is true that one finds ministerial statements that European arrest warrants would be issued by precisely the same authorities as currently issued the (necessarily domestic) warrants on the basis of which executive requests were previously made between states for surrender: see eg Mr Ainsworths statements in Standing Committee on 9 January 2003 (Hansard (HC Debates), col. 48), which I quoted in Assange [2012] 2 AC 471, para 253. But immediately afterwards Mr Ainsworth went on to say that By the time that countries start to operate the European arrest warrant, we will know which authorities will be competent to issue them. It will be reasonably straightforward for the issuing authority to be identified and it will be possible to cross check them with the central record kept by the general secretariat and a little later (at col 51) that If the issuing authority were not a judicial authority as designated in the framework document, the body charged with certifying would not accept the warrant. These statements made clear that in the ministers mind certification was linked with the information provided under article 6 of the Framework Decision, which goes to the function of issuing European arrest warrants, not domestic warrants. The upshot is that neither in these nor in any other passages is there the clarity of statement that could assist to put a different meaning on section 2(7) to that which I consider otherwise follows on ordinary principles of construction. In my view, section 2(7) must (other than in the context of Schengen alerts under section 212) be taken as referring, however awkwardly, to the function of issuing European arrest warrants, not domestic. Judicial authority The second ground of challenge to the requests therefore fails, and I turn to consider whether the Ministries can be regarded as judicial authorities for the purposes of issuing the requests in issue on these appeals. The question is whether the concept of judicial authority embraces any category of persons beyond courts, judges, magistrates and (in the light of Assange) public prosecutors, and if so in what circumstances. Mr Knowles argued for a positive answer, relying on all five reasons on which Lord Phillips based his judgment in Assange. But only one of these reasons received any real endorsement even in the other majority judgments in that case: see Lord Walker at para 92. Lord Brown at para 95, Lord Kerr generally and Lord Dyson at paras 155 to 159 and 171. I add only, with regard to the third reason, that I agree with Lord Dyson (para 158) that the removal from the December 2001 Council redraft of the Commissions September 2001 proposal of definitions of judicial authority in terms of a judge or public prosecutor provides no basis for concluding that it was intended to broaden the scope of the concept beyond judge or public prosecutor. It is at least as likely that there were considerable reservations in some member states about appearing to accept a judge or public prosecutor as an appropriate judicial authority for the purposes of both issuing and executing European arrest warrants, as would have been the effect of the definitions included in the September 2001 proposal. Any further conclusion would be speculation. As regards the fourth reason, I also agree with Lord Dyson (para 159) that the assumption in article 6 that there may be a range of judicial authorities from which to chose that which is to be competent to issue European arrest warrants says nothing significant about the scope of the concept of judicial authority. This is all the more so, now that it is decided by Assange that the range can include both courts and public prosecutors. The one ground which did influence most members of the court in Assange was Lord Phillips fifth and final ground, based on applying the principles of the Vienna Convention on the Law of Treaties 1969 to the international agreement reached under Title VI and embodied in the Framework Decision. As appears by the five paragraph coda which appears at the end of the Courts judgment in Assange as published in [2012] 2 AC 471, 569 570, the relevance of the principles in the Vienna Convention was assumed, not argued, in Assange. When, after the draft judgment on the substance was handed down, Miss Rose QC applied to re open the appeal to take issue with the relevance of the Vienna Convention, her application was rejected as being without merit, not because the point she wished now to raise would itself have been meritless, but because it was too late to do so on that appeal. She had had her chance to raise it during the course of oral argument before the hand down, but had accepted that the Vienna Convention applied and that state practice was a potentially relevant aid to construction. On the present appeals, there has been no such acceptance. The applicability of the Vienna Convention and the relevance of state practice have been put squarely in issue. The issue is of potential relevance (though each countrys law and practice may raise different considerations) because, in addition to Lithuania and Estonia, it appears that Finland and Sweden have under article 6 designated bodies operating as part of or under their Ministries of Justice as their issuing judicial authority in the case of conviction warrants in the case of Finland the Criminal Sanctions Agency, in the case of Sweden the National Police Board; and Germany has designated its Ministry of Justice, although stating that its powers have been transferred to the public prosecutor at the relevant regional court. Further, two countries have designated their Ministries of Justice as their issuing authority in the case of accusation warrants Denmark outright, and Germany subject to the same transfer of powers to the regional public prosecutor. The evidence of state practice is thus, on any view, much more limited than that which existed in relation to the use of public prosecutors as recounted in Assange, where it appeared that some 11 states had nominated public prosecutors in the case of accusation warrants and some ten in relation to post conviction warrants. (The information now before the court indicates that these figures were slightly inaccurate, and should have been ten, or pre trial 12, in the case of accusation warrants and eight in the case of conviction warrants.) Nonetheless, Mr Knowles submits that the designation of Ministries of Justice should, even if limited, be regarded as significant, because of the absence of evidence that other states have challenged the designation or refused to execute warrants. Bearing in mind that it is unclear how far any challenge would fall to be raised by executing states, rather than by the persons whose surrender was sought, and that there has been no detailed study of state legislation or practice in cases where it is by implication suggested that a challenge might have been raised, I am unimpressed by the strength of the alleged practice as an indicator of any agreement of the state parties regarding interpretation, within the meaning of article 31(3)(c) of the Vienna Convention. As I noted in Assange, at para 242, the fact that three states (Denmark, Germany and Romania) have also designated their Ministries of Justice as executing judicial authorities is also capable of raising questions about the reliability of state practice as a guide, even if otherwise admissible. As to the question of principle, whether the Vienna Convention is applicable to the Framework Decision, in my view it is unlikely as a matter of European law that it is or would be so regarded. For reasons already indicated in paragraph 23 above, the Framework Decision must be understood in the context of Title VI of the pre Lisbon Treaty on European Union, and the structure of objectives, principles, powers and procedures contained in that Treaty, including, where individual States agreed, provisions relating to the Court of Justices jurisdiction: see eg articles 2 to 6, 29, 31, 35 and 39. So viewed, I do not consider it correct to describe the Framework Decision as a treaty at all. It is a subsidiary measure, which fell to be agreed by unanimity within the scope of the powers conferred by, as well as in accordance with the procedures defined by, the pre Lisbon Treaty on European Union. It must be interpreted as such: see the passages from Edward and Lane cited in paragraph 23 above. Under the pre Lisbon Treaty on European Union, among the important pre conditions to the agreement of the Framework Decision was the express requirement under article 39(1) for the Council to consult the European Parliament upon it as a measure agreed for facilitating extradition within article 34(2)(b). The European Parliament had three months to deliver an opinion upon the measure. Its opinion, delivered on 9 January 2002, approved the measure, but with the request that the Council notify the Parliament should it intend to depart from the approved text. The argument that subsequent state practice by members of the Council could change or affect the meaning of a Framework Decision potentially sidelines the European Parliaments role. For that reason alone, it is not one that I believe that the Court of Justice would be likely to endorse even under the pre Lisbon Treaty on European Union. There is a striking absence in the textbooks and case law of any reference to, or any instance of the application of, subsequent member state practice as establishing the agreement of member states to a particular interpretation, or as having any real relevance to interpretation, of a measure introduced under any of the European Treaties. The court was referred to The Court and the Tribunal of the EC and the Vienna Convention on the Law of Treaties 1969, an article by P J Kuijper (a legal adviser to the Commission), published in Legal Issues of European Integration, (1998) vol 25, issue No 1. The article focuses on references to the Vienna Convention in relation to treaties and secondary legal acts entered into by the Community with third parties. The European Treaties themselves are of a special and different nature, as the article points out with reference to the Court of Justices Opinion 1/91 [1991] ECR I 6079. In that Opinion the court said: 21 In contrast, the EEC Treaty, albeit concluded in the form of an international agreement, none the less constitutes the constitutional charter of a Community based on the rule of law. As the Court of Justice has consistently held, the Community treaties established a new legal order for the benefit of which the states have limited their sovereign rights, in ever wider fields, and the subjects of which comprise not only member states but also their nationals (see, in particular, the judgment in Van Gend en Loos (Case 26/62) [1963] ECR 1). The essential characteristics of the Community legal order which has thus been established are in particular its primacy over the law of the member states and the direct effect of a whole series of provisions which are applicable to their nationals and to the member states themselves. With regard to the possibility that subsequent practice might influence the interpretation of Community law, the article at pp 9 10 states bluntly that: It may be interesting to recall here that, as far as Community law is concerned, and certainly where the provisions of the Community Treaty are concerned, the Court of Justice does not accept arguments of subsequent practice at all. The Court in such cases has recourse to the standard phrase that mere practice cannot change the treaty. Cited in support are French Republic v Commission of the European Communities (Case C 327/91) [1994] ECR I 3641 and the Court of Justices Opinion 1/94 [1994] ECR I 5267. In the former, the issue was the extent of the Commissions powers to conclude agreements with third countries, under article 228 EEC which provided for such agreements to be negotiated by the Commission and concluded by the Council after consulting the Parliament subject to the powers vested in the Commission (reconnues la Commission) in this field. The Commission argued that its powers might be derived from previous practice of the respective Community institutions, to which the Court observed (para 36) that a mere practice cannot override the provisions of the Treaty. Likewise, the court held in United Kingdom of Great Britain and Northern Ireland v Council of the European Communities (Case 68/86) ECR 855, para 24, and reiterated in its Opinion 1/94 [1994] ECR I 5267 in relation to suggested external competence in the field of GATs (the General Agreement on Trade in Services) that a mere practice of the Council cannot derogate from the rules laid down in the Treaty and cannot, therefore, create a precedent binding on Community institutions with regard to the correct legal basis (para 52), that, it would, in the field of TRIPs (trade related aspects of intellectual property rights), enable the Community institutions to escape the internal constraints to which they are subject in relation to procedures and to rules as to voting (para 60) and that Institutional practice in relation to autonomous measures or external agreements adopted on the basis of article 113 cannot alter this conclusion (para 61). These statements, made in the context of arguments about institutional competence under the Treaties themselves, are a strong indicator of the attitude that the court would take to any suggestion that the member states could by agreement between themselves alter or influence the meaning of Community measures arrived at under the Treaties, following procedures for their negotiation and enactment, including consultation with the European Parliament, contained in such Treaties. The only case which the Ministries have been able to locate in which the court might be said to have taken account of member state practice in interpreting a Community instrument under any of the European Treaties is Skatteministeriet v Henriksen (Case 173/88) [1989] ECR 2763. There, after giving its reasons for a particular construction, the court added a paragraph saying: That interpretation is also in conformity with the view common to all the member states, none of which has adopted legislation [consistent with the interpretation which the court rejected] (para 13) That comment, in a case where member states view or practice was consistent with that at which the court had arrived, is wholly inapt to show that such practice is capable of changing the meaning of an autonomous European concept in a Community or Union instrument agreed under the Treaties. I can therefore put aside the suggestion that member states alleged practice can affect the question whether the Ministries are capable of being designated as judicial authorities for the purpose of issuing European arrest warrants under the Framework Decision. Equally, however, the interpretation of the Framework Decision cannot, as it seems to me, be influenced by comments made in some evaluation reports to the effect that Ministries of Justice are not judicial authorities: see eg Council Evaluation Report on Lithuania 12399/1/07, para 7.2.1.1, reporting that The Lithuanian authorities recognised that EAWs should be issued by judicial authorities and that the Ministry of Justice could not be considered a judicial authority; and the Commission report on the operation of the Framework Decision COM(207) 407, commenting in relation to both Lithuania and Estonia that the Ministry of Justice is not a judicial authority. In my opinion, the concept of judicial authority falls simply to be interpreted in the teleological and contextual manner that Professor Anthony Arnull indicates in The European Union and its Court of Justice, 2nd ed (2006), pp. 612 and 621, as I stated in paragraph 229 of my judgment in Assange [2012] 2 AC 471. In the context of the Framework Decision, the most obvious purpose of insisting on the concept was to ensure objectivity (including freedom from political or executive influence) in decision making and to enhance confidence in a system which was going to lead to a new level of mutual cooperation including the surrender of member states own nationals to other member states. The special emphasis in recital 6 on the importance of this concept in the context of execution of European arrest warrants indicates a possible difference between its significance in the contexts of issuing and executing a European arrest warrant. Likewise, article 19 with its distinction between the competent executing judicial authority and another judicial authority which may need to be involved at the hearing stage in order to ensure the proper application of this article and of the conditions laid down. This leads to consideration of the features which an authority must as a minimum have, if it is to be regarded as an issuing judicial authority for the purposes of the Framework Decision. Mr Lewis, submits that they are three: (i) it must be functionally independent of the executive, (ii) it must be capable of making a judicial decision and (iii) it must be separate from the designated central authority, a separation assumed by recital 9 and article 7. In Assange, at para 153, Lord Dyson was inclined to think that the essential characteristics of an issuing judicial authority are that it should be functionally (but not necessarily institutionally) independent of the executive. In the Administrative Court in the present cases, Aikens LJ considered that a ministry of justice could be an issuing judicial authority for a conviction warrant if the person in the ministry making the decision was sufficiently independent of the executive for the purposes of making that judicial decision and thought, in this connection, that there was much force in Lord Phillips point [in Assange [2012] 2 AC 471, paras 62 64] about the requisite safeguards being predominantly in the antecedent process which forms the basis on which the conviction European arrest warrant is issued (para 98). I would make three points in relation to these observations. First, Assange was a case of an accusation warrant and Lord Dyson noted at paras 156 157 the difficulty about Lord Phillips point, which constituted his second reason in Assange (see paras 62 64): there is no guarantee that a domestic accusation warrant would be based on any judicial decision at all, and the implications of a European arrest warrant are likely to be more serious than those of a domestic arrest warrant. Second, a test which would mean seeking to ascertain whether one or more individual decision makers within a ministry was or were functionally, even though not institutionally, independent of the ministry in which they served, may be regarded as problematic, both in principle and because of the evidential issues to which it could give rise. On no view, in any event, would the Minister of Justice signing on behalf of the Ministry of Justice of Lithuania appear to satisfy any such test. I need say no more than that on these appeals. Third, Aikens LJ must I think have had this point in mind when he went on, immediately after his above quoted observations, to focus his conclusions on the need for a prior court request that a European arrest warrant should be issued, and on the consequent restriction of any positive ministry role to determining that effect be given to such a request: If the national law concerned provides that the pre condition to the issue of a conviction EAW by the ministry of justice is that there must be not only an enforceable judgment and sentence but also a request from the sentencing court that a conviction EAW be issued, then the scope for executive interference is much reduced if not entirely eliminated. (para 98) This postulates a situation in which the ministrys decision to issue a conviction European arrest warrant has by law to be and is firmly founded on a judicial decision by the responsible court that such a warrant is appropriate. Consistently with this approach, both Ministries of Justice sought in their submissions and evidence to meet the criteria suggested by Aikens LJ. Accusation and conviction warrants do not necessarily raise the same considerations. A conviction warrant must necessarily have been preceded by a domestic court process. There is less scope for discretion in relation to the issue of a European arrest warrant following from a conviction. If the court responsible for the conviction or execution of the sentence considers that the European arrest warrant should be sought, and the issue of such a warrant follows from its decision, then the issue of the warrant can be regarded as the result of a judicial decision, even though the issue takes place by and in the name of a different authority. The key question is whether the issuing authority can in such a case be regarded as a judicial authority for the purposes of the Framework Decision or 2003 Act, when it is, as here, the Ministry of Justice or a section within that Ministry. Mr Lewis and Mr Jones submit that it cannot, on the basis that a body, which cannot act of its own initiative and which simply box ticks, cannot be a judicial authority taking a judicial decision. They also point out that the two Ministries have also been designated as their respective countries central authorities for the purposes of article 7, in circumstances where both recital 9 and article 7 contemplate that such a body will be separate from and have a limited role in proving practical and administrative assistance to the competent judicial authorities. Before going further into these questions, it is however relevant to look more closely at the evidence and facts in the cases under appeal. The evidential material The Administrative Court proceeded on the basis that the two requests made by the Ministry of Justice of Lithuania were based in each case upon a request made by a court, not by a prison or the Prison Department; the functions of the officials of the Ministry were tightly defined by the Rules and the decision on whether to issue the conviction European arrest warrant has to be made on the basis of those Rules alone (para 104). The warrants, though signed for the Ministry by the Minister of Justice, were on this basis regarded as issued by a judicial authority. In relation to the procedure in Estonia there was, however, much less material before the Administrative Court; there appeared to be no requirement that the sentencing court must prepare a draft European arrest warrant and then request the ministry to issue the European arrest warrant and no procedural rules which dictate what the ministry officials have to do or which dictate the time in which a request to issue a conviction warrant be carried out. The court was not satisfied that the Ministry of Justice of Estonias decision to issue a European arrest warrant could be regarded as judicial or that the International Judicial Cooperation Unit within that Ministry and its personnel had sufficient functional independence from the executive to enable the Ministry to be characterised as a judicial authority for the relevant purposes (para 106). Before the Supreme Court further material has been produced, in relation to both the Lithuanian and the Estonian positions. Mr Lewis referred to and relied upon the Lithuanian material as did eventually Mr Jones, after initially objecting to its admission. I for my part consider that the new material should be admitted and considered, even though it should have been before the Administrative Court. Without it, it is clear that we would be at risk of deciding these appeals on a false basis. The Lithuanian position The picture which emerges in relation to Lithuania from communications to the Crown Prosecution Service by the Vice Minister of Justice is that the Ministry only issues any European arrest warrant after conviction on the initiative of either (a) a court or (b) an authority responsible for executing the sentence. It does so then after examination of all the documents to ascertain that valid grounds exist for issuing such a warrant. In this connection, article 69 of the Code of Criminal Procedure provides: 2. European arrest warrants regarding citizens of the Republic of Lithuania or other persons who have been sentenced to imprisonment by enforceable judgments in the Republic of Lithuania and who have absconded from serving the sentence in another member state of the European Union shall be issued and competent authorities of that state shall be contacted by the Ministry of Justice of the Republic of Lithuania. 3. The procedure for issuing a European arrest warrant and surrendering the person under the European arrest warrant shall be defined by the Prosecutor General of the Republic of Lithuania and by the Minister of Justice of the Republic of Lithuania. Under article 69(3), the following Rules for issuing European arrest warrant were duly promulgated by Order no. IR 95/I 114 of 26 August 2004. They provide: I. GENERAL PROVISIONS 4. The Ministry of Justice of the Republic of Lithuania shall issue the European arrest warrant with a view to arrest a person who has been punished by custodial sentence but who has gone into hiding from the enforcement of this sentence. In this case the European arrest warrant shall be issued under the following circumstances: 4.1. when the remainder of the sentence to be served is of four months or of longer term; 4.2. when there is a ground to believe that the convicted person may be located in the member state of the European Union or other State, which applies the surrender procedure of the persons concerned pursuant to the European Arrest Warrant. RECOURSE FOR WARRANT 7. If the case has been heard in the trial and the judgement of conviction rendered in absentia of the accused, the court shall send a copy of the enforceable judgement of conviction whereby a sentence of imprisonment has been imposed together with the draft European arrest warrant (except section (i)) to the Ministry of Justice of the Republic of Lithuania after taking into consideration the criteria for ISSUING EUROPEAN ARREST issuing a European arrest warrant laid down in paragraph 12 of the Rules. 8. If the convicted person, who has not been arrested until the court judgement became enforceable, absconds from the execution of the custodial sentence imposed on him by the court's judgment, or if the convicted person while serving his custodial sentence runs away from the correctional institution or fails to return there, the request to issue the European arrest warrant shall be submitted to the Ministry of Justice by the institution executing the sentence after taking into consideration the criteria for issuing a European arrest warrant laid down in paragraph 12 of the Rules. A copy of the enforceable judgement of conviction whereby a sentence of imprisonment has been imposed and the draft European arrest warrant (except section (i)) shall be enclosed with the request. 9. When the court renders a Ruling to quash the suspension of the sentence execution, a Ruling to quash either a conditional early release from custodial sentence or conversion of the remainder of the sentence into a more lenient punishment or a Ruling to refer the person released conditionally from the correctional institution to serve the remaining sentence of imprisonment in the correctional institution, the court shall forward a copy of the aforesaid Ruling together with the draft European arrest warrant (except section (i)) to the Ministry of Justice of the Republic of Lithuania after taking into consideration the criteria for issuing a European arrest warrant laid down in paragraph 12 of the Rules. III. ISSUING OF THE EUROPEAN ARREST WARRANT 12. Upon receiving the documents set out in Chapter II of these Rules, the Prosecutor General's Office of the Republic of Lithuanian or the Ministry of Justice of the Republic of Lithuania shall analyse the above documents and, if there are all preconditions listed in paragraphs 3 or 4 of the Rules, shall issue the European arrest warrant taking into consideration the severity and type of the offence committed and the suspected, accused or convicted person's personality. If the information is insufficient to issue the European arrest warrant, the Prosecutor General's Office of the Republic of Lithuania or the Ministry of Justice of the Republic of Lithuania shall contact the institution, which has requested to issue the European arrest warrant, asking to provide the missing information within the time limit specified by the Prosecutor General's Office of the Republic of Lithuania or the Ministry of Justice of the Republic of Lithuania. If there are no grounds for issuing the European arrest warrant or the missing information is not obtained during the time limit defined, or if the issuance of the European arrest warrant does not satisfy the principles of proportionality and procedural economy, the request to issue the European arrest warrant shall be returned to the requesting institution. 13. The European arrest warrant shall be issued not later than within 5 days after receiving all information necessary for preparing the European arrest warrant. 14. The European arrest warrant shall be prepared in accordance with the form contained in the Annex 1 of these Rules. 16. if the European arrest warrant is issued by the Ministry of Justice of the Republic of Lithuania, then it shall be undersigned by the Minister of Justice of the Republic of Lithuania or his delegated persons. Contrary to the Administrative Courts understanding, it is now clear (from the Ministry of Justices letter dated 5 November 2012) that, while the request made to the Ministry of Justice in respect of Bucnys, came under rule 9 from the Vilnius City 1st District Court after it had on 20 February 2010 quashed Bucnyss conditional release, the request in respect of Sakalis came from the Prison Department of the Republic under rule 8, based on its assessment that Sakalis had absconded from the whole of the four year sentence imposed by the Vilnius City 1st District Court on 25 January 2008 and upheld on appeal on 24 December 2008. The Vice Minister of Justice of Lithuania has explained in correspondence put before the Supreme Court that the prison department would only act after being provided by the Vilnius City 1st District Court with relevant documentation regarding the conviction and sentence. It does not follow that the District Court made any sort of judicial decision at this point and the evidence does not show that it did. Both in law and in practice, the responsibility for requesting the Ministry of Justice to issue a European arrest warrant rested on the prison authorities, upon which rule 8 conferred it. In these circumstances, I cannot regard the European arrest warrant issued in respect of Sakalis as having been either issued by a judicial authority or as being the result of a judicial decision. The Prison Department is an executive agency charged, as rule 8 states, with the execution of the sentence. It is not a judicial body considering and ruling upon the question whether the person wanted has absconded. The language of rules 8 and 12, read together, makes it possible (though surprising) that the Prison Department is required before submitting a request to issue a European arrest warrant to the Ministry to take into consideration the severity and type of the offence committed and the . convicted persons personality. In other words, it may have a discretion. If so, the evident oddity in the context of a European arrest warrant of such a discretion being entrusted to a prison department merely underlines the fact that it cannot be regarded as a judicial authority. The Ministry of Justice after receiving the Prison Department request is under rule 12 required not only to consider for itself whether the formal pre conditions listed in rule 4 are satisfied but (it appears) also to take into consideration the severity and type of the offence and the . convicted persons personality. Assuming again that this connotes an element of discretion, even in the case of a conviction, as to whether it issues a warrant, the mere fact that the Ministry of Justice is given a discretion does not make it a judicial body. If anything, it points once again towards a need for a judicial decision by a body or bodies which could be regarded as judicial. I would therefore allow the appeal by Sakalis and set aside the Part 1 warrant issued in respect of him. The position in relation to Bucnys is different. Under the combination of rules 9 and 12, the Vilnius City 1st District Court not only took the decision to quash his conditional release on 12 September 2008, it also forwarded copies of its ruling to the Minister with a draft European arrest warrant, and it must be taken to have done this after taking into account the criteria for issuing such a warrant laid down in rule 12, including the severity and type of the offence and the . convicted persons personality. The Ministry of Justices only role was to repeat the same exercise. Its review could not worsen the position of the convicted person. At best, if the Ministry took a different view on the question whether the criteria were met, its review might lead to a decision not to issue a European arrest warrant which the Vilnius court had adjudged to be appropriate. Essentially, therefore, the European arrest warrant issued in respect of Bucnys emanated from the court responsible for him having to serve a further period in prison. That was a judicial decision by a judicial authority. The Ministry by issuing the warrant effectively endorsed that decision. Under article 7 of the Framework Decision, it would have been permissible for Lithuania to designate the Vilnius City 1st District Court as the relevant judicial authority and to restrict the Ministrys role to its capacity of central authority. If a court were to out source its registry and the registry were to be designated as the judicial authority responsible for issuing warrants or other orders to give effect to the courts orders, it should I think be possible to regard the registry as a judicial authority issuing a judicial decision, even though or because it would simply be giving effect to the courts orders. In the present case, it appears that the Ministry of Justice had some discretion, but only in the sense of a one way discretion to check that, in its view also, a European arrest warrant was appropriate. This requirement for two concurrent decisions in favour of such a warrant could only operate to the benefit of the person whose surrender was proposed by the court responsible for the conviction or sentence. In these circumstances, I consider that European law would accept that the spirit of the Framework Decision was met in the case of European arrest conviction warrants issued by the Ministry of Justice of Lithuania to give effect to a corresponding request by the Court responsible for the sentence, and would treat the Ministry of Justice in that context as an appropriate issuing judicial authority. I have been addressing the present situation of a Ministry of Justice acting at the request of the responsible court. It is possible that the spirit of the Framework Decision may also be satisfied in some other situations, for example when a Ministry of Justice acts on the basis of a request made by a public prosecutor, held by this court in Assange to be capable of being regarded as a judicial authority. To take a specific instance, in Germany the Ministry of Justice is designated as the relevant judicial authority for the purpose of issuing conviction (and indeed also accusation) European arrest warrants, but has in some way transferred or delegated its role to the public prosecutor at the relevant regional court. As we have no details of the arrangements or how they operate, I can express no conclusion either way, but it may prove appropriate to treat the Federal Ministry of Justice as the issuing judicial authority, when a German public prosecutors decision that a conviction European arrest warrant should be issued is simply endorsed by or leads to the issue of such a warrant in the name of the Ministry. The Estonian position Turning to the position of the European arrest warrant issued by the Head of the International Cooperation Unit of the Estonian Ministry of Justice, it is now known that the Viru County Court on 10 February 2011, on learning that Lavrov was living in the United Kingdom, sent a request to the Ministry of Justice to issue a warrant to give effect to the domestic arrest warrant that it had itself issued on 9 February 2010. There is also substantial further information about the Estonian legal position in the form of answers dated 28 February 2013 to a questionnaire submitted by the Crown Prosecution Service. The legal framework is contained in article 507 of the Code of Criminal Procedure of Estonia which reads: Submission of European arrest warrant (1) In pre trial proceedings, the Prosecutor's Office and, in court proceedings, the court which conducts proceedings regarding a criminal offence which is the basis for a European arrest warrant is competent to submit the European arrest warrant. (2) The Ministry of Justice is competent to submit a European arrest warrant for the execution of a court judgment which has entered into force. (21) In pre trial proceedings, a preliminary investigation judge may, at the request of the Prosecutor's Office, apply arrest for surrender before preparation of a European arrest warrant. (22) If surrender of a person is requested in court proceedings, the arrest for surrender of the person shall be applied by the court which conducts proceedings regarding the criminal offence. (3) A European arrest warrant shall be prepared in Estonian and it shall be translated into the language determined by the requesting state by the Ministry of Justice. (4) A European arrest warrant shall be communicated to a requesting state through the Ministry of Justice. (5) In cases of urgency, a request for application of arrest for surrender with regard to a person to be surrendered may be submitted to a member state of the European Union through the International Criminal Police Organisation (Interpol) or the central authority responsible for the national section of the Schengen Information System with the consent of the Prosecutor's Office before a European arrest warrant is submitted. In the case of Lavrov, articles 507(2) and 507(22) both applied. The Deputy Secretary General of the Ministry of Justice explained by letter dated 28 February 2013: The court ruling declaring the person a wanted and applying arrest on sight towards him or her is the prerequisite for later issuance of a European arrest warrant. No European arrest warrant can be issued without a court first declaring the person a wanted and applying arrest on sight (domestic arrest warrant) towards him or her. Pursuant to section 507 (21) and (22) of the Estonian Code of Criminal Procedure, applying arrest for surrender is a prerequisite for issuing an European arrest warrant. If no arrest pending surrender has been applied towards the person, then an European arrest warrant cannot be issued. This letter gives the following further information: in this current case a court requested the Ministry of Justice to issue a European arrest warrant on the basis of court decisions entered into force. The issuance of an European arrest warrant in conviction cases by the Estonian Ministry of Justice only takes place upon request by the court who made the decision in the specific case or a court that has the competence to issue the arrest warrant and to declare the person a fugitive in cases where the person was convicted by conditional sentence and the person escaped from the execution of sentence or the person was in freedom during the court procedures but has to appear to prison on a specific date and time to start the service of his/her sentence. Thus, this is the court that sends to the Ministry of Justice the judgment or ruling with request to issue the European arrest warrant. The court's decision has to be either a final and enforceable judgment satisfying the requirements of the framework decision or a domestic arrest warrant stating that the detention conditions are met. The only restrictions that the Ministry of Justice is obliged to follow upon issuing a European arrest warrant on a court's request, are the general restrictions on issuing of European arrest warrants from [the] Framework Decision ie the requirement that the punishment of imprisonment applicable to a crime for which the person has been convicted must be longer than four months of imprisonment. If the materials sent to the Ministry of Justice for issuance of an European arrest warrant regarding a person towards whom the court has applied arrest for surrender, indicate that the actual punishment imposed on the person or actually servable part thereof is less than four months, then the Ministry of Justice may inform the court that there are no legal grounds for issuing an EAW. In other cases the court's request to issue a specific EAW is compulsory for the Ministry of Justice. The same letter also addresses the possibility that a European arrest warrant might be issued under executive influence: The Judicial Co operation Unit is one of the structural units of the Ministry of Justice, but it is independent in its decisions and bases its actions solely on the law and the international instruments. This independence is also expressed in the fact that all documents prepared by the unit, ie both European arrest warrants and MLA [mutual legal assistance] requests for judicial assistance are undersigned by the head of unit or the advisor who prepared the letter. All materials, ie requests from courts, materials of the prosecutor's office, and also judicial co operation materials and requests for legal assistance received from abroad are forwarded from the Ministry's office directly to the Judicial Co operation Unit without passing through the Minister, the Secretary General or the Deputy Secretary General. Therefore the executive has no information about whether, how much or which judicial co operation materials are being preceded by the unit at any time. There has been no intervention by the executive in the unit's work and there cannot be any intervention of that kind because communication in the field of international law is very strictly regulated by domestic legislation and by various other legal acts, so it is unthinkable that the Minister or the Secretary General could order the issuance of some request for legal assistance without the initiative of a prosecutor's office or a court. International judicial co operation is very strictly and precisely regulated by various international conventions and treaties which prescribe also the role and competence of Ministries of Justice as central authorities. It is unthinkable that the Ministry of Justice could exceed its limits of competence by way of its executive ordering a request for legal assistance for which the Ministry of Justice has competence. It is also unthinkable that the executive of the Ministry of Justice could order that a request for legal assistance be not issued or not forwarded. As described above, in daily work the management has no information at all about the requests that are preceded [sic] by the Unit at any given time. Furthermore, the Public Service Act of the Republic of Estonia prohibits (article 62) unlawful orders from the executive and gives the ways how to react in such situations. On the basis of this detailed description of the legal, procedural and practical position, it is clear that the real decision is taken by the court responsible for the conviction and sentence, and the Judicial Cooperation Unit of the Ministry of Justices only lawful role is to check that the formal conditions for issue of a European arrest warrant are satisfied, and, if they are, to issue the warrant. On the basis, by parallel reasoning to that which I have indicated in relation to Bucnys, I consider that the Ministry can be regarded as a judicial authority issuing a warrant containing a judicial decision, albeit one taken in reality by the responsible court, here the Viru County Court. However, Mr Jones points to other information in the form of the Council Evaluation Report on Estonia 5301/07 dated 20 February 2007, which states: 3.1. THE DECISION TO ISSUE The Estonian authorities do not have a formal practice guide concerning the instigation of European arrest warrant proceedings or the subsequent steps to be taken. Standardised European arrest warrant practices have been outlined to all European arrest warrant stakeholders during training provision supplied by the CA together with professional trainers from the Estonian Law Centre. It states that, in the case of accusation warrants, the following factors will be taken into consideration by a review made before any decision to issue a European arrest warrant: severity of the offence, degree of participation, extent of the injury/damage. It continues: In cases concerning the enforcement of a sentence, officials within the CA will apply similar merit tests to assess the appropriateness of the application. They will then obtain, directly from the criminal court concerned, a copy of the order to be enforced and proceed to draft an European arrest warrant. In real terms therefore a pragmatic de minimis test is brought to bear, balancing the seriousness of the criminality against the merits (costs or otherwise) of issuing an European arrest warrant. Estonia reported that their outgoing European arrest warrants were all of a benchmarked standard. This second hand account of the Estonian system does not bear much relationship with that given by the Ministry of Justice itself in 2012 and 2013. It makes no reference to the provisions of article 507 of the Code of Criminal Procedure, or to any role of the court responsible for the conviction, still less to any duty on the part of the Ministry to issue a European arrest warrant, once satisfied that the formal conditions are met. Although the report points out earlier that the Ministry of Justice has been designated both as the competent judicial authority and as the central authority in relation to the issue of European arrest conviction warrants, it speaks at this point only of the CA. The report was based on a visit by experts to Estonia in September 2006, little over two years after Estonia joined the European Union on 1 May 2004. The European arrest warrant system may not have been well digested by that date. The Code of Criminal Procedure may have been amended since 2006 it seems clear that article 507(21) 2 and (2) must have been added at some point. However, even if, contrary to the Ministrys emphatic explanation, the Judicial Cooperation Unit of the Ministry does enjoy some form of proportionality discretion, when it comes to the exercise of a European arrest warrant requested by a court responsible for a sentence, this is again a factor which can only weigh in favour of the person whose surrender is sought. It does not therefore mean, in my opinion, that the Ministry in issuing the European arrest warrant in respect of Lavrov should not be regarded as a judicial authority communicating a judicial decision made by the Viru County Court. Conclusions The conclusions of principle that I reach are: For the purposes of Council Framework Decision 2002/584/JHA and Part 1 of the Extradition Act 2003: i) A European arrest warrant issued by a Ministry in respect of a convicted person with a view to his or her arrest and extradition can be regarded as issued by a judicial authority for the purposes of Council Framework Decision 2002/584/JHA and Part 1 of the Extradition Act 2003 if the Ministry only issues the warrant at the request of, and by way of endorsement of a decision that the issue of such a warrant is appropriate made by: a) the court responsible for the sentence; or some other person or body properly regarded as a judicial b) authority responsible for its execution (see para 57 above). ii) If this condition is satisfied, the existence of a discretion on the part of the Ministry not to issue a European arrest warrant which the responsible court (or other judicial authority) has decided appropriate and requested it to issue does not affect this. iii) Subject only to the second point in para 47 above (so far as left open), a Ministry which has power to issue and issues a European arrest warrant of its own motion or at the request of non judicial authority, including an executive agency such as a prison department, cannot be regarded as a judicial authority for the above purposes. i) The European arrest warrant issued in respect of Bucnys by the Ministry of Justice of Lithuania at the request of the Vilnius City 1st District Court was a valid Part I warrant under the 2003 Act, and Bucnyss appeal should accordingly be dismissed. ii) The European arrest warrant issued in respect of Sakalis by the same Ministry of Justice at the request of the Prison Department was not a valid Part 1 warrant, and Sakaliss appeal should accordingly be allowed. iii) The European arrest warrant issued in respect of Lavrov by the Ministry of Justice of Estonia at the request of the Viru County Court was a valid Part I warrant, and the Ministry of Justice of Estonias appeal in the case of Lavrov should accordingly be allowed. The conclusions I reach on these appeals are that:
+Miles Buckinghamshire Neil Braithwaite Alexis Cleveland Elaine Diver Lesley Lee Hugh Mackintosh Christopher Close (following the retirement of John Bartlett) Representative Members of the scheme Janet Forrest Malcolm Dick LORD HODGE: (with whom Lady Hale, Lord Wilson, Lord Sumption and Lord Briggs agree) 1. This appeal raises a question of interpretation of a clause in a pension scheme trust deed which defines the phrase Retail Prices Index and which allows the trustees of the pension scheme to adopt a replacement of the officially published Retail Prices Index (the RPI). 2. The background is the recognised need for private pension schemes to provide some form of indexation of pensions to protect the value of members pensions against price inflation. As discussed below, the question is whether the clause allows the pension scheme trustees to adopt an index of price inflation, such as the Consumer Prices Index (the CPI), when the official body responsible for compiling the RPI (now the Office of National Statistics) has not discontinued the RPI, thereby requiring its replacement. 3. Barnardos, the well known charity who is the sponsoring employer, argues that the clause empowers the trustees to adopt another index which they consider a suitable measure of price inflation, whether or not the RPI continues to be published. Barnardos see the CPI as a more appropriate measure of inflation which will also enable a reduction of the schemes deficit. Representatives of the members of the scheme, who are concerned that the adoption of the CPI as the index would over time reduce the benefits which they receive from the scheme, argue that the clause does not empower the trustees to depart from the RPI for the purposes of indexation if the RPI continues to be published. The trustees adopt a neutral stance on the question. The Barnardo Staff Pension Scheme 4. In 1984 Barnardos adopted a staff pension scheme which took effect from 1978. In 1991 Barnardos adopted a new pension scheme which took effect from 1 April 1988 and completely superseded the 1978 scheme. The 1988 rules have subsequently been amended and adopted with effect from 2001, 2004 and 2007. But the relevant provisions of the current rules are in substance the same as those in the 1988 rules, to which counsel referred in their submissions. I therefore set out the relevant provisions from the 1988 rules. 5. Rule 7 of the scheme gave members a pension of 1/60th of their final pensionable earnings for each complete year of pensionable service. Rule 30 provided for pensions in the course of payment to be increased by the prescribed rate. Rule 30.1.3 provided: For the purpose of this rule 30 the prescribed rate means an increase at the rate of the lesser of: (a) 5%, and (b) the percentage rise in the Retail Prices Index (if any) over the year ending on the previous 31 December. 6. Rule 53, which contains a definition of Retail Prices Index lies at the heart of the dispute. An important part of the argument concerns the relationship between the first and second sentences of the definition. In order to assist comprehension I present the definition in a disaggregated manner, adding (i) and (ii) before each sentence, although the text of the definition is simply an undifferentiated paragraph, and highlighting in italics the critical part of the definition. The rule 53 definition (the Definition) is as follows: Retail Prices Index (i) means the General Index of Retail Prices published by the Department of Employment or any replacement adopted by the Trustees without prejudicing Approval. (ii) Where an amount is to be increased in line with the Retail Prices Index over a period, the increase as a percentage of the original amount will be equal to the percentage increase between the figures in the Retail Prices Index published immediately prior to dates when the period began and ended, with an appropriate restatement of the later figure if the Retail Prices Index has been replaced or re based during the period. 7. The Appendix to the Rules of the 1988 rules contains a summary of the rules by which the Commissioners of Inland Revenue (the CIR) then imposed limits on the benefits which a private pension scheme could confer if it were to obtain the approval to which I refer in para 8 below. The basic limit for a pension of a member who retired at or before the normal retirement date was 1/60th of the final remuneration for each year of service. In several places in the Appendix the text referred to the indexation of benefits in line with RPI. Thus, for example, in para 6 it was stated that the maximum pension may be increased whilst in payment at 3% per year compound or (if greater) in line with RPI. In para 10 the Appendix defined the phrase in these terms: in line with RPI over a period means in proportion to increases between figures in the General Index of Retail Prices published by the Department of Employment (or a replacement of that Index not prejudicing Approval), immediately prior to the dates when the period began and ended with appropriate restatement of the later figure if the Index has been replaced or re based during the period. 8. The reference to Approval in the Rules and in the Appendix was a reference to the discretionary approval of the scheme by the CIR as an exempt approved scheme under Chapter 1 of Part XIV of the Income and Corporation Taxes Act 1988. The definitions of Tax Approval in the Rules and of Approval in the Appendix were to this effect. 9. Lewison LJ in the Court of Appeal (para 6) neatly summarised the principal question in the appeal in this way: The critical words in the definition of the RPI are or any replacement adopted by the Trustees without prejudicing Approval. Does the definition mean: the RPI or any index that replaces the RPI and is (i) adopted by the trustees; or (ii) trustees as a replacement for the RPI? the RPI or any index that is adopted by the The first meaning involves a two stage process by which the RPI is replaced by an official body responsible for its publication and the trustees then adopt the replacement or one of several indices produced as replacements. The second meaning, which Barnardos advances, involves a single step and would allow the trustees to choose another index as a replacement of the RPI, whether or not the RPI continued to be published. The decisions of the courts and the appellants challenge The trustees of the pension scheme sought a ruling on the meaning of the Definition by a claim under Part 8 of the Civil Procedure Rules. In a judgment ([2015] EWHC 2200 (Ch); [2015] Pens LR 501) Warren J held that, on a proper construction, the Definition did not empower the trustees to adopt an index other than the RPI unless the RPI had been discontinued as an officially published index and replaced. The Court of Appeal by majority (Lewison and McFarlane LJJ, Vos LJ dissenting) dismissed Barnardos appeal. Barnardos sought permission to appeal. This court gave permission to appeal on the understanding that there might be clauses in many pension schemes which contained similar wording. But it is not clear whether that is so. Mr Brian Green QC presented the case on behalf of Barnardos. I mean no disrespect to his elegant submissions if I summarise them briefly. First, he explained that the scheme had been subject to the CIRs discretionary approval. He referred to the CIR guidance known as IR 12 (1979) which set out the limits on the benefits which the CIR allowed. The arrangement for CIR approval was superseded by the Finance Act 2004 but the requirement for that approval explained the repeated reference in the scheme, including in the definition of RPI in rule 53, to Approval. Mr Green submitted that the first sentence of the Definition fell to be construed as RPI or any alternative adopted by the trustees. The phrase, he submitted, contained pointers which supported his interpretation. It was not disputed that the trustees had to exercise discretion in deciding to adopt a replacement. There might be no room for the exercise of discretion if the official body which published the RPI replaced it with another index. Similarly, the requirement that the adopted replacement did not prejudice CIR approval pointed to a circumstance where there was a possibility that the trustees choice of replacement might not receive CIR approval. That eventuality was very unlikely if the clause operated only when the RPI was replaced by another official index. He also submitted that it was inherently improbable in 1991 that the Government would discontinue the RPI. While recognising that the second sentence of the Definition also referred to replaced, he submitted that that sentence was of no relevance to a proper understanding of the first sentence as it referred to the phrase, in line with the Retail Prices Index, which did not appear in the Rules but only in the Appendix. Replacement in sentence 1 did not necessarily have the same meaning as replaced in sentence 2. Discussion The construction of pension schemes In the trilogy of cases, Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900, Arnold v Britton [2015] AC 1619 and Wood v Capita Insurance Services Ltd [2017] AC 1173, this court has given guidance on the general approach to the construction of contracts and other instruments, drawing on modern case law of the House of Lords since Prenn v Simmonds [1971] 1 WLR 1381. That guidance, which the parties did not contest in this appeal, does not need to be repeated. In deciding which interpretative tools will best assist in ascertaining the meaning of an instrument, and the weight to be given to each of the relevant interpretative tools, the court must have regard to the nature and circumstances of the particular instrument. A pension scheme, such as the one in issue on this appeal, has several distinctive characteristics which are relevant to the courts selection of the appropriate interpretative tools. First, it is a formal legal document which has been prepared by skilled and specialist legal draftsmen. Secondly, unlike many commercial contracts, it is not the product of commercial negotiation between parties who may have conflicting interests and who may conclude their agreement under considerable pressure of time, leaving loose ends to be sorted out in future. Thirdly, it is an instrument which is designed to operate in the long term, defining peoples rights long after the economic and other circumstances, which existed at the time when it was signed, may have ceased to exist. Fourthly, the scheme confers important rights on parties, the members of the pension scheme, who were not parties to the instrument and who may have joined the scheme many years after it was initiated. Fifthly, members of a pension scheme may not have easy access to expert legal advice or be able readily to ascertain the circumstances which existed when the scheme was established. Judges have recognised that these characteristics make it appropriate for the court to give weight to textual analysis, by concentrating on the words which the draftsman has chosen to use and by attaching less weight to the background factual matrix than might be appropriate in certain commercial contracts: Spooner v British Telecommunications plc [2000] Pens LR 65, Jonathan Parker J at paras 75 76; BESTrustees v Stuart [2001] Pens LR 283, Neuberger J at para 33; Safeway Ltd v Newton [2018] Pens LR 2, Lord Briggs, giving the judgment of the Court of Appeal, at paras 21 23. In Safeway, Lord Briggs stated (para 22): the Deed exists primarily for the benefit of non parties, that is the employees upon whom pension rights are conferred whether as members or potential members of the Scheme, and upon members of their families (for example in the event of their death). It is therefore a context which is inherently antipathetic to the recognition, by way of departure from plain language, of some common understanding between the principal employer and the trustee, or common dictionary which they may have employed, or even some widespread practice within the pension industry which might illuminate, or give some strained meaning to, the words used. I agree with that approach. In this context I do not think that the court is assisted by assertions as to whether or not the pensions industry in 1991 could have foreseen or did foresee the criticisms of the suitability of the RPI, which later emerged in the public domain, or then thought that it was or was not likely that the RPI would be superseded. The emphasis on textual analysis as an interpretative tool does not derogate from the need both to avoid undue technicality and to have regard to the practical consequences of any construction. Such an analysis does not involve literalism but includes a purposive construction when that is appropriate. As Millett J stated in In re Courage Groups Pension Schemes [1987] 1 WLR 495, 505 there are no special rules of construction applicable to a pension scheme but its provisions should wherever possible be construed to give reasonable and practical effect to the scheme. Instead, the focus on textual analysis operates as a constraint on the contribution which background factual circumstances, which existed at the time when the scheme was entered into but which would not readily be accessible to its members as time passed, can make to the construction of the scheme. It is nevertheless relevant to the construction of pension schemes that they are drafted to comply with tax rules so as to preserve the considerable benefits which the United Kingdoms tax regime confers on such schemes. They must be construed against their fiscal backgrounds: National Grid Co plc v Mayes [2001] 1 WLR 864, para 18 per Lord Hoffmann; British Airways Pension Trustees Ltd v British Airways Plc [2002] Pens LR 247, Arden LJ at para 30. In this case, the CIR guidance on approval of schemes, which is contained in the practice note on occupational pension schemes (IR 12 (1979)), forms part of the relevant background. In the footnote to para 6.14 of that guidance, the CIR stated: Increases in the cost of living may be measured by the index of retail prices published by the Department of Employment or by any other suitable index agreed for the particular scheme by the Superannuation Funds Office. It appears therefore that the CIR, in giving discretionary approval to a scheme, would not have objected to a scheme which empowered its trustees to substitute an appropriate index for the RPI. This is relevant background as it means that there was no CIR constraint which might influence the construction of the words in dispute. This contrasts with the National Grid case in which the fiscal background was directly relevant to the interpretation of a phrase in the scheme. The tax regime did not allow an employer to be paid part of a surplus of scheme funds, which had already received tax exemptions when payments were made into the scheme. But the tax regime did not prohibit the release of a debt due by the employer to the scheme which had not had those tax advantages. This assisted the House of Lords to construe narrowly a provision in the scheme which prohibited the making of scheme moneys payable to the employers. In the present case, as Lewison LJ stated at para 32 of his judgment, the draftsman of the scheme did not track the wording of the Revenue guidance in the Definition but chose different language. The scheme could have empowered the trustees to select an index as an alternative to the RPI. The question is whether it did so. Finally, a focus on textual analysis in the context of the deed containing the scheme must not prevent the court from being alive to the possibility that the draftsman has made a mistake in the use of language or grammar which can be corrected by construction, as occurred in Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101, where the court can clearly identify both the mistake and the nature of the correction. The construction of the Definition I am persuaded that the judge and the majority of the Court of Appeal were right to conclude that the correct interpretation of the first sentence of the Definition is the first of the options to which Lewison LJ referred and which I have repeated in para 9 above, namely, that the RPI means the RPI or any index that replaces the RPI and is adopted by the trustees. I reach this view for the following eight reasons. First, the draftsman has chosen to use the word replacement which does not naturally suggest the selection of an alternative to an option which remains available. It is, nonetheless, capable of bearing that meaning and one must look to the context for guidance. Secondly, the word order and grammatical construction of the phrase a replacement adopted by the trustees suggest that the RPI must first be replaced and that the trustees adopt the replacement. The word order suggests a sequence of events rather than the single event of an index being adopted by the trustees as a replacement. Thirdly, the existence of a discretion on the part of the trustees and the requirement that the adoption should not prejudice the CIRs approval do not militate against this view. In paras 15 20 of his judgment Lewison LJ usefully sets out the history of official cost of living indices in the United Kingdom which he derived from a report, UK Consumer Price Statistics: A Review, by Mr Paul Johnson, the Director of the Institute for Fiscal Studies, which was prepared for the UK Statistics Authority in 2015. There is no benefit in repeating that account in this judgment. It suffices to say that there were several additional official price indices in 1991 when the 1988 rules were prepared, namely the state pensioner indices introduced in 1969, the Tax and Prices Index introduced in 1979 and the Rossi Index, which was introduced in 1981 and was used to uprate income related state benefits. In 1981 the UK started to issue index linked gilts, using the RPI. A cautious draftsman may well have chosen to provide for the eventuality of the RPI being replaced by more than one official index. As a result the trustees would be required to exercise discretion in the selection of the appropriate replacement and the CIR themselves would have an interest in making sure that the chosen index was suitable when considering whether to approve the scheme. Fourthly, it is trite both that a provision in a pension scheme or other formal document should be considered in the context of the document as a whole and that one would in principle expect words and phrases to be used consistently in a carefully drafted document, absent a reason for giving them different meanings. In the second sentence of the Definition the draftsman has defined the phrase in line with the Retail Prices Index. That sentence speaks of the RPI having been replaced or re based. The re basing of the RPI involves the resetting of the starting point for measuring changes in prices to 100. The authority responsible for publication of the RPI has re based the index from time to time. It is not suggested that anyone other than the official body responsible for the index could re base it. Other things being equal, I would expect that the draftsman of the phrase replaced or re based envisaged the same official body either replacing or re basing the index. This is supported by the definition of the same phrase (albeit referring to RPI rather than Retail Prices Index) in the Appendix, which I have set out in para 7 above. It is clear that the definition in the Appendix is referring to the replacement or re basing of the RPI by an official body responsible for the production of that index. In the late 1980s the Central Statistical Office (CSO) took responsibility for the RPI and the CSO became part of the Office for National Statistics in 1996. Consistency within the scheme as a whole, and indeed within the Definition itself would suggest that it is that official body and not the trustees who are to effect the replacement in the first sentence of the Definition. Mr Green submitted that the court in construing the first sentence of the Definition should not attach any significant weight to the second sentence because it was defining an expression used only in the Appendix and it duplicated the definition in the Appendix in any event. I do not agree. Clause 3 of the Deed containing the rules of the scheme stated that the Scheme will be governed by the Rules (including the Appendix) contained in this deed, thereby clarifying that the Appendix was to be seen as part of the rules. Further, rule 32, which prohibited the payment of benefits in excess of the CIR limits, referred to the Appendix as containing a summary of those limits. The rules and the Appendix are intimately related. While it is true that there was no need to include the second sentence of the Definition because of the definition of the same term in para 10 of the Appendix, its inclusion cannot be viewed as a mistake. The second sentence forms part of the Definition and cannot be airbrushed out of it simply because there has been duplication. Thus in construing the scheme as a whole the court must have regard to the use of the words replacement and replaced or re based in the same definitional rule and also the use of the latter words in the parallel definition in para 10 of the Appendix. Fifthly, I do not derive any assistance from the CIR guidance in IR 12, because (as I have discussed in para 17 above) the draftsman has not chosen to use wording similar to that guidance in the Definition. If there were any inconsistency between the terms of IR 12 on the one hand and the rules and Appendix of the Scheme on the other, the latter must prevail. It may be that the draftsman thought that IR 12 was addressing the initial choice of index when a scheme was first established rather than an alteration of an index during the currency of the scheme. But whether or not that is a correct inference, it cannot be doubted that he or she chose to use language in both the Definition and the Appendix which differed from IR 12. Sixthly, I do not derive any real assistance from the superseded 1978 scheme, in which the term Index was defined in the introductory interpretation clause as: the Governments Index of Retail Prices or any other official cost of living index published by authority in place of or in substitution for that Index. This definition can provide little assistance because the 1988 rules involved a wholesale re drafting of the earlier rules in which the draftsman may or may not have had regard to the wording of the earlier rules, with the result that there is no basis for assuming that the draftsmans use of different words points to an intention to achieve a different meaning. In any event, I agree with Lewison LJ in para 23 of his judgment that the nature of a pension scheme, which may have members who have no knowledge of the prior rules, makes it unprofitable to delve into the archaeology of the rules in this case. Seventhly, a provision which provided for the circumstance of the official replacement of a cost of living index does not lack a rational purpose. The United Kingdom Government had changed its official index in 1946 and again in 1956 and, as I have said, had published additional indices by 1991 when the 1988 rules were drafted. Whether or not it was likely that the Government might dispense with and replace the RPI, a cautious draftsman of a long term contract or trust such as the scheme might well provide for such an eventuality. Commercial common sense therefore does not point against the interpretation to which a primarily textual analysis of the words points. While, since 1991, the RPI has fallen from favour as an appropriate measure of the cost of living, it is not appropriate to use hindsight of such post execution events to assess whether a provision makes good commercial sense. Eighthly, while the requirement of indexation by reference to the RPI imposes obligations on Barnardos and contributes to the pension deficit at a time when many see the CPI as a more reliable index for the cost of living, the court must construe the scheme without any preconceptions as to whether a construction should favour the sponsoring employer or the members: British Airways Pension Trustees (above), Arden LJ at para 31. The sponsoring employers gain may be the members loss and vice versa. Finally, I must address an argument which Vos LJ favoured and which contributed to the reasoning in his dissent. That argument is that the provision would be inconveniently inflexible if the trustees were not able to switch to another index in the eventuality that the RPI ceased to be a suitable index for measuring the cost of living for pensioners but was not abolished because it was retained in existence for other purposes. The proviso to rule 46 of the scheme prevents Barnardos from altering the scheme to the prejudice of any pension or annuity then payable under the scheme or any benefit already secured. Thus, it was argued, common sense required the trustees to be vested with a power to change the index if the RPI ceased properly to reflect inflation in the cost of living. But, while it may have been desirable to have that flexibility, the draftsman appears to have put his or her faith in the suitability of the officially produced index and not to have foreseen the circumstances in which the RPI ceased to be seen as an appropriate index for the cost of living. Only by relying on hindsight can weight be given to this consideration; and that is not legitimate. For these reasons, which are essentially the same as those which Lewison LJ gave in his impressive judgment, the appeal must fail. As a result, it is not necessary to address the cross appeal on the subsisting rights provisions contained in sections 67 and 67A 67I of the Pensions Act 1995. Conclusion I would dismiss the appeal.
+The question at issue on this appeal is: in what circumstances is it permissible to sue an unnamed defendant? It arises in a rather special context in which the problem is not uncommon. On 26 May 2013 Ms Bianca Cameron was injured when her car collided with a Nissan Micra. It is common ground that the incident was due to the negligence of the driver of the Micra. The registration number of the Micra was recorded, but the driver made off without stopping or reporting the accident to the police and has not been heard of since. The registered keeper of the Micra was Mr Naveed Hussain, who was not the driver but has declined to identify the driver and has been convicted of failing to do so. The car was insured under a policy issued by Liverpool Victoria Insurance Co Ltd to a Mr Nissar Bahadur, whom the company believes to be a fictitious person. Neither Mr Hussain nor the driver was insured under the policy to drive the car. The statutory framework The United Kingdom was the first country in the world to introduce compulsory motor insurance. It originated with the Road Traffic Act 1930, which was part of a package of measures to protect accident victims, including the Third Parties (Rights Against Insurers) Act 1930. The latter Act entitled a person to claim directly against the insurer where an insured tortfeasor was insolvent. But it was shortly superseded as regards motor accidents by the Road Traffic Act 1934, which required motor insurers to satisfy any judgment against their insured and restricted the right of insurers to rely as against third parties on certain categories of policy exception or on the right of avoidance for non disclosure or misrepresentation. The statutory regime has become more elaborate and more comprehensive since 1934, but the basic framework has not changed. The current legislation is Part VI of the Road Traffic Act 1988. As originally enacted, it sought to give effect to the first three EEC Motor Insurance Directives, 72/166/EEC, 84/5/EEC and 90/232/EEC. It was subsequently amended by statutory instruments under the European Communities Act 1972 to reflect the terms of the Fourth, Fifth and Sixth Motor Insurance Directives 2000/26/EC, 2005/14/EC and 2009/103/EC. The object of the current legislation is to enable the victims of negligently caused road accidents to recover, if not from the tortfeasor then from his insurer or, failing that, from a fund operated by the motor insurance industry. Under section 143 of the Act of 1988 it is an offence to use or to cause or permit any other person to use a motor vehicle on a road or other public place unless there is in force a policy of insurance against third party risks in relation to the use of the vehicle by the particular driver (I disregard the statutory provision for the giving of security in lieu of insurance). Section 145 requires the policy to cover specified risks, including bodily injury and damage to property. Section 151(5) requires the insurer, subject to certain conditions, to satisfy any judgment falling within subsection (2). This means (omitting words irrelevant to this appeal) judgments relating to a liability with respect to any matter where liability with respect to that matter is required to be covered by a policy of insurance under section 145 of this Act and either (a) it is a liability covered by the terms of the policy or security , and the judgment is obtained against any person who is insured by the policy or it is a liability which would be so covered if (b) the policy insured all persons , and the judgment is obtained against any person other than one who is insured by the policy The effect of the latter subsection is that an insurer who has issued a policy in respect of the use of a vehicle is liable on a judgment, even where it was obtained against a person such as the driver of the Micra in this case who was not insured to drive it. The statutory liability of the insurer to satisfy judgments is subject to an exception under section 152 where it is entitled to avoid the policy for non disclosure or misrepresentation and has obtained a declaration to that effect in proceedings begun within a prescribed time period. But the operation of section 152 is currently under review in the light of recent decisions of the Court of Justice of the European Union. Under section 145(2), the policy must have been issued by an authorised insurer. This means a member of the Motor Insurers Bureau: see sections 95(2) and 145(5). The Bureau has an important place in the statutory scheme for protecting the victims of road accidents in the United Kingdom. Following a recommendation of the Cassell Committee, which reported in 1937 (Cmnd 5528/1937), the Bureau was created in 1946 to manage a fund for compensating victims of uninsured motorists. It is a private company owned and funded by all insurers authorised to write motor business in the United Kingdom. It has entered into agreements with the Secretary of State to compensate third party victims of road accidents who fall through the compulsory insurance net even under the enlarged coverage provided by section 151(2)(b). This means victims suffering personal injury or property damage caused by (i) vehicles in respect of which no policy of insurance has been issued; and (ii) drivers who cannot be traced. These categories are covered by two agreements with the Secretary of State, the Uninsured Drivers Agreement and the Untraced Drivers Agreement respectively. The relevant agreement covering Ms Camerons case was the 2003 Untraced Drivers Agreement. It applied to persons suffering death, bodily injury or property damage arising out of the use of a motor vehicle in cases where it is not possible to identify the person who is or appears to be liable: see clause 4(d). The measure of indemnity under this agreement is not always total. Under clause 10, there is a limit to the Bureaus liability for legal costs; and under clause 8 the indemnity for property damage is subject to a modest excess (at the relevant time 300) and a maximum limit corresponding to the minimum level of compulsory insurance (at the relevant time 1,000,000). The Bureau assumes liability under the Uninsured Drivers Agreement in cases where the insurer has a defence under the provisions governing avoided policies in section 152. But under article 75 of the Bureaus articles of association, each insurer binds itself to meet the Bureaus liability to satisfy a judgment in favour of the third party in such cases. In 2017, there were 17,700 concluded applications to the Motor Insurers Bureau by victims of untraced drivers. It is a fundamental feature of the statutory scheme of compulsory insurance in the United Kingdom that it confers on the victim of a road accident no direct right against an insurer in respect of the underlying liability of the driver. The only direct right against the insurer is the right to require it to satisfy a judgment against the driver, once the latters liability has been established in legal proceedings. This reflects a number of features of motor insurance in the United Kingdom which originated well before the relevant European legislation bound the United Kingdom, and which differentiate it from many continental systems. In the first place, policies of motor insurance in the United Kingdom normally cover drivers rather than vehicles. Section 151(2)(b) of the Act (quoted above) produces a close but not complete approximation to the continental position. Secondly, the rule of English insurance law is that an insurer is liable to no one but its insured, even when the risks insured include liabilities owed by the insured to third parties. Subject to limited statutory exceptions, the third party has no direct right against the insurer. Thirdly, even the insured cannot claim against his liability insurer unless and until his liability has been ascertained in legal proceedings or by agreement or admission. The Untraced Drivers Agreement assumes that judgment cannot be obtained against the driver if he cannot be identified, and therefore that no liability will attach to the insurer in that case. This is why it is accepted as a liability of the Motor Insurance Bureau. On the present appeal, Ms Cameron seeks to challenge that assumption. Such a challenge is usually unnecessary. It is cheaper and quicker to claim against the Bureau. But for reasons which remain unclear, in spite of her counsels attempt to explain them, Ms Cameron has elected not to do that. The proceedings Ms Cameron initially sued Mr Hussain for damages. The proceedings were then amended to add a claim against Liverpool Victoria Insurance for a declaration that it would be liable to meet any judgment obtained against Mr Hussain. The insurer served a defence which denied liability on the ground that there was no right to obtain a judgment against Mr Hussain, because there was no evidence that he was the driver at the relevant time. Ms Camerons response was to apply in the Liverpool Civil and Family Court to amend her claim form and particulars of claim so as to substitute for Mr Hussain the person unknown driving vehicle registration number Y598 SPS who collided with vehicle registration number KG03 ZJZ on 26 May 2013. District Judge Wright dismissed that application and entered summary judgment for the insurer. Judge Parker dismissed Ms Camerons appeal. But a further appeal to the Court of Appeal was allowed by a majority (Gloster and Lloyd Jones LJJ, Sir Ross Cranston dissenting): [2018] 1 WLR 657. Gloster LJ delivered the leading judgment. She held that the policy of the legislation was to ensure that the third party victims of negligent drivers received compensation from insurers whenever a policy had been issued in respect of the vehicle, irrespective of who the driver was. In her judgment, the court had a discretion to permit an unknown person to be sued whenever justice required it. Justice required it when the driver could not be identified, because otherwise it would not be possible to obtain a judgment which the issuer of a policy in respect of the car would be bound to satisfy. The majority considered it to be irrelevant that Ms Cameron had an alternative right against the Motor Insurance Bureau. She had a right against the driver and, upon getting judgment against him, against the insurer. In principle she was entitled to choose between remedies. Sir Ross Cranston dissented. He agreed that there was a discretion, but he did not consider that justice required an action to be allowed against the unknown driver when compensation was available from the Motor Insurance Bureau. Accordingly, the Court of Appeal (i) gave Ms Cameron permission to amend the claim form so as to sue the driver under the above description; (ii) directed under CPR 6.15 that service on the insurer should constitute service on the driver and that further service on the driver should be dispensed with; and (iii) gave judgment against the driver, as described, recording in their order that the insurer accepted that it was liable to satisfy that judgment. Suing unnamed persons Before the Common Law Procedure Act 1852 abolished the practice, it was common to constitute actions for trespass with fictional parties, generally John (or Jane) Doe or Roe, in order to avoid the restrictions imposed on possession proceedings by the forms of action. Placeholders such as these were also occasionally named as parties where the identity of the real party was unknown, a practice which subsists in the United States and Canada. After the disappearance of this practice in England, the extent of any right to sue unnamed persons was governed by rules of court. The basic rule before 1999 was laid down by the Court of Appeal in 1926 in Friern Barnet Urban District Council v Adams [1927] 2 Ch 25. The Friern Barnet District Council had a statutory right to recover the cost of making up Alexandra Road from the proprietors of the adjoining lands, but in the days before registered title reached Friern Barnet it had no way of discovering who they were. It therefore began proceedings against a named individual who was not concerned and the owners of certain lands adjoining Alexandra Road, whose names and addresses are not known to the plaintiffs. The judge struck out these words and declined to order substituted service by affixing copies of the writ to posts on the relevant land. The Court of Appeal dismissed the appeal. They held that there was no power to issue a writ in this form because the prescribed form of writ required it to be directed to C D of, etc in the County of (p 30). When the Civil Procedure Rules were introduced in 1999, the function of prescribing the manner in which proceedings should be commenced was taken over by CPR Part 7. The general rule remains that proceedings may not be brought against unnamed parties. This is implicit in the limited exceptions contemplated by the Rules. CPR 8.2A provides that a practice direction may set out circumstances in which a claim form may be issued under this Part without naming a defendant. It is envisaged that permission will be required, but that the notice of application for permission need not be served on any other person. However, no such practice direction has been made. The only express provision made for proceedings against an unnamed defendant, other than representative actions, is CPR 55.3(4), which permits a claim for possession of property to be brought against trespassers whose names are unknown. This is the successor to RSC Order 113, which was introduced in order to provide a means of obtaining injunctions against unidentifiable squatters, following the decision of Stamp J in In re Wykeham Terrace, Brighton, Sussex, Ex p Territorial Auxiliary and Volunteer Reserve Association for the South East [1971] Ch 204, that they could not be sued if they could not be named. In addition, there are specific statutory exceptions to broadly the same effect, such as the exception for proceedings for an injunction to restrain any actual or apprehended breach of planning controls under section 187B of the Town and Country Planning Act 1990. Section 187B(3) provides that rules of court may provide for such an injunction to be issued against a person whose identity is unknown. The Rules are supplemented by a practice direction which deals with the administrative steps involved. CPR 7A PD4.1 provides that a claim form must be headed with the title of the proceedings, which should state, among other things, the full name of each party. English judges have allowed some exceptions. They have permitted representative actions where the representative can be named but some or all of the class cannot. They have allowed actions and orders against unnamed wrongdoers where some of the wrongdoers were known so they could be sued both personally and as representing their unidentified associates. This technique has been used, for example, in actions against copyright pirates: see EMI Records Ltd v Kudhail [1985] FSR 35. But the possibility of a much wider jurisdiction was first opened up by the decision of Sir Andrew Morritt V C in Bloomsbury Publishing Group Plc v News Group Newspapers Ltd [2003] 1 WLR 1633. The claimant in that case was the publisher of the Harry Potter novels. Copies of the latest book in the series had been stolen from the printers before publication and offered to the press by unnamed persons. An injunction was granted in proceedings against the person or persons who have offered the publishers of The Sun, the Daily Mail and the Daily Mirror newspapers a copy of the book Harry Potter and the Order of the Phoenix by J K Rowling or any part thereof and the person or persons who has or have physical possession of a copy of the said book or any part thereof without the consent of the claimants. The real object of the injunction was to deter newspapers minded to publish parts of the text, who would expose themselves to proceedings for contempt of court by dealing with the thieves with notice of the order. The Vice Chancellor held that the decision in Friern Barnet Urban District Council v Adams had no application under the Civil Procedure Rules; that the decision of Stamp J in In re Wykeham Terrace was wrong; and that the words should state in CPR 7A PD4.1 were not mandatory, but imported a discretion to depart from the practice in appropriate cases. In his view, a person could be sued by a description, provided that the description was sufficiently certain as to identify both those who are included and those who are not (para 21). Since this decision, the jurisdiction has regularly been invoked. Judging by the reported cases, there has recently been a significant increase in its use. The main contexts for its exercise have been abuse of the internet, that powerful tool for anonymous wrongdoing; and trespasses and other torts committed by protesters, demonstrators and paparazzi. Cases in the former context include Brett Wilson LLP v Persons Unknown [2016] 4 WLR 69 and Smith v Unknown Defendant Pseudonym Likeicare [2016] EWHC 1775 (QB) (defamation); Middleton v Person Unknown [2016] EWHC 2354 (QB) (theft of information by hackers); PML v Persons Unknown [2018] EWHC 703 (QB) (hacking and blackmail); CMOC v Persons Unknown [2017] EWHC 3599 (Comm) (hacking and theft of funds). Cases decided in the second context include Hampshire Waste Services Ltd v Intending Trespassers upon Chineham Incinerator Site [2004] Env LR 9; Ineos Upstream Ltd v Persons Unknown [2017] EWHC 2945 (Ch); UK Oil and Gas Investments Plc v Persons Unknown [2018] EWHC 2253 (Ch). In some of these cases, proceedings against persons unknown were allowed in support of an application for a quia timet injunction, where the defendants could be identified only as those persons who might in future commit the relevant acts. The majority of the Court of Appeal followed this body of case law in deciding that an action was permissible against the unknown driver of the Micra who injured Ms Cameron. This is the first occasion on which the basis and extent of the jurisdiction has been considered by the Supreme Court or the House of Lords. The Civil Procedure Rules neither expressly authorise nor expressly prohibit exceptions to the general rule that actions against unnamed parties are permissible only against trespassers. The prescribed forms include a space in which to designate the claimant and the defendant, a format which is equally consistent with their being designated by name or by description. The only requirement for a name is contained in a practice direction. But unlike the Civil Procedure Rules, which are made under statutory powers, a practice direction is no more than guidance on matters of practice issued under the authority of the heads of division. As to those matters, it is binding on judges sitting in the jurisdiction with which it is concerned: Bovale Ltd v Secretary of State for Communities and Local Government [2009] 1 WLR 2274. But it has no statutory force, and cannot alter the general law. Whether or not the requirement of CPR 7A PD4.1 that the claim form should state the defendants full name admits of a discretion on the point, is not therefore the critical question. The critical question is what, as a matter of law, is the basis of the courts jurisdiction over parties, and in what (if any) circumstances can jurisdiction be exercised on that basis against persons who cannot be named. In approaching this question, it is necessary to distinguish between two kinds of case in which the defendant cannot be named, to which different considerations apply. The first category comprises anonymous defendants who are identifiable but whose names are unknown. Squatters occupying a property are, for example, identifiable by their location, although they cannot be named. The second category comprises defendants, such as most hit and run drivers, who are not only anonymous but cannot even be identified. The distinction is that in the first category the defendant is described in a way that makes it possible in principle to locate or communicate with him and to know without further inquiry whether he is the same as the person described in the claim form, whereas in the second category it is not. This appeal is primarily concerned with the issue or amendment of the claim form. It is not directly concerned with its service, which occurs under the rules up to four months after issue, subject to extension by order of the court. There is no doubt that a claim form may be issued against a named defendant, although it is not yet known where or how or indeed whether he can in practice be served. But the legitimacy of issuing or amending a claim form so as to sue an unnamed defendant can properly be tested by asking whether it is conceptually (not just practically) possible to serve it. The court generally acts in personam. Although an action is completely constituted on the issue of the claim form, for example for the purpose of stopping the running of a limitation period, the general rule is that service of originating process is the act by which the defendant is subjected to the courts jurisdiction: Barton v Wright Hassall LLP [2018] 1 WLR 1119, para 8. The court may grant interim relief before the proceedings have been served or even issued, but that is an emergency jurisdiction which is both provisional and strictly conditional. In Dresser UK Ltd v Falcongate Freight Management Ltd [1992] QB 502, the Court of Appeal held that, for the purposes of the Brussels Convention (the relevant provisions of the Brussels Regulation are different), an English court was seised of an action when the writ was served, not when it was issued. This was because of the legal status of an unserved writ in English law. Bingham LJ described that status, at p 523, as follows: it is in my judgment artificial, far fetched and wrong to hold that the English court is seised of proceedings, or that proceedings are decisively, conclusively, finally or definitively pending before it, upon mere issue of proceedings, when at that stage (1) the courts involvement has been confined to a ministerial act by a relatively junior administrative officer; (2) the plaintiff has an unfettered choice whether to pursue the action and serve the proceedings or not, being in breach of no rule or obligation if he chooses to let the writ expire unserved; (3) the plaintiffs claim may be framed in terms of the utmost generality; (4) the defendant is usually unaware of the issue of proceedings and, if unaware, is unable to call on the plaintiff to serve the writ or discontinue the action and unable to rely on the commencement of the action as a lis alibi pendens if proceedings are begun elsewhere; (5) the defendant is not obliged to respond to the plaintiffs claim in any way, and not entitled to do so save by calling on the plaintiff to serve or discontinue; (6) the court cannot exercise any powers which, on appropriate facts, it could not have exercised before issue; (7) the defendant has not become subject to the jurisdiction of the court. The case was decided under the Rules of the Supreme Court. But Bingham LJs statement would be equally true (mechanics and terminology apart) of an unserved claim form under the Civil Procedure Rules. An identifiable but anonymous defendant can be served with the claim form or other originating process, if necessary by alternative service under CPR 6.15. This is because it is possible to locate or communicate with the defendant and to identify him as the person described in the claim form. Thus, in proceedings against anonymous trespassers under CPR 55.3(4), service must be effected in accordance with CPR 55.6 by attaching copies of the documents to the main door or placing them in some other prominent place on the land where the trespassers are to be found, and posting them if practical through the letter box. In Brett Wilson LLP v Persons Unknown, supra, alternative service was effected by email to a website which had published defamatory matter, Warby J observing (para 11) that the relevant procedural safeguards must of course be applied. In Smith v Unknown Defendant Pseudonym Likeicare, supra, Green J made the same observation (para 11) in another case of internet defamation where service was effected in the same way. Where an interim injunction is granted and can be specifically enforced against some property or by notice to third parties who would necessarily be involved in any contempt, the process of enforcing it will sometimes be enough to bring the proceedings to the defendants attention. In Bloomsbury Publishing Group, for example, the unnamed defendants would have had to identify themselves as the persons in physical possession of copies of the book if they had sought to do the prohibited act, namely disclose it to people (such as newspapers) who had been notified of the injunction. The Court of Appeal has held that where proceedings were brought against unnamed persons and interim relief was granted to restrain specified acts, a person became both a defendant and a person to whom the injunction was addressed by doing one of those acts: South Cambridgeshire District Council v Gammell [2006] 1 WLR 658, para 32. In the case of anonymous but identifiable defendants, these procedures for service are now well established, and there is no reason to doubt their juridical basis. One does not, however, identify an unknown person simply by referring to something that he has done in the past. The person unknown driving vehicle registration number Y598 SPS who collided with vehicle registration number KG03 ZJZ on 26 May 2013, does not identify anyone. It does not enable one to know whether any particular person is the one referred to. Nor is there any specific interim relief such as an injunction which can be enforced in a way that will bring the proceedings to his attention. The impossibility of service in such a case is due not just to the fact that the defendant cannot be found but to the fact that it is not known who the defendant is. The problem is conceptual, and not just practical. It is true that the publicity attending the proceedings may sometimes make it possible to speculate that the wrongdoer knows about them. But service is an act of the court, or of the claimant acting under rules of court. It cannot be enough that the wrongdoer himself knows who he is. This is, in my view, a more serious problem than the courts, in their more recent decisions, have recognised. Justice in legal proceedings must be available to both sides. It is a fundamental principle of justice that a person cannot be made subject to the jurisdiction of the court without having such notice of the proceedings as will enable him to be heard. The principle is perhaps self evident. The clearest statements are to be found in the case law about the enforcement of foreign judgments at common law. The English courts will not enforce or recognise a foreign judgment, even if it has been given by a court of competent jurisdiction, if the judgment debtor had no sufficient notice of the proceedings. The reason is that such a judgment will have been obtained in breach of the rules of natural justice according to English notions. In his celebrated judgment in Jacobson v Frachon (1927) 138 LT 386, 392, Atkin LJ, after referring to the principles of natural justice put the point in this way: Those principles seem to me to involve this, first of all that the court being a court of competent jurisdiction, has given notice to the litigant that they are about to proceed to determine the rights between him and the other litigant; the other is that having given him that notice, it does afford him an opportunity of substantially presenting his case before the court. Lord Atkins principle is reflected in the statutory provisions for the recognition of foreign judgments in section 9(2)(c) of the Administration of Justice Act 1920 and section 8(1) and (2) of the Foreign Judgments (Reciprocal Enforcement) Act 1933, as well as in article 45(1)(b) of the Brussels I Regulation (Recast), Regulation (EU) No 1215/2012. It would be ironic if the English courts were to disregard in their own proceedings a principle which they regard as fundamental to natural justice as applied to the proceedings of others. In fact, the principle is equally central to domestic litigation procedure. Service of originating process was required by the practice of the common law courts long before statutory rules of procedure were introduced following the Judicature Acts of 1873 and 1875. The first edition of the Rules of the Supreme Court, which was promulgated in 1883, required personal service unless an order was made for what was then called substituted (now alternative) service. Subsequent editions of the rules allowed for certain other modes of service without a special order of the court, notably in the case of corporations, but every mode of service had the common object of bringing the proceedings to the attention of the defendant. In Porter v Freudenberg [1915] 1 KB 857 a specially constituted Court of Appeal, comprising the Lord Chief Justice, the Master of the Rolls and all five Lords Justices of the time, held that substituted service served the same function as personal service and therefore had to be such as could be expected to bring the proceedings to the defendants attention. The defendants in that case were enemy aliens resident in Germany during the First World War. Lord Reading CJ, delivering the judgment of the court, said at p 883: Once the conclusion is reached that the alien enemy can be sued, it follows that he can appear and be heard in his defence and may take all such steps as may be deemed necessary for the proper presentment of his defence. If he is brought at the suit of a party before a court of justice he must have the right of submitting his answer to the court. To deny him that right would be to deny him justice and would be quite contrary to the basic principles guiding the Kings courts in the administration of justice. It followed, as he went on to observe at pp 887 888, that the court must take into account the position of the defendant the alien enemy, who is, according to the fundamental principles of English law, entitled to effective notice of the proceedings against him. In order that substituted service may be permitted, it must be clearly shown that the plaintiff is in fact unable to effect personal service and that the writ is likely to reach the defendant or to come to his knowledge if the method of substituted service which is asked for by the plaintiff is adopted. The principle stated in Porter v Freudenberg was incorporated in the Rules of the Supreme Court in the revision of 1962 as RSC Order 67, rule 4(3). This provided: Substituted service of a document, in relation to which an order is made under this rule, is effected by taking such steps as the court may direct to bring the document to the notice of the person to be served. This provision subsequently became RSC Order 65, rule 4(3), and continued to appear in subsequent iterations of the Rules until they were superseded by the Civil Procedure Rules in 1999. The treatment of the principle in the more recent authorities is, unfortunately, neither consistent nor satisfactory. The history may be summarised as follows: (1) Murfin v Ashbridge [1941] 1 All ER 231 arose out of a road accident caused by the alleged negligence of a driver who was identified but could not be found. The case is authority for the proposition that while an insurer may be authorised by the policy to defend an action on behalf of his assured, he was not a party in that capacity and could not take any step in his own name. In the course of considering that point, Goddard LJ suggested at p 235 that possibly service on the driver might have been effected by substituted service on the insurers. Porter v Freudenberg was cited, but the point does not appear to have been argued. (2) In Gurtner v Circuit [1968] 2 QB 587, the driver alleged to have been responsible for a road accident had emigrated and could not be traced. He was thought to have been insured, but it was impossible to identify his insurer. The plaintiff was held not to be entitled to an order for substituted service on another insurer who had no relationship with the driver. Lord Denning MR thought (pp 596 597) that the affidavit in support of the application was defective because it failed to state that the writ, if served on a non insurer, was likely to reach the defendant. But he suggested that substituted service might have been effected on the real insurer if it had been identified. Diplock LJ thought (p 605) that it might have been effected on the Motor Insurers Bureau. Porter v Freudenberg was not cited, and the point does not appear to have been argued. In Clarke v Vedel [1979] RTR 26, the question was fully argued by (3) reference to all the relevant authorities in the context of the Road Traffic Acts. A person had stolen a motor cycle, collided with the plaintiffs, given a fictitious name and address and then disappeared. He was sued under the fictitious name he had given, and an application was made for substituted service on the Motor Insurance Bureau. The affidavit in support understandably failed to state that that mode of service could be expected to reach the driver. The Court of Appeal proceeded on the assumption (p 32) that there was no more reason to suppose that [the writ] will come to his notice or knowledge by being served on the Motor Insurance Bureau than by being served on any one else in the wide world. But it declined to treat the dicta in the above cases as stating the law. Stephenson LJ considered (p 36), on the strength of the dicta in Murfin v Ashbridge and Gurtner v Circuit, that there may be cases where a defendant, who cannot be traced and, therefore, is unlikely to be reached by any form of substituted service, can nevertheless be ordered to be served at the address of insurers or the Bureau in a road accident case. The existence of insurers and of the Bureau and of these various agreements does create a special position which enables a plaintiff to avoid the strictness of the general rule and obtain such an order for substituted service in some cases. But he held (p 37) that This is a case in which, on the face of it, substituted service under the rule is not permissible and the affidavit supporting the application for it is insufficient. This fictitious, or, at any rate, partly fictitious defendant cannot be served, so Mr Crowther is right in saying that he cannot be sued I do not think that Lord Denning MR or Diplock LJ or Salmon LJ or Goddard LJ had anything like the facts of this case in mind; and whatever the cases in which the exception to the general rule should be applied, in my judgment this is not one of them. In his concurring judgment, Roskill LJ (pp 38 39) approved the statement in the then current edition of the Supreme Court Practice that [t]he steps which the court may direct in making an order for substituted service must be taken to bring the document to the notice of the person to be served, citing Porter v Freudenberg in support of it. (4) 20 years later, another division of the Court of Appeal reached the opposite conclusion in Abbey National Plc v Frost (Solicitors Indemnity Fund Ltd intervening) [1999] 1 WLR 1080. The issue was the same, except that the defendant was a solicitor insured by the Solicitors Indemnity Fund pursuant to a scheme managed by the Law Society under the compulsory insurance provisions of the Solicitors Act 1974. The claimant sued his solicitor, who had absconded and could not be found. The Court of Appeal made an order for substituted service on the Fund. Nourse LJ (with whom Henry LJ and Robert Walker LJ agreed) distinguished Porter v Freudenberg on the ground that it was based on the practice of the masters of the Supreme Court recorded in the White Book at the time; and Clarke v Vedel on the ground that the policy of the statutory solicitors indemnity rules required a right of substituted service on an absconding solicitor. RSC Order 65, rule 4(3) was held to be purely directory and not to limit the discretion of the court as to whether or in what circumstances to order substituted service. Nourse LJ held that RSC Order 65 did not require that the order should be likely to result in the proceedings coming to the defendants attention. The current position is set out in Part 6 of the Civil Procedure Rules. CPR 6.3 provides for service by the court unless the claimant elects to effect service himself. It considerably broadens the permissible modes of service along lines recommended by Lord Woolfs reports on civil justice. But the object of all the permitted modes of service, as his final report made clear, was the same, namely to enable the court to be satisfied that the method used either had put the recipient in a position to ascertain its contents or was reasonably likely to enable him to do so within any relevant time period: see Access to Justice, Final Report (1996), Ch 12, para 25. CPR 6.15, which makes provision for alternative service, provides, so far as relevant: 6.15(1) Where it appears to the court that there is a good reason to authorise service by a method or at a place not otherwise permitted by this Part, the court may make an order permitting service by an alternative method or at an alternative place. (2) On an application under this rule, the court may order that steps already taken to bring the claim form to the attention of the defendant by an alternative method or at an alternative place is good service. CPR 6.15 does not include the provision formerly at RSC Order 65, rule 4(3). But it treats alternative service as a mode of service, which is defined in the indicative glossary appended to the Civil Procedure Rules as steps required by rules of court to bring documents used in court proceedings to a persons attention. Moreover, sub paragraph (2) of the rule, which is in effect a form of retrospective alternative service, envisages in terms that the mode of service adopted will have had that effect. Applying CPR 6.15 in Abela v Baadarani [2013] 1 WLR 2043 Lord Clarke of Stone cum Ebony (with whom the rest of this court agreed) held (para 37) that the whole purpose of service is to inform the defendant of the contents of the claim form and the nature of the claimants case. The Court of Appeal appears to have had no regard to these principles in ordering alternative service of the insurer in the present case. In my opinion, subject to any statutory provision to the contrary, it is an essential requirement for any form of alternative service that the mode of service should be such as can reasonably be expected to bring the proceedings to the attention of the defendant. Porter v Freudenberg was not based on the niceties of practice in the masters corridor. It gave effect to a basic principle of natural justice which had been the foundation of English litigation procedure for centuries, and still is. So far as the Court of Appeal intended to state the law generally when it observed in Abbey National Plc v Frost that service need not be such as to bring the proceedings to the defendants attention, I consider that they were wrong. An alternative view of that case is that that observation was intended to apply only to claims under schemes such as the solicitors compulsory insurance scheme, where it was possible to discern a statutory policy that the public should be protected against defaulting solicitors. If so, the reasoning would apply equally to the compulsory insurance of motorists under the Road Traffic Acts, as indeed the Court of Appeal held in the present case. That would involve a narrower exception to the principle of natural justice to which I have referred, and I do not rule out the possibility that such an exception might be required by other statutory schemes. But I do not think that it can be justified in the case of the scheme presently before us. In the first place, the Road Traffic Act scheme is expressly based on the principle that as a general rule there is no direct liability on the insurer, except for its liability to meet a judgment against the motorist once it has been obtained. To that extent, Parliaments intention that the victims of negligent motorists should be compensated by the insurer is qualified. No doubt Parliament assumed, when qualifying it in this way, that other arrangements would be made which would fill the compensation gap, as indeed they have been. But those arrangements involve the provision of compensation not by the insurer but by the Motor Insurers Bureau. The availability of compensation from the Bureau makes it unnecessary to suppose that some way must be found of making the insurer liable for the underlying wrong when his liability is limited by statute to satisfying judgments. Secondly, ordinary service on the insurer would not constitute service on the driver, unless the insurer had contractual authority to accept service on the drivers behalf or to appoint solicitors to do so. Such provisions are common in liability policies. I am prepared to assume that the policy in this case conferred such authority on the insurer, although we have not been shown it. But it could only have conferred authority on behalf of the policy holder (if he existed), and it is agreed that the driver of the Micra was not the policy holder. Given its contingent liability under section 151 of the Road Traffic Act 1988, the insurer no doubt has a sufficient interest to have itself joined to the proceedings in its own right, if it wishes to be. That would authorise the insurer to make submissions in its own interest, including submissions to the effect that the driver was not liable. But it would not authorise it to conduct the defence on the drivers behalf. The driver, if sued in these proceedings, is entitled to be heard in his own right. Thirdly, it is plain that alternative service on the insurer could not be expected to reach the driver of the Micra. It would be tantamount to no service at all, and should not therefore have been ordered unless the circumstances were such that it would be appropriate to dispense with service altogether. There is a power under CPR 6.16 to dispense with service of a claim form in exceptional circumstances. It has been exercised on a number of occasions and considered on many more. In general, these have been cases in which the claimant has sought to invoke CPR 6.16 in order to escape the consequences of some procedural mishap in the course of attempting to serve the claim form by one of the specified methods, or to confer priority on the English court over another forum for the purpose of the Brussels Regulation, or to affect the operation of a relevant limitation period. In all of them, the defendant or his agents was in fact aware of the proceedings, generally because of a previous attempt by the claimant to serve them in a manner not authorised by the Rules. As Mummery LJ observed, delivering the judgment of the Court of Appeal in Anderton v Clwyd County Council (No 2) [2002] 1 WLR 3174, para 58, service was dispensed with because there was no point in requiring him to go through the motions of a second attempt to complete in law what he has already achieved in fact. In addition, I would accept that it may be appropriate to dispense with service, even where no attempt has been made to effect it in whatever manner, if the defendant has deliberately evaded service and cannot be reached by way of alternative service under CPR 6.15. This would include cases where the defendant is unidentifiable but has concealed his identity in order to evade service. However, a person cannot be said to evade service unless, at a minimum, he actually knows that proceedings have been or are likely to be brought against him. A court would have to be satisfied of that before it could dispense with service on that basis. An inference to that effect may be easier to draw in the case of hit and run drivers, because by statute drivers involved in road accidents causing personal injury or damage to another vehicle must either stop and, if required to do so by any person having reasonable grounds for so requiring, give his name and address and also the name and address of the owner and the identification marks of the vehicle, or else report the incident later. But the mere fact of breach of this duty will not necessarily be enough, for the driver may be unaware of his duty or of the personal injury or damage or of his potential liability. No submission was made to us that we should treat this as a case of evasion of service, and there are no findings which would enable us to do so. I would not wish arbitrarily to limit the discretion which CPR 6.16 confers on the court, but I find it hard to envisage any circumstances in which it could be right to dispense with service of the claim form in circumstances where there was no reason to believe that the defendant was aware that proceedings had been or were likely to be brought. That would expose him to a default judgment without having had the opportunity to be heard or otherwise to defend his interests. It is no answer to this difficulty to say that the defendant has no reason to care because the insurer is bound to satisfy a judgment against him. If, like the driver of the Micra, the motorist was not insured under the policy, he will be liable to indemnify the insurer under section 151(8) of the Road Traffic Act. It must be inherently improbable that he will ever be found or, if found, will be worth pursuing. But the court cannot deny him an opportunity to be heard simply because it thinks it inherently improbable that he would take advantage of it. I conclude that a person, such as the driver of the Micra in the present case, who is not just anonymous but cannot be identified with any particular person, cannot be sued under a pseudonym or description, unless the circumstances are such that the service of the claim form can be effected or properly dispensed with. The European law issue Mr Williams QC, who appeared for Ms Cameron, submitted that this result was inconsistent with the Sixth Motor Insurance Directive 2009/103/EC, and that the Road Traffic Act 1988 should be read down so as to conform with it. The submission was pressed with much elaboration, but it really boils down to two points. First, Mr Williams submits that the Directive requires a direct right against the insurer on the drivers underlying liability, and not simply a requirement to have the insurer satisfy a judgment against the driver. Secondly, he submits that recourse to the Motor Insurers Bureau is not treated by the Directive as an adequate substitute. Neither point appears to have been raised before the Court of Appeal, for there is no trace of them in the judgments. Before us, they emerged as Mr Williams main arguments. I propose, however, to deal with them quite shortly, because I think it clear that no point on the Directive arises. Article 3 of the Directive requires member states to ensure that civil liability in respect of the use of vehicles is covered by insurance, and article 9 lays down minimum amounts to be insured. Recital 30 states: The right to invoke the insurance contract and to claim against the insurance undertaking directly is of great importance for the protection of victims of motor vehicle accidents In order to facilitate an efficient and speedy settlement of claims and to avoid as far as possible costly legal proceedings, a right of direct action against the insurance undertaking covering the person responsible against civil liability should be extended to victims of any motor vehicle accident. Effect is given to this objective by article 18, which provides: Article 18 Direct Right of Action Member states shall ensure that any party injured as a result of an accident caused by a vehicle covered by insurance as referred to in article 3 enjoys a direct right of action against the insurance undertaking covering the person responsible against civil liability. I assume (without deciding) that article 18 requires a direct right of action against the insurer in respect of the underlying wrong of the person responsible and not just a liability to satisfy judgments entered against that person. It is a plausible construction in the light of the recital and the reference to Directive 2000/26/EC. However, Ms Cameron is not trying in these proceedings to assert a direct right against the insurer for the underlying wrong. Her claim against the insurer is for a declaration that it is liable to meet any judgment against the driver of the Micra. Her claim against the driver is for damages. But the right that she asserts against him on this appeal is a right to sue him without identifying him or observing rules of court designed to ensure that he is aware of the proceedings. Nothing in the Directive requires the United Kingdom to recognise a right of that kind. Indeed, it is questionable whether it would be consistent with article 47 of the Charter of Fundamental Rights regarding the fairness of legal proceedings. Mr Williams second point is in reality a reiteration of the first. It is based on article 10 of the Directive, which requires member states to ensure that there is a national bureau charged to pay compensation for damage to property or personal injuries caused by an unidentified vehicle or a vehicle for which the insurance obligation provided for in article 3 has not been satisfied. The submission is that the Directive requires that recourse to the Bureau, as the relevant body in the United Kingdom, should be unnecessary in a case like this, because the Micra was identified. It was only the driver who was unidentified. This is in effect a complaint that the indemnity available from the Motor Insurers Bureau under the Untraced Drivers Agreement, which extends to untraced drivers whether or not the vehicle is identified, is wider than the Directive requires. In reality, the complaint is not about the extent of the Bureaus coverage, which unquestionably extends to this case. The complaint is that it is the Bureau which is involved and not the insurer. But that is because the insurer is liable only to satisfy judgments, which is Mr Williams first point. It is true that the measure of the Bureaus indemnity is slightly smaller than that of the insurer (because of the excess for property damage and the limited provision for costs). But in that respect it is consistent with the Directive. Disposal I would allow the appeal, set aside the order of the Court of Appeal, and reinstate that of District Judge Wright.
+The issue in this case is the proper approach of the immigration appellate authorities where the Secretary of State has decided that a national of the European Economic Area who is lawfully living in the United Kingdom should be removed on the ground of abuse of the right to reside here. The abuse in question happened to be an alleged attempt to enter into a marriage of convenience but the issue would arise in respect of any abuse which would justify removal under article 35 of Directive 2004/38/EC on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States (the Directive). The facts Ms Sadovska is a citizen of Lithuania. She came to this country lawfully in February 2007 and has since been living and working here lawfully, exercising her rights under the Directive. She lives in Edinburgh, where her sisters also live, and works as a cleaner. Mr Malik is a citizen of Pakistan who came to this country lawfully with a Tier 4 student visa in May 2011. His visa expired on 15 April 2013 and he has been here unlawfully ever since. He too lives and worked in Edinburgh until 17 April 2014. They say that they met at a disco, El Barrio in Edinburgh, in October 2012. They spent that night together and saw one another from time to time afterwards, meeting members of one anothers families, but the relationship did not become a steady one until Valentines Day 2013. Thereafter, they say, they saw one another as boyfriend and girlfriend. It is common ground (and there is photographic evidence) that in December 2013, Mr Malik attended the wedding of Ms Sadovskas sister and that they were on the streets of Edinburgh together during the celebrations at Hogmanay 2013. It is also common ground that Mr Malik booked a double room for two adults at a London hotel for four nights in January 2014 and that they were both in London at that time. They say that they were on holiday together and that was when they decided to get married. On 25 March 2014, they published notice of their intention to marry on 17 April 2014 at Leith Registry Office. On 28 March 2014, they signed a one page statement about their relationship which included the following puzzling sentence: We have discussed the idea of living together in depth and also have touched upon the subject of marriage, but as of yet, none of these discussions have manifested into action. That statement was enclosed in a letter dated 11 April 2014, sent by solicitors acting for Mr Malik (and, it would appear, also for Ms Sadovska) to the Home Office in Glasgow. This explained that their client was an over stayer, but that he intended to marry an EEA national on 17 April 2014 and would be applying for recognition that he was exercising Treaty rights as a family member of an EEA national, so it was hoped that no enforcement action would be taken against him. The letter recognised that officials might wish to interview their clients but hoped that this could be done before their wedding on 17 April. It also stated that: We would like you to take this letter as a human rights allegation that both the applicant and the EEA national have established a family life in the United Kingdom and any decision to attempt to remove the applicant from the United Kingdom would be challenged on article 8 grounds and also on the grounds that the applicant [sci: attempt?] breaches our clients right to marry under article 12 of the ECHR. Enclosed were copies of Mr Maliks passport, of Ms Sadovskas identity card, birth certificate and most recent payslip, a receipt from the Property Management Company in respect of a flat in Edinburgh for which they had signed a lease on 6 April 2014, three statements from two people who knew them, and their statement of 28 March. Mr Malik and Ms Sadovska had indeed signed a lease for a flat in Edinburgh on 6 April 2014 and each gave this as their home address when interviewed on 17 April. (We are told that they still live together but at a different address.) On 16 April 2016 they bought wedding rings. The solicitors letter was faxed to the Home Office on Friday 11 April. The wedding was due to take place on the afternoon of the following Thursday. Before that could happen, however, immigration officers arrived at the Registrars Office and asked to interview them. They agreed. Each was cautioned and agreed to be interviewed in English. They were interviewed separately, Mr Malik from 14.55 to 16.20 and Ms Sadovska from 14.54 to 16.50, according to the immigration officers records. After the interviews they were detained and thus unable to marry. Ms Sadovska was released soon afterwards, but Mr Malik was detained until 11 June. On the same day as the interviews, each was issued with a two part decision notice. Mr Malik was issued with a notice that he was a person liable to removal as an over stayer, who had not applied for further leave to remain after his visa had expired and was thus liable to be detained pending a decision whether or not to give directions for his removal from the United Kingdom. The notice explained that he had breached section 10(1)(a) of the Immigration and Asylum Act 1999, which provides that a person who is not a British citizen may be removed from the United Kingdom, in accordance with directions given by an immigration officer, if (a) having only a limited leave to enter or remain, he . remains beyond the time limited by the leave, and had therefore committed an offence under section 24(1)(b)(i) of the Immigration Act 1971. Ms Sadovska was issued with a notice that she was a person liable to removal because her removal was justified on grounds of abuse of rights, specifically that she had attempted to enter into a marriage of convenience with Mr Malik. The notice referred to regulation 19(3)(c), without explaining that this was contained in the Immigration (European Economic Area) Regulations 2006. At the time, this provided that an EEA national who has entered the United Kingdom . may be removed if (c) the Secretary of State has decided that the persons removal is justified on grounds of abuse of rights in accordance with regulation 21B(2). Regulation 21B(1) provided that The abuse of a right to reside includes (c) entering, attempting to enter or assisting another person to enter or attempt to enter, a marriage or civil partnership of convenience. Regulation 21B(2) provided that The Secretary of State may take an EEA decision on the grounds of abuse of rights where there are reasonable grounds to suspect the abuse of a right to reside and it is proportionate to do so. Regulation 24(2) provided that where a decision to remove was taken under regulation 19(3)(c), the person was to be treated as someone to whom section 10(1)(a) of the 1999 Act applied. In each case, the notice was accompanied with notice of a decision to remove. Both appealed to the First tier Tribunal which heard their appeals together on 4 August 2014 and promulgated a determination refusing them both on 19 August 2014. Their appeals to the Upper Tribunal were heard on 5 February 2015 and a determination refusing them was promulgated on 9 February 2015. Their appeals to the First Division of the Inner House of the Court of Session were refused on 17 June 2016: [2016] CSIH 51. They now appeal to this court. They make two complaints about the decisions of the tribunals and court below. The first, and most important, relates to the burden of proof in a case such as this. Under the heading Applicable law, the First tier Tribunal judge said this, at para 7: In immigration appeals, the burden of proof is on the appellant and the standard of proof required is a balance of probabilities. In human rights appeals, it is for the appellant to show that there has been an interference with his or her human rights. If that is established, and the relevant article permits, it is then for the respondent to establish that the interference was justified. The appropriate standard of proof is whether there are substantial grounds for believing the evidence. It is apparent from his determination that his whole approach was to require Ms Sadovska and Mr Malik to prove that their proposed marriage was not a marriage of convenience, rather than to require the Home Office to prove that it was. Before the Upper Tribunal the appellants complaint was that the First tier Tribunal judge had taken the interviews as his starting point and given too much weight to the inconsistencies between them and had not considered them in the context of the totality of the evidence, as required by the decision of the Upper Tribunal in Papajorgji v Entry Clearance Officer, Nicosia [2012] UKUT 38, [2012] Imm AR 3 (at para 39). Papajorgji was an extraordinary case in which an Albanian woman who had been married to and living with a Greek man for 12 years and had two children with him was refused a visa to accompany him on a visit to this country on the ground that theirs was a marriage of convenience, a belief which, as the Upper Tribunal said, was on the information supplied with the application simply ludicrous (para 32). There was no burden on the claimant in an application for a family permit to establish that she was not party to a marriage of convenience unless the circumstances known to the decision maker gave reasonable ground for suspecting that that was the case. Where there was such a suspicion the matter required further investigation and the claimant should be invited to respond to by producing evidential material to dispel it (para 27). But suspicion was not enough. The claimant was only disqualified if it was established that the marriage was one of convenience (para 37). The question for the judge was in the light of the totality of the information before me, including the assessment of the claimants answers and any information provided, am I satisfied that it is more probable than not this is a marriage of convenience? (para 39) Before the First Division, the appellants did complain that the tribunal had adopted the wrong approach to the burden of proof and that the respondent had failed to prove to the requisite high degree that the appellants were guilty of fraud. The court dealt with the matter in this way, at para 20: However, as has often been said, once the evidence has been heard, questions of onus usually cease to be important (Sanderson v McManus 1997 SC (HL) 55, Lord Hope at 62). The view of the UT in Papajorgji (at para 39) that the question, in the Tribunal context, was whether it is more probable than not that the marriage is one of convenience in [the] light of the totality of the information, accords with that dictum. The court went on to say that the First tier Tribunal had considered all the information and reached a decision based upon it. That decision did not depend upon onus but upon weighing the various factors in the balance. In that context, there was only one standard of proof, that being the balance of probabilities (Scottish Ministers v Stirton 2014 SC 218, the Lord Justice Clerk (Lord Carloway) at paras 117 119). It is perhaps worth noting that Lord Hopes observation in Sanderson v McManus, that questions of onus usually cease to be important once the evidence is before the court was in the context of a dispute between unmarried parents about a fathers contact with his child, when, as Lord Hope observed the matter then becomes one of overall impression, balancing one consideration against another and having regard always to the consideration which has been stated to be paramount (that is, the welfare of the child). Even then, the court had to be able to come to the conclusion that making an order would be in the childs best interests. This demonstrates that, when considering the burden of proof, it is necessary to understand what the issues are and what has to be established. The appellants also complain that their interviews were unfair, oppressive and repugnant to public law standards. The circumstances of being approached on their wedding day by uniformed immigration officers carrying batons and handcuffs meant that they were frightened. They agreed to be interviewed in English but neither is fluent in English. They had no time to contact their solicitor for advice, to obtain an interpreter, to produce evidence and contact witnesses. They complain that both the First tier and the Upper Tribunal had thought the interviews were of central importance, yet they gave no weight to the circumstances in which they had taken place. The law It is of central importance in this case to consider the substantive law governing the respondents decisions and what had therefore to be established in each case. It differs significantly as between the two appellants. Ms Sadovska is an EEA national. Her rights are therefore governed by the Directive, which the 2006 Regulations were designed to implement in UK law. To the extent, if any, that the 2006 Regulations do not accurately transpose the requirements of the Directive, we have to give effect to the Directive rather than the Regulations and so it is appropriate to focus on the provisions of the Directive. She has been living lawfully in the United Kingdom for a continuous period of more than five years. This means that, under article 16 of the Directive, she has the right of permanent residence here. None of the conditions attached to the right of residence of people who have been here for more than three months but less than five years, provided for in article 8 of the Directive, applies. Article 28.2 lays down the general rule that a host member state may not take an expulsion decision against a Union citizen who has the right of permanent residence except on serious grounds of public policy or public security. However, Recital 28 to the Directive states that: To guard against abuse of rights or fraud, notably marriages of convenience or any other form of relationships contracted for the sole purpose of enjoying the right of free movement and residence, member states should have the possibility to adopt the necessary measures. This is therefore provided for in article 35, which is the crucial article in this case: Member states may adopt the necessary measures to refuse, terminate or withdraw any right conferred by this Directive in the case of abuse of rights or fraud, such as marriages of convenience. Any such measure shall be proportionate and subject to the procedural safeguards provided for in articles 30 and 31. Article 30 requires that the person concerned be notified in writing of the decision and informed precisely and in full of the reason for it and where and within what time that person may lodge an appeal. Article 31 requires that the person have access to judicial and, where appropriate, administrative redress procedures to appeal against or seek review of any decision taken against them. These shall allow for an examination of the legality of the decision, as well as of the facts and circumstances on which [it] is based. They shall ensure that the decision is not disproportionate A Communication from the Commission to the European Parliament and the Council on guidance for the better transposition and application of Directive 2004/38/EC, dated 2 July 2009, has this to say about marriages of convenience, at para 4.2: Recital 28 defines marriages of convenience for the purposes of the Directive as marriages contracted for the sole purpose of enjoying the right of free movement and residence under the Directive that someone would not have otherwise. A marriage cannot be considered as a marriage of convenience simply because it brings an immigration advantage, or indeed any other advantage. The quality of the relationship is immaterial to the application of Article 35. The definition in the first sentence is repeated in the Commissions more recent Handbook on addressing the issues of alleged marriages of convenience between EU citizens and non EU nationals in the context of EU law on free movement of EU citizens, dated 26 September 2014. However, this goes on to explain that: the notion of sole purpose should not be interpreted literally (as being the unique or exclusive purpose) but rather as meaning that the objective to obtain the right of entry and residence must be the predominant purpose of the abusive conduct. But it repeats that: On the other hand, a marriage cannot be considered as a marriage of convenience simply because it brings an immigration advantage, or indeed any other advantage (for example the right to a particular surname, location related allowances, tax advantages or entitlement to social housing for married couples). Mr Malik is in a different position from Ms Sadovska. As an over stayer he is, as noted above, liable to be removed under section 10(1)(a) of the 1999 Act. However, had he succeeded in marrying Ms Sadovska, he would have become a family member within the meaning of article 2.2 of the Directive. Under article 7.2, this would bring with it the right of residence for more than three months, provided that Ms Sadovska satisfied one of the conditions in article 7.1(a), (b) or (c). As a worker she would satisfy condition (a). Once he had been living here lawfully for five years, he too would acquire a right of permanent residence under article 16.2. As with Ms Sadovska, of course, he would be liable to removal under article 35 if their marriage was one of convenience. As they have not succeeded in marrying, Mr Malik is not a family member of an EU citizen. However, article 3.2 requires Member States to facilitate the entry and residence of certain other persons, who include (b) the partner with whom the Union citizen has a durable relationship, duly attested. Article 3.2 also requires that The host member state shall undertake an extensive examination of the personal circumstances and shall justify any denial of entry or residence to these people. Finally, of course, both Ms Sadovska and Mr Malik have rights under the European Convention on Human Rights. Article 8.1 guarantees the right to respect for private and family life, although under article 8.2 interference is justified if it is in accordance with the law and necessary in a democratic society to achieve a legitimate aim. Article 12 guarantees the right of men and women of marriageable age to marry and to found a family, according to the national laws governing the exercise of [the] right. Analysis It is clear from the provisions of the Directive quoted above that Ms Sadovska has a right of permanent residence in the United Kingdom. As an EU citizen, under article 27.1, her freedom of movement can only be restricted on grounds of public policy, public security or public health. As a permanent resident, under article 28 she could only be removed if those grounds are serious. It is not suggested that she can be removed under article 28 on any of those grounds. She can therefore only be removed, under article 35, if it is established that she has entered, or attempted to enter, into a marriage of convenience. Furthermore, although the Regulations permit the respondent to take steps on the basis of reasonable grounds to suspect that that is the case, Ms Sadovska is entitled to an appeal where the facts and circumstances must be fully investigated. That must mean, as held in Papajorgji, that the tribunal has to form its own view of the facts from the evidence presented. The respondent is seeking to take away established rights. One of the most basic rules of litigation is that he who asserts must prove. It was not for Ms Sadovska to establish that the relationship was a genuine and lasting one. It was for the respondent to establish that it was indeed a marriage of convenience. For this purpose, marriage of convenience is a term of article Although it is defined in the Directive and the 2009 Communication as a marriage the sole purpose of which is to gain rights of entry to and residence in the European Union, the 2014 Handbook suggests a more flexible approach, in which this must be the predominant purpose. It is not enough that the marriage may bring incidental immigration and other benefits if this is not its predominant purpose. Furthermore, except in cases of deceit by the non EU national, this must be the purpose of them both. Clearly, a non EU national may be guilty of abuse when the EU national is not, because she believes that it is a genuine relationship. In the case of a person exercising EU law rights, the tribunal must also be satisfied that the removal would be a proportionate response to the abuse of rights established. So it would be one thing to find that the proposed marriage had been shown to be one of convenience, and therefore that it was right to prevent it, but quite another thing to find that expelling Ms Sadovska from the country where she had lived and worked for so long and had other family members living was a proportionate response to that. The First tier Tribunal did not analyse her rights in this way. It was quite simply incorrect to deploy the statement that in immigration appeals the burden of proof is on the appellant, correct though it is in the generality of non EU cases, in her case. She had established rights and it was for the respondent to prove that the quite narrow grounds existed for taking them away. Nor did the determination address the issue of proportionality. It is impossible for this court to conclude that, had the matter been approached in the right way, the decision would inevitably have been the same. The position of Mr Malik is different, for he has no established rights, either in EU law or in non EU immigration law. In order to benefit from the Directive, he would have to show that he has a durable relationship with Ms Sadovska. However, article 3.2 requires the respondent to justify any refusal of entry or residence in such cases. So if he can produce evidence of a durable relationship (a term which is not defined in the Directive), it would be for the respondent to show that it was not or that there were other good reasons to deny him entry. It is not impossible that a tribunal, properly directing itself, would reach different conclusions in the case of these two appellants. But it is impossible for this court to conclude that, had the matter been approached in the right way, the decision relating to Mr Malik would inevitably have been the same. It follows that the appeal must be allowed and the case remitted for a full re hearing by the First tier Tribunal. In seeking to establish its case, the respondent will no doubt concentrate on the interviews, the discrepancies between the appellants accounts, and the gaps in Ms Sadovskas knowledge of Mr Maliks family, together with the sentence in their statement of 28 March that their thoughts of living together and marriage had not yet manifested into action (which on 28 March was strictly true in that they were not yet living together or married but they had given notice of intention to marry). But in considering those discrepancies, the circumstances in which the interviews took place and the statement was made must be borne fully in mind. Furthermore, there were many matters on which their accounts were consistent. It turns out, for example, that Ms Sadovskas mother does indeed live in Lithuania, as Mr Malik said in explaining why she was not there. There is also a considerable body of evidence which supports their claim to have been in a genuine relationship, dating back some time before they gave notice of intention to marry. Should the tribunal conclude that Mr Malik was delighted to find an EU national with whom he could form a relationship and who was willing to marry him, that does not necessarily mean that their marriage was a marriage of convenience, still less that Ms Sadovska was abusing her rights in entering into it. Their legal and their factual cases must be considered separately. Having reached the firm conclusion that the case must be remitted to the First tier Tribunal to be heard afresh, because a wrong approach was taken to the requirements of EU law in this case, it is unnecessary to consider whether the appellants Convention rights add anything further to their claims. But for my part I would not accept their argument that, because their marriage was frustrated by the respondents actions, their case should be approached as if they were married, which would, of course, enhance Mr Maliks claims. It must be permissible for the state to take steps to prevent sham marriages, although it is also incumbent on the state to show that the marriage would indeed be a sham.
+This appeal concerns the application of the test of obviousness under section 3 of the Patents Act 1977 to a dosage patent. In summary, a patent, whose validity is not challenged, identified a compound as an efficacious treatment but did not identify an optimal dosage regime. A pharmaceutical company, which had acquired the patent, conducted extensive research into ascertaining the optimal dosage of the compound. It discovered a dose which not only was safe and effective but also, unexpectedly, could be administered in a new and beneficial manner, because of both the half life of the compound and its minimal side effects at that dose. A number of generic drug manufacturers challenge the validity of the dosage patent on the basis that it involves no inventive step. The appeal raises two principal questions. The first relates to the application of the obviousness test to a dosage patent and the second is concerned with whether the Court of Appeal was entitled to reverse the judgment of the judge at first instance on that question in the circumstances of this case. The patent under challenge The dosage patent which is the subject of this appeal is EP(UK) 1,173,181 (the 181 patent). It is owned by ICOS and exclusively licensed to Eli Lilly (collectively Lilly). It relates to the use of tadalafil in a dosage form for the treatment of sexual dysfunction. It was filed on 26 April 2000 and claims priority from US application no 60/132036P filed on 30 April 1999. It was granted on 15 October 2003. The form of the 181 patent is a B3 specification following centralised amendments made in the European Patent Office (EPO) on 25 March 2015. The claimants, who are the respondents in this appeal, raised proceedings to revoke the 181 patent and Lilly defended the claim and counterclaimed that the claimants were threatening to infringe its patent. The earlier phases of this litigation involved challenges to the 181 patent based on (a) priority, (b) added matter, (c) lack of novelty, (d) obviousness and (e) insufficiency. Of those challenges, the principal matter of contention is obviousness. The claimants challenges on priority, added matter and lack of novelty arise only if this court upholds the appeal by Lilly against the Court of Appeals finding of obviousness. Factual background Erectile dysfunction (ED) is a common medical condition which affects approximately 50% of the male population between the ages of 40 and 70. It is caused by a number of disorders, both physiological and psychological. Unsurprisingly, the discovery of a drug to treat ED, called sildenafil, which was and is sold under the brand name VIAGRA, proved to be a very great commercial success. The drug, which is the subject of the patent in dispute, is called tadalafil. Tadalafil is the generic name for a drug which is sold under the brand name CIALIS for the treatment of ED and benign prostatic hyperplasia, and under the brand name ADCIRCA for the treatment of pulmonary arterial hypertension. CIALIS has also enjoyed great commercial success. In 2014 worldwide sales amounted to about $2.29 billion and UK sales amounted to about $99m. In that year UK sales of ADCIRCA amounted to about $1m. Technical background I derive my summary of the technical background from the judgment of Kitchin LJ, who wrote the leading judgment in the Court of Appeal [2017] EWCA Civ 1671; [2018] RPC 7, and the findings of the trial judge, Birss J [2016] EWHC 1955 (Pat). The penis contains smooth muscle. When in its normal resting state, the smooth muscle contracts and so restricts the arteries supplying blood to the penis. When an erection is triggered, the smooth muscle relaxes and no longer restricts the supply of arterial blood, causing the penis to become tumescent. The smooth muscle relaxation which leads to the erection results from a cascade of complex biochemical reactions within the body. Sexual stimulation causes the release of the neurotransmitter nitric oxide (NO) which enters the smooth muscle cells where it leads to an increase in the production of a second molecule, cyclic guanosine 3, 5 monophosphate (cGMP). cGMP in turn binds to and activates an enzyme which regulates the activity of other intracellular proteins and leads to the relaxation of the smooth muscle. An increase in the intracellular level of cGMP, through NO production, therefore promotes smooth muscle relaxation, while a decrease in the intracellular level of cGMP tends to cause the smooth muscle to return to its ordinary contracted state. The intracellular concentrations of cGMP and another second molecule, cyclic adenosine 3,5 monophosphate (cAMP), are regulated by a class of enzymes known as cyclic nucleotide phosphodiesterases (PDEs). By the priority date in 1999 at least six PDE families had been identified. It was known that the PDE family most prevalent in the penis was PDE5. This binds cGMP and hydrolyses it to its non cyclic form GMP, so leading to a reduction in smooth muscle relaxation and the prevention of penile tumescence. It is necessary to mention also the concept of potency. Potency is the amount of the drug required to produce a defined biological effect of given intensity. Potency can be measured as the concentration or dose of a drug required to produce 50% of the drugs maximal effect (EC50 or ED50) as depicted by a graded dose response curve. In the context of a drug that inhibits the action of another substance, potency can be expressed as the concentration of a drug required to inhibit a given biological process by half, ie the in vitro concentration of the drug which is required for 50% inhibition (IC50). A higher potency drug will have a lower concentration because less drug will be required to achieve the same effect. As Kitchin LJ illustrated in paras 17 and 18 of his judgment the dose response curve of a drug is illustrated graphically as a sigmoid (or S shaped) curve with a flat or gently inclined base at which increasing doses are slow to manifest a significant effect, a steep central part at which increasing doses have an increasing effect, and a plateau at the top at which increasing doses have no increased effect. The minimum effective dose is the smallest dose in the dose response curve at which a clinically relevant effect can be seen. The concept of the minimum effective dose would be known to the skilled team, who would be aware that regulators could ask for it to be identified. But they would also know that it is not always required. The trial judge found that it had not been established that the skilled team would always seek to identify the minimum effective dose for a given drug. It might be sufficient to know that the minimum effective dose was somewhere in a range. In the context of ED, there was no agreed definition of a minimum clinically relevant effect and this had a bearing on the judges reasoning in relation to obviousness. Identification of the minimum effective dose depends on a value judgment, as the skilled team would know. The primary task of the skilled team was and is to make safe, tolerable and effective medicines. Sildenafil and tadalafil Sildenafil was marketed as an orally administered PDE5 inhibitor, which prevented PDE5 from hydrolysing cGMP to the inactive GMP. cGMP levels remain elevated as a result and this promotes smooth muscle relaxation. This leads to greater arterial blood flow into the penis when it is stimulated and results in penile tumescence. A disadvantage of sildenafil was its effect on other PDE families and, in particular, PDE6 which was associated with known visual side effects. Sildenafil was also associated with normally mild and transient side effects including flushing, headache and dyspepsia, which were thought to be related to its mode of action as a PDE5 inhibitor. Sildenafil was known to be administered on demand with an onset of action of about one hour and a half life of about four hours. It was marketed at doses of 25mg, 50mg and 100mg. It was known that broadly efficacy increased with dose and so did side effects. Those were the doses upon which a skilled team would focus although it was also known that a 10mg dose of sildenafil had been investigated in trials and shown to be efficacious. Sildenafil was a first in class drug which validated the rationale for trying to treat ED using an oral PDE5 inhibitor. Any other PDE5 inhibitor for ED would be known as a second in class drug. A clinical pharmacologist would have an enhanced expectation that a second in class drug would be efficacious. But the idea of investigating chronic dosing of a drug for ED was not part of the common general knowledge. Tadalafil is a second in class drug. It is another PDE5 inhibitor and operates in essentially the same way as sildenafil. An advantage which tadalafil was found to have over sildenafil was its selectivity; it was able to bind to and inhibit its target PDE5 while having significantly less effect than sildenafil on other PDE families and, in particular, PDE6. This selectivity resulted in less and a smaller number of side effects. The skilled team The parties agreed that the notional skilled team, by reference to which the question of the obviousness of the patent in dispute would be assessed, would include a clinical pharmacologist with experience in pharmacokinetics and a clinician specialising in urology. Both were important and would work together. The clinical pharmacologist would take the lead in the quantification of doses and the dose response. The clinician would take the lead when assessing the clinical significance of an effect, whether a desired effect or a side effect. The clinical pharmacologist would be primarily responsible for selecting the doses to be tried in the dose ranging study, with input from the clinician. The phases of clinical research It was of central importance to the case of obviousness which the claimants presented that clinical research into a new medicine follows a standard pathway of four phases. The judge set out this pathway in paras 76 81 of his judgment and below I draw heavily on Kitchin LJs summary of that exposition. A new drug, identified through appropriate in vitro testing and pre clinical animal studies, is taken forward into human tests. The first of such tests are known as Phase I and they are carried out on healthy volunteers to test safety rather than efficacy. The tests provide pharmacokinetic information and allow an assessment of bio availability. If these tests are positive, the next step is to move the drug into Phase II. Phase II studies are generally carried out in two stages, Phase IIa and Phase IIb. Phase IIa, which consists of what are sometimes known as go, no go studies, provides proof of concept. The studies are generally carried out at one dose, selected to be high enough to give the drug the best chance of showing a positive effect on the disease, albeit not too high to risk serious side effects. Phase IIb involves testing a range of doses to show the effect of the dose. In the judges words, the idea is that the highest dose will show a larger clinical effect than the smallest dose. The obviousness challenge in this case focuses on what the hypothetical skilled team would do in this phase of clinical research. If the decision after Phase II is positive, the next phase is Phase III. This is a large scale clinical trial designed to generate data to support an application for regulatory approval. Phase IV studies take place after regulatory approval and are not relevant to the issues arising in this appeal. The Daugan patent Glaxo filed an application for a patent which was published on 6 February 1997 and led to patent EP 0 839 040 (the Daugan patent or Daugan). Glaxo did not take forward the research to implement the Daugan patent but transferred it to ICOS. The Daugan patent discloses the idea of using certain compounds which are PDE5 inhibitors for the treatment of ED. It specifically describes two compounds, A and B. Compound A is tadalafil. Daugan discloses tadalafils (and Compound Bs) potency (ie IC50) against PDE5 as 2 nM. Daugan discloses that doses of Compounds A and B will generally be in the range of 0.5mg to 800mg daily for the average adult patient. It gives examples of a tablet containing a 50mg dose of the active ingredient. But the Daugan patent does not purport to set out an appropriate dosage regime as an oral treatment of ED. It is not disputed that at the priority date it was entirely obvious for the notional skilled team, given the Daugan patent, to set out taking tadalafil forward into a routine pre clinical and clinical trial programme as an oral treatment for ED. The statements in Daugan and the huge success of sildenafil as an oral PDE5 inhibitor made it very obvious. Tadalafil would be an attractive potential second in class medicine to develop because Daugan teaches that it has a promising IC50 against PDE5. It is more potent than sildenafil, which has an IC50 of about 3 or 3.9 nM. The trial judge found that the skilled team would understand the limitations of in vitro IC50 data and would know that there could be all sorts of factors such as bioavailability and tissue compartmentalisation which might limit tadalafils clinical utility. But he found that that would not deter the skilled team from embarking on a routine pre clinical and clinical trial programme. The central question in this appeal is whether in the light of the common general knowledge which I have summarised in paras 8 16 and 18 22 above and the Daugan patent as the nearest prior art, the relevant claims in the 181 patent were obvious. I therefore turn to the 181 patent. The 181 patent The 181 patent is a dosage patent. In the specification (para 1) it refers for priority to the provisional patent application to the US Patent and Trademark Office Serial no 60/132036, which was filed on 30 April 1999. It asserts (para 2) that the invention relates to a highly selective PDE enzyme inhibitor and to its use in a pharmaceutical unit dosage form. In particular it relates to a potent inhibitor of PDE5 that is useful for the treatment of sexual dysfunction. In its description of the background of the invention, it refers to VIAGRA, its lack of selectivity for PDE6 and its side effects (para 4). It refers in para 7 to the Daugan patent and its disclosures. It asserts (para 8) that the applicants have discovered that tadalafil (which it described as compound (I)) can be administered in a unit dose that provides an effective treatment without the side effects associated with the presently marketed PDE5 inhibitor, sildenafil. Prior to the present invention such side effects were considered inherent to the inhibition of PDE5. It continues (para 9) that clinical studies revealed that the product is effective with a reduced tendency to cause flushing and, unexpectedly, can be administered with clinically insignificant side effects associated with the combined effects of a PDE5 inhibitor and an organic nitrate. In its summary of the invention (paras 11 15) it discloses a pharmaceutical dosage form for human pharmaceutical use of about 1 to about 5mg of tadalafil in a unit dosage form suitable for oral administration for the treatment of sexual dysfunction, including ED up to a maximum total dose of 5mg per day. The relevant claims are as follows. Claim 1 asserts A pharmaceutical unit dosage composition comprising 1 to 5mg of a compound having [the illustrated structural formula of tadalafil] said unit dosage form suitable for oral administration up to a maximum total dose of 5mg per day. Claims 2 and 3 assert dosage forms comprising 2.5mg and 5mg of the compound respectively. Claim 6 states: the dosage form of any one of claims 1 through 3 for use in treating a condition where inhibition of PDE5 is desirable. Claim 7 refers to the dosage form of claim 6 wherein the condition is a sexual dysfunction. It is a claim for a purpose limited product, known as an EPC 2000 claim, which, since 2011, the European Patent Office (EPO) issues in place of Swiss form claims, and claim 8 refers to the sexual dysfunction of ED. Claim 10 is a Swiss form claim which, as is well known, is a purpose limited process claim, giving a monopoly for the use of compound X in the manufacture of a medicament for the treatment of indication Y. It is in the following terms: 10. Use of a unit dose containing 1 to 5mg of a compound having the structure [of tadalafil] for the manufacture of a medicament for administration up to a maximum total dose of 5mg of said compound per day in a method of treating sexual dysfunction in a patient in need thereof. Kitchin LJ in his judgment (para 46) observed that the purpose limited claim 7 is dependent on claim 6 and claim 1 and construed it as manifesting an intention that the maximum dose per day constituted part of the purpose limitation of the claim. He also interpreted claims 7 and 10 as being directed to the treatment of sexual dysfunction by the administration of a dose of no more than 5mg tadalafil per day. The claimed invention is the application of the discovery that sexual dysfunction may be treated by administering such a dose and with minimal side effects (paras 50 52). The claimants do not challenge those findings. Lilly asserts that the essence of the invention is the discovery that tadalafil is effective in treating ED at such a low dose and with minimal side effects. This discovery has allowed the drug to be taken daily (for chronic use) rather than on demand, thus avoiding the need to anticipate when sexual activity might occur. This is, Lilly claims, a significant technical advantage as sildenafil by contrast is approved for on demand use only. Obviousness: the claimants challenge and Lillys answer Before Birss J the claimants submitted that it would be obvious for a skilled team given the Daugan patent to take tadalafil forward into a routine pre clinical and clinical trial programme as an oral treatment for ED at the priority date. While costly and time consuming, the programme would involve nothing other than routine work and no inventive effort was required. In the course of the programme to establish tadalafil as a safe, tolerable and effective treatment for ED, a 5mg dose would be one of the doses used on patients as it was obvious to ascertain the lowest dose at which the drug was effective. Standard dose ranging studies would lead to the claims in the 181 patent. The programme would reveal the invention without any inventive step. The fact that the 5mg per day dosage has a surprising beneficial property of minimal side effects was simply a bonus which did not make the dosage regime an invention. Lillys response was first that the discovery of the dosage regime was the result of expensive and unpredictable research which was entitled to patent protection. Secondly, at the start of the programme it was not obvious to try a low dose like 5mg per day as there was no reason to think that it would be effective at that dosage. To invalidate the claim, it would be necessary to show that at the start of the programme it was obvious to the skilled team that a 5mg/day dose would be safe and effective and also would have the minimal PDE5 related side effects. Lilly referred to the EPOs problem and solution approach and sought to apply it to the facts of the case. Birss J accepted neither approach in its entirety. He analysed the obviousness case by concentrating on claim 7. He reminded himself that the test for obviousness is a single and relatively simple question of fact. It is a question of fact to be decided by detailed technical arguments and evidence concerning the particular facts and circumstances, a task with which wide generalisations do not assist. He accepted that some experiments which were undertaken without a particular expectation as to the result were obvious. When considering pre clinical and clinical research it may be necessary to consider a step wise series of tests which the skilled team would undertake. But even if each of those steps were obvious, one must avoid the risk of hindsight by standing back and looking at the facts as a whole. The fact that routine tests have uncertain results does not on its own turn those results into an invention. Similarly, the fact that, before the pre clinical, Phase I and Phase IIa tests had been performed, one cannot say what particular doses will be tested in a Phase IIb test does not of itself make those doses inventive if some of them are found to work. He referred to the statement by Kitchin J in Generics (UK) Ltd v H Lundbeck A/S [2007] RPC 32, which I set out in para 63 below, and identified as relevant factors in his assessment of obviousness in this case the following: motive, multiple avenues, the effort involved and the expectation of success, the occurrence of unexpected and surprising results and the need for and nature of value judgments which have to be made in carrying out the project. The judges findings of fact were based principally on the evidence of (i) Mr Gary Muirhead a consultant to the pharmaceutical industry, whom the claimants called and who had worked for Pfizer on the development of drugs, including sildenafil, (ii) Dr Jay Saoud, whom Lilly called and who had over 25 years of experience in clinical development, pharmacokinetics and statistical analysis in industry, academia and contract research organisations and (iii) Dr Gerald Brock, whom Lilly called and who is a practising clinical urologist with extensive clinical, academic and advisory experience in matters concerning treatments for ED. In his careful assessment of their evidence Birss J held, at paras 287 et seq, that it would have been entirely obvious for a skilled team given Daugan to set out to take tadalafil forward into a routine pre clinical and clinical trial programme as an oral treatment for ED at the priority date. The Phase I studies would produce results which would lead the skilled team to design and undertake the Phase IIa go no go study of a single 50mg dose of tadalafil in a relatively small group of patients. They would embark on that study with a reasonable expectation that the drug would be safe, tolerable and effective at that dose. Turning to the Phase IIb studies, Birss J concluded that the first dose ranging study would be of on demand dosing using 25, 50 and 100mg of the drug. He did not accept Mr Muirheads suggestion that a 5mg dose would be included in this first study. The skilled teams expectations would be that they would hope that the study would show a dose response relationship. But the results would not be what the team expected because they would show no difference in efficacy between the three doses, demonstrating an apparent therapeutic plateau. The critical dispute at this stage was whether in the light of those findings it was an obvious thing for the skilled team to conduct a further dose ranging study or studies to investigate lower doses and determine the minimum effective dose. Birss J did not accept the claimants case that it was. He held that the skilled team would be well aware that there was no defined standard of minimal efficacy in relation to ED and that it would require a value judgement to characterise a minimum effective dose. He concluded (para 327) that it was not inevitable that the skilled team would investigate lower doses after discovering the therapeutic plateau because they had found a dose (at least 25mg) which was safe, tolerable and effective and thus had secured the prime objective of the programme; but he held that it was very likely that they would. A skilled team would be familiar with multiple dose ranging studies as necessary as a generality. If the skilled team carried out a further dose ranging study they would have included 5mg and 10mg doses. They would not have any expectation that the minimum effective dose was substantially lower than 25mg or that they would find a dose below 25mg at which there was a clinically relevant effect with reduced side effects. The discovery that at a 5mg dose tadalafil was efficacious and had reduced side effects would surprise the team. The investigation of chronic daily dosing in addition to on demand dosing would follow the similar pattern but the initial study would probably include a 10mg dose. The teams expectation would be the same. Having conducted this step by step analysis, Birss J then looked at the programme as a whole and assessed obviousness overall. He concluded that, given Daugan, a 25mg/day dose of tadalafil was obvious as a treatment for ED but that a 5mg daily dose was not. In para 343 he summarised his reasons in these terms: i) In terms of motives to find a solution to the problem the patent addresses, the skilled team would be highly motivated by Daugan and the success of sildenafil to investigate tadalafil as a treatment for [ED]. ii) As for possible avenues of research, overall tadalafil would be obvious to investigate. In terms of doses however, 5mg/day is a significantly lower dose than the 50mg dose exemplified in the Daugan prior art and the marketed doses of sildenafil. It is also significantly lower than the 50mg dose which would be chosen for the first test of efficacy at Phase IIa. It would not be chosen in the routine first dose ranging study. The team would not have anticipated daily dosing as something to be studied from the outset but once the half life was discovered it is likely that daily dosing would be included. In terms of effort, overall the programme would involve iii) very substantial resources of time, money and people but it would be pursued. However, by the time the idea of investigating lower doses presents itself, the team would have established safe, tolerable and effective doses of tadalafil at 25mg on demand and 10mg for daily dosing. At that stage the impetus to investigate lower doses would be reduced but not eliminated. iv) Expectations of success can be considered overall and in relation to particular studies. Overall the team would embark on the project with a reasonable expectation of success in establishing tadalafil as a safe, tolerable and effective treatment for [ED]. However, the claimants failed to prove that efficacy at 5mg tadalafil was predictable or worth considering by the skilled team based on the properties of tadalafil as compared to sildenafil. The team would know that in principle there would be a minimum effective dose for tadalafil but would also know that its definition depends on a value judgment made by the team. In relation to the dose ranging studies, the team would conduct them hoping for a dose response. Following discovery of a plateau starting at 25mg or 10mg, there would very likely be a subsequent dose ranging study which included 5mg. The team would include a 5mg dose in this study hoping to see a dose response but that does not mean they would have a reasonable expectation that 5mg would produce a clinically relevant effect at all nor one with minimal side effects. Assuming a 5mg/day dose of tadalafil was tested, it would not be tested with a reasonable expectation of success. v) Considering unexpected or surprising results, the position is as follows. The path to a 5mg dose requires the discovery of new information such as the half life and the IC50 vs PDE6. That information would inevitably be found in any clinical programme. The path includes an important result which is unexpected even if it is not actually surprising, ie the plateau in the dose response from 10 to 100mg. There is also a surprising result: the existence of a useful effect with reduced side effects. The claimed 5mg/day dose has that property. vi) A number of value judgments would be required of a skilled team in a programme which reaches the claimed invention. One is to define the level of clinical effect to be regarded as relevant. Another is to embark on investigating daily dosing. An important value judgment is what to do when an unexpected plateau in the dose response has been identified as the same time as a marketable dose. He therefore concluded that claim 7 of the 181 patent involves an inventive step. The Court of Appeal reached a contrary conclusion and allowed the appeal on the ground that claims 1, 7 and 10 were invalid for lack of inventive step. In the leading judgment, Kitchin LJ addressed the claimants case that, in the light of Daugan, it was obvious to take tadalafil forward into routine pre clinical and clinical trial programme to assess its use as an oral treatment for sexual dysfunction. The claimants argued that nearly all dosage regimes in a Swiss form claim will be obvious: Actavis UK Ltd v Merck & Co Inc [2008] EWCA Civ 444; [2009] 1 WLR 1186, Jacob LJ at para 32. A 5mg daily dose would be used in patients in the course of that programme and would reveal that it was a safe, tolerable and effective treatment. In other words, it would reveal the invention. The alleged invention was merely the product of standard practice in a routine clinical trials process and the purpose of Phase IIb studies was to provide an understanding of the dose response relationship. Lillys answer was that at the start of the programme it was not obvious to try a 5mg dose because the skilled team would have no idea if it would be a safe, tolerable and effective treatment. The skilled team had to make a series of value judgements in order to arrive at the invention and would have had no expectation that the 5mg dose would be efficacious or that it would have reduced side effects. Kitchin LJ stated, at paras 131 135, that it was not the law that investigations into appropriate dosage regimes cannot yield patentable inventions and that Jacob LJ had not suggested otherwise in Actavis v Merck. The statutory task of the court was to have regard to all the relevant circumstances in order to answer the single question: was it obvious to the skilled but unimaginative addressee in light of the prior art and the common general knowledge to make a product or carry out a process falling within the claim? He affirmed that the judge would have had this well in mind. Accordingly, where no question of principle was involved, an appellate court had to be very cautious in differing from a judges evaluation. Nonetheless, he held that claim 1 was invalid for obviousness. It had no purpose limitation and encompassed a unit dosage composition comprising 1mg to 5mg of tadalafil which was suitable for administration up to a maximum total dose of 5mg per day but which was intended and was in fact used for administration of a higher per day total dose. On the judges findings, given Daugan, it was obvious to develop such a composition and the judge should have so found. I do not understand Lilly to challenge this finding in this appeal. Instead, the battleground relates to claims 7 and 10. In relation to those claims, the debate in the Court of Appeal appears to have focussed on the notional skilled teams approach to the Phase II trial. Kitchin LJ recorded Lillys case that, having carried out the initial Phase IIb study, which would have found the 25mg dose on demand to be safe and efficacious, the skilled team needed to go no further but if they chose to do so, would test a 10mg dose before deciding whether to go further and test a 5mg dose. The skilled team also had to decide whether to test daily dosing. There were therefore various possible avenues of research, involving value judgements and it was not inevitable that the skilled team would investigate lower doses. Kitchin LJ accepted that it was relevant to consider whether the skilled team, starting with Daugan, would be faced with various possible avenues of research. He recognized that the skilled team would be faced with choices when embarking on Phase II studies, including how to proceed with the dose ranging studies and whether to study on demand or daily dosing. But in relation to the latter decision, he pointed out that the judge had found that the Phase I trial would have revealed the half life of tadalafil and that the team would have decided to pursue both on demand and daily dosing in Phase II. In relation to the former decision, Kitchin LJ pointed out that the judge had found that the team would very likely investigate the 5mg dose of tadalafil after the first or, in the case of on demand dosing, a possible second dose ranging study. This finding was supported by the purpose of dose ranging studies, which was to ascertain the dose response relationship of the drug, and the fact that, so long as the study showed the IC50 remaining on the upper therapeutic plateau, that dose response relationship had not been found. Further, it was consistent with the evidence of the expert clinical pharmacologists, Mr Muirhead and Dr Saoud, and Kitchin LJ quoted the latters evidence on cross examination that, having discovered the therapeutic plateau, it was a no brainer to test a lower dose and that the skilled team would have done so. Kitchin LJ therefore rejected the idea that the skilled team would have been faced with a series of parallel avenues of studies and would have no expectation that any one of them would prove fruitful. Further, the team would have addressed both on demand and daily dosing and each avenue of inquiry would be very likely to lead the team to the invention. Kitchin LJ held that the judge should not have attached weight to the fact that a 5mg dose was considerably less than the 50mg dose which would have been used in Phase IIa, because the Phase IIb tests were carried out for a different purpose, that is to ascertain the dose response relationship. Nor should the judge have attached weight to the conclusion that a 5mg dose would not be tested in the first Phase IIb study because he had also found that the team would very likely investigate it afterwards: the impetus to investigate lower doses would have remained because the purpose of the Phase IIb study had not been fulfilled. The finding that the skilled team could not predict at the outset that a 5mg dose would be safe and efficacious was of little weight because at least one of the purposes of the Phase IIb studies is to understand better the dose response relationship of the drug and so identify the appropriate dose for the target population. Similarly the judge was wrong to attach weight to the conclusion that the team would not have an expectation of success when testing the 5mg dose: the judge had held that the team were very likely to test the 5mg dose as part of the dose ranging study but it was hard to see why they would have done so unless they had a reasonable expectation that it would assist them better to understand the dose response relationship. Kitchin LJ also held that little weight could be attached to the fact that it was surprising (a) that there was a therapeutic plateau from 10mg to 100mg, and (b) that a 5mg per day dose was efficacious and had reduced side effects. While the discovery of a surprising or unexpected technical effect may be suggestive of invention, in this case the discovery of the therapeutic plateau and the efficacy of the 5mg dose was the product of a routine trial programme and the unexpected reduced side effects of the 5mg dose was a bonus effect which did not cause the 5mg dose to cease to be obvious. He also concluded that the value judgments to which the judge referred in para 343(vi) of his judgment (para 38 above) provided no effective support for the judges conclusion in the face of his critical finding that it was very likely that the team would test the 5mg dose. Kitchin LJ summarised his conclusions in this way, at para 152: Drawing the threads together, I am satisfied that Mr Speck has made good his criticisms of the judges reasoning. The judge has lost sight of the fact that, on his own findings, the claimed invention lies at the end of the familiar path through the routine pre clinical and clinical trials process. The skilled but non inventive team would embark on that process with a reasonable expectation of success and in the course of it they would carry out Phase IIb dose ranging studies with the aim of finding out, among other things, the dose response relationship. It is very likely that in so doing they would test a dose of 5mg tadalafil per day and, if they did so, they would find that it is safe and efficacious. At that point they would have arrived at the claimed invention. In my judgment claims 7 and 10 are therefore invalid. Floyd and Lewison LJJ issued concurring judgments to which I will refer in the discussion below. Mr Waughs challenge to the judgment of the Court of Appeal can be boiled down to one central submission: the statutory question in section 3 of the 1977 Act is whether the claimed invention was obvious at the priority date. This straightforward approach to the assessment of obviousness, he submitted, required the court to look at the invention set out in the relevant claim or claims of the patent and ask itself whether that asserted invention was obvious to the notional skilled but uninventive team at the priority date having regard to the state of the art at that date. Therefore, the question which the Court of Appeal should have asked was whether at the priority date, before the skilled team embarked on its investigation, it was obvious in the light of Daugan, and without knowledge of the alleged invention, that a 5mg per day dose of tadalafil would be a safe and effective treatment, with minimal side effects, for sexual dysfunction. The Court of Appeal erred by not adopting that approach and instead by holding that the invention was obvious, because the claimed invention was the product of a familiar and routine path of pre clinical and clinical research, in which each step was likely to follow the outcome of the prior step. This erroneous approach failed to address the question whether it was obvious to try that low dose because there was a reasonable expectation of success at the outset. It was also in conflict with the approach of the EPO which adopted a problem and solution analysis. Costly and time consuming research which led to an unexpected technical effect will be patentable, whether such work is routine or not. The Court of Appeal, which accepted the trial judges findings of fact, was not entitled to overrule his analysis. Mr Speck sought to answer this case by making seven propositions. They were, first, that patent law is concerned with technical information which is of use industrially. A technical contribution is the difference between what a skilled person is enabled to do (a) in light of the state of the art and (b) with the teaching of the patent. Secondly, there was a symmetry or balance in the patent system which required an enabling disclosure, in other words a technical contribution, as the basis of a patent. Thirdly, the fundamental principle underlying the grant of a monopoly through a patent is that the monopoly must be commensurate with that technical contribution. The monopoly cannot cover that which the skilled person is already able to do or make, including obvious modifications or additions to the state of the article Those he described as the skilled persons repertoire. Fourthly, if all that a skilled person discovers is more information about products or processes that are already within that notional persons repertoire, there is no basis for the grant of a patent because that information does not add to the products or processes which the skilled person can make or do. Fifthly, the principle advanced by Lilly, that it is not permissible to take into account information not known at the priority date, is contrary to the basic scheme of patent law. Sixthly, if that principle were correct, it would apply whether or not the research revealed an unexpected benefit. Seventhly, patent law excludes from consideration information which is routinely ascertained using routine methods as part of the state of the art and using them for a routine purpose towards a routine end: in this case the implementation of the Daugan patent. Discussion i) I am not persuaded that the law adopts the extreme position of either submission. Lillys approach would require the court to disregard the work which a skilled person would carry out after the priority date in order to implement the teaching of the Daugan patent. That approach, as Mr Speck submitted, is contrary to the basic scheme of patent law. Actaviss approach in its reliance on the skilled persons repertoire, in other words on what the skilled person could already do, cannot be a general test for obviousness as it would render irrelevant many of the The approach to obviousness factors to which the courts have had regard in the assessment of obviousness, some of which I mention below. Since the enactment of the 1623 Statute of Monopolies, which prohibited the grant of a monopoly by the Crown but in section VI created an exception for a patent for the sole working or making of any manner of new Manufactures to the true and first Inventor and Inventors of such Manufactures , the purpose of a grant of a patent has been to encourage innovation. The monopoly granted by the patent rewards the inventor by enabling him or her to charge a higher price than would have been possible if there had been competition. The patent bargain is this: the inventor obtains a monopoly in return for disclosing the invention and dedicating it to the public for use after the monopoly has expired. Lord Mansfield stated the point with his characteristic succinctness in Liardet v Johnson (1778): The condition of giving encouragement is this: that you must specify upon record your invention in such a way as shall teach an artist, when your term is out, to make it and to make it as well by your directions: for then at the end of the term, the public shall have benefit of it. The inventor has the benefit during the term, and the public have the benefit after (quoted in Hulme, On the History of Patent Law (1902) 18 LQR 280, 285 and cited by Lord Sumption in the leading judgment in Generics (UK) Ltd (trading as Mylan) v Warner Lambert Co LLC [2018] UKSC 56; [2019] Bus LR 360, para 17). This overarching principle has survived the amendment of UK patent law after accession to the European Patent Convention. The EPO Technical Board of Appeal has confirmed the principle in, for example, its decision of 12 September 1995 in Agrevo/Triazoles (Case T 939/92) [1996] EPOR 171, para 2.4.2 in which it stated: it has for long been a generally accepted legal principle that the extent of the patent monopoly should correspond to and be justified by the technical contribution to the article [T]his general legal principle was applied in relation to the extent of the patent protection that was justified by reference to the requirements of articles 83 and 84 EPC, the same legal principle also governs the decision that is required to be made under article 56 EPC, for everything falling within a valid claim has to be inventive. See also EXXON/Fuel Oils (Case T 409/91) [1994] OJ EPO 653 at paras 3.3 and 3.4. Articles 83 and 84 of the EPC are concerned with the sufficiency of the disclosure of the invention in the patent application and the support which the description gives to the claims in that application. Section 14(3) and (5) of the 1977 Act correspond to those requirements. Article 56 of the EPO is concerned with the inventive step and provides: An invention shall be considered as involving an inventive step if, having regard to the state of the art, it is not obvious to a person skilled in the article Section 3 of the 1977 Act, which I set out below, corresponds to this requirement. As is well known, section 130(7) of the 1977 Act declares that specified sections of the 1977 Act are so framed as to have, as nearly as practicable, the same effects in the United Kingdom as the corresponding provisions of the European Patent Convention, the Community Patent Convention and the Patent Co operation Treaty have in the territories to which those Conventions apply. Those sections include the sections which govern (a) the principal conditions of validity, that is to say novelty (section 2), inventive step (section 3), capability of industrial application (section 4) sufficiency of disclosure and the support of the claim by the description in the patent application (section 14(3) and (5)), and (b) the power of the court to revoke a patent on application, on grounds which include that the invention is not a patentable invention (which is a reference via section 1 to inter alia sections 2, 3 and 4) and inadequate disclosure in the patent application to enable the skilled person to perform the invention (section 72(1)). It is also well established in the jurisprudence of courts in the United Kingdom that our courts, although not bound to do so, should normally follow the settled jurisprudence of the EPO (especially decisions of its Enlarged Board of Appeal) on the interpretation of the European Patent Convention in the interests of uniformity, especially when the question is one of principle: Merrell Dow Pharmaceuticals Inc v H N Norton & Co Ltd [1996] RPC 76, 82 per Lord Hoffmann; Gales Application [1991] RPC 305, 322 per Nicholls LJ; Actavis UK Ltd v Merck & Co Inc [2009] 1 WLR 1186, paras 45 48 per Jacob LJ; Conor Medsystems Inc v Angiotech Pharmaceuticals Inc [2008] UKHL 49; [2008] 4 All ER 621, para 3 per Lord Hoffmann; Generics (UK) Ltd v H Lundbeck A/S [2009] UKHL 12; [2009] 2 All ER 955, para 35 per Lord Walker of Gestingthorpe; Dr Reddys Laboratories (UK) Ltd v Eli Lilly and Co Ltd [2010] RPC 9, para 102 per Lord Neuberger of Abbotsbury MR; Eli Lilly and Co v Human Genome Sciences Inc [2011] UKSC 51; [2012] 1 All ER 1154; [2012] RPC 6, paras 83 87 per Lord Neuberger. The general principle that the extent of the patent monopoly should correspond to and be justified by the actual technical contribution to the art is thus part of the jurisprudence of both the EPO and the UK courts and, as Lord Sumption observed in Generics v Warner Lambert (above), para 17, the principal conditions of validity, novelty, inventive step, industrial application and sufficiency are all, in one way or another, directed to satisfying the principle thus expressed. There is therefore a balance or symmetry in patent law, as Mr Speck submitted. This case is concerned with the condition which requires there to be an inventive step. Section 3 of the 1977 Act provides: An invention shall be taken to involve an inventive step if it is not obvious to a person skilled in the art, having regard to any matter which forms part of the state of the art by virtue only of section 2(2) above (and disregarding section 2(3) above). Section 2(2) provides: The state of the art in the case of an invention shall be taken to comprise all matter (whether a product, a process, information about either, or anything else) which has at any time before the priority date of that invention been made available to the public (whether in the United Kingdom or elsewhere) by written or oral description, by use or in any other way. These statutory provisions mandate the court to assess whether an invention is obvious by having regard to the state of the art at the priority date of the invention. If the invention is not obvious to the skilled person at that date, section 3 deems the invention to involve an inventive step. The notional skilled person, while having the compendious knowledge of the state of the art which section 2(2) requires, has no inventive capacity. But that does not mean that the skilled person has no skill to take forward in an uninventive way the teaching of the prior article In this case the notional skilled team comprises the clinical pharmacologist and the clinician specialising in urology (para 17 above). That notional team is treated as exercising the professional skills of its members in responding to the teaching of the Daugan patent. It follows that uninventive steps which the skilled team would take after the priority date to implement the Daugan patent are not excluded from consideration in assessing the obviousness of the alleged invention at the priority date. In addressing the statutory question of obviousness in section 3 of the 1977 Act it is common for English courts to adopt the so called Windsurfing/Pozzoli structure which asks these questions: Identify the notional person skilled in the art; Identify the relevant common general knowledge (1) (a) (b) of that person; Identify the inventive concept of the claim in question (2) or if that cannot readily be done, construe it; (3) Identify what, if any, differences exist between the matter cited as forming part of the state of the art and the inventive concept of the claim or the claim as construed; (4) Viewed without any knowledge of the alleged invention as claimed, do those differences constitute steps which would have been obvious to the person skilled in the art or do they require any degree of invention? (Pozzoli SPA v BDMO SA [2007] EWCA Civ 588; [2007] FSR 37, para 23 per Jacob LJ). The fourth question is the statutory question and the first three questions or tasks, the second and third of which involve knowledge and consideration of the invention, are a means of disciplining the courts approach to that fourth question: DSM NVs Patent [2001] RPC 35, para 55 per Neuberger J; Actavis UK Ltd v Novartis AG [2010] EWCA Civ 82; [2010] FSR 18, para 21 per Jacob LJ. In this case the trial judge adopted the Pozzoli approach. There is no dispute about the first question. Mr Waugh emphasises the focus of the second question on the wording of the claim, as I shall discuss below. An alternative approach which the EPO often adopts, is the so called problem and solution approach. The EPO has described the approach in these terms: the Boards of Appeal consistently decide the issue of obviousness on the basis of an objective assessment of the technical results achieved by the claimed subject matter, compared with the results obtained according to the state of the article It is then assumed that the inventor did in fact seek to achieve these results and, therefore, these results are taken to be the basis for defining the technical problem (or, in other words, the objective) of the claimed invention. The next step is then to decide whether the state of the art suggested the claimed solution of this technical problem in the way proposed by the patent in suit (Agrevo/Triazoles (above) para 2.4.3) The test is helpfully summarised in the EPOs Guidelines for Examination in the EPO (November 2017) (Part G Chapter VII) para 5: Problem and solution approach In order to assess inventive step in an objective and predictable manner, the so called problem and solution approach should be applied. Thus deviation from this approach should be exceptional. In the problem and solution approach there are three main stages: (i) (ii) establishing the objective technical problem to be solved, and (iii) considering whether or not the claimed invention, starting from the closest prior art and the objective technical problem, would have been obvious to the skilled person. determining the closest prior art, Again, Mr Waugh urges the application of this approach because of the emphasis which, he submits, it places on the terms of the claim. While both approaches focus on the inventive concept put forward in the claims, neither approach should be applied in a mechanistic way. Both are glosses on the text of section 3 of the 1977 Act and article 56 of the EPC and neither require a literalist approach to the wording of the claim in identifying the inventive concept. In Conor Medsystems Inc v Angiotech Pharmaceuticals Inc [2008] UKHL 49; [2008] RPC 28; [2008] 4 All ER 621, at para 42 Lord Hoffmann endorsed the fact specific approach which Kitchin J set out in Generics (UK) Ltd v H Lundbeck [2007] RPC 32, para 72 where he stated: The question of obviousness must be considered on the facts of each case. The court must consider the weight to be attached to any particular factor in the light of all the relevant circumstances. These may include such matters as the motive to find a solution to the problem the patent addresses, the number and extent of the possible avenues of research, the effort involved in pursuing them and the expectation of success. Kitchin Js list of factors is illustrative and not exhaustive. Another factor which needs to be considered in the present case is the routineness of the research. Much of the interest and controversy which the Court of Appeals judgment has generated relates to how people have understood or misunderstood the significance which that court has attached to the routine nature of the pre clinical and clinical research which I have described. Again, I discuss this below (paras 102 104). Factors which are relevant considerations in the present case include the following. First, it is relevant to consider whether at the priority date something was obvious to try, in other words whether it was obvious to undertake a specific piece of research which had a reasonable or fair prospect of success: Conor v Angiotech (above) para 42 per Lord Hoffmann; MedImmune Ltd v Novartis Pharmaceuticals UK Ltd [2012] EWCA Civ 1234; [2013] RPC 27, paras 90 and 91 per Kitchin LJ. In many cases the consideration that there is a likelihood of success which is sufficient to warrant an actual trial is an important pointer to obviousness. But as Kitchin LJ said in Novartis AG v Generics (UK) Ltd [2012] EWCA Civ 1623, para 55, there is no requirement that it is manifest that a test ought to work; that would impose a straightjacket which would preclude a finding of obviousness in a case where the results of an entirely routine test are unpredictable. As Birss J observed in this case (para 276), some experiments which are undertaken without any particular expectation as to result are obvious. The relevance of the obvious to try consideration and its weight when balanced against other relevant considerations depend on the particular facts of the case. Secondly, it follows that the routine nature of the research and any established practice of following such research through to a particular point may be a relevant consideration which is weighed against the consideration that the claimed process or product was not obvious to try at the outset of a research programme. Again, it is only one of several factors to be weighed in the assessment and it has no primacy and certainly no paramount status as a consideration. Thirdly, the burden and cost of the research programme is relevant. But the weight to be attached to this factor will vary depending on the particular circumstances. This appeal concerns a pharmaceutical patent claiming as an invention a dosage regime. The cost and effort involved in bringing a drug to market through pre clinical and clinical trials are notorious. Mr Waugh referred to the extrajudicial writing of Sir Hugh Laddie, Patents whats invention got to do with it? (in Intellectual property in the new millennium: essays in honour of William R Cornish (2004), p 91 et seq), in which he stated, at p 92: In this field it is apparent that, without patents, few new products would be marketed. The expense in producing a new pharmaceutical is in the research and development stage. Normally, once it has been discovered and given regulatory approval, the manufacture of a new pharmaceutical will be comparatively cheap and its replication by competitors easy. Without the protection of patents, there will be no ability to recoup the cost of the research and development, let alone fund such activities in the future. No private company is going to enter this business unless it can see a reasonable prospect of obtaining a return on investment. The need to facilitate expensive pharmaceutical research is an important policy consideration for legislators and others involved in intellectual property law. It was a factor behind the creation of the Swiss form claim and the EPC 2000 claim as well as the supplementary protection certificate regime under Regulation (EC) 469/2009, which is available after market authorisation to give the patent owner the protection of the patent for up to 15 years, and the data exclusivity regime which Directive 2001/83/EC (article 10) and Regulation (EC) 726/2004 (article 14), which may confer ten years of exclusive marketing protection against competition from generic manufacturers. But the effort involved in research is only one of several factors which may be relevant to the answer to the statutory question of obviousness. Fourthly, the necessity for and the nature of the value judgments which the skilled team would have in the course of a testing programme are relevant considerations as both the trial judge and the Court of Appeal held. Fifthly, the existence of alternative or multiple paths of research will often be an indicator that the invention contained in the claim or claims was not obvious. If the notional skilled person is faced with only one avenue of research, a one way street, it is more likely that the result of his or her research is obvious than if he or she were faced with a multiplicity of different avenues. But it is necessary to bear in mind the possibility that more than one avenue of research may be obvious. In Brugger v Medic Aid Ltd (No 2) [1996] RPC 635, 661, Laddie J stated: [I]f a particular route is an obvious one to take or try, it is not rendered any less obvious from a technical point of view merely because there are a number, and perhaps a large number, of other obvious routes as well. I agree. As a result, the need to make value judgments on how to proceed in the course of a research programme is not necessarily a pointer against obviousness. Sixthly, the motive of the skilled person is a relevant consideration. The notional skilled person is not assumed to undertake technical trials for the sake of doing so but rather because he or she has some end in mind. It is not sufficient that a skilled person could undertake a particular trial; one may wish to ask whether in the circumstances he or she would be motivated to do so. The absence of a motive to take the allegedly inventive step makes an argument of obviousness more difficult. In Agrevo/Triazoles (above), para 2.4.2, the Technical Board of Appeal of the EPO, having referred to the principle that the extent of the patent monopoly should correspond to and be justified by the technical contribution to the art (see para 54 above) made the point in these terms: Moreover, in the Boards judgment, it follows from this same legal principle that the answer to the question what a skilled person would have done in the light of the state of the art depends in large measure on the technical result he had set out to achieve. In other words, the notional person skilled in the art is not to be assumed to seek to perform a particular act without some concrete technical reason: he must, rather, be assumed to act not out of idle curiosity but with some specific technical purpose in mind. This forms the basis of the EPOs problem and solution approach to obviousness which I have quoted in para 61 above. Seventhly, the fact that the results of research which the inventor actually carried out are unexpected or surprising is a relevant consideration as it may point to an inventive step, at least in so far as it suggests that a test was not obvious to try or otherwise the absence of a known target of the research which would make it less likely that the skilled person would conduct a test. Eighthly, the courts have repeatedly emphasised that one must not use hindsight, which includes knowledge of the invention, in addressing the statutory question of obviousness. That is expressly stated in the fourth of the Windsurfing/Pozzoli questions. Where the pattern of the research programme which the notional skilled person would undertake can clearly be foreseen, it may be legitimate to take a step by step analysis. In Gedeon Richter plc v Bayer Schering Pharma AG [2011] EWHC 583 (Pat); [2011] Bus LR D153, Floyd J stated (para 114): I think that the guiding principle must be that one has to look at each putative step which the skilled person is required to take and decide whether it was obvious. Even then one has to step back and ask an overall question as to whether the step by step analysis, performed after the event, may not in fact prove to be unrealistic or driven by hindsight. The obvious danger of a step by step analysis is that the combination of steps by which the inventor arrived at his invention is ascertained by hindsight knowledge of a successful invention. Lord Diplock warned against this in Technograph Printed Circuits Ltd v Mills & Rockley (Electronics) Ltd [1972] RPC 346, 362, a warning which judges have reiterated in later cases. I am not persuaded by Mr Specks suggestion that Technograph is concerned only with a case in which a step by step approach was constructed by counsel on cross examination in the absence of evidence of routine steps of research. The case contains a wider warning against the use of hindsight and has been interpreted as doing so. I agree with Birss Js analysis in Hospira UK Ltd v Genentech Inc [2014] EWHC 3857 (Pat), para 240, where he stated: The particular point made in Technograph was that it was wrong to find an invention was obvious if it was only arrived at after a series of steps which involve the cumulative application of hindsight. In some circumstances success at each step in a chain is a necessary predicate for the next one and it is only the hindsight knowledge of the invention as the target which could motivate a skilled person to take each step without knowledge about the next one. In a situation like that, Technograph is important. But the Technograph warning has no bearing in a case in which the steps which the notional skilled person would take can readily be ascertained without the taint of hindsight. Ninthly, it is necessary to consider whether a feature of a claimed invention is an added benefit in a context in which the claimed innovation is obvious for another purpose. In Hallen & Co v Brabantia (UK) Ltd [1991] RPC 195 the Court of Appeal was concerned with an alleged selection patent for a self pulling corkscrew which had a helix coated with polytetrafluoroethylene (PTFE) which was a known friction reducing material. At the priority date PTFE had been used for several years to coat the helix of a twin lever type corkscrew to aid its penetration into the cork. The PTFE coated helix had this effect also on the self pulling corkscrew, a fact which was obvious at the priority date. The PTFE coat when applied to a self pulling corkscrew also had a non obvious benefit of making a striking improvement in the extraction of the cork. The trial judge, Aldous J, held that the patent was invalid on the ground of obviousness because it was obvious to select the features of the claim for the first purpose notwithstanding that it was not obvious for the other purpose: [1989] RPC 307, 326 327. The Court of Appeal agreed with the judge, holding (pp 215 216) that it was self evident that a PTFE coating would improve the penetration by any corkscrew and that the golden bonus or added benefit of the dramatic improvement in extraction of the cork would not found a valid patent as the claimed innovation was obvious for another purpose. Mr Waugh does not challenge this principle but submits that the 181 patent does not involve such an added benefit. ii) Dosage patents The courts are enjoined to have regard to all the relevant facts of particular case in assessing whether an alleged invention is obvious. One of those facts is the nature of the invention. A tenth consideration, therefore, is that here we are concerned with a dosage patent with a Swiss form claim and an EPC 2000 claim. The possibility that a dosage patent with such claims may be valid has been recognized both by the EPO and in the United Kingdom courts. In decision Abbott Respiratory LLC/Dosage regime (G 0002/08) EP:BA:2010:G000208.20100219 the Enlarged Board of Appeal of the EPO decided that, when it was already known to use a medicament to treat a particular illness, it was possible to obtain a patent for a new and inventive dosage regime for that medicament to treat that illness. In so finding the Enlarged Board decided (a) that the dosage patent did not breach the prohibition against the patenting of medical treatment in article 53(c) of the EPC and (b) that a novel dosage regime for the treatment of the same illness could be a specific use under article 54(5) of the European Patent Convention. Recognizing the risks of undue prolongation of patent rights, the Enlarged Board confirmed that the whole body of jurisprudence relating to the assessment of novelty and inventive step generally also applies. In relation to the assessment of obviousness this included consideration whether the dosage regime caused a new technical effect (para 6.3). The EPO has therefore not sanctioned any relaxation of the tests of obviousness in relation to dosage patents. In the United Kingdom the Court of Appeal addressed the question of dosage patents in Actavis UK Ltd v Merck & Co Inc [2009] 1 WLR 1186. The case concerned an application to revoke a patent which included a Swiss form claim for the use of a specified dose of a known and already patented substance, finasteride, in the treatment of androgenic alopecia. The Court of Appeal reversed the trial judges revocation of the patent, holding (para 29) that there was no policy reason why a novel non obvious dosage regime, which was the product of expensive and unpredictable research, should not be rewarded with a patent of a Swiss form claim. Jacob LJ, who delivered the judgment of the court, added this significant qualification (para 32): So holding is far from saying that in general just specifying a new dosage regime in a Swiss form claim can give rise to a valid patent. On the contrary nearly always such dosage regimes will be obvious it is standard practice to investigate appropriate dosage regimes. Only in an unusual case such as the present (where, see below, treatment for the condition with the substance had ceased to be worth investigating with any dosage regime) could specifying a dosage regime as part of the therapeutic use confer validity on an otherwise invalid claim. The reason for this qualification is no mystery. The target of the skilled persons research is in large measure pre determined. As Jacob LJ stated (para 109), the skilled person would aim for a dose as low as possible consistent with effectiveness. That would normally be the appropriate dosage regime. I recognize and respect Birss Js finding of fact that there was no defined standard of minimal efficacy in relation to ED and that this would require the skilled team to make a value judgment (para 36 above). But he also found that it was common general knowledge that regulators were often interested in and could require evidence of the minimum effective dose (para 83 of his judgment) and that the skilled team would be familiar with multiple dose ranging studies as necessary as a generality (para 327 of his judgment). In my view, the inventiveness of the dosage regime falls to be assessed in that context. iii) The role of the appellate court Finally, before addressing directly the question whether the Court of Appeal was entitled to reverse Birss Js finding of non obviousness, I remind myself of the limits of an appellate courts power to overturn the evaluation of a trial judge in this field. Where inferences from findings of primary fact involve an evaluation of numerous factors, the appropriateness of an intervention by an appellate court will depend on variables including the nature of the evaluation, the standing and experience of the fact finding judge or tribunal, and the extent to which the judge or tribunal had to assess oral evidence: South Cone Inc v Bessant, In re Reef Trade Mark [2002] EWCA Civ 763; [2003] RPC 5, paras 25 28 per Robert Walker LJ. An experienced patent judge faced with a challenge to a patent on the ground of obviousness, and who has heard oral evidence including cross examination, carries out an evaluation of all the relevant factors, none of which alone is decisive but each of which must be weighed in the balance in reaching a conclusion. In Biogen Inc v Medeva plc [1997] RPC 1, 45, Lord Hoffmann emphasised the need for appellate caution in reversing the judges evaluation of the facts where the application of a legal standard involved no question of principle but was simply a matter of degree. He held that it would be wrong to interfere with the judges assessment if no question of principle were involved. What is a question of principle in this context? An error of principle is not confined to an error as to the law but extends to certain types of error in the application of a legal standard to the facts in an evaluation of those facts. What is the nature of such an evaluative error? In this case we are not concerned with any challenge to the trial judges conclusions of primary fact but with the correctness of the judges evaluation of the facts which he has found, in which he weighs a number of different factors against each other. This evaluative process is often a matter of degree upon which different judges can legitimately differ and an appellate court ought not to interfere unless it is satisfied that the judges conclusion is outside the bounds within which reasonable disagreement is possible: Assicurazioni Generali SpA v Arab Insurance Group (Practice Note) [2002] EWCA Civ 1642; [2003] 1 WLR 577, paras 14 17 per Clarke LJ, a statement which the House of Lords approved in Datec Electronic Holdings Ltd v United Parcels Service Ltd [2007] UKHL 23; [2007] 1 WLR 1325, para 46 per Lord Mance. Thus, in the absence of a legal error by the trial judge, which might be asking the wrong question, failing to take account of relevant matters, or taking into account irrelevant matters, the Court of Appeal would be justified in differing from a trial judges assessment of obviousness if the appellate court were to reach the view that the judges conclusion was outside the bounds within which reasonable disagreement is possible. It must be satisfied that the trial judge was wrong: see, by way of analogy, In re B (A Child) (Care Proceedings Threshold Criteria) [2013] UKSC 33; [2013] 1 WLR 1911, paras 90 93 per Lord Neuberger, para 203 per Lady Hale. iv) Were claims 7 and 10 of the 181 patent obvious? The patent bargain which Lord Mansfield described and the EPO has used as an overarching principle (paras 53 and 54 above) underpins and creates a symmetry between the various provisions of the 1977 Act which govern the validity of a patent (para 55 above). Bearing in mind that symmetry, the starting point in the assessment of obviousness in this case is the Daugan patent. Its validity is not contested. Indeed, Lillys case assumes its validity. But to be valid it must both disclose and enable. It must disclose the invention, that is that tadalafil may be used as a PDE5 inhibitor for the treatment of ED, to the notional skilled person who uses common general knowledge in construing the patent. It must also enable the notional skilled person to perform the invention using the disclosed matter, common general knowledge, and that persons uninventive skill in making trial and error experiments. In Synthon BV v SmithKline Beecham plc [2005] UKHL 59; [2006] 1 All ER 685, the House of Lords addressed and distinguished the concepts of disclosure and enablement in the context of a challenge to the validity of a patent on the ground of lack of novelty because of anticipation by a prior patent application under section 2(3). But their Lordships discussion of the need for both disclosure and enablement is equally relevant to the validity of a patent under sections 14(3) and 72(1)(c) as Lord Hoffmann stated at para 27 and Lord Walker at paras 63 and 64. One begins therefore with the assumption that the Daugan patent has enabled the skilled person to perform the invention of the use of tadalafil for the treatment of ED. The notional skilled persons task is to implement the ex hypothesi valid patent. That involves finding the appropriate dosage regime having regard to safety, tolerability and effectiveness. The procedures to achieve that end are familiar and routine. In my view it is important to see the Court of Appeals discussion of familiar routine research in this case in this context (paras 102 104 below). In assessing whether the Court of Appeal was entitled to reject the trial judges evaluation it is important to recognize that the Court of Appeal did not reverse any of Birss Js findings of primary fact. Both courts accepted that it was obvious for the skilled team to pursue the pre clinical and clinical research in order to implement Daugan. Motive was clearly present. It was not in dispute that the target of that research was to identify the appropriate dosage regime for tadalafil in the treatment of ED. It was accepted that the skilled team were looking for a dose response relationship and that they would know that, as a generality, multiple dose ranging studies were necessary. There was no challenge to the finding that the discovery of a therapeutic plateau between 25mg and 100mg doses would have surprised the skilled team. Birss J, without relying on hindsight, held that it was very likely that the skilled team would research further by testing doses of 10mg and 5mg. That finding was amply justified as both Mr Muirhead and Lillys expert, Dr Saoud, agreed that the skilled team would not stop the dose ranging studies when they had revealed that therapeutic plateau. Indeed, as Kitchin LJ recorded, Dr Saoud accepted that the decision to test the lower doses, including the 5mg dose, was a no brainer. In short, the skilled team, having embarked on the Phase IIb tests, would have continued their search for a dose response relationship, because the purpose of the Phase IIb study had not been fulfilled. The Court of Appeal was correct to attach significance to this central finding because it undermined several of the factors which Birss J placed in the balance as pointing to non obviousness in para 343 of his judgment. The fact that a 5mg dose was so much lower than the 50mg dose, which was recommended for sildenafil, mentioned in the Daugan patent for tadalafil, and used in the notional skilled teams Phase IIa tests, is neither here nor there. The lack of an expectation of efficacy at a 5mg dose is a factor of little weight if, as was found, the skilled team would be very likely to study such a dose in the search for a dose response relationship. For the same reason the fact that the effectiveness of tadalafil at a dose of 5mg was a surprise can carry little, if any, weight. Similarly, the finding that there was an important value judgment to be made when the therapeutic plateau was identified at the same time as a marketable dose can bear little weight when there is a finding, which is not tainted by hindsight, that the skilled team would continue their tests. I consider that the Court of Appeal was entitled to treat the judges failure to appreciate the logical consequences of the finding that it was very likely that the skilled team would continue the testing as an error of principle which allowed an appellate court to carry out its own evaluation. Lilly also argues that the daily dosing regime by which a person prescribed tadalafil can take the drug once per day rather than on demand in expectation of sexual activity was enabled by the technical effect of the drug, namely the maintenance of efficacy with minimal side effects, which was not obvious and which justified the patent. I disagree for two reasons. First, the judge correctly treated the daily dosing regime as obvious because it was the result of the inevitable discovery of the half life of tadalafil in Phase 1 of the tests. Secondly, claims 7 and 10 are not confined to the daily dosing regime but also cover on demand use of the drug subject to a maximum total dose of 5mg per day. That is fatal to this argument. The inventive concept by which a patentee seeks to justify his or her monopoly must apply to all embodiments falling within the claims which are said to have independent validity. In Brugger v Medic Aid Ltd (No 2) [1996] RPC 635, 656 Laddie J stated: It is not legitimate to define the inventive step as something narrower than the scope of the relevant claims. In particular it is not legitimate to identify a narrow sub group of embodiments falling within the claim and which have certain technical advantages and then to define the inventive step in terms which apply to that sub group but not the rest of the claim. I agree. A similar rule applies in the EPOs problem and solution approach in the requirement that the identified problem must be covered by all embodiments of the claim: see for example (Cognis IP Management GmBH / Satuarated dicarboxylic acids) (Case T 1014/07) EP:BA:2012:T101407.20120702, para 5. The daily dosing regime is not a factor which pointed against obviousness. Standing back from the step by step analysis, it is clear that the skilled team was engaged in the familiar and routine testing of a drug to establish the appropriate dosage regime for tadalafil in order to implement the teaching of the Daugan patent. That target was never in doubt. It was obvious to embark on that exercise and carry out tests in a routine way until that appropriate dose was ascertained. Those tests included the completion of the dose ranging studies which were the purpose of Phase IIb. The fact that tadalafil at the dose of 5mg, while remaining effective as a treatment of ED, also, and unexpectedly, had the additional benefit of reduced side effects was an added benefit which does not prevent the identification of 5mg as the appropriate dose from being obvious. The completion of the Phase IIb dose ranging studies led to the asserted invention. Mr Waugh also submits (a) that the Court of Appeal lost sight of the requirement that obviousness must be assessed by reference to the subject matter of the relevant claims a dose of tadalafil of between 1mg and 5mgs for oral administration up to a maximum total dose of 5mg per day for the treatment of sexual dysfunction and not a loose paraphrase of what the claim or the process by which the dose is discovered, and (b) that the Court of Appeals approach conflicts with the problem and solution approach which the EPO adopts. In support of the first submission, he refers to the statement of Kitchin LJ in MedImmune Ltd v Novartis (above), para 93, that the court must answer a relatively simple question of fact: was it obvious to the skilled but unimaginative addressee to make a product or carry out a process falling within the claim (emphasis added). He also refers to Lord Hoffmanns statement in Conor v Angiotech (above) para 19, that the patentee is entitled to have the question of obviousness determined by reference to his claim and not a vague paraphrase based upon the extent of his disclosure. I am not persuaded that, in the context of a dosage patent, it is necessary for the skilled team to identify in advance of the Phase IIb tests the specific dose which is the subject of the claim. Were it otherwise, many, if not most, dosage regimes would be patentable, whether the results of the tests were surprising or not, simply because the precise doses which ultimately are specified in the claim may not be sufficiently foreseeable. In my view, the MedImmune requirement is met if the step by step approach, without the benefit of hindsight, demonstrates that the skilled team would be very likely to pursue the tests to the point at which they would ascertain the product or process falling within the claims. Conor v Angiotech does not assist Lilly in this context. In that case the relevant claim of the patent taught the use of a stent coated with taxol in the prevention or treatment of recurrent stenosis, or restenosis, which is the constriction of an arterial channel after the insertion of a stent. Conor, which challenged the patent on the ground of obviousness and not on the ground of insufficiency, sought to argue by reference to the patents specification that the patent taught no more than that taxol was worth trying. The House of Lords rejected this challenge, directed attention to the terms of the claim, as section 125 of the 1997 Act requires, rather than the specification, and held that the specification supported that claim. The case is not authority for the proposition that, in all circumstances, obviousness must be assessed by reference to the precise wording of the claim. In relation to the second submission, that the Court of Appeals approach was in conflict with the EPOs problem and solution approach, it is important to recall Jacob LJs words in Actavis v Novartis (above) (para 26) that no one has ever suggested that the problem and solution approach is the only way to go about considering obviousness. Like the Windsurfing/Pozzoli approach, it provides a structured approach which may assist in avoiding the dangers of hindsight and may be more helpful in some cases than in others. No formula should distract the court from the statutory question: Generics (UK) Ltd v Daiichi Pharmaceutical Co Ltd [2009] EWCA Civ 646; [2009] RPC 23, para 17 per Jacob LJ. Further, there is considerable room for judgment and disagreement on the formulation of the objective technical problem to be solved. The EPOs Guidelines for Examination state (Part G Chapter VII, para 5.2): In the context of the problem and solution approach, the technical problem means the aim and task of modifying or adapting the closest prior art to provide the technical effects that the invention provides over the closest prior article The technical problem thus defined is often referred to as the objective technical problem. The Guidelines recognize the difficulty which a court or tribunal faces in formulating the objective technical problem and state: The objective technical problem derived in this way may not be what the applicant presented as the problem in his application. The latter may require reformulation, since the objective technical problem is based on objectively established facts, in particular appearing in the prior art revealed in the course of the proceedings, which may be different from the prior art of which the applicant was actually aware at the time the application was filed. In particular, the prior art cited in the search report may put the invention in an entirely different perspective from that apparent from reading the application only. It is noted that the objective technical problem must be so formulated as not to contain pointers to the technical solution, since including part of a technical solution offered by an invention in the statement of the problem must, when the state of the art is assessed in terms of that problem, necessarily result in an ex post facto view being taken of inventive activity (see T 229/85, [OJ 1987, 237]). The expression technical problem should be interpreted broadly; it does not necessarily imply that the technical solution is an improvement to the prior article Thus the problem could be simply to seek an alternative to a known device or process which provides the same or similar effects or is more cost effective. The Guidelines continue in para 5.3 to discuss the could would approach, which the EPO adopts in the problem and solution approach, stating: the point is not whether the skilled person could have arrived at the invention by adapting or modifying the closest prior art, but whether he would have done so because the prior art incited him to do so in the hope of solving the objective technical problem or in expectation of some improvement or advantage (see T 2/83) When an invention requires various steps to arrive at the complete solution of the technical problem, it should nevertheless be regarded as obvious if the technical problem to be solved leads the skilled person to the solution in a step by step manner and each individual step is obvious in the light of what has already been accomplished and of the residual task still to be solved (see T 623/97 and T 558/00). I am not persuaded that the problem and solution approach would necessarily give a different answer from that of the Court of Appeal. The closest prior art is the Daugan patent and the well established procedures of pre clinical and clinical testing. The problem posed by Daugan was the identification of an appropriate dosage regime. The EPO approach to assessing the obviousness of the claimed invention would then be to apply the could would approach, which means asking not whether the skilled person could have carried out the invention, but whether he would have done so in the hope of solving the underlying technical problem or in the expectation of some improvement or advantage: T 2/83 OJ 1984 265 (Rider/Simethicone tablet), para 7; T 1014/07 (above) paras 7 and 8. The tangible evidence which reveals why the skilled team would have been prompted to come upon the asserted invention is that (a) the team would not have completed the dose ranging studies which Phase IIb requires if it had stopped after the initial dose ranging studies which revealed the therapeutic plateau and (b) Dr Saouds evidence that it was a no brainer to go on with the tests. The judges finding that the skilled team would not have had an expectation of effectiveness at a 5mg dose does not militate against the conclusion that the team would have investigated that dose in the course of a sequence of tests which had as its purpose the solution of the underlying technical problem, which the implementation of the Daugan patent entailed. Foreign judgments The court heard submissions about the judgments of the courts of other countries which are signatories of the EPC on parallel revocation proceedings against the 181 patent. The claimants founded principally on the judgments in the Netherlands and Germany, in which in each case the national court revoked the patent on the ground of obviousness. We were also referred to judgments from other jurisdictions concerning the same patent, including Belgium and Portugal, which upheld the obviousness challenge, and Denmark, Poland and the Czech Republic, which reached a different view. I do not find the judgments particularly helpful. While consistency of approach between the domestic courts of the signatory states to the EPC on matters of principle is desirable, we are not bound by the judgments of other national courts and it is possible that national courts applying the same law may come to different conclusions for various reasons: Conor v Angiotech (above) para 3 per Lord Hoffmann; Dr Reddys Laboratories (UK) Ltd v Eli Lilly (above) paras 79 82 per Jacob LJ, para 92 per Lord Neuberger MR; Actavis UK Ltd v Eli Lilly & Co [2017] UKSC 48; [2017] RPC 21, para 52 per Lord Neuberger. The Dutch District Court of the Hague in Teva Pharmaceuticals Europe BV v ICOS Corpn (14 March 2018) held the patent to be invalid as obvious over Daugan and in its judgment referred in some detail to the decisions of Birss J and the Court of Appeal in this case. The court treated as important the objective of the Phase IIb test and Dr Saouds evidence in the English proceedings (para 4.22). The court recorded (para 4.24) that it had not used the problem and solution approach but that if it had, the outcome would probably not have been different: if one adopted ICOSs formulation of the problem as providing an improved dosing regime the skilled team, having ascertained the half life of tadalafil, would have tested doses during the dose ranging studies that enabled safe and effective daily use. The German Federal Patent Court in its judgment in Hexal AG v ICOS Corpn of 24 October 2017 analysed the problem in the problem and solution approach to be to provide dosages of tadalafil for effective treatment of sexual dysfunction and stated that the skilled team would conduct dose finding studies as part of the standard repertoire in [their] field of activity. It considered and disagreed with the judgment of Birss J on the significance of the unexpected reduction in side effects, which in German case law would be treated as a bonus effect. One can draw some support from judicial decisions in other national courts which reach the same conclusion as one has come to. But it is necessary to recognize not only that the first instance decisions in the Netherlands and Germany are the subject of appeals but also that the evidence led before different courts in parallel proceedings may differ and, even when the same evidence is led, each courts findings of fact based on that evidence may not be the same. For example, the German court attached weight to evidence (a) that sildenafil was effective at a 5mg dose and the skilled person would infer from that that tadalafil would be more effective at low dosages because of its IC50 value (a finding which supported the conclusion that the skilled team had a reasonable expectation of success in a test at that level) and (b) that it was customary to start dose ranging studies with very low initial doses and increase the doses if tolerated. Neither of those findings was made in the English proceedings. Similarly, the Dutch court in its analysis of the Phase IIb studies accepted a mathematical calculation which Tevas expert, Dr Cohen, advanced in those proceedings which was similar to the three factors point which the claimants put on cross examination to Dr Saoud in the English proceedings but which Dr Saoud accepted only as a paper exercise and Birss J rejected as the thinking of the skilled team (paras 297 303 of his judgment). It is also necessary to observe, as Mr Waugh pointed out, that there was also a judgment in favour of Lilly on obviousness in Australia, which is not a signatory of the European Patent Convention. Because of the differences in the evidence led, the manner by which it is tested, and the differing findings to which that evidence gives rise, one may derive support from the approach to the question and methods of reasoning of other national courts but should never rely uncritically on the outcome. Interventions, selection patents and improvement patents In this appeal the court had the benefit of interventions from the IP Federation, Medicines for Europe, the British Generic Manufacturers Association, and the UK BioIndustry Association. The first intervener represents the views of a wide range of UK industry on policy and practice in relation to intellectual property rights. The second and third interveners represent the interests of a range of manufacturers of generic drugs. The fourth intervener is a national trade association for innovative enterprises in the bioscience sector of the UK economy. Several interveners advocated that obviousness be approached by a fact specific assessment on a case by case basis, an approach which is consistent with my approach in this judgment, and resisted the recognition of any one factor as being of overriding importance, whether it be the cost and effort which pre clinical and clinical trials entail, or the standardised and sometimes routine nature of such tests. The UK BioIndustry Association asked for guidance on the relevance in the assessment of obviousness of (a) the reasonable expectation of success as a factor and (b) the problem and solution approach of the EPO. It expressed concern that the judgment of the Court of Appeal might support the view that empirical research in the field of bioscience would not be seen as inventive in so far as the methods of research were well established. The IP Federation similarly expressed concern about a perceived risk that people might extrapolate from statements in the Court of Appeals judgments that the result of routine investigations cannot lead to a valid patent claim. It expressed a particular concern about the breadth of the statement by Lewison LJ (in para 180): in a case which involves routine pre clinical and clinical trials, what would be undertaken as part of that routine is unlikely to be innovative. Its concern was that a simplistic adoption of this phrase as a blanket test without regard to the facts of the specific case would be contrary to the fundamental principles of patent law. I do not interpret the Court of Appeals judgments, including Lewison LJs statement which I have quoted, as supporting such an extrapolation. Kitchin LJ gave the leading judgment, in which he adopted a fact specific assessment based on the facts of this case and involving the weighing up of several factors, and Floyd and Lewison LJJ agreed with his reasoning and conclusions. I do not construe the judgments of the Court of Appeal as supporting any general proposition that the product of well established or routine enquiries cannot be inventive. If that had been what the experienced judges had said, I would have respectfully disagreed. But it is not. As Jacob LJ stated in Actavis v Merck (above) para 29, there is no policy reason why a novel and inventive dosage regime should not be rewarded by a patent. A fortiori, efficacious drugs discovered by research involving standard pre clinical and clinical tests should be rewarded with a patent if they meet the statutory tests (para 54 above). Mr Waugh in his reply attacks Mr Specks proposition that nothing which was already within the skilled persons repertoire could be inventive. He suggests that such a proposition would undermine the so called selection patents and improvement patents. But because I do not accept Mr Specks submission on the skilled persons repertoire in this broad formulation, this judgment does not militate against selection patents or improvement patents. Selection patents are patentable as involving an inventive step if the selection is not arbitrary and is justified by a hitherto unknown technical effect (Agrevo/Triazoles (above) para 2.5.3) or, in other words, when they make a real, novel and non obvious technical advance (Dr Reddys Laboratories (above) para 50 per Jacob LJ; para 104 per Lord Neuberger MR). Improvement in the context of the law of patents is in the most technical sense an invention which comes within the claims of an earlier patent but contains a further inventive step: Buchanan v Alba Diagnostics Ltd [2004] UKHL 5; 2004 SC (HL) 9; [2004] RPC 34, para 32 per Lord Hoffmann. The use of well known research tests of itself does not render such selections and improvements obvious. Summary The balance or symmetry in patent law and the pre established or at least readily foreseeable target of the skilled teams tests hold the key to the resolution of this dispute. The Daugan patent is ex hypothesi valid and it is not in dispute that it discloses an invention that is the use of tadalafil in the treatment of ED in a manner which enables the skilled person to perform it as section 14(3) of the 1977 Act requires. The task which the notional skilled team would undertake was that of implementing Daugan. The target of the skilled team would be to ascertain the appropriate dose, which would usually be the lowest effective dose. The skilled team would know of that target from the outset of its research. The pre clinical and clinical tests involved familiar and routine procedures and normally progressed to the discovery of the dose response relationship in Phase IIb. In this case the trial judges findings of what would have been the sequence of the tests, which did not depend upon hindsight, included the finding, which the evidence clearly justified, that the team, having found a therapeutic plateau, would be very likely to test lower doses and so come upon the dosage regime which is the subject matter of the patent. For the reasons which I have given above, I am satisfied that the Court of Appeal was entitled to interfere with the trial judges assessment of obviousness and to hold that the 181 patent was invalid for lacking an inventive step. The claimants other challenges Having reached that conclusion, it is not necessary to address the claimants alternative arguments for revocation on the grounds of non disclosure by the priority document, anticipation, and added matter. Conclusion I would dismiss the appeal.
+In circumstances in which at the time of a divorce a spouse, say a wife, is awarded capital which enables her to purchase a home but later she exhausts the capital by entry into a series of unwise transactions and so develops a need to pay rent, is the court entitled to decline to increase the order for the husband to make periodical payments to her so as to fund payment of all (or perhaps even any) of her rent even if he could afford to do so? Mr Mills (whom it will be convenient to describe as the husband notwithstanding his divorce from Mrs Mills, the wife, in 2002) appeals against an order for upwards variation of an order for periodical payments against him in favour of the wife. The order for variation was made by the Court of Appeal (Longmore LJ and Sir Ernest Ryder, Senior President of Tribunals) on 1 February 2017: [2017] EWCA Civ 129. By that order, the Court of Appeal allowed the wifes appeal against the dismissal of her application to vary the order for periodical payments by Judge Everall QC (the judge) in the Central Family Court in London on 9 June 2015. The husband and wife are each aged 52. They were married in 1987. The wife is a qualified beauty therapist. In the early years of the marriage she worked, self employed, in that capacity. The husband built up a surveying business within two companies which he and the wife owned in equal shares. They had one child, a son, now adult. In 1996 the wife unfortunately suffered a late miscarriage, which precipitated a long period of painful gynaecological difficulties for her. In 2000 the husband left the home in Guildford. On 7 June 2002, in the ensuing divorce proceedings, financial issues were resolved within a consent order. In addition to provision for their son, who was to continue to make his home with the wife and have contact with the husband, the order provided that: i) the home, vested in the joint names of the parties, should be sold; ii) its net proceeds should be divided in accordance with a formula which in the event yielded 230,000 for the wife in settlement of all her capital claims against the husband and 23,000 for him; the wife should transfer to the husband her interest in policies worth iii) 23,000 and her shares in the surveying companies; and iv) the husband should make periodical payments to her at the annual rate of 13,200 (not index linked) on the open ended basis, namely during their joint lives until her remarriage or further order in the interim. The wife therefore received the vast preponderance of the parties liquid capital. The value of the two companies was not identified. At the time of making the consent order the wife had represented that ill health was disabling her from working and that she would need 350,000 with which to purchase a suitable home for herself and their son. The husband had conceded that she then had no capacity to raise a mortgage but had suggested, by contrast, that she could purchase a suitable home for 230,000 or less, in other words free of mortgage. In the event, later in 2002, she proceeded to purchase a house in Weybridge for 345,000 by deploying in effect her entire share of the proceeds of the home and by raising the balance of 125,000 on mortgage. When he learnt of the wifes purchase, the husband, by solicitors, expressed surprise at its high cost and concern about her ability to service a mortgage, let alone one of such size. By solicitors, she replied only that she had not been able to secure reasonably priced accommodation in an area in which it would in her opinion be best for their son to grow up. wife had begun to work again as a beauty therapist, but part time. In 2006 the wife sold the house in Weybridge at the price for which she had bought it, namely 345,000. But the sum owing on mortgage had risen by 93,000 to 218,000. Having received written and oral evidence from the wife, the judge found that she had been unable satisfactorily to explain why the sum owing had increased or in what way the increase had been spent. Upon the sale of the house in Weybridge the wife bought a flat in Wimbledon for 323,000, with a deposit of 48,000 and a mortgage of 275,000. The judge therefore calculated that, net of collateral costs of the transactions, about 62,000 of the proceeds of sale had not been used in the purchase of the flat; but he noted that the wife had refurbished it to some extent. It is clear that, by the time of her purchase of the house in Weybridge, the In 2007 the wife sold the flat in Wimbledon for 435,000. The sum then owing on mortgage had risen only marginally, namely to 277,000. Instead she bought a flat in Battersea for 520,000, with a deposit of 78,000 and a mortgage of 442,000. The judge therefore calculated that, net of the collateral costs, about 44,000 of the proceeds of sale had not been used in the purchase of the second flat. It is unclear from his judgment how the wife was able to secure, and then to service, a borrowing as high as 442,000. In 2009 the wife sold the flat in Battersea for 580,000 and began to rent accommodation. The judge calculated that, after repaying the mortgage of 442,000 and meeting the collateral costs, the wife received about 120,000 from the proceeds of sale. Between 2009 and 2015 the wife rented six successive properties in London and Surrey. By April 2015, when the judge heard the case, the wife had no capital. On the contrary, she had overdrafts of 4,000, credit card liabilities of 18,000 and a tax liability of about 20,000. Before the judge were cross applications. The husband had applied for discharge of the order for periodical payments on his payment to the wife of a modest capital sum, say of 26,000; or for a fixed period to be set on her continued receipt of periodical payments and/or for a downwards variation of their amount. The wife had cross applied for an upwards variation of their amount. Both applications were made under section 31(1) of the Matrimonial Causes Act 1973 (the Act). Section 31(7) provides: In exercising the powers conferred by this section the court shall have regard to all the circumstances of the case, [which] shall include any change in any of the matters to which the court was required to have regard when making the order to which the application relates, and (a) in the case of a periodical payments . order made on or after the grant of a decree of divorce . , the court shall consider whether in all the circumstances and after having regard to any such change it would be appropriate to vary the order so that payments under the order are required to be made only for such further period as will in the opinion of the court be sufficient to enable the party in whose favour the order was made to adjust without undue hardship to the termination of those payments; The matters to which the court was required to have regard when making the order in 2002, even though it was made by consent, were those set out in section 25(2) of the Act. In his judgment, which was reserved, the judge described the wifes oral evidence as not fully satisfactory. He explained that she had been unable to give him a clear picture of her financial circumstances in the years since 2002; that, apart from her failure to explain the dramatic increase in the size of the mortgage on the house in Weybridge, she had been unable to identify the size of her income from her part time work in the earlier years, first as a beauty therapist and then for an estate agent. He accepted that between 2004 and 2010 she had undergone no less than seven surgical procedures referable to her gynaecological difficulties and that they had affected her earning capacity at that time. He found, however, that she had exaggerated the continuing impact, five years later, of those difficulties upon her earning capacity. In 2010 she had reverted to work as a beauty therapist. Her accounts for the last available year, namely to April 2014, disclosed an annual income net of tax of about 18,500. She had then been working about three days each week. The judge rejected her contention that ill health precluded her from working for a fourth day but accepted that she might not be able to attract the extra clients to occupy it. He therefore ascribed to her annual net earnings of only 18,500. The husband contends that it was a somewhat conservative figure; but it is appropriate for an appellate court to adopt it without qualification. The judge found that the husband, by contrast, gave reliable and truthful evidence in all respects. He had remarried and was living with his second wife, their nine year old son and an adult step daughter in a house in Guildford in which, subject to a substantial mortgage, he had a half interest. As in 2002 he had little liquid capital. The judge studied his earned income from the surveying companies. They had suffered a reverse in 2012 but had slowly recovered since then and, as the husband frankly conceded at the hearing, they were likely to be thriving by 2025. The judge ascribed to the husband an existing net annual income of 55,000 inclusive of a small salary which one of the companies chose to pay to his current wife. It may again have been a somewhat conservative figure; but it is again appropriate for an appellate court to adopt it without qualification. At the hearing the wifes then counsel put before the judge a breakdown of what he suggested to be the amount of her necessary annual expenditure. The judge accepted it as very modest. Exclusive of figures referable to the adult son, the annual total was 35,792, of which 10,200 was for rent. Following deduction of her earnings of 18,500, the wifes annual need was therefore for 17,292. But the judges decision was not to vary, whether upwards or downwards, the existing order for periodical payments in the annual sum of 13,200. In other words he countenanced a shortfall of 4,092 between the wifes annual need and the husbands obligation to meet it. The answer lies in the judges analysis of the wifes loss of the capital sum which had been awarded to her in 2002. The judge found that: the award in 2002 would then have enabled the wife to buy a home it had however been reasonable for her to be ambitious and to secure i) free of mortgage; ii) a mortgage for the purchase of the house in Weybridge; iii) thereafter she had not managed her finances wisely; iv) like others at that time, she had committed herself to borrowings which were too high; v) or wanton; vi) but her needs had been augmented by reason of the choices which she had made. In the light of those findings the judge decided to reject the husbands submission that the wifes need to pay rent of 10,200 should be entirely eliminated from the total annual need which it would be appropriate for him to meet. Nevertheless it was it would be wrong to describe her approach to finances as profligate fair that the husbands contribution to the wifes needs should not include a full contribution to her housing costs. If, however arbitrarily, one omits to ascribe any part of the wifes earnings to the payment of rent of 10,200 and treats the rent as entirely subsumed within her residual annual need of 17,292, it is easy to see that the effect of the judges decision to countenance a shortfall from that figure of 4,092 was to oblige the husband to pay 6,108 towards the rent, or 60% of it. Although the judge had described the wifes schedule of annual needs totalling 35,792 as very modest and indeed as basic, he said that the husbands contribution should do no more than to enable her to meet her bare minimum needs, which, so he therefore implied, were properly to be reflected in an even lower figure. The wife, he said, will have to adjust her expenditure to live within her means. The judge found on clear evidence that the husband could afford to continue to make periodical payments in the annual sum of 13,200. Indeed, although there was no cause for him to make a finding to this effect, it also seems reasonably clear that the husband could have afforded to pay the extra annual sum of 4,092 if it had been otherwise appropriate to order him to do so; it was certainly no part of the judges reasoning that the husband could not have afforded to pay it. In accordance with his duty the judge then turned to consider the husbands application for him to set a fixed period upon the wifes continued receipt of the periodical payments. But, applying section 31(7)(a) set out in para 14 above, the judge concluded, unsurprisingly, that he could not identify any fixed period as being sufficient to enable the wife to adjust without undue hardship to their termination. It followed that the order should continue to require them to be paid on the open ended basis, namely during their joint lives until her remarriage or further order in the interim. Although the open ended basis does not specify a fixed term for the life of the order, the circumstances which it identifies as bringing it to an end, in particular the potential for a further order ending it at any time, show how misleading (indeed, as the husband himself says, how unattractive) it is for some non lawyers to describe such an order as a meal ticket for life. Inevitably the judge also concluded that any appropriate capitalisation of periodical payments in that continuing sum and on that continuing basis appeared to be beyond the husbands means. So the judge dismissed both the husbands application and the wifes cross application. Both the husband and the wife sought permission from the Court of Appeal to appeal against the respective dismissals of their applications. The wife secured permission to do so but, in circumstances which rendered him aggrieved but are no longer relevant, the husbands application for permission was not granted likewise but was listed to be heard by the court at the time when it was to hear the wifes substantive appeal. At the conclusion of the hearing on 1 February 2017 Sir Ernest Ryder gave an impromptu judgment, with which Longmore LJ agreed. In his judgment Sir Ernest said that i) the judge did not give any reason why any part of the trimmed budget, that is the wifes basic needs budget, should be cut in explanation of why that shortfall should not be met; ii) budget that he, the judge, had accepted in evidence; and iii) his decision that she would have to adjust her expenditure to reduce those needs was a conclusion [which] required reasoning that is not in the judgment. he did not explain why she should live below the basic needs So the Court of Appeal allowed the wifes appeal by varying the order for periodical payments upwards from the annual sum of 13,200 to that of 17,292, backdated to the date of the judges judgment. It refused the husbands application for permission to appeal to it on the ground that his proposed appeal had no prospect of success. The husband filed a notice of appeal to this court. He challenged the increase in the order for periodical payments directed by the Court of Appeal. But he also purported to challenge its refusal to discharge the order for periodical payments; and, alternatively, its refusal to set a fixed period on the wifes continued receipt of them and/or to vary the amount of them downwards. In these respects he was, however, purporting to challenge the Court of Appeals refusal to permit him to appeal to itself on these grounds and, by section 54(4) of the Access to Justice Act 1999, no appeal can be brought against a refusal of permission. So the order of this court was to limit its permission for him to appeal to the single ground whether, in light of the fact that provision had already been made for the wifes housing needs in the capital settlement, the Court of Appeal had been entitled to interfere with the judges determination not to make full allowance for her need to pay rent in the continuing order for periodical payments. Unfortunately the husbands advisers considered that the terms of the limited grant of permission could in some way prove broad enough to enable them to make submissions at the hearing along the wider lines of his impermissible challenge to the Court of Appeals refusal to grant him permission to appeal to it. So at an early stage of the hearing the court had to re emphasise the limited ambit of its inquiry in this particular case. With the greatest of respect to the Court of Appeal, and with (I believe) a full appreciation of the heavy work load under which it currently labours, it erred in saying that the judge had given no reason for declining to increase the order for periodical payments so as to enable the wife to meet all her basic needs. The judge gave a clear reason which is summarised in paras 20 and 21 above. So the question which the Court of Appeal should have addressed, and which this court should now address, is the question set out in para 1 above. the Court of Appeal. First, Pearce v Pearce [2003] EWCA Civ 1054, [2004] 1 WLR 68. At the time of the original order in 1997 the wife had owned a flat in Chelsea free of mortgage. Later she sold the flat; depleted the proceeds by an unfortunate speculation in Ireland; and, upon returning to live in London, could only afford to buy a flat in Fulham subject to mortgage. The original order had also provided for the husband to make periodical payments to the wife; and the subsequent order under appeal in 2003 was to capitalise her entitlement to periodical payments, ie to discharge the order for them upon payment to her by the husband of a lump sum in lieu of them pursuant to section 31(7A) and (7B) of the Act. The major significance of the decision of the Court of Appeal lies in its approach to the exercise of capitalising an order for periodical payments. For present purposes, however, its significance lies in its removal of the wifes mortgage repayments from its calculation of the amount of the periodical payments to which, in the absence of capitalisation, she would then have been entitled and therefore of the amount of the lump sum to be paid by the husband in lieu of them. Thorpe LJ said at para 36 that the judge In addressing the question, the court must consider three earlier decisions of should not have allowed the wife to discharge her mortgage at the husbands expense. Such an indemnity violates the principle that capital claims compromised in 1997 could not be revisited in 2003. There is simply no power or discretion to embark on further adjustment of capital to reflect the outcome of unwise or unfortunate investment on one side or prudent or lucky investment on the other. Second, North v North [2007] EWCA Civ 760, [2007] All ER (D) 386 (Jul). In 1981 an order by consent had provided the wife with ownership of a mortgage free house in Sheffield and of ground rents which generated a comfortable income for her. The order had also included provision for the husband to make periodical payments to her in a nominal sum. In 2000 the wife sold her assets in England and moved to Sydney with relatively disastrous financial consequences, which led her to apply for an upwards variation of the order for periodical payments. The Court of Appeal set aside an order capitalising her entitlement to them in the sum of 202,000 and, although not visible in the transcript or in the report, apparently substituted a substantially lower figure. Thorpe LJ said: 32. In any application under section 31 the Applicants needs are likely to be the dominant or magnetic factor. But it does not follow that the respondent is inevitably responsible financially for any established needs. He is not an insurer against all hazards nor, when fairness is the measure, is he necessarily liable for needs created by the applicants financial mismanagement, extravagance or irresponsibility 33. Thus in the present case the wifes failure to utilise her earning potential, her subsequent abandonment of the secure financial future provided for her by the husband, her choice of a more hazardous future in Australia, together with her lifestyle choices in Australia, were all productive of needs which she had generated and for which the husband should not as a matter of fairness be held responsible in law. And third, Yates v Yates [2012] EWCA Civ 532, [2013] 2 FLR 1070. Under a consent order the wife had received a substantial lump sum on the basis that she would use half of it in discharging a mortgage on her home. In the event she had repaid only part of the mortgage debt and had invested in a non income bearing bond the sum which she had thus elected not to apply to full clearance of the mortgage. When, later, a judge came to capitalise her right to continuing periodical payments, he included in his calculation of her need the amount of interest payable by her in respect of the residual mortgage debt. The Court of Appeal held that the inclusion had been wrong. Thorpe LJ said: Lewison LJ said: 12. It seems to me little more than common sense that if a recipient of a lump sum twice the size of the mortgage on the final matrimonial home elects to hold back capital made available for the mortgage discharge in order to invest in a bond that bears no income, she cannot look to the payer thereafter for indemnity or contribution to the continuing mortgage interest payments. That seems to me to be an absolutely self evident point. 21. the need to pay the mortgage at all arose from her own choice not to apply the lump sum in discharging the existing mortgage The financial consequences of her investment choice are her responsibility. It is wrong in principle for the husband to have to continue to fund the mortgage. Mr Feehan QC, who, like Ms Dunseath, nobly appears for the wife without fee, seeks to distinguish the mortgage instalments disallowed in the cases of Pearce and Yates from payments of rent. I see no relevant distinction. He also submits that, unlike the present case, all three of the decisions concerned the capitalisation of an entitlement to periodical payments and that what was there rightly disallowed was the insinuation into the lump sum thus payable of a sum more reflective of an impermissible second claim for capital provision than of a permissible claim for conversion into capital of an income entitlement. Mr Feehan relies in particular on the statement of Thorpe LJ in the Pearce case, quoted at para 36 above. I reject the submission. As the Court of Appeal valuably established in that case, the first step in the exercise of capitalisation is a calculation of the amount of periodical payments to which, in the absence of capitalisation, the payee would then have been entitled. It was in the course of making this calculation that in the three decisions the objectionable elements of the claim were disallowed. Even had there been no capitalisation of the entitlement to periodical payments, those elements would therefore have been disallowed in quantifying the amount of the ongoing order for periodical payments. The cases of Pearce, North and Yates were correctly decided. The answer to the question posed in para 1 above is yes. By its terms that question asks only whether a court would be entitled, rather than obliged, in the circumstances there identified to decline to require the husband to fund payment of the rent. Its reference to the courts entitlement to do so serves to respect the wide discretion conferred upon it by section 31(1) and (7) of the Act in determining an application for variation of an order for periodical payments. But, in the passages quoted above, the Court of Appeal has expressed itself in forceful terms; and a court would need to give very good reasons for requiring a spouse to fund payment of the other spouses rent in the circumstances identified by the question. A spouse may well have an obligation to make provision for the other; but an obligation to duplicate it in such circumstances is most improbable. The judge was clearly entitled to decline to vary the order for periodical payments so as to require the husband to pay all of the wifes rent. The order of the Court of Appeal should be set aside and his order restored.
+The question at issue on this appeal is whether two provisions of the State Immunity Act 1978 are consistent with the European Convention on Human Rights and the European Union Charter of Fundamental Rights. The two provisions are section 4(2)(b) and section 16(1)(a). I shall set out both below, but in summary the effect of section 4(2)(b) is that a state is immune as respects proceedings relating to a contract of employment between a state and a person who at the time of the contract is neither a national of the United Kingdom nor resident there; and the effect of section 16(1)(a) is that a state is immune as respects proceedings concerning the employment of members of a diplomatic mission, including its administrative, technical and domestic staff. It is common ground that the answer depends in both cases on whether these provisions have any basis in customary international law although, as I shall explain, there is an issue about what kind of basis it must have. Ms Minah Janah, the Respondent to this appeal, is a Moroccan national. In 2005, when she was resident in Libya, she was recruited to work for the Libyan government as a domestic worker at its embassy in London. She entered the United Kingdom on a visa which recorded her status as Domestic Worker (Diplomatic), and continued to work for the embassy until she was dismissed in 2012. During that time, she worked successively in a number of Libyan diplomatic households, and latterly in the residence of the ambassador. Her duties were cooking, cleaning, laundry, shopping and serving at meals. In April 2012, she began proceedings against Libya in the Employment Tribunal in support of a claim for failure to pay her the National Minimum Wage, breaches of the Working Time Regulations, failure to provide her with payslips or a contract of employment, unfair dismissal, discrimination and harassment. At all material times since her arrival in the United Kingdom, Ms Janah has been resident, but not permanently resident here. Ms Fatimah Benkharbouche is also a Moroccan national. In 2000, when she was working for the Sudanese government in Iraq, she agreed to move to the United Kingdom to work for its embassy in London as a housekeeper and cook to the ambassador. Her employment by the London embassy began on 16 May 2000 and continued until the autumn of 2001. She then returned for some years to Iraq, before being re engaged to work for the London embassy in the same role as before. Her second term of employment began on 28 January 2005 and continued until she was dismissed on 27 November 2010. She subsequently began proceedings in the Employment Tribunal in support of claims for unfair dismissal, failure to pay her the National Minimum Wage, unpaid wages and holiday pay, and breaches of the Working Time Regulations. By the time of her dismissal, she was permanently resident in the United Kingdom, having been granted indefinite leave to remain with effect from 25 January 2010. It is common ground that under the terms of the State Immunity Act 1978, Libya is entitled to state immunity in respect of Ms Janahs claim and Sudan in respect of Ms Benkharbouches. In Ms Janahs case, this is because she has never been a Libyan national and was not a national or permanent resident of the United Kingdom at the time when her contract was made. Both section 4(2)(b) and section 16(1)(a) therefore apply to her. In Ms Benkharbouches case, it is because section 16(1)(a) applies to her. There are as yet no findings about whether the facts of her case bring her within section 4(2)(b). Both claims were dismissed by different judges in the Employment Tribunal on the ground that the employer was immune. In the Employment Appeal Tribunal the two cases were heard together. The EAT declared that sections 4(2)(b) and 16(1)(a) of the Act should be disapplied so far as they prevented Ms Janah from bringing claims based on EU law, on the ground that they were contrary to the right of access to a court guaranteed by article 47 of the EU Charter. The claims based on discrimination and harassment and breaches of the Working Time Regulations were accordingly allowed to proceed. Leave to appeal to the Court of Appeal was granted, inter alia, in order to enable it to consider whether to make a declaration of incompatibility under section 4 of the Human Rights Act 1998. This led to the joinder of the Secretary of State under section 5 of the Human Rights Act 1998 so as to participate in the appeal. The Court of Appeal affirmed the judgment of the EAT, disapplying the relevant provisions so far as they applied to the EU law claims. It also made a declaration of incompatibility affecting all the claims, whether founded on domestic or EU law. Sudan elected not to participate in the proceedings before the Court of Appeal and has not appealed to this court. Ms Benkharbouche was represented in the Court of Appeal but has not appeared before us. Libya participated in the proceedings in the Court of Appeal, but although it was granted permission to appeal to this court, it has not been permitted to pursue the appeal because it has failed to comply with an order of this court for security for costs. In those circumstances, the effective participants in the appeal to this court have been the Secretary of State, who appeals in both cases, and Ms Janah. We have also received written and oral submissions on behalf of the AIRE centre, and written submissions on behalf of 4A Law. It is agreed that Ms Janahs appeal raises all of the issues in either case, but I shall refer from time to time to Ms Benkharbouches position also. I propose first to examine the provisions of the State Immunity Act and then the requirements of the Human Rights Convention, before turning to the relationship between the Act and the international law of state immunity. The State Immunity Act 1978 Before 1978, state immunity was governed in the United Kingdom by the common law. Properly speaking, it comprised two immunities whose boundaries were not necessarily the same: an immunity from the adjudicative jurisdiction of the courts of the forum, and a distinct immunity from process against its property in the forum state. During the second half of the nineteenth century, the common law had adopted the doctrine of absolute immunity in relation to both. The classic statement was that of Lord Atkin in Compania Naviera Vascongada v S S Cristina (The Cristina) [1938] AC 485, 490: The courts of a country will not implead a foreign sovereign, that is, they will not by their process make him against his will a party to legal proceedings whether the proceedings involve process against his person or seek to recover from him specific property or damages. By 1978, however, the position at common law had changed as a result of the decisions of the Privy Council in The Philippine Admiral [1977] AC 373 and the Court of Appeal in Trendtex Trading Corpn v Central Bank of Nigeria [1977] QB 529. These decisions marked the adoption by the common law of the restrictive doctrine of sovereign immunity already accepted by the United States and much of Europe. The restrictive doctrine recognised state immunity only in respect of acts done by a state in the exercise of sovereign authority (jure imperii), as opposed to acts of a private law nature (jure gestionis). Moreover, and importantly, the classification of the relevant act was taken to depend on its juridical character and not on the states purpose in doing it save in cases where that purpose threw light on its juridical character: Playa Larga (Owners of Cargo Lately Laden on Board) v I Congreso del Partido (Owners) [1983] 1 AC 244. Before the adoption of the restrictive doctrine at common law, the United Kingdom had signed a number of treaties limiting the scope of state immunity in particular respects. It was a signatory to the International Convention for the Unification of Certain Rules concerning the Immunity of State owned Ships (Brussels, 1926), which restricted the immunity of state owned trading vessels. It had also signed the European Convention on State Immunity (Basle, 1972), a regional treaty drawn up under the auspices of the Council of Europe which identified specified categories of acts done by foreign states in the territory of the forum state which would not attract immunity. These treaties were concerned mainly with acts of a kind which would generally not attract immunity under the restrictive doctrine. But neither of them sought to codify the law of state immunity or to apply the restrictive doctrine generally. In addition, they have attracted limited international support. The Brussels Convention of 1926 has attracted 31 ratifications to date. The Basle Convention of 1972 has to date been ratified by only eight of the 47 countries of the Council of Europe. One purpose of the State Immunity Act 1978 was to give effect to the Brussels and Basle Conventions, and thereby enable the United Kingdom to ratify them. It did this in both cases in 1979. But by this time, the conventions had been largely superseded by the adoption of the restrictive doctrine of state immunity at common law. The Act therefore dealt more broadly with state immunity, by providing in section 1 for a state to be immune from the jurisdiction of the courts of the United Kingdom except as provided in the following sections of Part I. The exceptions relate to a broad range of acts conceived to be of a private law character, including widely defined categories of commercial transactions and commercial activities, as well as contracts of employment and enforcement against state owned property used or intended for use for commercial purposes. In Alcom Ltd v Republic of Colombia [1984] AC 580, 597 598, Lord Diplock, with whom the rest of the Appellate Committee agreed, observed that given the background against which it was enacted, the provisions of the Act fall to be construed against the background of those principles of public international law as are generally recognised by the family of nations. The principle of international law that is most relevant to the subject matter of the Act is the distinction that has come to be drawn between claims arising out of those activities which a state undertakes jure imperii, ie, in the exercise of sovereign authority, and those arising out of activities which it undertakes jure gestionis, ie transactions of the kind which might appropriately be undertaken by private individuals instead of sovereign states. For present purposes, the relevant provisions of the State Immunity Act are sections 1, 3, 4 and 16. So far as they bear on the points at issue, they provide as follows: Immunity from jurisdiction 1.(1) A State is immune from the jurisdiction of the courts of the United Kingdom except as provided in the following provisions of this part of this Act. 3.(1) A State is not immune as respects proceedings relating to (3) a commercial transaction entered into by the (a) State; an obligation of the State which by virtue of a (b) contract (whether a commercial transaction or not) falls to be performed wholly or partly in the United Kingdom. In this section commercial transaction means any contract for the supply of goods or services; (a) (b) any loan or other transaction for the provision of finance and any guarantee or indemnity in respect of any such transaction or of any other financial obligation; and (c) any other transaction or activity (whether of a commercial industrial, financial, professional or other similar character) into which a State enters or in which it engages otherwise than in the exercise of sovereign authority; but neither paragraph of subsection (1) above applies to a contract of employment between a State and an individual. 4.(1) A State is not immune as respects proceedings relating to a contract of employment between the State and an individual where the contract was made in the United Kingdom or the work is to be wholly or partly performed there. (2) Subject to subsections (3) and (4) below, this section does not apply if at the time when the proceedings are brought the (a) individual is a national of the State concerned; or (b) at the time when the contract was made the individual was neither a national of the United Kingdom nor habitually resident there; or (c) in writing. the parties to the contract have otherwise agreed 16.(1) This Part of this Act does not affect any immunity or privilege conferred by the Diplomatic Privileges Act 1964 or the Consular Relations Act 1968; and (a) section 4 above does not apply to proceedings concerning the employment of the members of a mission within the meaning of the Convention scheduled to the said Act of 1964 or of the members of a consular post within the meaning of the Convention scheduled to the said Act of 1968. The Convention scheduled to the Diplomatic Privileges Act of 1964 is the Vienna Convention on Diplomatic Relations (1961). Article 1 of that Convention defines members of a mission as including the staff of the mission in the domestic service of the mission. It follows that section 16(1)(a) covers employees in the position of Ms Janah and Ms Benkharbouche. Since the passing of the State Immunity Act, the United Kingdom has signed, but not ratified, a further treaty, the United Nations Convention on Jurisdictional Immunities of States and their Property (2004). The Convention is the result of the long drawn out labours of the United Nations International Law Commission between 1979 and 2004. For the most part, it is consistent with the United Kingdom Act, which indeed was one of the models used by the draftsmen. But there are differences, in particular relating to contracts of employment, which would require the Act to be amended before the United Kingdom could ratify it. To date, however, the United Nations Convention has attracted limited support. Twenty eight states have signed it, including the United Kingdom. Of these, 21 have ratified it, not including the United Kingdom. Libya and Sudan have neither signed nor ratified it. It will not come into force until it has been ratified by 30 states. The European Convention on Human Rights The respondents case is that sections 4(2)(b) and 16(1)(a) of the State Immunity Act 1978 are incompatible with article 6 of the Convention, because they unjustifiably bar access to a court to determine their claims. Article 4(2)(b) is also said to be incompatible with article 14 read in conjunction with article 6, because it unjustifiably discriminates on grounds of nationality. For the moment I shall put the case on discrimination to one side, to return to it later. The main point argued before us was based on article 6. Article 6 of the Human Rights Convention provides that in the determination of his civil rights and obligations, or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. Two points are well established, and uncontroversial in this appeal. The first is that article 6 implicitly confers a right of access to a court to determine a dispute and not just a right to have it tried fairly: Golder v United Kingdom (1975) 1 EHRR 524. The right to a court corresponds to a right which the common law has recognised for more than two centuries. As early as the 1760s, Blackstone wrote in his Commentaries, 4th ed (1876), 111: A right of every [man] is that of applying to the courts of justice for redress of injuries. Since the law is in England the supreme arbiter of every mans life, liberty and property, courts of justice must at all times be open to the subject and the law be duly administered therein. The second uncontroversial point is that although there is no express qualification to a litigants rights under article 6 (except in relation to the public character of the hearing), the right to a court is not absolute under the Convention any more than it is at common law. It is an aspect of the rule of law, which may justify restrictions if they pursue a legitimate objective by proportionate means and do not impair the essence of the claimants right: Ashingdane v United Kingdom (1985) 7 EHRR 528, para 57. One of the perennial problems posed by the right to a court is that article 6 is concerned with the judicial processes of Convention states, and not with the content of their substantive law. When the Duke of Westminster complained in James v United Kingdom (1986) 8 EHRR 123 that the Leasehold Reform Act 1967 allowed qualifying leaseholders to enfranchise their properties without providing any grounds on which the freeholder could object, he was met with the answer (para 81) that article 6 does not in itself guarantee any particular content for (civil) rights and obligations in the substantive law of the Contracting States. In Fayed v United Kingdom (1994) 18 EHRR 393, the Court explained (para 65) that it was not at liberty to create through the interpretation of article 6(1) a substantive civil right which has no legal basis in the state concerned, but that it would be inconsistent with the rule of law if the state were to confer immunities from civil liability on large groups or categories of persons. These statements have been repeated in much of the subsequent case law of the Strasbourg Court. It is not always easy to distinguish between cases in which the petitioners problem arose from some difficulty in accessing the adjudicative jurisdiction of the court, and cases where it arose from the rules of law which fell to be applied when he got there. The jurisprudence of the Strasbourg court establishes that, as a general rule, the question whether such cases amount to the creation of immunities engaging article 6 depends on whether the rule which prevents the litigant from succeeding is procedural or substantive: see, among other cases, Fayed v United Kingdom, at para 67; Al Adsani v United Kingdom (2002) 34 EHRR 11, para 47; Fogarty v United Kingdom (2001) 34 EHRR 12, para 25; Roche v United Kingdom (2005) 42 EHRR 30, paras 118 119; Markovic v Italy (2006) 44 EHRR 52, para 94. The dichotomy between procedural and substantive rules is not always as straightforward as it sounds, partly because the categories are not wholly distinct and partly because they do not exhaust the field. There may be rules of law, such as limitation, which are procedural in the sense that they bar the remedy, not the right, but which operate as a defence. There may be rules of law which require proceedings to be dismissed without consideration of the merits. These may be substantive rules, such as the foreign act of state doctrine, or procedural rules such as state immunity. There may be rules, whether substantive or procedural, which limit the territorial or subject matter jurisdiction of the domestic courts, and which they have no discretion to transgress. Or the claimants right may be circumscribed by a substantive defence, such as privilege in the law of defamation. Or he may simply have no legal right to assert under the domestic law, for example because the law is that no relevant duty is owed by a particular class of defendants although it would be by defendants generally. But these are not refinements with which the Strasbourg court has traditionally been concerned. What the Strasbourg court means by a procedural rule is a rule which, whether technically procedural or substantive in character, has the effect of barring a claim for reasons which do not go to its legal merits; that is to say, rules which do not define the existence or extent of any legal obligation. State immunity in the jurisprudence of the European Court of Human Rights State immunity is a mandatory rule of customary international law which defines the limits of a domestic courts jurisdiction. Unlike diplomatic immunity, which the modern law treats as serving an essentially functional purpose, state immunity does not derive from the need to protect the integrity of a foreign states governmental functions or the proper conduct of inter state relations. It derives from the sovereign equality of states. Par in parem non habet imperium. In the modern law the immunity does not extend to acts of a private law character. In respect of these, the state is subject to the territorial jurisdiction of the forum in the same way as any non state party. In Germany v Italy: Greece Intervening (Jurisdictional Immunities of the State) [2012] ICJ Rep 99, at para 59, the International Court of Justice observed that the rule occupies an important place in international law and international relations. It derives from the principle of sovereign equality of States, which, as article 2, para 1, of the Charter of the United Nations makes clear, is one of the fundamental principles of the international legal order. The rule, where it applies, is that a state may not be impleaded in a domestic court against its will. State immunity may be waived. But waiver does not dispense with the rule. It is inherent in the rule. It is a voluntary submission to the forum courts jurisdiction, which constitutes the consent that has always qualified the rule. The International Court of Justice has characterised state immunity as procedural: Democratic Republic of the Congo v Belgium (Arrest Warrant of 11 April 2000) [2002] ICJ Rep 3, paras 59 61; Germany v Italy: Greece Intervening (Jurisdictional Immunities of the State) [2012] ICJ Rep 99, at paras 92 97. This is correct, but state immunity is not procedural in the sense that the organisation and practices of the courts are procedural. It is procedural in the same sense as that concept has been used in the case law of the European Court of Human Rights. In other words, it requires the court to dismiss the claim without determining its merits. But it leaves intact the claimants legal rights and any relevant defences, which remain available, for example, to be adjudicated upon in the courts of the state itself. This gives rise to difficulty in a case where the rule goes to the courts jurisdiction. Proceedings brought against a state entitled to immunity are not a nullity. But the courts jurisdiction to entertain the proceedings is limited to examining the basis on which immunity is asserted and determining whether it applies. As the International Court of Justice put it in Jurisdictional Immunities of the State (para 60), the question whether the acts relied upon are such as to attract immunity must be determined before that jurisdiction can be exercised, whereas the legality or illegality of the act is something which can be determined only in the exercise of that jurisdiction. The impleaded state may consent to the proceedings. Where, however, it does not consent, there is no jurisdiction to proceed to the adjudicatory stage. The court must dismiss the claim. As Lord Bingham observed in Jones v Ministry of the Interior of the Kingdom of Saudi Arabia [2007] 1 AC 270, at para 14, article 6 cannot confer on a court a jurisdiction which it does not have, and a state cannot be said to deny access to its courts if it has no access to give. In Holland v Lampen Wolfe [2000] 1 WLR 1573, Lord Millett had put the matter in this way, at p 1588: Article 6 requires contracting states to maintain fair and public judicial processes and forbids them to deny individuals access to those processes for the determination of their civil rights. It presupposes that the contracting states have the powers of adjudication necessary to resolve the issues in dispute. But it does not confer on contracting states adjudicative powers which they do not possess. State immunity, as I have explained, is a creature of customary international law and derives from the equality of sovereign states. It is not a self imposed restriction on the jurisdiction of its courts which the United Kingdom has chosen to adopt. It is a limitation imposed from without upon the sovereignty of the United Kingdom itself. The immunity in question in the present case belongs to the United States. The United States has not waived its immunity. It is not a party to the Convention. The Convention derives its binding force from the consent of the contracting states. The United Kingdom cannot, by its own act of acceding to the Convention and without the consent of the United States, obtain a power of adjudication over the United States which international law denies it. The Strasbourg court has dealt with many cases involving claims to state immunity since it first grappled with these matters in Waite and Kennedy v Germany (2000) 30 EHRR 261. Although the reasoning has been somewhat modified over the years, its position has remained constant. Notwithstanding the difficulty pointed out in the preceding paragraph, it has always treated article 6 as being engaged by a successful claim to state immunity. But it has applied the Convention in the light of article 31(3) of the Vienna Convention of the Law of Treaties, which requires an international treaty to be interpreted in the light of (inter alia) any relevant rules of international law. Against that background, it has always held that the proper application of the rule of state immunity was justifiable because it was derived from a fundamental principle of international law. The only cases in which it has ever held article 6 to have been violated are those in which it has found that a claim to state immunity was unfounded in international law. It is convenient to start with three judgments delivered on the same day by a similarly constituted Grand Chamber: Al Adsani v United Kingdom (2001) 34 EHRR 11, McElhinney v Ireland (2001) 34 EHRR 13 and Fogarty v United Kingdom (2001) 34 EHRR 12. In Al Adsani, the applicant had been barred by state immunity from proceeding in England against the government of Kuwait in an action claiming damages for torture. The Court held (para 48) that article 6 was engaged, because the grant of immunity is seen not as qualifying a substantive right but as a procedural bar on the national courts power to determine the right. It rejected the submission of the British government (para 44) that article 6 could not extend to matters which under international law lay outside the jurisdiction of the state. However, it held that the bar was justifiable, for reasons stated at paras 54 56: 54. The Court must first examine whether the limitation pursued a legitimate aim. It notes in this connection that sovereign immunity is a concept of international law, developed out of the principle par in parem non habet imperium, by virtue of which one State shall not be subject to the jurisdiction of another State. The Court considers that the grant of sovereign immunity to a State in civil proceedings pursues the legitimate aim of complying with international law to promote comity and good relations between States through the respect of another States sovereignty. 55. The Court must next assess whether the restriction was proportionate to the aim pursued. It recalls that the Convention has to be interpreted in the light of the rules set out in the Vienna Convention of 23 May 1969 on the Law of Treaties, and that article 31(3)(c) of that treaty indicates that account is to be taken of any relevant rules of international law applicable in the relations between the parties. The Convention, in including article 6, cannot be interpreted in a vacuum. The Court must be mindful of the Conventions special character as a human rights treaty, and it must also take the relevant rules of international law into account. The Convention should so far as possible be interpreted in harmony with other rules of international law of which it forms part, including those relating to the grant of State immunity. It follows that measures taken by a High Contracting 56. Party which reflect generally recognised rules of public international law on State immunity cannot in principle be regarded as imposing a disproportionate restriction on the right of access to court as embodied in article 6(1). Just as the right of access to court is an inherent part of the fair trial guarantee in that article, so some restrictions on access must likewise be regarded as inherent, an example being those limitations generally accepted by the community of nations as part of the doctrine of State immunity. McElhinney v Ireland (2001) 34 EHRR 13 arose out of a claim against the British government in the courts of Ireland for psychological injury arising from an incident at the border with Northern Ireland. The Court rejected the allegation that by upholding the assertion of immunity the Irish court had violated article 6, in language substantially identical to that employed in Al Adsani. Fogarty v United Kingdom (2001) 34 EHRR 12 was the first of a number of cases to come before the Strasbourg court involving employment disputes between a state and non diplomatic staff at one of its embassies. It concerned a sex discrimination claim brought in England against the United States by a secretary employed at US embassy in London. Once again, the Court held in substantially identical language that article 6(1) was engaged but not violated. The importance of the decision for present purposes lies in the additional observations which the Court addressed specifically to diplomatic employment disputes. The Court said at para 37 that: on the material before it, there appears to be a trend in international and comparative law towards limiting State immunity in respect of employment related disputes. However, where the proceedings relate to employment in a foreign mission or embassy, international practice is divided on the question whether State immunity continues to apply and, if it does so apply, whether it covers disputes relating to the contracts of all staff or only more senior members of the mission. Certainly, it cannot be said that the United Kingdom is alone in holding that immunity attaches to suits by employees at diplomatic missions or that, in affording such immunity, the United Kingdom falls outside any currently accepted international standards. That being so the Court concluded (para 39) that in conferring immunity on the United States in the present case by virtue of the provisions of the 1978 Act, the United Kingdom cannot be said to have exceeded the margin of appreciation allowed to States in limiting an individual's access to court. These observations are consistent with the view that in the absence of a recognised rule of customary international law, article 6 is satisfied if the rule applied by a Convention state lies within the range of possible rules consistent with current international standards. The first case in which the European Court of Human Rights held that the recognition of state immunity violated article 6(1) of the Convention was Cudak v Lithuania (2010) 51 EHRR 15. The applicant was a secretary and switchboard operator employed in the Polish embassy in Vilnius, Lithuania. The Supreme Court of Lithuanias decision appears to have been closely based on the Strasbourg courts decision in Fogarty. It had upheld Polands claim to state immunity on the ground that: there was no uniform international practice of states whereby the members of staff of foreign states diplomatic missions who participated in the exercise of the public authority of the states they represented could be distinguished from other members of staff. As there were no legally binding international rules, it was for each state to take its own decisions in such matters. (para 24) The European Court of Human Rights reiterated the general principles governing the application of article 6 in such cases, which they had previously laid down in Fogarty. They held that although that had been a complaint about the employers recruitment practices, the same principles applied to claims arising out of a subsisting employment relationship. However, they held that the Lithuanian courts had exceeded the margin of appreciation available to them. The reason was that there were now binding international rules on contracts of employment. The court found these rules in article 11 of the International Law Commissions draft articles of 1991 on Jurisdictional Immunities of States and their Property. The draft articles were part of the travaux preparatoires for what ultimately became, 13 years later, the United Nations Convention. Draft article 11(1) provided that there was no immunity in respect of contracts of employment to be performed in the forum state, save in five cases specified in draft article 11(2). The five cases were: (a) the employee has been recruited to perform functions closely related to the exercise of governmental authority; the subject of the proceeding is the recruitment, renewal (b) of employment or reinstatement of an individual; (c) the employee was neither a national nor a habitual resident of the State of the forum at the time when the contract of employment was concluded; (d) time when the proceeding is instituted; or (e) the employer State and the employee have otherwise agreed in writing, subject to any considerations of public policy conferring on the courts of the State of the forum exclusive jurisdiction by reason of the subject matter of the proceeding. the employee is a national of the employer State at the The Strasbourg court recognised that the draft articles were not a treaty and that Lithuania had not ratified the Convention ultimately adopted. But it held that article 11 was nevertheless binding on the state because it reflected customary international law: see paras 64 67. The court considered that none of the five exceptions in draft article 11(2) applied. In particular, exception (a) did not apply. It then reviewed the Lithuanian Supreme Courts findings of fact and concluded that it had given inadequate reasons for regarding the applicants employment as being related to the exercise of governmental authority: 70. The Court observes in particular that the applicant was a switchboard operator at the Polish Embassy whose main duties were: recording international conversations, typing, sending and receiving faxes, photocopying documents, providing information and assisting with the organisation of certain events. Neither the Lithuanian Supreme Court nor the respondent Government have shown how these duties could objectively have been related to the sovereign interests of the Polish Government. Whilst the schedule to the employment contract stated that the applicant could have been called upon to do other work at the request of the head of mission, it does not appear from the case file nor has the Government provided any details in this connection that she actually performed any functions related to the exercise of sovereignty by the Polish State. In its judgment of June 25, 2001 the Supreme Court 71. stated that, in order to determine whether or not it had jurisdiction to hear employment disputes involving a foreign mission or embassy, it was necessary to establish in each case whether the employment relationship in question was one of a public law nature (acta jure imperii) or of a private law nature (acta jure gestionis). In the present case, however, the Supreme Court found that it had been unable to obtain any information allowing it to establish the scope of the applicant's actual duties. It therefore referred solely to the title of her position, and to the fact that Poland had invoked immunity from jurisdiction, in concluding that the duties entrusted to her had facilitated, to a certain degree, the exercise by the Republic of Poland of its sovereign functions. Some further explanation is called for concerning the Strasbourg Courts treatment of the ILCs draft articles of 1991, since it is criticised by Ms Karen Steyn QC, for the Secretary of State on grounds that I think misunderstand it. The Court began its observations on this question by noting (para 64) that the application of absolute state immunity has, for many years, clearly been eroded. This is a reference to the progressive adoption of the restrictive doctrine. The court treated draft article 11 as reflecting the adoption of the restrictive doctrine in the domain of employment. As regards the critical parts of draft article 11, this is plainly correct. The exceptions which were relevant in Ms Cudaks case were (a) and (b). Of these, (a) directly imported the classic distinction between acts jure imperii and acts jure gestionis. As to (b), the International Law Commissions commentary on the draft articles suggested that it confirmed the existing practice of states by which state immunity extended to the recruitment, renewal of employment and reinstatement of an employee, these being dependent on policy considerations lying within a states discretionary power and likely to have been determined as an exercise of governmental authority. A substantial body of domestic case law from various jurisdictions is cited in support of this statement: see Report of the International Law Commission on the work of its forty third session, 29 April 19 July 1991 [A/46/10], pp 43 44, para (10). The Strasbourg court presumably based its reasoning on the draft articles of 1991 rather than the final text of the Convention because the relevant proceedings in Lithuania occurred in 2000 and 2001, before the final text of the Convention was adopted. But although the final text of article 11 differs in significant respects from the draft article, exception (a) is substantially the same in the final version, and exception (b) (renumbered (c)) is identical. The Court was therefore right to regard these provisions of draft article 11 as applying the restrictive doctrine of state immunity to contracts of employment, and as foreshadowing, in that respect, the terms of the Convention. I do not read the Strasbourg Court as having assumed that everything else in draft article 11 was declaratory of existing customary international law. It did not need to, because the other exceptions in article 11(2) did not affect the issue. Ms Cudak appears to have been a national of or habitually resident in Lithuania, and there was no contractual submission to the local forum. Exceptions (c), (d) and (e) therefore did not arise. Sabeh El Leil v France (2011) 54 EHRR 14 arose out of another unfair dismissal claim, this time brought in the French courts by the head of the accounts department of the Kuwaiti embassy in Paris. In this case, the final decision of the French courts barring the claim on grounds of state immunity was handed down after the adoption of the United Nations Convention. After reiterating the principle on which the Strasbourg court had always held article 6 to be engaged in such cases, the Grand Chamber summarised its case law as follows (paras 51 52): 51. Therefore, in cases where the application of the rule of state immunity from jurisdiction restricts the exercise of the right of access to a court, the Court must ascertain whether the circumstances of the case justified such restriction. 52. The Court further reiterates that such limitation must pursue a legitimate aim and that state immunity was developed in international law out of the principle par in parem non habet imperium, by virtue of which one state could not be subject to the jurisdiction of another. It has taken the view that the grant of immunity to a state in civil proceedings pursues the legitimate aim of complying with international law to promote comity and good relations between states through the respect of another state's sovereignty. The Court then restated the view which it had taken in Cudak, that article 11 of the ILCs draft articles of 1991, as now enshrined in the 2004 Convention represented customary international law binding as such even on those states (such as France) which had not ratified it at the relevant time. In saying this, the Court must have had in mind exceptions (a) and (b) in draft article 11(2), since these are the only potentially relevant exceptions subsequently enshrined in the Convention. The rest of article 11(2) in the final version is very different from the draft. The Court found that article 6 had been violated because the Cour de Cassation had not had regard to customary international law as embodied in article 11 of the United Nations Convention and had not given adequate reasons for finding that some of the applicants duties involved participating in exercises of governmental authority. The reasoning in Cudak and Sabeh el Leil was subsequently applied by the Strasbourg court in Wallishauser v Austria (Application 156/04, Judgment of 19 Nov 2012) and Radunovi v Montenegro (Applications 45197/13, 53000/13 and 73404/13, Judgment 25 Oct 2016), all of them cases involving technical and administrative staff of a foreign embassy. The Court of Appeal in the present cases thought that it was questionable whether article 11 of the draft articles was in fact a definitive statement of customary international law in embassy employment disputes. For my part, I would agree that some of the Strasbourg courts observations about article 11 have simply served to sow confusion. Article 11 codifies customary international law so far as it applies the restrictive doctrine to contracts of employment. That would have been enough for Ms Cudaks and Mr El Leils purposes. So far as article 11 goes beyond the application of the restrictive doctrine, its status is uncertain. I shall expand on this point below. It would perhaps have been better if the Strasbourg court had simply said that employment disputes should be dealt with in accordance with the restrictive doctrine instead of in accordance with an article of a treaty which is not in force and which a large majority of states have neither signed nor ratified. But this is a point of presentation, not of substance. The Threshold Issue: Jurisdiction Ms Steyn for the Secretary of State has raised a threshold issue. She contends that a decision of a domestic court that a state is entitled to immunity does not engage article 6 at all, because its effect is that there is no jurisdiction capable of being exercised and no access to a court capable of being withheld. As I have pointed out, this is a point which was powerfully made in the House of Lords in Holland v Lampen Wolfe [2000] 1 WLR 1573 and Jones v Saudi Arabia [2007] 1 AC 270, but was rejected by the Grand Chamber in Al Adsani. In Jones v United Kingdom (2014) 59 EHRR 1, a chamber of the European Court of Human Rights was invited to depart from Al Adsani on this point, but it declined to do so, adhering to its long standing distinction between procedural and substantive bars to the exercise of jurisdiction. Ms Steyn now invites us to resolve this issue in accordance with the views of the House of Lords. In my view, there may well come a time when this court has to choose between the view of the House of Lords and that of the European Court of Human Rights on this fundamental question. But the premise on which the question arises is that there is a rule of international law which denies the English court jurisdiction in the instant case. In both Jones and Lampen Wolfe, the Appellate Committee had satisfied itself that there was. I would not be willing to decide which of the competing views about the implications of a want of jurisdiction is correct, unless the question actually arose. So the first question which I shall address is what is the relevant rule of international law. Identifying Customary International Law To identify a rule of customary international law, it is necessary to establish that there is a widespread, representative and consistent practice of states on the point in question, which is accepted by them on the footing that it is a legal obligation (opinio juris): see Conclusions 8 and 9 of the International Law Commissions Draft Conclusions on Identification of Customary International Law (2016) [A/71/10]. There has never been any clearly defined rule about what degree of consensus is required. The editors of Brownlies Principles of Public International Law, 8th ed (2012), 24, suggest that complete uniformity of practice is not required, but substantial uniformity is. This accords with all the authorities. In the words of the International Court of Justice The Court does not consider that, for a rule to be established as customary, the corresponding practice must be in absolutely rigorous conformity with the rule. In order to deduce the existence of customary rules, the Court deems it sufficient that the conduct of States should, in general, be consistent with such rules, and that instances of State conduct inconsistent with a given rule should generally have been treated as breaches of that rule, not as indications of the recognition of a new rule: Military and Paramilitary Activities in and against Nicaragua (Nicaragua v United States of America), (1986) ICJ Rep, 14, at para 186. What is clear is that substantial differences of practice and opinion within the international community upon a given principle are not consistent with that principle being law: Fisheries Case (United Kingdom v Norway), (1951) ICJ Rep 116, 131. In view of the emphasis placed by the European Court of Human Rights on the United Nations Convention and its antecedent drafts, it is right to point out that a treaty may have no effect qua treaty but nevertheless represent customary international law and as such bind non party states. The International Law Commissions Draft Conclusions on Identification of Customary International Law (2016) [A/71/10], propose as Conclusion 11(1): A rule set forth in a treaty may reflect a rule of customary international law if it is established that the treaty rule: (a) codified a rule of customary international law existing at the time when the treaty was concluded; (b) has led to the crystallization of a rule of customary international law that had started to emerge prior to the conclusion of the treaty; or (c) has given rise to a general practice that is accepted as law (opinio juris) thus generating a new rule of customary international law. It would be difficult to say that a treaty such as the United Nations Convention which has never entered into force had led to the crystallisation of a rule of customary international law that had started to emerge before it was concluded. For the same reason, it is unlikely that such a treaty could have given rise to a general practice that is accepted as law. These difficulties are greatly increased in the case of the United Nations Convention by the consideration that in the 13 years which have passed since it was adopted and opened for signature it has received so few accessions. The real significance of the Convention is as a codification of customary international law. In Jones v Ministry of the Interior of the Kingdom of Saudi Arabia [2007] 1 AC 270, Lord Bingham described it (para 26) as the most authoritative statement available on the current international understanding of the limits of state immunity in civil cases. However, it is not to be assumed that every part of the Convention restates customary international law. As its preamble recites, it was expected to contribute to the codification and development of international law and the harmonisation of practice in this area. Like most multilateral conventions, its provisions are based partly on existing customary rules of general acceptance and partly on the resolution of points on which practice and opinion had previously been diverse. It is therefore necessary to distinguish between those provisions of the Convention which were essentially declaratory and those which were legislative in the sense that they sought to resolve differences rather than to recognise existing consensus. That exercise would inevitably require one to ascertain how customary law stood before the treaty. The margin of appreciation: a tenable view The Secretary of States case is that there is no sufficient consensus on the application of state immunity to a contract for the employment of non diplomatic staff of a foreign diplomatic mission, to found any rule of customary international law on the point. He submits that two consequences follow from this. The first is that article 6 of the Human Rights Convention is satisfied if the rule of the forum state reflects generally recognised principles of international law. For this purpose, it is enough for the forum state to apply a tenable view of what international law is, or at any rate that its domestic law applies a solution that is not outside the currently accepted international standards treated as a benchmark in Fogarty. He submits that it is not necessary to show that international law requires the foreign state to be treated as immune. The second consequence is said to be that in the absence of a rule of customary international law justifying some other solution, the state employer is entitled to absolute immunity. This is because, in the Secretary of States submission, the restrictive doctrine of state immunity operates by grafting exceptions onto the principle of absolute immunity, so that unless and until a relevant exception has achieved the status of customary international law, the immunity remains unqualified. I can deal quite shortly with the suggested distinction between reflects and requires, for in my opinion it is misconceived. The argument is based on the observation of the European Court of Human Rights in Al Adsani (para 56) that measures taken by a High Contracting Party which reflect generally recognised rules of public international law are within a states margin of appreciation. That observation is repeated in most of the subsequent cases: see Fogarty (para 36), Cudak (para 57), Sabeh El Leil (para 49). But in my view the distinction proposed by the Secretary of State is a purely semantic one. International law is relevant to the operation of article 6 of the Human Rights Convention because, in accordance with article 31(3)(c) of the Vienna Convention on the Law of Treaties, the Human Rights Convention is interpreted in the light of any relevant rules of international law applicable in the relations between the parties. It is therefore necessary to ask what is the relevant rule of international law by reference to which article 6 must be interpreted. The relevant rule is that if the foreign state is immune then, as the International Court of Justice has confirmed in Jurisdictional Immunities of the State, the forum state is not just entitled but bound to give effect to that immunity. If the foreign state is not immune, there is no relevant rule of international law at all. What justifies the denial of access to a court is the international law obligation of the forum state to give effect to a justified assertion of immunity. A mere liberty to treat the foreign state as immune could not have that effect, because in that case the denial of access would be a discretionary choice on the part of the forum state: see Al Jedda v United Kingdom (2011) 53 EHRR 23; Nada v Switzerland (2012) 56 EHRR 593, paras 180, 195; Perincek v Switzerland (2016) 63 EHRR 6, paras 258 259. To put the same point another way, if the legitimate purpose said to justify denying access to a court is compliance with international law, anything that goes further in that direction than international law requires is necessarily disproportionate. I conclude that unless international law requires the United Kingdom to treat Libya and Sudan as immune as regards the claims of Ms Janah and Ms Benkharbouche, the denial to them of access to the courts to adjudicate on their claim violates article 6 of the Human Rights Convention. There are circumstances in which an English court considering the international law obligations of the United Kingdom may properly limit itself to asking whether the United Kingdom has acted on a tenable view of those obligations. A suggestion to this effect by Sir Philip Sales and Joanne Clement, International law in domestic courts: the developing framework (2008) 124 LQR 388, 405 407 was tentatively endorsed by Lord Brown of Eaton under Heywood in R (Corner House Research) v Serious Fraud Office [2009] 1 AC 756, at para 68. Thus the court may in principle be reluctant to decide contentious issues of international law if that would impede the executive conduct of foreign relations. Or the rationality of a public authoritys view on a difficult question of international law may depend on whether its view of international law was tenable, rather than whether it was right. Both of these points arose in Corner House. Or the court may be unwilling to pronounce upon an uncertain point of customary international law which only a consensus of states can resolve. As Lord Hoffmann observed in Jones v Saudi Arabia (para 63), it is not for a national court to develop international law by unilaterally adopting a version of that law which, however desirable, forward looking and reflective of values it may be, is simply not accepted by other states. But I decline to treat these examples as pointing to a more general rule that the English courts should not determine points of customary international law but only the tenability of some particular view about them. If it is necessary to decide a point of international law in order to resolve a justiciable issue and there is an ascertainable answer, then the court is bound to supply that answer. In the present cases, the law requires us to measure sections 4(2)(b) and 16(1)(a) against the requirements of customary international law, something that we cannot do without deciding what those requirements are. I do not read the Strasbourg court as having said anything very different in Fogarty. The court considered (para 37) that although there had been a trend in favour of the restrictive doctrine of state immunity, there was too much diversity of state practice in the specific area of embassy staff to enable them to say that the restrictive doctrine applied to them. In those circumstances they thought it sufficient that the United Kingdom had acted on a view of international law which, although not the only possible one, was within currently accepted international standards. But this is not the same point as the one made by the Secretary of State, for it applies only if there is no relevant and identifiable rule of international law. If there is such a rule, the court must identify it and determine whether it justifies the application of state immunity. That is what the Strasbourg court did in Cudak and Sabeh El Leil, and what it criticised the Lithuanian Supreme Court and the French Court de Cassation for failing to do in those cases. For reasons which I shall explain, I find the view expressed in Fogarty that there was no relevant and identifiable rule of international law surprising, but that is another matter. The starting point: absolute or restrictive immunity? The fundamental difference between the parties to this appeal concerns the starting point. On the footing that customary international law must require the United Kingdom to treat Libya and Sudan as immune, the Secretary of State submits that it does. This is because in his submission state immunity is absolute unless the case is brought within an internationally recognised exception to it. This submission, if it is correct, would considerably broaden the scope of state immunity in customary international law, by extending it to any group of claimants about whom there was a diversity of state practice. But in my view, it is not correct. The rule of customary international law is that a state is entitled to immunity only in respect of acts done in the exercise of sovereign authority. In the absence of a special rule to some different effect applicable to employees in the position of Ms Janah and Ms Benkharbouche, that is the default position. It is true that the State Immunity Act 1978 adopts the drafting technique of stating a presumptive immunity subject to exceptions. Section 1 provides that a state is immune except as provided in the following sections of Part I. The same drafting technique is employed in other national legislation, especially in common law jurisdictions, for example the United States, Canada and Australia. As applied to international law, the submission is lent a certain superficial plausibility by the fact that the United Nations Convention has adopted the same drafting technique. Article 5 provides for a general immunity subject to the provisions of this Convention. In Jones v Saudi Arabia, Lord Bingham relied on the way that the United Nations Convention was drafted as showing that a state was immune in respect of everything that was not the subject of an express exception, and concluded that the immunity extended to torture because torture was not the subject of any express exception: see paras 8 9 (Lord Bingham), and cf para 47 (Lord Hoffmann). I do not regard these considerations as decisive of the present issue. No one doubts that as a matter of domestic law, Part I of the State Immunity Act is a complete code. If the case does not fall within one of the exceptions to section 1, the state is immune. But the present question is whether the immunity thus conferred is wider than customary international law requires, and that raises different considerations. In the first place, it is necessary to read the grant of the immunity in article 5 of the United Nations Convention together with the exceptions which follow, as an organic whole. The exceptions are so fundamental in their character, so consistent in their objective and so broad in their effect as to amount in reality to a qualification of the principle of immunity itself rather than a mere collection of special exceptions. Secondly, it is important when doing this to distinguish between a drafting technique and a principle of law. The travaux prparatoires of the United Nations Convention show that the technique of stating a general rule of immunity subject to exceptions, was highly contentious. This was partly because it might be taken as an implicit recognition that absolute immunity was the basic rule, something which many states did not accept; and partly because it was thought that it would lead to undue rigidity and thereby impede the future development of customary international law. These differences are summarised in the Report of the International Law Commission on the Work of its thirty eighth session [A/41/10] ILC Yearbook (1986), ii(2), 16, and in the valuable commentary of OKeefe and Tams (ed), The United Nations Convention of Jurisdictional Immunities of States and their Property (2013), 99 101. It is clear that the draftsmans objective was to remain neutral as between the competing doctrines said to represent the current state of international law. Various proposals were made with a view to achieving this and avoiding undue rigidity. In particular, it was proposed that what became article 5 should provide that a state was immune subject to the provisions of the present articles [and the relevant rules of general international law applicable in the matter]. This provoked much discord, and the bracketed words were ultimately dropped on the ground that they made no difference. In its commentary on the draft articles of 1991, the International Law Commission explained that this was because it was considered that any immunity or exception to immunity accorded under the present articles would have no effect on general international law and would not prejudice the future development of State practice Article 5 is also to be understood as the statement of the principle of State immunity forming the basis of the present draft articles and does not prejudge the question of the extent to which the articles, including article 5, should be regarded as codifying the rules of existing international law. Draft articles on Jurisdictional Immunities of States and their Property, with commentaries (1991), 23 (para (3) under article 5) Thirdly, as I have already observed, the United Nations Convention has for the time being no binding effect qua treaty. All that can be said about it is that so far as it seeks to codify existing customary international law, it is evidence of what that law is. But even where it is declaratory, it can never be definitive, if only in order to allow for the future development of state practice. Hence the fifth recital in its preamble (Affirming that the rules of customary law continue to govern matters not regulated by the provisions of the present Convention), which was inserted in the course of the debates about article 11 to which I have referred. Fourthly, the House of Lords in Jones v Saudi Arabia was not concerned with the question whether the starting point was absolute or restrictive immunity. It was concerned with the question whether torture and other breaches of peremptory norms of international law constituted an implied additional limitation upon an immunity which was unquestionably recognised by international law. Without an implied limitation of this kind, a state would have been immune in international law as regards an allegation of torture under either the absolute or the restrictive doctrine because, as the House of Lords held, torture is by definition a governmental act: see paras 16, 19 (Lord Bingham), and 83 85 (Lord Hoffmann). The main difficulty about the Secretary of States submission is a more fundamental one, namely that it is not consistent with the way that the law of state immunity has developed. Unlike diplomatic immunity, which is based mainly on an international consensus established by writers and governmental practice over many centuries, state immunity was developed during the nineteenth and twentieth centuries primarily by municipal courts. In the words of the Special Rapporteur of the International Law Commission, presenting in 1980 the first draft of what became the United Nations Convention, their decisions constituted a great and divergent volume of municipal jurisprudence: [A/35/10] ILC Yearbook (1980), ii(2), 143. Before the age of state trading organisations, there were few occasions for testing the limits of state immunity. States rarely did acts in peacetime within the territory of other states, other than conduct diplomatic relations, and that was the subject of a distinct and far older international law immunity. Leaving aside the rather special case of the immunity of personal sovereigns visiting the forum state, the only other acts which a sovereign performed in the territory of another state involved the presence of state owned ships in its ports or the placing of public procurement contracts. The latter were generally for military or diplomatic purposes, and were therefore closely related to the inherently governmental acts of the state, even if they were strictly speaking acts of a private law character. The earliest notable landmark was the judgment of the Supreme Court of the United States in The Schooner Exchange v McFaddon 11 US 116 (1812), delivered by Chief Justice Marshall. The Exchange was a trading vessel belonging to two American merchants, which was captured at sea by French ships of war, converted into an armed cruiser and incorporated into the French navy. When the ship put in to the port of Philadelphia, its former owners claimed possession. The Supreme Court held that a ship of war in the possession of a foreign state was immune from any proceedings in rem. Marshall CJ founded the rule on an implied exception to the territorial sovereignty of states for certain classes of act done there by a foreign state, which was based on the usages and received obligations of the civilised world. At pp 144 145, he drew a distinction between trading vessels and ships of war. It may safely be affirmed that there is a manifest distinction between the private property of the person who happens to be a prince and that military force which supports the sovereign power and maintains the dignity and the independence of a nation. A prince, by acquiring private property in a foreign country, may possibly be considered as subjecting that property to the territorial jurisdiction; he may be considered as so far laying down the prince and assuming the character of a private individual, but this he cannot be presumed to do with respect to any portion of that armed force which upholds his Crown and the nation he is entrusted to govern. The Exchange was a decision on the immunity of the property of a foreign state, a context in which the immunities recognised by international law have generally been wider than those available in actions for breach of duty. But it will be seen even in that context, at its origins the immunity was not conceived to be absolute. It was assumed to extend only to property employed for public or governmental purposes. The same assumption was made in the earliest English cases. In Duke of Brunswick v King of Hanover (1848) 2 HL Cas 1 the House of Lords held, in the words of Lord Chancellor Cottenham (p 17), that a foreign Sovereign, coming into this country, cannot be made responsible here for an act done in his sovereign character in his own country; whether it be an act right or wrong, whether according to the constitution of that country or not, the Courts of this country cannot sit in judgment upon an act of a Sovereign, effected by virtue of his Sovereign authority abroad. In De Haber v Queen of Portugal (1851) 7 QB 196, 207 Lord Campbell CJ gave it as his opinion that an action cannot be maintained in any English Court against a foreign potentate, for anything done or omitted to be done by him in his public capacity as representative of the nation of which he is the head; and that no English Court has jurisdiction to entertain any complaints against him in that capacity. The question whether a corresponding immunity applied to a sovereigns non sovereign acts arose for the first time in England in The Charkieh (1872 5) LR 4 A & E 59, a collision action brought against a ship which belonged to the Khedive of Egypt and flew the flag of the Ottoman navy, but was employed for ordinary commercial purposes and at the time was under charter to a British trading house. Sir Robert Phillimore, sitting in the Admiralty Court, held that the vessel was not immune because the Khedive was not a sovereign but an officer of the Ottoman Porte. However, he went on to hold that there would have been no immunity in any event, because the use of state property for trading purposes was an implicit waiver of any immunity attaching to the state. At pp 99 100, he stated that no principle of international law, and no decided case, and no dictum of jurists of which I am aware, has gone so far as to authorize a sovereign prince to assume the character of a trader, when it is for his benefit; and when he incurs an obligation to a private subject to throw off, if I may so speak, his disguise, and appear as a sovereign, claiming for his own benefit, and to the injury of a private person, for the first time, all the attributes of his character. Six years later, Sir Robert had to deal with the same issue in The Parlement Belge (1879) 4 PD 129, another collision action brought against a ship belonging to the Belgian state, which was employed as a mail packet but also carried some passengers and freight. He followed his own judgment in The Charkieh, holding that any immunity would not include a vessel engaged in commerce, whose owner is (to use the expression of Bynkershoek, De Leg Mercatore) strenue mercatorem agens. The Court of Appeal overruled this decision. The judgment of the court (delivered by Brett LJ) was authority for two points. The first, which was technically obiter dictum, was that by extension from the personal immunity of an ambassador, which at that time was absolute, the courts could not exercise any jurisdiction in personam against a sovereign. The second, which was the ratio of the decision, was that immunity extended to proceedings in rem against the public property of any state which is destined to public use. The ground on which the appeal was allowed was that the vessel was employed substantially for public purposes as a mail packet. The court declined to decide whether it would have been immune if it had been used wholly or substantially for ordinary trading. It was enough that the incidental carriage of passengers and freight did not deprive Belgium of the immunity to which the substantially public purpose of its operations entitled it. Cf the analysis of the decision by Lord Cross of Chelsea, delivering the advice of the Privy Council in The Philippine Admiral [1977] AC 377, 391 392. Nonetheless, the Parlement Belge was for many years regarded as authority for the absolute immunity of state property. The extreme point of this tendency was reached with the decision of the Court of Appeal in The Porto Alexandre [1920] P 30. In that case there was no suggestion that the vessel was in use for any public purpose. She was engaged in ordinary trading operations. But the Parlement Belge was treated as warranting the absolute immunity of state owned ships from actions in rem. The decision provoked controversy well before the Privy Council held in The Philippine Admiral [1977] AC 373 that it had been wrongly decided. In Compania Naviera Vascongada v Steamship Cristina (The Cristina) [1938] AC 485, a Spanish trading ship had been requisitioned by the Spanish government while on the high seas in order to assist the republican government of Spain to put down the nationalist rebellion. Possession of her had then been taken in the port of Cardiff by the Spanish consul there. The speeches need to be read in conjunction with the fuller account of the facts and arguments which are reported at (1938) 60 Lloyds Rep 147. It was not in doubt that the Spanish consul had taken possession of it for public purposes. The real issues were whether an action in rem against a state owned ship impleaded the foreign state; and whether the English courts should recognise an extraterritorial decree of the Spanish state. The House of Lords rejected the argument about the extraterritorial operation of the decree, and dismissed the action on the ground (i) that an action in rem against a state owned ship indirectly impleaded the state, or indeed (per Lord Wright, at p 505) directly impleaded it; and (ii) that however she had previously been employed by her owners, she was intended for public purposes in the hands of the Spanish government. An action for possession could not therefore proceed. The interest of the case for present purposes lies in the divergence of views about the Porto Alexandre. Lord Atkin and Lord Wright considered that the immunity of states was absolute and applied irrespective of the purpose for which a ship was in the states possession. But the other members of the Appellate Committee doubted this, primarily on the ground that it could be correct only if there was a sufficient international consensus to that effect. However, no attempt had been made in the earlier cases to establish that there was. Lord Thankerton observed (pp 495 496) that it may be argued that the judgment of Brett LJ in the Parlement Belge did not authorise the extension of state immunity to property in commercial use since proceedings against such property were not to be regarded as inconsistent with the independence and equality of the state represented by such owner. He pointed out that the Court of Appeal in the Porto Alexandre had made no inquiry as to whether such an exemption was generally agreed to by the nations, and it seems to be common knowledge that they have not so agreed. Lord Macmillan shared these doubts, remarking at p 498: I confess that I should hesitate to lay down that it is part of the law of England that an ordinary foreign trading vessel is immune from civil process within this realm by reason merely of the fact that it is owned by a foreign State, for such a principle must be an importation from international law and there is no proved consensus of international opinion or practice to this effect. On the contrary the subject is one on which divergent views exist and have been expressed among the nations. When the doctrine of the immunity of the person and property of foreign sovereigns from the jurisdiction of the Courts of this country was first formulated and accepted it was a concession to the dignity, equality and independence of foreign sovereigns which the comity of nations enjoined. It is only in modern times that sovereign States have so far condescended to lay aside their dignity as to enter the competitive markets of commerce, and it is easy to see that different views may be taken as to whether an immunity conceded in one set of circumstances should to the same extent be enjoyed in totally different circumstances. Lord Maugham said (pp 519 520): My Lords, I cannot myself doubt that, if the Parlement Belge had been used solely for trading purposes, the decision would have been the other way. Almost every line of the judgment would have been otiose if the view of the Court had been that all ships belonging to a foreign Government even if used purely for commerce were entitled to immunity The judgments in The Porto Alexandre seem to me to have omitted any consideration of what I deem to be a vital point namely, the fact that other countries while they admit the immunity as regards ships of war and other public ships have not been at all agreed that the same immunity ought to be granted to ships and cargoes engaged in ordinary trading voyages. In this uncertain state of English law, Lord Simon, delivering the advice of the Privy Council in Sultan of Johore v Abubakar Tunku Aris Bendahar [1952] AC 318, 343, observed: Their Lordships do not consider that there has been finally established in England any absolute rule that a foreign independent sovereign cannot be impleaded in our courts in any circumstances. It seems desirable to say this much having regard to inferences that might be drawn from some parts of the Court of Appeals judgment in The Parlement Belge, and from the speech of Lord Atkin in The Cristina. The doubts expressed in The Cristina by Lord Thankerton, Lord Macmillan and Lord Maugham about the international law basis for a rule of absolute immunity were justified, as a review of pre 1945 decisions in different jurisdictions demonstrates. For what follows, I am indebted to the extensive reviews of this large body of material by Sir Hersch Lauterpacht in his influential article The Problem of Jurisdictional Immunities of Foreign States, 28 BYIL (1951), 220, 250 272, by the German Bundesverfassungsgericht in Claim against the Empire of Iran (1963), Entscheidungen des Bundesverfassungsgerichts, 16 (1964), 27 (partially translated in 45 ILR 257), and by Fox, The Law of State Immunity, 3rd ed (2013), Ch 6, and Dunbar, Controversial Aspects of Sovereign Immunity in the Case law of some States, (1971) 132 Recueil des Cours, 197. Broadly speaking, these show that states which adopted the absolute doctrine of state immunity generally did so on one or other of two grounds. One was that the sovereign equality of states implied an entire absence of jurisdiction by the courts on one state over another. The other was that while there was in principle a distinction between the public and private acts of a state, the distinction should depend on the states purpose in doing the relevant act and not on its juridical character, so that even trading activities were immune if they were carried on in the public interest. The two approaches are very different but in practice they lead to the same result, except perhaps in the case of the private acts of personal sovereigns. As far as the common law world is concerned, the English courts, after a period of hesitation, finally opted for the first analysis. In British dependencies and dominions, the absolute doctrine of state immunity was generally adopted in line with what was assumed to have been laid down in The Parlement Belge. In the United States, the absolute doctrine had a more chequered history, but it ultimately adopted the second analysis. The State Departments traditional approach to the question of state owned ships was described in a communication addressed by the Secretary of State to the Attorney General in 1918, stating that where [state owned] vessels were engaged in commercial pursuits, they should be subject to the obligations and restrictions of trade, if they were to enjoy the benefits and profits. Instructions to this effect were given to United States diplomatic and consular officers abroad: see Hackworth, Digest of International Law, ii (1941), 429, 439 440. This only changed with the decision of the United States Supreme Court in Berizzi Brothers Co v Steamship Pesaro, 271 US 562 (1926), an action in rem in support of a cargo claim against a trading vessel owned by the Italian state. The State Department had refused, in accordance with its traditional practice, to certify that the ship was immune, on the ground that vessels owned by a state and engaged in commerce are not entitled, within the territorial waters of another state, to the immunity accorded to vessels of war, and that notwithstanding such ownership these vessels are subject to the local jurisdiction to the same extent as other merchant vessels: Hackworth, op cit, ii, 437. But the Supreme Court upheld the claim to immunity. The Court adopted The Parlement Belge, as it had been interpreted in subsequent English case law, including The Porto Alexandre. It accepted in principle the distinction between ships operated for public and private purposes which dated back to The Schooner Exchange v McFaddon. But it largely emptied it of substance by applying it according to the states purpose in doing the act. As Van Devanter J put it, at p 574, when, for the purpose of advancing the trade of its people or providing revenue for its treasury, a government acquires, mans, and operates ships in the carrying trade, they are public ships in the same sense that war ships are. We know of no international usage which regards the maintenance and advancement of the economic welfare of a people in time of peace of any less a public purpose than the maintenance and training of a naval force. This settled the position for some twenty years as far as claims for state immunity in the United States courts were concerned. But, as the State Department recorded in the Tate Letter of 1952 ((1952) 26 Department of State Bulletin, 984 985), it maintained its long standing practice of not asserting immunity in foreign courts in proceedings alleging ordinary contractual or tortious liability against the United States. The position in civil law countries was highly diverse. In France, the absolute doctrine was endorsed by the Cour de Cassation in its celebrated decision in Lambge et Pujol v Etat dEspagne, 22 Jan 1849, Dalloz (1849), i, 5. But the principle was not consistently applied in its absolute form, and a series of decisions in the first half of the 20th century appeared to recognise a distinction between the public and private law functions of states: see Dunbar, art cit, 212 218. The absolute doctrine was consistently applied until recent times in Spain, Portugal and Japan, but less consistently in Germany and the Netherlands and not at all in Switzerland. It has never been recognised in Italy or Belgium, whose highest courts were among the first to adopt the restrictive doctrine in a recognisably modern form. As early as 1886, the Italian Corte di Cassazione justified its position by observing: No one can deny that the foundation of international law is the sovereignty and independence of states; and that in consequence of this principle each state, in the exercise of its powers, is exempted from the jurisdiction of other states. But the fallacy consists in considering the state exclusively and always as a body politic, although its activity as a civil entity cannot be gainsaid when it performs acts acquiring rights and assuming obligations in private relationships, like any other physical or juristic person being capable of exercising civil rights. Typaldos, Console di Grecia v Manicmio di Aversa, Giurisprundenzia Italiana (1886), I, 228, 229. The Belgian Cour de Cassation, after some three decades in which the restrictive doctrine had been applied by the lower courts, adopted it in SA des Chemins de Fer Ligeois Luxembourgeois v Etat Nerlandais, Pasicrisie Belge (1903), ii, 294, 301 302 for very similar reasons. Looking at the position in the years immediately following the second world war, Sir Hersch Lauterpacht concluded that the common assumption that the majority of states were wedded to the doctrine of absolute state immunity was inaccurate. On the contrary, in the great majority of states in which there is an articulate practice on the subject, courts have declined to follow the principle of absolute immunity (pp 250 251). It followed, that so far as the actual practice of states may be said to be evidence of customary international law, there is no doubt that the principle of absolute immunity forms no part of international custom (p 221). Thirty five years later the International Law Commission, reporting to the United Nations General Assembly on the difficulties which it had encountered in formulating a basic principle of state immunity, expressed the same view: There is common agreement that, for acts performed in the exercise of the prerogatives de la puissance publique or sovereign authority of the State, there is undisputed immunity. Beyond or around that hard core of immunity, however, there appears to be a grey zone in which opinions and existing case law, and indeed legislations, still vary. Report of the International Law Commission on the Work of its thirty eighth session [A/41/10] ILC Yearbook (1986), ii(2), 16. The story of the progressive adoption of the restrictive doctrine of state immunity in the past 70 years is well known and can be shortly summarised. The main impetus for this was the growing significance of state trading organisations in international trade. The critical moment was the formal adoption (or readoption) of the restrictive doctrine by the United States government in the Tate Letter, addressed by the legal adviser to the State Department to the Acting Attorney General on 19 May 1952. After reciting the adoption of the restrictive doctrine by a growing number of states, it stated the intention of the executive to act on it. The widespread and increasing practice on the part of governments of engaging in commercial activities, it observed, makes necessary a practice which will enable persons doing business with them to have their rights determined in the courts: loc cit, 985. Following the Tate Letter, the restrictive doctrine was generally adopted by Federal Courts, a development which was ultimately approved by the Supreme Court in Alfred Dunhill of London Inc v Republic of Cuba, 425 US 682, 701 703 (1976). In Europe, the main landmark was the adoption by the German Bundesverfassungsgericht of the restrictive theory in 1963, and its acceptance that the distinction between acts jure imperii and jure gestionis depended on the juridical character of the act, not the purpose of the state in doing it: Claim against the Empire of Iran (1963) 45 ILR 257. The courts of the United Kingdom, followed suit in the 1970s. Today, the international consensus in favour of the restrictive doctrine is almost complete. While there are a few states whose domestic position is unclear, with the legislative adoption of the restrictive doctrine by Russia in 2015, the only notable state still to adhere to the absolute doctrine is China. Three points can be derived from this history. The first is that there has probably never been a sufficient international consensus in favour of the absolute doctrine of immunity to warrant treating it as a rule of customary international law. All that can be said is that during certain periods, a substantial number of states, but not necessarily a majority, have adopted the absolute doctrine as part of their domestic law. Some of them have done so on the assumption that it represented international law, but without any real investigation of the rule recognised in other states. Secondly, while there has for at least two centuries been a consensus among nations in favour of some form of state immunity, the only consensus that there has ever been about the scope of that immunity is the consensus in favour of the restrictive doctrine. Thirdly, the adoption of the restrictive doctrine has not proceeded by accumulating exceptions to the absolute doctrine. What has happened is that governments, courts and writers of authority have been prompted by the widening scope of state operations and their extension into commerce and industry, to re examine the true basis of a doctrine originally formulated at a time when states by and large confined their operations in other countries to the classic exercises of sovereign authority. The true basis of the doctrine was and is the equality of sovereigns, and that never did warrant immunity extending beyond what sovereigns did in their capacity as such. As Lord Wilberforce put it in The I Congreso del Partido [1983] 1 AC 244, 262, It is necessary to start from first principle. The basis upon which one state is considered to be immune from the territorial jurisdiction of the courts of another state is that of par in parem, which effectively means that the sovereign or governmental acts of one state are not matters upon which the courts of other states will adjudicate. Application to contracts of employment As a matter of customary international law, if an employment claim arises out of an inherently sovereign or governmental act of the foreign state, the latter is immune. It is not always easy to determine which aspects of the facts giving rise to the claim are decisive of its correct categorisation, and the courts have understandably avoided over precise prescription. The most satisfactory general statement is that of Lord Wilberforce in The I Congreso del Partido, at 267: The conclusion which emerges is that in considering, under the restrictive theory whether state immunity should be granted or not, the court must consider the whole context in which the claim against the state is made, with a view to deciding whether the relevant act(s) upon which the claim is based, should, in that context, be considered as fairly within an area of activity, trading or commercial, or otherwise of a private law character, in which the state has chosen to engage, or whether the relevant act(s) should be considered as having been done outside that area, and within the sphere of governmental or sovereign activity. In the great majority of cases arising from contract, including employment cases, the categorisation will depend on the nature of the relationship between the parties to which the contract gives rise. This will in turn depend on the functions which the employee is employed to perform. The Vienna Convention on Diplomatic Relations divides the staff of a diplomatic mission into three broad categories: (i) diplomatic agents, ie the head of mission and the diplomatic staff; (ii) administrative and technical staff; and (iii) staff in the domestic service of the mission. Diplomatic agents participate in the functions of a diplomatic mission defined in article 3, principally representing the sending state, protecting the interests of the sending state and its nationals, negotiating with the government of the receiving state, ascertaining and reporting on developments in the receiving state and promoting friendly relations with the receiving state. These functions are inherently governmental. They are exercises of sovereign authority. Every aspect of the employment of a diplomatic agent is therefore likely to be an exercise of sovereign authority. The role of technical and administrative staff is by comparison essentially ancillary and supportive. It may well be that the employment of some of them might also be exercises of sovereign authority if their functions are sufficiently close to the governmental functions of the mission. Cypher clerks might arguably be an example. Certain confidential secretarial staff might be another: see Governor of Pitcairn v Sutton (1994) 104 ILR 508 (New Zealand Court of Appeal). However, I find it difficult to conceive of cases where the employment of purely domestic staff of a diplomatic mission could be anything other than an act jure gestionis. The employment of such staff is not inherently governmental. It is an act of a private law character such as anyone with the necessary resources might do. This approach is supported by the case law of the European Court of Human Rights, which I have already summarised. In Cudak, Sabeh El Leil, Wallishauser and Radunovi, all cases concerning the administrative and technical staff of diplomatic missions, the test applied by the Strasbourg Court was whether the functions for which the applicant was employed called for a personal involvement in the diplomatic or political operations of the mission, or only in such activities as might be carried on by private persons. In Mahamdia v Peoples Democratic Republic of Algeria (Case C 154/11) [2013] ICR 1, para 55 57, the Court of Justice of the European Union applied the same test, holding that the state is not immune where the functions carried out by the employee do not fall within the exercise of public powers. The United States decisions are particularly instructive, because the Foreign State Immunity Act of the United States has no special provisions for contracts of employment. They therefore fall to be dealt with under the general provisions relating to commercial transactions, which have been interpreted as confining state immunity to exercises of sovereign authority: see Saudi Arabia v Nelson 507 US 349, 360 (1993). The principle now applied in all circuits that have addressed the question is that a state is immune as regards proceedings relating to a contract of employment only if the act of employing the plaintiff is to be regarded as an exercise of sovereign authority having regard to his or her participation in the diplomatic functions of the mission: Segni v Commercial Office of Spain 835 F 2d 160, 165 (7th Cir, 1987), Holden v Canadian Consulate 92 F 3d 918 (9th Cir, 1996). Although a foreign state may in practice be more likely to employ its nationals in those functions, nationality is in itself irrelevant to the characterisation: El Hadad v United Arab Emirates 216 F 3d 29 (DC Cir, 2000), at 4, 5. In Park v Shin 313 F 3d 1138 (9th Cir, 2002), paras 12 14, it was held that the act of hiring a domestic servant is not an inherently public act that only a government could perform, even if her functions include serving at diplomatic entertainments. A very similar principle has been consistently applied in recent decisions of the French Cour de Cassation: Barrandon v United States of America, 116 ILR 622 (1998), Coco v Argentina 113 ILR 491 (1996), Saignie v Embassy of Japan 113 ILR 492 (1997). In the last named case, at p 493, the court observed that the employee, a caretaker at the premises of the mission, had not had any special responsibility for the performance of the public service of the embassy. I would, however, wish to guard against the suggestion that the character of the employment is always and necessarily decisive. Two points should be made, albeit briefly since neither is critical to this appeal. The first is that a states immunity under the restrictive doctrine may extend to some aspects of its treatment of its employees or potential employees which engage the states sovereign interests, even if the contract of employment itself was not entered into in the exercise of sovereign authority. Examples include claims arising out of an employees dismissal for reasons of state security. They may also include claims arising out of a states recruitment policy for civil servants or diplomatic or military employees, or claims for specific reinstatement after a dismissal, which in the nature of things impinge on the states recruitment policy. These particular examples are all reflected in the United Nations Convention and were extensively discussed in the preparatory sessions of the International Law Commission. They are certainly not exhaustive. In re Canada Labour Code [1992] 2 SCR 50, concerned the employment of civilian tradesmen at a US military base in Canada. The Supreme Court of Canada held that while a contract of employment for work not involving participation in the sovereign functions of the state was in principle a contract of a private law nature, particular aspects of the employment relationship might be immune as arising from inherently governmental considerations, for example the introduction of a no strike clause deemed to be essential to the military efficiency of the base. In these cases, it can be difficult to distinguish between the purpose and the legal character of the relevant acts of the foreign state. But as La Forest J pointed out (p 70), in this context the states purpose in doing the act may be relevant, not in itself, but as an indication of the acts juridical character. The second point to be made is that the territorial connections between the claimant on the one hand and the foreign or forum state on the other can never be entirely irrelevant, even though they have no bearing on the classic distinction between acts done jure imperii and jure gestionis. This is because the core principle of international law is that sovereignty is territorial and state immunity is an exception to that principle. As the International Court of Justice observed in Jurisdictional Immunities of the State, at para 57, the principle of state immunity has to be viewed together with the principle that each State possesses sovereignty over its own territory and that there flows from that sovereignty the jurisdiction of the State over events and persons within that territory. Exceptions to the immunity of the State represent a departure from the principle of sovereign equality. Immunity may represent a departure from the principle of territorial sovereignty and the jurisdiction which flows from it. The whole subject of the territorial connections of a non state contracting party with the foreign or the forum state raises questions of exceptional sensitivity in the context of employment disputes. There is a substantial body of international opinion to the effect that the immunity should extend to a states contracts with its own nationals irrespective of their status or functions even if the work falls to be performed in the forum state; and correspondingly that it should not extend to staff recruited from the local labour force in whose protection the forum state has a governmental interest of its own. Both propositions received substantial support in the preparatory sessions leading to the United Nations Convention and were reflected in the final text of article 11. Both receive a measure of recognition in the Vienna Convention on Diplomatic Relations which carefully distinguishes between the measure of immunity accorded to the staff of a diplomatic mission according to whether they are nationals of the foreign state or nationals or permanent residents of the forum state: see articles, 33.2, 37, 38, 39.4 and 44. In a practical sense, it might be thought reasonable that a contract between a state and one of its own nationals should have to be litigated in the courts of that state under its laws, but unreasonable that the same should apply to locally recruited staff. There is, however, only limited international consensus on where the boundaries lie between the respective territorial responsibilities of the foreign and the forum state, and on how far the territorial principle can displace the rule which confers immunity on acts jure imperii but not on acts jure gestionis. I shall expand on this point below, in the context of section 4 of the State Immunity Act, which is largely based on the territorial principle. Section 4(2) At the time when the State Immunity Act was enacted, the application of state immunity to contracts of employment had only lately emerged as a potential problem. States had traditionally recruited the staff of diplomatic and representative missions at home. The employment of locally recruited staff in significant numbers was a recent development. The European Convention on State Immunity was one of the first international instruments to make special provision for contracts of employment, which would otherwise have fallen to be dealt with under the general principles of customary international law relating to state immunity. There was, however, no consistency of state practice capable of founding a special rule of customary international law governing employment. This was recognised during the preparatory sessions of the International Law Commission relating to jurisdictional immunities of states. The working group reviewing the Commissions draft articles of 1991 observed in 1999: 96. Although it has been argued that there are no universally accepted international law principles regulating the position of employees of foreign States, relevant case law has often considered a contract of employment as merely a special type of commercial/private law contract. 97. In this regard, it is important to distinguish between those States whose law on sovereign immunities makes a specific provision for contracts of employment and those States where it does not or which have no statute on the subject. In the latter cases, it is necessary to analyse the contract of employment as a commercial or private law contract, whereas in the former case, the only question is whether the contract of employment falls within the relevant provisions. 98. A key concern has been to balance the sovereignty of States with the interests of justice involved when an individual enters into a transaction with a State. One way of achieving this balance has been to stress a distinction between acts that are sovereign, public or governmental in character as against acts that are commercial or private in character 99. Immunity has generally been granted in respect of the employment of persons at diplomatic or consular posts whose work involves the exercise of governmental authority. 100. The cases examined indicate a tendency for courts to find that they have the jurisdiction to hear disputes relating to employment contracts, where the employment mirrors employment in the private sector. However, there has also been recognition that some employment based on such contracts involves governmental activities by the employees and, in such circumstances, courts have been prepared to grant immunity. ILC Yearbook (1999), ii(2), 166. The travaux leading to article 11 of the United Nations Convention contain no suggestion that existing state practice supported a special rule of international law concerning employment claims, extending beyond the immunity attaching to sovereign acts. On the contrary, it is clear from both the travaux themselves and the impressive body of legal materials assembled by the parties to this appeal that, while many states assert a special jurisdiction over employment disputes extending to the employees of foreign states, there is considerable diversity in this area. The ILCs Special Rapporteur reported in 1983 (ILC Yearbook (1983), ii(1), 34 8 [A/CN.4/363]) that: the current practice of States with regard to contracts of employment can offer no greater comfort nor absolute proof approaching a universal or uniform State practice. It only indicates a deeper intrusion into a darker or greyer zone of greater controversy. (para 39) The most that could be said was that All things considered, an emerging trend appears to favour the application of local labour law in regard to recruitment of the available labour force within a country, and consequently to encourage the exercise of territorial jurisdiction at the expense of jurisdictional immunities of foreign States. (para 60) The result is that the State Immunity Act 1978 can be regarded as giving effect to customary international law only so far as it distinguishes between exercises of sovereign authority and acts of a private law character, and requires immunity to be conferred on the former but not the latter. There is no basis in customary international law for the application of state immunity in an employment context to acts of a private law character. Under the terms of the Act, contracts of employment are excluded from the ambit of section 3, which applies the distinction between sovereign acts and acts of a private law character to other contracts for the supply of services. Section 4 by comparison identifies those contracts of employment which attract immunity by reference to the respective connections between the contract or the employee and the two states concerned. In principle, immunity does not attach to employment in the local labour market, ie where the contract was made in the United Kingdom or the work fell to be performed there: see section 4(1). However, this is subject to sections 4(2)(a) and (b), which are concerned with the employees connections by nationality or residence with the foreign state (section 4(2)(a)) or the forum state (section 4(2)(b)). Section 4(2)(a) extends the immunity to claims against the employing state by its own nationals. As I have said, this may have a sound basis in customary international law, but does not arise here. Section 4(2)(b) extends it to claims brought by nationals or habitual residents of third countries. Both subsections apply irrespective of the sovereign character of the relevant act of the foreign state. Sections 4(2)(a) and (b) are derived from article 5.2(a) and (b) of the European Convention on State Immunity. Like section 4 of the Act, article 5 of the Convention deals with contracts of employment without reference to the distinction between acts jure imperii and jure gestionis which are the basis of the restrictive doctrine of immunity. Contractual submission apart, the availability of state immunity in answer to employment claims is made to depend entirely on the location of the work and the respective territorial connections between the employee on the one hand and the foreign state or the forum state on the other. The explanatory report submitted to the Committee of Ministers of the Council of Europe justified this on the ground that the links between the employee and the employing State (in whose courts the employee may always bring proceedings), are generally closer than those between the employee and the State of the forum. The United Kingdom is not unique in applying this principle. Seven other European countries are party to the European Convention on State Immunity and six other countries have enacted legislation containing provisions similar to section 4(2) of the United Kingdom Act. But this is hardly a sufficient basis on which to identify a widespread, representative and consistent practice of states, let alone to establish that such a practice is accepted on the footing that it is an international obligation. The considerable body of comparative law material before us suggests that unless constrained by a statutory rule the general practice of states is to apply the classic distinction between acts jure imperii and jure gestionis, irrespective of the nationality or residence of the claimant. Indeed, the courts of a significant number of jurisdictions have refused to apply the immunity as between states which are not I conclude that section 4(2)(b) of the State Immunity Act 1978 is not justified both party to the Convention, unless they performed functions directly related to the exercise of the states sovereign authority, on the ground that the requirements of general international law differed on this point from those of the Convention: see French Consular Employee Claim (1989) 86 ILR 583 (Supreme Court, Austria); British Consulate General in Naples v Toglia (1989) 101 ILR 379, 383 384 (Corte de Cassazione, Italy); De Queiroz v State of Portugal, 115 ILR 430 (1992) (Brussels Labour Court, Belgium, 4th Chamber); M v Arab Republic of Egypt (1994) 116 ILR 656 (Federal Tribunal, Switzerland); Muller v United States of America 114 ILR 512, 517 (1998) (Regional Labour Court, Hesse); X v Saudi School in Paris and Kingdom of Saudi Arabia, 127 ILR 163 (2003) (Cour de Cassation, France note the observations of the Advocate General at p 165); A v B Oxf Rep Int L (ILDC 23) (2004) (Supreme Court, Norway); Kingdom of Morocco v HA Yearbook of International Law (2008), 392 (Court of Appeal of the Hague, Netherlands). by any binding principle of international law. The Secretary of State has an alternative argument to the effect that section 4(2)(b) may be justifiable as an application of purely domestic policy, on the ground that the United Kingdoms interest in asserting the jurisdiction of its own courts over the employment of the local labour force does not extend to nationals or residents of third countries. I reject this argument. On the footing that international law does not require a state to be given immunity, I do not see how the absence of British nationality or residence at the time of the contract can be a proper ground for denying an employee access to the courts in respect of their employment in the United Kingdom. They have no territorial connection with their employer, other than that which is implicit in the employment relationship itself. The fact that they may have had no connection with the United Kingdom either before they came to work here does not prevent them from being part of the domestic labour force afterwards. Nor do I accept that the only relevant interest for this purpose is that of the United Kingdom state. The forum state has duties as well as rights, and as a matter of domestic policy they extend to the protection of those lawfully living and employed in the United Kingdom. Section 16(1)(a) Since section 16(1)(a) extends state immunity to the claims of any employee of a diplomatic mission, irrespective of the sovereign character of the employment or the acts of the state complained of, it is plain that it cannot be justified by reference to any general principle of immunity based on the restrictive doctrine. It could be justified only if there were a special rule, in effect an absolute immunity, applicable to embassy staff. I have already pointed out, in the context of section 4(2)(b), that in jurisdictions where the courts determine claims to immunity by reference to customary international law, the test is whether the relevant acts of the state were exercises of sovereign authority. The analysis need not be repeated here. It is inconsistent with any suggestion that immunity can attach to all embassy staff as such. The Secretary of State submits that there is indeed a special rule applicable to embassy staff. He says that such a rule is implicit in the international obligations of the United Kingdom under the Vienna Convention on Diplomatic Relations, the European Convention on State Immunity, and the state of customary international law reflected in the United Nations Convention. The Vienna Convention on Diplomatic Relations has been ratified by almost every state in the world and may for practical purposes be taken to represent a universally binding standard in international law. Article 7 provides that a sending state may freely appoint members of the staff of a diplomatic mission. The staff referred to include the technical, administrative and domestic staff as well as the diplomatic staff: see article 1. The argument is that the freedom to appoint embassy staff must imply a freedom to dismiss them. Article 32 of the European Convention on State Immunity and article 3.1 of the United Nations Convention both provide that they are not to prejudice the privileges and immunities of a state in relation to the exercise of the functions of its diplomatic missions and persons connected with them. In my opinion, however, article 7 of the Vienna Convention has only a limited bearing on the application of state immunity to employment claims by embassy staff. I would accept that the right freely to appoint embassy staff means that a court of the forum state may not make an order which determines who is to be employed by the diplomatic mission of a foreign state. Therefore, it may not specifically enforce a contract of employment with a foreign embassy or make a reinstatement order in favour of an employee who has been dismissed. But a claim for damages for wrongful dismissal does not require the foreign state to employ any one. It merely adjusts the financial consequences of dismissal. No right of the foreign state under the Vienna Convention is infringed by the assertion of jurisdiction in the forum state to carry out that adjustment. Therefore, no right under the Vienna Convention would be prejudiced by the refusal of the forum state to recognise the immunity of the foreign state as regards a claim for damages. The closest that any international instrument has come to providing for a general immunity of states as regards claims by embassy staff is article 11.2(b) of the United Nations Convention. The article provides, so far as relevant: 1. Unless otherwise agreed between the States concerned, a State cannot invoke immunity from jurisdiction before a court of another State which is otherwise competent in a proceeding Article 11 which relates to a contract of employment between the State and an individual for work performed or to be performed, in whole or in part, in the territory of that other State. 2. Paragraph 1 does not apply if: (a) the employee has been recruited to perform particular functions in the exercise of governmental authority; (b) the employee is: (i) a diplomatic agent, as defined in the Vienna Convention on Diplomatic Relations of 1961; (ii) a consular officer, as defined in the Vienna Convention on Consular Relations of 1963; (iii) a member of the diplomatic staff of a permanent mission international organization or of a special mission, or is recruited to represent a State at an international conference; or (iv) any other person enjoying diplomatic immunity. (c) the subject matter of the proceeding is the recruitment, renewal of employment or reinstatement of an individual; (d) the subject matter of the proceeding is the dismissal or termination of employment of an individual and, as determined by the head of State, the head of Government or the Minister for Foreign Affairs of the employer State, such a proceeding would interfere with the security interests of that State; to an (e) the employee is a national of the employer State at the time when the proceeding is instituted, unless this person has the permanent residence in the State of the forum; (f) the employer State and the employee have otherwise agreed to any in writing, subject considerations of public policy conferring on the courts of the State of the forum exclusive jurisdiction by reason of the subject matter of the proceeding. In general, article 11 adheres to the restrictive doctrine, confining the immunity in employment disputes to cases where the making of the contract or the acts giving rise to the complaint were exercises of sovereign authority, or the dispute is between a state and one of its own nationals. Article 11.2(b) of the United Nations Convention lists four categories of employee whose claims will attract immunity. The first three categories are diplomatic or consular staff whose functions would normally be regarded as inherently governmental. But the fourth category comprises any other person enjoying diplomatic immunity. Under the Vienna Convention on Diplomatic Relations, all members of the staff of a mission who are not nationals of or permanently resident in the receiving state enjoy diplomatic immunity, including (in respect of acts performed in the course of their duties) domestic staff: see article 37(3). On the face of it, therefore, this provision applies state immunity to all claims by embassy staff at whatever level and irrespective of the juridical character of the acts giving rise to the dispute. The Court of Appeal, adopting a suggestion in OKeefe and Tams (ed), The United Nations Convention of Jurisdictional Immunities of States and their Property. A Commentary (2013), 201 2, have held that it could not have meant this in the light of the travaux preparatoires. These do not explain how article 11.2(b) came to assume its final form. But they do show that the working groups and committees of the International Law Commission intended to limit the immunity to the employment of diplomatic agents. It was suggested to us that sub paragraph (iv) might also have been intended to cover diplomats at international conferences, and there are passages in the travaux which support that view: see, in particular, Report of the ILC Working Group on Jurisdictional Immunities of States, ILC Yearbook (1999), ii(2), para 105. But since both of these categories are already covered by article 11(2)(b)(i) and (iii), and the language of (iv) is unequivocal, I doubt whether these suggestions can be supported. It is, however, unnecessary to decide the point, because it is in my view clear that if article 11(2)(b)(iv) means what it says, it is legislative rather than declaratory of existing international law. It may one day bind states qua treaty. It may come to represent customary international law if and when the Convention attracts sufficient support. But it does not do either of these things as matters presently stand. There are judicial decisions in which the court, while limiting the immunity to exercises of sovereign authority, has taken an expansive view of the range of acts relating to an embassy employee which can be so described. Sengupta v Republic of India [1983] ICR 221 was a decision of the Employment Appeal Tribunal under the common law in force before the passing of the State Immunity Act 1978. The Tribunal held that state immunity attached to a claim for the unfair dismissal of an employee of the Indian High Commission in London. He was employed at what Browne Wilkinson J, delivering the judgment of the court, described (p 223) as the lowest clerical level. He was essentially responsible for collating press cuttings. The tribunals reasons appear from pp 228 229 of the judgment: When one looks to see what is involved in the performance of the applicants contract, it is clear that the performance of the contract is part of the discharge by the foreign state of its sovereign functions in which the applicant himself, at however lowly a level, is under the terms of his contract of employment necessarily engaged. One of the classic forms of sovereign acts by a foreign state is the representation of that state in a receiving state A contract to work at a diplomatic mission in the work of that mission is a contract to participate in the public acts of the foreign sovereign. The dismissal of the applicant was an act done in pursuance of that public function, ie the running of the mission. As a consequence, the fairness of any dismissal from such employment is very likely to involve an investigation by the industrial tribunal into the internal management of the diplomatic representation in the United Kingdom of the Republic of India, an investigation wholly inconsistent with the dignity of the foreign state and an interference with its sovereign functions. A very similar view was taken in Government of Canada v Employment Appeals Tribunal and Burke (1992) 95 ILR 467, 500 where the Irish Supreme Court, applying the common law in the absence of any domestic legislation in Ireland, held that the services of a chauffeur employed by the Canadian embassy in Dublin were sufficiently related to the diplomatic functions of the embassy to make Canada immune from suit. OFlaherty J, delivering the judgment of the majority, said (p 500) that prima facie anything to do with the embassy is within the public domain of the government in question. There have been occasional decisions to the same effect in other jurisdictions: see, for example, Heusala v Turkey (1993) Oxf Rep Int L (ILDC 576) (Supreme Court, Finland); A v B (2004) Oxf Rep Int L (ILDC 23) (Supreme Court, Norway). These decisions amount to saying that the employment of embassy staff is inherently governmental notwithstanding the non governmental character of the particular employees functions or of the relevant acts of the employer. Sengupta was decided at an early stage of the development of the law in this area and, in my opinion, the test applied by the Employment Appeal Tribunal was far too wide. I agree with the criticism of the decision in Fox, The Law of State Immunity, 3rd ed (2013), 199n, that the reasoning had more regard to the purpose than to the juridical character of the claimants employment. It is not for this court to review the domestic case law of the other jurisdictions cited, least of all when they are based on the categorisation of the particular facts. For my part, however, I doubt whether an English court applying customary international law could properly have categorised the facts of these cases as involving exercises of sovereign authority. The way in which the restrictive doctrine has been applied by the European Court of Human Rights, the federal courts of the United States and the French Cour de Cassation appears to me to be more consistent with the underlying principle. What is, however, clear beyond argument is that there is no international consensus on this point sufficient to found a rule of customary international law corresponding to section 16(1)(a) of the State Immunity Act 1978. I have already pointed out that in treating article 11 as expressing customary international law, the European Court of Human Rights had in mind those parts of article 11 which reflected the restrictive doctrine. In all of the cases in which it has held the recognition of immunity to violate article 6 of the Human Rights Convention, the applicant appears to have been a national or permanently resident in the forum state. The applicant did not therefore enjoy diplomatic immunity and neither article 11(2)(b)(iv) nor article 11(2)(e) arose for consideration. Application to the present cases Since I have concluded that no principle of international law deprived the Employment Tribunal of jurisdiction in these cases, it follows that the United Kingdom had jurisdiction over Libya and Sudan as a matter of international law, and article 6 is engaged by its refusal to exercise it. The jurisdictional issue raised by Lord Millett in Holland v Lampen Wolfe and by Lord Bingham and Lord Hoffmann in Jones v Saudi Arabia does not arise. The employment of Ms Janah and Ms Benkharbouche were clearly not exercises of sovereign authority, and nothing about their alleged treatment engaged the sovereign interests of their employers. Nor are they seeking reinstatement in a way that would restrict the right of their employers to decide who is to be employed in their diplomatic missions. As a matter of customary international law, therefore, their employers are not entitled to immunity as regards these claims. It follows that so far as sections 4(2)(b) or 16(1)(a) of the State Immunity Act confer immunity, they are incompatible with article 6 of the Human Rights Convention. Discrimination Ms Janahs case that the discriminatory character of section 4(2)(b) of the Act is a violation of article 14 of the Human Rights Convention, read in conjunction with article 6, adds nothing to her case based on article 6 alone. Section 4(2)(b) unquestionably discriminates on grounds of nationality. The only question is whether the discrimination is justifiable by reference to international law. If state immunity is no answer to the claim under article 6 alone, then it is no answer to the claim under the combination of article 6 and article 14. In my view, the denial of access to the courts to persons in her position is unjustifiable whether it is discriminatory or not. Article 47 of the EU Charter of Fundamental Rights Article 47 provides, so far as relevant, that: everyone whose rights and freedoms guaranteed by the law of the Union are violated has the right to an effective remedy before a tribunal in compliance with the conditions laid down in this article. The scope of article 47 of the Charter is not identical to that of article 6 of the Human Rights Convention, but the Secretary of State accepts that on the facts of this case if the Convention is violated, so is the Charter. A claim to state immunity which is justified in international law, would be an answer in both cases: Mahamdia v Peoples Democratic Republic of Algeria (Case C 154/11) [2013] ICR 1, Advocate General at paras 17 23, endorsed by the Court at para 55. It follows that there is no separate issue as to article 47 of the Charter. The only difference that it makes is that a conflict between EU law and English domestic law must be resolved in favour of the former, and the latter must be disapplied; whereas the remedy in the case of inconsistency with article 6 of the Human Rights Convention is a declaration of incompatibility. Conclusion I would dismiss the Secretary of States appeal and affirm the order of the Court of Appeal. The result is that sections 4(2)(b) and 16(1)(a) of the State Immunity Act 1978 will not apply to the claims derived from EU law for discrimination, harassment and breach of the Working Time Regulations. Subject to any question as to the application of section 4(2)(b) to the particular circumstances of Ms Benkharbouche, the other claims (failure to provide payslips or a contract of employment, unpaid wages, failure to pay the national minimum wage and unfair dismissal) are barred by those sections of the Act. But to that extent they are incompatible with article 6 of the Human Rights Convention, and also, in the case of section 4(2)(b) with article 6 read with article 14 of the Convention. Both cases must be remitted to the Employment Tribunal to determine the claims based on EU law on their merits.
+This appeal concerns the lawfulness of a proposal by the Lord Chancellor (then The Rt Hon Christopher Grayling MP) in September 2013 to introduce a residence test for civil legal aid by amending Schedule 1 to the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), by means of delegated legislation, in the form of a statutory instrument, which I will refer to as the draft order. Part 1 of LASPO In November 2010, the Ministry of Justice published a consultation paper entitled Proposals for the Reform of Legal Aid in England and Wales. Following the subsequent public consultation exercise, the Ministry published a paper entitled Reform of Legal Aid in England and Wales: the Government Response in June 2011. The proposals in this June 2011 paper were then largely reflected in a Bill which was put before Parliament, and which, subject to amendments, was enacted as LASPO, a statute which was enacted on 1 May 2012. As its title suggests, LASPO is concerned with a number of different areas of the legal system. This case is concerned with Part 1 of LASPO, which came into force on 1 April 2013, is entitled Legal Aid, and contains 43 sections. Sections 1 to 12 are headed Provision of legal aid. Sections 8 to 12 are concerned with civil legal services, and sections 13 to 20 with Criminal legal aid. Sections 21 and 22 are concerned with Financial resources, sections 23 to 26 with Contributions and costs, and sections 27 to 30 with Providers of services etc. Sections 31 to 43 are Supplementary provisions. Section 1(1) of LASPO imposes on the Lord Chancellor a duty to secure that legal aid is made available in accordance with this Part, and section 1(4) enables him to do anything to further those functions. Section 2(1) empowers him to make such arrangements as [he] considers appropriate to carry out those functions, and section 3 is concerned with standards of service. Section 4(1) requires the Lord Chancellor to appoint a Director of Legal Aid Casework, defined as the Director. Section 8 defines civil legal services as the provision of legal advice and assistance as to the law, proceedings, disputes and enforcement other than in connection with criminal matters. Section 9 of LASPO is entitled General cases, and it provides: (1) Civil legal services are to be available to an individual under this Part if they are civil legal services described in Part 1 of (a) Schedule 1, and (b) the Director has determined that the individual qualifies for the services in accordance with this Part (2) The Lord Chancellor may by order add services to Part 1 of Schedule 1, or (a) (b) vary or omit services described in that Part, (whether by modifying that Part or Parts 2, 3 or 4 of the Schedule). Section 10 of LASPO deals with Exceptional cases, in respect of which civil legal services are to be available even though they would not be available under section 9. It includes, in subsection (3), cases where the denial of civil legal services would be a breach of [an] individuals Convention rights or EU rights. Section 11 of LASPO is entitled Qualifying for civil legal aid. Section 11(1) requires the Director to determine whether an individual qualifies for civil legal services by reference to (a) his financial resources (as defined in section 21 and regulations under that section), and (b) criteria set out in regulations. Section 11(2) provides that, in setting the criteria under section 11(1)(b), the Lord Chancellor (a) must consider the circumstances in which it is appropriate to make civil legal services available, and (b) must, in particular, consider the extent to which the criteria ought to reflect the factors set out in subsection (3). The ten factors set out in section 11(3) include (a) the likely cost and likely benefit of providing the services, (b) the availability of resources, (e) the nature and the seriousness of the case, (f) the availability of alternative services, (g) the prospects of success, (h) the conduct of the individual concerned in connection with services made available under this Part, and (j) the public interest. subsections (1), (2) and (3) are in these terms: Section 41 of LASPO is headed Orders, regulations and directions, and (1) Orders, regulations and directions under this Part (a) may make different provision for different cases, circumstances or areas, (b) may make provision generally or only for specified cases, circumstances or areas, and (c) may make provision having effect for a period specified or described in the order, regulations or direction. (2) They may, in particular, make provision by reference to services provided for the purposes of (a) proceedings before a particular court, tribunal or other person, (b) individual, or (c) services provided for individuals selected by reference to particular criteria or on a sampling basis. services provided for a particular class of (3) Orders and regulations under this Part (a) may provide for a person to exercise a discretion in dealing with any matter, (b) may make provision by reference to a document produced by any person, and (c) may make consequential, supplementary, incidental, transitional or saving provision. Section 41(6) provides that a statutory instrument containing an order made under any section mentioned in section 41(7) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament, and section 41(7) included, in para (a), orders under section 9. Schedule 1 to LASPO is headed Civil Legal Services and Part 1 sets out the Services, which are referred to in section 9(1)(a). Over 40 categories are set out in Part 1 of Schedule 1, and almost all of them begin with the words Civil legal services provided either to or in relation to. They include care, supervision and protection of children (para 1), special educational needs (para 2), and abuse of an individual when a child or a vulnerable adult, but only where (a) the services are provided to the individual (para 3). The categories also include appeals relating to welfare benefits (para 8), victims of domestic violence and family matters (para 12), and judicial review, save where such review will produce no benefit to the individual concerned (para 19). Other categories are breach of Convention rights by a public authority (para 22), certain specified immigration matters (paras 24 31), loss of home and homelessness (paras 33 and 34), protection from harassment (para 37), in relation to a sexual offence, but only where (a) the services are provided to the victim of the offence (para 39). Also, inquests (para 41), environmental pollution (para 42), and equality (para 43). Some of these paragraphs are fairly detailed and include exclusions and definitions. Part 2 of Schedule 1 is entitled Excluded services, and it is introduced with the following words, The services described in Part 1 of this Schedule do not include the services listed in this Part of this Schedule, except to the extent that Part 1 of this Schedule provides otherwise. Part 2 contains 18 paragraphs, and (with the exception of para 14) they all begin with the words Civil legal services provided in relation to, and then refer to specific areas, including personal injury or death (para 1), a claim in tort in respect of negligence (para 2), damage to property (para 6), a claim in tort in respect of breach of statutory duty (para 8) and a benefit, allowance, payment, credit or pension under certain statutes (para 15). Paragraph 14 of Part 2 of Schedule 1 is Civil legal services provided to an individual in relation to matters arising out of establishing, carrying on, or terminating a business. Part 3 of Schedule 1 is concerned with Advocacy: exclusion and exceptions, and it sets out tribunals before which advocacy is within the Services covered by Part 1 of the Schedule. Part 4 of that Schedule is concerned with Interpretation. The draft order In April 2013, the Ministry of Justice issued a paper, Transforming Legal Aid, and subsequently carried out a public consultation exercise in connection with its proposals. In September 2013, the Ministry published its response to the results of that exercise, Transforming Legal Aid: Next Steps. In the September 2013 paper, the Ministry stated at para 132 that, subject to certain specified exceptions: [T]he Government has decided to proceed with the introduction of a residence test in civil legal aid so that only those who are: lawfully resident in the UK, Crown Dependencies or British Overseas Territories at the time the application for civil legal aid was made; and have resided lawfully in the UK, Crown Dependencies or British Overseas territories for a continuous period of at least 12 months at any point in the past would be eligible for civil legal aid The specified exceptions were (i) serving members of the armed forces and their families, (ii) asylum seekers, and (iii) in relation to the second bullet point, children aged under 12 months. No exception was to be made for older children who were not responsible for their lack of lawful resident status. The Ministry later agreed to exclude certain classes of case from the ambit of this proposal, namely categories of case which broadly relate to an individuals liberty, where the individual is particularly vulnerable, or where the case relates to the protection of children. In its September 2013 paper, the Ministry described the proposal as justified and proportionate, and pointed out that anyone excluded by the residence test would be entitled to apply for exceptional funding. In para 6.3 of an Equality Statement attached to that paper, the Ministry described the primary objective of the proposal as being to bear down on the cost of legal aid, ensuring that every aspect of expenditure is justified and that we are getting the best deal for the taxpayer, and further stated that the reforms seek to promote public confidence in the system by ensuring limited public resources are targeted at those cases which justify it and those people who need it. Also in September 2013, the Lord Chancellor decided to proceed with his proposal described in paras 12 and 13 above, and to give effect to that decision by laying a draft order before Parliament. The draft order was put before Parliament on 31 March 2014. The draft order stated that it was made pursuant to sections 9(2)(b), 41(1)(a) and (b), 41(2)(a) and (b), and 41(3)(b) and (c) of LASPO. The draft order effectively provides that an individual who fails the residence test would no longer qualify for civil legal aid for any types of claim, subject to certain limited exceptions. The effect of the draft order was to insert a new para 19 into Part 2 of Schedule 1, whose effect was explained by Moses LJ in the Divisional Court at [2015] 1 WLR 251, paras 21 24, and was more shortly summarised by Mr Eadie QC, who appeared for the Lord Chancellor, in a description adopted by Laws LJ in the Court of Appeal at para 8: To satisfy the residence test, an individual would have to be lawfully resident in the UK, the Channel Islands, Isle of Man or a British Overseas Territory on the day the application for civil legal services was made, and (unless they were under 12 months old or a particular kind of asylum claimant or involved with the UK Armed Forces) have been so lawfully resident for a 12 month period at some time in the past (excluding absences of up to 30 days). There were proposed exceptions to the test. Claimants pursuing certain types of proceedings were not required to satisfy the test (for example, domestic violence cases, and challenges to the lawfulness of detention). In any event, regardless of residence, a claimant who failed the residence test would have been entitled to apply for legal aid under the Exceptional Case Funding regime in section l0 of LASPO whose purpose is to ensure that all those who have a right to legal aid under the European Convention or EU law are able to obtain it. The instant proceedings Before the draft order had been laid before Parliament, Public Law Project (PLP) applied to the High Court for a declaration that it would be unlawful. The alleged unlawfulness was based on two grounds, namely that the draft order was or would be (i) ultra vires, ie outside the scope of the power granted to the Lord Chancellor in LASPO to bring forward delegated legislation, and (ii) unjustifiably discriminatory in its effect. The Divisional Court, in a judgment given by Moses LJ (with whom Collins and Jay JJ agreed), held that the draft order was unlawful on both grounds [2015] 1 WLR 251. As the draft order was before Parliament at the time of the decision of the Divisional Court, it was withdrawn, and that remains the position today. The Lord Chancellor appealed against both conclusions reached by the Divisional Court. The Court of Appeal, in a judgment given by Laws LJ (with whom Kitchin and Christopher Clarke LJJ agreed), allowed his appeal, holding that the draft order was intra vires and, while it was discriminatory in its effect, the discrimination could be justified [2016] 2 WLR 995. PLP now appeals to this court, and maintains both the ultra vires and the discrimination arguments. The ultra vires principle in the present context The draft order, once formally made, would, of course, be secondary, or subordinate, legislation, unlike LASPO itself which, as a statute, is primary legislation. Primary legislation is initiated by a Bill which is placed before Parliament. To the extent that Parliament considers it appropriate, all or any of the provisions of a Bill can be subject to detailed scrutiny, discussion, and amendment in Parliament before being formally enacted as primary legislation; it is then formally approved by the monarch, whereupon it becomes a statute. In our system of parliamentary supremacy (subject to arguable extreme exceptions, which I hope and expect will never have to be tested in practice), it is not open to a court to challenge or refuse to apply a statute, save to the extent that Parliament authorises or requires a court to do so. Subordinate legislation consists of legislation made by members of the Executive (often, as in this case, by Government ministers), almost always pursuant to an authority given by Parliament in primary legislation. The draft order in the present case would be a statutory instrument, which is a type of subordinate legislation which must be laid in draft before Parliament. Some statutory instruments are subject to the negative resolution procedure ie they will become law unless, within a specified period, they are debated and voted down. Other statutory instruments, such as the draft order in this case, are subject to the affirmative resolution procedure ie they can only become law if they are formally approved by Parliament see subsections (6) and (7)(a) of section 41. Although they can be said to have been approved by Parliament, draft statutory instruments, even those subject to the affirmative resolution procedure, are not subject to the same legislative scrutiny as bills; and, unlike bills, they cannot be amended by Parliament. Accordingly, it is well established that, unlike statutes, the lawfulness of statutory instruments (like other subordinate legislation) can be challenged in court. As Lord Diplock said in F Hoffmann La Roche & Co v Secretary of State for Trade and Industry [1975] AC 295, 365, even though [subordinate legislation] is contained in an order made by statutory instrument approved by resolutions of both Houses of Parliament, I entertain no doubt that the courts have jurisdiction to declare it to be invalid if they are satisfied that in making it the Minister who did so acted outwith the legislative powers conferred upon him by the Act of Parliament under which the order [was] purported to be made . Subordinate legislation will be held by a court to be invalid if it has an effect, or is made for a purpose, which is ultra vires, that is, outside the scope of the statutory power pursuant to which it was purportedly made. In declaring subordinate legislation to be invalid in such a case, the court is upholding the supremacy of Parliament over the Executive. That is because the court is preventing a member of the Executive from making an order which is outside the scope of the power which Parliament has given him or her by means of the statute concerned. Accordingly, when, as in this case, it is contended that actual or intended subordinate legislation is ultra vires, it is necessary for a court to determine the scope of the statutorily conferred power to make that legislation. Normally, statutory provisions which provide for subordinate legislation are concerned with subsidiary issues such as procedural rules, practice directions, and forms of notice; hence statutory instruments are frequently referred to as regulations. However, such statutory provisions sometimes permit more substantive issues to be covered by subordinate legislation, and, as is the case with section 9(2)(b) of LASPO, they sometimes permit subordinate legislation which actually amends the statute concerned (or even another statute), by addition, deletion or variation. As explained in Craies on Legislation (10th ed (2015)), edited by Daniel Greenberg), para 1.3.9: The term Henry VIII power is commonly used to describe a delegated power under which subordinate legislation is enabled to amend primary legislation. When a court is considering the validity of a statutory instrument made under a Henry VIII power, its role in upholding Parliamentary supremacy is particularly striking, as the statutory instrument will be purporting to vary primary legislation passed into law by Parliament. The interpretation of the statutory provision conferring a power to make secondary legislation is, of course, to be effected in accordance with normal principles of statutory construction. However, in the case of an amendment that is permitted under a Henry VIII power, to quote again from Craies (op cit) para 1.3.11: as with all delegated powers the only rule for construction is to test each proposed exercise by reference to whether or not it is within the class of action that Parliament must have contemplated when delegating. Although Henry VIII powers are often cast in very wide terms, the more general the words by Parliament to delegate a power, the more likely it is that an exercise within the literal meaning of the words will nevertheless be outside the legislatures contemplation. In two cases, R v Secretary of State for Social Security, Ex p Britnell [1991] 1 WLR 198, 204 and R v Secretary of State for the Environment, Transport and the Regions, Ex p Spath Holme Ltd [2001] 2 AC 349, 383, the House of Lords has cited with approval the following observation of Lord Donaldson MR in McKiernon v Secretary of State for Social Security, The Times, November 1989; Court of Appeal (Civil Division) Transcript No 1017 of 1989, which is to much the same effect: Whether subject to the negative or affirmative resolution procedure, [subordinate legislation] is subject to much briefer, if any, examination by Parliament and cannot be amended. The duty of the courts being to give effect to the will of Parliament, it is, in my judgment, legitimate to take account of the fact that a delegation to the Executive of power to modify primary legislation must be an exceptional course and that, if there is any doubt about the scope of the power conferred upon the Executive or upon whether it has been exercised, it should be resolved by a restrictive approach. Immediately after quoting this passage in Spath Holme, Lord Bingham went on to say [r]ecognition of Parliaments primary law making role in my view requires such an approach. He went on to add that, where there is little room for doubt about the scope of the power in the statute concerned, it is not for the courts to cut down that scope by some artificial reading of the power. Is the draft order ultra vires? The argument that the draft order is ultra vires the powers granted to the Lord Chancellor is, in essence, as follows. The exclusion of a specific group of people from the right to receive civil legal services in relation to an issue, on the ground of personal circumstances or characteristics (namely those not lawfully resident in the UK, Crown Dependencies or British Overseas Territories) which have nothing to do with the nature of the issue or services involved or the individuals need, or ability to pay, for the services, is simply not within the scope of the power accorded to the Lord Chancellor by section 9(2)(b) of LASPO, and nothing in section 41 undermines that contention. In my view, that argument is sound, and should be accepted. Turning to section 9(2)(b) itself, as a matter of ordinary language, the relevant parts of the draft order do not seek to vary or omit services: rather they seek to reduce the class of individuals who are entitled to receive those services by reference to a personal characteristic or circumstance unrelated to the services. Of course, the words of section 9(2)(b) have to be interpreted in their context, and I accept that a sufficiently clear and strong context could justify a different conclusion, in the sense that the words of section 9(2)(b) could, as a matter of language, just about extend to a regulation such as the draft order. Nonetheless, that is not their natural meaning, and, of course, the natural meaning of the words in question is an important factor in an issue of statutory interpretation, particularly when they suggest that a so called Henry VIII power does not extend to authorise the subordinate legislation in question. When one turns to the wider statutory context, I consider that it supports, rather than undermines, the conclusion indicated by the natural meaning of the words of section 9(2)(b) on their own. First, section 9(2)(b) permits a variation or omission of the services set out in Part 1 of Schedule 1, by, inter alia, modifying that Part or Part 2 of that Schedule. Each of the services identified in Part 1 and Part 2 is linked to a specific type of legal issue or claim, and has nothing to do with the personal circumstances or characteristics, and in particular the geographical residence, of the potential recipient of the services, other than those which relate to the issue or the services concerned. The point is well demonstrated by the fact that, as mentioned in para 10 above, all the existing 18 paragraphs of Part 2 of the Schedule are concerned with Civil legal services provided in relation to specified areas of litigation, whereas the new proposed para 19 will have nothing to do with any specified area of litigation at all. It is true that, as mentioned in para 9 above, some provisions, such as paras 3(a) and 39(a) of Part 1, limit the right to receive legal services to one specific group, namely the victims of alleged wrongdoing, and exclude, for instance, the alleged perpetrators. However, that does not in any way undermine PLPs case, because the objection to the draft order is that it excludes (albeit subject to exceptions) a group of individuals on grounds which have nothing to do with the issue or services involved. This conclusion is supported by the contrast in the wording of the two subsections of section 9. Subsection (1) states that [c]ivil legal services are to be available to an individual if (a) they are civil legal services described in Part 1 of Schedule 1, and (b) the Director determines that the individual qualifies for the services. Thus, subsection (1) clearly distinguishes between the question whether the particular services qualify para (a) and whether the particular individual qualifies para (b). When one turns to the subsection under which the draft order in the present case is said to have been made, both para (a) and para (b) of subsection (2) refer only to services within Part 1 of Schedule 1. The natural inference from this is that subsection (2) is concerned with adding to, varying or omitting services, and not the individuals to whom the services may be provided. Looking elsewhere in LASPO, whereas section 9, the section under which the draft order was purportedly made, is concerned with the issues in respect of which civil legal services are to be available, section 11 of LASPO is the provision which appears to be concerned with identifying the characteristics or circumstances of individuals who are to qualify for civil legal aid. Section 11 gives rise to two points in favour of PLPs case. First, the very fact that it is that section which sets out the personal characteristics or circumstances of those individuals who are entitled to civil legal aid provides obvious support that such matters are outwith section 9. Secondly, the factors listed in section 11(1) or (3), some of which are described in para 7 above, are concerned with criteria which are connected to the need of the individual for the services, the cost of the services, the extent and likelihood of the benefit from those services and the conduct of the individual in connection with the services. There is no criterion which is based on personal characteristics or circumstances which have nothing to do with the issue involved, the services concerned, or the need of the individual concerned for financial assistance. (It is true that public interest, mentioned in section 11(3)(j), would be capable in some contexts of extending to personal characteristics or circumstances, but, read in their context, those words cannot have such an effect in section 11(3), and it was not argued otherwise.) This suggests that the draft order is attempting to do something which the legislature never had in mind when enacting Part 1 of LASPO, let alone section 9. As Lord Carnwath mentioned, that point is underlined by the strong presumption that, as it is put in Bennion on Statutory Interpretation 6th ed (2013), section 129, an enactment applies to foreigners within its territory as it applies to persons within that territory belonging to it. It was conceded on behalf of the Lord Chancellor that he could not have made the draft order under section 11. Given that that section is concerned with prescribing the characteristics and circumstances of those who should be able to qualify for civil legal services, it seems to me that that concession tends of itself to provide additional support for PLPs contention that the Lord Chancellor cannot make such an order under section 9. The Court of Appeal concluded that section 41, and in particular section 41(2)(b), could be invoked to defeat this contention. It is true that section 41(2)(b) permits any order made under section 9(2)(b) to make provision by reference to services provided for a particular class of individual. However, I cannot accept that this means that the power to make orders under section 9(2)(b) is thereby extended to exclude a whole class of individuals from the scope of Part 1 of LASPO by reference to their residence. Section 41 is clearly intended to grant ancillary powers to those powers which are, as it were, primarily granted by provisions such as section 9: it is not intended to permit an alteration in the nature, or a substantive extension, of those powers. The observations in Craies, cited in para 26 above, is very much in point. In my view, in relation to his powers under section 9(2), section 41(2)(b) enables the Lord Chancellor to make limitations such as those already found in paras 3(a) and 39(a) of Part 1 of Schedule 1 to LASPO, and explained in para 8 above. Finally, looking at the issue more broadly, it is said that one of the main purposes of Part 1 of LASPO was to reduce the availability of legal aid in connection with legal advice and representation in relation to civil claims, and that this is also the reason for the draft order. It is also said that one of the aims of the provisions of sections 9 and 11 of, and Parts 1 and 2 of Schedule 1 to, LASPO is to direct legal aid to what are believed to be the individuals who, and types of claim which, are most deserving of public support, and that the draft order has that aim too. However, even if they are right (which in a broad sense I think they are), those contentions involve expressing the aim of the legislation in far too general terms to justify rejecting PLPs case. As is apparent from sections 9 and 11 themselves, and from the Ministry of Justices June 2011 paper referred to in para 2 above, the purpose of Part 1 of LASPO was, in very summary terms, to channel civil legal aid on the basis of the nature and importance of the issue, an individuals need for financial support, the availability of other funding, and the availability of other forms of dispute resolution. The exclusion of individuals from the scope of most areas of civil legal aid on the ground that they do not satisfy the residence requirements of the proposed order involves a wholly different sort of criterion from those embodied in LASPO and articulated in the 2011 paper. Conclusion Accordingly, in agreement with the Divisional Court, I have reached the conclusion that the appeal should be allowed on the first, ultra vires, issue. We had unanimously come to this view at the end of the argument on the ultra vires issue, and decided that, subject to the parties seeking to persuade us otherwise, it would be wiser not to deal with the discrimination issue. The parties did not seek to dissuade us from this course, and therefore it would be inappropriate to say anything more about it.
+provides as follows: 15. Registration of Greens Section 15 of the Commons Act 2006, so far as relevant to this appeal, (1) Any person may apply to the commons registration authority to register land to which this Part applies as a town or village green in a case where subsection (2), (3) or (4) applies. (2) This subsection applies where (a) a significant number of the inhabitants of any locality, or of any neighbourhood within a locality, have indulged as of right in lawful sports and pastimes on the land for a period of at least 20 years; and (b) they continue to do so at the time of the application. (4) This subsection applies (subject to subsection (5)) where (a) a significant number of the inhabitants of any locality, or of any neighbourhood within a locality, indulged as of right in lawful sports and pastimes on the land for a period of at least 20 years; (b) they ceased to do so before the commencement of this section; and (c) the application is made within the period of five years beginning with the cessation referred to in paragraph (b). (7) For the purposes of subsection (2)(b) in a case where the condition in subsection (2)(a) is satisfied (a) where persons indulge as of right in lawful sports and pastimes immediately before access to the land is prohibited as specified in subsection (6), those persons are to be regarded as continuing so to indulge; and (b) where permission is granted in respect of use of the land for the purposes of lawful sports and pastimes, the permission is to be disregarded in determining whether persons continue to indulge in lawful sports and pastimes on the land as of right. The application relevant to this appeal was expressed to be made under section 15(4). It was suggested in argument that (because of the deeming provision in subsection (7)) it was also, or alternatively, made under subsection (2). In any case it was a valid application, and neither subsection (5) nor subsection (6) is in point. The issue The general issue for the Court is whether a piece of open land next to the sea in Redcar ought to have been registered as a town green under section 15. For at least 80 years before 2002 the land in question (the disputed land) formed part of a golf course in regular use by members of the Cleveland Golf Club, whose trustees were tenants of the course. The inspector who held a public inquiry found as a fact that when local residents using the disputed land for recreation encountered members of the golf club playing golf, the former deferred to the latter. In these circumstances the legal issue for the Court can be more particularly stated as whether the legal consequence of this deference was that the local residents were not indulging in recreation as of right within the meaning of the Commons Act 2006. During the last decade there have been three important decisions of the House of Lords dealing with different aspects of the law (as it stood before the Commons Act 2006) as to town and village greens: R v Oxfordshire County Council Ex p Sunningwell Parish Council [2000] 1 AC 335 (Sunningwell); R(Beresford) v Sunderland City Council [2003] UKHL 60, [2004] 1 AC 889 (Beresford); and Oxfordshire County Council v Oxford City Council [2006] UKHL 25, [2006] 2 AC 674 (Oxfordshire). In none of these appeals did the House of Lords have to decide the point now at issue, although both sides have placed reliance on some passages in their Lordships opinions. The Commons Act 2006 (which is still not fully in force) makes important changes in the law, but does not directly affect the issue of deference. The facts The appellant, Mr Kevin Lewis, is one of five local residents who made the application for registration of the disputed land under section 15 of the Commons Act 2006. The first respondent, Redcar and Cleveland Borough Council, has a dual capacity, being both the registration authority and the freehold owner of the disputed land. The second respondent, Persimmon Homes (Teesside) Ltd is an interested party. It has since 2003 been the Borough Councils development partner in the Coatham Links coastal regeneration project. The project is for a mixed development for residential and leisure purposes on a site extending to 14 hectares. The disputed land forms an important, and possibly indispensable, part of the development site. The appeal is therefore of great importance to the parties, as well as raising a point of law of general public interest. Redcar is on the south side of the Tees estuary. The disputed land is part of an area known as Coatham Common or Coatham Links (Coatham was originally a separate village but is now part of Redcar). On the south (landward) side of the disputed land there is a mainly residential area. To the east is the site of the former club house and a leisure centre (the club house site is not included in the disputed land but was included in the earlier application mentioned below). To the west is more open land still used as a golf course. To the north is the beach and the North Sea. The disputed land formerly included the tees, fairways and greens of the first and eighteenth holes, and a small practice area. The inspectors report dated 14 March 2006 described the boundaries in more detail and contained (paras 6 and 7) this further description of the disputed land (referred to as the Report Land): The character of the Report Land is typical of coastal sand dunes, with irregular sand hills covered in rough grass. The dunes are noticeably higher on the northern side. There is a flatter area along the southern side, particularly west of the Church Street access. The former tees, greens and fairways of the golf course are no longer obvious. The Report Land is crossed by numerous informal paths of which the most well used run alongside and close to the southern and northern boundaries. A number of photographs show the general nature of the land. There are some fairly new signs erected by [the Borough Council] on the Report Land. The gist of the signs is that they give the public temporary permission to use the Report Land for recreation pending its redevelopment. I call these signs the permissive signs. The footpath near the southern boundary is a public footpath. Mr Lewis and his fellow applicants applied for registration of the disputed land on 8 June 2007, soon after section 15 of the Commons Act 2006 had come into force on 5 April 2007. It was not the first application that had been made in respect of the disputed land. An earlier application had been made by another group of local residents on 1 March 2005. It was therefore considered under the earlier law, that is the Commons Registration Act 1965 as amended by the Countryside and Rights of Way Act 2000. This earlier application was the subject of a public inquiry held by Mr Vivian Chapman QC as an inspector appointed by the Borough Council as registration authority. The inquiry was held over several days in December 2005 and January 2006. Mr Chapman produced a lengthy report dated 14 March 2006 recommending that the application should be refused, and the Borough Council accepted his recommendation. An application for leave for judicial review of that decision was refused on the papers by Collins J on 22 August 2006 and was not renewed. When the second application was made in 2007 it was rightly thought that it was unnecessary, and would be a waste of time and money, to hold a second public inquiry, since it would be directed to the same factual issues. Mr Chapman did however (in connection with the first application) make a second report dated 9 June 2006 addressing the decision of the House of Lords in Oxfordshire (he advised that it made no difference to his conclusions, and that in any case it was not open to the Borough Council to reopen its decision). The relevant findings of fact are therefore in Mr Chapmans report dated 14 March 2006 on the first application. The crucial findings are in paras 171, 172, and 175. These paragraphs are set out in full in the judgment of Dyson LJ in the Court of Appeal [2009] EWCA Civ 3, [2009] 1 WLR 1461, but they are of such central importance that they need to be set out again. Para 171 dealt with use of the disputed land by golfers: 171. I find that, from as far back as living memory goes (at least as far back as the 1920s), the Report Land was continuously used as part of the Cleveland Golf Club links. The only exception is that the golfing was suspended during World War II. Golfing use ceased in 2002. I find that the club was a popular one and that the golf links were well used nearly every day of the year. In the years before 2002, the Report Land was used for the club house, the first and eighteenth holes and for a practice ground. There is some evidence that the precise configuration of the course changed somewhat over the years. The club house, tees, fairways, greens and practice ground did not, however, take up the whole of the Report Land and there were substantial areas of rough ground beside and between these features. Para 172 dealt with use by non golfers (that is, local residents): I find that from as far back as living memory goes, the open parts of the Report Land have also been extensively used by non golfers for informal recreation such as dog walking and childrens play. Some of the walking has been linear walking in transit. Thus the informal paths running east west have been used by caravan residents to get access to the centre of Redcar with its shops and public houses. Also, there is evidence of people taking a short cut south north from Church Street to the gap in the fence in Majuba Road. However I am satisfied that the open parts of the Report Land have been extensively used by non golfers for general recreational activities apart from linear walking. I prefer the evidence on this point of the applicants witnesses and of Mr Fletcher to the evidence of the objectors other witnesses that such use was occasional and infrequent. Paras 173 and 174 concluded that the local people who used the land for informal recreation came primarily from the Coatham area of Redcar. Then para 175 dealt with the relationship between the two types of use: I find that the relationship between the golfers and the local recreational users was generally cordial. There was evidence of only a few disputes. Only Squadron Leader Kime seems to have caused problems by actively asserting a right to use the Report Land and the golf club appears to have tried to avoid any formal dispute with him. In my judgment, the reason why the golfers and the local people generally got on so well was because the local people (with the exception of Squadron Leader Kime) did not materially interfere with the use of the land for playing golf. Many of the applicants witnesses emphasised that they would not walk on the playing areas when play was in progress. They would wait until the play had passed or until they were waved across by the golfers. Where local people did inadvertently impede play, a shout of fore would be enough to warn them to clear the course. I find that recreational use of the Report Land by local people overwhelmingly deferred to golfing use. Para 221 (in the part of the report applying the law to the facts as found) referred to the decisions of Sullivan J in R (Laing Homes Ltd) v Buckinghamshire County Council [2003] EWHC 1578 (Admin), [2004] 1 P&CR 573 (Laing Homes) and His Honour Judge Howarth in Humphreys v Rochdale MBC unreported, 18 June 2004: Leaving aside the public footpath, I consider that the reasoning in Laing Homes Ltd and Humphreys squarely applies to the Report Land in the present case. Use of the Report Land as a golf course by the Cleveland Golf Club would have been in breach of Inclosure Act 1857 section 12 and Commons Act 1876 section 29 if the Report Land had been a town or village green. It was a use which conflicted with the use of the Report Land as a place for informal recreation by local people. It was not a use which was with a better view to the enjoyment of the Report Land as a town or village green. The overwhelming evidence was that informal recreational use of the Report Land deferred to its extensive use as a golf course by the Cleveland Golf Club. Accordingly, use of the Report Land by local people was not as of right until use as a golf course ceased in 2002. Mr Chapman concluded (para 223) that (apart from use of the public footpath) recreational user of the disputed land was not as of right before 2002 because it deferred to extensive use of the land by the golf club, and that user as of right was not continuing because of the permissive signs erected in 2003. It is convenient, at this point, to dispose of the matter of the signs. They were contentious earlier but are no longer a live issue. There were two sets of signs: warning signs erected by the golf club in 1998 and the permissive signs erected by the Borough Council in 2003. The warning signs read Cleveland Golf Club. Warning. It is dangerous to trespass on the golf course. The inspector found (para 176): Although these were vandalised several times after which the golf club gave up trying to maintain them, I am satisfied that they were in place long enough for regular users of the report land to know of them. Indeed it seems that they caused a stir locally because of the implication that local people using Coatham Common were trespassers. The inspector treated them as material to the outcome of both applications, but on judicial review of the second application Sullivan J ([2008] EWHC 1813 (Admin), paras 11 to 23) held that the wording was too ambiguous to alter the character of the residents use of the land, and that conclusion has not been challenged by the respondents. The permissive signs erected in 2003 were fatal to the first application but not to the second application, because of the change in the law made by s.15 of the Commons Act 2006. The course of the second application Mr Chapman advised the Borough Council in an opinion dated 12 June 2007 that the application made on 6 June 2007 was bound to fail on two of the same grounds on which the first application failed, that is the deference issue and the 1998 warning notices. He recommended that the application should be summarily dismissed, subject to any new points raised by the applicants. Various points were raised but in three further opinions dated 29 July, 13 October and 18 October 2007 Mr Chapman maintained his advice that the application should be rejected. On 19 October 2007 the Borough Council, by its General Purposes and Village Greens Committee, accepted Mr Chapmans advice and resolved to reject the application for registration. On 18 July 2008 Sullivan J, at a rolled up hearing, granted the applicants permission to apply for judicial review of the Borough Councils decision, but dismissed the substantive application. He did so on the ground that the local residents deference to the golfers had prevented their user being as of right before 2002. He relied on para 82 of his own judgment in Laing Homes [2004] 1 P & CR 573, and on para 57 of Lord Hoffmanns opinion in Oxfordshire [2006] 2 AC 674. He granted leave to appeal, commenting, deference is judge made law, judge made by me. The Court of Appeal (Laws, Rix and Dyson LJJ) unanimously dismissed the appeal in reserved judgments handed down on 15 January 2009: [2009] 1 WLR 1461. Dyson LJ gave the principal judgment, and Rix LJ added a concurring judgment. Both judgments put the decision squarely on the ground of deference excluding user as of right (although Dyson LJ denied that there was any principle of deference). The provisions of two Victorian statutes relating to greens (section 12 of the Inclosure Act 1857 and section 29 of the Commons Act 1876) which had formed part of the grounds of decision in Laing Homes, were not relied on in the Court of Appeal. In short, all the subsidiary issues have disappeared and this Court is faced with the single issue of deference. It is not however a simple issue. As of right The concept of user as of right is found (either in precisely those words or in similar terms) in various statutory provisions dealing with the acquisition by prescription of public or private rights. Section 5 of the Prescription Act 1832 makes it sufficient to plead enjoyment as of right (while section 2 refers to a way actually enjoyed by any person claiming right thereto without interruption for the full period of 20 years). Section 31 of the Highways Act 1980 refers to use of a way being actually enjoyed by the public as of right and without interruption for the full period of 20 years. Section 22(1A) of the Commons Registration Act 1965, as substituted by the Countryside and Rights of Way Act 2000, refers simply to inhabitants indulging in lawful sports and pastimes as of right for at least 20 years. Both Sunningwell [2000] 1 AC 335 and Beresford [2004] 1 AC 889 were concerned with the meaning of as of right in the Commons Registration Act 1965. In Sunningwell Lord Hoffmann discussed the rather unprincipled development of the English law of prescription. He explained that by the middle of the 19th century the emphasis shifted from fictions (pp350 351): to the quality of the 20 year user which would justify recognition of a prescriptive right or customary right. It became established that such user had to be, in the Latin phrase, nec vi, nec clam, nec precario: not by force, nor stealth, nor the licence of the owner. (For this requirement in the case of custom, see Mills v Colchester Corporation (1867) LR 2 CP 476, 486.) The unifying element in these three vitiating circumstances was that each constituted a reason why it would not have been reasonable to expect the owner to resist the exercise of the right in the first case, because rights should not be acquired by the use of force, in the second, because the owner would not have known of the user and in the third, because he had consented to the user, but for a limited period. Lord Hoffmann pointed out that for the creation of a highway, there was an additional requirement that an intention to dedicate it must be evinced or inferred (as to that aspect see R(Godmanchester Town Council) v Secretary of State for the Environment, Food and Rural Affairs [2007] UKHL 28; [2008] AC 221). In Sunningwell the villagers had used about ten acres of glebe land for dog walking, childrens games, and similar activities. This use seems to have coincided with the land being let for grazing by horses, but the report gives little detail about this. The inspector (as it happens, Mr Chapman) advised against acceptance of the registration because although the witnesses had said that they thought they had the right to use the glebe, they did not say that they thought the right was confined to villagers (as opposed to the general public). Lord Hoffmann held (and the rest of the Appellate Committee agreed) that this was an error. The decision of the Court of Appeal in R v Suffolk County Council Ex p Steed (1996) 75 P & CR 102 was overruled. That was the context in which Lord Hoffmann stated in a passage (at pp352 353) relied on by the respondents: My Lords, I pause to observe that Lord Blackburn [in Mann v Brodie (1885) 10 App Cas 378, 386, as to dedication of a highway] does not say that there must have been evidence that individual members of the public using the way believed there had been a dedication. He is concerning himself, as the English theory required, with how the matter would have appeared to the owner of the land. The user by the public must have been, as Parke B said in relation to private rights of way in Bright v Walker 1 CM & R 211, 219, openly and in the manner that a person rightfully entitled would have used it. The presumption arises, as Fry J said of prescription generally in Dalton v Angus & Co 6 App Cas 740, 773, from acquiescence. The proposition that as of right is sufficiently described by the tripartite test nec vi, nec clam, nec precario (not by force, nor stealth, nor the licence of the owner) is established by high authority. The decision of the House of Lords in Gardner v Hodgsons Kingston Brewery Co. [1903] AC 229 is one of the clearest: see Lord Davey at p238 and Lord Lindley at p239. Other citations are collected in Gale on Easements, 18th ed. (2008) paras 4 80 and 4 81. The proposition was described as clear law by Lord Bingham of Cornhill in Beresford [2004] 1 AC 889, para 3. The opinion of Lord Rodger of Earlsferry (para 55) is to the same effect. So is that of Lord Scott of Foscote (para 34), though with a cautionary note as to the difference between the acquisition of public and private rights. Laing Homes The respondents case is that although Sullivan J, in his judgment in Laing Homes [2004] 1 P & CR 573, was indeed the first judge to speak in terms of deference shown by local residents, he was not striding into entirely unknown and uncharted territory. Earlier authorities (including those mentioned in the passage of Lord Hoffmanns opinion in Sunningwell quoted in para [19] above) suggest that although the local residents private beliefs as to their rights are irrelevant, the same is not true of their outward behaviour on the land in question, as it would appear to a reasonable owner of the land. It is relevant, on this argument, to look at what might today be called the residents attitude or body language (this thought is elaborated in an imaginary example given by JG Riddall, Miss Tomkins and the Law of Village Greens [2009] Conveyancer and Property Lawyer 326). I propose to look next at Laing Homes itself, and then to consider how far the respondents can claim much more long established roots for the doctrine of deference which Laing Homes articulates. Laing Homes was concerned with three adjoining fields (the application area), extending in all to 38 acres, on the edge of Widmer End in Buckinghamshire. This land, together with three smaller fields not affected by the application for registration, had been acquired by Laing Homes, a house builder, and held in its land bank since 1963. The land was subject to a grazing licence from 1973 to 1979, when the farmer stopped using it for grazing because of repeated troubles with trespassers. In the course of time footpaths were established round the three fields in the application area (cutting some corners) and these were officially recognised as public footpaths in June 2000. An application for registration of the application area was made in August 2000. The registration authoritys decision to register the land as a village green was challenged by way of judicial review on various grounds (including human rights grounds on which Sullivan J did not find it necessary to rule). In his judgment Sullivan J listed, in para 50, the four main grounds on which Laing Homes was attacking the inspectors report (and the registration based on it). The first ground was that there was insufficient evidence of the use of the whole of the application area for lawful sports and games over the 20 year period. The second was the inspectors conclusion that the use of the fields for an annual hay crop (from about 1980 until the early 1990s) was not incompatible with the establishment of village green rights. Sullivan J considered the second ground first. He discussed it at some length and differed from the inspector. He did so primarily on the view he took of the perception of a reasonable landowner, although he was also influenced by the point (no longer relied on) as to the Victorian statutes (para 86): Like the Inspector, I have not found this an easy question. Section 12 [of the Inclosure Act 1857] acknowledges that animals may be grazed on a village green. Rough grazing is not necessarily incompatible with the use of land for recreational purposes: see Sunningwell. If the statutory framework within which section 22(1) [of the Commons Registration Act 1965] was enacted had made provision for low level agricultural activities to coexist with village green type uses, rather than effectively preventing them once such a use has become established, it would have been easier to adopt the Inspectors approach, but it did not. I do not consider that using the three fields for recreation in such a manner as not to interfere with [the farmers] taking of an annual hay crop for over half of the 20 year period, should have suggested to Laings that those using the fields believed that they were exercising a public right, which it would have been reasonable to expect Laings to resist. I have to say that I am rather puzzled by Sullivan Js summary of the evidence about hay making, and the discussion of it (both by the inspector at paras 56 and 57, and by the judge himself at paras 59 63). There is a detailed description of the local residents keeping off the fields for a few days in spring when they were harrowed, rolled and fertilized, and again for a few days during hay making. But there are only the most passing references by the judge (in paras 59 and 111) to the further need for people to keep off the fields for many weeks while the crop was growing, if it was to be worth the farmers while to get it in. The length of this period would vary with the quality of the land and the seasonal weather, but would usually, I imagine, be of the order of three months. The evidence was that the farmer generally got well over 2,000 bales of hay from the application area. So it seems that the local residents must, in general, have respected the hay crop. The puzzle is partly explained by Sullivan Js consideration of the first ground (evidence of use of the whole application area) which follows at paras 88 111. In para 111 the judge commented that there was an overlap between the two grounds, because the existence of public footpaths round the three fields (cutting some corners) provided an alternative explanation of the local residents use of the fields. It seems likely that they used the perimeter paths and kept off the hay while it was growing, although their dogs may not have done, as the judge discussed at some length (paras 103 to 110). There are some dicta about Laing Homes in Lord Hoffmanns opinion in Oxfordshire [2006] 2 AC 674. Lord Rodger and I expressed general agreement with Lord Hoffmann, but did not comment on this point. Lord Hoffmann observed (para 57): No doubt the use of the land by the owner may be relevant to the question of whether he would have regarded persons using it for sports and pastimes as doing so as of right. But, with respect to the judge, I do not agree that the low level agricultural activities must be regarded as having been inconsistent with use for sports and pastimes for the purposes of section 22 if in practice they were not. There was some discussion in the course of argument of what Lord Hoffmann meant by the first sentence of this passage. In the Court of Appeal (para 45) Dyson LJ took it to mean inconsistency between competing uses manifested where the recreational users adjust their behaviour to accommodate the competing activities of the owner (or his lessees or licensees). I am rather doubtful about that. I think it just as likely that Lord Hoffmann had in mind, not concurrent competing uses of a piece of land, but successive periods during which recreational users are first excluded and then tolerated as the owner decides. An example would be a fenced field used for intensive grazing for nine months of the year, but left open for three months when the animals were indoors for the worst of the winter. Whether that is correct or not, I see great force in the second sentence of the passage quoted. Taking a single hay crop from a meadow is a low level agricultural activity compatible with recreational use for the late summer and from then until next spring. Fitch v Fitch (1797) 2 Esp 543 is venerable authority for that. That is not to say that Laing Homes was wrongly decided, although I see it as finely balanced. The residents of Widmer End had gone to battle on two fronts, with the village green inquiry in 2001 following a footpaths inquiry two or three years earlier, and some of the evidence about their intensive use of the footpaths seems to have weakened their case as to sufficient use of the rest of the application area. The earlier authorities I have already referred to Fitch v Fitch, the case about cricket and hay making at Steeple Bumpstead in Essex. The report is brief, but what Heath J is reported as having said is a forthright declaration of the need for coexistence between concurrent rights: The inhabitants have a right to take their amusement in a lawful way. It is supposed, that because they have such a right, the plaintiff should not allow the grass to grow. There is no foundation in law for such a position. The rights of both parties are distinct, and may exist together. If the inhabitants come in an unlawful way, or not fairly, to exercise the right they claim of amusing themselves, or to use it in an improper way, they are not justified under the custom pleaded, which is a right to come into the close to use it in the exercise of any lawful games or pastimes, and are thereby trespassers. Against that Mr Laurence QC relied on the general proposition that if the public (or a section of the public) is to acquire a right by prescription, they must by their conduct bring home to the landowner that a right is being asserted against him, so that the landowner has to choose between warning the trespassers off, or eventually finding that they have established the asserted right against him. That was in line with what Lord Hoffmann (in Sunningwell [2000] 1 AC 335, 350 351, quoted at para [18] above) called the unifying element in the tripartite test: why it would not have been reasonable to expect the owner to resist the exercise of the right. The first of the old authorities relied on by Mr Laurence was Bright v Walker (1834) 1 CM & R 211, 219, a case on a private right of way, in which Parke B spoke of use of a way openly and in the manner that a person rightfully entitled would have used it. I read that reference to the manner of use as emphasising the importance of open use, rather than as prescribing an additional requirement. On its facts the case raised as much of an issue as to vi as to clam since gates had been erected and broken down during the relevant period. The point of law in the case turned on the peculiarity that the freehold owner of the servient tenement was a corporation sole. The next case relied on (another case about a claim to a private way) was Hollins v Verney (1884) 13 QBD 304 (there is a fuller statement of the facts in the first instance report (1883) 11 QBD 715). Lindley LJ (giving the judgment of the Court of Appeal) observed at p315: No user can be sufficient which does not raise a reasonable inference of such a continuous enjoyment. Moreover, as the enjoyment which is pointed out by the statute is an enjoyment which is open as well as of right, it seems to follow that no actual user can be sufficient to satisfy the statute, unless during the whole of the statutory term (whether acts of user be proved in each year or not) the user is enough at any rate to carry to the mind of a reasonable person who is in possession of the servient tenement, the fact that a continuous right to enjoyment is being asserted, and ought to be resisted if such right is not recognised, and if resistance to it is intended. Can a user which is confined to the rare occasions on which the alleged right is supposed in this instance to have been exercised, satisfy even this test? It seems to us that it cannot: that it is not, and could not reasonably be treated as the assertion of a continuous right to enjoy; and when there is no assertion by conduct of a continuous right to enjoy, it appears to us that there cannot be an actual enjoyment within the meaning of the statute. The second sentence of this passage begins with Moreover, suggesting that Lindley LJ was adding to the requirement that the use should be continuous. But the passage as a whole seems to be emphasising that the use must be openly (or obviously) continuous (the latter word being used three more times in the passage). The emphasis on continuity is understandable since the weight of the evidence was that the way was not used between 1853 and 1866, or between 1868 and 1881. It was used exclusively, or almost exclusively, for carting timber and underwood which was cut on a 15 year rotational system. The use relied on was too sparse for any jury to find section 2 of the Prescription Act 1832 satisfied. In Bridle v Ruby [1989] QB 169 the plaintiff established a right of way by prescription despite his personal belief that he had such a right by grant. Ralph Gibson LJ said at p178: The requirement that user be as of right means that the owner of the land, over which the right is exercised, is given sufficient opportunity of knowing that the claimant by his conduct is asserting the right to do what he is doing without the owners permission. If the owner is not going to submit to the claim, he has the opportunity to take advice and to decide whether to question the asserted right. The fact that the claimant mistakenly thinks that he derived the right, which he is openly asserting, from a particular source, such as the conveyance to him of his property, does not by itself show that the nature of the user was materially different or would be seen by the owner of the land as other than user as of right. That the claimants private beliefs are generally irrelevant, in the prescription of either private or public rights, was finally confirmed by the House of Lords in Sunningwell (see paras [18] and [19] above). The last authority calling for mention on this point is Cumbernauld and Kilsyth District Council v Dollar Land (Cumbernauld) Ltd [1992] SLT 1035 (Court of Session), 1993 SC (HL) 44 (House of Lords). In the Court of Session the Lord President (Lord Hope), after considering several authorities, observed (at p1041): The significance of these passages for present purposes is that, where the user is of such amount and in such manner as would reasonably be regarded as being the assertion of a public right, the owner cannot stand by and ask that his inaction be ascribed to his good nature or to tolerance. Lord Hopes reference to the manner of use must, I think, be related to the unusual facts of the case (set out in detail at pp1037 1038). The issue was whether there was a public right of way over an extensive walkway in a new town, designed to separate pedestrian from vehicular traffic. It gave access to the town centre where there were numerous shops (whose tenants no doubt had private rights of way for themselves and their customers). But the walk was also used for access to public places such as the railway station, the church, a health centre and a swimming pool. It was held that the use of the way had the character of general public use of a town centre pedestrian thoroughfare (p1042). The House of Lords upheld this decision. It is worth noting that Lord Jauncey of Tullichettle stated, at p47, There is no principle of law which requires that there be conflict between the interest of users and those of a proprietor. Deference or civility? In the light of these and other authorities relied on by Mr Laurence I have no difficulty in accepting that Lord Hoffmann was absolutely right, in Sunningwell [2000] 1 AC 335, to say that the English theory of prescription is concerned with how the matter would have appeared to the owner of the land (or if there was an absentee owner, to a reasonable owner who was on the spot). But I have great difficulty in seeing how a reasonable owner would have concluded that the residents were not asserting a right to take recreation on the disputed land, simply because they normally showed civility (or, in the inspectors word, deference) towards members of the golf club who were out playing golf. It is not as if the residents took to their heels and vacated the land whenever they saw a golfer. They simply acted (as all the members of the Court agree, in much the same terms) with courtesy and common sense. But courteous and sensible though they were (with occasional exceptions) the fact remains that they were regularly, in large numbers, crossing the fairways as well as walking on the rough, and often (it seems) failing to clear up after their dogs when they defecated. A reasonably alert owner of the land could not have failed to recognise that this user was the assertion of a right and would mature into an established right unless the owner took action to stop it (as the golf club tried to do, ineffectually, with the notices erected in 1998). There is in my opinion a significant difference, on this point, between the acquisition of private and public rights. As between neighbours living in close proximity, what I have referred to as body language may be relevant. In a Canadian case of that sort, Henderson v Volk (1982) 35 OR (2d) 379, 384, Cory JA (delivering the judgment of the Court of Appeal of Ontario) observed: It is different when a party seeks to establish a right of way for pedestrians over a sidewalk. In those circumstances the user sought to be established may not even be known to the owner of the servient tenement. In addition, the neighbourly acquiescence to its use during inclement weather or in times of emergency such as a last minute attempt to catch a bus, should not too readily be accepted as evidence of submission to the use. It is right and proper for the courts to proceed with caution before finding that title by prescription or by the doctrine of lost modern grant was established in a case such as this. It tends to subject a property owner to a burden without compensation. Its ready invocation may discourage acts of kindness and good neighbourliness; it may punish the kind and thoughtful and reward the aggressor. That is, if I may say so, obviously good sense. But I do not think it has any application to a situation, such as the Court now faces, in which open land owned by a local authority is regularly used, for various different forms of recreation, by a large number of local residents. The inspectors assessment did in my opinion amount to an error of law. He misdirected himself as to the significance of perfectly natural behaviour by the local residents. Rights after registration Mr Laurence made some forceful submissions as to what the position would have been on a double hypothesis: that the disputed land had been registered as a town green, and that it had continued to be let to the golf club after its registration. In those circumstances, he said, the fortunes of the golfers and the local residents would be dramatically reversed: instead of being all give by the residents it would be all take, to the point at which the golf club would no longer be able to function at all. There was, he said, a massive mismatch between what the residents would have done in order to gain the rights, and what they would be in a position to do after the green had been registered. This lack of symmetry was a reason, he argued, for doubting the soundness of the reasoning on which the appellants case rested. These submissions raise two distinct questions. The first is a question of law about the effect of registration of a green. The second is a speculative question of predicting the behaviour of a group of people in an eventuality which cannot now arise. I would spend little time on the second question. Like other members of the Court, I am sceptical about the notion that the local residents attitude towards the golfers, if the green were to be registered in circumstances where it was still being used by the golf club, would suddenly turn from friendly civility to vindictive triumphalism. Many of them must have friends or neighbours who are members of the golf club; some are even members themselves. But I would accept that the question of law needs to be considered on the footing that it is at least possible that relations between the two groups might become rather more strained. Here it is necessary to come back to Oxfordshire [2006] 2 AC 674. The proceedings in that case were not judicial review proceedings. They were initiated by the registration authority, by a claim form under CPR Part 8, for guidance on a pending application for registration (the first instance judgment is reported at [2004] Ch 253). In the House of Lords both Lord Scott of Foscote and Baroness Hale of Richmond regarded some of the questions raised as unnecessary, academic and inappropriate (see Lord Scott at paras 91 103 and Baroness Hale at paras 131 137). The questions to which they most strongly objected were (i) whether, when a green was registered, the relevant inhabitants had legal rights to take recreation on it; and (ii) whether land registered as a green fell within the scope of what had been referred to as the Victorian statutes. Lord Hoffmann, while recognising these concerns, thought that it would be appropriate to answer the questions, because Oxford City Council had a real interest in the question (para 45): But the interest of the city council in these questions is concrete in the most literal sense. They wish to build houses on the land. If registration creates no rights and the land does not fall within the Victorian statutes, they will be able to do so. So Lord Hoffmann proceeded to answer them, and Lord Rodger and I expressed general agreement with his opinion. Lord Hoffmann noted (para 46) that registration is conclusive evidence of the matters registered, but In the case of a town or village green, the registration states simply that the land is a green. No other information is prescribed. The position under the Commons Act 2006 will be similar once it has come fully into force. The only rights specifically registrable in respect of a town or village green will be rights of common: see section 2(2) and section 3(4). But section 3(5) enables regulations to be made requiring or permitting other information to be included in the register. Regulations have been made (The Commons Registration (England) Regulations 2008 S.I.2008/1961) but they do not require or permit specific rights of recreation to be registered. The extensive management provisions in Part 2 of the Act apply to town or village greens only if they are subject to rights of common, and deal with the regulation of rights of common. This seems to be in line with what Lord Hoffmann said in Oxfordshire [2006] 2 AC 674, para 48, that although the Commons Registration Act 1965 was intended to be followed by further legislation in relation to the management of commons, it was by no means clear that Parliament contemplated further legislation as to rights over greens. I must set out at some length what Lord Hoffmann said about rights after registration (paras 49 to 51): So one has to look at the provisions about greens in the 1965 Act like those of any other legislation, assuming that Parliament legislated for some practical purpose and was not sending commons commissioners round the country on a useless exercise. If the Act conferred no rights, then the registration would have been useless, except perhaps to geographers, because anyone asserting rights of recreation would still have to prove them in court. There would have been no point in the conclusive presumption in section 10. Another possibility is that registration conferred such rights as had been proved to support the registration but no more. So, for example, if land had been registered on the strength of a custom to have a bonfire on Guy Fawkes Day, registration would confer the right to have a bonfire but no other rights. But this too would make the registration virtually useless. Although the Act provides for the registration of rights of common, it makes no provision for the registration of rights of recreation. One cannot tell from the register whether the village green was registered on the basis of an annual bonfire, a weekly cricket match or daily football and rounders. So the establishment of an actual right to use a village green would require the inhabitants to go behind the registration and prove whatever had once satisfied the Commons Commissioner that the land should be registered. In my view, the rational construction of section 10 is that land registered as a town or village green can be used generally for sports and pastimes. It seems to me that Parliament must have thought that if the land had to be kept available for one form of recreation, it would not matter a great deal to the owner whether it was used for others as well. This would be in accordance with the common law, under which proof of a custom to play one kind of game gave rise to a right to use the land for other games: see the Sunningwell case [2000] 1 AC 335, 357A C. This does not mean that the owner is altogether excluded from the land. He still has the right to use it in any way which does not interfere with the recreational rights of the inhabitants. There has to be give and take on both sides. Lord Hoffmann then (paras 54 to 57) dealt with the Victorian statutes as I have already mentioned. Lord Scott (thinking it right to express a limited view on this issue) disagreed (para 105): But I do not agree that registration can authorise local inhabitants to enjoy recreative user of the land that is different in kind from the 20 years user that has satisfied the statutory criteria for registration or that would diminish the ability of the landowner to continue to use the land in the manner in which he has been able to use the land during that 20 year period. I do not accept that a tolerant landowner who has allowed the local inhabitants to use his grass field for an annual 5 November bonfire for upwards of 20 years must, after registration, suffer his field to be used throughout the year for all or any lawful sports and pastimes with the consequential loss of any meaningful residual use that he could continue to make of the field. Having reconsidered the general agreement that I expressed in Oxfordshire, I find that I agree with almost all that Lord Hoffmann said in the paragraphs that I have quoted. He had already, in Sunningwell [2000] 1 AC 335, 357, explained that sport or pastime denotes a single composite class, and recognised that dog walking and playing with children [are], in modern life, the sort of informal recreation which may be the main function of a village green. The only point on which I differ from Lord Hoffmann is the point which Lord Scott picked up in para 105: the notion that a custom to have an annual bonfire on Guy Fawkes Day could be a sufficient basis for registration of a green. Such a right might have been established as a stand alone custom, but would to my mind be far too sporadic to amount to continuous use for lawful sports and pastimes (quite apart from the fact that most bonfires are now illegal on environmental grounds). Once that special case is eliminated, I see little danger, in normal circumstances, of registration of a green leading to a sudden diversification or intensification of use by local residents. The alleged asymmetry between use before and after registration will in most cases prove to be exaggerated. Golfers and local residents can co exist without much friction even when the latter have established legal rights. Conclusion Disparaging references are sometimes made to the village green industry and to applications for registration being used as a weapon of guerrilla warfare against development of open land. The House of Lords has (both in Beresford and Oxfordshire) expressed some doubt about the extension of town or village green protection to land very different (both in size and appearance) from a traditional village green. However, in the Commons Act 2006 Parliament has made it easier, rather than more difficult, to register a green. There is also the prospect (as Lord Hope mentions in para 56 of his judgment) of further legislation, which might possibly make provision for the management of greens on lines comparable to those proposed for commons in Part 2 of the Commons Act 2006. As it is, district councils have power under section 1 of the Commons Act 1899 to make by laws for the preservation of order on commons, which are defined (in section 15) as including town and village greens. Even without such regulation, conflicts over competing uses (whether as between the owner and the local residents, or between different interest groups among the local residents) are capable of resolution by the constant refrain in the law of easements that between neighbours there must be give as well as take (Gray and Gray, Elements of Land Law, 5th ed. (2009) para 5.2.72, citing Megarry J in Costagliola v English (1969) 210 EG 1425, 1431). For these reasons I would allow the appeal and order that the Borough Council should register the disputed land as a town green under section 1 of the Commons Act 2006 (if then in force in Redcar and Cleveland) or under the applicable transitional provisions. LORD HOPE This appeal relates to an application by Kevin Paul Lewis for judicial review of a decision of the General Purposes and Village Greens Committee of Redcar and Cleveland Borough Council on 19 October 2007 to reject an application to register part of the land in Redcar known as Coatham Common as a town or village green under the Commons Act 2006 (the 2006 Act). On 18 July 2008 Sullivan J dismissed the application but granted permission to appeal: [2008] EWHC 1813 (Admin). On 15 January 2009 the Court of Appeal (Laws, Rix and Dyson LJJ) dismissed the appeal: [2009] EWCA Civ 3; [2009] 1 WLR 1461. The applicant now appeals to this court. The interested party, Persimmon Homes (Teesside) Ltd., seeks to develop the land for housing and leisure activities. It supports the case for the local authority, as it did in the courts below. As Lord Walker has explained, the land is owned by the local authority. Until 2002 it was part of the land that formed the links of the Cleveland Golf Club. It comprised the first and eighteenth holes of the golf course and a practice ground. There were also substantial areas of rough ground beside and between these features. It was also used by the local inhabitants for informal recreation such as walking their dogs, childrens games and picnics. They did not interfere with or interrupt play by the golfers. They would wait until the play had passed or until they were waved through by the golfers. The relationship between the golfers and the local inhabitants was cordial. The two activities appear to have co existed quite happily during this period. The details are set out in the report by Mr Vivian Chapman QC (the Inspector). He was appointed by the local authority to hold an inquiry following an application by Mr Lewis and a number of other local inhabitants to register an area of land which included the club house as a town or village green under the Commons Registration Act 1965 (the 1965 Act). He was asked to provide a further report following a second application to register the area with which this case is concerned which was made after the 2006 Act came into force. His comments in a series of further opinions on the relationship between the golfers and the local inhabitants confirmed his earlier conclusions that the local inhabitants deferred to the golfers, and that the deferral to golfing use precluded use of the land by the local inhabitants as of right for recreational purposes. The relevant findings have been quoted in full by Lord Walker: see paras 9 11, above. On 18 January 2008 these judicial review proceedings were commenced. Sullivan J agreed with Mr Chapmans conclusion that the recreational use of the land was not as of right because it deferred to the use of the land by the golf club. Asking himself how the matter would have appeared to the golf club, he said that it would not be reasonable to expect the club to resist the recreational use of the land by local users if their use of the land did not in practice interfere with its use by the golf club: para 41. The Court of Appeal agreed with that approach: [2009] 1WLR 1461, Dyson LJ, para 54; Rix LJ, paras 64 65. Rix LJ said that, if it were otherwise, there would be no way of resolving questions that would subsequently arise, given that registration does not confer qualified or limited rights but the unqualified right to use the land generally for sports and pastimes. He envisaged questions as to whether, if a right of registration were to be assumed, the local inhabitants had a right of walking on the golf greens themselves during play or of playing golf as though they were members of the club itself. The issues As Lord Walker has explained, the question is whether the land ought to have been registered. In an attempt to focus their arguments more precisely, the parties were agreed that it raised the following issues: (1) Where land has been extensively used for lawful sports and pastimes nec vi, nec clam, nec precario for 20 years by the local inhabitants, is it necessary under section 15(4) of the 2006 Act to ask the further question whether it would have appeared to a reasonable landowner that users were asserting a right to use the land for the lawful sports and pastimes in which they were indulging? (2) If the answer to (1) is yes, does the mere fact that local inhabitants did not prevent the playing of golf by walking in front of the ball (or seeking to prevent the playing of strokes by golfers) preclude the use from being as of right under section 15(4)? (3) If the answer to (2) is no, did the local authority (and the Inspector) err in law in concluding that the inhabitants use was not as of right, given what the Inspector described as overwhelming evidence that recreational use of the land by local people deferred to the golfing use? This presentation was not, as it turned out, particularly helpful. As counsel recognised, issues (2) and (3) fall to be taken together, as they are both directed to the question of deference. And I agree with Lord Brown that the critical question, which none of these issues addresses, is what are the respective rights of the local inhabitants and the owner of the land once it has been registered. It is a remarkable fact that the statute gives no guidance at all on this issue. In R (Laing Homes Ltd) v Buckinghamshire County Council [2003] EWHC 1578 (Admin), [2004] 1 P & C R 573, paras 27 29, referring to what Carnwath J said in R v Suffolk County Council, Ex p Steed (1995) 70 P & C R 487, Sullivan J said that this was not the original intention. The 1965 Act was intended to be a two stage legislative process. As a first step the registers would establish the facts and provide a definitive record of what land was, and was not, common land or a town or village green. In the second stage Parliament would deal with the consequences of registration by defining what rights the public had over the land that had been registered. In New Windsor Corporation v Mellor [1975] Ch 380, 392, Lord Denning MR said that he hoped that the second stage legislation would not be long delayed. But here we are, 45 years after the passing of the 1965 Act. Parliament has still not said what these rights are. In Oxfordshire County Council v Oxford City Council [2006] 2 AC 674, para 48 Lord Hoffmann said that, while there were indications that further legislation about rights over common land was in prospect, it was by no means clear that Parliament contemplated further legislation about rights over village greens. It has been left to the courts to try to work this out for themselves. As Lord Hoffmann put in para 49, one has to look at the provisions about greens like those of any other legislation and assume that Parliament legislated for some practical purpose. I think that one must assume too that it was Parliaments intention that practical common sense would be the best guide to the way the public right was to be exercised once the land had entered the register. In answer to a series of written questions by Lord Greaves, the Parliamentary Under Secretary of State for the Department for the Environment, Food and Rural Affairs, Lord Davies of Oldham, said that the Government proposes to consult in the spring of 2010 as to whether changes are needed to the existing framework: Hansard (HL) Written Questions, 15 January 2010, Qs 961 964. This initiative appears to have been prompted by a research report which was received by DEFRA into the registration of new town and village greens, which has identified particular concerns as to its use in relation to land which is subject to proposals for residential development. I hope that the opportunity will be taken to look at the consequences of registration as revealed by the developing case law as well as how the registration system itself is working. Previous authority I agree with Lord Walker that in none of the three decisions of the House of Lords to which he refers (see para 3, above) was it necessary for the House to address the question of deference which lies at the heart of this case. Reg v Oxfordshire County Council, Ex p Sunningwell Parish Council [2000] 1 AC 335 was concerned with the registration of a glebe which was used predominantly by the villagers for informal recreation. The diocesan board had obtained planning permission to build two houses on part of the glebe, and it objected to registration. But the inspector found that it had been tolerant of harmless public use of the land for informal recreation. In R (Beresford) v Sunderland City Council [2004] 1 AC 889 the land was an open, flat area of grass which was used by the local inhabitants for ball games and other lawful pastimes. The council cut the grass from time to time, but it did not use it in any other way that might have interfered with its use by the locals. In Oxfordshire County Council v Oxford City Council, para 125 the land was described by Lord Walker as an overgrown, rubble strewn, semi submerged area, sandwiched between the canal and the railway in north west Oxford hardly the ideal site to focus close attention on the critical issue that is before us in this case. The only passages in these three cases that might be taken as suggesting that the rights acquired by the local inhabitants would be enlarged over those of the owner once the land had been registered, as Rix LJ assumed would happen in this case, are to be found in Lord Hoffmanns speech in Oxfordshire. In para 51 he said of the effect of registration: This does not mean that the owner is altogether excluded from the land. He still has the right to use it in any way which does not interfere with the recreational rights of the inhabitants. In para 59, where he distinguished Oxfordshire from the decision of the European Court of Human Rights in J A Pye (Oxford) Ltd v United Kingdom [2005] 3 EGLR 1, there is a subtle change of language. He said: In the present case, first, the owner retains his title to the land and his right to use it in any way which does not prevent its use by the inhabitants for recreation and, secondly, the system of registration under the 1965 Act was introduced to preserve open spaces in the public interest. I think that the first passage, in which Lord Hoffmann uses the words interfere with, goes some way to supporting the idea that after registration the rights of the local inhabitants predominate. The second passage, on the other hand, does not. Preventing the use of the land for recreation would, of course, defeat the point of registration completely. Lord Scott of Foscote was obviously very troubled in Oxfordshire by the idea that the public would acquire much broader, more intrusive rights over the land after registration and the management problems that this might give rise to: para 85. But his objections were, as I read them, based on an assumption as to the effect of the registration as a town or village green on places such as a dense wood in which people wandered to pick bluebells or look for mushrooms: para 76. His dissent casts some light on what he thought was at issue in that case. But I do not think that it can be used to elevate what Lord Hoffmann said in para 51 to a ruling on the point which, on the facts of that case, did not arise. The only case which directly addresses the question of deference is R (Laing Homes Ltd) v Buckinghamshire County Council [2004] 1 P & CR 573, in which Sullivan J quashed the resolution that the land should be registered. As Dyson LJ observed in the Court of Appeal, [2009] 1 WLR 1461, para 30, the concept of deference as a bar to the creation of a new town or village green is Sullivan Js creation. The land in that case consisted of three adjacent fields which Laing Homes Ltd held as part of its land bank. It granted a grazing licence to a farmer, Mr Pennington, who for a few years at the start of the 20 year period kept cattle on the fields until he had to give this up because of problems with members of the public, whose use of the perimeters of the fields resulted in the paths that they had established there being registered as public footpaths. For over half of that period Mr Pennington used the land for taking an annual crop of hay. The question was whether this use of the land, or the growing of any other crop, was inconsistent with the right to use the land for recreation that was contended for by the local inhabitants. After referring to passages in Lord Hoffmanns speech in Sunningwell about the extent of the user by the public that was needed to establish that the land was being used by them as of right, Sullivan J said in para 82: If the starting point is, how would the matter have appeared to Laings? it would not be reasonable to expect Laings to resist the recreational use of their fields so long as such use did not interfere with their licensee, Mr Penningtons, use of them for taking an annual hay crop. In para 84 he said that, so long as the local inhabitants recreational activities did not interfere with the way in which the owner had chosen to use his land, there would be no suggestion to him that they were exercising or asserting a public right to use it for lawful sports and pastimes. In para 85 he said: I do not believe that Parliament could have intended that such a user for sports or pastimes would be as of right for the purposes of section 22 [of the 1965 Act]. It would not be as of right, not because of interruption or discontinuity, which might be very slight in terms of numbers of days per year, but because the local inhabitants would have appeared to the landowner to be deferring to his right to use his land (even if he chose to do so for only a few days in the year) for his own purposes. In para 86 he added these words: Like the Inspector, I have not found this an easy question. Section 12 acknowledges that animals may be grazed on a village green. Rough grazing is not necessarily incompatible with the use of the land for recreational purposes: see Sunningwell. If the statutory framework within which section 22(1) was enacted had made provision for low level activities to co exist with village green type uses, rather than effectively preventing them once such a use has become established, it would have been easier to adopt the Inspectors approach, but it did not. I do not consider that using the three fields for recreation in such a manner as not to interfere with Mr Penningtons taking of an annual hay crop for over half the 20 year period, should have suggested to Laings that those using the fields believed that they were exercising a public right, which it would have been reasonable to expect Laings to resist. This passage suggests that Sullivan J was approaching the case on the assumption that registration was inconsistent with the continued use of the land by Mr Pennington for taking the annual hay crop. In other words, registration would bring non interference to an end. The public right to use the fields for recreational purposes would make it impossible for them to be used for growing hay. His approach has also been taken as indicating that in cases where the land has been used by a significant number of inhabitants for 20 years for recreational purposes nec vi, nec clam, nec precario, there is an additional question that must be addressed: would it have appeared to a reasonable landowner that the inhabitants were asserting a right to use the land for the recreational activities in which they were indulging? I am not sure that Sullivan J was really saying that there was an additional question that had to be addressed. But if he was, I would respectfully disagree with him on both points. The section 15 questions The application in this case was made under section 15(4) of the 2006 Act, which provides that a person may apply for registration of land as a town or village green where a significant number of the inhabitants of any locality, or of any neighbourhood within a locality, indulged as of right in lawful sports and pastimes on the land for a period of at least 20 years if they ceased to do so before the commencement of that subsection, so long as the application is made within a period of five years beginning with the date of the cessation. The words that I have set out in quotation marks appear in each of subsections (2), (3) and (4) of section 15. The definition of the phrase town or village green in section 22(1) of the 1965 Act, as amended by section 98 of the Countryside and Rights of Way Act 2000, has been repeated throughout this section, with the addition of the words a significant number. The theory on which these provisions are based is known to the common law as prescription: see Lord Hoffmanns explanation in Sunningwell, [2000] 1 AC 335, 349 351, of the background to the definition of town or village green in section 22(1) of the 1965 Act. As the law developed in relation to private rights, the emphasis was on the quality of the user for the 20 year period which would justify recognition of a prescriptive right: It became established that such user had to be, in the Latin phrase, nec vi, nec clam, nec precario: not by force, nor stealth, nor the licence of the owner. The unifying element in these three vitiating circumstances was that each constituted a reason why it would not have been reasonable to expect the owner to resist the exercise of the right in the first case, because rights should not be acquired by the use of force, in the second, because the owner would not have known of the user and in the third, because he had consented to the use, but for a limited period. So in Dalton v Angus (1881) 6 App Cas 740, 773 Fry J (advising the House of Lords) was able to rationalise the law of prescription as follows: the whole law of prescription and the whole law which governs the presumption or inference of a grant or covenant rest upon acquiescence. Section 2 of the Prescription Act 1832 made it clear that what mattered was the quality of the user during the 20 year period. It had to be by a person claiming right thereto. It must have been enjoyed openly and in the manner that a person rightfully entitled would have used it, and not by stealth or by licence: Bright v Walker (1834) 1 CM & R 211, 219 per Parke B. In Gardner v Hodgson's Kingston Brewery Co Ltd [1903] AC 229, 239 Lord Lindley said that the words as of right were intended to have the same meaning as the older expression nec vi, nec clam, nec precario. Referring then to section 1(1) of the Rights of Way Act 1932, Lord Hoffmann said in Sunningwell at p 353: The words actually enjoyed by the public as of right and without interruption for a full period of 20 years are clearly an echo of the words actually enjoyed by any person claiming right thereto without interruption for the full period of 20 years in section 2 of the Act of 1832. Introducing the Bill into the House of Lords (HL Debates), 7 June 1932, col 637, Lord Buckmaster said that the purpose was to assimilate the law of public rights of way to that of private rights of way. It therefore seems safe to assume that as of right in the Act of 1932 was intended to have the same meaning as those words in section 5 of the Act of 1832 and the words claiming right thereto in section 2 of that Act. He concluded at p 354 that there was no reason to believe that as of right in section 22(1) of the 1965 Act was intended to mean anything different from what those words meant in the Acts of 1832 and 1932. The same can be said of the meaning of those words in section 15 of the 2006 Act. In the light of that description it is, I think, possible to analyse the structure of section 15(4) in this way. The first question to be addressed is the quality of the user during the 20 year period. It must have been by a significant number of the inhabitants. They must have been indulging in lawful sports and pastimes on the land. The word lawful indicates that they must not be such as will be likely to cause injury or damage to the owners property: see Fitch v Fitch (1797) 2 Esp 543. And they must have been doing so as of right: that is to say, openly and in the manner that a person rightfully entitled would have used it. If the user for at least 20 years was of such amount and in such manner as would reasonably be regarded as being the assertion of a public right (see R (Beresford) v Sunderland City Council [2004] 1 AC 889, paras 6 and 77), the owner will be taken to have acquiesced in it unless he can claim that one of the three vitiating circumstances applied in his case. If he does, the second question is whether that claim can be made out. Once the second question is out of the way either because it has not been asked, or because it has been answered against the owner that is an end of the matter. There is no third question. The answer to the first issue (see para [4], above) is: no. Mr Charles George QC for the appellants said that there was only one simple test: was the use caught by any of the three vitiating circumstances? Mr George Laurence QC confirmed that it was common ground that the use of the land for recreation in this case was nec vi, nec clam, nec precario, but he said that this did not exhaust the issue. The unifying principle was one of reasonableness. He said that, if it was not reasonable to expect the owner to resist what the users were doing, no harm could come to the owner from his omission to resist or complain. In this case, as the Inspector held, the local inhabitants overwhelmingly deferred to the golfers. As Dyson LJ said in the Court of Appeal, the user of the local inhabitants was extensive and frequent, but so too was the use by the golfers: the greater the degree of deference, the less likely it was that it would appear to the reasonable owner that the locals were asserting any right to use the land [2009] 1 WLR 1461, paras 48 49. I agree with Mr George that all the authorities show that there are only three vitiating circumstances: Gardner v Hodgson's Kingston Brewery Co Ltd [1903] AC 229, 238 per Lord Davey, p 239 per Lord Lindley; Sunningwell [2000] 1 AC 335, p 350, per Lord Hoffmann; Beresford [2004] 1 AC 889, para 3 per Lord Bingham of Cornhill, para 16 per Lord Scott of Foscote, para 55 per Lord Rodger of Earlsferry; Riddall and Trevelyan, Rights of Way, 4th ed (2007) pp 41, 47. There is no support there for the proposition that there is an additional requirement. But that does not answer Mr Laurences point, which was really and quite properly directed to the first question as to the quality of the user that is relied on. That, as has been said, is the critical question in this case. Deference In para 175 of his report the Inspector said that he found that the relationship between the golfers and the local recreational users was generally cordial. This was because local people (with the exception of Squadron Leader Kime) did not materially interfere with the use of the land for playing golf. They would wait until the play had passed or until they had been waved on by the golfers. When local people did inadvertently impede play, the golfers shout of fore was enough to warn them to clear the course. The Inspector asked himself whether this indicated deference to the golfers. Following what Sullivan J said in Laing [2004] P & CR 573, para 85, he understood that the use would not be as of right if the local inhabitants would have appeared to the owner to be deferring to his right to use his land for his own purposes. That approach is based on the judges assumption, which the Court of Appeal endorsed, that the effect of registration would be to enlarge the right of the local inhabitants in a way that would effectively prevent the golfers from using the land for their own purposes. I do not find anything in the words used in section 15(4) of the 2006 Act that supports that approach. On the contrary, the theme that runs right through all of the law on private and public rights of way and other similar rights is that of an equivalence between the user that is relied on to establish the right on the one hand and the way the right may be exercised once it has been established on the other. In Dalton v Henry Angus & Co (1881) 6 App Cas 740, 774 Fry J, having stated at p 773 that the whole law of prescription rests upon acquiescence, said that it involved among other things the abstinence by the owner from any interference with the act relied on for such a length of time as renders it reasonable for the Courts to say that he shall not afterwards interfere to stop the act being done. [my emphasis] In other words, one looks to the acts that have been acquiesced in. It is those acts, and not their enlargement in a way that makes them more intrusive and objectionable, that he afterwards cannot interfere to stop. This is the basis for the familiar rule that a person who has established by prescriptive use a right to use a way as a footpath cannot, without more, use it as a bridleway or for the passage of vehicles. In White v Taylor (No 2) [1969] 1 Ch 160, 192 Buckley LJ said that the user must be shown to have been of such a character, degree and frequency as to indicate an assertion by the claimant of a continuous right, and of a right of the measure of the right claimed. [again, my emphasis] That was a case in which it was claimed, among other things, that sheep rights had been established by prescription at common law. But I think that this observation is consistent with the approach that is taken to prescriptive rights generally. It has to be recognised, of course, that once the right to use the land for lawful sports and pastimes is established and the land has been registered its use by the local inhabitants for those purposes is not restricted to the sports or pastimes that were indulged in during the 20 year period. Lord Hoffmann said in Oxfordshire [2006] 2 AC 674, para 50, that the rational construction of section 10 of the 1965 Act, which did not require the rights of recreation as such to be registered, was that land registered as a town or village green can be used generally for sports and pastimes: It seems to me that Parliament must have thought that if the land had to be kept available for one form of recreation, it would not matter a great deal to the owner whether it was used for others as well. This would be in accordance with the common law, under which proof of a custom to play one kind of game gave rise to a right to use the land for other games: see the Sunningwell case [2000] 1 AC 335, 357A C. As he put in the passage referred to in Sunningwell, as long as the activity can properly be called a sport or pastime, it falls within the composite class. This approach indicates that, while the principle of equivalence tells one in general terms what the land may be used for, there may be some asymmetry as to the manner of its use for that purpose before and after it has been registered. But it does not follow that, where the use for recreation has co existed with the owners use of the land during the 20 year period, the relationship of co existence is ended when registration takes place. In Fitch v Fitch 2 Esp 543, where the inhabitants had the right to play lawful games and pastimes on the plaintiffs close which he used for growing grass for hay, the jury were told that the rights of both parties were distinct and might co exist together. But the inhabitants could not use the close in the exercise of their right in a way that was not fair or was improper. Referring to that case in Oxfordshire [2006] 2 AC 674, para 51, Lord Hoffmann said that there had to be give and take on both sides. Mr Stewart Smith, following Mr Laurence QC, did not agree. He said that it was fundamental to his argument that the concept of give and take had no place in rights of the kind that were established by registration under the 2006 Act. He submitted that these rights were unqualified and unlimited. He said that Fitch v Fitch did not support the idea of give and take, and he sought to contrast rights of the kind that follow registration with those of the kind discussed in Mercer v Woodgate (1869) LR 5 QB 26, where there was dedication of the right of way to the public subject to the owners right to plough the soil in the due course of husbandry. Cockburn CJ said at p 30 that there would be great injustice and hardship to hold that there had been an absolute dedication where the owner had clearly only intended a limited dedication. Blackburn J said at p 31 that he could see no objection in law to such a partial dedication. I agree that care needs to be taken in drawing conclusions from cases about the creation of a right of way by dedication. But the concepts of partial dedication and the co existence of rights on both sides appear to me to be capable of being applied generally. Lord Hoffmann would not have mentioned give and take in the Oxfordshire case [2006] 2 AC 674 if he had thought that it had no application to town and village greens. If it were otherwise it would in practice be very difficult, if not impossible, to obtain registration in cases where the owner is putting his land to some use other than, perhaps, growing and cutting grass for hay or silage. There being no indication in the statute to the contrary, I would apply these concepts to the rights created by registration as a town or village green too. Where then does this leave deference? Its origin lies in the idea that, once registration takes place, the landowner cannot prevent use of the land in the exercise of the public right which interferes with his use of it: Laing [2004] P & CR 573, para 86. So it would be reasonable to expect him to resist use of his land by the local inhabitants if there was reason to believe that his continued use of the land would be interfered with when the right was established. Deference to his use of it during the 20 year period would indicate to the reasonable landowner that there was no reason to resist or object to what was taking place. But once one accepts, as I would do, that the rights on either side can co exist after registration subject to give and take on both sides, the part that deference has to play in determining whether the local inhabitants indulged in lawful sports or pastimes as of right takes on an entirely different aspect. The question is whether the user by the public was of such amount and in such manner as would reasonably be regarded as being the assertion of a public right. Deference by the public to what the owner does on his land may be taken as an indication that the two uses can in practice co exist. Of course, the position may be that the two uses cannot sensibly co exist at all. But it would be wrong to assume, as the Inspector did in this case, that deference to the owners activities, even if it is as he put it overwhelming, is inconsistent with the assertion by the public to use of the land as of right for lawful sports and pastimes. It is simply attributable to an acceptance that where two or more rights co exist over the same land there may be occasions when they cannot practically be enjoyed simultaneously: Rowena Meager, Deference & user as of right: an unholy alliance, Rights of Way Law Review, October 2009, 147, 152. If any of the local inhabitants were to exercise their rights by way of all take and no give in a way to which legitimate objection could be taken by the landowner they could, no doubt, be restrained by an injunction: Philip Petchey, R (Lewis) v Redcar and Cleveland B C, Rights of Way Law Review, March 2009, 139, 143. In my opinion the Inspector misdirected himself on this point. The question then is whether the Councils decision which was based on his recommendation can be allowed to stand if the facts are approached in the right way. The facts of this case, as described by the Inspector, show that the local inhabitants (except for Squadron Leader Kime) were behaving when they were using the land for sports and pastimes in the way people normally behave when they are exercising public rights over land that is also used as a golf course. They recognise that golfers have as much right to use the land for playing golf as they do for their sports and pastimes. Courtesy and common sense dictates that they interfere with the golfers progress over the course as little as possible. There will be periods of the day, such as early in the morning or late in the evening, when the golfers are not yet out or have all gone home. During such periods the locals can go where they like without causing inconvenience to golfers. When golf is being played gaps between one group of players and another provide ample opportunities for crossing the fairway while jogging or dog walking. Periods of waiting for the opportunity are usually short and rarely inconvenience the casual walker, rambler or bird watcher. I cannot find anything in the Inspectors description of what happened in this case that was out of the ordinary. Nor do I find anything that was inconsistent with the use of the land as of right for lawful sports and pastimes. Conclusion For these reasons, and those given by everyone else with which I agree, I would allow the appeal and make the order that has been proposed by Lord Walker. LORD RODGER issue, I add some observations of my own. As Lord Walker has explained, until 2002 an area of land (the disputed land) in the Coatham district of Redcar formed part of a golf course on which members of the Cleveland Golf Club played. The club were tenants of the Council, which owned the land. Then, in 2002, the course was reconfigured and the club gave up its tenancy of the disputed land. The following year, the Council entered into an agreement with Persimmon Homes (Teesside) Ltd for a mixed residential I agree with the judgment of Lord Walker. In view of the importance of the and leisure development on an area of land of which the disputed land formed an important part. In March 2005 a group of residents applied to have the disputed land registered as a village green. In March 2006 the inspector recommended against registration. In June 2007 Mr Lewis and his fellow applicants put in a fresh application under section 15 of the Commons Act 2006. Again the inspector recommended against registration and the matter has now led to the present appeal. This sequence a proposal to develop an area of open land, followed by an application to register the land as a village green in order to stop the development is very familiar. The House of Lords dealt with three such cases in the space of a few years and newspaper articles refer to many other examples. But the fact that the disputed land was used by the golf club during the period of 20 years which the applicants rely on to justify its registration as a village green has prompted much heart searching as to what the position would have been if the land had been registered as a village green while the club was still in occupation and its members were still wanting to play on the land. Would registration have enabled the dog walkers of Redcar to take over and, in effect, extinguish the rights of the golfers to play on that part of their course? However interesting the point of law may be, in a case like this the issue is more than just a little unreal. The fact of the matter is that, if the golf club had remained as tenants after 2002, the golfers would have continued to hack their way over the disputed area and the dog walkers would have continued to make their way across the course. It is a fair bet that in that happy state of affairs no one would have dreamed of applying to have the land registered as a village green. It was only the prospect of the development on this open space, when the golf club was no longer using it, which prompted the application for registration with a view to stopping the development in its tracks. So, in the real world, the dog walkers and golfers will never actually have to co exist on the disputed land if it is registered as a village green. If, however, in some imaginary parallel universe, the two groups had been required to co exist after registration, then, like Lord Walker, I find it hard to imagine that there would, in practice, have been many problems. The pre existing situation suited the local inhabitants well enough: doubtless, some of them were themselves members of the club and played on the land; in any event, the golf club must have kept the grass cut and the area looking presentable. If the inhabitants had previously shown no inclination to break out the croquet hoops, or to set up butts or cricket stumps or to dance around a maypole on the disputed land, it seems unlikely that registration would have suddenly brought on the urge. Indeed, too many developments of these kinds would probably have upset the dog walkers almost as much as the golfers. In all likelihood, therefore, things would have gone on much as before, with a bit of give and take on both sides. I would therefore particularly associate myself with what Lord Walker says in para 47 of his judgment. Under section 15 of the Commons Act 2006 registration of land as a village green requires that a significant number of the inhabitants of any locality, or of any neighbourhood in a locality, have indulged as of right in lawful sports and pastimes on the land for a period of at least 20 years. Since R v Oxfordshire County Council Ex p Sunningwell Parish Council [2000] 1 AC 335 it has been settled law that dog walking and playing with children count as lawful sports and pastimes. Since both activities can and do take place on almost any and every open space near centres of population, the scope for applying to register land as a village green is correspondingly wide. Owners of land are taken to be aware of this chapter of the law and of the need to take appropriate preventive steps if they see a risk of circumstances arising in which an application could be made and their land become registered as a village green. If they fail to do so, they are treated as having acquiesced in the inhabitants indulging in sports and pastimes on their land as of right. Here the evidence shows that, as far back as living memory goes, many local inhabitants used the disputed land for informal recreation such as dog walking and childrens play. But the courts below have held that they were not doing so as of right. The basic meaning of that phrase is not in doubt. In R v Oxfordshire County Council Ex p Sunningwell Parish Council [2000] 1 AC 335 Lord Hoffmann showed that the expression as of right in the Commons Registration Act 1965 was to be construed as meaning nec vi, nec clam, nec precario. The parties agree that the position must be the same under the Commons Act 2006. The Latin words need to be interpreted, however. Their sense is perhaps best captured by putting the point more positively: the user must be peaceable, open and not based on any licence from the owner of the land. The opposite of peaceable user is user which is, to use the Latin expression, vi. But it would be wrong to suppose that user is vi only where it is gained by employing some kind of physical force against the owner. In Roman law, where the expression originated, in the relevant contexts vis was certainly not confined to physical force. It was enough if the person concerned had done something which he was not entitled to do after the owner had told him not to do it. In those circumstances what he did was done vi. See, for instance, D.43.24.1.5 9, Ulpian 70 ad edictum, commenting on the word as used in the interdict quod vi aut clam. English law has interpreted the expression in much the same way. For instance, in Sturges v Bridgman (1879) 11 Ch D 852, 863, where the defendant claimed to have established an easement to make noise and vibration, Thesiger LJ said: Consent or acquiescence of the owner of the servient tenement lies at the root of prescription, and of the fiction of a lost grant, and hence the acts or user, which go to the proof of either the one or the other, must be, in the language of the civil law, nec vi nec clam nec precario: for a man cannot, as a general rule, be said to consent to or acquiesce in the acquisition by his neighbour of an easement through an enjoyment of which he has no knowledge, actual or constructive, or which he contests and endeavours to interrupt, or which he temporarily licenses (emphasis added). In short, as Gale on Easements 18th ed, (2008), para 4 84, suggests, user is If the use continues despite the neighbours protests and attempts to interrupt it, it is treated as being vi and so does not give rise to any right against him. Similarly, in Dalton v Henry Angus & Co (1881) 6 App Cas 740, 786, Bowen J equated user nec vi with peaceable user and commented that a neighbour, without actual interruption of the user, ought perhaps, on principle, to be enabled by continuous and unmistakeable protests to destroy its peaceable character, and so to annul one of the conditions upon which the presumption of right is raised: Eaton v Swansea Waterworks Co (1851) 17 QB 267. The contrary view, that the only manner in which enjoyment of window lights could be defeated before the Prescription Act was by physical obstruction of the light, was not the doctrine of the civil law, nor the interpretation which it placed upon the term non vi. only peaceable (nec vi) if it is neither violent nor contentious. In R v Oxfordshire County Council ex p Sunningwell Parish Council [2000] 1 AC 335, 350 351, Lord Hoffmann found that the unifying element in the three vitiating circumstances was that each constituted a reason why it would not have been reasonable to expect the owner to resist the exercise of the right. In the case of nec vi he said this was because rights should not be acquired by the use of force. If, by force, Lord Hoffmann meant only physical force, then I would respectfully disagree. Moreover, some resistance by the owner is an aspect of many cases where use is vi. Assuming, therefore, that there can be vis where the use is contentious, a perfectly adequate unifying element in the three vitiating circumstances is that they are all situations where it would be unacceptable for someone to acquire rights against the owner. If, then, the inhabitants use of land is to give rise to the possibility of an application being made for registration of a village green, it must have been peaceable and non contentious. This is at least part of the reason why, as Lord Jauncey observed, in the context of a claim to a public right of way, in Cumbernauld and Kilsyth District Council v Dollar Land (Cumbernauld) Ltd 1993 SC (HL) 44, 47, There is no principle of law which requires that there be conflict between the interest of users and those of a proprietor. In this case the local inhabitants use of the disputed land for recreation was peaceable, open and not based on any licence from the Council or the golf club. So, prima facie, the inhabitants did everything that was necessary to bring home to the Council, if they were reasonably alert, that the inhabitants were using the land for recreation as of right. But the Council argue that, since there were competing interests, the inhabitants use of the land was peaceable only because they overwhelmingly deferred to the golfers simultaneous use of the same land. Had they not done so, it would have become contentious. But, because they routinely deferred to the golfers, the inhabitants did not do sufficient to bring home to the reasonable owner of the application site that they were asserting a right to use it. Cf Dyson LJ, [2009] 1 WLR 1461, para 49. In other words, the reasonable owner of the disputed land would have inferred from the behaviour of the inhabitants that they were not asserting a right over the land and so would have seen no need to take any steps to prevent such a right accruing. On closer examination, the starting point for this argument must be that the owner of the land is entitled to infer from the inhabitants behaviour in deferring to the golfers that they are aware of the legal position. But that starting point is inherently implausible. To adapt what Lord Sands said in connexion with a public right of way in Rhins District Committee of Wigtownshire County Council v Cuninghame 1917 2 SLT 169, 172, people walk their dogs or play with their children on the disputed land because they have been accustomed to see others doing so without objection. The great majority know nothing about the legal character of their right to do so and never address their minds to the matter. Moreover, to draw an inference based on the premise that the inhabitants are aware of the legal position is hard to reconcile with the decision in R v Oxfordshire County Council, Ex p Sunningwell Parish Council [2000] 1 AC 335, 355 356, that the subjective views of the inhabitants as to their right to indulge in sports and pastimes on the land are irrelevant. It would therefore have been far from reasonable for the Council to infer that the inhabitants behaviour towards the golfers was based on some understanding of the legal position. It would have been equally unreasonable for the Council to go further and conclude that the inhabitants were deferring to the golfers because of a conscious decision on their part to respect what they perceived to be the superior rights of the owners of the land. Such a conclusion might, just conceivably, have been plausible and legitimate if there had been no other explanation for the inhabitants behaviour. But that is far from so. The local inhabitants may well have deferred to the golfers because they enjoyed watching the occasional skilful shot or were amused by the more frequent duff shots, or simply because they were polite and did not wish to disturb the golfers who experience shows almost invariably take their game very seriously indeed. A reasonable landowner would realise that any of these motives was a more plausible explanation for the inhabitants deference to the golfers than some supposed unwillingness to go against a legal right which they acknowledged to be superior. In my view the inspector misdirected himself on this aspect of the case. I would accordingly allow the appeal and make the order proposed by Lord Walker. I confess that I view the outcome with little enthusiasm. The idea that this land should be classified and registered as a village green, when it was really just an open space that formed part of a golf course, is unattractive, to say the least. It is hard to imagine that those who devised the registration system ever contemplated that it would produce such a result. But, given the established case law and given also that Parliament has not amended the law despite the known problems, the result is unavoidable. LORD BROWN I would formulate the critical question for the Courts determination on this appeal very differently from any of those identified in the statement of facts and issues. The critical question to my mind is what are the respective rights of the landowner (the owner) and the local inhabitants (the locals) over land once it is registered as a town or village green? Take the facts of this case, as already sufficiently recounted by other members of the Court, but assume that the land here in question, instead of becoming vacant in 2002 and subject now to development proposals, remained in use by the owner (as for convenience I shall call the Redcar & Cleveland Golf Club, the actual owners licensee) as the first and 18th holes (and practice green) of their golf course. Suppose then that the local inhabitants, having themselves made such use of the land as the Inspector records, deferring to the golfers in the way he describes, successfully applied for its registration as a town green, what then would be the consequences with regard to the owners own continuing rights? Would the owner remain entitled to use the land for golf with the locals continuing to defer to the golfers? Or would the balance shift entirely, the locals rights being substantially enlarged by registration, the owners effectively extinguished? So far from this question begging that as to the right to registration (the ultimate question at issue here), it seems to me one which necessarily should be resolved before it can sensibly be decided what must be established in order to have the land registered. Indeed, I may as well say at once that, were it the law that, upon registration, the owners continuing right to use his land as he has been doing becomes subordinated to the locals rights to use the entirety of the land for whatever lawful sports and pastimes they wish, however incompatibly with the owner continuing in his, I would hold that more is required to be established by the locals merely than use of the land for the stipulated period nec vi nec clam nec precario. If, however, as I would prefer to conclude, the effect of registration is rather to entrench the previously assumed rights of the locals, precluding the owner from thereafter diminishing or eliminating such rights but not at the expense of the owners own continuing entitlement to use the land as he has been doing, then I would hold that no more is needed to justify registration than what, by common consent, is agreed to have been established by the locals in the present case. This is not merely because in my opinion no other approach would meet the merits of the case. Also it is because, to my mind, on the proper construction of section 15 of the Commons Act 2006, the only consequence of registration of land as a green is that the locals gain the legal right to continue to indulge in lawful sports and pastimes upon it (which previously they have done merely as if of right) no more and no less. To the extent that the owners own previous use of the land prevented their indulgence in such activities in the past, they remain restricted in their future use of the land. The owners previous use ex hypothesi would not have been such as to have prevented the locals from satisfying the requirements for registration of the land as a green. No more should the continuance of the owners use be regarded as incompatible with the lands future use as a green. Of course, in so far as future use by the locals would not be incompatible with the owner continuing in his previous use of the land, the locals can change, or indeed increase, their use of the land; they are not confined to the same lawful sports and pastimes, the same recreational use as they had previously enjoyed. But they cannot disturb the owner so long as he wishes only to continue in his own use of the land. Is there, then, anything in the case law which precludes our deciding, as I have already indicated I would prefer to decide, that registration does not carry with it a right in future to use the land inconsistently with such use as the owner himself has been making and wishes to continue making of it? The respondents here urge that the decision of the House of Lords in Oxfordshire County Council v Oxford City Council [2006] 2 AC 674 is just such a case. They so submit notwithstanding that the land there was disused scrubland of which the owner made no use whatever so that no question arose there as to possibly conflicting uses or the respective rights of owners and locals following registration. For my part I simply cannot regard Oxfordshire as having decided the particular question I am addressing here. The respondents rely on passages in Lord Hoffmanns speech such as that, following registration, [The owner] still has the right to use it in any way which does not interfere with the recreational rights of the inhabitants (para 51) and [T]he owner retains his title to the land and his right to use it in any way which does not prevent its use by the inhabitants for recreation (para 59). To my mind, however, these are not inconsistent with the position which I have suggested arises on registration and, indeed, (also at para 51) Lord Hoffmann states: There has to be give and take on both sides. True it is that, in a partially dissenting opinion, Lord Scott (at para 105) himself appears to have understood the other members of the Committee to have decided that registration of land as a green bring[s] about a diminution of the landowners property rights, not simply by establishing the local inhabitants right to go on doing what they had been doing for the last 20 years but by depriving the landowner of the right to go on doing what he has been doing for the last 20 years. Lord Scott did not agree [inferentially, with the majority view] that registration can authorise local inhabitants to enjoy recreative user of the land that is different in kind from the 20 years user that has satisfied the statutory criteria for registration or that would diminish the ability of the landowner to continue to use the land in the manner in which he had been able to use the land during that 20 year period . [or] that a tolerant landowner who has allowed the local inhabitants to use his grass field for an annual 5 November bonfire for upwards of 20 years must, after registration, suffer his field to be used throughout the year for all or any lawful sports and pastimes with the consequential loss of any meaningful residual use that he could continue to make of the field. That, however, was in the context of Lord Scotts view (para 106) that registration of the land there in question would (or at least should) entitle the locals only to recreative rights of user . commensurate with the nature of the user that had led to that result and would not necessarily extend to the right to use the land for all or any lawful sports or pastimes [for instance, clay pigeon shooting or archery contests]. It is important to note, moreover, that all of this was concerned with the first of the ten issues before the House as to which it was held (per the headnote) that: registration gave rise to rights for the relevant inhabitants to indulge in lawful sports and pastimes, such rights extending (Lord Scott of Foscote dissenting) to sports and pastimes generally and not merely that use which had been the basis for registration, the landowner retaining the right to use the land in any way which did not interfere with those rights. I repeat, the position arising on registration at a time when both the owner and the locals are using land in theoretically conflicting ways but in fact harmoniously simply did not arise in Oxfordshire and I for my part would decline to treat that case as if it has decided how such an issue should be resolved. I would, therefore, hold that in this different situation the owner remains entitled to continue his use of the land as before. If, of course, as in Oxfordshire itself, he has done nothing with his land, he cannot complain that upon registration the locals gain full and unqualified recreational rights over it. But that is not the position I am considering here. In short, on the facts of this case, had the use of the land as part of a golf course continued, the locals would in my opinion have had to continue deferring to the golfers. By this I understand the Inspector to have meant no more than that the locals (with the single exception of Squadron Leader Kime) recognised the golfers rights to play (in this sense only the locals overwhelmingly deferred to golfing use), both locals and golfers sensibly respecting the use being made of the land by the other, neither being seriously inconvenienced by the other, sometimes the locals waiting for the golfers to play before themselves crossing, sometimes the golfers waiting for the walkers to cross before playing. It is not unique for golf courses to embrace at least some common land and there are innumerable courses crossed by public footpaths. Both walkers and golfers are generally sensible and civilised people and common courtesy dictates how to behave. Harmonious coexistence is in practice easily achievable. For my part, and in the light of my own experience both as a golfer and a walker for over six decades, I do not read the Inspectors findings as indicating (to quote Sullivan J) [2008] EWHC 1813 (Admin) para 40 that there was overwhelmingly give on the part of the local users and take on the part of the golfers. This being so I see no good reason whatever to superimpose upon the conventional tripartite test for the registration of land which has been extensively used by local inhabitants for recreational purposes a further requirement that it would appear to a reasonable landowner that the users were asserting a right to use the land for the lawful sports and pastimes in which they were indulging. As Lord Walker has explained, there is nothing in the extensive jurisprudence on this subject to compel the imposition of any such additional test. Rather, as Lord Hope, Lord Walker and Lord Kerr make plain, the focus must always be on the way the land has been used by the locals and, above all, the quality of that user. I too, therefore, would allow this appeal. LORD KERR For the reasons given by Lord Hope, Lord Rodger, Lord Walker and Lord Brown with all of which I agree, I too consider that this appeal should be allowed. I venture to offer a few words of my own because my conclusion that the appeal should be allowed represents a change from the view that I initially held and because I can well understand why the Court of Appeal and Sullivan J dismissed the application for judicial review. The critical question in this case centres on the meaning to be given to the words as of right in section 15 of the Commons Act 2006. It is not possible to give a literal interpretation to the words since, clearly, the right cannot vest in the local inhabitants until the period of twenty years has elapsed. They cannot be considered to have indulged in sports and pastimes by dint of a right until the right has come to fruition see Lord Bingham in R(Beresford) v Sunderland City Council [2003] UKHL 60 [2004] 1 AC 889, para 3. It is also clear that they do not need to believe that they have a right see below. As Lord Walker said in Beresford at paragraph 72 it has sometimes been suggested that the meaning of the statutory formula is closer to as if of right: see, for instance, Lord Cowie in Cumbernauld & Kilsyth District Council v Dollar Land (Cumbernauld) Ltd 1992 SLT 1035, 1043. Using this formulation, the question is what does as if of right mean. Does it simply mean openly indulging in the pastimes etc without force or under licence or does it connote something more? Clearly, it cannot be construed to mean as if they believed they had the right. The House of Lords so held in R v Oxfordshire County Council, Ex p Sunningwell Parish Council [2000] 1 AC 335. Does it mean that they acted as if they had the right? If so, how is that to be judged? Does it mean that they gave every indication that they had the right to indulge in the pastimes and sports? According to Mr George QC, the only exception to the tripartite test arises where the users expressly represent that they are not asserting any right at all. In those circumstances, according to him, they are either benefitting from the implied permission of the owner or they are covertly allowing the necessary period to elapse in which case they fall foul of the requirement that the use of the lands should not be secret. The question that has troubled me is, What if the inhabitants engagement in the pastimes and sports is not on foot of an express representation that they are not asserting a right but on the basis of an unspoken understanding by all concerned that they are not doing so? Is there a reason why, as a matter of principle, there should be any different legal outcome? It appears to me that there is none. If the owner of the lands and those who recreate on them share the appreciation that no right is being asserted, then no right is acquired. Therefore, as Lord Hope has said (in para 19 of his judgment), one must focus on the manner in which the local inhabitants have used the land or, as he has put it, the quality of the user relied on. The use of the word deferring in the context of the inhabitants use of lands is potentially misleading. In common parlance deferring to an owners use of his lands can easily be understood to mean no more than the ordinary courteous and civilised acknowledgement of the entitlement of the owner to make use of the lands. Such civility does not necessarily import an acceptance of any lack of entitlement on the part of the users to continue to indulge their recreations with a view to the acquisition of a right under section 15. But if deference takes the form of acceptance that the users are not embarked on a process of accumulating the necessary number of years of use of the lands or if it evinces an intention not to embark on such a process, this must surely have significance in relation to the question whether the inhabitants have indulged in the activities as of right. It is for this reason in particular that I am in emphatic agreement with Lord Hope in his view that one must focus on the way in which the lands have been used by the inhabitants. Have they used them as if they had the right to use them? This question does not require any examination of whether they believed that they had the right. That is irrelevant. The question is whether they acted in a way that was comparable to the exercise of an existing right? Posed in that way, one can understand why the Court of Appeal considered that the examination of the relevant question partook of an inquiry as to the outward appearance created by the use of the lands by the inhabitants. On that basis also one can recognise the force of Mr Laurence QCs argument that it was necessary to show not only that the lands had been used nec vi, nec clam, nec precario but also that it was reasonable to expect the landowner to resist the use of the land by the local inhabitants. The essential underpinning of both these assertions, however, was the view that the registration of the lands as a village or town green had the inexorable effect of enlargement of the inhabitants rights and the commensurate diminution of the right of the owner to maintain his pre registration level of use, if that interfered with the inhabitants extended use of the lands. For the reasons that Lord Hope and Lord Walker have given, the view that this was the effect of the relevant authorities in this area may now be discounted. For my part, I find it unsurprising that this view formerly held sway. Mr Laurence (without direct demur from Mr George) informed us that it was the universal opinion of all who practised in this field that the inevitable consequence of the decision in Oxfordshire County Council v Oxford City Council [2006] 2 AC 674 was that local inhabitants acquired unrestricted rights of recreation after registration. Passages from the speech of Lord Hoffmann in that case particularly at para 51 appeared to lend support for the notion that general, unrestricted rights of recreation over the entire extent of the lands followed upon registration. And the speech of Lord Scott of Foscote certainly seemed to imply that he apprehended that this was the outcome of the decision by the majority. Whatever may have been the position previously, however, it is now clear that, where it is feasible, co operative, mutually respecting uses will endure after the registration of the green. Where the lands have been used by both the inhabitants and the owner over the pre registration period, the breadth of the historical user will be, if not exactly equivalent to, at least approximate to that which will accrue after registration. On that basis, I am content to accept and agree with the judgments of Lord Hope, Lord Walker and Lord Brown that no overarching requirement concerning the outward appearance of the manner in which the local inhabitants used the land is to be imported into the tripartite test. The inhabitants must have used it as if of right but that requirement is satisfied if the use has been open in the sense that they have used it as one would expect those who had the right to do so would have used it; that the use of the lands did not take place in secret; and that it was not on foot of permission from the owner. If the use of the lands has taken place in such circumstances, it is unnecessary to inquire further as to whether it would be reasonable for the owner to resist the local inhabitants use of the lands. Put simply, if confronted by such use over a period of twenty years, it is ipso facto reasonable to expect an owner to resist or restrict the use if he wishes to avoid the possibility of registration.
+This appeal concerns the question whether the provisions of Part 4 of the Children and Young People (Scotland) Act 2014 lie within the legislative competence of the Scottish Parliament. Before considering the issues that arise (summarised in para 26 below), it is helpful to begin with an account of the background to the legislation. A suitable starting point is the consultation paper, A Scotland for Children, published by the Scottish Government in July 2012. In general terms, two ideas underlay many of the proposals. The first was a shift away from intervention by public authorities after a risk to childrens and young peoples welfare had been identified, to an emphasis on early intervention to promote their wellbeing, understood as including all the factors that could affect their development. The second was a shift away from a legal structure under which the duties of statutory bodies to cooperate with one another (under, for example, section 13 of the National Health Service (Scotland) Act 1978 and section 21 of the Children (Scotland) Act 1995) were linked to the performance of their individual functions, to ensuring that they work collaboratively and share relevant information so that all relevant public services can support the whole wellbeing of children and young people (para 73). In that regard, the consultation paper stated that it was essential that information is shared not only in response to a crisis or serious occurrence but, in many cases, information should be shared about relevant changes in a child's and young persons life. There was, however, no commonly agreed process for routine information sharing about concerns about wellbeing (para 110). The establishment of a new professional role, that of named person, was proposed in order to address those concerns (para 111). On its introduction in April 2013, the Children and Young People (Scotland) Bill was accompanied by a Policy Memorandum which was similar in content to the consultation paper. It stated, in relation to named persons: They can monitor what children and young people need, within the context of their professional responsibilities, link with the relevant services that can help them, and be a single point of contact for services that children and families can use, if they wish. The named person is in a position to intervene early to prevent difficulties escalating. The role offers a way for children and young people to make sense of a complicated service environment as well as a way to prevent any problems or challenges they are facing in their lives remaining unaddressed due to professional service boundaries. (para 68) The Bill aimed to ensure that every child in Scotland had a named person (para 70). It provided for a wide ranging duty on all relevant public authorities to cooperate with the named person in the conduct of their duties. This would be of particular importance in the area of information sharing, since the role of the named person will depend on the successful sharing of information between relevant public authorities (para 73). The memorandum explained that concern had been expressed about the existing legal framework for information sharing. This was felt to be confusing and potentially insufficient to enable the role of the named person to operate as well as anticipated. In particular, there were concerns regarding sharing information about children where consent was not given (para 75). The memorandum continued: Currently, information about a child may be shared where the child is at a significant risk of harm. However, the role of the named person is based on the idea that information on less critical concerns about a childs wellbeing must be shared if a full picture of their wellbeing is to be put together and if action is to be taken to prevent these concerns developing into more serious issues. Without the necessary power to share that kind of information, the named person will not be able to act as effectively as is intended Specific provisions in the Bill, therefore, set out arrangements on information sharing, to give professionals and named persons the power to share information about those concerns. (paras 76 77) It appears, therefore, that one of the principal purposes of Part 4, as envisaged at that stage, was to alter the existing law in relation to the sharing of information about children and young people, so as to enable information about concerns about their wellbeing, held by individual bodies, to be pooled in the hands of named persons and shared with other bodies, with the ultimate aim of promoting their wellbeing. The provisions of Part 4 Part 4 of the Act begins with section 19, which defines a named person service as the service of making available, in relation to a child or young person, an identified individual who is to exercise the functions listed in subsection (5): (a) doing such of the following where the named person considers it to be appropriate in order to promote, support or safeguard the wellbeing of the child or young person (i) advising, informing or supporting the child or young person, or a parent of the child or young person, (ii) helping the child or young person, or a parent of the child or young person, to access a service or support, or (iii) discussing, or raising, a matter about the child or young person with a service provider or relevant authority, and such other functions as are specified by this Act or any (b) other enactment as being functions of a named person in relation to a child or young person. In relation to section 19(5)(a)(iii), the expression service provider is defined by section 32 as meaning, in a context of this kind, each health board, local authority, directing authority, and the Scottish Ministers. The expression directing authority is defined by section 32 as meaning the managers of each grant aided school, the proprietor of each independent school, and the local authority or other person who manages each residential establishment which comprises secure accommodation. The expression relevant authorities is defined by section 31 and Schedule 2 as including a wide variety of public bodies, including NHS 24, NHS National Services Scotland, the Scottish Ambulance Service Board, the Scottish Sports Council, the Scottish Police Authority, and the Scottish Fire and Rescue Service. Under sections 20 and 21, responsibility for the provision of a named person service lies with health boards in relation to all pre school children residing within their area, and generally with local authorities in relation to all other children residing within their area. There are exceptions in relation to pupils at independent and grant aided schools, where responsibility lies with the directing authority; children kept in secure accommodation, where responsibility lies with the directing authority; children kept in custody, where responsibility lies with the Ministers; and children (as defined) who are members of the armed forces. Under section 22, named person services must also be provided in relation to all young people over 18 who remain at school. Responsibility for making provision for them in that situation lies with the local authority, except in relation to young people at independent or grant aided schools, where responsibility lies with the directing authority. Section 23 deals with the communication of information following a change in the identity of the service provider in relation to a child or young person (defined by section 32, in this context, as meaning the person whose function it is to make arrangements for the provision of a named person service in relation to the child or young person). That will occur, for example, when a child first goes to school, and the service provider ceases to be the health board and becomes the local authority or directing authority, or when a child goes from a local authority school to an independent or grant aided school, and the service provider ceases to be the local authority and becomes the directing authority of the school. In terms of section 23(2)(b), the outgoing service provider must provide the incoming service provider with: Information falls within section 23(3) if the outgoing service provider considers that: the name and address of the child or young person and (i) each parent of the child or young person (so far as the outgoing service provider has that information), and (ii) all information which the outgoing service provider holds which falls within subsection (3). (a) (b) it is likely to be relevant to (i) the exercise by the incoming service provider of any functions of a service provider under this Part, or (ii) the future exercise of the named person functions in relation to the child or young person, it ought to be provided for that purpose, and (c) its provision would not prejudice the conduct of a criminal investigation or the prosecution of any offence. In considering for the purpose of section 23(3)(b) whether information ought to be provided, the outgoing service provider is, so far as reasonably practicable, to ascertain and have regard to the views of the child or young person, taking account of the childs age and maturity: section 23(4) and (5). In terms of section 23(6), the outgoing service provider may decide for the purpose of section 23(3)(b) that information ought to be provided only if the likely benefit to the wellbeing of the child or young person outweighs any likely adverse effect on that wellbeing. Section 23(7) provides: Other than in relation to a duty of confidentiality, this section does not permit or require the provision of information in breach of a prohibition or restriction on the disclosure of information arising by virtue of an enactment or rule of law. Section 24 imposes on service providers a duty to publish information about the operation of the named person service, and to provide children and young people and their parents with information about the arrangements for contacting named persons. Section 25 imposes on service providers and relevant authorities a duty to help in the exercise of named person functions. Section 26 is concerned with the sharing of information, and is expressed in similar language to section 23. It imposes two duties to disclose information, and also confers a power. First, under section 26(1), a service provider or relevant authority (or any person exercising a function on their behalf, such as an independent contractor: section 26(10)) must provide to the service provider in relation to a child or young person any information which falls within subsection (2). Information falls within section 26(2) if the information holder considers that: (a) it is likely to be relevant to the exercise of the named person functions in relation to the child or young person, it ought to be provided for that purpose, and (b) (c) its provision to the service provider in relation to the child or young person would not prejudice the conduct of any criminal investigation or the prosecution of any offence. Secondly, under section 26(3) the service provider in relation to a child or young person must provide to a service provider or relevant authority (or any person exercising a function on their behalf) any information which falls within subsection (4). Information falls within section 26(4) if the information holder considers that: it is likely to be relevant to the exercise of any function (a) of the service provider or relevant authority which affects or may affect the wellbeing of the child or young person, (b) it ought to be provided for that purpose, and (c) its provision to the service provider or relevant authority would not prejudice the conduct of any criminal investigation or the prosecution of any offence. In considering for the purpose of section 26(2)(b) and the corresponding provision in section 26(4)(b) whether information ought to be provided, the information holder is, so far as reasonably practicable, to ascertain and have regard to the views of the child or young person, taking account of the childs age and maturity: section 26(5) and (6). In terms of section 26(7), the information holder may decide for the purpose of section 26(2)(b) and (4)(b) that information ought to be provided only if the likely benefit to the wellbeing of the child or young person outweighs any likely adverse effect on that wellbeing. Thirdly, section 26(8) confers an additional power: the service provider in relation to a child or young person may provide to a service provider or relevant authority any information which falls within subsection (9). Information falls within section 26(9) if the information holder considers that its provision to the service provider or relevant authority is necessary or expedient for the purpose of the exercise of any of the named person functions. Finally, in relation to section 26, subsection (11) provides: Other than in relation to a duty of confidentiality, this section does not permit or require the provision of information in breach of a prohibition or restriction on the disclosure of information arising by virtue of an enactment or rule of law. Section 27 makes further provision in relation to the disclosure of information in breach of a duty of confidentiality: where a person by virtue of Part 4 provides information in breach of such a duty and informs the recipient of that breach, the recipient may not provide the information to another person unless its provision is permitted or required by virtue of any enactment or rule of law. Section 28 imposes a duty on local authorities, health boards, directing authorities and relevant authorities to have regard to guidance issued by the Ministers about the exercise of functions conferred by Part 4. Section 29 imposes a duty on the same bodies to comply with any direction issued by the Ministers. Section 30 confers on the Ministers a power to make provision about complaints concerning the exercise of functions conferred by or under Part 4. These provisions confirm that one of the central purposes of Part 4 is to establish new legal powers and duties, and new administrative arrangements, in relation to the sharing of information about children and young people, so as to create a focal point, in the form of named persons, for the pooling and sharing of such information, and the initiation of action to promote their wellbeing. The terms in which sections 23 and 26 define the information which is subject to those powers and duties indicate an intention that the range of information to be shared will depend on the exercise of judgement by the information holder, and is potentially very wide. That is consistent with the emphasis in the consultation paper on collaborative working and routine information sharing. Thus, under sections 23(3) and 26(2), the duty to share information does not depend on whether it is objectively relevant or necessary that it should be shared, but on whether the information holder considers that the information is likely to be relevant to the exercise of the named person functions (or, as the case may be, the functions of a service provider under Part 4): functions which are defined by section 19(5) by reference to what the named person considers to be appropriate in order to promote, support or safeguard wellbeing. Section 26(4)(a) is equally wide: the duty again applies to information which the information holder considers is likely to be relevant to the exercise of a function, and in addition the function need not be one which actually affects the wellbeing of a child or young person, but merely one which the information holder considers may affect their wellbeing. Section 26(9) is wider still: the power of disclosure conferred by section 26(8) can be exercised in relation to information whose disclosure the information holder considers to be necessary or expedient for the purpose of the exercise of any of the named person functions. Wellbeing is not defined. The only guidance as to its meaning is provided by section 96(2), which lists eight factors to which regard is to be had when assessing wellbeing. The factors, which are known under the acronym SHANARRI, are that the child or young person is or would be: safe, healthy, achieving, nurtured, active, respected, responsible, and included. These factors are not themselves defined, and in some cases are notably vague: for example, that the child or young person is achieving and included. The identification of a wellbeing need does not of itself give rise to compulsory measures. Part 5 of the Act introduces the childs plan and targeted interventions. Section 33(2) defines wellbeing need broadly: a child has a wellbeing need if the childs wellbeing is being, or is at risk of being, adversely affected by any matter. Where the responsible authority considers that a child has a wellbeing need and that that need cannot be met, or met fully, without a targeted intervention which is capable of meeting the need to some extent, it is to prepare a childs plan for a targeted intervention or interventions. A targeted intervention is the provision of services for the child to meet needs which are not capable of being fully met by the general services to children which the relevant authority provides (section 33(4)). The childs plan identifies the relevant authority which is to provide the service, the manner in which it is to be provided and the outcome which the targeted intervention is intended to achieve (section 34(1)). This does not involve any compulsion. Further, in deciding whether a child requires a childs plan the responsible authority is required to consult the named person and, so far as reasonably practicable, to ascertain and have regard to the views of the child and the childs parents, among others (section 33(6)). The Scottish Governments revised draft statutory guidance Section 28(1) of the Act provides that a local authority, a health board, a directing authority and a relevant authority must have regard to guidance issued by the Scottish Ministers about the exercise of functions under Part 4. The Scottish Government in performance of its duty under section 96(3) published revised draft statutory guidance (RDSG) in December 2015. The RDSG is aimed at the strategic leaders and operational managers of health boards, local authorities, directing authorities and relevant authorities, which are responsible for operating Parts 4, 5 and 18 of the Act. It provides that the organisations must have regard to the guidance in carrying out those functions (para 1.2.2). It states (para 1.2.5) that separate practice materials will be made available for practitioners. It records the success of the pathfinder project set up in the Highland council area in 2006, which achieved the better coordination of assessment and planning in support of childrens needs by establishing common procedures and processes for sharing concerns about a child (para 1.3.3). It states: The pathfinder brought significant improvements to children and young people and their families, reducing the need for statutory intervention in childrens and families lives by resolving potential problems at an earlier stage. The improvements included greater clarity about whom families should go to when they needed help, falls in the number of referrals to the Childrens Reporter, a reduced number of children placed on the Child Protection Register, and the focussing of resources on the children who needed most support (para 1.3.3). It records that the approach had been adopted to varying degrees across Scotland (para 1.3.4). The RDSG provides a useful insight into the context in which the named person is expected to operate. It explains that wellbeing is multidimensional (para 2.3.4) and that wellbeing is a broader, more holistic concept than welfare (para 2.3.5). It advises on the relationship between child protection and wellbeing in these terms at para 2.3.6: child protection is not something which sits separately from wellbeing. Indeed a series of low level indicators of wellbeing need (whether obviously related or not) taken together can amount to a child protection issue. Child protection requires taking prompt action to safeguard a child where an assessment indicates that the child may be at risk of significant harm. The childs wider wellbeing should also be assessed to ensure their current and future holistic needs are considered. In para 2.4.2, it gives guidance on the interpretation of the eight wellbeing indicators in section 96(2) as follows: Safe protected from abuse, neglect or harm at home, at school and in the community. Healthy having the highest attainable standards of physical and mental health, access to suitable healthcare, and support in learning to make healthy, safe choices. Achieving being supported and guided in learning and in the development of skills, confidence and self esteem, at home, in school and in the community. Nurtured having a nurturing place to live in a family setting, with additional help if needed, or, where this is not possible, in a suitable care setting. Active having opportunities to take part in activities such as play, recreation and sport, which contribute to healthy growth and development, at home, in school and in the community. Respected having the opportunity, along with carers, to be heard and involved in decisions that affect them. Responsible having opportunities and encouragement to play active and responsible roles at home, in school and in the community, and where necessary, having appropriate guidance and supervision, and being involved in decisions that affect them. Included having help to overcome social, educational, physical and economic inequalities, and being accepted as part of the community in which they live and learn. The RDSG observes (at para 2.5.4) that the views of the child, young person or parents may differ from the practitioners view of wellbeing needs and states that a holistic assessment should take account of all views. It recognises that children can thrive in different environments and counsels respect for their and their parents culture and beliefs (para 2.5.5). It advises that a referral to the Childrens Reporter should be made where the wellbeing assessment reveals that a child needs protection, guidance, treatment or control and that a compulsory supervision order might be needed (para 2.5.6). It continues (at para 2.5.7): Early intervention and a compulsory supervision order are not mutually exclusive in promoting, supporting and safeguarding the wellbeing of a child or young person. The use of compulsion at an early stage may help to ensure compliance with interventions, and prevent wellbeing needs escalating. Parental capacity and willingness to change should be considered in order to assess whether the childs wellbeing needs are likely to be met by voluntary support or whether a compulsory supervision order might be necessary. A named person, on becoming aware of a wellbeing need, should use professional judgement in deciding how to respond. Seeking and considering the views of the child and parent should be a key part of the process unless doing this is likely to be detrimental to the childs wellbeing (para 4.1.28). The RDSG also gives guidance on the information sharing duties contained in sections 23, 26 and 27 of the Act. It records (para 10.1.2) that Part 4 of the Act does not change the type of information being shared and received by service providers and relevant authorities but expresses the view that the Act will increase consistency in practice which in turn is likely to mean that more information will be shared. It advises that the Information Commissioners Office (ICO) Guide to Data Protection and its Data Sharing Code of Practice should be used to support the governance of data sharing (para 10.1.4). On article 8 of the European Convention on Human Rights (ECHR) it states (para 10.3.1): The right to privacy in article 8 is a qualified rather than an absolute right. Public authorities can share information if it is lawful and proportionate to do so, but each case must be considered carefully to assess what is lawful and proportionate in the particular circumstances. The RDSG refers to the three tests for the sharing of information in section 26(2) and (4), namely (i) that the information is likely to be relevant to the exercise of the functions in question, (ii) that it ought to be provided for that purpose, and (iii) that the sharing of the information would not prejudice the conduct of a criminal investigation or the prosecution of any offence. In its discussion of the second test (para 10.7.4) it states: It is routine good practice to seek parents views about information shared, unless it would be against the childs wishes, where they are considered capable of making that decision, or where seeking the views of the parent may be detrimental to the childs wellbeing. It states that in all but exceptional situations, the child or young person, and, as appropriate, their parents will be involved in the decision to share information (para 10.10.3) (emphasis added). It does not make the involvement of the parents a requirement in all but exceptional circumstances. It says, without elaborating, that there must be no other legal restrictions (paras 10.7.1 and 10.8.1). It explains the discretionary power of a named person service provider to share information under section 26(8) and (9) in para 10.11: where the named person service has identified a wellbeing need or has been made aware of a likely wellbeing need they have the opportunity to share information in order to explore options for support or to make enquiries on behalf of the child, young person or parents. It states in relation to this discretionary sharing of information (para 10.11.2): Any information shared must be legal and considered in terms of the principles and boundaries of data protection, human rights and childrens rights, again without elaboration. It explains section 26(11) in these terms (paras 10.13.2 10.13.4): This sub section of the Act permits health professionals and others governed by a professional or common law duty of confidentiality to legally disclose relevant information without the information providers consent where disclosure of that information has been considered and meets the tests set out in the relevant sub sections of section 26. Section 26(11) does not permit or require the sharing of information in breach of any other legal restriction such as the [Data Protection Act 1998 (DPA)], the Human Rights Act 1998, an order of the court or a decision by a Childrens Hearing specifying non disclosure of specific information. In all but exceptional situations, the child or young person, and as appropriate their parents, will be involved in the decision to share information and will be told what information has been shared in breach of a duty of confidentiality. (emphasis added) Finally, the RDSGs guidance on section 27 (disclosure of information provided in breach of confidentiality) is as follows (para 10.14.2): If the person receiving the information believes it is necessary to share all or part of it in order to promote, support or safeguard the childs wellbeing, then the considerations in section 26 must be applied. This would include taking into account the childs views and understanding the likely effect of sharing on the childs wellbeing. Other legal requirements must also be considered, including the DPA and the childs right to private and family life under article 8 of the ECHR. Decisions to share information in these situations will need to be evidenced, and the rationale recorded. (emphasis added) The reserved matters challenge The challenges to legislative competence Section 29(1) of the Scotland Act 1998 provides that an Act of the Scottish Parliament is not law so far as any provision of the Act is outside its legislative competence. In terms of section 29(2), a provision is outside its competence so far as any of the following paragraphs apply. Paragraph (b) applies where the provision relates to reserved matters. We address that challenge in section I (paras 27 to 66 below). Paragraph (d) applies where the provision is incompatible with any of the Convention rights or with EU law. We address the Convention rights challenge and comment briefly on the EU law challenge in sections II and III (paras 67 to 105 below). The appellants are four registered charities with an interest in family matters and three individual parents. They challenge the lawfulness of the data sharing and retention provisions in the Act on the ground that they relate to reserved matters, with the consequence that section 29(2)(b) of the Scotland Act applies. They have focused on sections 26 and 27 of the 2014 Act, but their arguments apply also in relation to section 23(2). In terms of section 29(3) of the Scotland Act, the question whether a provision relates to a reserved matter is to be determined (subject to subsection (4), which has no bearing on the present case) by reference to the purpose of the provision, having regard (among other things) to its effect in all the circumstances. Section 30 of the Scotland Act gives effect to Schedule 5, in which reserved matters are defined. In particular, paragraph 1 of Part II of Schedule 5 provides that the matters to which the Sections in that Part apply are reserved matters. As was pointed out by Lord Hope in Imperial Tobacco Ltd v Lord Advocate [2012] UKSC 61; 2013 SC (UKSC) 153, in a judgment with which the other members of the court agreed, the matters listed have a common theme: It is that matters in which the United Kingdom as a whole has an interest should continue to be the responsibility of the UK Parliament at Westminster. They include matters which are affected by its treaty obligations and matters that are designed to ensure that there is a single market within the United Kingdom for the free movement of goods and services. (para 29) Amongst the matters listed in Schedule 5 is Section B2: B2. Data protection The subject matter of the Data Protection Act 1998, and (a) (b) Council Directive 95/46/EC (protection of individuals with regard to the processing of personal data and on the free movement of such data). Paragraph 5 of Part III of Schedule 5 provides that references in the schedule to the subject matter of any enactment are to be read as references to the subject matter of that enactment as it had effect on the principal appointed day, which was 1 July 1999. It is therefore the version of the Data Protection Act (DPA) which was in force on that date which is relevant. This court has had to apply section 29(2)(b) and (3) on a number of occasions, and the approach to be adopted is now well established. In Martin v Most [2010] UKSC 10; 2010 SC (UKSC) 40, para 49, Lord Walker said that the expression relates to was familiar in this sort of context, indicating more than a loose or consequential connection, and the language of section 29(3), referring to a provisions purpose and effect, reinforces that. That approach was endorsed by Lord Hope in Imperial Tobacco (para 16). Whether a provision relates to a reserved matter, in the sense explained by Lord Walker, is determined by reference to the purpose of the provision in question. That purpose is to be ascertained having regard to the effect of the provision, amongst other relevant matters. As was said in relation to the similar provisions in the Government of Wales Act 2006 in In re Agricultural Sector (Wales) Bill [2014] UKSC 43; [2014] 1 WLR 2622, para 50: As the section requires the purpose of the provision to be examined it is necessary to look not merely at what can be discerned from an objective consideration of the effect of its terms. Determining the purpose of a provision may not be an easy matter. For example, must a single predominant purpose be identified, or will the provision relate to a reserved matter provided one purpose which can properly be attributed to it justifies that conclusion? That question was considered, obiter, by Lord Hope in Imperial Tobacco. The legislation in issue imposed restrictions upon the advertising and sale of tobacco products, and was challenged as relating to reserved matters, namely consumer protection and product safety. Lord Hope stated: I do not see this as a case which gives rise to the problem which may need to be dealt with if the provision in question has two or more purposes, one of which relates to a reserved matter. In such a situation the fact that one of its purposes relates to a reserved matter will mean that the provision is outside competence, unless the purpose can be regarded as consequential and thus of no real significance when regard is had to what the provision overall seeks to achieve. (para 43) This approach should not be confused with the pith and substance test developed to resolve problems in a number of federal systems, to which the Court of Session referred in the present case. Although in Martin v Most Lord Hope mentioned cases applying that test as forming part of the background to the scheme applied in the Scotland Act, he went on to point out that the phrase did not appear in the Act, and that the rules which had to be applied were those laid down in the Act (para 15). In Imperial Tobacco, Lord Hope emphasised the latter point: [T]he intention was that it was to the 1998 Act itself, not to decisions as to how the problem was handled in other jurisdictions, that one should look for guidance. So it is to the rules that the 1998 Act lays down that the court must address its attention. (para 13) So, in the present case, the Second Divisions finding that the pith and substance of the 2014 Act are child protection does not answer the question whether any of its provisions relate to the subject matter of the DPA and Directive 95/46/EC (the Directive). It is necessary only to add that the question whether a provision of an Act of the Scottish Parliament relates to a reserved matter is different from the question whether such a provision modifies the law on reserved matters. The latter question is addressed by section 29(2)(c) of the Scotland Act and Schedule 4, paragraph 2. The subject matter of the Directive The Directive was made under article 100a of the EC Treaty, which authorises measures for the harmonisation of national laws with the aim of achieving the internal market. The subject matter of the Directive is described in general terms in its title: it is a directive on the protection of individuals with regard to the processing of personal data, and the free movement of such data. The link between these two subjects is explained in the recitals. In particular, recital 7 states that the difference in levels of protection of the rights and freedoms of individuals, notably the right to privacy, with regard to the processing of personal data afforded in the member states may . constitute an obstacle to the pursuit of a number of economic activities at Community level, distort competition and impede authorities in the discharge of their responsibilities under Community law. The recital continues by noting that this difference in levels of protection is due to the existence of a wide variety of national laws, regulations and administrative provisions. Accordingly, recital 8 states that in order to remove the obstacles to flows of personal data, the level of protection of the rights and freedoms of individuals with regard to the processing of such data must be equivalent in all member states. The intended result, as recital 9 states, is that given the equivalent protection resulting from the approximation of national laws, the member states will no longer be able to inhibit the free movement between them of personal data on grounds relating to protection of the rights and freedoms of individuals, and in particular the right to privacy. The scope of application of the Directive is not, however, restricted to situations involving free movement: Bodil Lindquist (Case C 101/01) [2003] ECR I 12971, paras 40 44. Turning to the substantive articles of the Directive, Chapter I sets out general provisions. In particular, article 1 defines the twofold object of the Directive: In accordance with this Directive, member states shall 1. protect the fundamental rights and freedoms of natural persons, and in particular their right to privacy with respect to the processing of personal data. 2. Member states shall neither restrict nor prohibit the free flow of personal data between member states for reasons connected with the protection afforded under paragraph 1. Article 2 defines certain terms, and article 3 describes the scope of the Directive. In terms of article 3(1), it applies to the processing of personal data wholly or partly by automatic means, and to the processing otherwise than by automatic means of personal data which form part of a filing system or are intended to form part of a filing system. Personal data is defined by article 2(a) as meaning any information relating to an identified or identifiable natural person (data subject). Processing of personal data is defined by article 2(b) as meaning any operation or set of operations which is performed upon personal data, whether or not by automatic means, such as collection, recording, organization, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, blocking, erasure or destruction. Article 3(2) lists certain circumstances in which the Directive is not to apply. It has not been argued that any of those circumstances applies in the present case. Chapter II sets out general rules on the lawfulness of the processing of personal data. Article 5 requires member states, within the limits of the provisions of that Chapter, to determine more precisely the conditions under which the processing of personal data is lawful. Article 6 sets out five general principles, somewhat misleadingly described as principles relating to data quality, to which member states must give effect. For example, the second principle is that personal data must be collected for specified, explicit and legitimate purposes and not further processed in a way incompatible with those purposes. Article 7 sets out six general conditions, described as criteria for making data processing legitimate, which member states must apply to the processing of personal data, so that at least one of the conditions is satisfied. Article 8 sets out particular rules in relation to the processing of what are described as special categories of data, including data revealing racial or ethnic origins, and data concerning health or sex life. Article 8(1) requires member states to prohibit the processing of such data. The remaining paragraphs of article 8 then disapply article 8(1) in a number of specified circumstances, to which it will be necessary to return. Articles 10 and 11 require member states to provide that the data controller must provide the data subject with information about the processing of his personal data. Article 12 requires member states to guarantee certain rights of data subjects in relation to data controllers. Article 13 permits member states to adopt legislation restricting the scope of certain of these rights and obligations where specified conditions are met. Article 14 requires member states to grant the data subject the right to object to the processing of his personal data in certain circumstances. Most of the remaining provisions of Chapter II are concerned with the regulation of data controllers. Chapter III is concerned with judicial remedies, liability, and sanctions. Chapter IV is concerned with the transfer of personal data to third countries. Chapter V is concerned with codes of conduct, and Chapter VI with the establishment of national supervisory authorities and of an EU working party. Finally, Chapter VII is concerned with Community implementing measures. Put shortly, therefore, the Directive was designed to harmonise the laws of the member states relating to the protection of individuals interests in relation to the use of their personal data. Its provisions specify the standards of protection which the laws of the member states must afford, and the methods by which those standards are to be secured and enforced. The subject matter of the DPA The DPA is the measure implementing the Directive in the UK. One would therefore expect its subject matter to be the same as that of the Directive, and so it proves. The subject matter of the DPA is described in general terms in its short title: the regulation of the processing of information relating to individuals, including the obtaining, holding, use or disclosure of such information. Part I of the DPA defines some of the critical terms, broadly following the definitions in the Directive. Part I also contains some other fundamental provisions of the DPA. Section 4 imposes on a data controller an obligation to comply with the data protection principles set out in Part I of Schedule 1, to which it will be necessary to return. Section 6 establishes the office of Information Commissioner, known in 1999 (cf para 28 above) as the Data Protection Commissioner. Part II of the DPA confers various rights on individuals relating to information concerning themselves, including rights to access personal data (section 7), to prevent processing which is likely to cause damage or distress (section 10), and to apply for the rectification or destruction of inaccurate data (section 14). Part III contains provisions relating to the regulation of data controllers by the Commissioner. Part IV makes provision for exemptions from the data protection principles, and from Parts II and III. Part V concerns enforcement by the Commissioner, and Part VI contains miscellaneous and general provisions. It is apparent that the DPA is intended to secure equivalent standards of protection of the rights of individuals in relation to the processing of personal data throughout the UK, and equivalent methods of securing and enforcing those standards. That is as one would expect, given the aims of the Directive. Accordingly, the DPA applies to data controllers throughout the UK: section 5. It establishes a single regulatory authority for the whole of the UK: section 6. (Somewhat confusingly, a separate Scottish Information Commissioner exercises functions under the Freedom of Information (Scotland) Act 2002, but has no regulatory role in relation to data protection). The Commissioner is the designated authority in the UK for the purposes of the 1981 Council of Europe Convention for the Protection of Individuals with regard to Automatic Processing of Personal Data, and is also the supervisory authority in the UK for the purposes of the Directive: section 54(1). He is accountable to the UK Parliament, and must lay before it reports and codes of practice: section 52. His accounts are examined by the Comptroller and Auditor General: Schedule 5, Part I, paragraph 10. His power to issue codes of practice is exercisable as directed by the Secretary of State: section 51(3). The powers to make orders, regulations and rules under the DPA are exercisable only by the Secretary of State, and only by means of a statutory instrument approved by the UK Parliament: see, for example, sections 30, 38, 54, 64 and 67. The power to designate codes of practice, for the purpose of exemptions relating to journalism, literature and art, is similarly conferred on the Secretary of State: section 32(3). Appeals under the DPA lie to the First tier and Upper Tribunals (in 1999, to the Data Protection Tribunal) throughout the UK: section 70(1). The DPA allows scope for derogation from certain of its requirements by enactments either of the UK Parliament or of the Scottish Parliament. An example relevant to the present case, to which it will be necessary to return, is section 35(1), under which personal data are exempt from certain provisions relating to the disclosure of information where the disclosure is required by or under any enactment, an expression which is defined by section 70(1) as including any enactment comprised in, or in any instrument made under, an Act of the Scottish Parliament. Put shortly, therefore, the DPA was designed to implement the Directive by establishing standards of protection of individuals interests in relation to the use of their personal data, and methods by which those standards are to be secured and enforced, which are equivalent in effect throughout the UK. In particular, it imposes obligations on data controllers in relation to the processing of data, and creates rights on the part of data subjects. It also creates a system for the regulation of data controllers by the Commissioner. It allows scope, however, for derogation from certain of its requirements by legislation which need not be UK wide in application. The effect of Part 4 of the 2014 Act in relation to the DPA The bodies described in Part 4 of the 2014 Act as service providers, relevant authorities and directing authorities are currently subject, prior to the entry into force of that Act, to a variety of legal duties in relation to the disclosure of information, including duties imposed by the DPA. In particular, as mentioned earlier, section 4 of that Act imposes on a data controller an obligation to comply with the data protection principles set out in Part I of Schedule 1. Those principles include the following: 1. Personal data shall be processed fairly and lawfully and, in particular, shall not be processed unless at least one of the conditions in Schedule 2 is met, (a) and in the case of sensitive personal data, at least one (b) of the conditions in Schedule 3 is also met. 2. Personal data shall be obtained only for one or more specified and lawful purposes, and shall not be further processed in any manner incompatible with that purpose or those purposes. 3. Personal data shall be adequate, relevant and not excessive in relation to the purpose or purposes for which they are processed. Section 2 of the DPA defines sensitive personal data as including (amongst other matters) information as to a persons racial or ethnic origins, his physical or mental health or condition, his sexual life, or the commission or alleged commission by him of any offence. Those principles are supplemented by the provisions of Part II of Schedule 1 to the DPA, which indicate how they are to be interpreted. For example, Part II contains provisions specifying circumstances in which a data subject is to be provided with information, and the nature of that information, in order for the data to be regarded as having been processed fairly for the purposes of the first principle. In relation to the conditions referred to in the first principle, Schedule 2 sets out the following conditions, so far as material to the present case: 1. The data subject has given his consent to the processing. 3. The processing is necessary for compliance with any legal obligation to which the data controller is subject, other than an obligation imposed by contract. 4. The processing is necessary in order to protect the vital interests of the data subject. 5. The processing is necessary . for the exercise of any functions conferred on any (b) person by or under any enactment . 6. (1) The processing is necessary for the purposes of legitimate interests pursued by the data controller or by the third party or parties to whom the data are disclosed, except where the processing is unwarranted in any particular case by reason of prejudice to the rights and freedoms or legitimate interests of the data subject. It follows from those conditions that, prior to the entry into force of the 2014 Act, a data controller in Scotland can disclose information about a child or young person without her consent (assuming, in the case of a statutory body, that the disclosure is otherwise within its powers), if the disclosure is necessary to protect her vital interests (condition 4), a test which requires more than that it is likely to benefit her wellbeing; or if the disclosure is necessary for the exercise of a statutory function (condition 5(b)), but not merely because it considers that the information is likely to be relevant to the exercise of that function. The data controller is also, of course, obliged to comply with the other data protection principles so far as relevant, and with any requirements arising from Part II of Schedule 1. In particular, it is required to comply with the third data protection principle, in terms of which personal data must be relevant (and not merely considered by the data controller to be likely to be relevant) in relation to the purpose or purposes for which they are processed. conditions, so far as material: In relation to sensitive data, Schedule 3 sets out the following additional 1. The data subject has given his explicit consent to the processing of the personal data. 3. The processing is necessary in order to protect the vital interests of the data (a) subject or another person, in a case where consent cannot be given by or on behalf of (i) the data subject, or (ii) the data controller cannot reasonably be expected to obtain the consent of the data subject, or in order to protect the vital interests of another (b) person, in a case where consent by or on behalf of the data subject has been unreasonably withheld. 7. (1) The processing is necessary for the exercise of any functions conferred on any (b) person by or under an enactment . 8. The processing is necessary for medical purposes and is undertaken by a health professional, or (a) (b) a person who in the circumstances owes a duty of confidentiality which is equivalent to that which would arise if that person were a health professional. It follows from those conditions that, prior to the entry into force of the 2014 Act, a data controller in Scotland of sensitive data can disclose information about the health or sexual life of a child or young person, without his or her explicit consent (assuming, in the case of a statutory body, that the disclosure is otherwise within its powers), if the disclosure is necessary in order to protect his or her vital interests (and not merely because it is likely to benefit her wellbeing) and, in addition, it is either impossible for him or her to give consent or the data controller cannot reasonably be expected to obtain it (condition 3). The information can also be disclosed if its disclosure is necessary for the exercise of a statutory function (condition 7(1)(b)), but not merely because the data controller considers that the information is likely be relevant to the exercise of that function. It can also be disclosed for medical purposes, but only where a duty of confidentiality is owed (condition 8): a requirement which gives rise to a difficulty (not discussed in this appeal) where disclosure is liable to be made under Part 4 of the 2014 Act, since sections 23(7) and 26(11) of the 2014 Act override duties of confidentiality. It is in addition necessary to comply with the other data protection principles, and with any requirements arising from Part II of Schedule 1. The effect of Part 4 of the 2014 Act on the requirements of the DPA is extremely complex. Numerous difficult questions are liable to arise, which were not discussed in detail, if at all, in the present appeal. A sufficient idea of the effect of Part 4 can, however, be obtained to enable the issue arising in relation to reserved matters to be determined. It may be helpful to explain at the outset that much of the difficulty arises from sections 23(7) and 26(11) of the 2014 Act, in terms of which sections 23 and 26 do not permit or authorise the provision of information in breach of a prohibition or restriction on its disclosure arising by virtue of an enactment or rule of law (other than in relation to a duty of confidentiality). This means that the powers and duties of disclosure set out in sections 23 and 26 cannot be taken at face value. To the extent that their terms may be inconsistent with the requirements of the DPA, they have no effect. The DPA itself, however, contains provisions which confer exemptions from some of its requirements where they are inconsistent with another enactment, or which treat some of its requirements as satisfied where disclosure is necessary for compliance with a statutory obligation. In these circumstances, it is necessary for anyone wanting to understand the effect of sections 23 and 26 on the disclosure of information to have the 2014 Act in one hand and the DPA in the other, to determine the priority which their provisions have vis vis one another notwithstanding the logical puzzle created by sections 23(7) and 26(11) of the 2014 Act when read with the DPA, and to try, by cross reference, to work out their cumulative effect. One potentially significant effect follows from section 35(1) of the DPA, in terms of which personal data are exempt from the non disclosure provisions where the disclosure is required by or under any enactment. A provision of an Act of the Scottish Parliament is an enactment for this purpose: section 70(1). The non disclosure provisions are defined by section 27(3) of the DPA as meaning the provisions specified in section 27(4) of that Act, to the extent to which they are inconsistent with the disclosure in question. Those provisions are the first data protection principle, except to the extent to which it requires compliance with the conditions in Schedules 2 and 3, the second, third, fourth and fifth data protection principles, section 10 (the right to prevent processing likely to cause damage or distress) and section 14(1) to (3) (the rectification, blocking, erasure and destruction of data). Sections 23(2), 26(1) and 26(3) of the 2014 Act require the disclosure of personal data, subject to sections 23(7) and 26(11). Accordingly, if those provisions are within devolved competence, and if the logical puzzle as to whether section 35(1) of the DPA prevails over sections 23(7) and 26(11) of the 2014 Act is resolved in favour of section 35(1) (a point which was not the subject of argument in this appeal, but was the implicit basis on which the arguments proceeded), then it follows that disclosure as required by sections 23 and 26 is exempt from the non disclosure provisions, as defined, to the extent that the non disclosure provisions are inconsistent with the disclosure. For example, the third data protection principle is inconsistent with the disclosure required by sections 23(2), 26(1) and 26(3) of the 2014 Act, since those provisions require disclosure of information which is considered by the data processor to be likely to be relevant, whereas the third principle requires any personal data disclosed to be relevant, as well as adequate and not excessive in relation to the purpose or purposes for which they are processed. On the other hand, the fifth principle (that data processed for any purpose or purposes shall not be kept for longer than is necessary for that purpose or those purposes) is not inconsistent with sections 23 and 26 of the 2014 Act, and therefore continues to apply. The duties of disclosure imposed by sections 23 and 26 remain subject to numerous other provisions of the DPA, including the first data protection principle, to the extent to which it requires compliance with the conditions in Schedules 2 and 3. The power conferred by section 26(8) of the 2014 Act, on the other hand, does not require disclosure, and therefore cannot benefit from the exemption conferred by section 35(1) of the DPA. The discussion in this appeal focused on only one aspect of the complex inter relationship between Part 4 of the 2014 Act and the DPA, namely the question whether disclosure in accordance with the duties imposed by Part 4 of the 2014 Act would comply with the conditions imposed by Schedules 2 and 3 to the DPA. It was argued on behalf of the Ministers that conditions 3 and 5(b) in Schedule 2, and condition 7(1)(b) in Schedule 3, would be met. Condition 3 is satisfied where the processing is necessary for compliance with any legal obligation to which the data controller is subject, other than an obligation imposed by contract. Condition 5(b) in Schedule 2, and condition 7(1)(b) in Schedule 3, are satisfied where the processing is necessary . for the exercise of any functions conferred on any person by or under any [or an] enactment. The imposition of a statutory duty of disclosure by sections 23(2), 26(1) and 26(3) of the 2014 Act has the consequence that condition 3 in Schedule 2 to the DPA is satisfied. The terms in which that duty is imposed do not, on the other hand, meet the requirements of condition 5(b) in Schedule 2 and condition 7(1)(b) in Schedule 3. In each case, the data controller is required by the 2014 Act to disclose personal data to a third party if he considers that the data are likely to be relevant to the exercise of certain statutory functions by the third party and ought to be provided for that purpose. The test imposed by condition 5(b) in Schedule 2 and condition 7(1)(b) in Schedule 3 to the DPA requires that disclosure must be necessary for the exercise of statutory functions (which must again refer to the functions of the person to whom the disclosure is made, given that section 35(1), read with section 27, requires that a data processor who is under a statutory duty to make the disclosure must comply with Schedules 2 and 3: a requirement which would be pointless if it were met ex hypothesi). The meaning of necessary was considered by this court in South Lanarkshire Council v Scottish Information Comr [2013] UKSC 55; 2014 SC (UKSC) 1; [2013] 1 WLR 2421. As was explained there at paras 25 27, it is an expression whose meaning depends on the context in which it falls to be applied. Where the disclosure of information constitutes an interference with rights protected by article 8 of the ECHR, as in the present context (as explained at paras 75 77 below), the requirement that disclosure is necessary forms part of a proportionality test: the disclosure must involve the least interference with the right to respect for private and family life which is required for the achievement of the legitimate aim pursued. Disclosure where the data processor considers that the information is likely to be relevant cannot be regarded as necessary if the legitimate aim could be achieved by something less. It cannot be necessary, in that sense, to disclose information merely on the ground that it is objectively relevant, let alone on the ground that a particular body considers that it is likely to be relevant. Relevance is a relatively low threshold: information may be relevant but of little significance. A test of potential relevance fails to recognise the need to weigh the importance of the disclosure in achieving a legitimate aim against the importance of the interference with the individuals right to respect for her private and family life. That deficiency is not made good by the requirement that the data controller considers that the information ought to be provided. It will be necessary to return to the question of proportionality when we consider the challenge to the legislation under article 8. So far as the power conferred by section 26(8) is concerned, a data controller may disclose information to a third party if he considers that to do so is necessary or expedient for the purpose of the exercise of any of the named person functions. Those conditions are less demanding than any of the conditions in Schedules 2 and 3 to the DPA that are relied on by the Ministers. Condition 3 in Schedule 2 is not satisfied, since the disclosure does not have to be necessary for compliance with any legal obligation imposed on the data controller. Condition 5(b) in Schedule 2, and condition 7(1)(b) in Schedule 3, are not satisfied, since the processing does not have to be necessary for the exercise of any of the named person functions. Nor is the third data protection principle met, since there is no requirement that the information should be relevant. The first data protection principle is therefore complied with, in so far as the duties of disclosure imposed by Part 4 of the 2014 Act apply to non sensitive data, but not in so far as they apply to sensitive data or in so far as Part 4 confers a power to disclose information rather than imposing a duty. Sections 23(7) and 26(11) therefore apply, with the consequence that the duties imposed by sections 23(2), 26(1) and 26(3) in respect of sensitive data, and the power conferred by section 26(8) in respect of data of all kinds, cannot be taken at face value. Instead, the duties imposed by sections 23(2), 26(1) and 26(3) in respect of sensitive data must be understood as being conditional upon compliance with at least one of the conditions in Schedule 3 to the DPA, and therefore as being subject to more stringent criteria than those which appear on the face of the 2014 Act. The power conferred by section 26(8) must likewise be understood as being conditional upon compliance with at least one of the conditions in Schedule 2 to the DPA, and also, if the information in question is sensitive data, upon compliance with at least one of the conditions in Schedule 3. In addition, it is subject to compliance with the requirements arising in relation to the first data protection principle under Part II of Schedule 1 to the DPA, and also to compliance with the other data protection principles and the other duties imposed by the DPA. The effect of Part 4 of the 2014 Act in relation to the Directive As explained earlier, the Directive requires member states to establish a number of principles relating to the processing of data, which find their counterpart in the data protection principles laid down in the DPA. The principles set out in the Directive are complex and raise numerous issues of interpretation, like their UK counterparts. For present purposes, it is sufficient to focus on the provisions corresponding to Schedules 2 and 3 to the DPA. As explained earlier, article 7 sets out six general criteria which member states must apply to the processing of personal data, so that at least one of the criteria is satisfied. The criteria which the Ministers maintain are satisfied by the terms of Part 4 of the 2014 Act are the following: (c) processing is necessary for compliance with a legal obligation to which the controller is subject; or . (e) processing is necessary for the performance of a task carried out in the public interest or in the exercise of official authority vested in the controller or in a third party to whom the data are disclosed. These criteria are almost identical to those set out in conditions 3 and 5(b) in Schedule 2 to the DPA. For the reasons explained earlier, sections 23(2), 26(1) and 26(3) meet the requirements of criterion (c), but section 26(8) does not meet the requirements of any of the criteria. As explained earlier, article 8(2) permits specified exemptions from the general prohibition imposed by article 8(1) on the processing of personal data revealing racial or ethnic origin, political opinions, religious or philosophical beliefs, trade union membership, and the processing of data concerning health or sex life. The exemptions, so far as potentially relevant, are as follows: (a) the data subject has given his explicit consent to the processing of those data, except where the laws of the member state provide that the prohibition referred to in paragraph 1 may not be lifted by the data subjects giving his consent; or . (c) processing is necessary to protect the vital interests of the data subject or of another person where the data subject is physically or legally incapable of giving his consent. Article 8(3) disapplies the prohibition in article 8(1) where processing of the data is required for the purposes of preventive medicine, medical diagnosis, the provision of care or treatment or the management of health care services, and where those data are processed by a health professional subject . to the obligation of professional secrecy or by another person also subject to an equivalent obligation of secrecy. Article 8(4) of the Directive permits member states to lay down additional exemptions for reasons of substantial public interest, subject to the provision of suitable safeguards. Any such additional exemptions must be notified to the Commission. Sections 23(2) and 26(1), (3) and (8) of the 2014 Act do not meet the requirements of the exemptions in article 8(2). The provisions of Part 4 of the 2014 Act have not been notified to the Commission, and it is not suggested that there has been any other relevant notification. Nor has it been argued that the provisions of Part 4 would meet the other requirements of article 8(4). It follows for this reason also that, applying sections 23(7) and 26(11), sections 23 and 26 cannot be taken at face value. The performance of the powers and duties created by those provisions, in respect of data falling within the scope of article 8, must be understood as being permissible only where either one of the exemptions listed in article 8(2) applies, or the processing falls within the scope of article 8(3). Discussion Does it follow, for the purposes of Section B2 of Schedule 5 to the Scotland Act, that any of the provisions of Part 4 of the 2014 Act relate to the subject matter of the DPA and the Directive? The fact that a provision of an Act of the Scottish Parliament requires or authorises the disclosure of personal data does not in itself mean that the provision is outside legislative competence: as explained earlier, the DPA envisages in section 35(1), read with section 70(1), that the disclosure of personal data may be required by an enactment comprised in an Act of the Scottish Parliament. In view of that provision, the Scotland Act cannot sensibly be interpreted as meaning that an enactment relates to the subject matter of the DPA, and is therefore outside the powers of the Scottish Parliament, merely because it requires or authorises the disclosure of personal data. On the other hand, an enactment does not have to modify the DPA in order to relate to the subject matter of that Act. That follows from the distinction between section 29(2)(b) and (c) of the Scotland Act. The question whether an enactment relates to the subject matter of the DPA and the Directive has to be decided by following the approach described in paras 29 to 31 above. Following that approach, it was argued on behalf of the Ministers that the purpose of Part 4 is to promote the wellbeing of children and young people, and that the provisions concerning the processing of personal data are merely consequential upon, or incidental to, that purpose. It is true that the ultimate aim of Part 4 is to promote the wellbeing of children and young people. Its more specific objective is to alter the institutional arrangements, and the legal structure of powers and duties, governing cooperation between the different agencies which deal with children and young people, so that they work collaboratively, with the named person playing a coordinating role. That objective reflects the concern, noted in the background material to the 2014 Act, that a weakness in the existing arrangements was that information was not shared until the stage had been reached where a child or young person was at risk of harm. Part 4 is designed to address that concern by ensuring that information is shared between the relevant agencies, and acted on where appropriate, before that stage is reached. Accordingly, although Part 4 contains provisions whose objective is to ensure that information relating to children and young people is shared, that objective is not truly distinct from the overall purpose of promoting their wellbeing, but can be regarded as consequential upon it. It is also important to bear in mind the central aim of the provisions in the Scotland Act concerning reserved matters, explained at para 28 above: that matters in which the UK as a whole has an interest should continue to be the responsibility of the UK Parliament. As explained at para 44 above, the DPA deals with matters in which the UK as a whole has an interest, because it implements the Directive, in accordance with the UKs treaty obligations, by establishing standards of protection of individuals interests in relation to the use of their personal data, and methods by which those standards are to be secured and enforced, which are equivalent in effect throughout the UK. But it also, in section 35 and elsewhere, leaves scope for derogation from certain of its requirements by the UK Parliament and by the Scottish Parliament. To the extent that Part 4 of the 2014 Act affects the way in which the data protection regime under the DPA applies to matters falling within its scope, that possibility is contemplated by the DPA itself, in section 35. Part 4 does not detract from the regime established by the DPA and the Directive, even if that is only by reason of the fail safe provisions of sections 23(7) and 26(11). For these reasons, we are not persuaded that the provisions of Part 4 relate to the subject matter of the DPA and the Directive. The appellants challenge the compulsory appointment of a named person as a breach of the rights of the parents of children under article 8 of the ECHR. Article 8 provides: The human rights challenge 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 wellbeing of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others. The appellants challenge proceeds on both a broad basis and a narrower basis. The broad challenge is that the compulsory appointment of a named person to a child involves a breach of the parents article 8 rights unless the parents have consented to the appointment or the appointment is necessary to protect the child from significant harm. The narrower challenge focusses on the provisions in sections 26 and 27 for the sharing of information about a child. Before the Inner House, the appellants narrower challenge, as recorded by the Lord Justice Clerk, raised article 8 of the ECHR but concentrated on EU law. That was also the appellants focus in this court. The intervener, Community Law Advice Network, challenges only the information sharing provisions, arguing that they impose too low a threshold for the disclosure of confidential information and amount to an infringement of the article 8 rights of children and young people. As a result there was more focus on article 8 of the ECHR in the narrower challenge than there had been in the debates both in the Inner House and before the Lord Ordinary. In our view these challenges raise the following four questions: (i) what are the interests which article 8 of ECHR protects in this context, (ii) whether and in what respects the operation of the Act interferes with the article 8 rights of parents or of children and young people, (iii) whether that interference is in accordance with the law, and (iv) whether that interference is proportionate, having regard to the legitimate aim pursued. (i) The interests protected by article 8 In the context of this legislation, the interests protected by article 8 include both family life and privacy. The relationship between parent and child is an integral part of family life. As the European Court of Human Rights (ECtHR) stated in, among others, Olsson v Sweden (No 1) (1988) 11 EHRR 259, [t]he mutual enjoyment by parent and child of each others company constitutes a fundamental element of family life (para 59). Family life also encompasses a broad range of parental rights and responsibilities with regard to the care and upbringing of minor children, enabling parents to take important decisions on their behalf, and article 8 protects the rights of parents to exercise such parental authority: Nielsen v Denmark (1988) 11 EHRR 175, para 61. As is well known, it is proper to look to international instruments, such as the UN Convention on the Rights of the Child 1989 (UNCRC), as aids to the interpretation of the ECHR. The Preamble to the UNCRC states: the family, as the fundamental group of society and the natural environment for the growth and wellbeing of all its members and particularly children, should be afforded the necessary protection and assistance so that it can fully assume its responsibilities within the community. Many articles in the UNCRC acknowledge that it is the right and responsibility of parents to bring up their children. Thus article 3(2) requires States Parties, in their actions to protect a childs wellbeing, to take into account the rights and duties of his or her parents or other individuals legally responsible for him or her; article 5 requires States Parties to respect the responsibilities, rights and duties of parents or, where applicable, other family or community members or others legally responsible for the child to provide appropriate direction and guidance to the child in the exercise of his or her rights under the Convention; article 14(2) makes similar provision in relation to the childs right to freedom of thought, conscience and religion; article 27(2) emphasises that the parents have the primary responsibility to secure, within their abilities and financial capabilities, the conditions of living necessary for the childs development; article 18(1) provides that: States Parties shall use their best efforts to ensure recognition of the principle that both parents have common responsibilities for the upbringing and development of the child. Parents or, as the case may be, legal guardians, have the primary responsibility for the upbringing and development of the child. The best interests of the child will be their basic concern. (Emphasis supplied) Articles 27(3) and 18(2) make it clear that the states role is to assist the parents in carrying out their responsibilities, although article 19(1) requires the state also to take appropriate measures to protect the child from all forms of abuse or neglect. This represents the detailed working out, for children, of the principle established in article 16(3) of the Universal Declaration of Human Rights and article 23(1) of the International Covenant on Civil and Political Rights that the family is the natural and fundamental group unit of society and is entitled to protection by society and the state. There is an inextricable link between the protection of the family and the protection of fundamental freedoms in liberal democracies. The noble concept in article 1 of the Universal Declaration, that all human beings are born free and equal in dignity and rights is premised on difference. If we were all the same, we would not need to guarantee that individual differences should be respected. Justice Barak of the Supreme Court of Israel has put it like this (in El Al Israeli Airlines Ltd v Danielowitz [1992 4] IsrLR 478, para 14): The factual premise is that people are different from one another, no person is completely identical to another Every person is a world in himself. Society is based on people who are different from one another. Only the worst dictatorships try to eradicate these differences. Individual differences are the product of the interplay between the individual person and his upbringing and environment. Different upbringings produce different people. The first thing that a totalitarian regime tries to do is to get at the children, to distance them from the subversive, varied influences of their families, and indoctrinate them in their rulers view of the world. Within limits, families must be left to bring up their children in their own way. As Justice McReynolds, delivering the Opinion of the Supreme Court of the United States famously put it in Pierce v Society of Sisters 268 US 510 (1925), 534 535: The fundamental theory of liberty upon which all governments in this Union repose excludes any general power of the state to standardize its children by forcing them to accept instruction from public teachers only. The child is not the mere creature of the state; those who nurture him and direct his destiny have the right, coupled with the high duty, to recognize and prepare him for additional obligations. Thus it is not surprising that the ECtHR, in Neulinger and Shuruk v Switzerland (2012) 54 EHRR 31, interpreted article 8 in the context, among other instruments, of the UNCRC and explained the concept of the childs best interests in this way: The childs interest comprises two limbs. On the one hand, it dictates that the childs ties with its family must be maintained, except in cases where the family has proved particularly unfit. It follows that family ties may only be severed in very exceptional circumstances and that everything must be done to preserve personal relations and, if and when appropriate, to rebuild the family (see Gnahor, cited above, para 59). On the other hand, it is clearly also in the childs interest to ensure its development in a sound environment, and a parent cannot be entitled under article 8 to have such measures taken as would harm the childs health and development (see, among many other authorities, Elsholz v Germany (2002) 34 EHRR 58 at [50], and Marlek v the Czech Republic, no 8153/04, at [71], 4 April 2006). (para 136) The privacy of a child or young person is also an important interest. Article 16 of the UNCRC provides: 1. No child shall be subjected to arbitrary or unlawful interference with his or her privacy, family, home or correspondence, nor to unlawful attacks on his or her honour and reputation. 2. The child has the right to the protection of the law against such interference or attacks. The concept of private life in article 8 covers the disclosure of personal data, such as information about a persons health, criminal offending, sexual activities or other personal matters. The notion of personal autonomy is an important principle underlying the guarantees of the ECHR. See, for example, Gillan v United Kingdom (2010) 50 EHRR 1105, para 61. Article 8 protects confidential information as an aspect of human autonomy and dignity: Campbell v MGN Ltd [2004] 2 AC 457, Lord Hoffmann paras 50 51, Lady Hale para 134. Thus in Z v Finland (1998) 25 EHRR 371, para 95, a case concerning the disclosure by a court of a persons identity and medical data, the ECtHR stated: the protection of personal data, not least medical data, is of fundamental importance to a persons enjoyment of his or her right to respect for private and family life as guaranteed by article 8 of the Convention. Respecting the confidentiality of health data is a vital principle in the legal systems of all the Contracting Parties to the Convention. It is crucial not only to respect the sense of privacy of a patient but also to preserve his or her confidence in the medical profession and in the health services in general. Without such protection, those in need of medical assistance may be deterred from revealing such information of a personal and intimate nature as may be necessary in order to receive appropriate treatment and, even, from seeking such assistance, thereby endangering their own health and, in the case of transmissible diseases, that of the community. The domestic law must therefore afford appropriate safeguards to prevent any such communication or disclosure of personal health data as may be inconsistent with the guarantees in article 8 of the Convention. (para 95) More recently, in a case concerning a complaint that a hospital had failed to guarantee the security of a persons data against unauthorised access, the ECtHR repeated that statement and again confirmed that the processing of information relating to an individuals private life comes within the scope of article 8 and that personal information relating to a patient undoubtedly belongs to his or her private life: I v Finland (2009) 48 EHRR 740, paras 35 38. Similarly, the Court of Justice of the European Union in X v Commission [1994] ECR I 4347 has opined (para 17) that the right to respect for private life, embodied in article 8, includes in particular a persons right to keep his state of health secret. (ii) Whether Part 4 of the 2014 Act interferes with article 8 rights The provisions of Part 4 of the 2014 Act by which the state may intervene in family life and private life engage article 8. But, while article 8 is engaged, not all that may be done under Part 4 would involve an interference with a persons article 8 rights. There are elements of the role of the named person which are unlikely, by themselves, to involve any interference with the right of a parent, child or young person to respect for his or her private and family life. Thus, by themselves, the functions in section 19(5)(a)(i) and (ii) of providing advice, information and support and helping the parent, child or young person to access a service or support would not normally constitute an interference with the article 8 rights of either the child or his or her parents. But it is clear from the consultation paper, A Scotland for Children and the Policy Memorandum, which we discussed in paras 1 to 3 above, that the sharing of personal data between relevant public authorities is central to the role of the named person. As we have explained, this may well constitute an interference with the article 8 rights of those to whom the information relates. We are therefore satisfied that the operation of the information sharing provisions of Part 4 (in particular, sections 23, 26 and 27) will result in interferences with rights protected by article 8 of the ECHR. The question therefore arises whether such interferences can be justified under article 8(2). (iii) In accordance with the law In order to be in accordance with the law under article 8(2), the measure must not only have some basis in domestic law which it has in the provisions of the Act of the Scottish Parliament but also be accessible to the person concerned and foreseeable as to its effects. These qualitative requirements of accessibility and foreseeability have two elements. First, a rule must be formulated with sufficient precision to enable any individual if need be with appropriate advice to regulate his or her conduct: Sunday Times v United Kingdom (1979) 2 EHRR 245, para 49; Gillan v United Kingdom (2010) 50 EHRR 1105, para 76. Secondly, it must be sufficiently precise to give legal protection against arbitrariness: it must afford a measure of legal protection against arbitrary interferences by public authorities with the rights safeguarded by the Convention. In matters affecting fundamental rights it would be contrary to the rule of law for a legal discretion granted to the executive to be expressed in terms of an unfettered power. Consequently, the law must indicate with sufficient clarity the scope of any discretion conferred on the competent authorities and the manner of its exercise. The level of precision required of domestic legislation which cannot in any case provide for every eventuality depends to a considerable degree on the content of the instrument in question, the field it is designed to cover and the number and status of those to whom it is addressed. Gillan v United Kingdom, para 77; Peruzzo v Germany (2013) 57 EHRR SE 17, para 35. Recently, in R (T) v Chief Constable of Greater Manchester Police [2015] AC 49 this court has explained that the obligation to give protection against arbitrary interference requires that there must be safeguards which have the effect of enabling the proportionality of the interference to be adequately examined. This is an issue of the rule of law and is not a matter on which national authorities are given a margin of appreciation. In deciding whether there is sufficient foreseeability to allow a person to regulate his or her conduct and sufficient safeguards against arbitrary interference with fundamental rights, the court can look not only at formal legislation but also at published official guidance and codes of conduct: Silver v United Kingdom (1983) 5 EHRR 347 (paras 88 90); Gillan v United Kingdom (paras 35, 36 and 78) and MM v United Kingdom (Application no 24029/07). In R (Roberts) v Comr of Police of the Metropolis [2015] UKSC 79; [2016] 1 WLR 210 this court took into account as constraints on the power of the police to stop and search not only the limits on that power in section 60 of the Criminal Justice and Public Order Act 1994 and the legal protection provided by both section 6 of the Human Rights Act 1998 and the Equality Act 2010, but also the requirements of the Metropolitan Polices Standard Operating Procedures. That statutory document, which was published on the Metropolitan Polices website, regulated the authorisation of stop and search, the operation and also the individual encounter between a police officer and a member of the public on the street. In relation to the exercise on the street of the stop and search power it not only gave officers detailed instructions, which were designed to ensure their proportionate use of such power, but also required them to explain to the individual who was to be searched the reason for the search, to record that reason in writing and make available to the affected individual a copy of that written record. These provided adequate safeguards to enable the courts to examine the proportionality of any interference with fundamental rights: see the judgment of Lady Hale and Lord Reed at paras 43 48. Thus in assessing whether Part 4 of the 2014 Act is in accordance with the law this court has been invited to take into account not only the terms of the Act but also, proleptically, the RDSG, which we have discussed in paras 18 to 25 above. As we have stated (in para 18 above), the RDSG is directed to specified public authorities, which under section 28(1) of the Act are required to have regard to it. In contrast with, for example, the Metropolitan Polices Standard Operating Procedures which we have mentioned, there is no compulsion to follow the guidance. The RDSG gives very little guidance as to the requirements of the DPA or article 8 of the ECHR but envisages that separate practice materials will be made available to practitioners. As we explained in paras 52 to 62 above when we discussed the effect of the Act in relation to the DPA and the Directive, the powers and duties of disclosure set out in sections 23 and 26 cannot be taken at face value. In several crucial respects, the scope of the duties and powers to disclose or share information set out on the face of the Act are, in reality, significantly curtailed by the requirements of the DPA and the Directive. To recap: (1) Although section 23(2)(b) purports to impose on the outgoing service provider a duty to provide the incoming service provider with all information which it holds which falls within subsection (3), in reality no such duty exists in relation to sensitive data as defined in the DPA, unless at least one of the conditions set out in Schedule 3 to the DPA is satisfied (the conditions set out in section 23(3) (6) of the 2014 Act not in themselves ensuring their satisfaction). (2) Although section 26(1) purports to impose on a service provider or relevant authority (or any person exercising a function on their behalf) a duty to provide to the service provider in relation to a child or young person any information which the person holds which falls within subsection (2), in reality no such duty exists in relation to sensitive data as defined in the DPA, unless at least one of the conditions set out in Schedule 3 to the DPA is satisfied (the conditions set out in section 26(2) and (5) (7) of the 2014 Act not in themselves ensuring their satisfaction). (3) Although section 26(3) purports to impose on the service provider in relation to a child or young person a duty to provide to a service provider or relevant authority (or any person exercising a function on their behalf) any information which the person holds which falls within subsection (4), in reality no such duty exists in relation to sensitive data as defined in the DPA, unless at least one of the conditions set out in Schedule 3 to the DPA is satisfied (the conditions set out in section 26(4) and (5) (7) of the 2014 Act not in themselves ensuring their satisfaction). (4) Although section 26(8) purports to confer on the service provider in relation to a child or young person the power to provide to a service provider or relevant authority (or any person exercising a function on their behalf) any information which the person holds which falls within subsection (9), in reality no such power can lawfully be exercised unless the requirements of the DPA are satisfied (the condition set out in section 26(9) of the 2014 Act not in itself ensuring their satisfaction). Those requirements include, but are not limited to, compliance with at least one of the conditions in Schedule 2 to the DPA, and also, if the information in question is sensitive data, compliance with at least one of the conditions in Schedule 3. They also include compliance with the requirements arising in relation to the first data principle under Part II of Schedule 1 to the DPA, and also the other data protection principles and the other duties imposed by the DPA. That is not a comprehensive account of the requirements imposed by the DPA: as explained above, those requirements were not fully discussed at the hearing of the appeal. The relationship between the Act and the DPA is rendered particularly obscure by what we have described as the logical puzzle arising from sections 23(7) and 26(11) when read with section 35(1) of the DPA. It is also necessary to ensure that the requirements of articles 7 and 8 of the Directive are met, so far as information falls within its scope. There are thus very serious difficulties in accessing the relevant legal rules when one has to read together and cross refer between Part 4 of the Act and the DPA and work out the relative priority of their provisions. Of even greater concern is the lack of safeguards which would enable the proportionality of an interference with article 8 rights to be adequately examined. Section 26(5) requires an information holder, when considering whether information ought to be provided in the exercise of the duties in section 26(1) or (3), so far as reasonably practicable to ascertain and have regard to the views of the child or young person. But there is no such requirement in relation to a service providers discretionary power to share information under section 26(8). There the test is merely that the provision of the information is necessary or expedient for the purposes of the exercise of any of the named person functions. Moreover, there is no statutory requirement, qualified or otherwise, to inform the parents of a child about the sharing of information. The RDSG is only guidance, speaks of routine good practice, and leaves it to the discretion of the information holder whether to involve the parent or parents. It is thus perfectly possible that information, including confidential information concerning a child or young persons state of health (for example, as to contraception, pregnancy or sexually transmitted disease), could be disclosed under section 26 to a wide range of public authorities without either the child or young person or her parents being aware of the interference with their article 8 rights, and in circumstances in which there was no objectively compelling reason for the failure to ascertain and have regard to their views. While para 10.14.2 of the RDSG advises that a record should be kept of the rationale behind a decision to share information, such a record will not assist a child, young person or parent who is not informed that the information is to be or has been shared. We conclude therefore that the information sharing provisions of Part 4 of the Act and the RDSG as currently drafted do not meet the article 8 criterion of being in accordance with the law. (iv) Whether the interference is proportionate The fourth question is whether Part 4 of the Act, when considered along with section 6 of the Human Rights Act 1998, the DPA and the RDSG, will give rise to interferences with the article 8 rights of children, young persons or parents which are proportionate, having regard to the legitimate aim pursued. In assessing proportionality it is necessary to distinguish between the Act itself and its operation in individual cases. The Act gives the named person three principal functions in section 19(5). As we have said (para 78 above), the first two would not normally constitute an interference with the right to respect for private or family life. The third, which itself involves the sharing of information, may more readily do so. The information sharing provisions in sections 23, 26 and 27 are, as we have said, limited by the DPA, particularly in relation to the disclosure of sensitive personal data. Separately, the operation of the Act in individual cases will involve the exercise of powers in many different circumstances which may entail more or less serious interferences with private and family life and which may provide stronger or weaker justification for such interference. This court has explained that an ab ante challenge to the validity of legislation on the basis of a lack of proportionality faces a high hurdle: if a legislative provision is capable of being operated in a manner which is compatible with Convention rights in that it will not give rise to an unjustified interference with article 8 rights in all or almost all cases, the legislation itself will not be incompatible with Convention rights: R (Bibi) v Secretary of State for the Home Department [2015] UKSC 68; [2015] 1 WLR 5055, paras 2 and 60 per Lady Hale, para 69 per Lord Hodge. The proportionality challenge in this case does not surmount that hurdle. Nonetheless, it can readily be foreseen that in practice the sharing and exchange of information between public authorities are likely to give rise to disproportionate interferences with article 8 rights, unless the information holder carries out a scrupulous and informed assessment of proportionality. In their submissions, the Ministers treated the promotion of childrens wellbeing as being in itself a legitimate aim under article 8. They relied on international instruments in which the term wellbeing is used, although possibly not in quite as wide a sense as in the 2014 Act. For example, article 3(2) of the UNCRC provides: States Parties undertake to ensure the child such protection and care as is necessary for his or her wellbeing, taking into account the rights and duties of his or her parents, legal guardians, or other individuals legally responsible for him or her, and, to this end, shall take all appropriate legislative and administrative measures. Similarly, article 24(1) of the EU Charter of Fundamental Rights (CFR) provides: Children shall have the right to such protection and care as is necessary for their wellbeing The promotion of the wellbeing of children and young people is not, however, one of the aims listed in article 8(2) of the ECHR. At the most general level, it can be said to be linked to the economic wellbeing of the country, as the Ministers submissions emphasised. The extent to which an individual intervention is likely to promote the achievement of such a general aim is however very limited. Individual interventions may make a greater contribution towards achieving other legitimate aims, such as the prevention of disorder or crime, or the protection of health or morals, depending on the circumstances. However, the more tenuous the link between the objective pursued by the intervention (eg that a child or young person should be achieving, nurtured, active, respected, responsible and included) and the achievement of one of the legitimate aims listed in article 8(2), the more difficult it will be to justify a significant interference with the individuals private and family life. For example, if (contrary to our view) the 2014 Act as currently enacted had enabled the disclosure of sensitive personal data without the consent of the affected party, the disclosure by health professionals of information that a young person was being prescribed contraceptives or had contracted a sexually transmitted disease would be a major interference with private life which could only be justified on very compelling grounds. questions when it considers the question of proportionality: It is now the standard approach of this court to address the following four (i) whether the objective is sufficiently important to justify the limitation of a protected right, (ii) whether the measure is rationally connected to the objective, (iii) whether a less intrusive measure could have been used without unacceptably compromising the achievement of the objective, and (iv) whether, balancing the severity of the measures effects on the rights of the persons to whom it applies against the importance of the objective, to the extent that the measure will contribute to its achievement, the former outweighs the latter (ie whether the impact of the rights infringement is disproportionate to the likely benefit of the impugned measure). See Huang v Secretary of State for the Home Department [2007] UKHL 11; [2007] 2 AC 167, para 19 per Lord Bingham of Cornhill; R (Aguilar Quila) v Secretary of State for the Home Department [2011] UKSC 45; [2012] 1 AC 621, para 45 per Lord Wilson; Bank Mellat v HM Treasury (No 2) [2013] UKSC 39; [2014] AC 700, para 74 per Lord Reed; and R (Bibi) v Secretary of State for the Home Department [2015] UKSC 68; [2015] 1 WLR 5055, para 29 per Lady Hale. As to the first of those questions, it can be accepted, focusing on the legislation itself rather than on individual cases dealt with under the legislation, that Part 4 of the 2014 Act pursues legitimate aims. The public interest in the flourishing of children is obvious. The aim of the Act, which is unquestionably legitimate and benign, is the promotion and safeguarding of the wellbeing of children and young persons. As the Dean of Faculty submitted, the policy of promoting better outcomes for individual children and families is not inconsistent with the primary responsibility of parents to promote the wellbeing of their children. Improving access to, and the coordination of, public services which can assist the promotion of a childs wellbeing are legitimate objectives which are sufficiently important to justify some limitation on the right to respect for private and family life. Secondly, Part 4 of the Act is rationally connected to the legitimate aims pursued. As the Scottish Governments consultation paper, A Scotland for Children showed, the aims of the legislation are to move public bodies with responsibility for children towards early intervention to promote childrens wellbeing rather than only responding to a serious occurrence and to ensure that those public bodies collaborated and shared relevant information concerning the wellbeing of individual children. As the Second Division stated (para 63), the named person is at the heart of the Scottish Governments proposals. That person is tasked with advising on the wellbeing of a child, helping a child or parent to access a service or support, and being the single point of contact for public services in relation to the child in order to promote, support or safeguard the childs wellbeing. The third question (whether a less intrusive measure could have been used) does not involve a court in identifying the alternative legislative measure which was least intrusive. The court allows the legislature a margin of discretion and asks whether the limitation on the fundamental right is one which it was reasonable for the legislature to impose: Bank Mellat v HM Treasury (No 2), para 75. If, as the appellants submitted in their broader challenge, a named person should be appointed in relation to a child only if the parents consented or, absent such consent, if the appointment was necessary to protect the welfare of a child who was at risk of harm, the scope for early intervention to resolve problems and for the coordination of public services in support of a childs wellbeing would be diminished. Separate questions will arise as to whether, in an individual case, early intervention and coordination of services could be achieved by less intrusive means. That issue can be considered under the final question of fair balance. The fourth question is whether the impact of the rights infringement may be disproportionate to the likely benefit of the impugned measure. This requires consideration of the operation of Part 4 of the Act in particular cases, since it cannot be said that its operation will necessarily give rise to disproportionate interferences in all cases. In that regard, the named persons functions to give advice, information and support (section 19(5)(a)(i)) and to help the child, young person or parent to access a service or support (section 19(5)(a)(ii)) are, as we have said, less likely to give rise to any question of disproportion in a particular case. The provision of access to services could involve the creation of a childs plan under Part 5 of the Act, but that involves no compulsion. The Act does not alter the statutory criteria of any compulsory measures in relation to children and young people. Thus the criteria for making a child assessment order in section 36(2) or a child protection order in sections 38 and 39 of the Childrens Hearings (Scotland) Act 2011 require (put shortly) reasonable grounds to suspect that the child is likely to suffer significant harm. The long list of grounds upon which a child may come before a childrens hearing with a view to making a compulsory supervision order (which can include taking the child away from home) in section 67 of that Act remain focused upon the risk of harm to the child or the childs own misconduct. Nevertheless, there must be a risk that, in an individual case, parents will be given the impression that they must accept the advice or services which they are offered, especially in pursuance of a childs plan for targeted intervention under Part 5; and further, that their failure to co operate with such a plan will be taken to be evidence of a risk of harm. An assertion of such compulsion, whether express or implied, and an assessment of non cooperation as evidence of such a risk could well amount to an interference with the right to respect for family life which would require justification under article 8(2). Given the very wide scope of the concept of wellbeing and the SHANARRI factors, this might be difficult. Care should therefore be taken to emphasise the voluntary nature of the advice, information, support and help which are offered under section 19(5)(a)(i) and (ii) and the Guidance should make this clear. The function, in section 19(5)(a)(iii), of discussing or raising a matter about a child or young person with a service provider or relevant authority, involves the disclosure of information. It and the information sharing provisions in sections 23, 26 and 27 raise difficult questions of proportionality in particular cases, where the information holder, when considering whether the information ought to be provided (section 26(2)(b) and (4)(b)) or whether to provide information under section 26(8), will have to consider carefully whether the particular circumstances justify the disclosure of the particular information. In our view, given this role of the information holder, it cannot be said that the operation of the information sharing duties and powers in relation to any of the named persons functions will necessarily amount to a disproportionate interference with article 8 rights. But for the problem in relation to the requirement that the Act be in accordance with the law (paras 79 85 above), we consider that the Act would be capable of being operated in a manner which is compatible with the Convention rights. But the task facing the information holder is a daunting one because the Act does not address the factors to be considered in an assessment of proportionality and the RDSG gives exiguous guidance on that issue. The provisions of the Act appear to point toward a more relaxed approach to disclosure than is compatible with article 8. Section 26(1) and (3) oblige the information holder to provide information which meets the criteria set out in subsections (2) and (4). Those criteria include an assessment of whether the information is likely to be relevant to the exercise of functions which may affect the wellbeing of the child or young person. In turn, the assessment of that wellbeing under section 96, as explained by the RDSG, involves the use of very broad criteria which could trigger the sharing of information by a wide range of public bodies (as to which see para 5 above) and also the initiation of intrusive inquiries into a childs wellbeing. In our view, the criteria in sections 23(3), 26(2) and 26(4) by themselves create too low a threshold for disclosure (as explained at para 56 above), and for the overriding of duties of confidentiality in relation to sensitive personal information. Under sections 23(4) and 26(5) the information holder, when deciding whether information ought to be provided under sections 23(2) and 26(1) or (3), is obliged so far as is reasonably practicable to ascertain and have regard to the views of the child or young person. But those provisions do not require that persons consent, or require that there be any good reason for dispensing with her consent, before what may be highly personal information, imparted in confidence, is shared. Further, the information holder is under no obligation to ascertain the views of the child or young person, or her parents, when exercising a discretion under section 26(8), in which the test is whether the provision of the information is considered to be necessary or expedient for the purposes of the exercise of any of the named person functions. Thus the exercise of the section 26(8) power could involve the overriding of duties of confidentiality without any obligation even to consult the child, young person or parent. The RDSG (at paras 4.1.28 and 10.7.4) presents such consultation as good practice but it is not obligatory, even on a qualified basis. Further, there is no provision imposing even a qualified requirement that the child or young person or her parents be warned that confidential information may be disclosed, or informed after the event that it has been shared. In many circumstances the Acts intended overriding of the duty of confidentiality may not be achieved. In our discussion of reserved matters (paras 27 to 66 above) we showed that, because of the terms of sections 23(7) and 26(11), the DPA and the Directive impose significant restrictions on the ability of public authorities in the performance of their duties under sections 23(2), 26(1) and (3) to share information which is sensitive personal data, such as information about a persons health or sexual life, without the explicit consent of the data subject. We showed that, for the same reasons, the power under section 26(8) to share information remains subject to all of the restrictions of the DPA against disclosure, thus normally requiring consent of the data subject, in relation also to non sensitive personal data. Thus some of the concerns of the appellants and the interveners in relation to the criteria for the sharing of information are, on a proper interpretation of the legislation, addressed by the continued operation of the DPA and the Directive, which in many cases will require the consent of the data subject to the sharing of the information. Nonetheless, there may be information which is not sensitive personal data which is nonetheless confidential. Even with the restrictions of the DPA, the Act does not point towards a fair balance in relation to the disclosure of such confidential information in the performance of duties under sections 23(2), 26(1) and 26(3). The central problems are the lack of any requirement to obtain the consent of the child, young person, or his or her parents to the disclosure, the lack of any requirement to inform them about the possibility of such disclosure at the time when the information is obtained from them, and the lack of any requirement to inform them about such disclosure after it has taken place. Such requirements cannot, of course, be absolute: reasonable exceptions can be made where, for example, the child is unable to give consent, or the circumstances are such that it would be inappropriate for the parents consent to be sought, or the childs best interests might be harmed. But, without such safeguards, the overriding of confidentiality is likely often to be disproportionate. In order to reduce the risk of disproportionate interferences, there is a need for guidance to the information holder on the assessment of proportionality when considering whether information should be provided. In particular, there is a need for guidance on (a) the circumstances in which consent should be obtained, (b) those in which such consent can be dispensed with and (c) whether, if consent is not to be obtained, the affected parties should be informed of the disclosure either before or after it has occurred. Also relevant is whether the recipient of the information is subject to sufficient safeguards to prevent abuse: MS v Sweden (1997) 28 EHRR 313. Further, if the guidance is to operate as law for the purposes of article 8, the information holder should be required to do more than merely have regard to it. III The EU Law challenge The appellants also challenge the information sharing provisions of sections 26 and 27 of the Act on the ground that they are incompatible with EU law. Counsel referred to the following articles of the CFR: article 7 (respect for private and family life), article 8 (protection of personal data), article 14 (right to education) particularly 14(3): respect for the right of parents to ensure that the education of their children conforms with their convictions and article 33(1) (family and professional life). In short, they submitted that the sharing of personal data without consent and absent strict necessity infringed one or more of those articles of the CFR. It is not suggested that the DPA fails to transpose the Directive or is contrary to the CFR. In so far as the appellants complaint relates to the sharing of what the DPA describes as sensitive personal data, we have, in large measure in agreement with the Inner House and the Lord Ordinary, interpreted the relevant provisions of the DPA and the 2014 Act as preserving the stringent restrictions in Schedule 3 to the DPA and having the effect that condition 7(1)(b) of Schedule 3 is not met (paras 49 to 58 above). In so far as the DPA allows the 2014 Act to authorise the disclosure of (non sensitive) personal data which are not subject to any duty of confidentiality, we do not see a separate issue arising under EU law. In so far as the challenge relates to the over riding of confidentiality of personal data (whether or not sensitive), we have addressed this in our discussion of article 8 of the ECHR. In Volker und Marcus Schecke GbR and Hartmut Eifert v Land Hessen (Cases C 92/09 and C 93/09) [2010] ECR I 11063, the Court of Justice of the European Union (Grand Chamber) held (para 52) that the limitations which may lawfully be placed on the right to the protection of personal data correspond to those tolerated in relation to article 8 of the ECHR. We are therefore satisfied that there is no additional incompatibility with EU law beyond that which we have found in relation to article 8 of the ECHR. The appellants also submit that the Act contravenes EU law because there is no provision enabling a parent or child to seek the removal of information concerning a child from a named persons database once the data are no longer needed for the purposes for which they were collected or processed. Reference was made to Google Spain SL v Agencia Espaola de Proteccin de Datos (Case C 131/12) [2014] QB 1022, paras 93 97. We do not accept this submission. In our view the data retained by public authorities in the exercise of powers under the Act are subject to the fifth data protection principle in Part I of Schedule 1 to the DPA, namely that personal data processed for any purpose or purposes shall not be kept for longer than is necessary for that purpose or those purposes. This is because this provision is not inconsistent with the disclosure which sections 23(2), 26(1) and 26(3) of the 2014 Act allows: DPA section 27(3) & (4) (paras 53 and 54 above). Part V of the DPA empowers the Information Commissioner, whether at the request of a data subject or otherwise, to enquire into a data controllers compliance with the data protection principles. Under section 40 of the DPA, the Information Commissioner is empowered to serve an enforcement notice on a data controller to require such compliance. The DPA thus has protections for a data subject, who can also, if necessary, seek judicial review of a decision of the Information Commissioner. In our view, the data subject is thereby given a legal remedy and judicial protection as required by Schrems v Data Protection Comr (Case C 362/14) [2016] QB 527, para 95. IV Remedy In summary, we conclude that the information sharing provisions of Part 4 of the Act (a) do not relate to reserved matters, namely the subject matter of the DPA and the Directive, (b) are incompatible with the rights of children, young persons and parents under article 8 of the ECHR because they are not in accordance with the law as that article requires, (c) may in practice result in a disproportionate interference with the article 8 rights of many children, young persons and their parents, through the sharing of private information, and (d) are not incompatible with EU law in any way which goes beyond their incompatibility with article 8 of the ECHR. We are satisfied that it is not possible to remedy this defect by reading down the provisions under section 101 of the Scotland Act 1998. Conclusion (b) therefore means that the information sharing provisions of Part 4 of the Act are not within the legislative competence of the Scottish Parliament. It would not be appropriate for this court to propose particular legislative solutions. But we can properly say the following. We do not think that amendment of the RDSG will get round the problem in conclusion (b) or be sufficient in itself to prevent many instances of disproportionate interference to which we refer in conclusion (c). Section 28 requires the specified public authorities merely to have regard to the guidance. In relation to conclusion (b), it is necessary to address the lack of clarity as to the relationship between the Act and the DPA, arising from the conflict between the provisions of sections 23, 26 and 27 of the Act and the non disclosure provisions of the DPA, and, in particular, the confusion caused by sections 23(7) and 26(11) when read together with provisions of the DPA such as section 35(1). Further, in relation to conclusion (c), the Act, subordinate legislation, or binding guidance, should address the circumstances in which (i) the child, young person or parent should be informed of the sharing of information or (ii) consent should be obtained for the sharing of information, including confidential information. If the resolution of the problem in conclusion (b) leads to the authorisation of the disclosure of sensitive personal data, the problem identified in conclusion (c) will become even more acute as the sharing of such data will require a compelling justification. In short, changes are needed both to improve the accessibility of the legal rules and to provide safeguards so that the proportionality of an interference can be challenged and assessed. The reconsideration of the terms of the Act and the RDSG also provides an opportunity to minimise the risk of disproportionate interferences with the article 8 rights of children, young persons and parents. Consideration of these matters will involve policy questions which are the responsibility of the Scottish Ministers and the democratic legislature. Section 102 of the Scotland Act 1998 provides: (1) This section applies where any court or tribunal decides that an Act of the Scottish Parliament or any (a) provision of such an Act is not within the legislative competence of the Parliament (2) The court or tribunal may make an order suspending the effect of the decision for any (b) period and on any conditions to allow the defect to be corrected. We are of the view that this court should consider making an order under section 102(2)(b) of the Scotland Act 1998 to allow the Scottish Parliament and the Scottish Ministers an opportunity, if so advised, to correct the defects which we have identified. We do not think that it is appropriate to set out the possible terms of such an order until we have received written submissions from the parties on the terms of the order, including both the period of suspension and any conditions which should be attached to the order. As was said in Salvesen v Riddell 2013 SC (UKSC) 236 (Lord Hope at para 57), if such an order is made, it may be appropriate to give permission to the Lord Advocate to return to the court for any further orders under section 102(2)(b) as may be required. The court which is best placed to make such further orders may be the Court of Session. In the meantime, since the defective provisions are not within the legislative competence of the Parliament, they cannot be brought into force. Conclusion We would allow the appeal and invite the parties to produce written submissions on the terms of a section 102 order within 42 days of the date of this judgment.
+The contest in this case is about who should bear the costs and expenses of a receiver appointed under an order which ought not to have been made. The appellant, who is a former partner in a well known firm of accountants, was appointed to act as management receiver of the assets of a group of companies referred to as Eastenders (the companies) on the application of the Crown Prosecution Service (CPS). The order was made under section 48 of the Proceeds of Crime Act 2002 (POCA) but was quashed on appeal. The receivers costs and expenses are put at 772,547. Who should bear those costs? There are three possible answers: the companies, the receiver or the CPS. The question has been considered by four judges who have arrived at three different answers. The receiver applied to the Crown Court, after the order had been quashed, for permission to draw his remuneration and expenses from the assets of the companies. The application was refused by Underhill J (now Underhill LJ) in a judgment given on 4 April 2012. He held that to grant the application would infringe the companies rights under article 1 of the First Protocol to the European Convention on Human Rights (A1P1). This 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. In his judgment Underhill J held that in principle the liability for the receivers remuneration and expenses should be borne by the CPS, but at that stage there was no such application before him. After a further hearing on 8 May 2012 he made an order including the following terms: i) The CPS was to pay the receivers remuneration and disbursements, subject to an assessment by the taxing authority of the Crown Court under the Criminal Procedure Rules. ii) The CPS was to pay the legal costs incurred by the receiver in the exercise of his functions as receiver. iii) The parties were to lodge further evidence and submissions as to whether sums previously retained by the receiver should be repaid to the companies. (There is a potential argument that some of the expenses incurred by the receiver in the course of running the companies would have been incurred by them in any event, but on this appeal the court has not been concerned with points of that kind.) iv) The CPS was to pay the companies litigation costs in respect of the various applications relating to the receivership order. In making that order Underhill J held that it was possible to interpret POCA as giving the court the right, in circumstances such as those of the present case, to order that the receivers remuneration and expenses be paid by the CPS and not by the companies. The CPS appealed to the Court of Appeal Criminal Division. The majority (Mitting and Edwards Stuart JJ) upheld Underhill Js decision that the companies rights under A1P1 would be infringed by an order permitting the receivers costs and expenses to be taken out of their assets. Laws LJ, dissenting, would have held that there was no such breach and that the receiver was entitled to recover those costs out of the companies assets under the order made in the Crown Court. The court was unanimous that Underhill J was wrong in deciding that POCA could be interpreted as giving him power to order the CPS to pay the receivers costs. The result of the majoritys decision was to leave the receiver unable to recover his costs either from the companies assets or from the CPS. They acknowledged that the outcome of the appeal would be clearly unsatisfactory to a receiver who has undertaken work and incurred expenses in the expectation that he would be both rewarded and recompensed out of assets identified for him by the CPS, and they added that their judgment did not exclude the possibility that he may have a common law remedy against those who sought his appointment, but they said no more about what it might be, presumably because the matter had not been argued. The receiver now appeals to this court. The principal argument advanced on his behalf by Mr David Perry QC was that Laws LJ was right and that the costs of the receivership should be borne by the companies. If that submission was rejected, his alternative submission was that Underhill J was correct to order that the costs be borne by the CPS. Mr Perry submitted powerfully that it could not be a just solution that the receiver, an officer appointed by the court, should be left without payment for acting as the court directed. Mr Geraint Jones QC submitted on behalf of the companies that those judges (Underhill, Mitting and Edwards Stuart JJ) who had concluded that to take the receivers costs out of the companies assets would be a breach of their rights under A1P1 were right. He also suggested that it was highly arguable that the contractual arrangements between the receiver and the CPS would entitle the receiver to remuneration by the CPS, but that was a matter between the receiver and the CPS. Mr Michael Parroy QC on behalf of the CPS joined forces with Mr Perry in arguing that Laws LJ was right. If, however, the effect of A1P1 was to preclude recovery of the receivers costs out of the companies assets, Mr Parroy submitted that the Court of Appeal was right in its unanimous decision that POCA did not afford any basis for holding the CPS liable to the receiver. He also submitted that there was no substance in the argument that the receiver would have a contractual remedy against the CPS. Issues The first question is whether the companies rights under A1P1 would be infringed by having their assets taken to pay the receivers remuneration and expenses. If Laws LJ was right in his view that this would not involve an infringement of their A1P1 rights, no further question arises. But if the companies are right about that issue, the second question that arises is whether the receiver is entitled to look to the CPS for reimbursement. When granting permission to appeal to this court, the leave panel asked the parties to address the additional issue whether there are any powers which could be exercised to prevent this situation arising whatever the outcome of the appeal. It will be necessary to consider that too. On 6 December 2010 the CPS applied ex parte to HH Judge Hawkins QC at the Central Criminal Court for restraint and receivership orders under sections 41 and 48 of POCA. The judge was in the course of trying a murder case and his time for hearing the application was limited. After a 40 minute hearing the judge signed the orders which he was asked to make. The evidence before the judge consisted of two witness statements made by Mr Alan Brown, a financial investigator employed by HM Revenue & Customs (HMRC), and their exhibits. In summary, he stated that HMRC was conducting a covert investigation into the activities of a serious organised criminal group which was believed to be responsible for evading excise duty and VAT on a large scale and laundering the proceeds. The suspected fraud involved alcohol products, which had been imported into the UK duty free, being released from bonded warehouses into the UK market without payment of duty in such a way that the true facts were concealed from HMRC by the use of buffer companies and bogus documents. The subjects under investigation included Mr Alexander Windsor and Mr Kulwant Singh Hare, referred to as the defendants in Mr Browns statements. Company searches and other records showed that the defendants were the joint beneficial owners of the Eastenders Group parent company, which held between 50% and 100% of the shares in the other group companies. The parent company was a holding company and the trading companies were cash and carry outlets. Mr Brown suggested that the companies were a wholesale and retail arm of the criminal group responsible for the alleged fraud. Mr Brown described the case as the most complex restraint and receivership case that he had ever managed in more than 20 years experience of such work. He estimated the public loss at 23 million. Mr Brown invited the court to lift the corporate veil of the companies, to treat their assets as assets in which the defendants had an interest and to restrain them and the companies from dealing with those assets. He also asked the court to appoint a management receiver to run the companies. He described their activities in this way: It is through these companies that the non duty and non VAT paid alcohol is sold onto the legitimate market. It is probable that these companies also conduct legitimate trade, in the sense that they buy and sell duty and VAT paid goods as well. However I do not know the ratio of legitimate to illegitimate activity. In these circumstances Mr Brown invited the court to conclude that a receivership order would be the only effective means of ensuring that the defendants assets could be properly managed. Terms for the receivers appointment had been agreed with the receiver in correspondence which was exhibited to Mr Browns statements. He said that he was unable to give a realistic estimate of the likely costs of the receivership, having regard to the nature of the assets involved. The judge made orders in relation to each defendant. They were in materially identical terms and I will refer to them as a single order. The order restrained the defendant from disposing of, dealing with or diminishing the value of any of his assets, which were expressed to include the assets of the companies. It imposed a similar direct restraint on the companies, and it appointed the receiver to act as management receiver of all the assets and property identified in the order, including the business and undertakings of the companies. The imposition of the restraint and receivership order on the companies necessarily depended on the court having proper reason to regard the assets of the companies as the personal assets of the defendants. The order gave the receiver a wide range of standard powers, including the power to realise so much of the receivership property as is necessary to meet the receivers remuneration and expenses. As to his remuneration and expenses, the order provided: The remuneration and expenses of the Receiver shall be paid out of the Receivership Property and in accordance with the letter of agreement as exhibited to the witness statement of Alan Brown made on 3 December 2010. The letter referred to was a letter from the CPS to the receiver dated 29 November 2010. Under the heading Re Kulwant Singh Hare and Alexander Thomas Windsor the letter began: We are writing to enquire whether you would be prepared to act as a management receiver pursuant to section 48 of the Proceeds of Crime Act 2010 in the above case of which the Crown Prosecution Service has conduct. You will appreciate that your appointment is dependent on an order being made by the Crown Court. This letter sets out the terms upon which we propose to seek your appointment. These terms will form part of the order for your appointment. In addition, your appointment is subject to the Framework Agreement between the Crown Prosecution Service and the panel of approved receivers, to the provisions of Part 60 of the Criminal Procedure Rules and to the Capewell Guidelines laid down by the Court of Appeal in Capewell v Customs & Excise Commissioners [2005] 1 All ER 900. In a brief summary of the background the letter explained that HMRC was conducting an investigation into the commission of offences by the named defendants involving the evasion of VAT and excise duty on a massive scale. The letter said: It is alleged that much of the fraudulent activity has been facilitated through a company known as Eastenders Cash and Carry plc and various subsidiary companies in Slough, Barking, Croydon, Birmingham and Coventry. Clearly, the effective management of these companies and their stock is an urgent priority if you are appointedThe extent to which the companies can be allowed to be allowed to continue trading will clearly be of fundamental importancegiven the urgent necessity to prevent any further fraudulent trading and loss to the Exchequer. The letter set out proposed terms of the appointment, including the following term as to the receivers remuneration: Your remuneration costs and expenses are to be drawn from the assets of the defendants under your management in accordance with section 49(2)(d) of the Proceeds of Crime Act and the decision of the House of Lords in Capewell v HM Revenue & Customs [2007] UKHL 2. You are reminded that you will have a lien over the defendants assets for payment of your fees and that the Crown Prosecution Service does not undertake to indemnify you in relation to your fees in the event that there are insufficient assets within the defendants estate. Your remuneration, costs and expenses are to be paid in accordance with the Framework Agreement referred to above and any deviation must be agreed in writing with the Crown Prosecution Service. Clause 12.5 of the Framework Agreement provided: In the case of Management and Enforcement Receivers in criminal confiscation cases, the Receiver will be remunerated from the sums that they may realise from the sale of the assets over which they are appointed [subject to an immaterial exception]. To the extent [that] there is any shortfall, the Contracting Bodies will not agree to grant indemnities either in full or in part. Although the receivership order covered all assets of the defendants, including properties and money in bank accounts, its central purpose was to put the companies under the control of the receiver. But for the fact that the companies were trading entities, there would have been no need for a receivership order. The restraint order would have been sufficient to freeze the defendants bank accounts and to prevent any disposal of their personal properties. The companies had around 120 employees and an aggregate turnover in the region of 150 million. In order to comply with section 49(8) of POCA (set out below), the order provided that the receivers powers of management, and power to realise property to meet his remuneration and expenses, were not to be exercised until further order of the court. This was in order to give the companies a reasonable opportunity to make representations. The matter was further considered by the judge in a brief hearing, on 14 December 2010 at the end of his normal sitting day. On the eve of that hearing the companies put in substantial evidence, but the court did not have time to consider the merits or hear detailed argument. The judge activated the receivers powers. It was then the busiest time of the trading year, only 11 days before Christmas. The judge activated the receivers management powers in order that their continued trading should be under the receivers control. The judge considered the companies objections to the receivership order on 23 December 2010 at an inter partes hearing but refused to discharge it. The matter came before the Court of Appeal (Hooper LJ, Openshaw J and Sir Geoffrey Grigson) on 25 January 2011. According to the judgment delivered by Hooper LJ, the appeal occupied the time of the court for 1 days following 2 days preparation for the hearing. The court quashed the restraint and receivership orders but took time for the delivery of its reasons in a judgment handed down on 8 February 2011 (neutral citation [2011] EWCA Crim 143). The case is reported in abbreviated form at [2011] 1 WLR 159 but in full at [2011] 2 Cr App R 71. The court expressed considerable sympathy for the judge who had been given responsibility to decide at short notice whether to grant restraint and receivership orders at a time when he was occupied with the conduct of a complex jury trial. Having had a much better opportunity to analyse the evidence, it considered that Mr Browns statements consisted largely of broad and unsupported assertions. Careful analysis of the evidence in the appendices to his statement about particular transactions exposed serious gaps. The court held that the judge had been wrong on 6 December to find on the material before him that there was reasonable cause to believe that the defendants had benefited from the alleged criminal conduct. It postponed the drawing up of a final order in relation to the defendants (as distinct from the companies) in order to give the CPS an opportunity to adduce further evidence. The CPS subsequently made a renewed application to Mackay J, which he refused. As to the companies, the Court of Appeal held that there was no good arguable case for regarding their assets as the assets of the defendants and it quashed the order in so far as it affected the companies with immediate effect. In his judgment refusing to discharge the order, the judge had concluded that there was a good arguable case that the defendants had attempted to shelter behind a corporate faade, or veil, to hide their crimes and their benefits from it; and that the business structures constituted a device, or cloak or sham intended to disguise the true nature of what was going on. The Court of Appeal referred to Mr Browns statement that it was probable that the companies conducted legitimate trade and that he did not know the ratio of legitimate to illegitimate activity. It observed that by the time of the application to set aside a good deal of evidence had been filed by the companies, from which they asserted that 95% of the business was demonstrably legitimate, and HMRC had been driven to concede that they were not in a position to dispute this. The court concluded that on the material before the judge, at the time of the ex parte hearing, there may have been some force in the argument put forward by the CPS; but that on the application to discharge the orders there was insufficient evidence to support the judges conclusion that there was reasonable cause to believe that the companies were just a front, sham or device behind which the defendants were sheltering in order to conceal fraud. The court said that, on the contrary, the evidence before it suggested that the vast bulk of the companies business was legitimate. That evidence was before the court at the time when the judge made his order on 14 December activating the receivers management powers, although the judge had not then had the opportunity of digesting it. The effective period of the receivership therefore lasted from 14 December 2010 (when the receivers management powers were activated) to 26 January 2011 (when the order was set aside by the Court of Appeal). A witness statement by the receivers solicitor explains in broad outline how the sum claimed by the receiver is made up. The largest items were 248,220 for chargeable time recorded and 229,399 for providing manned security at the companies sites. The reason for the latter figure being so large was that the receiver had information that many of the operatives at the sites were either unlicensed workers from overseas (some with criminal records) or had family connections to the defendants. The receiver therefore instructed professional security staff to protect the sites and the stock. A further significant item was the cost of the receiver obtaining legal advice and representation. This amounted to 143,044. It included counsels fees for appearance at the hearings before the judge on 14 and 23 December 2010 and at the hearing before the Court of Appeal. On the hearing of the present appeal the court was informed that no criminal charges had yet been brought in connection with the investigation but that the investigation is continuing. Statutory Framework The purpose of POCA is to prevent criminals form benefiting from their criminal conduct. The Act provides various means for achieving this aim. Part 2 provides a scheme for making confiscation orders in criminal proceedings. Sections 40 to 49 make provision for protective measures by way of restraint orders and receivership orders in order to preserve the realisable assets of a defendant or prospective defendant against whom there is a reasonable likelihood of a confiscation order being made. The conditions for making a restraint order are set out in section 40. Among other things, the court must be satisfied that there is reasonable cause to believe that the alleged defendant has benefited from his criminal conduct. It is not necessary that criminal proceedings should have been instituted, but a criminal investigation must have begun. If the necessary conditions are satisfied, the court may make an order under section 41 prohibiting any specified person from dealing with any realisable property held by him. Realisable property is defined in section 83 as any free property held by the defendant (or by the recipient of a tainted gift). Under section 82, property is free for this purpose unless it is already the subject of a forfeiture or deprivation order made under another statute such as the Terrorism Act 2000. A restraint order may be made subject to exceptions and the court may make such other order as it believes is appropriate for the purpose of ensuring that the restraint order is effective. A disclosure order is a common example. Section 42 provides for applications to vary or discharge a restraint order, and section 43 provides for an appeal to the Court of Appeal by a person affected by the decision on such an application. As a supplement to a restraint order, section 48(2) provides that the Crown Court may appoint a receiver in respect of any realisable property to which the restraint order applies. Since the appointment of a management receiver is by its nature an interim measure before any criminal proceedings have been determined, when appointing a receiver under section 48 the court does not have to make a final determination that the relevant property is realisable property within the meaning of the Act. It is enough that on the documents a good arguable case arises for treating the relevant assets as the realisable property of the defendant: Crown Prosecution Service v Compton [2002] EWCA Civ 1720. Section 49 provides so far as material: 1) If the court appoints a receiver under section 48 it may act under this section on the application of the person who applied for the restraint order. 2) The court may by order confer on the receiver the following powers in relation to any realisable property to which the restraint order applies a) power to take possession of the property; b) power to manage or otherwise deal with the property; c) power to start, carry on or defend any legal proceedings in respect of the property; d) power to realise so much of the property as is necessary to meet the receivers remuneration and expenses. 4) The court may by order authorise the receiver to do any of the following for the purpose of the exercise of his functions a) hold property; b) enter into contracts; c) sue and be sued; d) employ agents; e) execute powers of attorney, deeds or other instruments; f) take any other steps the court thinks appropriate. 5) The court may order any person who has possession of realisable property to which the restraint order applies to give possession of it to the receiver. 8) The court must not a) b) confer the power mentioned in subsection (2) (b) or (d) in respect of property, or exercise the power conferred on it by subsection (6) in respect of property. unless it gives persons holding interests in the property a reasonable opportunity to make representations to it. 9) The court may order that a power conferred by an order under this section is subject to such conditions and exceptions as it specifies. Section 61 provides: If a receiver appointed under section 48 a) takes action in relation to property which is not realisable property, b) would be entitled to take the action if it were realisable property, and c) believes on reasonable grounds that he is entitled to take the action, he is not liable to any person in respect of any loss or damage resulting from the action, except so far as the loss or damage is caused by his negligence. Section 63 provides that any person affected by a receivership order may apply to the Crown Court to vary or discharge the order. Section 65 provides for appeal to the Court of Appeal against decisions under various sections including 48, 49 and 63. Section 66 provides: (1) An appeal lies to the Supreme Court from a decision of the Court of Appeal on an appeal under section 65. (2) An appeal under this section lies at the instance of any person who was a party to the proceedings before the Court of Appeal. (3) On an appeal under this section the Supreme Court may i. confirm the decision of the Court of Appeal, or ii. make such order as it believes is appropriate. Section 72 gives power to the Crown Court to order payment of such compensation as it believes is just in cases where an order has been made under the part of the Act which includes receivership orders, but there are a number of conditions. There must have been serious default by, among others, a member of the CPS. The default must have been such that the investigation would not have continued if it had not occurred (or, where criminal proceedings were instituted, that the proceedings would not have started or continued). Moreover, under section 72(6) the application must be made by a person who held realisable property and has suffered loss in consequence of something done in relation to it by or in pursuance of the order. Section 72(6) presents a drafting problem because section 83 confines the meaning of realisable property to property of the defendant or a tainted gift. If construed literally, it would therefore not extend to property of a third party which was wrongly made the subject of a receivership order. This could present an obstacle for a person in the position of the companies in this case, but it is not necessary to try to resolve that problem for present purposes. The Act does not contain any provisions about the application of funds obtained by a management receiver (other than section 49(2)(d) which empowers the court to give power to the receiver to realise so much of the property as is necessary to meet his remuneration and expenses), but that is explicable because of the interim nature of a management receivership. The task of the management receiver is essentially to hold and protect the assets. Where criminal proceedings result in the making of a confiscation order, the court may appoint an enforcement receiver under section 50. For collection purposes, a confiscation order is treated in the same way as a fine; payment is made thorough the magistrates court. Section 55 contains provisions about how the justices chief executive is to deal with sums received on account of the amount payable under a confiscation order. They must be applied first in the payment of expenses properly payable to an insolvency practitioner and next in the payment of the remuneration and expenses of a receiver appointed under section 48, to the extent that they have not been met by the exercise of a power conferred under section 49(2)(d) (that is, to the extent that they have not been met by the receiver selling assets in order to meet his own remuneration and expenses). Under analogous provisions of the Criminal Justice Act 1988, which POCA replaced, section 88(2) contained a long stop provision in the following terms: Any amount due in respect of the remuneration and expenses of a receiver so appointed shall, if no sum is available to be applied in payment of it under section 81 (5) above, be paid by the prosecutor or, in a case where proceedings for an offence to which this Part of this Act applies are not instituted, by the person on whose application the receiver was appointed. By contrast, POCA contains no provision for payment of the receivers remuneration and expenses by the prosecutor or applicant for the receivership order. The Criminal Procedure Rules include a part dealing with receivership orders. Rule 60.6 provides: (1) This rule applies where the Crown Court appoints a receiver under section 48 or 50 of the Proceeds of Crime Act 2002 (2) The receiver may only charge for his services if the Crown Court a) b) so directs; and specifies the basis on which the receiver is to be remunerated. (4) The Crown Court may refer the determination of a receivers remuneration to be ascertained by the taxing authority of the Crown Court (5) A receiver appointed under section 48 of the 2002 Act is to receive his remuneration by realising property in respect of which he is appointed, in accordance with section 49(2)(d) of the 2002 Act. (6) A receiver appointed under section 50 of the 2002 Act is to receive his remuneration by applying to the magistrates court officer for payment under section 55(4)(b) of the 2002 Act. Domestic Case Law At common law it is an established general principle of receivership that a court appointed receiver is entitled to look for payment of his proper expenses and remuneration to the assets placed by the court in his control, and that the receiver has a lien over these assets for that purpose. It is also established that this principle applies as much to a receiver appointed under a statutory scheme as to any other court appointed receiver, unless the statute otherwise provides: Capewell v Revenue and Customs Commissioners [2007] UKHL 2, [2007] 1 WLR 386, especially paras 18 21. This is the first case in which this court has had to consider the compatibility of the application of that general principle with A1P1, in circumstances where the relevant assets were not the property of the defendant (or prospective defendant) and ought never to have been put into the hands of the receiver. In In re Andrews [1999] 1 WLR 1236 a father and son were prosecuted for VAT fraud. In the course of the proceedings restraint and receivership orders were made against them under the Criminal Justice Act 1988. The son was convicted but the father was acquitted. The receiver used some of the proceeds of the fathers assets to cover his legal costs and expenses. The father claimed to recover this sum from the receiver by way of costs but, as Aldous LJ observed, the claim was really a claim for compensation dressed up as an application for an award of costs. The Court of Appeal held that the receiver was entitled to charge his costs and expenses against the assets in receivership but added that no argument had been addressed to the court about possible breach of A1P1. An argument based on A1P1 was raised in Hughes v Customs & Excise Commissioners [2002] EWCA Civ 734, [2003] 1 WLR 177. Nicholas Hughes was charged with VAT fraud. Nicholas was the joint owner of a company with his brother Timothy, each holding 50% of the shares. Timothy was never charged. A restraint and receivership order was made against Nicholas, preventing the company from dealing in any way with its assets. Nicholas was acquitted but the assets of the company were used to meet the receivers costs and expenses. The Court of Appeal held that there was no breach of A1P1. Simon Brown LJ said: 55. I entirely accept that an acquitted (or indeed unconvicted) defendant must for these purposes be treated as an innocent person I cannot accept, however, that for this reason it must be regarded as disproportionate, still less arbitrary (another contention advanced by the respondents), to leave the defendant, against whom restraint and receivership orders have been made, uncompensated for such loss as they may have caused him unless, of course, by establishing some serious fault on the prosecutors part he can bring himself within the strict requirements of section 89. 56. It is common ground that acquitted defendants are not, save in the most exceptional circumstances, entitled to compensation for being deprived of their liberty whilst on remand or indeed for any other heads of loss suffered through being prosecuted. In my judgment it is no more unfair, disproportionate or arbitrary that they should be uncompensated too for any adverse effects that restraint and receivership orders may have had upon their assets. As to the position of Timothy, Simon Brown LJ said at para 58 that the court should be astute, wherever possible, to protect the rights and interests of third parties, but that it was difficult to regard this legislation as riding roughshod over the rights of innocent third parties. In that case Timothys interest in the company was inextricably tied up with that of his brother and there was no suggestion that the order was not properly made. Hughes was cited with approval in Capewell, but not on this point because in Capewell there was no argument about A1P1. In Capewell, a receivership order was properly made against the defendant under section 77(8) of the Criminal Justice Act 1988. The known assets of the defendant comprised some properties, some cars, some bank accounts and an unincorporated financial services business. The order provided for the receivers remuneration and expenses to be taken from the receivership assets. The receivership order was made on 30 January 2003. After about a year an application was made by the defendant for the discharge of the receiver. The application was heard by Lindsay J in April 2004 and was dismissed. The defendant appealed against that decision. While the case was pending in the Court of Appeal, a fresh application was made for the discharge of the receivership, which on this occasion was not opposed by the receiver. On 13 October 2004 Davis J ordered that the receiver be discharged on the pragmatic grounds that all the parties agreed that the expenditure and sums involved mean it simply does not make sense for the receiver to continue in office. The defendant continued with his appeal against the dismissal of his earlier application, and the Court of Appeal held that Lindsay J had misdirected himself in his approach to that application. The court found it difficult to assess how matters would have proceeded if the judge had asked himself the correct questions but it inferred that the date of discharge would have been likely to have been brought forward and, doing the best it could, it estimated that the likely date of discharge would have been 1 June 2004. The defendant submitted that the Revenue and Customs (who had obtained the order) should be responsible for the receivers remuneration and expenses for the period of four and a half months from 1 June 2004 to the date when the receivership order was discharged. The Court of Appeal considered that this would be just, and that it had power to make such an order under a recently introduced provision of the Civil Procedure Rules. The issue before the House of Lords was whether the relevant rule, CPR r 69.7, gave the court such power. The House of Lords held that the new rule did not introduce a fundamental change in the general law of receivership or in the position of receiverships under the 1998 Act or other comparable statute powers. As a further reason for reversing the Court of Appeals decision, Lord Walker observed at para 27 that a receiver takes on heavy responsibilities when he accepts appointment, and he is entitled to the security of knowing that the terms of his appointment will not be changed retrospectively, even if an appellate court later decides that the receivership should have been terminated at an earlier date. The issue for the House of Lords was therefore narrow. It was not disputed that the assets had been properly put into the hands of the receiver and there was no suggestion of a possible violation of A1P1. In Sinclair v Glatt [2009] EWCA Civ 176, [2009] 1 WLR 1845 the defendant was convicted of money laundering offences. In the course of the proceedings a restraint and receivership order was made against him relating to assets including properties of which he was the legal owner. The defendants former wife intervened claiming to be the beneficial owner of certain property and her claim was upheld. The receivership order was held to have been properly made, because the defendant was the legal owner of the property, and the Court of Appeal upheld the receivers claim to be entitled to a lien over it for his remuneration, costs and expenses. There was no argument about A1P1, but Elias LJ said obiter at para 42 that, given the potential injustice of the operation of the principle that the receivers can recover their costs and expenses from the receivership assets, he would not rule out the possibility that in an appropriate case A1P1 could limit the costs and expenses recoverable from an innocent third party. He added that he did not read the judgment of the Court of Appeal in Hughes as excluding that possibility. European Case Law Mr Perry relied on a number of cases in which the Strasbourg Court held that interim restraints imposed on a defendants liberty or use of his property in the course of criminal proceedings did not contravene the Convention or A1P1. Mr Jones submitted that these decisions were distinguishable and he referred to other decisions of the court about the general interpretation of A1P1 in support of his case. In Sporrong and Lonnroth v Sweden (1982) 5 EHRR 35 the Strasbourg Court was sharply divided over the proper interpretation of A1P1. A forceful minority judgment favoured holding that the second paragraph (beginning The preceding provisions shall not, however, in any way impair the right of a State. ) qualified the whole of the first paragraph. The majority held that A1P1 contains three separate and distinct rules. The first rule, expressed in the first sentence, is a rule of general application which recognises every persons right to peaceful enjoyment of his possessions. The second rule, in the second sentence, deals with measures which deprive a person of his possessions. Deprivation is permissible if, but only if, it is in the public interest and subject to the conditions provided for by law and by the general principles of international law. The third rule deals with the states power to enforce laws controlling the use by a person of his property but is not relevant to cases of deprivation of property, which are governed by a combination of rules 1 and 2. The court also stressed, at para 69, that for the purpose of deciding whether there has been a breach of the first rule, the Court must determine whether a fair balance was struck between the demands of the general interest of the community and the requirements of the protection of the individuals fundamental rights. The search for this balance is inherent in the whole of the Convention and is also reflected in the structure of article 1. In James v United Kingdom (1986) 8 EHRR 123, para 37, the court clarified what it meant by A1P1 comprising three distinct rules. The court said that the three rules were not distinct in the sense of being unconnected. The second and third rules were concerned with particular instances of interference with the right to peaceful enjoyment of property and were therefore to be construed in the light of the general principle clearly enunciated in the first rule. The court rejected an argument that the public interest test in the deprivation rule is satisfied only if the property is taken for the use or benefit of the public at large. It held that a taking of property effected in pursuance of legitimate social, economic or other policies may be in the public interest; that the margin of appreciation open to a national legislature in implementing social and economic policies is a wide one; and that the court will respect its judgment as to what is in the public interest unless that judgment is manifestly without reasonable foundation (paras 39 to 45). However, in order for a taking of private property to be compliant with A1P1, not only must the measure under which the property is taken pursue a legitimate aim in the public interest, but there must be a reasonable relationship of proportionality between the means employed and the aim sought to be realised. The court in James repeated its statement in Sporrong that a fair balance must be struck between the demands of the general interest of the community and the requirements of the protection of the individuals fundamental rights, and it added that the requisite balance will not be found if the person concerned has had to bear an individual and excessive burden (para 50). The court held that the requirement in the deprivation rule that the taking must be in accordance with the general principles of international law does not apply to a taking by a state of the property of its own nationals (para 66). However, the court stated that the requirement that any taking shall be subject to the conditions provided for by law refers not merely to municipal law but relates also to the quality of the law, requiring it to be compatible with the rule of law and not arbitrary (para 67). In Lithgow v United Kingdom (1986) EHRR 329 the court held that the phrase subject to the conditions provided for by law requires the existence of and compliance with adequately accessible and sufficiently precise domestic legal provisions (para 110). As to the need for a reasonable relationship of proportionality between the means employed and the aim sought to be realised, and the requirement that a balance must be struck between the general interest to the community and protection of the individuals fundamental rights, it said that the taking of property without reasonable compensation would normally constitute a disproportionate interference (paras 121 to 151). The cases of Sporrong, James and Lithgow contain important statements of general principle (as this court recognised in AXA General Insurance Ltd v HM Advocate [2011] UKSC 46, [2012] 1 AC 868), but they were not cases of property being taken for purposes connected with criminal proceedings. In that context I come next to the cases on which the receiver and the CPS rely. In Raimondo v Italy (1994) 18 EHRR 237 the applicant was arrested and placed under house arrest on charges relating to his association with the Mafia. As an interim measure some of his property was seized. The proceedings ended in his acquittal. He claimed that the seizure of his property was a violation of his rights under A1P1 but his complaint was dismissed. The court held that the seizure, as a provisional measure intended to ensure that property which appeared to be the fruit of unlawful activities carried out to the detriment of the community could subsequently be confiscated if necessary, was justified by the general interest. In view of the extremely dangerous economic power of an organisation like the Mafia, it could not be said that taking the step of seizing the property at an early stage of the proceedings was disproportionate to the aim pursued. There was an additional complaint that the property was not only seized but confiscated. However, the confiscation order was rescindable and had in fact been rescinded. In practical terms it entailed no additional restriction to the seizure, and therefore the respondent state was held not to have overstepped the margin of appreciation available to it. The acquitted defendant in Andrews (referred to in para 45) took his case to Strasbourg: Application No 49584/99, 26 September 2002. He complained that the use of his assets to cover the receivers legal costs and expenses was a breach of his rights under A1P1 but his complaint was dismissed as manifestly ill founded. The court observed that the applicant had not argued that there was insufficient evidence on which to base the charges made against him; that he had specifically referred to his close involvement with the transport company when declaring his assets; that the proper administration of the affairs of the company was obviously in the applicants own interest; and that he was consulted by the receiver in the monitoring of the company. The court said: Having regard to these considerations, the Court is not persuaded that the applicant was required to bear an individual and excessive burden through having to fund the costs and expenses incurred by the receiver . It is true that the applicant was ultimately acquitted of the charges brought against him. However, it is equally true that at the time of the execution of the Restraint and Receivership Orders there was a case against him which required to be answered, and necessary steps had to be taken to preserve assets in respect of which he had more than a peripheral interest. In these circumstances, and having regard also to the absence of any arbitrariness in the impugned decisions, the Court does not consider that the authorities can be said to have failed to strike a fair balance between the applicants property right and the general interests of the community. The government in Andrews accepted that there had been an interference with the applicants right to the peaceful enjoyment of his property. The applicant argued that there had been a deprivation of his property within the meaning of the second sentence of A1P1. The court considered that the initial seizure had been an exercise of control over the use of the property, in order to ensure that it would be available for payment of revenue owed by him in the event of his conviction, and that payment of the receivers costs out of the property should be regarded as part of the exercise by the state of the rights reserved to it under the second paragraph of A1P1 and therefore served a legitimate aim. I have no difficulty with the courts view that there was a legitimate aim, but that is different from the question whether there was a deprivation of assets. The court seems to have regarded the payment of the receiver as money spent on the preservation of the applicants property and therefore not a deprivation; in other words, expenditure of funds for the benefit of the property was not to be regarded as a deprivation. That would account for the courts emphasis on the fact that the proper administration of the affairs of the company was obviously in the applicants own interest and that he was consulted by the receiver in the monitoring of the company. If so, that was a conclusion on the particular facts of that case, rather than a principle of law of general application, and its relevance was to the courts judgment about whether the applicant was required to bear an individual and excessive burden. In Benham v United Kingdom (1996) 22 EHRR 293 the applicant was committed to prison by a magistrates court for non payment of a community charge. The Divisional Court held on appeal that the magistrates had been wrong to do so. The applicant complained that his imprisonment was a violation of his rights under article 5 and that he had an enforceable right to compensation under article 5(5). The Strasbourg Court rejected his complaints. It held that his detention had been lawful within the meaning of article 5 because it was carried out pursuant to a court order. The subsequent finding that the court had erred under domestic law in making that order did not retrospectively affect the validity of his period of detention. His detention had not been arbitrary. There was no suggestion that the magistrates had acted in bad faith or that they had not attempted to apply the relevant legislation correctly. The law which the magistrates had to apply was not straightforward. Their decision had been erroneous but they had acted, albeit mistakenly, within their lawful jurisdiction. By contrast, in Frizen v Russia (2005) 42 EHRR 388 the Court held that a confiscation order made by a Russian criminal court was unlawful and involved a violation of the applicants rights under A1P1. The husband was convicted of fraud. She was not herself charged with any criminal offence. After his conviction the court made a confiscation order in respect of her husbands property and it included in the confiscation order a vehicle which the applicant maintained had been bought from money which she had borrowed and belonged to her. However, it failed to identify any legal basis justifying the confiscation. Judgment of Underhill J Quoting from the judgment of Simon Brown LJ in Hughes, Underhill J said that the essential questions arising under A1P1 were whether the measures taken were (i) in the public interest, (ii) appropriate for achieving their aim, (iii) proportionate and (iv) achieved a fair balance between the demands of the general interest of the community and the requirements of the protection of the individuals rights. He concluded that it would be a breach of the companies rights under A1P1 if they had ultimately to bear the burden of the receivers costs and expenses. Underhill J distinguished Hughes on the grounds that in that case the order had been properly made, notwithstanding the eventual acquittal (or non prosecution) of the alleged defender, and the adverse affects on the third party were the consequence of his having the misfortune to share an interest in property with someone reasonably suspected of involvement in serious crime. Underhill J continued: But the situation seems to me fundamentally different where the adverse effect on the third party is the result not of his sharing property rights with the alleged offender but of his property being treated, wrongly and without sufficient evidence, as property in which the alleged offender has an interest. It does not seem to me that the public interest justification endorsed in Hughes has any application to such a case: the third partys assets are simply confiscated to fund the execution of an order that should not have been made in the first place. Underhill J referred to some remarks in Sinclair v Glatt which could be taken as suggesting that an adverse impact on a third party might be disproportionate in the case of a stranger but justifiable where the parties were sufficiently closely associated. He noted that in the present case there was a close connection between the companies and the alleged offenders, and that it might be the case (as yet unproved) that the companies had been used to some extent in carrying out the alleged offences. He accepted that where the third party and the alleged offender shared an interest in property the nature of their association might be relevant in deciding whether the third party should bear the resulting cost of the receivership, but he regarded the case as different where the third partys property was unequivocally his own and there was no basis for a receiver being appointed over it. If there was sufficient ground for believing that the companies themselves were not innocent in relation to the alleged offending, the right course in his view was for the companies to be treated as alleged offenders in their own right. Underhill J went on to consider the position of the receiver and the CPS. He observed that to deny the receiver his remuneration would be an unacceptable way of vindicating the companies rights and would involve remedying one injustice only by creating another. The receiver took charge of the companies assets as an officer of the court, and incurred expenditure and liabilities on the faith of a court order which was valid and effective until discharged by the Court of Appeal. He had no responsibility for the fact that the order was wrongly made and it would be intolerable that he should not be entitled to be paid, from one source or another, his proper fees and expenses. Underhill J considered that section 3 of the Human Rights Act 1998 enabled him to interpret POCA as giving the court the right, in circumstances such as those of the present case, to order that the receivers remuneration and expenses be paid by the CPS. On that basis he ordered the CPS to pay the receivers remuneration and legal costs (subject to an assessment by the taxing authority of the Crown Court). Judgment of Mitting and Edwards Stuart JJ The majority of the Court of Appeal began by noting that it was settled law at Strasbourg that A1P1 comprises three distinct rules (Sporrong). Since the receivers application to use the assets of the company to meet his remuneration and expenses involved a taking and not merely an interference with the use of the companies property, the relevant rule was the second rule, contained in the second sentence of A1P1. The majority correctly noted that the general principles of international law were irrelevant for present purposes. The question was whether depriving the companies of their assets for the purpose of paying the receiver would meet the requirements of being in the public interest and subject to the conditions provided for by law. The majority concluded that the proposed taking of the companies assets would not comply with the conditions required by law. Their reasoning process was as follows: 1) Before assets could properly be made the subject of a receivership order, there must be reasonable cause to believe that the alleged offender had benefited from his criminal conduct (section 40(2)(b) of POCA) and there must be a good arguable case for treating particular assets as the realisable property of the defendant (CPS v Compton). 2) The first condition was not satisfied on either 6 or 23 December 2010 and the second was not satisfied on 23 December 2010. 3) It was true that deprivation of the companies property to pay the remuneration and expenses of the receiver was authorised by law in a superficial sense, in that it is a settled principle of receivership law that a receiver is entitled to be paid his remuneration and assets out of the assets he is appointed to receive and manage. 4) However, that proposition was subject to an important caveat: the conditions upon which a restraint order may be made and a receiver appointed must first be satisfied. If they are not, there is no lawful basis for the appointment of a receiver in respect of property belonging to an alleged offender, still less property belonging to a third person. 5) In order to determine the issue of lawfulness for the purpose of the second rule under A1P1, the court must look to the underlying lawfulness of the receivers appointment. 6) The bare fact that the receiver had been appointed by order of a court was not sufficient to authorise the deprivation: Frizen v Russia. The majority held, in agreement with Laws LJ, that Underhill J had been wrong to hold that POCA could be interpreted in such a way as to give the court power to order the receivers remuneration and expenses to be paid by the CPS. They recognised the unsatisfactoriness of the outcome, since the receiver had been appointed by the court, on the application of the CPS, had undertaken work and incurred expenses in the legitimate understanding that he would be rewarded and recompensed out of assets identified by the CPS. Their judgment left open the possibility that the receiver might have a common law remedy, but they did not elaborate on this, presumably because the point had not been developed in argument. Judgment of Laws LJ Laws LJs analysis began logically with domestic law. The setting aside of the receivership order by the Court of Appeal did not render the order under which the receiver was appointed a nullity ab initio. The Crown Court order had the force of law until it was set aside and the setting aside of the order did not retrospectively deprive the receiver of his right to remuneration under it. As Laws LJ pithily put it, The Crown Courts order is therefore good until set aside; and this is so whatever the basis on which it is set aside. The terms of the receivers appointment and his remuneration, costs and expenses were within the courts power to order (under section 49(2)(d) and the criminal procedure rules), and they entitled the receiver to recover his proper remuneration and expenses out of the companies assets. Laws LJ disagreed with the majoritys interpretation of the conditions provided for by law under A1P1. The conditions provided for by law were soundly constituted by (i) the material provisions of POCA, (ii) the order made by the Crown Court on 6 December 2010, (iii) the common law rule that the orders of a superior court of record are good until set aside and (iv) the common law rule that a receiver is entitled to be paid his remuneration and expenses out of the assets he is appointed to receive and manage, which gave a long standing historic context to the orders effect and vindicated the principle of legal certainty. Laws LJ went on to consider the requirement of proportionality. He cited Raimondo as an authority showing that statutory regimes of seizure and confiscation by the state may well be justified under A1P1 for the prevention of crime and that the Strasbourg Court will allow a margin of appreciation to the state. There could be no argument as to the POCA regimes legitimate aim, which was to preserve property for the satisfaction of confiscation orders made to strip criminals of the fruits of their crime. The Act constituted the judgment of Parliament as to how a fair balance between the demands of the general interest of the community and the requirements of the protection of the individuals right should be struck in this area. Parliaments judgment leant heavily towards the general interest, although there are careful, but limited, protections for the individual (notably in sections 61 and 72). Given the respect owed by domestic courts, and the Strasbourg Court, to Parliaments judgment as to how the balance between general interest and private right was to be struck, Laws LJ considered that A1P1 would only very rarely be violated on proportionality grounds by the effects of a receivership order. This was not in his judgment such a case. On Laws LJs approach to A1P1, the question of the courts power to order recovery of the receivers remuneration and expenses against the CPS would not have arisen, but he addressed it in view of the decision of the majority on the A1P1 issue. He noted that no express provision of POCA gave the court any such power. The question was whether section 3 of the Human Rights Act allowed the court to interpret or read down the statute so as to find such a power. There was no provision in the Act which might be amenable to that process of interpretation, and the policy of the statute was that the receivers right to recover his expenses from the receivership properly applied in every instance (unless different arrangements were made by contract). In those circumstances he concluded that there was no power in the court to make an order against the CPS. A1P1: discussion Since the present case involves deprivation of the companies assets, and not merely control of their use, the Court of Appeal identified the second of Sporrongs three rules as the key provision: 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]. As the court recognised, the reference to international law is irrelevant in the case of a taking by a state of the property of its own nationals. The critical questions are those addressed by Laws LJ: (1) whether the proposed taking is in accordance with conditions provided for by law; (2) if so, whether the measure relied upon to justify the taking has a legitimate aim; (3) if the first and second conditions are each satisfied, whether the taking strikes a fair balance between the general interest of the community and the requirements of the protection of the companies right to peaceful enjoyment of their possessions. On the question of lawfulness, Mr Jones submitted that the majority of the Court of Appeal were right in their analysis (summarised in para 71 above). Mr Perry and Mr Parroy submitted that the majority were wrong and that Laws LJ was correct in his analysis (summarised at paras 73 to 75 above). On this issue I agree with Laws LJ for the reasons given by him and I cannot improve on his analysis. Mr Jones sought to uphold the approach of the majority by reference to the observations of the Strasbourg Court in James at para 67 (referred to at para 58 above) to the effect that the expression the conditions provided for by law in A1P1 refers not merely to municipal law but also to the quality of the law. The point which the Strasbourg Court was making was that the relevant conditions must comply with the rule of law in terms of clarity, accessibility and lack of arbitrariness. The relevant provisions of POCA together with the common law of receivership (the Criminal Procedure Rules) amply satisfy the requirements of the rule of law. Frizen v Russia, on which Mitting and Edwards Stuart JJ placed some reliance, was not a comparable case because the state in that case was unable to identify any provision of domestic law under which the order had been made. Laws LJ was plainly right that as a matter of domestic law the appointment of the receiver was valid until the Court of Appeal set aside the order appointing him. Under domestic law the Crown Court had power to order that the receivers remuneration and expenses should be taken from the assets placed in his control. The setting aside of the receivers appointment did not retrospectively affect his entitlement to be paid out of those assets for his proper remuneration and expenses during the period of the receivership. Next, Mr Jones submitted that the measure relied on to justify payment of the receivers remuneration and expenses out of the assets of the companies was not in the public interest because it lacked a legitimate aim. Its aim, he submitted, was to enable the state to place the cost of an order which ought never to have been made on to the person against whom it was made, and that this was not a legitimate purpose. However, that is to start at the wrong end. It is to deduce the aim by reference to the result rather than to look at the measure itself in order to see what is its true aim. The safety valve against a measure with a legitimate aim being relied upon to produce an unjustifiable result is the separate requirement of proportionality. The Strasbourg Court has adopted a generous approach to the public interest test, allowing a wide measure of appreciation to a national legislature in determining what it considers to be in the public interest (see James, referred to at para 56 above). The aim of the legislature in enabling the court to appoint an interim receiver under section 48 was to preserve property pending the conclusion of criminal proceedings and the possible making of a confiscation order. A professional receiver would have to be paid, and the purpose of allowing the court to apply the usual common law principle as to the payment of receivers was to enable the receivership to operate like any other. I agree with Laws LJ it was open to Parliament to form the judgment that this would serve the legitimate public interest in combatting crime by making it unprofitable. The critical question is whether in the circumstances of the present case an order that the receivers costs and expenses should be met out of the companies assets is disproportionate, in that it would not achieve a fair balance between the interest of the community and protection of the companies right to their own property. I start from the position that the taking of property without compensation will normally be a disproportionate interference with a persons A1P1 rights. Although this was said in a case about compulsory purchase, it is a general principle, but it is only a starting point. To give an obvious example, a confiscation order under POCA is a taking of property without compensation, but it is done for the salutary purpose of depriving a criminal of the proceeds of his crime. A restraint order and receivership order may also be proportionate if reasonably ancillary to that process. In Andrews the Strasbourg Court judged that it was not disproportionate that the costs of a receivership should be taken from the assets of the defendant notwithstanding his ultimate acquittal. However, in its reasoning the Court highlighted the fact that there was a case against the applicant, which required to be answered, and that necessary steps had to be taken to preserve assets in which he had more than a peripheral interest. Sometimes too it may happen that an innocent third partys affairs are so intermingled with the defendants as to give reasonable cause to believe the defendant to be the owner of assets which are ultimately found to belong to a third party, but that is not the present case. In this case, the companies were neither defendants nor was there reasonable cause for regarding their assets as the assets of the defendants on the evidence before the court at the time when the receivership order against them was made effective (14 December 2010). Whilst those facts did not make the receivership order legally invalid under domestic law during the period until it was set aside, they are the cornerstone of the companies argument that it would be disproportionate and unfair to require them to pay the costs of the receivership. Mr Perry and Mr Parroy submitted that although it must now be accepted that the receivership order ought never to have been made, the court should adopt a similar approach to that of the Strasbourg Court in Benham (referred to in para 62 above). In that case the applicant was imprisoned under an order which ought not to have been made, but the matter was complex and the magistrates acted in good faith. It was held that there was therefore no breach of article 5. By parity of reasoning it was argued that the court should conclude that to require the companies to bear the costs of the receivership would not infringe A1P1, because (as is true) the order under which the receiver seeks to recover his remuneration and expenses from the companies was made by the Crown Court in good faith and the matter was complicated. Simon Brown LJ drew a similar analogy between article 5 and A1P1 in Hughes, referred to at para 46 above, when he said that it was no more unfair, disproportionate or arbitrary that an acquitted defendant should be uncompensated for any adverse effects of a restraint or a receivership order than that he should be uncompensated for loss of liberty whilst on remand. I am not persuaded that the analogy is apt. It is true that a remand in custody and the appointment of a management receiver are both forms of interim restraint and both may cause the individual to suffer financial loss as a side effect, but it is not right simply to lump together different forms of loss and assume that the Convention applies in the same way to them all. If the companies were claiming to recover trading losses resulting from the impact of their business being put into the hands of the receiver, it would be a claim for loss by interference with their property, to which the third rule in Sporrong would apply. It could be said that there would be an analogy between a claim for that kind of loss and a claim for loss resulting from the interim detention of the individual. I see the argument that it would be strange that a person who is remanded in custody and whose property is made the subject of a restraint and receivership order should be disentitled to claim for the loss of earnings resulting from his personal detention but might be entitled to claim for loss of trading opportunities resulting from the restraint on his property. I see also the argument that it might have a chilling effect on prosecutors if they faced the prospect of possibly having to make good trading losses during the period of a receivership, which might be considerable but would be hard to estimate and over which the prosecution would have no control. However, the court is not considering a claim of that kind. The companies are resisting an application by the receiver to take his expenses and remuneration out of their companies assets. It is quite different from a claim for compensation for a period of remand in custody. If one wanted to find an analogy with a defendant remanded in custody, the nearest equivalent would be if the assets of the defendant were sought to be used to defray the costs of detaining him and the legal proceedings. The important point for present purposes is that whereas incidental loss (such as trading loss) which a person may suffer as a by product of an interim restraint would come under the third rule in Sporrong, as loss resulting from the states interference with the property, the Court of Appeal were right to identify the second rule as the relevant rule in this case because it concerns a proposed taking of the companies assets. In support of their argument for regarding the taking as a proportionate measure, Mr Perry and Mr Parroy drew attention to the protections for the individual which are built into the relevant part of POCA, including particularly section 49(8), set out in para 34 above. Under that subsection the court must not activate any power given to the receiver to manage the property, or realise assets for the purpose of meeting his remuneration and expenses, until any person holding an interest in the property has had a reasonable opportunity to make representations. That provision is designed to minimise the risk of the court making a wrongful order such as was made in this case, but I do not see that a taking is rendered proportionate by the existence of a protective provision which failed to operate as it should. Indeed the opposite could be argued. This case is distinguishable from Raimondo, Andrews, Hughes, Capewell and Sinclair v Glatt, because all those cases were decided on the premise that the original receivership order was rightly made. In Sinclair v Glatt the applicant was not the defendant, but the relevant property was in the defendants legal ownership and was therefore held to be properly included in the receivership order. In the present case, however, not only were the companies not defendants, but at the time when the receivers powers were activated there was no reasonable cause to believe that their assets were assets of the defendants. The question is whether on those facts it strikes a fair balance between the general interest of the community and the protection of the companies rights to the peaceful enjoyment of their property that the companies assets should be taken to pay for the costs and remuneration of the receiver. At this point I part company with Laws LJ and agree with Underhill J that this would not be a fair balance. As Lord Reed observed in AXA General Insurance Ltd v HM Advocate at para 128, the assessment of proportionality requires careful consideration of the particular facts. In this instance there was no good arguable case for assimilating the companies assets with those of the defendants, and Underhill J aptly described it as simply a confiscation of a third partys assets to fund the execution of an order that should not have been made in the first place. In Capewell Lord Walker at para 25 described the relationship between the general law of receivership and the detailed provisions of the Criminal Justice Act 1988 (for which one must now substitute POCA) as somewhat opaque. Section 49(2)(d) empowers the court to authorise the receiver to realise so much of the property as is necessary to meet his remuneration and expenses in accordance with the ordinary law of receivership. However, the court as a public authority must not exercise its power in such a way as to breach the companies rights under A1P1. At the same time a real difficulty arises from my conclusion that the companies rights would be violated if the receivers application to use their assets to meet his remuneration and expenses were granted (and similarly if he were permitted to retain money already taken by him, subject to any further evidence and submissions for which Underhill J gave permission in his order referred to in para 4(iii) above). Nobody on the hearing of this appeal has disputed the courts jurisdiction not only to set aside the receivership order (as has happened) but to refuse the receivers application, if it concludes as I do that it would involve a violation of the companies A1P1 rights, but Underhill J correctly recognised that simply to refuse the application would replace one injustice with another. As Lord Walker said in Capewell, a receiver who accepts appointment by a court is entitled to know that the terms of his appointment will not be changed retrospectively. Moreover it is an ordinary part of receivership law that a receiver has a lien for his proper remuneration and expenses over the receivership property. To take away that right without compensating him would violate the receivers rights under A1P1. Unless it is within the power of the court to ensure that the receiver receives his recompense for which the lien is a security by some other means, the court will be left in the invidious position of violating the companies A1P1 rights if the receivers application is allowed and violating the receivers A1P1 rights if it is refused. That leads to the question whether the court has power to order that the receivers proper remuneration and expenses should be paid by the CPS. Relationship between the receiver and the CPS I agree with the Court of Appeal that it is not possible to locate within POCA a power to order the CPS to pay the receivers remuneration and expenses. Underhill J did not identify how this might be done and Mr Perry was not able to do so. Adopting an alternative approach suggested by the court, Mr Perry argued that the receiver was induced to accept his appointment on the promise or expectation of being able to recoup his expenses and remuneration from the property over which he was appointed to act, although the receiver accepted the financial risk that those assets might be of insufficient value. The terms on which the CPS asked the receiver to agree to act were set out in the letter to which I have referred. The relevant provisions are set out in paras 19 and 20. The letter included the statement that the receiver would have a lien over the defendants assets and that the CPS did not undertake to indemnify him if those assets were insufficient. The appointment by the court was made on the terms of the agreement between the CPS and the receiver, and the receivership assets included the assets of the company which were expressly included in the terms of the court order. The effect of my conclusion on A1P1 is that the lien is unenforceable. There is an argument that the statement you will have a lien over the defendants assets for payment of your fees should be interpreted as a promise that the receiver would have a legally enforceable lien over the receivership property, whatever its value might be, but to resort to that solution would involve a strained and artificial construction of the letter. The alternative is that the CPS made no such promise to the receiver, but that this was their mutual expectation and was the premise on which the receiver agreed to act. If the latter is the preferable analysis, does the receiver have a remedy against the CPS under the law of restitution or unjust enrichment? The current preference among scholars of the subject is to call it unjust enrichment rather than restitution. An example is the renaming of Goff and Jones seminal textbook. The first seven editions were entitled The Law of Restitution but the title of the eight edition (2011) has been changed to The Law of Unjust Enrichment. What matters is the content, and the words unjust and enrichment are both in some respects terms of article Enrichment requires the obtaining of a benefit, which may include the provision of services, as correctly stated by Professor Andrew Burrows in his Restatement of the English Law of Unjust Enrichment, 2012, at p 7. The CPS plainly perceived that there would be benefit to the public in the companies assets being removed from their control and placed in the hands of an independent receiver while its criminal investigation was proceeding. As to the unjust element in an unjust enrichment claim, I agree with the following overview in the current edition of Goff and Jones at para 1 08: the unjust element in unjust enrichment is simply a generalisation of all the factors which the law recognises as calling for restitution [a citation from the judgment of Campbell J in Wasada Pty Ltd v State Rail Authority of New South Wales (No 2) [2003] NSWSC 987 at [16], quoting Mason & Carter, Restitution Law in Australia (1995), 59 60]. In other words, unjust enrichment is not an abstract moral principle to which the courts must refer when deciding cases; it is an organising concept that groups decided authorities on the basis that they share a set of common features, namely that in all of them the defendant has been enriched by the receipt of a benefit that is gained at the claimants expense in circumstances that the law deems to be unjust. The reasons why the courts have held a defendants enrichment to be unjust vary from one set of cases to another, and in this respect the law of unjust enrichment more closely resembles the law of torts (recognising a variety of reasons why a defendant must compensate a claimant for harm) than it does the law of contract (embodying the single principle that expectations engendered by binding promises must be fulfilled). An important part of this branch of law is concerned with cases where money is paid or benefits are conferred for a consideration which has failed. Burrows Restatement at p 86, accommodates this within the concept of unjust enrichment by stating that a defendants enrichment is unjust if the claimant has enriched the defendant on the basis of a consideration that fails. Confusion is sometimes caused by the fact that the term consideration, when used in the phrase failure of consideration as a reason for a restitutionary claim, does not mean the same thing as it does when considering whether there is sufficient consideration to support the formation of a valid contract. Viscount Simon LC explained this in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32, 48: In English law, an enforceable contract may be formed by an exchange of a promise for a promise, or by the exchange of a promise for an act . but when one is considering the law of failure of consideration and of the quasi contractual right to recover money on that ground, it is, generally speaking, not the promise which is referred to as the consideration, but the performance of the promise. To avoid this confusion, Goff and Jones suggest, at paras 12 10 to 12 15, that the expression failure of basis is preferable to failure of consideration because it accurately identifies the essence of the claim being pursued. Whichever terminology is used, the legal content is the same. The attraction of failure of basis is that it is more apt, but failure of consideration is more familiar. Failure of basis, or failure of consideration as it has been generally called, does not necessarily require failure of a promised counter performance; it may consist of the failure of a state of affairs on which the agreement was premised. A succinct summary of the meaning of failure of consideration was given by Professor Birks in his An Introduction to the Law of Restitution (1989), p 223 (cited with approval by the Court of Appeal in Sharma v Simposh Ltd [2011] EWCA Civ 1383, [2013] Ch 23, para 24): Failure of the consideration for a payment . means that the state of affairs contemplated as the basis or reason for the payment has failed to materialise or, if it did exist, has failed to sustain itself. In the present case the receiver has lost his lien. Professor Birks reference to failure of the consideration for a payment would apply equally to failure of the consideration for the provision of services. The present case involves both; the receiver made payments for the protection of the receivership property (in particular by the employment of security guards) and also provided professional services for which he seeks remuneration. The point that a failure of consideration may consist of the failure of a non promissory event or state of affairs is reiterated in Burrows Restatement at pp 86 87. He states that consideration which fails may have been an event or a state of affairs that was not promised, and he cites the decision of the High Court of Australia in Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 as an example of a failure of a non promissory condition as to the future. Rothmans were licensed to act as wholesalers of tobacco products under a New South Wales statute. They sold products to retailers for a price including licence fees, which were in reality a form of indirect taxation, payable by Rothmans to the New South Wales government. The Act imposing that liability on Rothmans was held by the High Court to be unconstitutional. The retailers then sued Rothmans to recover the amounts which they had paid in respect of the tax which had until then been unlawfully imposed on Rothmans. The retailers argued unsuccessfully that there was an implied agreement under which they could claim repayment of any unpaid tax. This argument was described in the leading judgment of Gleeson CJ, Gaudron and Hayne JJ, as artificial and unconvincing (para 20). However, the retailers succeeded in restitution. Gleeson CJ, Gaudron and Hayne JJ, stated at para 16 that Failure of consideration is not limited to non performance of a contractual obligation, although it may include that. They also rejected Rothmans argument that the restitution claims failed because there had not been a total failure of consideration, by interpreting the consideration for the total payments made by the retailers as containing severable parts. Gummow J (concurring), in a passage at para 72 with which I agree, advocated caution in judicial acceptance of any all embracing theory of restitutionary rights and remedies founded upon a notion of unjust enrichment. To the lawyer whose mind has been moulded by civilian influences, the theory may come first, and the source of the theory may be the writing of jurists not the decisions of judges. However, that is not the way in which a system based on case law develops; over time, general principle is derived from judicial decisions upon particular instances, not the other way around. After reviewing the authorities Gummow J held, at paras 101 to 102, that failure of consideration in this area of law may include the collapse of a bargain, which need not be contractual in nature. He held at para 104 that there had been no failure in the performance by Rothmans of any promise made by them, but that there had been a failure of consideration in the failure to sustain itself of the state of affairs contemplated as a basis for the payments the appellants seek to recover. Similarly, in the present case the receiver agreed to accept the burden of management of the companies on the basis that he would be entitled to take his remuneration and expenses from the companies assets, and that state of affairs which was fundamental to the agreement has failed to sustain itself. It might nevertheless be argued that there has not been a total failure of consideration, because the restraint and receivership order included assets of the defendants other than the assets of the companies. There is a lively academic debate whether it is an accurate statement of law today that failure of consideration cannot found a claim in restitution or unjust enrichment unless the failure is total, but that point has not been fully argued and it is unnecessary to decide it in this case. Modern authorities show that the courts are prepared, where it reflects commercial reality, to treat consideration as severable. Rothmans itself is an example. Another example cited by Burrows is the decision of the Court of Appeal in D O Ferguson & Associates v M Sohl (1992) 62 BLR 1995. That case involved a building contract which was repudiated by the builders at a time when the works had been partly completed. The contract price was approximately 32,000. At the time when the builders abandoned the site they had been paid over 26,000 and the value of work done by them was about 22,000. It was held that the owner was entitled to claim in restitution for the sum of 4,673, representing the amount by which the sums paid to the builders exceeded the value of the work done. The builders objected that there had not been a total failure of consideration under the contract, since most of the building work had been done, but the court held that there had been a total failure of consideration for the amount by which the builders had been overpaid. In the present case there was a total failure of consideration in relation to the receivers rights over the companies assets, which was fundamental to the basis on which the receiver was requested by the CPS and agreed to act. I use the expression fundamental to the basis because it should not be thought that mere failure of an expectation which motivated a party to enter into a contract may give rise to a restitutionary claim. Most contracts are entered into with intentions or expectations which may not be fulfilled, and the allocation of the risk of their non fulfilment is a function of the contract. But in the present case the expectation that the receiver would have a legal right to recover his remuneration and expenses was not just a motivating factor. Nobody envisaged that the receiver should provide his services in managing the companies as a volunteer; those services were to be in return for his right to recover his remuneration and expenses from the assets of the companies, such as they might be. The agreement between the CPS and the receiver so provided, and that provision was incorporated into the order of the court. I would hold that the CPS fulfilled its contractual obligations to the receiver by ensuring that the order appointing him conformed with the terms of the underlying agreement between them, but that the receiver is entitled to recover his proper remuneration and expenses from the CPS because the work done and expenses incurred by the receiver were at the request of the CPS and there has been a failure of the basis on which the receiver was asked and agreed to do so. Disposal I would uphold the Court of Appeals decision dismissing the CPSs appeal from the refusal by Underhill J to make an order permitting the taking of the companies assets to meet his remuneration and expenses, essentially for the reasons given by Underhill J. I would allow the receivers appeal against the Court of Appeals decision in relation to the CPS and reinstate the order of Underhill J referred to at para 4 above (but for different reasoning). Lessons for the future In the judgment of the Court of Appeal referred to at para 24 above, Hooper LJ deplored the fact that the original application was made at short notice to a judge who was in the middle of conducting a heavy trial and with only a limited time available for considering it. It should be axiomatic that, as he said, an application of this complexity should be listed before a judge with sufficient time to read and absorb the papers and with sufficient time to conduct a proper hearing. The problem was compounded in this case by the lack of proper opportunity which the judge had to consider the evidence lodged by the companies before he made the critical decision to implement the receivers powers. When the CPS is proposing to seek a restraint order, and particularly a restraint order coupled with a receivership order, it should give as much advance notice to the listing office as it reasonably can, together with a properly considered estimate of the time likely to be required for pre reading and for the hearing of the application. If other trials are not to be interrupted, the listing office will need proper time to make the necessary arrangements under the supervision of the resident judge, who may well need to consult the presiding judge and should certainly do so in complex cases, which may merit being heard by a High Court judge. The fact that such applications are made ex parte, and the potential seriousness of the consequences for defendants (at this stage presumed to be innocent) and for potential third parties, mean that there is a special burden both on the prosecution and on the court. Hughes LJ spelt this out plainly and emphatically in In re Stanford International Bank Ltd [2010] EWCA Civ 137, [2011] 1 Ch 33, para 191, in a passage (cited in An Informer v A Chief Constable [2012] EWCA Civ 197, [2013] QB 579, para 71) which I would again repeat and endorse: it is essential that the duty of candour laid upon any applicant for an order without notice is fully understood and complied with. It is not limited to an obligation not to misrepresent. It consists in a duty to consider what any other interested party would, if present, wish to adduce by way of fact, or to say in answer to the application, and to place that material before the judge. That duty applies to an applicant for a restraint order under POCA in exactly the same way as to any other applicant for an order without notice. Even in relatively small value cases, the potential of a restraint order to disrupt other commercial or personal dealings is considerable. The prosecutor may believe that the defendant is a criminal, and he may turn out to be right, but that has yet to be proved. An application for a restraint order is emphatically not a routine matter of form, with the expectation that it will routinely be granted. The fact that the initial application is likely to be forced into a busy list, with very limited time for the judge to deal with it, is a yet further reason for the obligation of disclosure to be taken very seriously. In effect the prosecutor seeking an ex parte order must put on his defence hat and ask himself what, if he were representing the defendant or a third party with a relevant interest, he would be saying to the judge, and, having answered that question, that is what he must tell the judge. I would qualify that only by saying that it is not acceptable that such an application should be forced into a busy list, with very limited time for the judge to deal with it, except in the comparatively rare case of a true emergency application where there is literally no opportunity for the prosecution to give the court sufficient notice for any other arrangement to be made. In that case, the judge will need to consider what is the minimum required in order to preserve the situation until such time as the court has had an adequate opportunity to consider the evidence. A material failure to observe the duty of candour as explained above may well be regarded as serious default within the meaning of section 72 of the Act because of its potential to cause serious harm. Before making an application order for a restraint order, with or without a receivership order, the prosecutor must consider carefully the statutory conditions for making such order. There must be reasonable cause to believe that the prospective defendant has benefited from criminal conduct (section 40(2)(b)) and there must be a good arguable case that the assets which it is sought to restrain must be realisable property held by him. Both conditions require careful thought about who is alleged to have been party to the criminal conduct under investigation. Careful thought must also be given to the potential adverse effect on others who are not alleged to be party to the criminal conduct and possible means of avoiding or limiting it. A judge to whom such an application is made must look at it carefully and with a critical eye. The power to impose restraint and receivership orders is an important weapon in the battle against crime but if used when the evidence on objective analysis is tenuous or speculative, it is capable of causing harm rather than preventing it. Where third parties are likely to be affected, even if the statutory conditions for making the order are satisfied, the court must still consider carefully the potential adverse consequences to them before deciding whether on balance the order should be made and, if so, on what conditions. A judge who is in doubt may always ask for further information and require it to be properly vouched. It is important to remember that under section 49(9) a receivership order may be made subject to such conditions and exceptions as the court specifies. The conditions attached to receivership orders appear to have become largely standard, but the making of a receivership order should never be a rubber stamping exercise. The court has a responsibility to consider what conditions it should contain. In In re Piggott [2010] EWCA Civ 285, para 54, Rix LJ referred to a suggestion made by Wilson LJ in the course of argument that in an appropriate case a management receivership order might be made subject to a special term that, if it should be shown in due course that the property subject to the order was not realisable property of the defendant but wholly in the legal and beneficial ownership of a third party, then the costs of the management receivership should be borne, not by the property, but, in the absence of any other source, by the prosecutor. I attach as an appendix to this judgment a possible form of Piggott condition, for which I am grateful to Lord Wilson. In my view there may indeed be cases in which such a condition would be appropriate, particularly cases in which the court can see the possibility that payment of the receivers expenses and remuneration out of the relevant assets might infringe a persons A1P1 rights. APPENDIX THE PIGOTT CONDITION Order made under s 49(2)(d) of POCA and Crim. PR 60.6(5) (1) Subject to the condition set out in (2) below, the receiver shall, in relation to any property to which the above receivership order is expressed to apply, have powers to realise so much of it as is necessary to meet his or her remuneration and expenses and to recover them out of the proceeds of its realisation. Order made under s 49(9) of POCA (2) The condition referred to in (1) above is that, in the event that it is hereafter determined, whether on appeal or by way of application for variation or discharge of this order, that any property to which the above receivership order is expressed to apply is not arguably held by the defendant and so should not have been made subject to the above receivership order, the powers in (1) above shall not extend to such property and, to the extent that in consequence the said powers do not enable the receiver to recover his remuneration and expenses in full or in part, the applicant for this order do pay him in respect of them. LORD HUGHES I agree that the receivers appeal against the decision of the Court of Appeal should be dismissed, and that he should not, in this case, be entitled to recover his expenses from the third party assets belonging to the companies. I also agree that the receivers appeal should succeed against the CPS. I gratefully adopt the reasons given in Lord Toulsons comprehensive judgment and add only a very few words on the topic of the application of A1P1 to the particular case of receivership orders made under section 48 of POCA as ancillary to a restraint order under section 41. As Lord Toulson explains, an order for the receiver to recover his expenses in the usual way from the assets which he is directed to administer cannot be disproportionate for the reasons held by the majority of the Court of Appeal. The mere fact that an order is set aside on appeal does not mean that it violates the principle of legality; if it did, there would be a breach of one or other of the qualified articles of the ECHR wherever they were engaged and there was a successful appeal. Nor, generally, will there be any question of a restraint or receivership order being disproportionate when made against the assets of a defendant (in which term POCA includes for this purpose an alleged offender under a criminal investigation: see section 40(9)), providing that there is reasonable cause to believe that he has benefited from criminal conduct. When it comes to assets which turn out to belong to a third party, the question whether an order for the receiver to recover his expenses from them is or is not disproportionate will depend on the circumstances. A restraint order under section 41, and thus a receivership order under section 48, must be made against realisable property. Such property is defined in section 83; it consists of free property held by the defendant, or by the recipient of a tainted gift. At the interim stage of an application for either form of order, the true ownership of assets may not be known, especially (but not only) where a defendant has taken steps to obscure the true position. So the test is that a good arguable case exists for believing that the defendant has an interest in them: Crown Prosecution Service v Compton [2002] EWCA Civ 1720. On the findings of the Court of Appeal in February 2011, which were not in question before this court, the present is a strong case of disproportion. There was simply never any proper basis advanced for the contention that the assets of these trading companies were the property of the controlling directors, who were the alleged offenders. The inclusion of the company assets in the restraint and receivership orders was based on nothing more than a bald request to lift the corporate veil. But no proper basis for doing so was advanced. It was not being contended that the companies were suspected of being parties to the crimes under investigation, in which event they would themselves have been alleged offenders and their assets might have been apt for restraint if there were grounds for believing that they had benefited from criminal conduct. The companies were, on the prosecutions own case, businesses with substantial legitimate trading, so there could be no suggestion that they were sham entities concealing true ownership of their apparent assets by the suspected directors. It does not seem to have been suggested that the companies were used to evade the legal responsibility of the directors for any crimes suspected. Nor, on the findings of the Court of Appeal, was there any arguable case that they were being used by the directors to channel the benefits of crime to themselves. Other cases of assets which turn out to belong to third parties must be decided on their own facts. If the original order was made when there was indeed a good arguable case for believing that the defendant under investigation had an interest in them, then the fact that it later turns out that he had none will not normally mean that the usual route for a receiver to recover his expenses is disproportionate to the legitimate aim of confiscation legislation to preserve assets which may be needed to satisfy a confiscation order if conviction ensues. If an order was thus made, it does not seem likely that its subsequent setting aside on grounds such as that ownership turns out to be other than it appeared, or that the expense of receivership is not, on closer inspection, justified, would lead to a finding of disproportion. Underhill Js remarks about the closeness of the connection between the defendant and the third party are, on proper analysis, not independent tests of when an order can be made, but reflect a factor which may well be highly relevant to whether there is a good arguable case for believing that the assets are ones in which the defendant has an interest. I respectfully endorse Lord Toulsons remarks at para 122. Restraint (and occasionally receivership) orders may be very valuable in promoting the aims of POCA, which may otherwise all too easily be evaded by alleged offenders once they know that they are under investigation. But such orders are also capable of causing considerable loss to the holders of assets. Applicant prosecutors, and judges asked to make such orders, need to think constructively and critically about what is being alleged and who is said to be a party to it, and also about the balance between the benefits and the costs of the orders sought.
+The Director of Public Prosecutions (the Director) has power to take over a private prosecution and thereupon to discontinue it. In determining whether to do so, it is his policy to apply certain criteria. This appeal concerns his first criterion, which relates to the strength of the evidence in support of the prosecution. Prior to 2009 the Director asked himself whether the evidence clearly failed to disclose a case sufficient for the defendant to be called upon to answer it. If his conclusion was that it clearly failed to do so, he took over the prosecution and discontinued it; otherwise, and subject to the application of further criteria, he declined to take it over. But in 2009 he changed his policy in relation to the evidential criterion. It became his policy to take over a private prosecution and to discontinue it unless the evidence was such as to render the prosecution more likely to result in a conviction than not to do so. Although one could refer to it as the 51% chance test or the greater than even chance test, I will refer to the current criterion as the reasonable prospect test. The central issue in this appeal surrounds the lawfulness of the Directors current policy. Mr Gujra, the appellant, instituted two private prosecutions. The Director, acting by the Crown Prosecution Service (the CPS), concluded that the evidence in support of them was not such as to satisfy the reasonable prospect test. So, applying his current policy, he took them over and thereupon discontinued them. It is agreed that, had he applied his previous policy, he would not have done so. The appellant applied for judicial review of his decision to do so and, specifically, for an order that it be quashed. On 9 March 2011 the Divisional Court of the Queens Bench Division (Richards LJ and Edwards Stuart J) dismissed the application: [2011] EWHC 472 (Admin), [2012] 1 WLR 254. In this appeal the appellants central contention is that the Directors current policy is unlawful because it improperly restricts the statutory right of a citizen to bring a private prosecution. The first of the appellants private prosecutions was instituted by his laying an information before the Southampton Magistrates Court against two brothers, Mr Imran Mirza and Mr Tamoor Mirza, which led, on 18 August 2010, to the courts issue of a summons against them. By his information, the appellant alleged that on 17 May 2010 the brothers had jointly perpetrated a common assault upon him. His case was and is that he was sitting outside a caf with two friends; that the brothers drove up and got out of the car; that one of them punched him, as a result of which he fell to the ground; and that both of them kicked him. There is no doubt that the police were called; that he complained to them that the brothers had assaulted him; and that the police noticed that he had sustained injuries, albeit that they considered them to be very minor. The second of the appellants private prosecutions was instituted in the same way, before the same court and on the same day, against a third brother, Mr Wajeed Mirza. By his information, the appellant alleged that on 24 May 2010 the third brother had, with intent, used threatening words towards him, thereby causing him alarm, contrary to section 4A of the Public Order Act 1986. His case was and is that the brother approached him while he was sitting in his car; called him a dirty grass and, in reference to his caste, a dirty patra; and threatened to kill him. The appellant promptly consulted solicitors about a possible private prosecution referable to both these alleged incidents; but the police also launched an investigation into the alleged assault. Late in May 2010 the appellant made statements both to his solicitors and to the police. Although to the officer at the scene they had denied having witnessed the alleged assault, his two friends also made statements to his solicitors and to the police, in which they claimed to have witnessed it and, broadly, confirmed the accuracy of his account of it. The appellant referred to the later incident in his statement to his solicitors but not in his statement to the police, who learnt of it only when they received a copy of the former statement. He did not suggest that anyone had witnessed the later incident. In his statements the appellant explained that he had sworn an affidavit in support of a claim in civil proceedings brought by a third party against Mr Imran Mirza and Mr Wajeed Mirza; and he suggested that the incidents had been by way of revenge. Late in July 2010 the police arrested and interviewed the brothers who had allegedly assaulted the appellant. They made no comment and were bailed. Then the police sent the file to the CPS for a decision whether to institute prosecutions. When, on 18 August 2010, the appellant instituted the prosecutions, he and his solicitors were aware that the CPS was still in the course of considering whether itself to institute them. When the CPS learnt of their institution, the focus of its review became whether to take over their conduct in order either to continue or to discontinue them. The review was entrusted to Mr Massey, a senior officer in the Complex Casework Unit of the Wessex CPS. On 22 October 2010 Mr Massey signed a 15 page review of the appellants allegations, together with a further allegation made against all three defendants by one of the appellants two witnesses. In his review Mr Massey set out in detail his reasons for concluding that the evidence in support of each of the two private prosecutions failed to satisfy the reasonable prospect test. In accordance with the current policy of the CPS when taking over a private prosecution, Mr Masseys review was submitted to Miss Levitt QC, its Principal Legal Adviser, who, on 9 November 2010, endorsed his conclusion. The Chief Crown Prosecutor for Hampshire thereupon directed that conduct of the prosecutions should be taken over in order that they should be discontinued. On 16 November 2010 the CPS duly notified the magistrates court pursuant to section 23(3) of the Prosecution of Offences Act 1985 (the 1985 Act) that the Director did not want the prosecutions to continue; and they were thereby discontinued. It also notified the appellant and the three defendants, by their respective solicitors, of the discontinuance. HISTORY The manner in which, over the centuries, public authorities have come to assume responsibility for the vast majority of criminal prosecutions in England and Wales has been characteristically haphazard. Until late in the 19th century prosecutions were brought almost entirely by the victims of the alleged crimes or, if they were dead, by their kinsmen. Local parish constables, not organised on any national or even regional basis and not even paid, sometimes helped the victims to prosecute. By about 1730, if they could afford it, prosecutors and defendants sometimes engaged lawyers to represent them. At around the same time associations of people with a common, sectional, interest in prosecuting particular felonies sprang up in order to conduct prosecutions on behalf of their members. But, as late as 1816, Chitty, in A Practical Treatise on The Criminal Law 1st ed (1816), vol 1, p1 wrote: Criminal Prosecutions are carried on in the name of the King, and have for their principal object the security and happiness of the people in general, and not mere private redress. But as offences, for the most part, more immediately affect a particular individual, it is not usual for any other person to interfere. The Attorney General intervened to conduct only a few prosecutions in very serious or notorious cases. He also had a long standing prerogative power to halt any prosecution in a court of record by entering a nolle prosequi, of which, in modern times, he makes rare use, indeed usually only when he considers that the defendant is unfit to plead. In 1829 came the first step towards putting the police on a statutory, albeit only regional, footing. It was the Metropolitan Police Act of that year (10 Geo 4, c 44) and it established the London Metropolitan Police. It was followed in 1856 by the County and Borough Police Act (19 & 20 Vict, c 69), which required every county and borough to have its own constabulary. This improvement in the organisation of the police seems to have been the spur to their assumption of responsibility for most prosecutions. Technically, however, the prosecuting police officer was just another private prosecutor. From about 1830 onwards there were calls for the introduction of a system of public prosecutions in England and Wales such as had long been established in Scotland and elsewhere. But the Prosecution of Offences Act 1879 (42 & 43 Vict c 22) went only a small way towards it. It established the role of the Director, under the direction of the Attorney General, but in effect it provided for him to institute prosecutions only in cases of importance or difficulty. Part of section 7 provided: Nothing in this Act shall interfere with the right of any person to institute, undertake, or carry on any criminal proceeding. But the Prosecution of Offences Act 1908 (8 Edw 7, c 3) repealed that part of section 7 and, by section 2(3), instead provided: Nothing in the Prosecution of Offences Acts 1879 and 1884, or in this Act, shall preclude any person from instituting or carrying on any criminal proceedings, but the Director of Public Prosecutions may undertake at any stage the conduct of those proceedings if he thinks fit. It is well established, and unchallenged in this appeal, that the power of the Director, first conferred in 1908, to undertake the conduct of a prosecution instituted by a private prosecutor comprises a power to undertake its conduct in order not only to continue it but also to discontinue it. In Gouriet v Attorney General [1978] AC 435, 487, 521 both Viscount Dilhorne and Lord Fraser of Tullybelton referred to his power to discontinue it; and it was formally held to exist in two cases decided shortly thereafter, namely in Turner v Director of Public Prosecutions (1978) 68 Cr App R 70 and in Raymond v Attorney General [1982] QB 839. In January 1981 a Royal Commission on Criminal Procedure, of which the chairman was Sir Cyril Philips, produced a report (Cmnd 8092). Its central recommendation was that there should be a statutory prosecution service for all 43 police force areas in England and Wales, based locally but with national co ordinating features; and that the police should conduct the prosecution (and its preliminaries) only to the point of charge or of the issue of the summons, whereafter the prosecution service should decide whether to proceed and, if so, should assume conduct of the prosecution. There was, so the Commission observed at paras 6.5 and 6.6 of the report, a lack of pattern in the existing prosecuting system in that it was not uniformly organised and administered across the 43 areas, with the result that the arrangements were characterised by variety and haphazardness. Two further recommendations of the Royal Commission deserve note. The first is its recommendation about the minimum strength of the evidence which should justify a prosecution. It noted, at para 8.8, that, where it fell to the Director to decide whether to prosecute, he applied the test whether or not there is a reasonable prospect of conviction; in other words, whether it seems more likely that there will be a conviction than an acquittal. It approved this test and, at para 8.9, recommended that it should be extended to all cases, and applied by all who make the decisions that bring a case to court. Someone should not be put on trial, observed the Commission, if it can be predicted, with some confidence, that he is more likely than not to be acquitted, since it is both unfair to the accused and a waste of the restricted resources of the criminal justice system. The second is the Commissions recommendation for reform of the arrangements for private prosecutions realistically so called, ie prosecutions by private citizens. It recorded at para 7.47, albeit without any clear endorsement of the argument on its part, that the great majority of our witnesses. argue in one way or another that the private prosecution is one of the fundamental rights of the citizen in this country and that it is the ultimate safeguard for the citizen against inaction on the part of the authorities. It recommended, at para 7.50, that: (a) before even instituting a prosecution, a private citizen should ask the prosecution service to undertake it and that, by application of the criteria which it would apply to any other prosecution, the service should decide whether to do so; (b) were it to decline to do so, the citizen should be able to apply to a magistrates court for leave to prosecute it himself; and (c) were the court to grant leave (the criteria for the determination of which the Commission did not identify), the costs of the private prosecution should be paid out of public funds. Subject to its preference for a strong national direction of the proposed new service, the government accepted the central recommendation of the Royal Commission. The result was Parliaments enactment of the 1985 Act, section 1 of which established the CPS under the overall leadership of the Director and the regional leadership of Crown Prosecutors. Section 10 provided that: (1) The Director shall issue a Code for Crown Prosecutors giving guidance on general principles to be applied by them (a) in determining, in any case (i) whether proceedings for an offence should be instituted or, where proceedings have been instituted, whether they should be discontinued;. But the government did not accept the Commissions recommendation for reform of the arrangements for private prosecutions. By then section 2(3) of the 1908 Act had been replaced, in almost identical terms, by section 4 of the Prosecution of Offences Act 1979. The latter was replaced by section 6 of the 1985 Act, being the section central to this appeal and still in force today. It provides as follows: (1) Subject to subsection (2) below, nothing in this Part shall preclude any person from instituting any criminal proceedings or conducting any criminal proceedings to which the Directors duty to take over the conduct of proceedings does not apply. (2) Where criminal proceedings are instituted in circumstances in which the Director is not under a duty to take over their conduct, he may nevertheless do so at any stage. The references to the Directors duty to take over the conduct of proceedings are to section 3(2) of the Act, in which the various types of proceedings to which his duty applies are identified. In particular they include almost all criminal proceedings instituted on behalf of a police force. In July 1998 the Law Commission, under the chairmanship of Dame Mary Arden, published a paper entitled Consents to Prosecution (Law Com No 255), in which, at para 5.8, it analysed section 6 as giving the private prosecutor in effect an unlimited right to institute a prosecution but as limiting his right to continue it by reference both to the Directors duty to take it over in the circumstances identified in section 3(2) and to his power to do so in all other circumstances, conferred by subsection (2) of section 6 itself. I agree with the analysis. Pursuant to section 10 of the 1985 Act the Director issued a Code for Crown Prosecutors (the Code). The first edition was published in 1986. The current edition is the sixth, published in February 2010. Importantly, it provides, at para 2.3: Although each case must be considered on its own facts and on its own merits, there are general principles that apply to the way in which prosecutors must approach every case. As in all earlier editions, the Code then provides, at para 3.4, that, subject to an irrelevant exception, prosecutors should start or continue a prosecution only when the case has passed both stages of the Full Code Test, which, at para 4.1, are identified as the evidential stage and the public interest stage. Paras 4.5 and 4.6 provide that the evidential stage is passed if the evidence is sufficient to provide a realistic prospect of conviction, namely that the court is more likely than not to convict the defendant. In relation to the public interest stage, para 4.12 provides that a prosecution will usually take place unless the prosecutor is sure that public interest factors tending against prosecution outweigh those tending in favour; and examples of factors which tend in each direction are given at paras 4.16 and 4.17. The appellant submits that the terms of section 10 of the 1985 Act are not wide enough to entitle the Director to include in the Code reference to the principles which he himself will apply in deciding whether to exercise his power under section 6(2) to take over the conduct of a private prosecution in order to discontinue it. Strictly speaking, the submission may be valid; but there is no point in dwelling on it because the Director has not included any such reference in the Code. His policy in this respect has been articulated separately. The best exposition of the policy of the Director in this respect, as it stood prior to 23 June 2009, is contained in a letter written on his behalf dated 27 July 1998 which was quoted by Laws LJ in giving judgment in the Divisional Court of the Queens Bench Division, in R v Director of Public Prosecutions Ex p Duckenfield [2000] 1 WLR 55, 63: [W]here we have been asked . to take over the prosecution in order to discontinue it, we would do so if one (or more) of the following circumstances applies: there is clearly no case to answer. A private prosecution commenced in these circumstances would be unfounded, and would therefore be an abuse of the right to bring a prosecution; the public interest factors tending against prosecution clearly outweigh those factors tending in favour; the prosecution is clearly likely to damage the interests of justice. The CPS would then regard itself as having to act in accordance with our policy. If none of the above apply there would be no need for the CPS to become involved and we would not interfere with the private prosecution. Clearly there is a distinction between the realistic prospect of conviction test in the Code . and the clearly no case to answer test mentioned above. Accordingly we recognise that there will be some cases which do not meet the CPS Code tests where nevertheless we will not intervene. It has been considered that to apply the Code tests to private prosecutions would unfairly limit the right of individuals to bring their own cases. But on 23 June 2009 the Director performed a volte face. He introduced the very policy which, in the letter quoted, he had described as unfairly limiting the rights of private prosecutors. In guidance issued on his behalf to CPS prosecutors entitled Private Prosecutions, published on that date, he wrote: You should take over and continue with the prosecution if the papers clearly show that: the evidential sufficiency stage of the Full Code Test is met; and the public interest stage of the Full Code Test is met; and there is a particular need for the CPS to take over the prosecution. A private prosecution should be taken over and stopped if, upon review of the case papers, either the evidential sufficiency stage or the public interest stage of the Full Code Test is not met. However, even if the Full Code Test is met, it may be necessary to take over and stop the prosecution on behalf of the public where there is a particular need to do so, such as where the prosecution is likely to damage the interests of justice. You should not take over a private prosecution if the papers clearly show that: the evidential sufficiency stage of the Full Code Test is met; and the public interest stage of the Full Code Test is met; and there is no particular need for the CPS to take over the prosecution (either to stop or continue with the prosecution). DISCUSSION The value to our modern society of the right to bring a private prosecution is the subject of lively debate. The Gouriet case [1978] AC 435 concerned the ability of a private citizen to secure an injunction restraining a threatened refusal by post office workers to handle mail to South Africa in breach of the criminal law. Members of the appellate committee of the House of Lords considered, in passing, his right to bring a private prosecution in the hypothetical event that the workers had proceeded to commit such an offence. Lord Wilberforce said, at p 477: This historical right which goes right back to the earliest days of our legal system, though rarely exercised in relation to indictable offences, and though ultimately liable to be controlled by the Attorney General (by taking over the prosecution and, if he thinks fit, entering a nolle prosequi) remains a valuable constitutional safeguard against inertia or partiality on the part of authority. Lord Diplock observed, at p 498, that the need for private prosecutions to be undertaken had largely disappeared but that the right to undertake them still existed and was a useful constitutional safeguard against capricious, corrupt or biased failure or refusal of those authorities to prosecute offenders against the criminal law. Can one confidently say that the later advent of the CPS has banished all the concerns articulated in the Gouriet case, particularly in relation to inertia, or (to adopt what may be the fairer word used by the witnesses to the Royal Commission: see para 19 above) inaction, on the part of the public authority? In Jones v Whalley [2007] 1 AC 63 the police administered a formal caution to the perpetrator of an assault and explained to him that, as a result, he would not be brought before a criminal court in respect of it. Thereupon his victim instituted a private prosecution against him in respect of it. The House of Lords held that the magistrates had been correct to stay the proceedings as an abuse of their process. General observations were made about the value of the right of private prosecution. Lord Bingham said, at para 9: There are . respected commentators who are of opinion that with the establishment of an independent, professional prosecuting service, with consent required to prosecute in some more serious classes of case, with the prosecution of some cases reserved to the Director, and with power in the Director to take over and discontinue private prosecutions, the surviving right is one of little, or even no, value. [Counsel for the victim] is entitled to insist that the right of private prosecution continues to exist in England and Wales, and may have a continuing role. But it is hard to regard it as an important constitutional safeguard when, as I understand, private prosecutions are all but unknown in Scotland. Lord Bingham added, at para 16, that the surviving right of private prosecution was of questionable value and could be exercised in a way damaging to the public interest. By contrast, Lord Mance suggested, at para 39, that the rarity of a private prosecution in Scotland did not undermine the traditional English view that the right to institute it was an important safeguard; and, at para 43, that, as Lord Wilberforce and Lord Diplock had suggested in the Gouriet case, it was a safeguard against the wrongful refusal or failure by prosecuting authorities to institute proceedings. With respect, I consider that there is much to be said in favour of the views thus expressed by Lord Mance. In any event, however, the fact is, that, by section 6 of the 1985 Act, Parliament chose, albeit in qualified terms, to reaffirm the right of private prosecution; and the conduct of the CPS must conform to its reaffirmation. In Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997 Parliament had invested the Minister with a discretion to refer to a committee any complaint made to him about the operation of any scheme which he administered. Farmers in the South East of England complained to him about the price paid to them for milk which they were required to sell to the Milk Marketing Board. The House of Lords held that, in refusing to refer their complaint to the committee, the Minister had exercised his discretion unlawfully. Lord Reid explained, at p1030, that Parliament must have conferred the discretion with the intention that it should be used to promote the policy and objects of the Act and, at pp1032 1033, that it is the Ministers duty not to act so as to frustrate the policy and objects of the Act. So the question becomes: in applying the reasonable prospect test, as well as the two other tests, to his decision whether to intervene in a private prosecution in order to discontinue it, does the Director frustrate the policy and objects which underpin section 6 of the 1985 Act? Such is a focussed question; and, in my view, energetic, albeit (as I have indicated) controversial, assertions about the continuing constitutional importance of the right of private prosecution make little contribution to its answer. No greater contribution to an answer to the focussed question is made by the decision in Scopelight Ltd v Chief Constable of Northumbria Police Force [2009] EWCA Civ 1156, [2010] QB 438. There the Court of Appeal addressed the right of the police to continue to retain seized property under section 22 of the Police and Criminal Evidence Act 1984 once the CPS had decided, on grounds of public interest, not to prosecute the claimants for infringement of copyright but while a trade body formed to counter such infringements was determining whether to prosecute them. Although the relevant events took place prior to 23 June 2009, no change was then made to the Directors approach to the public interest in determining whether to intervene in a private prosecution in order to discontinue it. There was no suggestion in that case that, pursuant to his policy, the Director should intervene in the private prosecution, which the trade body had proceeded to institute, in order to discontinue it. That was because the CPS had decided not that it would be contrary to the public interest for the claimants to be prosecuted at all but only that it would be contrary to the public interest for a prosecution to be conducted by itself: see the judgment of Leveson LJ (with which Ward LJ and I agreed) at paras 12, 39 and 51. In suggesting a negative answer to the focussed question the CPS contends that both the earlier and the current tests which it was and is the policy of the Director to apply to the evidence in support of a private prosecution represent lawful approaches to the exercise of his discretion under section 6(2) of the Act; but that the current test is preferable for reasons to which, in part, I will refer in paras 34 to 38 below. The appellant does not go so far as to contend that the Directors current policy eliminates the private prosecution. Such prosecutions are still frequently instituted. The great majority survive his three current tests for intervention and discontinuance; they therefore proceed as private prosecutions or, occasionally, as prosecutions which he takes over and continues. Other public bodies, such as the Office of Fair Trading which prosecutes those who practise wrongful forms of selling, and Transport for London which prosecutes evaders of fares, apply the reasonable prospect test. So does the Royal Society for the Prevention of Cruelty to Animals, a private registered charity, the target of whose prosecutions is self evident. Retail companies often prosecute shop lifters and, although there is no firm evidence before this court as to the evidential test which they apply in determining whether to do so, the CPS seems not to intervene and, indeed, to be more than content thus to be spared entry into that sphere of prosecution. Other private bodies who sometimes conduct private prosecutions are identified in an illuminating article by Dr LH Leigh entitled Private prosecutions and diversionary justice in the Criminal Law Review: [2007] Crim LR 289, 293 294. Then there is the residue of prosecutions brought by individual citizens, often (as in this case) for alleged assaults upon them, which survive the CPS tests or of which, indeed, the CPS never comes to learn. In the Duckenfield case [2000] 1 WLR 55 police officers who had been made defendants to private prosecutions for manslaughter and other offences in connection with the Hillsborough disaster applied for judicial review of the Directors decision to decline to take over conduct of the prosecutions in order to discontinue them. By way of application of his old policy, the Director had declined to conclude that there was clearly no case for the officers to answer. Save in one irrelevant respect, their applications for judicial review failed. The Divisional Court rejected their contention that, in determining whether to intervene, the Director had appraised the evidence by reference to criteria which were insufficiently stringent or had applied them too rigidly. The officers did not go so far as to submit that the only lawful course open to the Director would have been to apply the criteria in the Code. But in his judgment, with which the other members of the court agreed, Laws LJ made observations about any such submission, upon which, in support of the present appeal, the strongest reliance is placed. Laws LJ said, at p 68: In truth, however, it could not be right for the DPP to apply across the board the same tests, in particular the reasonable prospect of conviction test. , in considering whether to take over and discontinue a private prosecution as the Code enjoins Crown Prosecutors to follow in deciding whether to institute or proceed with a prosecution themselves; the consequence would be that the DPP would stop a private prosecution merely on the ground that the case is not one which he would himself proceed with. But that, in my judgment, would amount to an emasculation of section 6(1) and itself be an unlawful policy; and in fairness [counsel for the officers] made it clear that he did not submit so much. The very premise of section 6(1) must be that some cases will go to trial which the DPP himself chooses not to prosecute. If, as the last sentence suggests, it was the preliminary view of Laws LJ in relation to this unargued point that the effect of applying the reasonable prospect test would be to eliminate private prosecutions, he was, as will be apparent from what I have said above, much mistaken. But there is another interesting feature of his judgment. For, at p 69 (reiterated in slightly different terms at p 71), he said: I see no reason why quite aside from the evidential test of no case to answer the DPP should not within his policy as presently formulated, have in mind the likelihood or otherwise of conviction when considering where the public interest lies. Therein lies, in my view, some dilution of the force of the judges earlier remarks. But, with respect to him, I have no appetite for thus blurring the distinction between the evidential test and the public interest test. The appellant argues that, within the policy previously applied by the Director to his determination whether to intervene and discontinue, there was a logical coherence wholly lacking within the current policy. The coherence lay, so it is said, in the fact that, subject of course to the difference between a survey of the written evidence and that of the oral evidence, the Director formerly asked himself in effect precisely the same question as the court would ask itself in ruling on a submission at the close of the prosecution case: is there a case for the defendant to answer? This argument, which finds favour in the judgment of Lord Mance at paras 98, 99 and 114 below, makes limited appeal to me. Much more relevant to the aptness of a prosecution than whether it is likely to survive a submission of no case to answer is whether it is likely to result in a conviction. In focussing, as his current policy does, on the prospects of a private prosecution in that regard, the Director in my view poses to himself a much more relevant question. I discern four additional reasons which help to justify the Directors current policy and which make it extremely difficult for the appellant to contend that it must be taken to frustrate the policy and objects which underpin Parliaments reaffirmation of the right of private prosecution in section 6(1) of the 1985 Act. They are as follows: (a) Parliament did not choose expressly to confine the discretion which, by subsection (2), it conferred upon the Director to take over the conduct of a private prosecution. (b) The object behind the main innovation of the 1985 Act, namely the establishment of the CPS, reflected the conclusion of the Royal Commission referred to above that there was a lack of consistency between local decisions whether to prosecute and, if so, how to conduct them. In moving the second reading of the Bill in the House of Lords Lord Elton, Minister of State at the Home Office, said (Hansard (HL Debates) 29 November 1984, cols 1014 1015) that what was needed was a prosecution service that avoided rigid uniformity yet applied consistent standards throughout the country. He was not there speaking of interventions in private prosecutions but it is hard to imagine that this central thread in the policy behind the Act was not long enough to extend to them. (c) A prosecution which lacks a reasonable prospect of success draws inappropriately upon the resources of the court. (d) A defendant would have a legitimate grievance about subjection to criminal prosecution at the instance of a private prosecutor in circumstances in which, by application of lawful criteria to the strength of the evidence against him, there would be no public prosecution. Furthermore, as in general terms he acknowledges in para 2.3 of the Code set out at para 22 above, the Director would act unlawfully if he were to adopt a rigid approach to the application of his policy in determining whether to institute prosecutions (and, by necessary extension, whether to intervene in order to discontinue them): British Oxygen Co Ltd v Board of Trade [1971] AC 610, 625 (Lord Reid). Indeed, as this case and the Duckenfield case [2000] 1 WLR 55 demonstrate, the lawfulness both of a determination to intervene in order to discontinue and of a determination not to do so is amenable to judicial review in which the determination will be scrutinised for compliance with, among others, the principle enunciated in the British Oxygen case. In Australia the Director of Public Prosecutions decides whether to institute a prosecution by applying, among others, a policy that a prosecution should not proceed if there is no reasonable prospect of a conviction being secured: Prosecution Policy of the Commonwealth, November 2008, para 2.5. His policy is to intervene in a private prosecution in order to discontinue it if, similarly, there is no reasonable prospect of a conviction being secured on the available evidence: para 4.10(a). It may be that the negative formulation in Australia of the reasonable prospect test renders it marginally less demanding than its positive formulation in England and Wales. But, for present purposes, the point is that the Director of Public Prosecutions in Australia applies the evidential test used in relation to all other prosecutions in determining whether to intervene in order to discontinue a private prosecution; and that, so far as this court is aware, there has been no challenge to the lawfulness of his so doing. In summary I find myself wholly unable to subscribe to the view that, in reaffirming, in qualified terms, the right to maintain a private prosecution in section 6 of the 1985 Act, Parliament must be taken to have intended that the Director should decline to exercise his discretion so as to intervene and discontinue it even if it lacks a reasonable prospect of success. In other words I discern nothing in the policy and objects underpinning the section to justify a conclusion that, by application of his current policy towards intervention and discontinuance, the Director frustrates them. Accordingly I would reject the appellants central contention in this appeal. In these circumstances the appellant falls back on two further, alternative, contentions. His first further contention is founded on a concession made on behalf of the CPS before the Divisional Court, namely that, although the Director had (so it was said) reasonably concluded that the prosecutions stood no reasonable prospect of resulting in convictions, the contrary conclusion would also be reasonable. From the foot of this concession the appellant contends that the only lawful application of a reasonable prospect test would be for the Director to ask not whether he concludes that there is a reasonable prospect of conviction but whether a reasonable prosecutor might so conclude. Efficacy, so the appellant argues, should in that way be given to such reasonable conclusion about the strength of the evidence as the private prosecutor may have reached. The CPS itself reminds the court that in deciding whether a prosecution is required in the public interest, prosecutors should take into account any views expressed by the victim regarding the impact that the offence has had: the Code, para 4.18; and the appellant thus argues for loosely analogous consideration of the views of the victim in relation to the evidential stage of the Directors inquiry. I discern nothing inherent in section 6 of the 1985 Act to mandate the Directors adoption of this different approach to the evidential test, being a type of approach the like of which I cannot readily recall in any other area of executive decision making. I regard the approach suggested by the appellant as unfounded in law and pregnant with intricate dispute. It is the CPS which contributes the expert, impartial, appraisal of the strength of the evidence; and, as Lord Neuberger explains in para 69 below, most victims are ill equipped to make a different contribution of significant value in this particular respect. The appellants second further contention is that, even if the Director was entitled to decide for himself whether there was a reasonable prospect of convictions, his negative conclusion was irrational. In an effort to substantiate this bold contention, the appellant makes detailed reference to aspects of the evidence. Like the first further contention, it was rejected by the Divisional Court and, had it been free standing, it would not have been permitted to be the subject of an appeal to this court. It would be wrong to prolong this judgment by descent into the detail of the evidence. I trust that my treatment of the second further contention will not be considered inappropriately high handed if I say only as I do that I reject it for the reasons given in paras 31 to 42 of the judgment of Richards LJ in the Divisional Court [2012] 1 WLR 245. RESULT So I would dismiss the appeal. LORD NEUBERGER The principal issue on this appeal is whether the current policy of the Director of Public Prosecutions (the Director) relating to taking over and discontinuing private prosecutions is, as the Divisional Court held, lawful. I agree with that conclusion for the reasons given by Lord Wilson, but, in the light of the division of opinion in this court, I propose to set out my thinking. The validity of the 2009 policy must be assessed in accordance with normal legal principles applicable to any policy promulgated by the Executive. In particular, it must be assessed against the current relevant statutory provisions, which are to be found in the Prosecution of Offences Act 1985 (the 1985 Act), of which the most important is section 6 (section 6). Ignoring classes of proceedings which the Director was obliged to take over by the 1985 Act, two relevant points emerge clearly from section 6. First, subsection (1) demonstrates that the long established right of individuals to institute and to conduct private prosecutions is, subject to subsection (2), to remain intact. Secondly, subsection (2) gives the Director the right, which is, at least in terms of the language of the subsection, wholly unfettered, to take over any prosecution initiated privately. As Lord Wilson says, the central issue on this appeal is whether the 2009 policy can fairly be said to frustrate the policy and objects which underpin section 6. Mr Fitzgerald put the issue slightly differently, namely, as reflected in Lord Mances judgment, whether the 2009 policy emasculated (or, to use Mr Fitzgeralds words, unlawfully attenuated, restricted or diminished) the right to conduct private prosecutions. In my view, a policy which emasculated the right would indeed frustrate the policy and objects of section 6, so I consider that there is, in principle and in practice, no real difference between the approach of Lord Wilson and that of Lord Mance. The Directors policy with regard to prosecutions which he is contemplating bringing and continuing is set out in his current Code for Crown Prosecutors (the Code), which is described by Lord Wilson in para 22 and by Lord Mance in paras 97 and 98. It is right to record that, when asked, Mr Fitzgerald QC, for the appellant, did not accept that that policy was necessarily lawful, even with regard to prosecutions which the Director is considering or conducting. However, I consider that, in the absence of any argument in this court or below to the contrary, we must proceed on the basis that the policy is lawful. Quite apart from the presumption of legality, it seems to me hard to quarrel with a policy that a prosecution will not be initiated or conducted by the Director unless the two requirements, set out and explained in the Code, are met, namely (i) there is a better than evens prospect of securing a conviction, and (ii) it would be in the public interest to proceed with the prosecution. The justification for the second requirement is self evident. While I am far from suggesting that the better than evens standard is the only one which the Director could adopt, there are several reasons for the first requirement. (i) It could be said to be oppressive on potential defendants to require them to face criminal proceedings unless there was a good chance of securing a conviction. (ii) Court time should not normally be taken up dealing with speculative prosecutions. (iii) Public money on prosecuting, and defending, criminal proceedings should generally be devoted to cases which are likely to be successful. And, perhaps more arguably, (iv) a low conviction rate may undermine confidence in the criminal justice system. I also note that the Royal Commission on Criminal Procedure (Cmnd 8092), chaired by Sir Cyril Philips in 1981 and the Law Commission in 1998 (Consents to Prosecution (Law Com No 255)) both considered the better than evens standard applied by the Director, and did not express any concerns about it. However, the mere fact that the better than evens standard is lawfully adopted by the Director for prosecutions which he is considering initiating and then conducts, does not ineluctably mean that it is a lawful standard for him to adopt when deciding whether to take over private prosecutions for the purpose of discontinuing them. However, there are four factors which seem to me to provide support for the contention that the Director is justified in adopting the same better than evens standard for private prosecutions as he applies under the Code to his own prosecutions. First, one of the primary purposes of the 1985 Act in expanding the Directors functions and duties was to introduce a degree of consistency in the approach to instituting and conducting prosecutions throughout England and Wales. Accordingly, at least on the face of it, it would seem hard to say that for him to adopt a consistent approach to public and private prosecutions was contrary to what was contemplated by the 1985 Act. Secondly, it is worth considering a case where the Director has taken over a private prosecution without the intention of discontinuing at the time, but subsequently decides (eg because of new evidence, or a change in the law) that the prospect of securing a conviction is less than evens. In such a case, it seems to me that he would be entitled to apply the Code to the case, and discontinue, particularly given that there is a continuing obligation on the Director under the Code to review any prosecution. If that is right, there is obvious logic in his applying the same standard when considering a private prosecution, given his power to take over its conduct in order to discontinue it. Thirdly, many of the factors which can be said to justify the better than evens standard in public prosecutions apply to private prosecutions. (i) Unfairness to defendants and (ii) use of court time apply to the same extent. (iii) Costs implications substantially apply to a similar extent, although unsuccessful private prosecutors will not always be reimbursed out of public funds. (iv) Confidence in the justice system may be rather less relevant, because the Directors record will not be affected, but, given the applicability of the other three factors, it still applies to a significant extent. Fourthly, as Lord Wilson has explained, the better than evens standard was approved in para 8.9 of the 1981 report of the Royal Commission, chaired by Sir Cyril Philips, not merely for prosecutions brought by the Director, but for all prosecutions. As mentioned above, Mr Fitzgeralds grounds for attacking the 2009 policy are based more on the contention that the 2009 policy emasculates the right of an individual to conduct a private prosecution. His case in this connection is that, while private prosecutions would not be wiped out by the 2009 policy, the right to conduct such prosecutions would be so substantially reduced as to be emasculated. He reinforced that argument by pointing out that it has to be judged bearing in mind that the right to bring a private prosecution is an aspect of a fundamental common law right, namely the right of every citizen to enjoy access to the courts. I have some sympathy with that argument, but in the end, I would reject it. The 1985 Act and the 2009 policy leave untouched the right of an individual to institute a private prosecution. Accordingly, in any case where the Director has not got round to deciding whether to prosecute, or has considered the facts and has decided not to prosecute, a private prosecution could be initiated. If that prosecution comes to the Directors attention, he will then have to assess, or, if he has already done so, to reassess, whether there is a better than evens prospect of the prosecution succeeding, and whether it is in the public interest that it proceed: if both those tests are satisfied, the prosecution will be permitted to proceed (either because the Director takes it over or as a private prosecution). That, of itself, gives the right to initiate private prosecutions an undoubted, indeed a virtually unlimited, function. As to the conduct of private prosecutions, it is clear that there will be some prosecutions which the Director will take over in order to discontinue, and some which he will take over in order to conduct them himself. However, it is also apparent from the 2009 policy that there will be prosecutions which the Director will not take over, and will allow to proceed as private prosecutions, even if one ignores the prosecutions which the Director effectively leaves to large concerns as described by Lord Wilson at para 33. After explaining that the Director has to be satisfied that the better than evens and public policy requirements are met if he is not to take over a private prosecution in order to discontinue it, the 2009 policy goes on to state that he should only take over and continue with the prosecution if the papers clearly show that there is a particular need for the CPS to take over the prosecution. Thus, any private prosecution which is found to have a better than evens chance of success and is not contrary to the public interest, will be permitted to continue as a private prosecution save where there is a particular need for it to be taken over by the Director. The examples of types of case where the private prosecution should be taken over in order to be pursued by the CPS suggest that there will be a significant proportion of private prosecutions which, if they satisfy the better than evens standard and the public policy requirement, will be allowed to proceed as private prosecutions. Albeit by way of non exhaustive, and non conclusive, examples, the 2009 policy suggests that private prosecutions should normally be taken over by the Director if the offence is serious, if there are detailed disclosure issues to resolve, or if the prosecution would involve the disclosure of highly sensitive material or applications for special measures or for witness anonymity. I unhesitatingly accept that no court should be relaxed about a code, or other set of rules or guidelines promulgated by any branch of the Executive, which has the effect of cutting down individuals rights of access to the courts. However, the right to institute and conduct a private prosecution is not in quite the same category of rights as a right to seek a remedy or compensation for a wrong by bringing a claim in the civil courts. The right to conduct a private prosecution has always been subject to being curtailed by the power of the Attorney General to stop the prosecution through issuing a nolle prosequi an executive power which, unsurprisingly, has no equivalent in the civil jurisdiction. Further, the most recent observations in the House of Lords about the right to bring private prosecutions are not universally enthusiastic contrast Lord Bingham of Cornhill (who described it as being of questionable value in a speech with which Lord Rodger of Earlsferry, Lord Carswell, and Lord Brown of Eaton under Heywood agreed), with Lord Mance (who described it as a safeguard against wrongful refusal or failure by public prosecuting authorities), in Jones v Whalley [2006] UKHL 41, [2007] 1 AC 63, paras 16 and 43 respectively. It is true that more enthusiasm was expressed about the right by Lord Wilberforce and Lord Diplock in Gouriet v Union of Post Office Workers [1978] AC 435, 477 and 498 respectively. However, that decision predated the 1985 Act; furthermore, both Lord Wilberforce and Lord Diplock accepted that the need for prosecutions to be undertaken (and paid for) by private individuals has largely disappeared (to quote Lord Diplock, at p 498), and Lord Wilberforce emphasised, at p 477, that the right was subject to the Attorney Generals power to enter a nolle prosequi a point also made by Lord Fraser of Tullybelton, at pp 520 521. It is also plain that the ability to bring private prosecutions does not rank as some sort of internationally recognised right, as Mr Fitzgerald fairly conceded. Lord Bingham pointed out in Jones [2007] 1 AC 63, at para 16, that it is primarily for the public authorities to prosecute criminals, and, according to Ms Montgomery QC, it is essentially for this reason that private prosecutions are not permitted in most courts of the United States. It is also true that, as Lord Mance says in para 105, a former Director and a former Attorney General, have spoken about the importance of retaining the right of individuals to bring private prosecutions. However, given my conclusion that the right to bring private prosecutions is not emasculated by the 2009 policy, it seems to me that such statements do not take matters much further. In any event, the fact that, in 1980, many informed people would have thought that a policy such as the 2009 policy was too restrictive does not mean that it would have been unlawful then, let alone that it is unlawful now, particularly following the passing of the 1985 Act. There is no doubt that the right to bring private prosecutions is still firmly part of English law, and that the right can fairly be seen as a valuable protection against an oversight (or worse) on the part of the public prosecution authorities, as Lord Wilson acknowledges at paras 28 and 29, and Lord Mance says at para 115. However, that does not really impinge on the lawfulness of the Director applying a better than evens test to private prosecutions. Once one accepts that the Director is entitled to apply that test to his own prosecutions, it is hard, as a matter of logic, to see how applying the same test to private prosecutions inhibits the valuable protection afforded by the right to bring such prosecutions. I am also not impressed by the point that an individual who was in some way directly involved in, or who witnessed, the commission of the alleged crime, is in a better position than the Director to assess the prospects of obtaining a conviction. An objective, expert, and experienced assessment of the prospects appears to me to be generally more reliable than the assessment of a person who will normally be (probably wholly) inexperienced in the criminal justice system, and (often, as in this case) involved, frequently as a victim, and therefore far from dispassionate. Given that the Director has been given statutory power to take over and discontinue a private prosecution, it seems to me hard therefore to say that the 2009 policy undermines the principle that the right to conduct private prosecutions should in principle survive. The interests of private prosecutors and of potential defendants, as the two groups with the greatest interest in the policy, should be taken into account, as should the public interest, which includes the efficient use of court time and public money, and confidence in the criminal justice system. I find it hard to see what is wrong with a policy that a private prosecution should be allowed to proceed as such, only if (i) it has a greater than evens chance of success, (ii) it is not contrary to the public interest, and (iii) there is no special reason why it should be conducted by the Director. I have no difficulty in accepting that many people might reasonably think that the 2009 policy is too restrictive of the rights of those individuals who wish to bring and conduct private prosecutions. However, that is a long way from saying that the policy is unacceptably restrictive as a matter of law. In my view, the arguments mounted by Mr Fitzgerald fall some way short of establishing such a proposition. Lord Wilson in para 34, and Lord Mance in paras 103 and 104 have referred to the observations of Laws LJ in R v Director of Public Prosecutions, Ex p Duckenfield [2000] 1 WLR 55, 68 69, which were understandably relied on by Mr Fitzgerald. There is no doubt that, in those observations, Laws LJ was addressing the very question which we have to decide, and that he answered that question, in characteristically trenchant terms, by indicating that a policy such as that contained in the 2009 policy would in his view be unlawful. Particularly coming from that source, the observations are entitled to great respect. However, they were not merely obiter: the issue had not been argued; indeed, it had actually been conceded on behalf of the then Director. There is a considerable difference in the weight to be attached to judicial observations in relation to a point which has been fully argued, as against those in relation to a point which has been conceded, often, no doubt, for good forensic reasons. Now that the point has been fully argued, I am satisfied, for the reasons given by Lord Wilson, that the 2009 policy, so far as it concerns the Directors approach to taking over private prosecutions with a view to discontinuing them, is lawful. As to the other issues, there is nothing which I can usefully add to what Lord Wilson has said at paras 42 44. Accordingly, I would dismiss this appeal. LORD KERR For the reasons given by Lord Neuberger and Lord Wilson, with which I agree, I too would dismiss this appeal. Section 6(2) of the Prosecution of Offenders Act 1985 gives the Director of Public Prosecutions (the Director) the power to take over the conduct of a private prosecution. Ancillary to this is the power to discontinue such a prosecution. The use of these powers involves the exercise of discretion. A person or agency who is exercising discretion as to how to use a statutory power may devise a policy to guide him in its use. He may formulate a policy or make a limiting rule as to the future exercise of his discretion, if he thinks that good administration requires it, provided that he listens to any applicant who has something new to say: British Oxygen Co Ltd v Board of Trade [1971] AC 610, 624G 625E. He must also ensure that the terms of the policy are readily available to those who are likely to be affected by its application. Beyond this, however, the only constraint on the exercise of his discretion is that it must not defeat or frustrate the policy of the Act from which it is derived: Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997. The policy should be used to promote the policy and objects of the Act: per Lord Reid, at p 1030. It has not been suggested that the Directors current policy is applied too rigidly in the British Oxygen sense or that its terms have not been sufficiently publicised. It has not been argued nor could it have been that the Director is not entitled to change his policy. The central plank of the appellants challenge has been as it had to be on its incompatibility with the policy and the objects of the Act. There is nothing in the language of section 6(2) (nor of the Act generally) to suggest that the policy of the enactment was to permit private prosecutions to continue unless they failed to meet a standard of raising a prima facie case against the proposed defendant. Nothing in the 1985 Act could be said to indicate a policy that the availability of the right to privately prosecute should continue as it had previously existed. There was, for instance, no provision such as is found in section 7 of the Prosecution of Offenders Act 1879 to the effect that nothing in the 1985 Act shall interfere with the right of any person to institute, undertake, or carry on any criminal proceeding. Indeed section 6(1) is expressly stated to be subject to the Directors power to take over the conduct of a private prosecution at any stage: section 6(2). If one is to find that the underlying policy objective of the 1985 Act was to preserve the right not to have ones private prosecution taken over and discontinued by the Director unless it did not disclose a case for a defendant to answer, one must look elsewhere. Lord Mance has said (in para 93) that the original stated purpose for which the Director was given the right to take over the conduct of proceedings in the enactments that preceded the 1985 Act was to ensure that cases which ought in the public interest to be pursued were not abandoned or inefficiently conducted because of lack of means on the part of the prosecutor or inertia. That may well be so. But, by the time that the 1985 Act came to be enacted, it was clear, not least because of the decision in Raymond v Attorney General [1982] QB 839, that the power of the Director to take over a prosecution with the object of aborting it in the public interest was not considered to be inimical to the purpose of the earlier enactments. If not in the language of the 1985 Act itself, where is the mooted right to be permitted to continue a private prosecution (provided it surmounts the prima facie case hurdle) to be found? Lord Mance suggests that it derives from an access to justice principle, rooted in fundamental constitutional theory. Lady Hale says that this is a centuries old right of access to a court to prosecute an alleged offender: para 123. But it is clear that the right, however venerable, has been modified by successive enactments. The very institution of the office of Director of Public Prosecutions impinged on the right. Prosecution of offenders was no longer exclusively in the domain of private individuals. Adjustment to the content of the right was therefore inevitable. The Director was given the power to stop private prosecutions. On whatever basis that power was exercised previously, the right to privately prosecute was affected. Moreover, access to justice is not, in any event, always an unqualified right of the citizen. In judicial review, for instance, the leave of the court to take proceedings is required. And it is undeniable that private prosecutions may still be and are regularly taken. As Lord Neuberger has pointed out, Mr Fitzgerald QC for the appellant accepted that for the Director to stop a private prosecution on the ground that the case is not one which he would himself proceed with would not, in the words of Laws LJ in R v Director of Public Prosecutions Ex p Duckenfield [2000] 1 WLR 55, 68, amount to an emasculation of section 6(1) of the 1985 Act, in the sense of extinguishing it. The change of policy has, of course, attenuated the right that had previously existed, as Mr Fitzgerald correctly contended. But this would not be the first instance of its attenuation. Access of the citizen to justice in the field of private prosecution is therefore not denied by the Directors change of policy. It is adjusted certainly. The essential question, however, is whether this adjustment is out of keeping with the underlying policy and objects of the 1985 Act. Various policy considerations have been examined in the judgments of the other members of the court. I do not consider it necessary for me to say anything about those beyond observing that the question whether it is lawful for the Director to change his policy is not necessarily answered by asking whether Parliament intended, by the 1985 Act, to curtail the right of the citizen to institute private prosecutions. It is clear that Parliament intended that the Director should have power to take over a private prosecution with a view to discontinuing it. Parliaments intention must be viewed against the background of the historical adjustment to the right to privately prosecute. That adjustment occurred because the Director was given the power to take over private prosecutions and because of the way in which he decided to exercise that power. Parliaments intention in 1985 was clearly to preserve the power and, it seems to me, its intention must also have contemplated that the policy by which the power might be exercised could be subject to change. Parliament may not have intended positively to restrict the right of citizens to institute private prosecutions but that does not mean that it had reached a settled intention that that right should remain precisely in the condition that, as a result of the then current policy of the Director, it then was. The conferring of a power on the Director to take over the conduct of a private prosecution, without prescription as to when and in what circumstances that power might be exercised, can only be regarded as consistent with a Parliamentary intention that the power could be exercised so as to assimilate the test for private prosecutions with that which the Director applied to the conduct of public prosecutions. After all, Parliament leaves to the Director the choice of the test as to when a public prosecution should proceed or be discontinued. Why should it be thought that the 1985 Act intended to preserve in aspic the test that had been in use at that particular time in respect of private prosecutions? There was, at least, lively debate about the value of the right to privately prosecute at the time of the passing of the 1985 Act. If Parliament had intended that the right to conduct private prosecutions or, more accurately, the right to prevent their being taken over by the Director in order to discontinue them should be maintained in the condition that it was permitted to exist by the then current policy of the Director, it would surely have been necessary to make this unequivocally clear. The right to instigate and continue private prosecutions had been subject to change before the 1985 Act. Most importantly, it had been subject to the policy of the Director that the prosecution evidence be sufficient to sustain a prima facie case. There was no reason to suppose that this policy would remain in an inviolate and immutable condition. I find it impossible to conclude therefore that there is anything about the discernible policy and object of the 1985 Act which would be undermined by the change to the policy in relation to private prosecutions which the Director has adopted. I have nothing to say on the subsidiary arguments advanced by the appellant beyond that I agree with Lord Wilsons and Lord Neubergers observations on them. LORD MANCE This appeal concerns the legitimacy, under section 6(2) of the Prosecution of Offences Act 1985, of a policy adopted by the Director of Public Prosecutions in 2009. The policy was to take over and discontinue any private prosecution coming to his notice which did not in his assessment meet an evidential test that it was more likely than not to lead to a conviction. Section 6(1) of the 1985 Act recognises the right to institute private prosecutions, but section 6(2) provides that the Director may take over their conduct. Lord Wilson has set out the section in para 21. Traditionally, all prosecutions in England and Wales could be described as private, even though brought in the name of the Crown. James Fitzjames Stephen said in his History of the Criminal Law of England, Vol I (1883), p 493: In England the prosecution of offences is left entirely to private persons, or to public officers who act in their capacity of private persons and who have hardly any legal powers beyond those which belong to private persons. In a lively and educative study, The Law Officers of the Crown (1964), by Professor J Edwards of the Middle Temple and University of Toronto, the then Director of Public Prosecutions, Sir Theobald Mathew, is quoted (p 335) as stating in 1950 that there are no public prosecutions in the ordinary sense of that term. Professor Edwards noted (p 401) the unreality of this analysis in relation to prosecutions by the Director or Treasury Counsel. The Directors office went back to the 1870s, but the Director had very few staff and undertook very few prosecutions prior to 1985. The vast majority of cases were prosecuted by the police, acting, Sir Theobald Mathew also said, as in effect, private citizens paid by their fellow citizens to carry out these duties on their behalf. (p 335). Quite apart from police prosecutions, however, a not inconsiderable number of bodies and some individuals have to this day continued to institute and pursue truly private prosecutions, as noted by Associate Professor Douglas Hay in Controlling the English Prosecutor (1983) 21 Osgoode Hall L J 165, 180 182, by Watkins LJ in R v Stafford Justices, Ex p Customs and Excise Comrs [1991] 2 QB 339, 350 351, by myself in Jones v Whalley [2006] UKHL 41, [2007] 1 AC 63, para 38 and by Dr L H Leigh, formerly Professor of Criminal Law at the London School of Economics, in Private prosecutions and diversionary justice [2007] Crim LR 289, 293 294. A research study for the Royal Commission on Criminal Procedure (Cmnd 8092) whose Report in 1981 preceded the 1985 Act is quoted by Hay (pp 180 181) as recording that less than 3% of all prosecutions were purely private, with about 9% of other prosecutions being for shoplifting by retail stores; roughly one quarter of adult prosecutions for non traffic offences were being brought by the police, more than one half of these originating with other official bodies. In The Law Officers of the Crown, Professor Edwards noted that the English and Welsh system had not been copied elsewhere, although describing it as a fundamental principle which was basic . in our constitution (p 336). Lord Simon of Glaisdale, speaking extra judicially on the second reading of the bill leading to the 1985 Act (Hansard (HL Debates), 29 November 1984, col 1068) described the right of private prosecution as founded on the fundamental constitutional principle of individual liberty based on the rule of law, and in Gouriet v Attorney General [1978] AC 435, 477, 498 Lord Wilberforce said that the right remained a valuable constitutional safeguard against inertia or partiality on the part of authority, and Lord Diplock spoke of a useful constitutional safeguard against capricious, corrupt or biased failure or refusal of authorities to prosecute offenders. Prior to the 1985 Act, the Directors office existed under and was governed by Prosecution of Offences Acts passed in successively 1879, 1884, 1908 and 1979. Section 7 of the 1879 Act (42 & 43 Vict c 22) stated that Nothing in this Act shall interfere with the right of any person to institute, undertake, or carry on any criminal proceeding. Under section 2 of the Act, regulations were to provide for the Director to institute, undertake or carry on proceedings in cases which appear to be of importance or difficulty, or in which special circumstances, or the refusal or failure of a person to proceed with a prosecution, appear to render the action of such Director necessary to secure the due prosecution of an offender; and regulations were duly made to that effect (see Edwards, p 379). Under section 6, where the Director had instituted or undertaken any proceeding, private persons might apply to a High Court judge for leave to continue such proceedings, if the Director had abandoned them or neglected to carry them on. The 1908 and 1979 Acts contained precursors to section 6 of the 1985 Act, which Lord Wilson has set out in para 14. However, these Acts contained no equivalent of section 6 of the 1879 Act. The original stated purpose for which the Director was given this right to take over the conduct of proceedings was thus to ensure that cases which ought in the public interest to be pursued were not abandoned or inefficiently conducted, whether through lack of means, inertia or any other reason. The Report of the Select Committee appointed to inquire into the Office of Public Prosecutor, 1884 (The Harcourt Committee) advocated that, in order to fulfil this aim, the police in every borough should transmit to the Director a list of all indictable offences committed in their district (see Edwards, p 376). However, this necessary adjunct to any comprehensive approach was and never has been implemented. While this was the original stated purpose, in practice, and modelling himself no doubt on the Attorney Generals right to enter a nolle prosequi (rarely exercised though that is, and then usually when he considers the defendant unfit to plead), the Director used also to take over cases with a view to discontinuing their prosecution. This practice was challenged but upheld at first instance in Turner v DPP (1978) 68 Cr App R 70 and on appeal in Raymond v Attorney General [1982] QB 839, where Sir Sebag Shaw said, at pp 846 847: The word conduct appears to us to be wider than the phrase carry on and suggests to our minds that when the Director intervenes in a prosecution which has been privately instituted he may do so not exclusively for the purpose of pursuing it by carrying it on, but also with the object of aborting it; that is to say, he may conduct the proceedings in whatever manner may appear expedient in the public interest. The Director will thus intervene in a private prosecution where the issues in the public interest are so grave that the expertise and the resources of the Director's office should be brought to bear in order to ensure that the proceedings are properly conducted from the point of view of the prosecution. On the other hand there may be what appear to the Director substantial reasons in the public interest for not pursuing a prosecution privately commenced. What may emerge from those proceedings might have an adverse effect upon a pending prosecution involving far more serious issues. The Director, in such a case, is called upon to make a value judgment. Unless his decision is manifestly such that it could not be honestly and reasonably arrived at it cannot, in our opinion, be impugned. Both Turner and Raymond were classic cases of abuse of process by private prosecutors, who had laid charges against persons who were Crown witnesses against them in separate proceedings. Our modern professionalised public prosecution system at the national level dates from the Prosecution of Offences Act 1985. This introduced for the first time a professional prosecuting service, of which the Director of Public Prosecutions was made head. He was given the duty under section 3(2): (a) to take over the conduct of all criminal proceedings instituted on behalf of a police force ; (b) to institute and have the conduct of criminal proceedings in any case where it appears to him that (i) the importance or difficulty of the case makes it appropriate that proceedings should be instituted by him; or (ii) it is otherwise appropriate for proceedings to be instituted by him; Under section 10, he was also bound to issue a Code for Crown Prosecutors giving guidance on general principles to be applied by them (a) in determining, in any case (i) whether proceedings for an offence should be instituted or, where proceedings have been instituted, whether they should be discontinued; or (ii) what charges should be preferred; and (b) in considering, in any case, representations to be made by them to any magistrates' court about the mode of trial suitable for that case. Section 10 did not require the Code to give guidance with regard to the situations in which the Director might under section 6(2) take over the conduct of a private prosecution. As Miss Clare Montgomery QC for the CPS accepted, the relevant version of the Code, issued in February 2010, therefore confines itself to addressing situations in which Crown prosecutors are faced with a decision whether to institute a prosecution; and, further, the Code imposes in this regard a Full Code Test with two limbs or stages: the first the evidential stage, the second the public interest stage. The first stage, derived from the Royal Commission Report 1981 which preceded the 1985 Act, involves considering whether there is a realistic prospect of success. That is a phrase familiar in other areas of the law and it sounds as if it should be beyond controversy until one appreciates that it is defined in this area to require a conclusion, before any prosecution, that an objective, impartial and reasonable jury or bench of magistrates or judge hearing a case alone, properly directed and acting in accordance with the law, is more likely than not to convict the defendant of the charge alleged (Code, para 4.6). This stage therefore imposes a substantially higher threshold for public prosecution than any criminal court would apply. This is mitigated only to some extent if the CPS eschews a purely predictive approach based on past experience of similar cases (the bookmakers approach) see R (B) v Director of Public Prosecutions (Equality and Human Rights Commission intervening) [2009] EWHC 106, [2009] 1 WLR 2072, para 50, per Toulson LJ and recognises the force of the reference to a reasonable jury, bench or judge, either by asking whether it itself (as a reasonable authority) considers the evidence to be on balance sufficient to merit a conviction by a reasonable jury, bench or judge or (putting the same point in a different way) by recognising explicitly that in certain areas actual statistics regarding convictions may not be a reliable guide to what ought reasonably to happen. Lady Hale makes this point compellingly in her paras 126 and 128 to 129, with which I agree. A criminal court would only refuse to allow a charge to proceed if it was one on which no jury, bench or judge properly directed could properly convict or was otherwise an abuse of process. In the leading authority, R v Galbraith [1981] 1 WLR 1039, 1041 Lord Lane CJ endorsed the earlier decision in R v Barker (Note) (1975) 65 Cr App R 287, 288, where Lord Widgery CJ said: It cannot be too clearly stated that the judge's obligation to stop the case is an obligation which is concerned primarily with those cases where the necessary minimum evidence to establish the facts of the crime has not been called. It is not the judge's job to weigh the evidenceto do that is to usurp the function of the jury. In essence the same principle was endorsed in R v Galbraith: Where however the prosecution evidence is such that its strength or weakness depends on the view to be taken of a witness's reliability, or other matters which are generally speaking within the province of the jury and where on one possible view of the facts there is evidence upon which a jury could properly come to the conclusion that the defendant is guilty, then the judge should allow the matter to be tried by the jury (emphasis added). A similar caution about any interference with the right of access to court applies in civil proceedings, In Raymond [1982] QB 839, 846 Sir Sebag Shaw quoted a passage from the judgment of Fletcher Moulton LJ in Dyson v Attorney General [1911] 1 KB 410, 418, which stressed, in relation to the power to strike out as disclosing no reasonable cause of action, the gulf that lies between the summary dismissal of actions as, on the one hand, baseless and, on the other, because the judge does not think they will be successful in the end and said that: the courts have properly considered that this power of arresting an action and deciding it without trial is one to be very sparingly used, and rarely, if ever, excepting in cases where the action is an abuse of legal procedure. (p 418) The second stage of the Full Code Test involves identification, analysis and weighing of a potentially wide variety of factors which may count in favour of or against prosecution being in the public interest in any particular case. The Code is careful to stress that, at the second stage, each case must be considered on its own facts and merits (para 4.15). Until 2009 the taking over of a private prosecution with a view to discontinuance was governed by a policy which, as confirmed by the CPSs evidence in this case, identified the evidential threshold at which the CPS would intervene in a private prosecution to take it over and stop it in these terms: You should take over and discontinue the prosecution if one (or more) of the following circumstances applies: There is clearly no case to answer. A private prosecution commenced in these circumstances would be unfounded, and would, therefore, be an abuse of the right to bring a prosecution. Note that this is a more rigorous test than the evidential sufficiency stage of the Full Code Test. The policy, although not apparently published as such, was well known. In R v Director of Public Prosecutions, Ex p Duckenfield [2000] 1 WLR 55, it was explained on behalf of the DPP in the passage set out by Lord Wilson in para 24. Giving the lead judgment in Duckenfield Laws LJ endorsed this approach, saying (p 68C E), in a passage cited by Lord Wilson in para 34, that, for the Director to stop a private prosecution merely on the ground that the case is not one which he would himself proceed with .would amount to an emasculation of section 6(1) and itself be an unlawful policy. Laws LJ adopted a parallel view of the Directors power to intervene in the light of public interest factors, saying (p 69C E): I see no reason why quite aside from the evidential test of no case to answer the DPP should not within his policy as presently formulated, have in mind the likelihood or otherwise of conviction when considering where the public interest lies. And I see no basis for the suggestion that the law should compel the DPP to reverse the effect of the public interest factors so as to favour discontinuance unless in his judgment they clearly point in the other direction. The test as presently formulated seems to me designed to allow proper scope for the operation of the right of private prosecution. The private prosecutor is very likely to take a different view as to where the public interest lies than does the DPP, and section 6(1), I think, implies that he is entitled to do so. The approach urged by Mr Harrison would in effect require the private prosecutor to persuade the DPP that his view of the public interest is plainly right. I consider it strongly arguable that that would place an illegitimate constraint upon the right of private prosecution; but it is enough to hold, as I would, that the present public interest policy is perfectly consistent with the objects of the statute and thus well within the proper discretion of the DPP. The approach taken by the Director and Laws LJ in Duckenfield was firmly based in history. The 1985 Act followed upon the work of the Royal Commission on Criminal Procedure 1981 to which the then Director gave evidence that: I and my predecessors have always considered that taking over a private prosecution with a view to offering no evidence would be an improper exercise of the power to intervene, save in the exceptional circumstances of a case like Turner v Director of Public Prosecutions (1978) 68 Cr App R 70. The protection against unjustified prosecution lies, in my view, with the courts. If process is granted to a private prosecutor, the case should, in my view, be allowed to proceed subject to the normal rules of evidence and procedure. The then Attorney General, Sir Michael Havers, also stated to the Commission that he did not think it right that any attempt to control generally the private prosecutor should be made through the Directors' powers to take over a case and offer no evidence or my power to enter a nolle prosequi. Both would smack of interference by the Executive in the citizen's right of free access to the Courts; it is better that the control be by judicial process. (21 Osgoode Hall LJ 181) I note in parenthesis that the Commission itself, at para 7.47, had noted the position of the great majority of our witnesses who argue that the private prosecution is one of the fundamental rights of the citizen in this country and that it is the ultimate safeguard for the citizen against inaction on the part of the authorities, although questioning whether the very rare incidence of prosecutions by private citizens seemed a sufficient basis for this position. It had recommended that a private prosecution should only be brought after application to a Crown prosecutor, who would apply the same criteria as he would apply to any other prosecution in deciding whether to take the case on, and that, if the Crown prosecutor decided not to take it on, the private person should be able to apply to a magistrates court for leave to commence proceedings. This recommendation for automatic notification was not adopted, either then or when effectively repeated by the Law Commission in paragraph 13 of its 1998 report, Consents to Prosecution, Instead, the basic right to institute a private prosecution was re enacted and remains in section 6(1). The views expressed to the Commission and by the Director and by Laws LJ in Duckenfield, on the inter relationship between private prosecution and the power to intervene and take over the conduct of proceedings, have a sound basis in constitutional principle. That is the right of access to justice, a right which is granted by section 6(1) and which section 6(2) cannot have been intended to make ineffective or subvert. It is well recognised that a right of access to a court can, as Mr Fitzgerald QC submitted, only be removed by clear and specific words. In R v Lord Chancellor, ex p Witham [1998] QB 575, Laws J rightly identified access to a court as a right given special weight by the common law, and continued, at p 585: It has been described as a constitutional right, though the cases do not explain what that means. In this whole argument, nothing to my mind has been shown to displace the proposition that the executive cannot in law abrogate the right of access to justice, unless it is specifically so permitted by Parliament; and this is the meaning of the constitutional right. That approach follows from general principle. Parliament legislates against the background of rights which the common law treats as fundamental or constitutional. Legislation is to be construed as displacing such rights only so far as it contains clear and specific provision to this effect: see eg R v Secretary of State for the Home Department, Ex p Pierson [1998] AC 539, 587C G and 591E F. The principle is very relevant when considering the extent to which the general power to take over [the] conduct of a private prosecution conferred by section 6(2) of the 1985 Act embraces the power to take over proceedings for which there is a proper evidential basis and to which no public policy objection can be raised, not in order to pursue them but in order to bring them to an end, simply because, in the Directors own paper assessment, the proceedings are more likely than not to fail, applying the test set out in para 106 above. Its relevance is heightened by (a) the inherent limitations of any evidential assessment on paper of the prospects of criminal conviction, (b) the fact that in another persons equally reasonable assessment the proceedings may well be more likely than not to succeed and (c) the role of private prosecutions, as a type of democratic long stop or safety valve, in enabling complainants whose case is that they know that they have been victims of serious offending to bring the matter before a criminal court, in circumstance where public prosecutors have on balance assessed their case as lacking sufficient evidential strength. The new policy adopted for the first time in 2009 assimilates public and private prosecutions for the purposes of both limbs of the Full Code Test. First, when (and if) the CPS finds out about a private prosecution, it should take over and continue with the prosecution if both limbs are clearly shown and there is a particular need for the CPS to take over the prosecution. Secondly, a private prosecution should be taken over and stopped if, upon review of the case papers, either the evidential sufficiency stage or the public interest stage of the Full Code Test is not met, and, even then, it may be necessary to do this where there is a particular need to do so, such as where the prosecution is likely to damage the interests of justice. One would have thought that this last situation and the examples given (which include situations such as that where the prosecution interferes with the investigation or prosecution of another criminal charge or is vexatious) would all lead to failure at the second, public interest stage of the Full Code Test, but that is presently unimportant. Finally, a private prosecution should not be taken over if the papers clearly show that both stages of the Full Code Test are met, and there is no particular need for the CPS to take over the prosecution. Under the language of the Code, as Miss Montgomery accepted, the CPS is obliged to prosecute all cases satisfying the two stages of the Full Code Test. The policy adopted in 2009 therefore leaves no room for private prosecutions, except in cases where a private prosecutor starts proceedings before the CPS does, and the CPS decides to allow the private prosecutor to continue. The only value in the right to institute a private prosecution would, on this basis, consist in the fact that it would avoid having to take other means (eg judicial review) to stimulate the CPS into action and would, perhaps, in a few specific situations prevent a time limit for bringing a criminal charge from passing, before the CPS could be stimulated into action. Further, a considerable number of statutes expressly require that the consent of the Director of Public Prosecutions to any prosecution brought under their provisions. The statutes range alphabetically from The Agricultural Land (Removal of Surface Soil) Act 1953, section 3 to the Wildlife and Countryside Act 1981, section 28. Such consent may be given by any Crown Prosecutor on the Directors behalf: Prosecution of Offenders Act 1985, section 1(7). Under para 3.7 of the Code, the DPP or prosecutors acting on his behalf apply the Code in deciding whether to give consent to a prosecution. A justification traditionally advanced for such consent requirements is the prevention of inappropriate prosecutions: see The Law Commission Report on Consents to Prosecution 1998 (LC 255), paras 3.17 to 3.22. The Directors new policy relating to private prosecutions in effect equates all private prosecutions with prosecutions which are by statute specifically made subject to his consent. The difference is that consent has to be given in advance where a statute specifically requires consent, whereas in relation to other private prosecutions it is given only retrospectively as and when the Director (or CPS) learns of such a prosecution and acquiesces in its continuation. Miss Montgomery went so far as to submit that the suggested assimilation was a purpose of the 1985 Act. If so, it is particularly surprising that this went unnoticed by Directors of Public Prosecutions for the 24 years from 1985 to 2009. Further, on this analysis, not only Laws LJs dicta in Duckenfield but also the Court of Appeal decision in Scopelight Ltd v Chief Constable of Northumbria Police Force [2009] EWCA Civ 1156, [2010] QB 438 must be wrong. The issue in Scopelight was whether the police could retain seized material required in the context of a private prosecution, in circumstances where the CPS had decided that the second stage of the Full Code Test was not satisfied. The court (Ward, Wilson and Leveson LJJ), in a judgment given by Leveson LJ, a highly experienced criminal judge, concluded that they could. In so doing, the Court held that the CPSs view of the public interest was not determinative: there are, or at least may be, circumstances in which it is perfectly consistent for the DPP to decide not to prosecute, yet for him to decline to decide that a private prosecution is not in the public interest so as to justify his interference with it: in other words, he does not consider himself (or, in less significant cases, the CPS) the sole arbiter of the public interest and neither does the court. (para 36) and In my judgment, there is no basis either in the statutory framework, the authorities or policy to justify the proposition that a decision by the CPS not to prosecute conclusively determines that a prosecution is not in the public interest. (para 39) In these circumstances, Miss Montgomery developed in her oral submissions an alternative (and inconsistent) case. This was that, while assimilation was intended and appropriate in relation to the evidential test, it was not called for in relation to public policy; and, on this basis, there could be circumstances in which a private prosecutor could institute and pursue proceedings which the CPS would not regard as being in the public interest. This alternative hybrid finds no support in the actual language of the Code and the 2009 policy. It is as regards public policy consistent with Scopelight, but as regards the evidential test inconsistent with Duckenfield. It involves the strange proposition that a private prosecutor is free to take a different view from the Director and CPS on matters of public policy, but not free to take a different view on the effect of the available evidence. I note in parenthesis that it is also inconsistent with the Scottish position indicated in X v Sweeney 1982 JC 70, where the Lord Advocate had declined (and foregone the right) to prosecute on grounds of evidential weakness (the mental state of a claimed victim of rape), but a later date the victim, having recovered, petitioned for leave to bring a private prosecution. Lord Elmslie in the Inner House said: The rights of a private prosecutor in our system of criminal jurisprudence have grown up alongside those of the Lord Advocate and indeed, historically, they bulked larger in earlier times than those of the King's Advocate. These rights still exist and there seems to be no good reason in principle for saying that they should not be available in any case in which the Lord Advocate has, for any reason, declined to prosecute an offender to a conclusion. I do not accept that the scope of the right to institute, and by necessary implication once instituted pursue, a private prosecution preserved by section 6(1) can have been intended to be emasculated in the manner indicated by the Code and 2009 policy and by both of Miss Montgomerys primary and alternative cases. Laws LJs words at pp 68 69 in Duckenfield is in my opinion appropriate. Emasculate does not mean eliminate. The 1985 Act must be construed in the light of the long standing constitutional significance attaching to the right of private prosecution and the long standing understanding of the scope of the Directors right to intervene stated by the then Director as well as the Attorney General to the Royal Commission which reported in 1981 and reflected in the subsequent practice which was explained in Duckenfield and continued up to 2009. Nowhere, until 2009, is there any suggestion that the Director could or should exercise the power to take over and discontinue on the simple basis of evidential weakness, and certainly not evidential weakness not amounting to abuse of process by the pursuit of a hopeless case on which no reasonable tribunal could convict. The fact that the discretion conferred by section 6(2) is in general words carries the matter nowhere. Parliament must, as Lord Reid put it in a parallel context in Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997, 1030C have conferred the discretion with the intention that it should be used to promote the policy and objects of the Act. The policy and objects of the 1985 Act cannot have been intended to undermine the right, long recognised as fundamental, of private prosecution in the manner which the Directors new policy would do. The power to take over the conduct of cases came into existence to enable the Director to carry on privately instituted cases which called for public prosecution. Despite the unspecific nature of the words of section 6(2), this subsection was accepted as including a power to take over and discontinue cases on general public policy grounds. The Director could be expected to be a good judge of these, which may (as where harm to national interests is involved or where the defendant has already suffered regulatory, civil or social consequences) be non justiciable. But evidential weakness, without more, is a matter on which the courts have developed their own clear policy and is a quite different matter. Litigants are not to be shut out from access to justice to pursue cases which they are otherwise on the face of it entitled to pursue unless such cases cannot reasonably hope to succeed. That is the test which the Director, like all his predecessors, applied until 2009. In my opinion, he exceeded his properly interpreted power under section 6(2) when in 2009 he departed from that long standing policy. An evidential test of balance of likelihood may be very appropriate as a test which the Director applies to CPS prosecutions. It is quite a different thing to impose it on private prosecutions. The Law Commission in its 1998 report, Consents to Prosecution, noted that private prosecutions were likely to be instituted which failed one or other of the evidential and public interest tests applied by the CPS (para 5.19), but also noted that it was regarded as an important safeguard for some members of society who believed that an individual prosecutor had misjudged the evidence in a case (para 5.4). It did not regard the fundamental right to institute a private prosecution as undermined by the harm that might result from an unsuccessful prosecution of an innocent defendant or from any prosecution not in the public interest, for three reasons (para 5.22), which I set out in Jones v Whalley [2007] 1 AC 63, para 42. They were (1) a risk that an individual Crown prosecutor will either misapply the Code or more likely, given the width of the Code tests apply a personal interpretation to the tests which, although not wrong, might differ from that of other prosecutors, (2) the perception in the eyes of some that the code may fail to achieve a proper balance and then this significant reason: (3) It should not be assumed that if it is wrong to bring a public prosecution then it is also wrong to bring a private prosecution. If, for example, a case is turned down by the CPS because it fails the evidential sufficiency test, but only just; if the private prosecutor knows that the defendant is guilty (because, say, he or she was the victim and can identify the offender); and if the case is a serious one, then a private prosecution might be thought desirable." These three reasons all inter relate. Private prosecution is, and I think always has been, a safeguard against the feelings of injustice that can arise when, in the eyes of the public, public authorities do not pursue criminal investigations and proceedings in a manner which leads to culprits being brought before a criminal court. The impunity which offenders appear to enjoy can be socially detrimental. This is, as the Law Commission rightly said, particularly so in those cases where a victim actually knows that the offence has been committed but finds that a CPS prosecutor does not think on a balance of likelihood that his evidence, if given orally in court, will be accepted. The feeling of injustice will be particularly acute, if (as is accepted, but is in any event clear, on the facts of the present case) the CPS prosecutors decision was a fine one, and the alleged victims or another prosecutor might equally reasonably have concluded that the case was one in which the evidential test was satisfied. All these considerations underline the sharp distinction between, on the one hand, the Directors power in the Code to set his own standards for publicly funded and pursued prosecutions and, on the other hand, his power to take over and discontinue a private prosecution. They underline the radical nature of the change purported to be introduced on a blanket basis by the policy issued in 2009. I am prepared to assume, though there is no evidence for this in the policy itself or the papers (and little support for it under the Code in the general words of clause 2.3 which Lord Wilson cites in para 22), that the CPS would recognise that it should be prepared to depart from that policy in particular exceptional cases (see British Oxygen Co Ltd v Board of Trade [1971] AC 610, 625C F). Even so, I regard a pure evidential test as outside the scope of section 6(2). The evidence filed on behalf of the Director in this case does not indicate that any investigation or analysis was undertaken of the actual incidence of, still less of any actual problems or unfairness created by, private prosecutions before the change of policy in 2009. It does however set out in general terms a number of considerations as the rationale for the change. These included the costs to society and those involved of a failed trial procedure and a suggested obvious need to ensure that cases were not brought where there is insufficient evidence and little prospect of conviction (witness statement of Alex Solomon, of the CPSs Strategy and Policy Directorate). But these are all considerations inherent in the right of access to a court, which the court controls only by eliminating cases that could not reasonably lead to conviction. The obvious need to eliminate cases where a reasonable jury, bench or judge could reasonably convict is not one which has ever occurred to courts, or which occurred to the Director, whose policy was the exact opposite until 2009. The Directors evidence also suggests that it is axiomatically wrong to have different tests for, or for a defendant to be exposed differently, in the context of private and public prosecutions. As an assertion, this begs the question, particularly in the light of decades, if not centuries, during which the distinction has been accepted as natural. For the reasons I have given and as confirmed by the authorities to this day, there are significant differences between private and public prosecutions. The differences are of principle and they arise from the constitutional status of the right to institute a private prosecution and of the right of access to the courts for that purpose. Private prosecutions cannot axiomatically be submitted, or taken over in order to be submitted, to whatever the Director may adopt as the appropriate evidential and public policy tests for the purposes of prosecutions which he himself initiates. It is not relevant on this appeal to consider the special case (probably very unusual) of a prosecution taken over by the Director on public policy grounds with the intention of pursuing it to trial, but in relation to which the CPS later concluded in the light of newly discovered material that the evidential test was no longer met. That special case does not arise here. Assuming that the Director would in such a case be entitled to apply his own evidential test, that does not throw any light on the scope of the Directors power to take over a private prosecution with a view to discontinuance. Finally, though as a lesser consideration, at a practical level there also appears to me to be a considerable difference between the pursuit by the CPS at public expense of a prosecution and the pursuit by a private person of a prosecution at his own cost in terms of time, as well as at his own expense subject to the courts power under section 17 of the 1985 Act to order reasonable compensation in respect of any expenses properly incurred in respect of proceedings for an indictable offence or in respect of a summary offence before a Divisional Court or the Supreme Court. Mr Fitzgerald had as an alternative submission the proposition that, even if the Director could otherwise take over and discontinue cases which did not meet the evidential test, he could not do so in cases where the private prosecutor could and did, equally reasonably, conclude that the evidential test was met, eg because he firmly believed that his oral testimony, if allowed to be presented before a court, would be believed. In the light of what I have already said, the possibility of two reasonable views is a strong reason why the right of private prosecution remains a valuable constitutional right, which is not to be taken as affected by a heightened evidential test well in excess of any that a criminal court would apply, in the absence of specific statutory authority. But, if what I have already said is to be rejected (as is I understand the view of the majority in this court), then I would align myself emphatically with Lady Hales further observations in her paras 131 to 133. Whatever else Parliament may be taken to have embraced by section 6(2), I see no reason at all to suppose that it included situations in which the alleged victim, who knows the facts, has commenced a private prosecution on the basis of his or her reasonably held conclusion that the test set out in para 98 above is met. Mr Fitzgerald had a yet further string to his bow, in case he had failed in his first two submissions. That is that the judgment formed by the CPS prosecutor in this case was Wednesbury unreasonable (Associated Provincial Picture Houses Ltd v Wednesbury Corpn [1948] 1 KB 223). I have considerable sympathy with the view that the CPSs assessment in this case was a harsh judgment, picking up small points and supposed but barely significant discrepancies in relation to charges which would ultimately have depended on an overall judgment on credibility, and would have been supported to a large extent by hard evidence, including in some measure injuries difficult to attribute to anything other than deliberate actions by the alleged offenders who were clearly identified by three persons as being at the scene and responsible for assault on 17 May 2010 and made no comment when interviewed under caution. I should add that I am not entirely convinced that the CPS applied even its own test correctly, in the sense which Lady Hale identifies in paras 126, 128 and 129 and which I have identified in para 98 above; although the relevant CPS review starts by setting out that test in full (para 6), it later describes it as a more likely than not to convict test (paras 7.1) and thereafter refers simply to the question as being whether there is a realistic prospect of conviction and to the court being unlikely [to] be satisfied of guilt (paras 7.4, 8 and 10). However, having regard to the views I have already expressed and which others hold, it is unnecessary for me to say more on these aspects. I would allow the appeal. LADY HALE I agree entirely with the judgment of Lord Mance and, like him, I would allow this appeal. For the reasons he gives, I cannot accept that it was the intention of Parliament, when setting up the Crown Prosecution Service in 1985, to allow the Director to reduce the centuries old right of private prosecution almost to vanishing point: in effect, to a right to pursue those prosecutions which the CPS are content to have pursued but would prefer to have pursued by some one else. Like him, I consider that the right of access to a court to prosecute an alleged offender is as much a constitutional right as a right of access to a court to bring a civil claim. The power to cut down that right in such a drastic manner could only be conferred by clear words and not by the repetition of very general words, especially when those very general words had previously been thought by all concerned to do no such thing. I add only a few words because the issue is of such fundamental importance for the protection of all victims of crime, but in particular of those most vulnerable victims, those who have traditionally had such difficulty in getting their voices heard or, if heard, believed. At the very least, in my view, this court should have acceded to the alternative case advanced by Mr Fitzgerald on the claimants behalf. The essential difference between the evidential tests applied by the courts and by the CPS relates to the likelihood of a witness being believed. The courts ask themselves: Is the evidence capable of being believed? If it is, and the jury or magistrates believe it, is it sufficient to prove the case? Is there, in other words, a case to answer? It is for the jury, judge or magistrates to decide whether they do in fact believe the witness. The CPS, on the other hand, ask themselves how likely it is that the witness will be believed. At least, that is what it looked as though the prosecutor was doing in this case. However, it is not quite as straightforward as that. There is more than one view of how the evidential stage of the CPS test is supposed to work. As Lord Mance explains in paragraph 98 a realistic prospect of success is defined in the Code as where an objective, impartial and reasonable jury, bench of magistrates or judge, properly directed and acting in accordance with the law, is more likely than not to convict the defendant of the charge alleged. Presumably, therefore, the reference to a reasonable jury is designed to allow certain types of case to proceed even though it is well known that juries find it difficult to convict. With all due respect to Lord Neuberger, it cannot be a simple better than evens or is a conviction more likely than not? test. As Toulson LJ pointed out in R (B) v Director of Public Prosecutions (Equality and Human Rights Commission intervening) [2009] EWHC 106 (Admin), [2009] 1 WLR 2072, para 50, if a prosecutor were to adopt this so called bookmakers approach then few allegations of so called date rape would be allowed to proceed. The same could be said of complaints brought by children or mentally ill or disabled people. It was suggested in that case that the prosecutor should imagine himself to be the fact finder and ask himself whether, on balance, the evidence was sufficient to merit a conviction taking into account what he knew about the defence case: para 49. That suggests a test of is it more likely than not that I would convict, knowing what I do about the case? However, the reference to a reasonable jury, judge or magistrate must contemplate that there are at least some cases in which different courts could reasonably take different views of the evidence in the same case. So the reasonable prosecutor should ask himself what a reasonable court might do, not necessarily what he himself would do. Due allowance should also be made for the fact that it is only when the matter actually comes on for trial that it will be possible to decide whom to believe. We all know that the evidence can come out very differently in court from how it comes over on the page: sometimes it is fatally undermined by cross examination but sometimes it is strengthened. But if the test does contemplate that different courts could reach different views, I have grave difficulty in understanding how the CPS could possibly have decided to stop the prosecution in this case on evidential grounds. It is admitted that there were two reasonable views of the evidence in this case, that a reasonable prosecutor could have formed the view that it was indeed more likely than not that a court would convict. That is scarcely surprising. The time when and place where the claimant suffered injuries are not in doubt. The injuries are consistent with an assault having taken place. Nor is the presence of the accused at the scene seriously disputed. As yet they have offered no alternative explanation of events. So if there are admittedly two reasonable views of the CPS defined realistic prospect of success in this case, I cannot understand how it was not allowed to proceed, unless the CPS test in fact means something rather different. Perhaps, in effect, it means, do I, as a reasonable prosecutor, think that it is more likely than not that, when this case gets to court, there will be a conviction? But if that is the test, we are back to a simple better than evens test, which contemplates that juries may indeed be unreasonable and prejudiced, and many cases which are in fact prosecuted now would not be taken forward. These nuances may seem overly technical, but they matter hugely to the protection of vulnerable people from all forms of neglect and abuse, whether physical or sexual. The requirement of corroboration was abolished two decades ago. But one has only to listen to the radio or read the newspapers, especially at present, to know that apparently credible complaints have not been taken further because of so called lack of evidence. This was presumably not because of a formal requirement of corroboration but because of the difficulty of securing convictions without some independent evidence which confirms the complainants account. Despite this reluctance, we have made great strides in recent years in understanding that vulnerable witnesses are capable of being believed and in helping them to give the best evidence that they can. A commendable willingness to prosecute in the face of considerable odds has been part of this advance. For my part, therefore, I consider that Mr Fitzgeralds alternative case is unanswerable. How can it possibly have been Parliaments intention to allow the CPS to take over and prevent a private prosecution where a reasonable prosecutor could take the view that a reasonable court is likely to convict? This is to leave the victim (who, as Lord Mance points out, knows whether or not she is the victim of crime) to the chance of which among many no doubt entirely reasonable prosecutors handles her case. The fact that this is done on paper without any face to face contact with the witnesses only increases the possibility that reasonable prosecutors can take different views. The possibility of judicial review of the prosecutors decision is not a good enough safeguard, as this case demonstrates only too clearly. Just as a reasonable prosecutor could take the view that the case should proceed, a reasonable prosecutor could take the view that it should not. The possibility of bringing a private prosecution, however remote to most people, is a much more effective safeguard. Now that the new policy has effectively removed it, the victims of crime will have little prospect of challenging the prosecutors decisions. This is likely to increase, rather than decrease, the risk of inertia or partiality on the part of authority (see Gouriet v Union of Post Office Workers [1978] AC 435, 477). That risk is already considerable in the sort of problematic cases about which I am most concerned. Nor am I the only person to be concerned about such cases. They are likely to involve a violation of the victims rights under article 8 or, in extreme cases, article 3 of the European Convention on Human Rights. Under both articles, the state has a positive obligation to provide an effective deterrent, in the shape of the criminal law: see, for example, X and Y v The Netherlands (1985) 8 EHRR 235. That obligation is not fulfilled if a private prosecution, which a reasonable prosecutor could consider more likely than not to succeed before a reasonable court, can be prevented because another prosecutor takes a different view.
+The issue on this appeal is whether and if so in what circumstances the Financial Services Authority (FSA) should, as a condition of obtaining a freezing injunction under section 380(3) of the Financial Services and Markets Act 2000 (FSMA) and/or section 37(1) of the Senior Courts Act 1981 (SCA), be required to give to the court a cross undertaking in damages in favour of third parties affected by the injunction. The answer I would give is that there is no general rule that an authority like the FSA acting pursuant to a public duty should be required to give such an undertaking, and that there are no particular circumstances why it should be required to do so in the present case. The issue has been argued as a matter of principle between the FSA and Barclays Bank plc (Barclays), a potentially affected third party. However, a brief statement of the background is appropriate. On 20th December 2010 proceedings were commenced by the FSA against three defendants (Sinaloa Gold plc, a person or persons trading as PH Capital Invest and a Mr Glen Lawrence Hoover) on the basis that (a) Sinaloa was promoting the sales of shares without being authorised to do so and without an approved prospectus, contrary to FSMA sections 21 and 85, (b) PH Capital Invest and Mr Hoover were knowingly engaged in this activity, and (c) PH Capital Invest was as an unauthorised person carrying on regulated activities in breach of FSMA section 19 in various other respects. which Mr Hoover was the sole authorised signatory. Before issuing these proceedings, the FSA had on 17th December 2010 obtained without notice an injunction freezing the defendants assets under sections 380(3) FSMA and/or 37(1) SCA. Barclays were notified of the order on 20th December 2010, and the injunction was continued by David Richards J at a hearing on notice on 31st December 2010. Sinaloa Gold plc had six bank accounts at Barclays, in respect of all of As originally issued, Schedule B to the injunction, headed Undertakings given to the Court by the Applicant, read: (1) The Applicant does not offer a cross undertaking in damages. (4) The Applicant will pay the reasonable costs of anyone other than the Respondents which have been incurred as a result of this order including the costs of finding out whether that person holds any of the Respondent's assets and if the court later finds that this order has caused such person loss, and decides that such person should be compensated for that loss, the Applicant will comply with any order the court may make. (italics added) By the time the injunction was continued, the possible inconsistency between paragraphs (1) and (4) was observed, and the FSA was required to agree to add at the end of paragraph (1) the phrase save to the extent provided in paragraph (4) below, without prejudice to its right to apply to vary paragraph (4). On 12th January 2011 the FSA applied to have the words which I have italicised in paragraph (4) removed. Barclays intervened to oppose the application, which was refused by HHJ David Hodge QC on 25th January 2011 [2011] EWHC 144(Ch). On 18th October 2011 the Court of Appeal reversed his decision and ordered a cross undertaking in the terms of paragraph (4) without the italicised words [2012] Bus LR 753. The effect was to preserve the undertaking in respect of costs incurred by third parties (which the FSA did not dispute), but to eliminate any requirement that the FSA give an undertaking in respect of losses incurred by third parties. Barclays now appeals by permission of this Court. The FSA and FSMA The FSA is governed by FSMA. Schedule 1 to FSMA makes provision about its status, including an exemption from liability in damages (paragraph 12 below). The FSA was given general functions which in discharging it must, so far as is reasonably possible, act in a way which is compatible with defined regulatory objectives and which it considers most appropriate for the purpose of meeting those objectives: FSMA, section 2(1) and (4). Its general functions include making rules, preparing and issuing codes, giving general guidance and determining general policy and principles by reference to which to perform particular functions. The regulatory objectives include maintaining market confidence in the UK financial system (section 3), protecting and enhancing the stability of the UK financial system (section 3A, as inserted by section 1(3) of the Financial Services Act 2010), securing the appropriate degree of protection for consumers (section 5) and reducing the extent to which it is possible for a business carried on by a regulated person or in contravention of the general prohibition to be used for a purpose connected with financial crime (section 6). Section 19 in Part II of FSMA prohibits any person from carrying on, or purporting to carry on, a regulated activity in the UK unless authorised (under sections 40 to 43 in Part IV) or exempt. This is the general prohibition, for contravention of which penalties are set by section 23. Section 21 contains specific restrictions on financial promotion, including communicating an invitation or inducement to engage in investment activity in the course of business, with penalties for contravention being set by section 25. Section 85 prohibits dealing in transferable securities without an approved prospectus. Section 380(3) provides that, if, on the application of the FSA or the Secretary of State, the court is satisfied that any person may have contravened, or been knowingly concerned in the contravention of, a relevant requirement it may make an order restraining him from disposing of, or otherwise dealing with, any assets of his which it is satisfied he is reasonably likely to dispose of or otherwise deal with. A relevant requirement includes a requirement which is imposed by or under this Act (section 380(6)(a)) and so includes the requirement under section 19 to be authorised or exempt before carrying on a regulated activity. Under Part IV of FSMA, permission may be given subject to such requirements as the FSA thinks appropriate (section 43), which may include an assets requirement prohibiting the disposal of, or other dealing with, any of the permitted persons (As) assets or their transfer to a trustee approved by the FSA (section 48(3)). Under section 45(4), the FSA may on its own initiative vary a previously included Part IV permission to include an assets requirement. Under section 48(4) and (5), if the FSA imposes an assets requirement and gives notice to any institution with which a person (A) keeps an account, the notice has the effect that (a) the institution does not act in breach of any contract with A in refusing any instruction from A in the reasonably held belief that complying would be incompatible with the requirement and (b) if the institution complies with the instruction, it is liable to pay to the FSA an amount equal to that transferred from or paid out of As account. In relation to authorised persons, the FSA thus enjoys a right to impose a freezing order without going to court and without any occasion arising on which a cross undertaking could be required of it. The FSA also enjoys an exemption from liability in damages, set out in paragraph 19 of Schedule 1 to FSMA: (1) Neither the Authority nor any person who is, or is acting as, a member, officer or member of staff of the Authority is to be liable in damages for anything done or omitted in the discharge, or purported discharge, of the Authority's functions. (2) Neither the investigator appointed under paragraph 7 nor a person appointed to conduct an investigation on his behalf under paragraph 8(8) is to be liable in damages for anything done or omitted in the discharge, or purported discharge, of his functions in relation to the investigation of a complaint. (3) Neither sub paragraph (1) nor sub paragraph (2) applies (a) if the act or omission is shown to have been in bad faith; or (b) so as to prevent an award of damages made in respect of an act or omission on the ground that the act or omission was unlawful as a result of section 6(1) of the Human Rights Act 1998. Paragraph 19(1) of Schedule 1 would protect the FSA, if it was, for example, the subject of a claim by A on whom it had imposed an assets requirement under section 45(4), by an institution to which it had notified the imposition of such a requirement under sections 48(4) and (5) or by any other third person. Paragraphs 7 and 8 of Schedule 1 require the FSA to establish a scheme for the independent investigation of complaints against it (other than complaints more appropriately dealt with in another way, e.g. by referral to the Upper Tribunal under the appeals procedure contained in Part IX of FSMA or by the institution of other legal proceedings), and the issue and, where appropriate, publication of reports on such complaints. The present issue The issue now before the Supreme Court raises for consideration: (a) whether and how far the position of the FSA, seeking an interim injunction pursuant to its public law function and duty, is to be equated with that of a person seeking such an injunction in pursuance of private interests; (b) whether and how far the position regarding the giving of any cross undertaking differs according to whether it is to protect a defendant or a third party; and (c) whether there is any coherent distinction between cross undertakings in respect of third party losses and costs. Taking the first point, I propose to start with the requirements which apply when a claimant is pursuing private interests. Since the first half of the 19th century such claimants have when seeking an interim injunction been required to give the usual undertaking. That means an undertaking to abide by any order this Court may make as to damages in case the Court shall hereafter be of opinion that the Defendants . shall have sustained any by reason of this order which the [claimant] ought to pay: see e.g. Tucker v New Brunswick Trading Company of London (1890) 44 Ch D 249, 251. The practice regarding defendants is reflected in CPR 1998, Practice Direction (PD) 25A 5.1(1), requiring, unless the court orders otherwise, an undertaking to pay any damages which the respondent sustains which the court considers the applicant should pay. But modern practice, reflected in PD 25A 5.1A, also provides that, when the court orders an injunction it should consider whether to require an undertaking by the applicant to pay any damages sustained by a person other than the respondent, including another party to the proceedings or any other person who may suffer loss as a consequence of the order. Asset freezing (formerly Mareva) injunctions were developed by the courts in the late 1970s and 1980s. Because of their particular, potentially stringent effects, they are separately regulated in the rules. PD 25A 6 annexes a sample wording which may be modified in any particular case. In addition to an undertaking in the usual form in favour of the defendant, it includes an undertaking in favour of third persons in identical form to paragraph (4) of that originally required in this case (paragraph 6 above). The history of the undertaking in favour of third persons can be traced back to a statement by Lord Denning MR in Prince Abdul Rahman Bin Turki Al Sudairy v Abu Taha [1980] 1 WLR 1268, 1273 and to decisions by Robert Goff J in Searose Ltd v Seatrain UK Ltd [1981] 1 WLR 894 and Clipper Maritime Co Ltd of Monrovia v Mineralimportexport [1981] 1 WLR 1262. In Searose, Robert Goff J, building on Lord Dennings statement, held that, where a bank had to incur costs in identifying whether a bank account existed within the terms of a Mareva injunction, it should be entitled to an undertaking to cover its reasonable costs, before it incurred them. In Clipper Maritime the freezing injunction obtained by the claimants covered cargo or bunkers belonging to the defendants Mineralimportexport on board a vessel which was on time charter to Mineralimportexport and which was in the port of Barry. Its effect might have been to inhibit the port authority in its use of the port and to cause it loss of income. An undertaking was required to cover any actual income lost to the port authority. In the later case of Galaxia Maritime SA v Mineralimportexport [1982] 1 WLR 539, the defendants were again Mineralimportexport and a freezing injunction was initially granted to prevent them from removing from the jurisdiction (just before Christmas) a cargo on a third partys vessel which was only on voyage charter to Mineralimportexport. The Court of Appeal categorically refused to continue the interim injunction on any terms, since it could effectively block the third partys vessel indefinitely. Under the standard forms of injunction currently in use for both ordinary interim injunctions and freezing injunctions, the enforcement of the undertaking is expressed to be in the courts discretion. There is little authority in this area. Neill LJ undertook a useful review of the general principles in Cheltenham and Gloucester Building Society v Ricketts [1993] 1 WLR 1545, 1551D 1552D. The position regarding undertakings in favour of defendants has been more recently reviewed in Commercial Injunctions, by Steven Gee QC, 5th ed (2004 and First Supplement), paragraphs 11.017 11.032, while the authorities on undertakings in favour of third parties are covered in paragraphs 11.008 11.012. An inquiry into damages will ordinarily be ordered where a freezing injunction is shown to have been wrongly granted, even though the claimant was not at fault: paragraph 11.023. But, depending on the circumstances, it may be appropriate for the court to await the final outcome of the trial before deciding whether to enforce: see the Cheltenham and Gloucester case, p.1552B. However, Professor Adrian Zuckerman has pointed out (The Undertaking in Damages Substantive and Procedural Dimensions [1994] CLJ 546, 562) that it does not follow from a defendants success on liability that he did not in fact remove (or seek to remove) assets from the reach of the claimant, justifying an interim freezing order. The court retains a discretion not to enforce the undertaking if the defendants conduct makes it inequitable to enforce: F Hoffmann La Roche & Co AG v Secretary of State for Trade and Industry [1975] AC 295, 361E, per Lord Diplock. It seems likely that compensation is assessed on a similar basis to that upon which damages are awarded for breach of contract: Cheltenham and Gloucester, p.1552C D, per Neill LJ. The position regarding third persons is necessarily different in certain respects. The purpose of the cross undertaking is to protect them so long at least as they are innocent third persons not implicated in the alleged wrongdoing or conduct justifying the freezing order whether or not the freezing order was justified as against the defendant. That purpose goes back to the orders first made in the Searose and Clipper Maritime cases. I turn to the position of an authority acting in pursuit of public functions. The leading authority is the Hoffmann La Roche case. Following a report by the Monopolies Commission the Department of Trade and Industry made an order under the relevant monopolies legislation: the Regulation of Prices (Tranquilising Drugs) (no. 3) Order 1973 (SI 1973 No 720), setting maximum prices for certain drugs. Hoffmann La Roche issued proceedings claiming that the Monopolies Commission report had been unfair and contrary to natural justice and was invalid, and that the Regulations based upon it were likewise ultra vires and invalid. The Department issued proceedings, and sought an injunction to restrain Hoffmann La Roche from charging prices in excess of the Order prices under a provision in the primary legislation (section 11 of the Monopolies and Restrictive Practices (Inquiry and Control) Act 1948) which provided that compliance with any such order shall be enforceable by civil proceedings by the Crown for an injunction or for any other appropriate relief. The issue argued was whether the Department should be required to give a cross undertaking in damages in order to obtain the order. The House recognised the general rule requiring a cross undertaking as a condition of the grant of an interim injunction in ordinary litigation: see e.g. per Lord Reid at p 341B. It recognised that, since the Crown Proceedings Act 1947, there was no continuing justification for the former blanket practice whereby the Crown was not required to give any such undertaking in any circumstances (even in cases where it was asserting proprietary or contractual rights which a private person could have and enforce): per Lord Reid at p 341C and Lord Diplock at p 362B H. But it considered, by a majority, that the Crown remains in a position different from that of any private individual when it brings what Lord Diplock described as a law enforcement action: p 363B. The majority did not express itself with one voice regarding the implications of this distinction. Lord Reid thought special circumstances or special reason to be required before the Crown should have to expose itself by cross undertaking: p 341E and G. Lord Cross of Chelsea however accepted that it might be fair to require that the Crown give a cross undertaking where the defendants defence was that what he is doing or proposing to do was not prohibited by the order in question, but that, where as here the defence was that what was on the face of it the law of the land was not in fact the law, exceptional circumstances would be required before the court should countenance the possibility that the Crown might be deterred from applying for an interim injunction by the need to give a cross undertaking: p 371D G. Lord Morris of Borth y Gest also focused on the apparent unlawfulness of the sales in excess of the order prices which Hoffmann La Roche was threatening. Lord Diplock saw no reason, since the Crown Proceedings Act, for a rigid rule that the Crown itself should never be required to give the usual undertaking in damages in a law enforcement action, but equally no basis for the converse proposition that the court . ought always to require an undertaking: p 364C D: this was because (p 364E): When . a statute provides that compliance with its provisions shall be enforceable by civil proceedings by the Crown for an injunction, and particularly if this is the only method of enforcement for which it provides, the Crown does owe a duty to the public at large to initiate proceedings to secure that the law is not flouted . Lord Diplock continued (p 364F G): I agree therefore with all your Lordships that the practice of exacting an undertaking in damages from the Crown as a condition of the grant of an interlocutory injunction in this type of law enforcement action ought not to be applied as a matter of course, as it should be in actions between subject and subject, in relator actions, and in actions by the Crown to enforce or to protect its proprietary or contractual rights. On the contrary, the propriety of requiring such an undertaking from the Crown should be considered in the light of the particular circumstances of the case. In concluding that no cross undertaking should be required, Lord Diplock repeated that the Crown was seeking to enforce the law by the only means available under the governing statute, and he, like Lord Morris and Lord Cross, stressed that Hoffmann La Roche was threatening to breach an apparently valid order approved by each House of Parliament: pp 364H 365B. On this basis, he also said (p 367A C): So in this type of law enforcement action if the only defence is an attack on the validity of the statutory instrument sought to be enforced the ordinary position of the parties as respects the grant of interim injunctions is reversed. The duty of the Crown to see that the law declared by the statutory instrument is obeyed is not suspended by the commencement of proceedings in which the validity of the instrument is challenged. Prima facie the Crown is entitled as of right to an interim injunction to enforce obedience to it. To displace this right or to fetter it by the imposition of conditions it is for the defendant to show a strong prima facie case that the statutory instrument is ultra vires. However, he went on (p 367C D): Even where a strong prima facie case of invalidity has been shown upon the application for an interim injunction it may still be inappropriate for the court to impose as a condition of the grant of the injunction a requirement that the Crown should enter into the usual undertaking as to damages. For if the undertaking falls to be implemented, the cost of implementing it will be met from public funds raised by taxation and the interests of members of the public who are not parties to the action may be affected by it. Lord Wilberforce, dissenting in Hoffmann La Roche, was unenthusiastic about English laws unwillingness to accept that a subject should be indemnified for loss sustained by invalid administrative action (p 359A), but rested his dissent ultimately on the fact that, without a cross undertaking, the Crown in Hoffmann La Roche would be put in a position where, if it ultimately lost the action, the injunction would have enabled it (through the National Health Service) to profit during the period while the injunction precluded Hoffmann La Roche from selling to the National Health Service at market, rather than order prices. Kirklees Metropolitan Borough Council v Wickes Building Supplies Ltd [1993] AC 227 was another case concerned with a claim to enforce apparently valid legislation, this time by a local authority and relating to Sunday trading. Lord Goff of Chieveley at p 274C D read the speeches in Hoffmann La Roche as dismantling an old Crown privilege and substituting for it a principle upon which, in certain limited circumstances, the court has a discretion whether or not to require an undertaking in damages from the Crown as law enforcer. In extending the principle to all public authorities, he said (p 274D E): The principle appears to be related not to the Crown as such but to [T]he the Crown when performing a particular function. considerations which persuaded this House to hold that there was a discretion whether or not to require an undertaking in damages from the Crown in a law enforcement action are equally applicable to cases in which some other public authority is charged with the enforcement of the law: see e.g. Lord Reid, at p. 341G, Lord Morris of Borth y Gest, at p. 352C, and Lord Cross of Chelsea, at p. 371B G. In In re Highfield Commodities Ltd [1985] 1 WLR 149 Sir Robert Megarry V C interpreted Hoffmann La Roche as deciding that no cross undertaking should be required of the Crown unless the defendant showed special circumstances justifying the requirement. In Attorney General v Wright [1988] 1 WLR 164 Hoffmann J regarded as undeniable (even if, to some eyes, not particularly attractive) the potency of the principle that Crown officials should not be inhibited from performing their duty to take action to enforce the law by the fear that public funds may be exposed to claims for compensation by people who have thereby caused [sic] loss (p 166C D). On the facts, however, he required an undertaking to be given by the receiver of, and to be met out of the funds of, the charity for whose benefit the Attorney General was suing to recover property. Although the Attorney General was not suing to protect any proprietary or contractual right of the Crown, he was suing in the proprietary interests of the charity, which could be expected to give an undertaking. In Director General of Fair Trading v Tobyward Ltd [1989] 1 WLR 517, Hoffmann J said that, whatever one might say about the policy, it is well established that the usual practice is that no cross undertaking is required when the Crown is seeking an interim injunction to enforce the law (p 524E H). In Securities and Investments Board v Lloyd Wright [1993] 4 All ER 210, Morritt J addressed the issues on the basis of defence counsels concession that it would not be appropriate that there should be a cross undertaking of damages in a law enforcement action (p 213H J), and in Customs and Excise Commissioners v Anchor Foods Ltd [1999] 1 WLR 1139 at p 1152C D, Neuberger J said that it would ordinarily not be right to require a cross undertaking in damages from Customs, but ordered one because of the unusual facts of this case, in which Customs was, to protect its right to VAT, seeking to halt a sale of business at an independent valuation to a new company. Finally, the Court of Appeal in United States Securities and Exchange Commission v Manterfield [2009] EWCA Civ 27, [2009] Lloyds Rep FC 203 applied the line of authority including Kirklees, In re Highfield and Lloyd Wright when endorsing the exercise of the judges discretion to dispense with the giving of a cross undertaking by the United States Securities and Exchange Commission. The Commission was seeking a freezing order in aid of Massachusetts proceedings brought in the interest of investors generally to recover assets obtained by Manterfield in the course of a fraudulent investment scheme involving the sale of limited partnership interests in an unregistered fund. Presenting the present appeal for Barclays, Mr Richard Handyside QC did not mount a direct attack on Hoffmann La Roche itself. Rather he submitted that it was distinguishable because it concerned enforcement of an apparently valid executive order in relation to which the only defence was that the order was invalid, and that the later authorities referred to in the preceding paragraph had read it too broadly. Mr Handyside did however also refer to Professor Zuckermanns article, which was avowedly critical of the decision in Hoffmann Roche. Professor Zuckermanns reasons included Lord Wilberforces, and he also argued that a cross undertaking can encourage greater care before interfering with a citizens liberty. He questioned the weight placed in Hoffmann La Roche on the presumption of validity of the relevant law. Mr Handyside submits that the same criticism applies, a fortiori, to the weight placed by Hoffmann J on the apparent strength of the complaint of misleading advertising on which the injunction was based in Tobyward. There is considerable general force in this particular criticism of Hoffmann La Roche. The purpose of a cross undertaking in favour of a defendant is to cover the possibility of loss in the event that the grant of an injunction proves to have been inappropriate. To refuse to require a cross undertaking because it appears, however strongly, unlikely ever to be capable of being invoked misses the point. The remoteness of the possibility of loss might indeed be thought to be a reason why the public authority would be unlikely to be inhibited from seeking injunctive relief by fear that public funds may be exposed to claims for compensation. I note that, although Lord Diplock attached some significance to the strength of the Crowns case in Hoffmann La Roche, he did not confine his comments on the difference between private litigation and law enforcement action to cases where the Crowns case was founded on apparently well founded legislation; on the contrary: see paragraph 24 above. In any event, however, this particular criticism does not impinge on the general distinction drawn in Hoffmann La Roche and subsequent cases between private litigation and public law enforcement action. In private litigation, a claimant acts in its own interests and has a choice whether to commit its assets and energies to doing so. If it seeks interim relief which may, if unjustified, cause loss or expense to the defendant, it is usually fair to require the claimant to be ready to accept responsibility for the loss or expense. Particularly in the commercial context in which freezing orders commonly originate, a claimant should be prepared to back its own interests with its own assets against the event that it obtains unjustifiably an injunction which harms anothers interests. Different considerations arise in relation to law enforcement action, where a public authority is seeking to enforce the law in the interests of the public generally, often in pursuance of a public duty to do so, and enjoys only the resources which have been assigned to it for its functions. Other than in cases of misfeasance in public office, which require malice, and cases of breach of the Convention rights within section 6(1) of the Human Rights Act 1998, it remains the case that English law does not confer a general remedy for loss suffered by administrative law action. That is so, even though it involves breach of a public law duty. In the present context, the fact that an injunction is discharged, or that the court concludes after hearing extended argument that it ought not in the first place to have been granted, by no means signifies that there was any breach of duty on the public authoritys part in seeking it. As I have said, Mr Handyside does not take issue with this general distinction, and the appeal has been argued accordingly. Mr Handyside does, however, take issue with the way in which Hoffmann La Roche has been interpreted as indicating that public authority claims to interim injunctions should be approached. Hoffmann la Roche has been understood at first instance as involving a usual or normal rule that a cross undertaking will not be required from the Crown. Mr Handyside submits that this understanding goes further than justified. In Hoffmann La Roche, only Lord Reid spoke of a general rule according to which special circumstances or reason must exist before a cross undertaking should be required from the Crown. Lord Morris was silent. But Lord Diplock said that the practice of exacting an undertaking ought not to be applied as a matter of course and should, on the contrary. be considered in the light of the particular circumstances of the case. This was a more neutral formulation, but still indicates a need to identify particular circumstances before a cross undertaking is required. Lord Morris and Lord Cross focused on the particular circumstance that the only defence involved a challenge to the validity of an apparently valid order. However, I do not regard that as a satisfactory demarcation of any distinction between public and private claims: paragraph 29 above. For reasons indicated in paragraph 31 above, there is in my view a more general distinction between public and private claims. Ultimately, there is a choice. Either the risk that public authorities might be deterred or burdened in the pursuit of claims in the public interest is accepted as a material consideration, or authorities acting in the public interest must be expected generally to back their legal actions with the public funds with which they are entrusted to undertake their functions. That latter approach could not be adopted without departing from Hoffmann La Roche, and Hoffmann La Roche draws a distinction between public and private claims which depends upon accepting the former approach. Hoffmann La Roche stands at least for the proposition that public authority claims brought in the public interest require separate consideration. Consistently with the speeches of Lord Reid and Lord Diplock (and probably also of Lord Cross), it indicates that no cross undertaking should be exacted as a matter of course, or without considering what is fair in the particular circumstances of the particular case. A starting point along these lines does not appear to me to differ significantly from the practice subsequently adopted at first instance: see paragraph 27 above. I accept its general appropriateness. Mr Handyside further submitted that, in whatever sense Hoffmann La Roche is understood, it concerned only the protection of defendants. The present appeal concerns the protection of third persons, who, unless the contrary is shown, are to be taken as having no involvement in the breach of the law alleged against the defendants. The present appeal certainly proceeds on the basis that Barclays had no such involvement. However, the distinction which Mr Handyside suggests does not in my opinion hold good. Speaking generally, a cross undertaking in relation to a defendant protects against the event that no injunction should have been granted, either when it was granted or in the light of the defendants ultimate success at trial. While it is possible to conceive of a case in which an injunction was wrongly granted on the material then available, but the defendant is at trial found to have breached the law, it is unlikely that the cross undertaking would then be enforced. A cross undertaking in relation to third persons protects against the event that an innocent third person, without involvement in whatever breach of the law is alleged against the defendant, suffers loss or expense through the grant of the injunction, whether this should or should not have occurred. In either case, therefore, it is loss caused by the grant of an injunction in circumstances where the person incurring the loss is essentially innocent that is covered by the cross undertaking. Finally, Mr Handyside submits that no sensible distinction can exist between a cross undertaking in respect of costs, which the FSA has accepted that Barclays should receive (paragraphs 6 and 7 above), and the cross undertaking in damages, which is at issue on this appeal. The FSA has, he submits, in effect, undermined its own case by conceding the former. This is not convincing. First, the appeal raises an issue of general principle, which cannot be resolved by a concession in a particular case. Second, there is to my mind a pragmatic basis for a distinction between specific costs and general loss. The rationale of Hoffmann La Roche, that public authorities should be able to enforce the law without being inhibited by the fear of cross claims and of exposing financially the resources allocated by the state for their functions, apply with particular force to any open ended cross undertaking in respect of third party loss. It does not apply in the same way to a cross undertaking in respect of third party expense. Even in a private law context, this distinction may sometimes be relevant to bear in mind. So Neuberger J thought in Miller Brewing Co v Mersey Docks & Harbour Co [2004] FSR 5, 81 paragraphs 44 45 (paragraphs not touched by criticism levelled at the actual decision in Mr Gees work on Commercial Injunctions, paragraph 11.015, into which it is unnecessary to go). The present case The present case resembles Hoffmann La Roche, Kirklees, Tobyward and Lloyd Wright. It is a case of a public authority seeking to enforce the law by the only means available under the governing statute. The FSA was acting under its express power to seek injunctive relief conferred by section 380(3). It was acting in fulfilment of its public duties in sections 3 to 6 of FSMA to protect the interests of the UKs financial system, to protect consumers and to reduce the extent to which it was possible for a business being carried on in contravention of the general prohibition being used for a purpose connected with financial crime. I therefore approach this appeal on the basis that there is no general rule that the FSA should be required to give a cross undertaking, in respect of loss suffered either by the defendants or by third parties. It is necessary to consider the circumstances to determine whether a cross undertaking should be required in this particular case. The circumstances include some further background considerations. First, there is no general duty in English public law to indemnify those affected by action undertaken under legislative authority. Innocent third parties may be affected in situations ranging from the Victorian example of trains run on an authorised railway line (Hammersmith and City Railway Company v Brand (1869) LR 4 HL 171) to the erection of a barrier on a pavement (Dormer v Newcastle upon Tyne Corp [1940] 2 KB 204) to police closure of a street following an incident. Secondly, if one focuses attention on acts for which fault might be alleged to attach to the FSA, the FSA will be liable in the unlikely event of a misfeasance in public office or in the event that its conduct amounts to a breach of the Human Rights Act Convention rights. But there is no basis in FSMA for treating the FSA as having a wider statutory or common law responsibility even to innocent third parties. Thus, thirdly, if the FSA were to fail to take appropriate steps to shut down unlawfully conducted activity, innocent third persons might suffer loss, but they could have no claim against the FSA. Fourthly, even in a case of positive action taken by the FSA affecting innocent third persons, the general protective duties and objectives of FSMA could not involve under FSMA or at common law any assumption of responsibility towards or any liability for breach of a duty of care enforceable at the instance of third persons: see e.g. Gorringe v Calderdale Metropolitan Borough Council [2004] UKHL 15, [2004] 1 WLR 1057, Jain v Trent Strategic Health Authority [2009] UKHL 4, [2009] 1 AC 853 and Customs and Excise Commissioners v Barclays Bank plc [2006] UKHL 28, [2007] 1 AC 181. Paragraph 19 of Schedule 1 to FSMA in any event provides expressly that they do not. The present appeal concerns the fourth situation, in that the FSA was taking positive action to shut down what it alleged to be unlawful activity. An interim injunction obtained in such a situation may cause innocent third persons loss. They clearly could not complain about loss arising from an unlawful scheme being closed down. But, if the scheme proved after all to be lawful, they might be seen to have sustained loss which they should not in a perfect world have suffered. However, the FSA has powers under Part IV of FSMA allowing it without any application to the court to freeze the assets of an authorised person, in a way which could equally cause loss to innocent third persons. If the exercise of a Part IV freezing power should subsequently transpire to have been inappropriate, no basis exists upon which such third persons could claim to be indemnified in respect of such loss. Indeed paragraph 19 of Schedule 1 to FSMA would again clearly exclude the FSA from any risk of liability: see paragraph 12 above. There would be an apparent imbalance, if the FSA were required to accept potential liability under a cross undertaking when it addresses the activities of unauthorised persons and has therefore to seek the courts endorsement of its stance in order for a freezing order to issue. The Respondent sought also to gain assistance from paragraph 19 of Schedule 1 to FSMA. A cross undertaking is colloquially described as being in damages, and liability under it is measured on ordinary damages principles. But it is clear that it does not involve a liability for damages in a conventional legal sense. The cross undertaking is to the court. Liability under it, when the court in its discretion determines that the cross undertaking should be enforced, is in a sum assessed by the court, albeit using similar principles to those by which it measures damages. Accordingly, it is common ground that paragraph 19 cannot directly apply to prevent the FSA from being required to give, or from enforcement of, a cross undertaking. On the other hand, as the Court was told without contradiction, the enactment of paragraph 19 was not based and did not follow upon any consideration of the possibility that the FSA might be required to give a cross undertaking before being granted an injunction under section 380(3). That possibility was, so far as appears, not in the legislators mind, one way or the other. In Lloyd Wright (paragraph 27 above), Morritt J considered in a context paralleling the present a predecessor to paragraph 19 which existed in the form of section 187(3) of the Financial Services Act 1986. He rejected a submission of the Securities and Investment Board that this prevented the court from requiring a cross undertaking. But he went on (p 214h): Rather, it seems to me to be a clear pointer in the exercise of the discretion, which the court undoubtedly has, to indicate that no such cross undertaking should be required where the designated agency is, in fact, seeking to discharge functions exercisable pursuant to a delegation under the 1986 Act. It seems to me that that is a matter which, in the exercise of my discretion, I should take into account in concluding that no cross undertaking should be required. It is unnecessary on this appeal to express any view on the correctness of treating paragraph 19 as a clear pointer in a context where that paragraph cannot ex hypothesi apply. In the light of the factors identified in paragraphs 36 to 38, there is on any view no reason to move away from the starting position, which is that the FSA should not have to give any cross undertaking in order to obtain an injunction under section 380(3). HHJ Hodge QC considered that such a cross undertaking in favour of innocent third parties should be required as a matter of course, from the moment when any freezing order was first granted on an ex parte basis (para 66). The Court of Appeal was in my view right to disagree and substituted for the undertaking as originally given an undertaking in the limited form (i.e. excluding the italicised words) indicated in paragraphs 6 and 7 above. I would therefore dismiss this appeal. Further observations A further word is appropriate regarding the positions at the initial stage, where injunctive relief is sought on an ex parte (or without notice) basis, and at the later stage, when the matter comes before the court on notice to both parties as well perhaps as to third persons, such as Barclays. Normally, there would only be a very short period before an on notice hearing could occur, and normally one would expect any third person affected by an injunction to become aware of this risk, even if not given formal notice of the injunction by the FSA. Loss could in theory be sustained by either a defendant or a third person in that short period. But any cross undertaking required as a condition of the grant of interim injunctive relief on a without notice basis would have to be in general and unqualified terms, and therefore be of the kind which could cause most concern to a regulator worried about risk and resource implications. The present appeal concerns the position of the FSA at the without notice and on notice stages. The starting position at each stage should in my view be that no cross undertaking should be required unless circumstances appear which justify a different position. Any inhibition on the part of a public authority about giving an undertaking is likely to be greater, rather than less, at a without notice stage. To require a blanket undertaking in favour of third parties at that stage would provide no incentive to third parties to come forward and identify any real concerns that they might have. The better approach is in my view to regard the starting position, that no cross undertaking should be required, as being as applicable at the without notice stage as it is at the on notice stage. A defendant or a third party who is or fears being adversely affected by an injunction obtained under section 380(3) can and should be expected to come forward, to explain the loss feared and to apply for any continuation of the injunction to be made conditional on such cross undertaking, if any, as the court may conclude should in all fairness be required to meet this situation. Finally, whenever the court is considering whether to order an interim injunction without any cross undertaking, it should bear in mind that this will mean that the defendant or an innocent third party may as a result suffer loss which will be uncompensated, even though the injunction later proves to have been unjustified. This consideration was rightly identified by Neuberger J in Miller Brewing at paragraph 40. Conclusion For the reasons given in paragraphs 1 to 41, I would dismiss this appeal.
+This case concerns the framework which will govern an application for the grant of development consent for the construction of a third runway at Heathrow Airport. This is a development scheme promoted by the appellant, Heathrow Airport Ltd (HAL), the owner of the airport. As a result of consideration over a long period, successive governments have come to the conclusion that there is a need for increased airport capacity in the South East of England to foster the development of the national economy. An independent commission called the Airports Commission was established in 2012 under the chairmanship of Sir Howard Davies to consider the options. In its interim report dated 17 December 2013 the Airports Commission reached the conclusion that there was a clear case for building one new runway in the South East, to come into operation by 2030. In that report the Airports Commission set out scenarios, including a carbon traded scenario under which overall carbon dioxide (CO) emissions were set at a cap consistent with a goal to limit global warming to 2C. The Commission reduced the field of proposals to three main candidates. Two of these involved building additional runway capacity at Heathrow Airport, either to the north west of the existing two runways (the NWR Scheme) or by extending the existing northern runway (the ENR Scheme). The third involved building a second runway at Gatwick airport (the G2R Scheme). The Airports Commission carried out an extensive consultation on which scheme should be chosen. In its final report dated 1 July 2015 (the Airports Commission Final Report) the Commission confirmed that there was a need for additional runway capacity in the South East by 2030 and concluded that, while all three options could be regarded as credible, the NWR Scheme was the best way to meet that need, if combined with a significant package of measures which addressed environmental and community impacts. The Government carried out reviews of the Airports Commissions analysis and conclusions. It assessed the Airports Commission Final Report to be sound and robust. On 14 December 2015 the Secretary of State for Transport (the Secretary of State) announced that the Government accepted the case for airport expansion; agreed with, and would consider further, the Airports Commissions short list of options; and would use the mechanism of a national policy statement (NPS) issued under the Planning Act 2008 (the PA 2008) to establish the policy framework within which to consider an application by a developer for a development consent order (DCO). The announcement also stated that further work had to be done in relation to environmental impacts, including those arising from carbon emissions. In parallel with the development of national airports policy, national and international policy to combat climate change has also been in a state of development. The Climate Change Act 2008 (the CCA 2008) was enacted on the same day as the PA 2008. It sets a national carbon target (section 1) and requires the Government to establish carbon budgets for the UK (section 4). There are mechanisms in the CCA 2008 to adjust the national target and carbon budgets (in sections 2 and 5, respectively) as circumstances change, including as scientific understanding of global warming develops. In 1992, the United Nations adopted the United Nations Framework Convention on Climate Change. 197 states are now parties to the Convention. Following the 21st Conference of the parties to the Convention, on 12 December 2015 the text of the Paris Agreement on climate change was agreed and adopted. The Paris Agreement set out certain obligations to reduce emissions of greenhouse gases, in particular CO2, with the object of seeking to reduce the rate of increase in global warming and to contain such increase to well below 2oC above, and if possible to 1.5oC, above pre industrial levels. On 22 April 2016 the United Kingdom signed the Paris Agreement and on 17 November 2016 the United Kingdom ratified the Agreement. An expansion of airport capacity in the South East would involve a substantial increase in CO2 emissions from the increased number of flights which would take place as a result. The proposals for such expansion have therefore given rise to a considerable degree of concern as to the environmental impact it would be likely to have on global warming and climate change. This is one aspect of the proposals for expansion of airport capacity, among many others, which have made the decision whether to proceed with such expansion a matter of controversy. On 25 October 2016, the Secretary of State announced that the NWR Scheme was the Governments preferred option. In February 2017 the Government commenced consultation on a draft of an Airports NPS which it proposed should be promulgated pursuant to the PA 2008 to provide the national policy framework for consideration of an application for a DCO in respect of the NWR Scheme. A further round of consultation on a draft of this NPS was launched in October 2017. There were many thousands of responses to both consultations. In June 2018 the Government published its response to the consultations. It also published a response to a report on the proposed scheme dated 1 November 2017 by the Transport Committee (a Select Committee of the House of Commons). On 5 June 2018 the Secretary of State laid before Parliament the final version of the Airports NPS (the ANPS), together with supporting documents. As is common ground on this appeal, the policy framework set out in the ANPS makes it clear that issues regarding the compatibility of the building of a third runway at Heathrow with the UKs obligations to contain carbon emissions and emissions of other greenhouse gases could and should be addressed at the stage of the assessment of an application by HAL for a DCO to allow it to proceed with the development. As is also common ground, the ANPS makes it clear that the emissions obligations to be taken into account at the DCO stage will be those which are applicable at that time, assessed in the light of circumstances and the detailed proposals of HAL at that time. On 25 June 2018 there was a debate on the proposed ANPS in the House of Commons, followed by a vote approving the ANPS by 415 votes to 119, a majority of 296 with support from across the House. On 26 June 2018 the Secretary of State designated the ANPS under section 5(1) of the PA 2008 as national policy. It is the Secretary of States decision to designate the ANPS which is the subject of legal challenge in these proceedings. Objectors to the NWR Scheme commenced a number of claims against the Secretary of State to challenge the lawfulness of the designation of the ANPS on a wide variety of grounds. For the most part, those claims have been dismissed in the courts below in two judgments of the Divisional Court (Hickinbottom LJ and Holgate J) in the present proceedings, [2019] EWHC 1070 (Admin); [2020] PTSR 240, and an associated action ([2019] EWHC 1069 (Admin)) and in the judgment of the Court of Appeal in the present proceedings: [2020] EWCA Civ 214; [2020] PTSR 1446. The Divisional Court dismissed all the claims brought by objectors, including those brought by the respondents to this appeal (Friends of the Earth FoE and Plan B Earth). FoE is a non governmental organisation concerned with climate change. Plan B Earth is a charity concerned with climate change. However, the Court of Appeal allowed appeals by FoE and Plan B Earth and granted declaratory relief stating that the ANPS is of no legal effect and that the Secretary of State had acted unlawfully in failing to take into account the Paris Agreement in making his decision to designate the ANPS. The Court of Appeal set out four grounds for its decision: (i) The Secretary of State breached his duty under section 5(8) of the PA 2008 to give an explanation of how the policy set out in the ANPS took account of Government policy, which was committed to implementing the emissions reductions targets in the Paris Agreement (the section 5(8) ground); (ii) The Secretary of State breached his duty under section 10 of the PA 2008, when promulgating the ANPS, to have regard to the desirability of mitigating and adapting to climate change, in that he failed to have proper regard to the Paris Agreement (the section 10 ground); (iii) The Secretary of State breached his duty under article 5 of the Strategic Environmental Assessment Directive (the SEA Directive, Directive 2001/42/EC of the European Parliament and of the Council on the assessment of the effects of certain plans and programmes on the environment) to issue a suitable environmental report for the purposes of public consultation on the proposed ANPS, in that he failed to refer to the Paris Agreement (the SEA Directive ground); and (iv) The Secretary of State breached his duty under section 10 of the PA 2008, when promulgating the ANPS, in that he failed to have proper regard to (a) the desirability of mitigating climate change in the period after 2050 (the post 2050 ground) and (b) the desirability of mitigating climate change by restricting emissions of non CO impacts of aviation, in particular nitrous oxide (the non CO2 emissions ground). The Court of Appeal also rejected a submission by HAL, relying on section 31 of the Senior Courts Act 1981, that it should exercise its discretion as to remedy to refuse any relief, on the grounds that (HAL argued) it was highly likely that even if there had been no breach of duty by the Secretary of State the decision whether to issue the ANPS would have been the same. HAL appeals to this court with permission granted by the court. HAL is joined in the proceedings as an interested party. It has already invested large sums of money in promoting the NWR Scheme and wishes to carry it through by applying for a DCO in due course and then building the proposed new runway. The Secretary of State has chosen not to appeal and has made no submissions to us. However, HAL is entitled to advance all the legal arguments which may be available in order to defend the validity of the ANPS. Prior to the Covid 19 pandemic, Heathrow was the busiest two runway airport in the world. The pandemic has had a major impact in reducing aviation and the demand for flights. However, there will be a lead time of many years before any third runway at Heathrow is completed and HALs expectation is that the surplus of demand for aviation services over airport capacity will have been restored before a third runway would be operational. Lord Anderson QC for HAL informed the court that HAL intends to proceed with the NWR Scheme despite the pandemic. The Planning Act 2008 We are grateful to the Divisional Court for their careful account of the PA 2008, on which we draw for this section. The PA 2008 established a new unified development consent procedure for nationally significant infrastructure projects defined to include certain airport related development including the construction or alteration of an airport that is expected to be capable of providing air passenger services for at least 10m passengers per year (sections 14 and 23). Originally, many of the primary functions under the Act were to be exercised by the Infrastructure Planning Commission, established under section 1. However, those functions were transferred to the Secretary of State by the Localism Act 2011. The mischiefs that the Act was intended to address were identified in the White Paper published in May 2007, Planning for a Sustainable Future (Cm 7120) (the 2007 White Paper). Prior to the PA 2008, a proposal for the construction of a new airport or extension to an airport would have required planning permission under the Town and Country Planning Act 1990. An application for permission would undoubtedly have resulted in a public inquiry, whether as an appeal against refusal of consent or a decision by the Secretary of State to call in the matter for his own determination. As paragraph 3.1 of the 2007 White Paper said: A key problem with the current system of planning for major infrastructure is that national policy and, in particular, the national need for infrastructure, is not in all cases clearly set out. This can cause significant delays at the public inquiry stage, because national policy has to be clarified and the need for the infrastructure has to be established through the inquiry process and for each individual application. For instance, the absence of a clear policy framework for airports development was identified by the inquiry secretary in his report on the planning inquiry as one of the key factors in the very long process for securing planning approval for Heathrow Terminal 5. Considerable time had to be taken at the inquiry debating whether there was a need for additional capacity. The Government has since responded by publishing the Air Transport White Paper to provide a framework for airport development. This identifies airport development which the Government considers to be in the national interest, for reference at future planning inquiries. But for many other infrastructure sectors, national policy is still not explicitly set out, or is still in the process of being developed. Paragraph 3.2 identified a number of particular problems caused by the absence of a clear national policy framework. For example, inspectors at public inquiries might be required to make assumptions about national policy and national need, often without clear guidance and on the basis of incomplete evidence. Decisions by Ministers in individual cases might become the means by which government policy would be expressed, rather than such decisions being framed by clear policy objectives beforehand. In the absence of a clear forum for consultation at the national level, it could be more difficult for the public and other interested parties to have their say in the formulation of national policy on infrastructure. The ability of developers to make long term investment decisions is influenced by the availability of clear statements of government policy and objectives, and might be adversely affected by the absence of such statements. The 2007 White Paper proposed that national policy statements would set the policy framework for decisions on the development of national infrastructure. They would integrate the Governments objectives for infrastructure capacity and development with its wider economic, environmental and social policy objectives, including climate change goals and targets, in order to deliver sustainable development. The role of Ministers would be to set policy, in particular the national need for infrastructure development (para 3.4). Paragraph 3.11 envisaged that any public inquiry dealing with individual applications for development consent would not have to consider issues such as whether there is a case for infrastructure development, or the types of development most likely to meet the need for additional capacity, since such matters would already have been addressed in the NPS. It was said that NPSs should have more weight than other statements of policy, whether at a national or local level: they should be the primary consideration in the determination of an application for a DCO (para 3.12), although other relevant considerations should also be taken into account (para 3.13). To provide democratic accountability, it was said that NPSs should be subject to Parliamentary scrutiny before being adopted (para 3.27). In line with the 2007 White Paper recommendation, Part 2 of the PA 2008 provides for NPSs which give a policy framework within which any application for development consent, in the form of a DCO, is to be determined. Section 5(1) gives the Secretary of State the power to designate an NPS for development falling within the scope of the Act; and section 6(1) provides that [t]he Secretary of State must review each [NPS] whenever the Secretary of State thinks it appropriate to do so. The content of an NPS is governed by section 5(5) (8) which provide that: set out the relative weight to be given to specified (5) The policy set out in [an NPS] may in particular (a) set out, in relation to a specified description of development, the amount, type or size of development of that description which is appropriate nationally or for a specified area; (b) set out criteria to be applied in deciding whether a location is suitable (or potentially suitable) for a specified description of development; (c) criteria; (d) identify one or more locations as suitable (or potentially suitable) or unsuitable for a specified description of development; (e) identify one or more statutory undertakers as appropriate persons to carry out a specified description of development; (f) set out circumstances in which it is appropriate for a specified type of action to be taken to mitigate the impact of a specified description of development. [An NPS] must give reasons for the policy set out in the (6) If [an NPS] sets out policy in relation to a particular description of development, the statement must set out criteria to be taken into account in the design of that description of development. (7) statement. (8) The reasons must (in particular) include an explanation of how the policy set out in the statement takes account of Government policy relating to the mitigation of, and adaptation to, climate change. As is made clear, the NPS may (but is not required to) identify a particular location for the relevant development. provides (so far as relevant to these claims): In addition, under the heading Sustainable development, section 10 (1) This section applies to the Secretary of States functions under sections 5 and 6. (2) The Secretary of State must, in exercising those functions, do so with the objective of contributing to the achievement of sustainable development. (3) For the purposes of subsection (2) the Secretary of State must (in particular) have regard to the desirability of (a) mitigating, and adapting to, climate change; The process for designation of an NPS is also set out in the Act. The PA 2008 imposed for the first time a transparent procedure for the public and other consultees to be involved in the formulation of national infrastructure policy in advance of any consideration of an application for a DCO. The Secretary of State produces a draft NPS, which is subject to (i) an appraisal of sustainability (AoS) (section 5(3)), (ii) public consultation and publicity (section 7), and (iii) Parliamentary scrutiny (sections 5(4) and 9). In addition, there is a requirement to carry out a strategic environmental assessment under the SEA Directive as transposed by the Environmental Assessment of Plans and Programmes Regulations 2004 (SI 2004/1633) (the SEA Regulations) (see regulation 5(2) of the SEA Regulations). The consultation and publicity requirements are set out in section 7, which so far as relevant provides: (1) This section sets out the consultation and publicity requirements referred to in sections 5(4) and 6(7). (2) The Secretary of State must carry out such consultation, and arrange for such publicity, as the Secretary of State thinks appropriate in relation to the proposal. This is subject to subsections (4) and (5). (3) In this section the proposal means (a) the statement that the Secretary of State proposes to designate as [an NPS] for the purposes of this Act or (b) (as the case may be) the proposed amendment. (4) The Secretary of State must consult such persons, and such descriptions of persons, as may be prescribed. (5) If the policy set out in the proposal identifies one or more locations as suitable (or potentially suitable) for a specified description of development, the Secretary of State must ensure that appropriate steps are taken to publicise the proposal. (6) The Secretary of State must have regard to the responses to the consultation and publicity in deciding whether to proceed with the proposal. A proposed NPS must be laid before Parliament (section 9(2) and (8)). The Act thus provides an opportunity for a committee of either House of Parliament to scrutinise a proposed NPS and to make recommendations; and for each House to scrutinise it and make resolutions (see section 9(4)). An NPS is not the end of the process. It simply sets the policy framework within which any application for a DCO must be determined. Section 31 provides that, even where a relevant NPS has been designated, development consent under the PA 2008 is required for development to the extent that the development is or forms part of a nationally significant infrastructure project. Such applications must be made to the relevant Secretary of State (section 37). Chapter 2 of Part 5 of the Act makes provision for a pre application procedure. This provides for a duty to consult pre application, which extends to consulting relevant local authorities and, where the land to be developed is in London, the Greater London Authority (section 42). There are also duties to consult the local community, and to publicise and to take account of responses to consultation and publicity (sections 47 49; and see also regulation 12 of the Infrastructure Planning (Environmental Impact Assessment) Regulations 2017 (SI 2017/572), which makes provision for publication of and consultation on preliminary environmental information). Any application for a DCO must be accompanied by a consultation report (section 37(3)(c)); and adequacy of consultation is one of the criteria for acceptance of the application (section 55(3) and (4)(a)). Part 6 of the PA 2008 is concerned with Deciding applications for orders granting development consent. Once the application has been accepted, section 56 requires the applicant to notify prescribed bodies and authorities and those interested in the land to which the application relates, who become interested parties to the application (section 102). The notification must include a notice that interested parties may make representations to the Secretary of State. Section 60(2) provides that where a DCO application is accepted for examination there is a requirement to notify any local authority for the area in which land, to which the application relates, is located (see section 56A)) and, where the land to be developed is in London, the Greater London Authority, inviting them each to submit a local impact report (section 60(2)). The Secretary of State may appoint a panel or a single person to examine the application (the Examining Authority) and to make a report setting out its findings and conclusions, and a recommendation as to the decision to be made on the application. The examination process lasts six months, unless extended (section 98); and the examination timetable is set out in the Infrastructure Planning (Examination Procedure) Rules 2010 (SI 2010/103) (the Examination Rules). In addition to local impact reports (section 60), the examination process involves written representations (section 90), written questions by the Examining Authority (rules 8 and 10 of the Examination Rules), and hearings (which might be open floor and/or issue specific and/or relating to compulsory purchase) (sections 91 93). As a result of the examination process, the provisions of the proposed DCO may be amended by either the applicant or the Examination Authority, eg in response to the representations of interested parties; and it is open to the Secretary of State to modify the proposed DCO before making it. Section 104 constrains the Secretary of State when determining an application for a DCO for development in relation to which an NPS has effect, in the following terms (so far as relevant to these claims): (2) In deciding the application the Secretary of State must have regard to (a) any [NPS] which has effect in relation to development of the description to which the application relates (a relevant [NPS]), any local impact report , (b) (c) any matters prescribed in relation to development of the description to which the application relates, and (d) any other matters which the Secretary of State thinks are both important and relevant to the Secretary of States decision. (3) The Secretary of State must decide the application in accordance with any relevant [NPS], except to the extent that one or more of subsections (4) to (8) applies. (4) This subsection applies if the Secretary of State is satisfied that deciding the application in accordance with any relevant [NPS] would lead to the United Kingdom being in breach of any of its international obligations. (5) This subsection applies if the Secretary of State is satisfied that deciding the application in accordance with any relevant [NPS] would lead to the Secretary of State being in breach of any duty imposed on the Secretary of State by or under any enactment. (6) This subsection applies if the Secretary of State is satisfied that deciding the application in accordance with any relevant [NPS] would be unlawful by virtue of any enactment. (7) This subsection applies if the Secretary of State is satisfied that the adverse impact of the proposed development would outweigh its benefits. (8) This subsection applies if the Secretary of State is satisfied that any condition prescribed for deciding an application otherwise than in accordance with [an NPS] is met. (9) For the avoidance of doubt, the fact that any relevant [NPS] identifies a location as suitable (or potentially suitable) for a particular description of development does not prevent one or more of subsections (4) to (8) from applying. (1) In deciding an application for an order granting development consent, the Secretary of State may disregard representations if the Secretary of State considers that the representations (a) (b) NPS]. In this section representation includes evidence. relate to the merits of policy set out in [an (2) Section 104 is complemented by section 106 which, under the heading Matters which may be disregarded when determining an application, provides (so far as relevant to these claims): That is also reflected in sections 87(3) and 94(8), under which the Examining Authority may disregard representations (including evidence) or refuse to allow representations to be made at a hearing if it considers that they relate to the merits of the policy set out in [an NPS] . By section 120(1), a DCO may impose requirements in connection with the development for which consent is granted, eg it may impose conditions considered appropriate or necessary to mitigate or control the environmental effects of the development. Section 120(3) is a broad provision enabling a DCO to make provision relating to, or to matters ancillary to, the development for which consent is granted including any of the matters listed in Part 1 of Schedule 5 (section 120(4)). That schedule lists a wide range of potentially applicable provisions, including compulsory purchase, the creation of new rights over land, the carrying out of civil engineering works, the designation of highways, the operation of transport systems, the charging of tolls, fares and other charges and the making of byelaws and their enforcement. Section 13 concerns Legal challenges relating to [NPSs]. Section 13(1) provides: A court may entertain proceedings for questioning [an NPS] or anything done, or omitted to be done, by the Secretary of State in the course of preparing such a statement only if the proceedings are brought by a claim for (a) judicial review, and (b) the claim form is filed before the end of the period of six weeks beginning with the day after (i) the day on which the statement is designated as [an NPS] for the purposes of this Act, or (ii) published. (if later) the day on which the statement is It was under section 13 that the claims by objectors to the ANPS were brought. The Climate Change Act 2008 Again, we gratefully draw on the account given by the Divisional Court. As they explain, the UK has for a long time appreciated the desirability of tackling climate change, and wished to take a more rigorous domestic line. In the 2003 White Paper, Our Energy Future Creating a Low Carbon Economy, the Government committed to reduce CO2 emissions by 60% on 1990 levels by 2050; and to achieve real progress by 2020 (which equated to reductions of 26 32%). The 60% figure emanated from the EU Council of Ministers Community Strategy on Climate Change in 1996, which determined to limit emissions to 550 parts per million (ppm) on the basis that to do so would restrict the rise in global temperatures to 2C above pre industrial levels which, it was then considered, would avoid the serious consequences of global warming. However, by 2005, there was scientific evidence that restricting emissions to 550ppm would be unlikely to be effective in keeping the rise to 2C; and only stabilising CO2 emissions at something below 450ppm would be likely to achieve that result. Parliament addressed these issues in the CCA 2008. Section 32 established a Committee on Climate Change (the CCC), an independent public body to advise the UK and devolved Governments and Parliaments on tackling climate change, including on matters relating to the UKs statutory carbon reduction target for 2050 and the treatment of greenhouse gases from international aviation. Section 1 gives a mandatory target for the reduction of UK carbon emissions. At the time of designation of the ANPS, it provided: It is the duty of the Secretary of State [then, the Secretary of State for Energy and Climate Change: now, the Secretary of State for Business, Enterprise and Industrial Strategy (BEIS)] to ensure that the net UK carbon account for the year 2050 is at least 80% lower than the 1990 baseline. The figure of 80% was substituted for 60% during the passage of the Bill, as evolving scientific knowledge suggested that the lower figure would not be sufficient to keep the rise in temperature to 2C in 2050. Therefore, although the CCA 2008 makes no mention of that temperature target, as the CCC said in its report on the Paris Agreement issued in October 2016 (see para 73 below): This 2050 target was derived as a contribution to a global emissions path aimed at keeping global average temperatures to around 2C above pre industrial levels. The statutory target of a reduction in carbon emissions by 80% by 2050 was Parliaments response to the international commitment to keep the global temperature rise to 2C above pre industrial levels in 2050. Since the designation of the ANPS, the statutory target has been made more stringent. The figure of 100% was substituted for 80% in section 1 of the CCA 2008 by the Climate Change Act 2008 (2050 Target Amendment) Order 2019/1056. The Secretary of State for BEIS has the power to amend that percentage (section 2(1) of the CCA 2008), but only: (i) if it appears to him that there have been significant developments in scientific knowledge about climate change since the passing of the Act, or developments in European or international law or policy (section 2(2) and (3)): the Explanatory Note to the Act says, as must be the case, that this power might be used in the event of a new international treaty on climate change; (ii) after obtaining, and taking into account, advice from the CCC (section 3(1)); and (iii) subject to Parliamentary affirmative resolution procedure (section 2(6)). Section 1 of the CCA 2008 sets a target that relates to carbon only. Section 24 enables the Secretary of State for BEIS to set targets for other greenhouse gases, but subject to similar conditions to which an amendment to the section 1 target is subject. In addition to the carbon emissions target set by section 1 and to ensure compliance with it (see sections 5(1)(b) and 8) the Secretary of State for BEIS is also required to set for each succeeding period of five years, at least 12 years in advance, an amount for the net UK carbon account (the carbon budget); and ensure that the net UK carbon account for any period does not exceed that budget (section 4). The carbon budget for the period including 2020 was set to be at least 34% lower than the 1990 baseline. Section 10(2) sets out various matters which are required to be taken into account when the Secretary of State for BEIS sets, or the CCC advises upon, any carbon budget, including: (a) scientific knowledge about climate change; (b) technology relevant to climate change; (c) economic circumstances, and in particular the likely impact of the decision on the economy and the competitiveness of particular sectors of the economy; (d) fiscal circumstances, and in particular the likely impact of the decision on taxation, public spending and public borrowing; (e) of the decision on fuel poverty; (f) (h) (i) international aviation and international shipping circumstances at European and international level; the estimated amount of reportable emissions from social circumstances, and in particular the likely impact Therefore, although for the purposes of the CCA 2008 emissions from greenhouse gases from international aviation do not generally count as emissions from UK sources (section 30(1)), by virtue of section 10(2)(i), in relation to any carbon budget, the Secretary of State for BEIS and the CCC must take such emissions into account. The evidence for the Secretary of State explains that the CCC has interpreted that as requiring the UK to meet a 2050 target which includes these emissions. The CCC has advised that, to meet the 2050 target on that basis, emissions from UK aviation (domestic and international) in 2050 should be no higher than 2005 levels, ie 37.5 megatons (million tonnes) of CO2 (MtCO2). This is referred to by the respondents as the Aviation Target. However, the Aviation Policy Framework issued by the Government in March 2013 explains that the Government decided not to take a decision on whether to include international aviation emissions in its carbon budgets, simply leaving sufficient headroom in those budgets consistent with meeting the 2050 target including such emissions, but otherwise deferring a decision for consideration as part of the emerging Aviation Strategy. The Aviation Strategy is due to re examine how the aviation sector can best contribute its fair share to emissions reductions at both the UK and global level. It is yet to be finalised. The SEA Directive Again, in this section we gratefully draw on the careful account given by the Divisional Court. As they explain, Directive 2011/92/EU of the European Parliament and of the Council of 13 December 2011 on the assessment of the effects of certain public and private projects on the environment as amended (the EIA Directive), as currently transposed by the Town and Country Planning (Environmental Impact Assessment) Regulations 2017 (SI 2017/571), requires a process within normal planning procedures. (For the purposes of these claims, the transposing regulations have not materially changed over the relevant period; and we will refer to them collectively as the EIA Regulations.) The SEA Directive as transposed by the SEA Regulations concerns the environmental impact of plans and programmes. The SEA Directive and Regulations applied to the ANPS. The EIA Directive would apply when there was a particular development for which development consent was sought, at the DCO stage. Recital (1) to the SEA Directive states: Article 174 of the Treaty provides that Community policy on the environment is to contribute to, inter alia, the preservation, protection and improvement of the quality of the environment, the protection of human health and the prudent and rational utilisation of natural resources and that it is to be based on the precautionary principle. Article 6 of the Treaty provides that environmental protection requirements are to be integrated into the definition of Community policies and activities, in particular with a view to promoting sustainable development. As suggested here, the SEA Directive relies upon the precautionary principle where appropriate. Recital (4) states: Environmental assessment is an important tool for integrating environmental considerations into the preparation and adoption of certain plans and programmes which are likely to have significant effects on the environment in the member states, because it ensures that such effects of implementing plans and programmes are taken into account during their preparation and before their adoption. Recital (9) states: This Directive is of a procedural nature, and its requirements should either be integrated into existing procedures in member states or incorporated in specifically established procedures. With a view to avoiding duplication of the assessment, member states should take account, where appropriate, of the fact that assessments will be carried out at different levels of a hierarchy of plans and programmes. Thus, the requirements of the SEA Directive are essentially procedural in nature; and it may be appropriate to avoid duplicating assessment work by having regard to work carried out at other levels or stages of a policy making process (see article 5(2) (3) below). Recital (17) states: The environmental report and the opinions expressed by the relevant authorities and the public, as well as the results of any transboundary consultation, should be taken into account during the preparation of the plan or programme and before its adoption or submission to the legislative procedure. The objectives of the SEA Directive are set out in article 1: The objective of this Directive is to provide for a high level of protection of the environment and to contribute to the integration of environmental considerations into the preparation and adoption of plans and programmes with a view to promoting sustainable development, by ensuring that, in accordance with this Directive, an environmental assessment is carried out of certain plans and programmes which are likely to have significant effects on the environment. Article 3(1) requires an environmental assessment to be carried out, in accordance with articles 4 to 9, for plans and programmes referred to in article 3(2) (4) which are likely to have significant environmental effects. Article 3(2) requires strategic environmental assessment generally for any plan or programme which is prepared for (inter alia) transport, town and country planning or land use and which sets the framework for future development consent for projects listed in Annexes I and II to the EIA Directive. Strategic environmental assessment is also required for other plans and programmes which are likely to have significant environmental effects (article 3(4)). By virtue of sections 104 and 106 of the PA 2008, the ANPS designated under section 5 sets out the framework for decisions on whether a DCO for the development of an additional runway at Heathrow under Part 6 of that Act should be granted. That development would, in due course, require environmental impact assessment under the EIA Directive and Regulations; and there is no dispute that the ANPS needed to be subjected to strategic environmental assessment under the SEA Directive and the SEA Regulations. Article 2(b) of the SEA Directive defines environmental assessment for the purposes of the Directive: environmental assessment shall mean the preparation of an environmental report, the carrying out of consultations, the taking into account of the environmental report and the results of the consultations in decision making and the provision of information on the decision in accordance with articles 4 to 9. Article 4(1) requires environmental assessment to be carried out during the preparation of a plan or programme and before its adoption . , which in this instance would refer to the Secretary of States decision to designate the ANPS. Article 5 sets out requirements for an environmental report. By article 2(c): environmental report shall mean the part of the plan or programme documentation containing the information required in article 5 and Annex I. In the case of the ANPS the environmental report was essentially the AoS. Article 5(1) provides: Where an environmental assessment is required under article 3(1), an environmental report shall be prepared in which the likely significant effects on the environment of implementing the plan or programme, and reasonable alternatives taking into account the objectives and the geographical scope of the plan or programme, are identified, described and evaluated. The information to be given for this purpose is referred to in Annex I. Annex I states, under the heading, Information referred to in article 5(1): The information to be provided under article 5(1), subject to article 5(2) and (3), is the following: the environmental characteristics of areas likely (a) an outline of the contents, main objectives of the plan or programme and relationship with other relevant plans and programmes; (b) the relevant aspects of the current state of the environment and the likely evolution thereof without implementation of the plan or programme; (c) to be significantly affected; (d) any existing environmental problems which are relevant to the plan or programme including, in particular, those relating to any areas of a particular environmental importance, such as areas designated pursuant to [the Habitats and Birds Directives]; (e) the environmental protection objectives, established at international, Community or member state level, which are relevant to the plan or programme and the way those objectives and any environmental considerations have been taken into account during its preparation; (f) the likely significant effects on the environment, including on issues such as biodiversity, population, human health, fauna, flora, soil, water, air, climatic factors, material assets, cultural heritage including architectural and archaeological heritage, landscape and the interrelationship between the above factors; (g) the measures envisaged to prevent, reduce and as fully as possible offset any significant adverse effects on the environment of implementing the plan or programme; (h) an outline of the reasons for selecting the alternatives dealt with, and a description of how the assessment was undertaken including any difficulties (such as technical deficiencies or lack of know how) encountered in compiling the required information; (i) a description of the measures envisaged concerning monitoring in accordance with article 10; (j) a non technical summary of the information provided under the above headings. (2) The environmental report prepared pursuant to paragraph 1 shall include the information that may reasonably be required taking into account current knowledge and methods of assessment, the contents and level of detail in the plan or programme, its stage in the decision making process and the extent to which certain matters are more appropriately assessed at different levels in that process in order to avoid duplication of the assessment. (3) Relevant information available on environmental effects of the plans and programmes and obtained at other levels of decision making or through other Community legislation may be used for providing the information referred to in Annex I. (Emphasis added) Thus, the information required by the combination of article 5(1) and Annex I is subject to article 5(2) and (3), which provide: Accordingly, the information which is required to be included in an environmental report, whether by article 5(1) itself or by that provision in conjunction with Annex I, is qualified by article 5(2) and (3) in a number of respects. First, the obligation is only to include information that may reasonably be required, which connotes the making of a judgment by the plan making authority. Second, that judgment may have regard to a number of matters, including current knowledge and assessment methods. In addition, the contents and level of detail in a plan such as the ANPS, the stage it has reached in the decision making process and the ability to draw upon sources of information used in other decision making, may affect the nature and extent of the information required to be provided in the environmental report for the strategic environmental assessment. The stage reached by the ANPS should be seen in the context of the statutory framework of the PA 2008, as set out above (see paras 19 38). Section 5(5) authorises the Secretary of State to set out in an NPS the type and size of development appropriate nationally or for a specified area and to identify locations which are either suitable or unsuitable for that development. In addition, the Secretary of State may set out criteria to be applied when deciding the suitability of a location. Section 104(3) requires the Secretary of State to decide an application for a DCO in accordance with a relevant NPS, save in so far as any one or more of the exceptions in section 104(4) (8) applies, which include the situation where the adverse impacts of a proposal are judged to outweigh its benefits (section 104(7)). Section 106(1) empowers the Secretary of State to disregard a representation objecting to such a proposal in so far as it relates to the merits of a policy contained in the NPS. In the present case, the Secretary of State made it plain in the strategic environmental assessment process that the AoS drew upon and updated the extensive work which had previously been carried out by, and on behalf of, the Airports Commission, including numerous reports to the Airports Commission and its own final report. It is common ground that the Secretary of State was entitled to take that course. Article 6 of the SEA Directive sets out requirements for consultation. Article 6(1) requires that the draft plan or programme and the environmental report be made available to the public and to those authorities designated by a member state under article 6(3) which, by virtue of their specific environmental responsibilities, are likely to be concerned by the environmental effects of implementing plans and programmes. In England, the designated authorities are Natural England, Historic England and the Environment Agency (see regulation 4 of the SEA Regulations). In the case of the ANPS, the Secretary of State also had to consult those designated authorities on the scope and level of detail of the information to be included in the environmental report (article 5(4)). In relation to the consultation process, article 6(2) provides: The authorities referred to in para 3 and the public referred to in para 4 shall be given an early and effective opportunity within appropriate time frames to express their opinion on the draft plan or programme and the accompanying environmental report before the adoption of the plan or programme or its submission to the legislative procedure. The public referred to in [article 6(4)] is a cross reference to the rules made by each member state for defining the public affected, or likely to be affected by, or having an interest in the decision making on the plan. Regulation 13(2) of the SEA Regulations leaves this to be determined as a matter of judgment by the plan making authority. Article 8 requires the environmental report prepared under article 5, the opinions expressed under article 6, and the results of any transboundary consultations under article 7 to be taken into account during the preparation of the plan or programme and before its adoption or submission to the legislative procedure. In Cogent Land LLP v Rochford District Council [2012] EWHC 2542 (Admin); [2013] 1 P & CR 2, Singh J held that a defect in the adequacy of an environmental report prepared for the purposes of the SEA Directive may be cured by the production of supplementary material by the plan making authority, subject to there being consultation on that material (see paras 111 126). He held that articles 4, 6(2) and 8 of the Directive, along with their transposition in the SEA Regulations, are consistent with that conclusion; and that none of the previous authorities on the SEA Directive (which he reviewed) suggested otherwise. He held that SEA is not a single document, still less is it the same thing as the environmental report. Rather, it is a process, during the course of which an environmental report must be produced (see para 112). The Court of Appeal endorsed this analysis in No Adastral New Town Ltd v Suffolk Coastal District Council [2015] EWCA Civ 88; [2015] Env LR 28, in deciding that SEA failures in the early stages of an authoritys preparation of its Core Strategy (a statutory development plan) were capable of being, and were in fact, cured by the steps taken in subsequent stages (see paras 48 54). We agree with this analysis. It follows that strategic environmental assessment may properly involve an iterative process; and that it is permissible for a plan making authority to introduce alterations to its draft plan subject to complying with the information requirements in article 5 and the consultation requirements in articles 6 and 7. Regulation 12 of the SEA Regulations transposes the main requirements in article 5 of the Directive governing the content of an environmental report as follows (emphasis added): (2) The report shall identify, describe and evaluate the likely significant effects on the environment of implementing the plan or programme; and (a) (b) reasonable alternatives taking into account the objectives and the geographical scope of the plan or programme. (3) The report shall include such of the information referred to in Schedule 2 to these Regulations as may reasonably be required, taking account of current knowledge and methods of assessment; the contents and level of detail in the plan or (a) (b) programme; (c) decision making process; and (d) the extent to which certain measures are more appropriately assessed at different levels in that process in order to avoid duplication of the assessment. the stage of the plan or programme in the Schedule 2 replicates the list of items in Annex I to the SEA Directive. No issue is raised as to the adequacy of that transposition. As the Divisional Court observed, it is plain from the language as may reasonably be required that the SEA Regulations, like the SEA Directive, allow the plan making authority to make a judgment on the nature of the information in Schedule 2 and the level of detail to be provided in an environmental report, whether as published initially or in any subsequent amendment or supplement. Factual background At the heart of the challenge to the ANPS is the Paris Agreement (para 7 above) which acknowledged that climate change represents an urgent and potentially irreversible threat to human societies and the planet (Preamble to the Decision to adopt the Paris Agreement). In article 2 the Paris Agreement sought to enhance the measures to reduce the risks and impacts of climate change by setting a global target of holding the increase in the global average temperature to well below 2C above pre industrial levels and pursuing efforts to limit the temperature increase to 1.5C above pre industrial levels. Each signatory of the Paris Agreement undertook to take measures to achieve that long term global temperature goal so as to achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century (article 4(1)). Each party agreed to prepare, communicate and maintain successive nationally determined contributions (NDCs) that it intended to achieve and to pursue domestic mitigation measures with the aim of achieving the objectives of such NDCs (article 4(2)). A partys successive NDC was to progress beyond its current NDC and was to reflect its highest possible ambition (article 4(3)). Notwithstanding the common objectives set out in articles 2 and 4(1), the Paris Agreement did not impose an obligation on any state to adopt a binding domestic target to ensure that those objectives were met. The specific legal obligation imposed in that regard was to meet any NDC applicable to the state in question. So far as concerns the United Kingdom, it is common ground that the relevant NDC is that adopted and communicated on behalf of the EU, which set a binding target of achieving 40% reduction of 1990 emissions by 2030. This is less stringent than the targets which had already been set in the fourth and fifth carbon budgets issued pursuant to section 4 of the CCA 2008, which were respectively a 50% reduction on 1990 levels for the period 2023 2027 and a 57% reduction for the period 2028 2032. Before the United Kingdom had signed or ratified the Paris Agreement two Government Ministers made statements in the House of Commons about the Governments approach to the Paris Agreement. On 14 March 2016 the Minister of State for Energy, Andrea Leadsom MP, told the House of Commons that the Government believe we will need to take the step of enshrining the Paris goal of net zero emissions in UK law the question is not whether, but how we do it, and there is an important set of questions to be answered before we do. Ten days later (24 March 2016) Amber Rudd MP, Secretary of State for Energy and Climate Change, responded to an oral question on what steps her department was taking to enshrine the net zero emissions commitment of the Paris Climate Change Conference by stating that the question is not whether we do it but how we do it. The Government received advice from the CCC on the UKs response to the Paris goal. At a meeting on 16 September 2016 the CCC concluded that while a new long term target would be needed to be consistent with the Paris goal, the evidence was not sufficient to specify that target now. In October 2016 the CCC published a report entitled UK Climate Action following the Paris Agreement on what domestic action the Government should take as part of a fair contribution to the aims of the Paris Agreement. In that report the CCC stated that the goals of the Paris Agreement involved a higher level of global ambition in the reduction of greenhouse gases than that which formed the basis of the UKs existing emissions reduction targets. But the CCC advised that it was neither necessary nor appropriate to amend the 2050 target in section 1 of the CCA 2008 or alter the level of existing carbon budgets at that time. It advised that there would be several opportunities to revisit the UKs targets in the future and that the UK 2050 target is potentially consistent with a wide range of global temperature outcomes. In its executive summary (p 7) the CCC summarised its advice: Do not set new UK emissions targets now The five yearly cycle of pledges and reviews created by the Paris Agreement provides regular opportunities to consider increasing UK ambition. In October 2017 the Government published its Clean Growth Strategy which set out its policies and proposals to deliver economic growth and decreased emissions. In Annex C in its discussion of UK climate action it acknowledged the risks posed by the growing level of global climate instability. It recorded the global goals of the Paris Agreement and that global emissions of greenhouse gases would need to peak as soon as possible, reduce rapidly thereafter and reach a net zero level in the second half of this century. It recorded the CCCs advice in these terms: In October 2016 the [CCC] said that the Paris Agreement target is more ambitious than both the ambition underpinning the UK 2050 target and previous international agreements, but that the UK should not set new UK emissions targets now, as it already had stretching targets and achieving them will be a positive contribution to global climate action. The CCC advised that the UKs fair contribution to the Paris Agreement should include measures to maintain flexibility to go further on UK targets, the development of options to remove greenhouse gases from the air, and that its targets should be kept under review. In December 2017 Plan B Earth and 11 other claimants commenced judicial review proceedings against the Secretary of State for BEIS and CCC alleging that the Secretary of State had unlawfully failed to revise the 2050 target in section 1 of the CCA 2008 in line with the Paris Agreement. The Secretary of State pleaded: [While] the Government is fully committed to the objectives in the Paris Agreement, the legal obligation upon the Parties is to prepare, communicate and maintain nationally determined contributions to reduce net emissions, with a view to achieving the purpose of holding global average temperature increases to well below 2C above pre industrial levels and pursuing efforts to limit them to 1.5C. This is not the same as a legal duty or obligation for the Parties, individually or collectively, to achieve this aim. (Emphasis in original) The CCC also explained its position in its written pleadings: The CCC recommended no change to the existing UK 2050 target (at that time, October 2016), not because a more ambitious target was unfeasible, but rather because the existing UK target was potentially consistent with more ambitious global temperature goals, including that in the Paris Agreement. At an oral hearing ([2018] EWHC 1892 (Admin); [2019] Env LR 13), Supperstone J refused permission to proceed with the judicial review, holding among other things that the Paris Agreement did not impose any legally binding target on each contracting party, that section 2 of the CCA 2008 gave the Secretary of State the power, but did not impose a duty, to amend the 2050 target in the event of developments in scientific knowledge or European or international law or policy, and that on the basis of the advice of the CCC, the Secretary of State was plainly entitled to refuse to change the 2050 target. Asplin LJ refused permission to appeal on 22 January 2019. In January 2018 the CCC published An independent assessment of the UKs Clean Growth Strategy. In that report the CCC explained that the aim of the Paris Agreement for emissions to reach net zero in the second half of the century was likely to require the UK to revise its statutory 2050 target to seek greater reductions and advised that it is therefore essential that actions are taken now to enable these deeper reductions to be achieved (p 21). The CCC invited the Secretary of State for BEIS to seek further advice from it and review the UKs long term emissions targets after the publication of the report by the Intergovernmental Panel on Climate Change (IPCC) on the implications of the Paris Agreements 1.5C goal. In January 2018 the Government published A Green Future: Our 25 Year Plan to Improve the Environment in which it undertook to continue its work in providing international leadership to meet the goals of the Paris Agreement (for example, p 118). In early 2018 governments, including the UK Government, were able to review a draft of the IPCC report and in early June 2018 the UK Government submitted final comments on the draft of the IPCC report. On 17 April 2018 the Government announced at the Commonwealth Heads of Government Meeting that after the publication of the IPCC report later that year, it would seek the advice of the CCC on the implications of the Paris Agreement for the UKs long term emissions reductions targets. At the same time the Government was working to develop an aviation strategy which would address aviation emissions. In April 2018, after public consultation, the Department for Transport published Beyond the Horizon: The Future of UK Aviation Next Steps towards an Aviation Strategy in which it undertook to investigate technical and policy measures to address aviation emissions and how those measures related to the recommendations of the CCC. It stated (para 6.24): The government will look again at what domestic policies are available to complement its international approach and will consider areas of greater scientific uncertainty, such as the aviations contribution to non carbon dioxide climate change effects and how policy might make provision for their effects. On 1 May in response to an oral parliamentary question concerning the offshore wind sector Claire Perry MP, Minister of State for Energy and Clean Growth, stated that the UK was the first developed nation to have said that it wanted to understand how to get to a zero carbon economy by 2050. On 5 June 2018, the Government issued its response to the consultation on the draft ANPS and the Secretary of State laid the proposed ANPS before Parliament. On the same day, the Secretary of State presented a paper on the proposed ANPS to a Cabinet sub committee giving updated information on the three short listed schemes and the Governments preference for the NWR scheme. In relation to aviation emissions it stated that it was currently uncertain how international carbon emissions would be incorporated into the Governments carbon budget framework, that policy was developing and would be progressed during the development of the Aviation Strategy. The Governments position remained that action to address aviation emissions was best taken at an international level. On 14 June 2018 the Chair of the CCC (Lord Deben) and Deputy Chair (Baroness Brown) wrote to the Secretary of State expressing surprise that he had not referred to the legal targets in the CCA 2008 or the Paris Agreement commitments in his statement to the House of Commons on the proposed ANPS on 5 June and stressing the need for his department to consider aviations place in the overall strategy for UK emissions reduction. They stated that the Government should not plan for higher levels of aviation emissions since this would place an unreasonably large burden on other sectors. The Secretary of State responded on 20 June 2018 stating that the Government remained committed to the UKs climate change target and that the proposed ANPS made it clear that an increase in carbon emissions that would have a material impact on the Governments ability to meet its carbon reduction targets would be a reason to refuse development consent for the NWR. He stated that the Government was confident that the measures and requirements set out in the proposed ANPS provided a strong basis for mitigating the environmental impacts of expansion. He explained that the forthcoming Aviation Strategy would put in place a framework for UK carbon emissions to 2050, which ensures that aviation contributes its fair share to action on climate change, taking into account the UKs domestic and international obligations. After the Parliamentary debate on 25 June 2018 (para 11 above), the Secretary of State designated the ANPS as national policy on 26 June 2018 (para 12 above). Section 5 of the ANPS focused on the potential impacts of the NWR Scheme and the assessments that any applicant would have to carry out and the planning requirements which it would have to meet in order to gain development consent. In its discussion of greenhouse gas emissions the ANPS stated that the applicant would have to undertake an environmental impact assessment quantifying the greenhouse gas impacts before and after mitigation so that the project could be assessed against the Governments carbon obligations. In para 5.82 the ANPS stated: Any increase in carbon emissions alone is not a reason to refuse development consent, unless the increase in carbon emissions resulting from the project is so significant that it would have a material impact on the ability of Government to meet its carbon reduction targets, including carbon budgets. As in this appeal a challenge has been made as to the factual basis of the Secretary of States decision not to consider the possible new domestic emissions targets which might result from the Paris Agreement, it is necessary to mention the evidence before the Divisional Court on this matter. In her first witness statement Ms Caroline Low, the Director of the Airport Capacity Programme at the Department for Transport, stated (para 458): In October 2016 the CCC said that the Paris Agreement is more ambitious than both the ambition underpinning the UK 2050 target and previous international agreements but that the UK should not set new UK emissions targets now, as it already has stretching targets and achieving them will be a positive contribution to global climate action. Furthermore, the CCC acknowledged in the context of separate legal action brought by Plan B against the Secretary of State for Business, Energy and Industrial Strategy that it is possible that the existing 2050 target could be consistent with the temperature stabilization goals set out in the Paris Agreement. Subsequently, in establishing its carbon obligations for the purpose of assessing the impact of airport expansion, my team has followed this advice and considered existing domestic legal obligations as the correct basis for assessing the carbon impact of the project, and that it is not appropriate at this stage for the government to consider any other possible targets that could arise through the Paris Agreement. Her account was corroborated by Ms Ursula Stevenson, an engineering and project management consultant whom the Secretary of State retained to deal with the process for consideration of the environmental impacts of the NWR Scheme. She stated (witness statement para 3.128) that the Department had followed the CCCs advice when preparing the AoS required by the PA 2008 (see para 28 above) and accordingly had considered existing domestic legal obligations to be the correct basis for assessing the carbon impact of the project. She added: At this stage, it is not possible to consider what any future targets [sic] might be recommended by the CCC to meet the ambitions of the Paris Agreement. It is expected that, should more ambitious targets be recommended and set through the carbon budgets beyond 2032, then government will be required to make appropriate policy decisions across all sectors of the economy to limit emissions accordingly. She emphasised (para 3.129) that the obligations under the CCA 2008 could be made more stringent in future, should that prove necessary, and that the ANPS provided that any application for a DCO would have to be assessed by reference to whatever obligations were in place at that time. The IPCC Special Report on Global Warming of 1.5C was published on 8 October 2018. It concluded that limiting global warming to that level above pre industrial levels would significantly reduce the risks of challenging impacts on ecosystems and human health and wellbeing and that it would require deep emissions reductions and rapid, far reaching and unprecedented changes to all aspects of society. To achieve that target global net emissions of CO would need to fall by about 45% from 2010 levels by 2030, reaching zero by 2050. The Government commissioned the CCC to advise on options by which the UK should achieve (i) a net zero greenhouse gas target and/or (ii) a net zero carbon target in order to contribute to the global ambitions set out in the Paris Agreement, including whether now was the right time to set such a target. In December 2018 the Department for Transport published consultation materials on its forthcoming Aviation Strategy. In Aviation 2050: The future of UK aviation the Department stated (paras 3.83 3.87) that it proposed to negotiate in the International Civil Aviation Organisation (the UN body responsible for tackling international aviation climate emissions) for a long term goal for international aviation that is consistent with the temperature goals of the Paris Agreement and that it would consider appropriate domestic action to support international progress. It stated that the Government would review the CCCs revised aviation advice and advice on the implications of the Paris Agreement. In the same month, in a paper commissioned and published by the Department and written by David S Lee, International aviation and the Paris Agreement temperature goals the author acknowledged that the Paris Agreement had a temperature based target which implied the inclusion of all emissions that affect the climate. The author stated that aviation had significant climate impacts from the oxides of nitrogen, particle emissions, and effects on cloudiness but that those impacts were subject to greater scientific uncertainty than the impacts of CO. It recorded that examples of CO emission equivalent metrics indicated up to a doubling of aviation CO equivalent emissions to account for those non CO effects. On 1 May 2019 Parliament approved a motion to declare a climate and environmental emergency. On the following day, the CCC published a report entitled Net zero: The UKs contribution to stopping global warming, in which they recommended that legislation should be passed as soon as possible to create a new statutory target of net zero greenhouse gases by 2050 and the inclusion of international aviation and shipping in that target (p 15). That recommendation, so far as it related to the CO target, was implemented on 26 June 2019 when the Climate Change Act (2050 Target Amendment) Order 2019 amended section 1(1) of the CCA 2008. On 24 September 2019 the CCC wrote to the Secretary of State for Transport advising that the international aviation and shipping emissions should be brought formally within the UKs net zero statutory 2050 target. The statutory target has not yet been changed to this effect but international aviation and shipping are taken into account when the carbon budgets are set against the statutory target: section 10(2)(i) of the CCA 2008. On 25 June 2020 the CCC published its 2020 Progress Report to Parliament entitled Reducing UK emissions, in which it recommended that international aviation and shipping be included in the UK climate targets when the Sixth Carbon Budget is set (which should be in 2021) and net zero plans should be developed (p 22). It recommended that the UKs airport capacity strategy be reviewed in the light of COVID 19 and the net zero target and that action was needed on non CO effects from aviation (p 180). The parties to this appeal have stated in the agreed Statement of Facts and Issues that it was expected that the Governments Aviation Strategy will be published before the end of 2020. From this narrative of events it is clear that the Governments response to the targets set in the Paris Agreement has been developing over time since 2016, that it has led to the amendment of the statutory CO target in section 1(1) of the CCA 2008 approximately one year after the Secretary of State designated the ANPS, and that the Government is still in the process of developing its Aviation Strategy in response to the advice of the CCC. Before turning to the legal challenges in this appeal it is also important to emphasise that, as we have stated in para 10 above, HAL, FoE and Plan B Earth agree that should the NWR Scheme be taken forward to a DCO application, the ANPS would not allow it to be assessed by reference to the carbon reduction targets, including carbon budgets, that were in place when the ANPS was designated in June 2018. The ANPS requires that the scheme be assessed against the carbon reduction targets in place at the time when a DCO application is determined: para 5.82 of the ANPS which we have set out in para 87 above. There is therefore no question of the NWR Scheme being assessed in future against outdated emissions targets. The judgments of the Divisional Court and the Court of Appeal A number of objectors to the NWR Scheme and the ANPS brought a large number of disparate claims in these proceedings to challenge the ANPS. The Divisional Court heard the claims on a rolled up basis, that is to say by considering the question of whether to grant permission to apply for judicial review at the same time as considering the merits of the claims should permission be granted. The hearing lasted for seven days and involved a full merits consideration of all the claims by the Divisional Court. In a judgment of high quality, described by the Court of Appeal as a tour de force, the Divisional Court dismissed all of the claims. For some claims it granted permission to apply for judicial review and then dismissed them on the merits. For others, it decided that they were not reasonably arguable on the merits and refused to grant permission. After thorough examination, the Divisional Court reached the conclusion that none of the claims which form the subject of grounds (i) to (iv) in the present appeal were reasonably arguable, and accordingly refused permission to apply for judicial review in relation to each of them. In relation to those claims, the Court of Appeal decided that they were both arguable and that they were made out as good claims. Accordingly, the Court of Appeal granted permission in relation to them for the respondents to apply for judicial review of the decision to designate the ANPS and then held that the ANPS was of no legal effect unless and until a review was carried out rectifying the legal errors. Analysis Ground (i) the section 5(8) ground This ground raises a question of statutory interpretation. Section 5(7) and (8) of the PA 2008, which we set out in para 25 above, provide that an NPS must give reasons for the policy set out in the statement and that the reasons must explain how the policy in the NPS takes account of Government policy relating to the mitigation of, and adaptation to, climate change. Mr Crosland for Plan B Earth presented this argument. Mr Wolfe QC for FoE adopted his submissions. Mr Crosland submits that it was unlawful for the Secretary of State when stating the reasons for the policy in the ANPS in June 2018 to have treated as irrelevant the Governments commitment to (a) the temperature target in the Paris Agreement and (b) the introduction of a new net zero carbon target. The Governments commitment to the Paris Agreement targets constituted Government policy within the meaning of section 5(8) of the PA 2008 and so should have been addressed in giving the reasons for the ANPS. Plan B Earth advanced this argument before the Divisional Court, which rejected the submission. The Divisional Court held that the Paris Agreement did not impose an obligation on any individual state to implement its global objective in any particular way, Parliament had determined the contribution of the UK towards global targets in section 1 of the CCA 2008 as a national carbon cap which represented the relevant policy in an entrenched form, and the Secretary of State could not change that carbon target unless and until the conditions set out in that Act were met. The Court of Appeal disagreed with the approach of the Divisional Court and held that Government policy in section 5(8) was not confined to the target set out in the CCA 2008. The words Government policy were words of the ordinary English language. Taking into account the consequences of the Paris Agreement involved no inconsistency with the provisions of the CCA 2008. Based on the Secretary of States written pleadings the Court of Appeal concluded that the Secretary of State had received and accepted legal advice that he was legally obliged not to take into account the Paris Agreement and the court characterised that as a misdirection of law. We address that conclusion in the next section of this judgment at paras 124 129 below. The court held that section 5(8) of the PA 2008 simply required the Government to take into account its own policy. The statements of Andrea Leadsom MP and Amber Rudd MP in March 2016 (para 72 above) and the formal ratification of the Paris Agreement showed that the Governments commitment to the Paris Agreement was part of Government policy by the time of the designation of the ANPS in June 2018. The principal question for determination is the meaning of Government policy in section 5(8) of the PA 2008. We adopt a purposive approach to this statutory provision which expands upon the obligation in section 5(7) that an NPS give reasons for the policy set out in it and interpret the statutory words in their context. The purpose of the provision is to make sure that there is a degree of coherence between the policy set out in the NPS and established Government policies relating to the mitigation of and adaptation to climate change. The section speaks of Government policy, which points toward a policy which has been cleared by the relevant departments on a government wide basis. In our view the phrase is looking to carefully formulated written statements of policy such as one might find in an NPS, or in statements of national planning policy (such as the National Planning Policy Framework), or in government papers such as the Aviation Policy Framework. For the subsection to operate sensibly the phrase needs to be given a relatively narrow meaning so that the relevant policies can readily be identified. Otherwise, civil servants would have to trawl through Hansard and press statements to see if anything had been said by a minister which might be characterised as policy. Parliament cannot have intended to create a bear trap for ministers by requiring them to take into account any ministerial statement which could as a matter of ordinary language be described as a statement of policy relating to the relevant field. In our view, the epitome of Government policy is a formal written statement of established policy. In so far as the phrase might in some exceptional circumstances extend beyond such written statements, it is appropriate that there be clear limits on what statements count as Government policy, in order to render them readily identifiable as such. In our view the criteria for a policy to which the doctrine of legitimate expectations could be applied would be the absolute minimum required to be satisfied for a statement to constitute policy for the purposes of section 5(8). Those criteria are that a statement qualifies as policy only if it is clear, unambiguous and devoid of relevant qualification: see for example Inland Revenue Comrs v MFK Underwriting Agents Ltd [1990] 1 WLR 1545, 1569 per Bingham LJ; R (Gaines Cooper) v Comrs for Her Majestys Revenue and Customs [2011] UKSC 47; [2011] 1 WLR 2625, paras 28 and 29 per Lord Wilson of Culworth, delivering the judgment with which the majority of the court agreed, and para 70 per Lord Mance. The statements of Andrea Leadsom MP and Amber Rudd MP (para 72 above) on which the Court of Appeal focused and on which Plan B Earth particularly relied do not satisfy those criteria. Their statements were not clear and were not devoid of relevant qualification in this context. They did not refer to the temperature targets at all and they both left open the question of how the Paris Agreement goal of net zero emissions would be enshrined in UK law. Andrea Leadsom went out of her way to emphasise that there is an important set of questions to be answered before we do. The statements made by these ministers were wholly consistent with and plainly reflected the fact that there was then an inchoate or developing policy being worked on within Government. This does not fall within the statutory phrase. We therefore respectfully disagree with the Court of Appeal in so far as they held (para 224) that the words Government policy were ordinary words which should be applied in their ordinary sense to the facts of a given situation. We also disagree with the courts conclusion (para 228) that the statements by Andrea Leadsom MP and Amber Rudd MP constituted statements of Government policy for the purposes of section 5(8). Although the point had been a matter of contention in the courts below, no party sought to argue before this court that a ratified international treaty which had not been implemented in domestic law fell within the statutory phrase Government policy. Plan B Earth and FoE did not seek to support the conclusion of the Court of Appeal (para 228) that it followed from the solemn act of the United Kingdoms ratification of [the Paris Agreement] that the Governments commitment to it was part of Government policy. The fact that the United Kingdom had ratified the Paris Agreement is not of itself a statement of Government policy in the requisite sense. Ratification is an act on the international plane. It gives rise to obligations of the United Kingdom in international law which continue whether or not a particular government remains in office and which, as treaty obligations, are not part of UK law and give rise to no legal rights or obligations in domestic law (R (Miller) v Secretary of State for Exiting the European Union [2017] UKSC 5; [2018] AC 61, para 55). Ratification does not constitute a commitment operating on the plane of domestic law to perform obligations under the treaty. Moreover, it cannot be regarded in itself as a statement devoid of relevant qualification for the purposes of domestic law, since if treaty obligations are to be given effect in domestic law that will require law making steps which are uncertain and unspecified at the time of ratification. Before applying these conclusions to the facts of this case, it is necessary to consider another argument which HAL advances in this appeal. HAL renews an argument which the Divisional Court had accepted at least in part. HAL argues that because Parliament had set out the target for the reduction of carbon emissions in section 1 of the CCA 2008 and had established a statutory mechanism by which the target could be altered only with the assent of Parliament, Government policy was entrenched in section 1 and could not be altered except by use of the subordinate legislation procedure in sections 2 and 3 of the CCA 2008. The statutory scheme had either expressly or by necessary implication displaced the prerogative power of the Government to adopt any different policy in this field. In support of this contention HAL refers to the famous cases of Attorney General v De Keysers Royal Hotel Ltd [1920] AC 508 and R v Secretary of State for the Home Department, Ex p Fire Brigades Union [1995] 2 AC 513, to which this court referred in R (Miller) v Secretary of State for Exiting the European Union [2017] UKSC 5; [2018] AC 61. The short answer to that submission is that it is possible for the Government to have a policy that it will seek Parliamentary approval of an alteration of the carbon target, which is to be taken into account in section 5(8) of the PA 2008. The ousting of a prerogative power in a field which has become occupied by a corresponding power conferred or regulated by statute is a legal rule which is concerned with the validity of the exercise of a power, and to the extent that exercise of powers might require reference to the target set out in section 1 of the CCA 2008 it would not be open to the Government to make reference to a different target, not as yet endorsed by Parliament under the positive resolution procedure applicable to changes to that statutory target. However, the rule does not address what is Government policy for the purposes of section 5(8) of the PA 2008. If at the date when the Secretary of State designated the ANPS, the Government had adopted and articulated a policy that it would seek to introduce a specified new carbon target into section 1 of the CCA 2008 by presenting draft subordinate legislation to that effect for the approval of Parliament, the Secretary of State could readily record in the ANPS that the Government had resolved to seek that change but that it required the consent of Parliament for the new target to have legal effect. Further, questions such as how to mitigate non CO emissions fell outside the carbon emissions target in the CCA 2008. Turning to the facts of the case, it is clear from the narrative of events in paras 70 96 above that in June 2018, when the Secretary of State for Transport designated the ANPS, the Governments approach on how to adapt its domestic policies to contribute to the global goals of the Paris Agreement was still in a process of development. There was no established policy beyond that already encapsulated in the CCA 2008. The Government followed the advice of the CCC. The CCCs advice in 2016 was that the evidence was not sufficient to specify a new carbon target and that it was not necessary to do so at that time (paras 73 74 above). In early 2018 the CCC invited the Government to seek further advice from it after the publication of the IPCCs report (para 79 above). During 2018 the Governments policy in relation to aviation emissions was in a process of development and no established policy had emerged on either the steps to be taken at international level or about which domestic measures would be adopted; it was expected that the forthcoming Aviation Strategy would clarify those matters (paras 83 and 86 above). The Governments consultation in December 2018 confirmed that the development of aviation related targets was continuing and in 2020 the Governments Aviation Strategy is still awaited (paras 92 and 96 above). Against this background, the section 5(8) challenge fails and HALs appeal on this ground must succeed. It is conceded that the Paris Agreement itself is not Government policy. The statements by Andrea Leadsom MP and Amber Rudd MP in 2016, on which Plan B Earth principally founds, do not amount to Government policy for the purpose of section 5(8) of the PA 2008. The statements concerning the development of policy which the Government made in 2018 were statements concerning an inchoate and developing policy and not an established policy to which section 5(8) refers. Mr Crosland placed great emphasis on the facts (i) that the Airports Commission had assessed the rival schemes against scenarios, one of which was that overall CO emissions were set at a cap consistent with a worldwide goal to limit global warming to 2C, and (ii) that that scenario was an input into Secretary of States assessment of the ANPS at a time when the UK Government had ratified the Paris Agreement and ministers had made the statements to which we referred above. But those facts are irrelevant to the section 5(8) challenge. It is not in dispute that the internationally agreed temperature targets played a formative role in the development of government policy. But that is not enough for Plan B Earth to succeed in this challenge. What Mr Crosland characterised as a policy commitment to the Paris Agreement target did not amount to Government policy under that subsection. Finally, Mr Crosland sought to raise an argument under section 3 of the Human Rights Act 1998 that interpreting section 5(8) so as to preclude consideration of the temperature limit in the Paris Agreement would tend to allow major national projects to be developed and that those projects would create an intolerable risk to life and to peoples homes contrary to articles 2 and 8 of the European Convention on Human Rights (ECHR). This argument must fail for two reasons. First, as Lord Anderson for HAL submits, the argument was advanced as a separate ground before the Divisional Court and rejected, that finding was not appealed to the Court of Appeal, and is therefore not before this court. Secondly, even if it were to be treated as an aspect of Plan B Earths section 5(8) submission and thus within the scope of the appeal (as Mr Crosland sought to argue), it is in any event unsound because any effect on the lives and family life of those affected by the climate change consequences of the NWR Scheme would result not from the designation of the ANPS but from the making of a DCO in relation to the scheme. As HAL has conceded and the respondents have agreed, the ANPS requires the NWR Scheme to be assessed against the emissions targets which would be current if and when an application for a DCO were determined. Ground (ii): the section 10 ground Mr Wolfe for FoE presented the submissions for the respondents on this ground and grounds (iii) and (iv). Mr Crosland for Plan B Earth adopted those submissions. Section 10 of the PA 2008 applies to the Secretary of States function in promulgating an NPS. In exercising that function the Secretary of State must act with the objective of contributing to the achievement of sustainable development. Sustainable development is a recognised term in the planning context and its meaning is not controversial in these proceedings. As explained in paras 7 and 8 of the National Planning Policy Framework (July 2018), at a very high level the objective of sustainable development involves meeting the needs of the present without compromising the ability of future generations to meet their own needs; it has three overarching elements, namely an environmental objective, an economic objective and a social objective. For a major infrastructure project like the development of airport capacity in the South East, which promotes economic development but at the cost of increased greenhouse gases emissions, these elements have to be taken into account and balanced against each other. Section 10(3)(a) provides that the Secretary of State must, in particular, have regard to the desirability of mitigating, and adapting to, climate change. Unlike in section 5(8) of the PA 2008, this is not a factor which is tied to Government policy. As it transpired, very little divided the parties under this ground. The basic legal approach is agreed. A useful summation of the law was given by Simon Brown LJ in R v Somerset County Council, Ex p Fewings [1995] 1 WLR 1037, 1049, in which he identified three categories of consideration, as follows: [T]he judge speaks of a decision maker who fails to take account of all and only those considerations material to his task. It is important to bear in mind, however, that there are in fact three categories of consideration. First, those clearly (whether expressly or impliedly) identified by the statute as considerations to which regard must be had. Second, those clearly identified by the statute as considerations to which regard must not be had. Third, those to which the decision maker may have regard if in his judgment and discretion he thinks it right to do so. There is, in short, a margin of appreciation within which the decision maker may decide just what considerations should play a part in his reasoning process. The three categories of consideration were identified by Cooke J in the New Zealand Court of Appeal in CREEDNZ Inc v Governor General [1981] NZLR 172, 183: What has to be emphasised is that it is only when the statute expressly or impliedly identifies considerations required to be taken into account by the [relevant public authority] as a matter of legal obligation that the court holds a decision invalid on the ground now invoked. It is not enough that a consideration is one that may properly be taken into account, nor even that it is one which many people, including the court itself, would have taken into account if they had to make the decision. Cooke J further explained at p 183 in relation to the third category of consideration that, notwithstanding the silence of the statute, there will be some matters so obviously material to a decision on a particular project that anything short of direct consideration of them by [the public authority] would not be in accordance with the intention of the Act. These passages were approved as a correct statement of principle by the House of Lords in In re Findlay [1985] AC 318, 333 334. See also R (Hurst) v London Northern District Coroner [2007] UKHL 13; [2007] 2 AC 189, paras 55 59 (Lord Brown of Eaton under Heywood, with whom a majority of the Appellate Committee agreed); R (Corner House Research) v Director of the Serious Fraud Office [2008] UKHL 60; [2009] 1 AC 756, para 40 (Lord Bingham of Cornhill, with whom a majority of the Appellate Committee agreed); and R (Samuel Smith Old Brewery (Tadcaster)) v North Yorkshire County Council [2020] UKSC 3; [2020] PTSR 221, paras 29 32 (Lord Carnwath, with whom the other members of the court agreed). In the Hurst case, Lord Brown pointed out that it is usually lawful for a decision maker to have regard to unincorporated treaty obligations in the exercise of a discretion (para 55), but that it is not unlawful to omit to do so (para 56). As the Court of Appeal correctly held in Baroness Cumberlege of Newick v Secretary of State for Communities and Local Government [2018] EWCA Civ 1305; [2018] PTSR 2063, paras 20 26, in line with these other authorities, the test whether a consideration falling within the third category is so obviously material that it must be taken into account is the familiar Wednesbury irrationality test (Associated Provincial Picture Houses Ltd v Wednesbury Corpn [1948] 1 KB 223; Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374, 410 411 per Lord Diplock). It is possible to subdivide the third category of consideration into two types of case. First, a decision maker may not advert at all to a particular consideration falling within that category. In such a case, unless the consideration is obviously material according to the Wednesbury irrationality test, the decision is not affected by any unlawfulness. Lord Bingham deals with such a case in Corner House Research at para 40. There is no obligation on a decision maker to work through every consideration which might conceivably be regarded as potentially relevant to the decision they have to take and positively decide to discount it in the exercise of their discretion. Secondly, a decision maker may in fact turn their mind to a particular consideration falling within the third category, but decide to give the consideration no weight. As we explain below, this is what happened in the present case. The question again is whether the decision maker acts rationally in doing so. Lord Brown deals with a case of this sort in Hurst (see para 59). This shades into a cognate principle of public law, that in normal circumstances the weight to be given to a particular consideration is a matter for the decision maker, and this includes that a decision maker might (subject to the test of rationality) lawfully decide to give a consideration no weight: see, in the planning context, Tesco Stores Ltd v Secretary of State for the Environment [1995] 1 WLR 759 (HL), 780 (Lord Hoffmann). The Divisional Court (para 648) and the Court of Appeal (para 237) held that the Paris Agreement fell within the third category identified in Fewings. In so far as it is an international treaty which has not been incorporated into domestic law, this is correct. In fact, however, as we explain (para 71 above), the UKs obligations under the Paris Agreement are given effect in domestic law, in that the existing carbon target under section 1 of the CCA 2008 and the carbon budgets under section 4 of that Act already meet (and, indeed, go beyond) the UKs obligations under the Paris Agreement to adhere to the NDCs notified on its behalf under that Agreement. The duties under the CCA 2008 clearly were taken into account when the Secretary of State decided to issue the ANPS. At para 5.69 of the ANPS the Secretary of State stated: The Government has a number of international and domestic obligations to limit carbon emissions. Emissions from both the construction and operational phases of the [NWR Scheme] project will be relevant to meeting these obligations. This statement covered the Paris Agreement as well as other international treaties. At para 5.71 the ANPS correctly stated that [t]he UKs obligations on greenhouse gas emissions are set under the [CCA 2008]. As explained above, the relevant NDCs required to be set under the Paris Agreement were covered by the target in the CCA 2008 and the carbon budgets set under that Act. At paras 5.72 5.73 of the ANPS it was explained how aviation emissions were taken into account in setting carbon budgets under the CCA 2008 in accordance with the advice given by the CCC. We have set out the evidence of Ms Low and Ms Stevenson regarding this topic (paras 88 and 89 above) which confirms that, in acting for the Secretary of State in drawing up the ANPS, they followed the advice of the CCC that the existing measures under the CCA 2008 were capable of being compatible with the 2050 target set by the Paris Agreement. The CCC did not recommend adjusting the UKs targets further at that stage. They were to be kept under review and appropriate adjustments could be made to the emissions target and carbon budgets under the CCA 2008 in future as necessary. According to that advice, therefore, sufficient account was taken of the Paris Agreement by ensuring that the relevant emissions target and carbon budgets under the CCA 2008 would be properly taken into account in the construction and operation of the NWR Scheme. The ANPS ensured that this would occur: see para 5.82 (set out at para 87 above). Therefore, on a correct understanding of the ANPS and the Secretary of States evidence, this is not a case in which the Secretary of State omitted to give any consideration to the Paris Agreement; nor is it one in which no weight was given to the Paris Agreement when the Secretary of State decided to issue the ANPS. On the contrary, the Secretary of State took the Paris Agreement into account and, to the extent that the obligations under it were already covered by the measures under the CCA 2008, he gave weight to it and ensured that those obligations would be brought into account in decisions to be taken under the framework established by the ANPS. On proper analysis the question is whether the Secretary of State acted irrationally in omitting to take the Paris Agreement further into account, or give it greater weight, than in fact he did. In its judgment, the Divisional Court recorded (para 638) that the Secretary of State accepted that, in designating the ANPS, he took into account only the CCA 2008 carbon emission targets and did not take into account either the Paris Agreement or otherwise any post 2050 target or non CO2 emissions (these latter points are relevant to ground (iv) below). However, this way of describing the position masks somewhat the way the Paris Agreement did in fact enter into consideration by the Secretary of State. In the same paragraph, the Divisional Court summarised two submissions advanced by counsel for the Secretary of State as to why the Secretary of States approach was not unlawful: (i) on its proper construction, and having regard to the express reference to the UKs international obligations in section 104(4) of the PA 2008, the PA 2008 requires the Secretary of State to ignore international commitments except where they are expressly referred to in that Act; alternatively, (ii) even if not obliged to ignore such commitments, the Secretary of State had a discretion as to whether to do so and was not obliged to take them into account. The Divisional Court rejected the first argument but accepted the second. It noted that the Secretary of State was bound by the obligations in the CCA 2008, which effectively transposed international obligations into domestic law (para 643). Beyond that, the Secretary of State had a discretion whether to take the Paris Agreement further into account, and had not (even arguably) acted irrationally in deciding not to do so. It therefore refused to give permission for judicial review of the ANPS on this ground. The Court said (para 648): In our view, given the statutory scheme in the CCA 2008 and the work that was being done on if and how to amend the domestic law to take into account the Paris Agreement, the Secretary of State did not arguably act unlawfully in not taking into account that Agreement when preferring the NWR Scheme and in designating the ANPS as he did. As we have described, if scientific circumstances change, it is open to him to review the ANPS; and, in any event, at the DCO stage this issue will be re visited on the basis of the then up to date scientific position. Mr Wolfe sought to support the judgment of the Court of Appeal in relation to this ground. He argued that the evidence for the Secretary of State had to be read in the light of the first submission made by his counsel in the Divisional Court, and that the true position was that the Secretary of State (acting by his officials and advisers) had been advised that he was not entitled to have regard to the Paris Agreement when deciding whether to designate the ANPS and had proceeded on that basis, with the result that he had not in fact exercised any discretion in deciding not to have further regard to the Paris Agreement. He also submitted that it was obvious that it was a material consideration. Mr Wolfe was successful in persuading the Court of Appeal on these points (paras 203 and 234 238 of its judgment). The Court of Appeal accepted his submissions that there was an error of law in the approach of the Secretary of State because he never asked himself the question whether he could take into account the Paris Agreement pursuant to his obligations under section 10 and [i]f he had asked himself that question the only answer that would reasonably have been open to him is that the Paris Agreement was so obviously material to the decision he had to make in deciding whether to designate the ANPS that it was irrational not to take it into account. With respect to the Court of Appeal, they were wrong to overturn the judgment of the Divisional Court on this ground. Mr Wolfes submissions conflated a submission of law (submission (i) above) made by counsel for the Secretary of State as recorded in para 638 of the judgment of the Divisional Court and the evidence of fact given by the relevant witnesses for the Secretary of State. In making his submission of law, counsel was not giving evidence about the factual position. There is a fundamental difference between submissions of law made by counsel and evidence of fact. Clearly, if the Secretary of State had been correct in submission (i) that would have provided an answer to the case against him whatever the position on the facts. This explains why counsel advanced the submission. But it is equally clear that if that submission failed, the Secretary of State made an alternative submission that he had a discretion whether to take the Paris Agreement further into account than was already the case under the CCA 2008 and that there had been no error of law in the exercise of that discretion. That was the submission accepted by the Divisional Court. In our view, both the submissions of Mr Wolfe which the Court of Appeal accepted are unsustainable. The Divisional Courts judgment on this point is correct. On the evidence, the Secretary of State certainly did ask himself the question whether he should take into account the Paris Agreement beyond the extent to which it was already reflected in the obligations under the CCA 2008 and concluded in the exercise of his discretion that it would not be appropriate to do so. As mentioned above, this case is in the class referred to in para 121 above. Mr Wolfe sought to suggest that in deciding the case as it did, the Court of Appeal had acted as a first instance court (since the Divisional Court had refused to give permission for judicial review on this ground) and that it had made factual findings to contrary effect which this court was not entitled to go behind. He also submitted that HAL, in its notice of appeal, had not questioned the factual position as it was taken to be by the Court of Appeal and was therefore not entitled to dispute it on this appeal. Neither of these submissions has any merit. The Divisional Court considered the claims brought against the Secretary of State at a rolled up hearing lasting many days and considered each claim in full and in depth. In respect of all aspects of the Divisional Courts decision, both in relation to those claims on which it granted permission for judicial review but then dismissed the claim and in relation to those claims (including those relating to grounds (i) to (iv) in this appeal) on which after full consideration it decided they were unarguable and so refused to grant permission for judicial review, the Court of Appeal correctly understood that its role was the conventional role of an appellate court, to examine whether the Divisional Court had erred in its decision. In any event, this court can read the undisputed evidence of Ms Low and Ms Stevenson for itself and has the benefit of an agreed Statement of Facts and Issues which makes it clear what the true factual position was. The Court of Appeal was wrong to proceed on the basis of a different assessment of the facts. On a fair reading of HALs notice of appeal, it indicated that its case under this ground was to be that the Secretary of State had a discretion whether to have regard to the Paris Agreement, which discretion had been exercised lawfully. In any event, that was put beyond doubt by HALs written case. FoE and Plan B Earth have been on notice of HALs case under this ground for a long time and are in no way prejudiced by it being presented in submissions to this court. The view formed by the Secretary of State, that the international obligations of the UK under the Paris Agreement were sufficiently taken into account for the purposes of the designation of the ANPS by having regard to the obligations under the CCA 2008, was in our judgment plainly a rational one. Mr Wolfe barely argued to the contrary. The Secretary of States assessment was based on the advice of the CCC, as the relevant independent expert body. The assessment cannot be faulted. Further, the ANPS itself indicated at para 5.82 that the up to date carbon targets under the CCA 2008, which would reflect developing science and any change in the UKs international obligations under the Paris Agreement, would be taken into account at the stage of considering whether a DCO should be granted. That was a necessary step before the NWR Scheme could proceed. Moreover, as observed by the Divisional Court, there was scope for the Secretary of State to amend the ANPS under section 6 of the PA 2008, should that prove to be necessary if it emerged in the future that there was any inconsistency between the ANPS and the UKs obligations under the Paris Agreement. It should also be observed that the carbon emissions associated with all three of the principal options identified by the Airports Commission (that is, the NWR Scheme, the ENR Scheme and the G2R Scheme) were assessed to be broadly similar. Accordingly, reference to the Paris Agreement does not provide any basis for preferring one scheme rather than another. To the extent the obligations under the Paris Agreement have a bearing on the decision to designate the ANPS, therefore, they are only significant if it is to be argued that there should not be any decision to meet economic needs by increasing airport capacity by one of these schemes. But in light of the extensive work done by the Airports Commission about the need for such an increase in capacity it could not be said that the Secretary of State acted irrationally in considering that the case for airport expansion had been sufficiently made out to allow the designation of the ANPS. The respondents did not seek to argue that this aspect of his reasoning was irrational. As we have noted above, the concept of sustainability in section 10 of the PA 2008 includes consideration of economic and social factors as well as environmental ones. In light of the factual position, it is not necessary to decide the different question whether, if the Secretary of State had omitted to think about the Paris Agreement at all (so that this was a case of the type described in para 120 above), as an unincorporated treaty, that would have constituted an error of law. That is not a straightforward issue and we have not heard submissions on the point. We say no more about it. Ground (iii): the SEA Directive ground The SEA Directive operates along with the EIA Directive to ensure that environmental impacts from proposals for major development are properly taken into account before a development takes place. The relationship between the Directives was explained by Lord Reed in Walton v Scottish Ministers [2012] UKSC 44; [2013] PTSR 51, paras 10 30. The SEA Directive applies upstream, at the stage of preparation of strategic development plans or proposals. The EIA Directive requires assessment of environmental impacts downstream, at the stage when consent for a particular development project is sought. Although the two Directives are engaged at different points in the planning process for large infrastructure projects such as the NWR Scheme, they have similar objects and have to deal with similar issues of principle, including in particular the way in which regard should be had to expert assessment of various factors bearing on that process. These points indicate that a similar approach should apply under the two Directives. The SEA Directive is implemented in domestic law by the SEA Regulations. It is common ground that the SEA Regulations are effective in transposing the Directive into domestic law. Accordingly, it is appropriate to focus the discussion of this ground on the SEA Directive itself. The structure of the SEA Directive appears from its provisions, set out and discussed above. The Directive requires that an environmental assessment of major plans and proposals should be carried out. The ANPS is such a plan, which will have a significant effect in setting the policy framework for later consideration of whether to grant a DCO for implementing the NWR Scheme. Therefore the proposal to designate it under section 5 of the PA 2008 required an environmental assessment as defined in article 2(b). The environmental assessment had to include the preparation of an environmental report and the carrying out of consultations. An environmental report for the purposes of the Directive is directed to providing a basis for informed public consultation on the plan. The decision making framework under the SEA Directive is similar to that under the EIA Directive for environmental assessment of particular projects. Under the EIA Directive, an applicant for planning consent for particular projects has to produce an environmental statement which, among other things, serves as a basis for consultation with the public. Under the SEA Directive, the public authority which proposes the adoption of a strategic plan has to produce an environmental report for the same purpose. In due course, any application by HAL for a DCO will have to go through the process of environmental assessment pursuant to the EIA Directive and the EIA Regulations. FoE and Plan B Earth complain that the environmental report which the Secretary of State was required under the SEA Directive to prepare and publish was defective, in that it did not make reference to the Paris Agreement. Mr Wolfe pointed out that the Secretary of State did not include the Paris Agreement in the long list of legal instruments and other treaties appended to the scoping report produced in March 2016 (ie after the Paris Agreement was adopted in December 2015 but before it was signed by the UK in April 2016 and ratified by it in November 2016) for the purposes of preparing the draft AoS which was to stand as the Secretary of States environmental report for the purposes of the SEA Directive for the consultation on the draft ANPS. No reference to the Paris Agreement was included in the AoS used for the February 2017 consultation on the draft ANPS, nor in that used for the October 2017 consultation on the draft ANPS. Against this, HAL points out that the carbon target in the CCA 2008 and the carbon budgets set under that Act were referred to in the AoS, as well as in the draft ANPS itself, so to that extent the UKs obligations under the Paris Agreement were covered in the environmental report. Beyond that, the evidence of Ms Stevenson (who led the team who prepared the AoS on behalf of the Secretary of State) makes it clear that the Secretary of State followed the advice of the CCC in deciding that it was not necessary and would not be appropriate to make further reference to the Paris Agreement in the AoS. The existing domestic legal obligations were considered to be the correct basis for assessing the carbon impact of the project, and it would be speculative and unhelpful to guess at what different targets might be recommended by the CCC in the future. Therefore, despite its omission from the scoping report, when the AoS actually came to be drafted the Paris Agreement (which had been ratified by the UK after the scoping report was issued) had been considered and the Secretary of State, acting by Ms Stevenson and her team, had decided in the exercise of his discretion not to make distinct reference to it. As regards the law, the parties are in agreement. Any obligation to make further reference to the Paris Agreement in the environmental report depended on the application of three provisions of the SEA Directive. Under paragraph (e) of Annex I, the AoS had to provide information in the form of the environmental protection objectives, established at international, Community or member state level, which are relevant to the plan or programme and the way those objectives and any environmental considerations have been taken into account during its preparation. But, as stated in the introduction to Annex I, this was subject to article 5(2) and (3) of the Directive, set out at para 58 above. It is common ground that the effect of article 5(2) and (3) is to confer on the Secretary of State a discretion regarding the information to include in an environmental report. It is also common ground that the approach to be followed in deciding whether the Secretary of State has exercised his discretion unlawfully for the purposes of that provision is that established in relation to the adequacy of an environmental statement when applying the EIA Directive, as set out by Sullivan J in R (Blewett) v Derbyshire County Council [2003] EWHC 2775 (Admin); [2004] Env LR 29 (Blewett). Blewett has been consistently followed in relation to judicial review of the adequacy of environmental statements produced for the purposes of environmental assessment under the EIA Directive and endorsed at the highest level. In Shadwell Estates Ltd v Breckland District Council [2013] EWHC 12 (Admin) Beatson J held that the Blewett approach was also applicable in relation to the adequacy of an environmental report under the SEA Directive. The Divisional Court and the Court of Appeal in the present case endorsed this view (at paras 401 435 and paras 126 144 of their respective judgments). The respondents have not challenged this and we see no reason to question the conclusion of the courts below on this issue. As Sullivan J held in Blewett (paras 32 33), where a public authority has the function of deciding whether to grant planning permission for a project calling for an environmental impact assessment under the EIA Directive and the EIA Regulations, it is for that authority to decide whether the information contained in the document presented as an environmental statement is sufficient to meet the requirements of the Directive, and its decision is subject to review on normal Wednesbury principles. Sullivan J observed (para 39) that the process of requiring that the environmental statement is publicised and of public consultation gives those persons who consider that the environmental statement is inaccurate or inadequate or incomplete an opportunity to point out its deficiencies. The EIA Directive and Regulations do not impose a standard of perfection in relation to the contents of an environmental statement in order for it to fulfil its function in accordance with the Directive and the Regulations that it should provide an adequate basis for public consultation. At para 41 Sullivan J warned against adoption of an unduly legalistic approach in relation to assessment of the adequacy of an environmental statement and said: The [EIA] Regulations should be interpreted as a whole and in a common sense way. The requirement that an [environmental impact assessment] application (as defined in the Regulations) must be accompanied by an environmental statement is not intended to obstruct such development. As Lord Hoffmann said in R v North Yorkshire County Council, Ex p Brown [2000] 1 AC 397, at p 404, the purpose is to ensure that planning decisions which may affect the environment are made on the basis of full information. In an imperfect world it is an unrealistic counsel of perfection to expect that an applicants environmental statement will always contain the full information about the environmental impact of a project. The Regulations are not based upon such an unrealistic expectation. They recognise that an environmental statement may well be deficient, and make provision through the publicity and consultation processes for any deficiencies to be identified so that the resulting environmental information provides the local planning authority with as full a picture as possible. There will be cases where the document purporting to be an environmental statement is so deficient that it could not reasonably be described as an environmental statement as defined by the Regulations , but they are likely to be few and far between. Lord Hoffmann (with whom the other members the Appellate Committee agreed on this issue) approved this statement in R (Edwards) v Environment Agency [2008] UKHL 22; [2008] 1 WLR 1587, para 38. As the Divisional Court and the Court of Appeal held in the present case, the discretion of the relevant decision maker under article 5(2) and (3) of the SEA Directive as to whether the information included in an environmental report is adequate and appropriate for the purposes of providing a sound and sufficient basis for public consultation leading to a final environmental assessment is likewise subject to the conventional Wednesbury standard of review. We agree with the Court of Appeal when it said (para 136): The courts role in ensuring that an authority here the Secretary of State has complied with the requirements of article 5 and Annex I when preparing an environmental report, must reflect the breadth of the discretion given to it to decide what information may reasonably be required when taking into account the considerations referred to first, current knowledge and methods of assessment; second, the contents and level of detail in the plan or programme; third, its stage in the decision making process; and fourth the extent to which certain matters are more appropriately assessed at different levels in that process in order to avoid duplication of the assessment. These requirements leave the authority with a wide range of autonomous judgment on the adequacy of the information provided. It is not for the court to fix this range of judgment more tightly than is necessary. The authority must be free to form a reasonable view of its own on the nature and amount of information required, with the specified considerations in mind. This, in our view, indicates a conventional Wednesbury standard of review as adopted, for example, in Blewett. A standard more intense than that would risk the court being invited, in effect, to substitute its own view on the nature and amount of information included in environmental reports for that of the decision maker itself. This would exceed the proper remit of the court. The EIA Directive and the SEA Directive are, of course, EU legislative instruments and their application is governed by EU law. However, as the Court of Appeal observed (paras 134 135), the type of complex assessment required in compiling an environmental report for the purposes of environmental assessment is an area where domestic public law principles have the same effect as the parallel requirements of EU law. As Advocate General Lger stated in his opinion in Upjohn Ltd v Licensing Authority Established Under Medicines Act 1968 (Case C 120/97) [1999] 1 WLR 927, para 50, [the] court has always taken the view that when an authority is required, in the exercise of its functions, to undertake complex assessments, a limited judicial review of the action which that authority alone is entitled to perform must be exercised, since otherwise that authoritys freedom of action would be definitively paralysed . The appropriateness of this approach is reinforced in the present context, having regard to the function which an environmental report is supposed to fulfil under the scheme of the SEA Directive. It is intended that such a report should inform the public by providing an appropriate and comprehensible explanation of the relevant policy context for a proposed strategic plan or project to enable them to provide comments thereon, and in particular to suggest reasonable alternatives by which the public need for development in accordance with the proposed plan or project could be met. As article 6(2) states, the public is to have an early and effective opportunity to express their opinion on a proposed plan or programme. It is implicit in this objective that the public authority responsible for promulgating an environmental report should have a significant editorial discretion in compiling the report to ensure that it is properly focused on the key environmental and other factors which might have a bearing on the proposed plan or project. Absent such a discretion, there would be a risk that public authorities would adopt an excessively defensive approach to drafting environmental reports, leading to the reports being excessively burdened with irrelevant or unfocused information which would undermine their utility in informing the general public in such a way that the public is able to understand the key issues and comment on them. In the sort of complex environmental report required in relation to a major project like the NWR Scheme, there is a real danger that defensive drafting by the Secretary of State to include reference to a wide range of considerations which he did not consider to be helpful or appropriate in the context of the decision to be taken would mean that the public would be drowned in unhelpful detail and would lose sight of the wood for the trees, and their ability to comment effectively during the consultation phase would be undermined. The appositeness of Sullivan Js analysis in Blewett at para 41, quoted above, has been borne out in this case. The draft ANPS issued with the AoS for the purposes of consultation included the statement that it was compatible with the UKs international obligations in relation to climate change. Concerns about the impact of the expansion of Heathrow on the UKs ability to meet its climate change commitments were raised in representations made during the consultation. In the Governments response to the consultation published on 5 June 2018 these representations were noted and the Governments position in relation to them was explained (paras 8.18 8.19 and 8.25). The Governments view was that the NWR Scheme was capable of being compatible with the UKs international obligations and that there was no good reason to hold up the designation of the ANPS until future policy in relation to aviation carbon emissions, which was in a state of development internationally and domestically, was completely fixed. Accordingly, it is clear that the public was able to comment on the Paris Agreement in the course of the consultation and that their comments were taken into account in the environmental assessment required by the SEA Directive. It again appears from this material that the Secretary of State did have regard to the Paris Agreement when deciding to designate the ANPS. As we have said, Mr Wolfe did not challenge the legal framework set out above. In particular, he did not challenge the appropriateness of applying the Wednesbury standard in relation to the exercise of discretion under article 5(2) and (3). Instead, in line with his submission under ground (ii) above, his submission was that the Secretary of State had decided that the Paris Agreement was not a relevant statement of international policy falling within Annex I, paragraph (e), because he had been advised that it was legally irrelevant to the decision he had to take as to whether to designate the ANPS. Thus, according to Mr Wolfe, the Secretary of State had never reached the stage of exercising his discretion whether to include a distinct reference to the Paris Agreement in the AoS. The Secretary of States decision that the Paris Agreement was irrelevant as a matter of law was wrong, and therefore the Secretary of State had erred in law because he simply did not turn his mind to whether reference to it should be included in the environmental report (the AoS). This was the argument which the Court of Appeal accepted at paras 242 to 247. The Court of Appeals reasoning on this point was very short because, as it pointed out, it followed its reasoning in relation to the respondents submissions in relation to section 10 of the PA 2008 (ground (ii) above). In our view, as with the ground (ii) above, Mr Wolfes submission and the reasoning of the Court of Appeal cannot be sustained in light of the relevant evidence on the facts. As we have explained, the Secretary of State did not treat the Paris Agreement as legally irrelevant and on that basis refuse to consider whether reference should be made to it. On the contrary, as Ms Stevenson explains in her evidence, in compiling the AoS as the environmental statement required under the SEA Directive the Secretary of State decided to follow the advice of the CCC to the effect that the UKs obligations under the Paris Agreement were sufficiently taken into account in the UKs domestic obligations under the CCA 2008, which were referred to in the ANPS and the AoS. Further reference to the Paris Agreement was not required. As we have already held above, this was an assessment which was plainly rational and lawful. Therefore, we would uphold this ground of appeal as well. Having regard to the evidence regarding the factual position, the Divisional Court was right to reject this complaint by the respondents (paras 650 656). The Secretary of State did not act in breach of any of his obligations under the SEA Directive in drafting the AoS as the relevant environmental report in respect of the ANPS, and in omitting to include any distinct reference in it to the Paris Agreement. Ground (iv) the post 2050 and non CO emissions grounds This ground concerns other matters which it is said that the Secretary of State failed to take into consideration in the performance of his duty under section 10(2) and (3) of the PA 2008. Those provisions, as we have said, obliged the Secretary of State in performing his function of designating the ANPS to do so with the objective of contributing to sustainable development and in so doing to have regard to the desirability of mitigating, and adapting to, climate change. FoE has argued and the Court of Appeal (paras 248 260) has accepted that the Secretary of State failed in his duty under section 10 to have regard to (i) the effect of emissions created by the NWR Scheme after 2050 and (ii) the effect of non CO emissions from that scheme. The Divisional Court dealt with this matter together with the matter which has become ground (ii) in this appeal, namely whether the Secretary of State failed to have regard to the Paris Agreement in breach of section 10, as issue 19 in the rolled up hearing (paras 633 648, 659(iv)) and held that that FoEs case was not arguable. The Court of Appeal (para 256) correctly treated this issue as closely bound up with what is now ground (ii) in this appeal. It is not in dispute in this appeal that in assessing whether the Secretary of State was bound to address the effect of the post 2050 emissions and the effect of the non CO emissions in the ANPS we are dealing with the third category of considerations in Simon Brown LJs categorisation in R v Somerset County Council, Ex p Fewings (para 116 above). The Secretary of State had a margin of appreciation in deciding what matters he should consider in performing his section 10 duty. It is also not in dispute that it is appropriate to apply the Wednesbury irrationality test to that decision (para 119 above). The task for the court therefore is one of applying that legal approach to the facts of this case. We address first the question of post 2050 emissions before turning to the non CO emissions. (i) post 2050 emissions FoEs argument on the relevance to the objectives of the Paris Agreement of the impacts of emissions after 2050 was straightforward. An assessment of the impact of the emissions from aircraft using the North West Runway by reference to a greenhouse gas target for 2050 fails to consider whether it would be sustainable for the additional aviation emissions from the use of the North West Runway to occur after 2050 given the goal of the Paris Agreement for global emissions to reach net zero in the second half of the century. HAL submitted that the Secretary of States approach is entirely rational. Lord Anderson points out, and FoE accepts, that the Airports Commission assessed the carbon emissions of each of the short listed schemes over a 60 year appraisal period up to 2085/2086 and that the same appraisal period was used in the AoS which accompanied the ANPS. The Secretary of State therefore did take into account the fact that there would be carbon emissions from the use of the North West Runway after 2050 and quantified those emissions. It was not irrational to decide not to attempt to assess post 2050 emissions by reference to future policies which had yet to be formulated. It was rational for him to assume that future policies in relation to the post 2050 period, including new emissions targets, could be enforced by the DCO process and mechanisms such as carbon pricing, improvements to aircraft design, operational efficiency improvements and limitation of demand growth. In our view, HAL is correct in its submission that the Secretary of State did not act irrationally in not attempting in the ANPS to assess post 2050 emissions against policies which had yet to be determined. It is clear from the AoS that the Department for Transport modelled the likely future carbon emissions of both Heathrow and Gatwick airports, covering aircraft and other sources of emissions, to 2085/2086 (paras 6.11.1 6.11.3, 6.11.13 and Table 6.4). As we have set out in our discussion of ground (i) above, policy in response to the global goals of the Paris Agreement was in the course of development in June 2018 when the Secretary of State designated the ANPS and remains in development. Further, as we have already pointed out (paras 10 and 98 above), the designation of the NWR Scheme in the ANPS did not immunise the scheme from complying with future changes of law and policy. The NWR Scheme would fall to be assessed against the emissions targets which were in force at the date of the determination of the application for a DCO. Under section 120 of the PA 2008 (para 37 above) the DCO may impose requirements corresponding to planning conditions and requirements that the approval of the Secretary of State be obtained. Under section 104 (para 35 above), the Secretary of State is not obliged to decide the application for the DCO in accordance with the ANPS if (i) that would lead the United Kingdom to be in breach of any of its international obligations, (ii) that would lead the Secretary of State be in breach of any duty imposed by or under any other enactment, (iii) the Secretary of State is satisfied that deciding the application in accordance with the ANPS would be unlawful by virtue of any enactment and (iv) the Secretary of State is satisfied that the adverse impact of the proposed development would outweigh its benefits. There are therefore provisions in place to make sure that the NWR Scheme complies with law and policy, including the Governments forthcoming Aviation Strategy, at the date when the DCO application is determined. There are also mechanisms available to the Government, as HAL submits (para 155 above), by which the emissions from the use of the North West Runway can be controlled. (ii) non CO emissions To understand FoEs argument in relation to non CO emissions, it is necessary first to identify what are the principal emissions which give rise to concern. Mr Tim Johnson, of the Aviation Environmental Federation, explained in his first witness statement that aircraft emit nitrogen oxides, water vapour and sulphate and soot aerosols, which combine to have a net warming effect. Depending on atmospheric humidity, the hot air from aircraft exhausts combines with water vapour in the atmosphere to form ice crystals which appear as linear condensation trails and can lead to cirrus like cloud formation. Using the metric of radiative forcing (RF), which is a measure of changes in the energy balance of the atmosphere in watts per square metre, it is estimated that the overall RF by aircraft is 1.9 times greater than the forcing by aircraft CO emissions alone, but the RF metric is not suitable for forecasting future impacts. He recognised that there is continuing uncertainty about the impacts of non CO emissions, which tend to be short lived, but he stated that there is high scientific consensus that the total climate warming effect of aviation is more than that from CO emissions alone. Scientists are exploring metrics to show how non CO impacts can be reflected in emission forecasts for the purpose of formulating policy. There is substantial agreement between the parties that there is continuing uncertainty in the scientific community about the effects of non CO emissions. The Department for Transport acknowledged this uncertainty in the AoS (para 6.11.11): The assessment undertaken is based on CO emissions only There are likely to be highly significant climate change impacts associated with non CO emissions from aviation, which could be of a similar magnitude to the CO emissions themselves, but which cannot be readily quantified due to the level of scientific uncertainty and have therefore not been assessed. There are also non CO emissions associated with the operation of the airport infrastructure, such as from refrigerant leaks and organic waste arisings, however, evidence suggests that these are minor and not likely to be material. The AoS returned to this topic (Appendix A 9, para 9.11.5): In addition, there are non carbon emissions associated with the combustion of fuels in aircraft engines while in flight, which are also thought to have an impact on climate change. As well as CO, combustion of aviation fuel results in emission of water vapour, nitrogen oxides (NO) and aerosols. NO are indirect greenhouse gases, in that they do not give rise to a radiative effect themselves, but influence the concentration of other direct greenhouse gases With the exception of sulphate aerosols, all other emissions cause warming. In addition, the flight of aircraft can also cause formation of linear ice clouds (contrails) and can lead to further subsequent aviation induced cloudiness. These cloud effects cause additional warming. Evidence suggests that the global warming impact of aviation, with these sources included, could be up to two times that of the CO impact by itself, but that the level of scientific uncertainty involved means that no multiplier should be applied to the assessment. For these reasons the [Airports Commission] did not assess the impact of the non CO effects of aviation and these have not been included in the AoS assessment. This position is kept under review by DfT but it is worth noting that non CO emissions of this type are not currently included in any domestic or international legislation or emissions targets and so their inclusion in the assessment would not affect its conclusion regarding legal compliance. It is recommended that further work be done on these impacts by the applicant during the detailed scheme design, according to the latest appraisal guidance. (Emphasis added) This approach of addressing the question of capacity by reference to CO emissions targets, keeping the policy in relation to non CO emissions under review and requiring an applicant for a DCO to address such impacts by reference to the state of knowledge current at the time of the determination of its application was consistent with the advice of the CCC to the Airports Commission and to the Secretary of State. The Airports Commission recorded that advice in its interim report in December 2013: because of the uncertainties in the quantification of the impact of non CO emissions, the target for constraining CO emissions remained the most appropriate basis for planning future airport capacity. The approach of reconsidering the effect of all significant emissions when determining an application for a DCO is reflected in the ANPS which addressed the CO emissions target and stated (para 5.76): Pursuant to the terms of the Environmental Impact Assessment Regulations, the applicant should undertake an assessment of the project as part of the environmental statement, to include an assessment of any likely significant climate factors. The applicant should quantify the greenhouse gas impacts before and after mitigation to show the impacts of the proposed mitigation. (Emphasis added) The approach remains consistent with the CCCs advice since the designation of the ANPS. In its letter of 24 September 2019 to the Secretary of State recommending that international aviation and shipping emissions be included in a net zero CO emissions target, the CCC stated: Aviation is likely to be the largest emitting sector in the UK by 2050, even with strong progress on technology and limiting demand. Aviation also has climate warming effects beyond CO, which it will be important to monitor and consider within future policies. (Emphasis added) The Government in its response to consultations on the ANPS (para 11.50) stated that it will address how policy might make provision for the effects of non CO aviation emissions in its Aviation Strategy. That strategy is due to be published shortly. The Secretary of State when he designated the ANPS was aware that the applicant for a DCO in relation to the NWR Scheme would have to provide an environmental assessment which addressed, and would be scrutinised against, the then current domestic and international rules and policies on aviation and other emissions. He would have been aware of his power to make requirements under section 120 of the PA 2008 and to depart from the ANPS in the circumstances set out in section 104 of that Act (para 157 above). The Court of Appeal (para 258) upheld FoEs challenge stating the precautionary principle and common sense suggested that scientific uncertainty was not a reason for not taking something into account at all, even if it could not be precisely quantified at this stage. The Court did not hold in terms that the Secretary of State had acted irrationally in this regard but said (para 261) that, since it was remitting the ANPS to the Secretary of State for reconsideration, the question of non CO emissions and the effect of post 2050 emissions would need to be taken into account as part of that exercise. We respectfully disagree with that approach. The precautionary principle adds nothing to the argument in this context and we construe the judgment as equating the principle with common sense. But a courts view of common sense is not the same as a finding of irrationality, which is the only relevant basis on which FoE seeks to impugn the designation in its section 10 challenges. In any event we are satisfied that the Secretary of States decision to address only CO emissions in the ANPS was not irrational. In summary, we agree with the Divisional Court that it is not reasonably arguable that the Secretary of State acted irrationally in not addressing the effect of the non CO emissions in the ANPS for six reasons. First, his decision reflected the uncertainty over the climate change effects of non CO emissions and the absence of an agreed metric which could inform policy. Secondly, it was consistent with the advice which he had received from the CCC. Thirdly, it was taken in the context of the Governments inchoate response to the Paris Agreement. Fourthly, the decision was taken in the context in which his department was developing as part of that response its Aviation Strategy, which would seek to address non CO emissions. Fifthly, the designation of the ANPS was only the first stage in a process by which permission could be given for the NWR Scheme to proceed and the Secretary of State had powers at the DCO stage to address those emissions. Sixthly, it is clear from both the AoS and the ANPS itself that the applicant for a DCO would have to address the environmental rules and policies which were current when its application would be determined. Conclusion It follows that HAL succeeds on each of grounds (i) to (iv) of its appeal. It is not necessary therefore to address ground (v) which is concerned with the question whether the court should have granted the relief which it did. We would allow the appeal.
+This appeal is about the application of the annual leave provisions of the Working Time Regulations 1998 (SI 1998/1833) (the WTR) to offshore workers in the oil and gas industry. Employers differ in the way they organise their employees working time. The familiar pattern of working from 9am to 5pm five days each week throughout the 52 weeks of the year, with a few weeks taken from that commitment for annual holidays, is by no means uniform. For some, the nature of the job requires them to work for longer hours during each working day and to be given more days off during the working week to compensate. For others such as teachers and others who work in the education sector, the working pattern has to take account of the fact that the organisation for which they work is open for some periods of the year and is closed for others. The appellants in this case work offshore, so their working pattern is divided into time spent working offshore and time spent onshore when, by and large, they are not working. The only unifying factors in what is, after all, an infinite variety are that the way in which a workers time is organised is a function of the nature of the job itself, and that in the interests of health and safety workers must be given some time off to rest. The WTR contain the provisions that currently provide for rest periods in domestic law. They were designed to implement Council Directive 93/104/EC. The 1993 Directive was repealed by Council Directive 2003/88/EC concerning certain aspects of the organisation of working time (the WTD). It consolidated the 1993 Directive and a subsequent amending Directive and took effect as from 2 August 2004. Among the aspects of the organisation of working time that are the subject of rules in the WTD are minimum rest periods. They are set out in chapter 2. As it is concerned with laying down what are described as minimum requirements, the provisions which it contains adopt for the most part a one size fits all approach. There is scope for derogation in particular cases, and there are special rules for mobile workers, those engaged in offshore work and workers on board seagoing fishing vessels. But there is no attempt, either in the WTD or the WTR, to identify particular patterns of working and legislate for them individually. It is for the judiciary, in the event of a dispute, to work out how its requirements are to be applied in particular cases The problem in this case is how the statutory right to paid annual leave under the WTR is to be applied to offshore workers in the oil and gas industry. Typically they work a two weeks offshore and two weeks onshore (known as field break) shift pattern. Some work three weeks offshore and three weeks onshore, and some work two weeks offshore and three weeks onshore. But nothing turns on these differences. The central issue is whether the period spent onshore should count towards the workers entitlement under regulation 13 of the WTR to what, when the appellants made their claims, was to four weeks paid annual leave. That entitlement has now been increased by an amendment to the WTR to 5.6 weeks, by adding 1.6 weeks to take account of Bank Holidays: regulation 13A, inserted by regulation 2(1)(2) of the Working Time (Amendment) Regulations 2007 (SI 2007/2079). But nothing turns on that point either in this case. The appellants say that annual leave, properly construed, means release from what would otherwise have been an obligation to work, and that the employers cannot discharge their obligation to provide them with annual leave by insisting that they take this during periods of field break. Their periods of field break, they say, is their time. It is not their employers time, and they insist that it is the employers time out of which the annual leave should be taken. The respondents say that the time spent onshore is in itself a rest period, as it is not working time. And they point out that it is substantially more than the minimum of four weeks annual leave to which the appellants are entitled under the WTR. Their case is that the requirements of the WTR are more than satisfied already, and there is no need for the appellants to take annual leave out of the periods spent offshore. As the appellants point out, the issue that this dispute raises is important not just for the parties themselves. It has significant implications for other parts of the labour market. We cannot resolve all the problems that may possibly arise in this case. But the answer to the dispute has to take account of the fact that the WTD, and the WTR which give effect to it, have been designed to apply to the labour market generally. Annual leave the statutory entitlement It will be necessary to examine the WTD and the WTR in more detail later. For the time being it is sufficient to note that article 7 of the WTD provides that member states shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks. This is to be in accordance with conditions laid down by national legislation and/or practice. Regulation 13(1) of the WTR gives effect to this requirement. It provides that a worker is entitled to four weeks annual leave in each leave year. Regulation 15 contains provisions about how the days when this is to be taken are to be worked out between the worker and the employer, if this has not already been agreed, by a system of notices and counter notices. The facts The appellants cases are seven sample cases which have been selected from a much larger number of similar complaints that were lodged with the employment tribunal. They were all employed to work in various capacities on offshore installations located in the United Kingdom Continental Shelf. There were differences in the way their contracts were expressed as they were working for different employers, but it was agreed that nothing turns on these details. With the exception of Mr Craig, the appellants were contracted to work to a pattern of two weeks offshore with a period of field break for two weeks onshore. Mr Craig was contracted to work three weeks offshore followed by three weeks onshore. Whilst offshore the appellants generally worked, and still work, a 12 hour shift each day during which rest breaks are taken. This was followed by 12 hours off duty living offshore on the installation. They did not have any days off while they were offshore. Part of the time during which the appellants were on field break was occupied in travelling to and from the installation and Aberdeen airport by helicopter, and to and from home once they were onshore. During the periods of field break the appellants attended occasional events that could only be undertaken onshore, such as training courses, appraisals, grievance and disciplinary hearings, medical assessments and offshore survival courses. But it is agreed that these occasional activities are of no significance for present purposes. For the most part the appellants were free from work related obligations during the entire period of their field breaks. They could spend their time as they chose. The appellants issued proceedings in the employment tribunal at Aberdeen in which they contended that the relevant provisions of the WTR required the respondents to permit them to take four weeks paid annual leave from periods when they would otherwise be required to work on the offshore installation. The respondents maintained that the paid annual leave entitlement was discharged by two weeks onshore within the shift pattern. In a long and careful judgment, which covered various other issues with which we are not concerned and was sent to the parties on 21 February 2008, the employment tribunal held that leave in regulation 13 of the WTR involved a release from what would otherwise have been an obligation to work, or at least to be available for work or otherwise in some way on call: para 300. So the field breaks were not to be regarded as annual leave for the purposes of the regulation, although they might provide periods of compensatory rest for the purposes of regulation 24 to the extent required: para 310 (xxviii). In a review judgment dated 1 December 2008 the tribunal confirmed that, in its view, a worker is entitled to exercise his or her right to paid annual leave under regulation 13 at such times as he or she would otherwise be obliged to work or be available to work. In the case of a worker whose pattern of work was to work for two weeks followed by two weeks break from work, the entitlement to paid annual leave amounted to two weeks to be taken from time when he or she would otherwise be working. It had already explained in para 308 of its judgment the calculation on which this conclusion was based and which is not now in dispute. The number of days worked during each period of 28 days was 14 days, which amounted to an average of three and a half days a week. This produced an annual leave entitlement of 14 days. The number of hours worked each day made no difference. The tribunals finding that the respondents had refused to permit the appellants to exercise their right to paid annual leave because this could not be taken out of field break was set aside by the Employment Appeal Tribunal (Lady Smith, Mr M Sibbald and Mr R Thomson, Mr Thomson dissenting) in a judgment issued on 6 March 2009: [2009] IRLR 519. Lady Smith said in para 130 of the judgment that the time conceded to be available during field breaks, after allowing for compensatory rest to take account of the fact that the appellants worked offshore without a weekly rest period, was more than sufficient to cover the entitlement to annual leave. It was time when they were free of all and any work obligations and not subject to the possibility of being called on to work. It was to be regarded as a rest period. It did not matter that, because of the working patterns in the industry, the appellants would not otherwise be working during these periods. The appellants appealed to the Inner House of the Court of Session. Their case was heard by an Extra Division (Lord Eassie, Lady Paton and Lord Emslie), which refused the appeal and remitted various outstanding issues to the Employment Appeal Tribunal to proceed accords: 2011 SC 175. The opinion of the court was delivered by Lord Eassie. He said that the court found force in the analysis advanced by the respondents that the structure of chapter 2 of the WTD involved different cycles of working time, and that what article 7 of the WTD required was that there be provided to the worker within the year at least four remunerated weeks of the yearly cycle in which he was free from working commitments: paras 33 34. There was nothing in the WTD to suggest that employers might not arrange matters so that annual leave was taken during the school holidays or such similar industrial equivalent: para 36. In para 37 he acknowledged that the appellants were required to work for about 26 weeks every year. But that requirement did not constitute an infringement of the cap, or limit, on the number of working weeks in the year set by article 7 as 48 weeks. That the 26 weeks onshore were termed as field break was not a matter upon which anything turned. He summarised the courts decision in para 51: on the core question of whether the annual provision by the employers of 26 weeks of field break fails to satisfy the entitlement of the employees under regulation 13 of the WTR, the answer which we give is in the negative. For all the reasons which we have given we consider that the working pattern of field break applicable in these appeals satisfies the requirements of the WTR, interpreted in the light of the WTD. Relevant provisions of the WTD The Treaty base for the WTD is identified in recital 2 of the preamble. It refers to article 137 of the Treaty establishing the European Community, which provides that the Community is to support and complement the activities of the member states with a view to improving the working environment to protect workers health and safety. As Lady Smith pointed out in the EATs judgment [2009] IRLR 519, para 9, the source for the WTD can be traced back to the Community Charter of the Fundamental Social Rights of Workers, adopted at Strasbourg on 9 December 1989. Adopting words used in paras 8 and 19 of the Charter, recitals 4 and 5 of the preamble to the WTD then state: 4. The improvement of workers safety, hygiene and health at work is an objective which should not be subordinated to purely economic considerations. 5. All workers should have adequate rest periods. The concept of rest must be expressed in units of time, ie in days, hours and/or fractions thereof. Community workers must be granted minimum daily, weekly and annual periods of rest and adequate breaks. It is also necessary in this context to place a maximum limit on weekly working hours. The purpose and scope of the Directive are identified in article 1, which states that it lays down minimum safety and health requirements for the organisation of working time and that it applies to minimum periods of daily rest, weekly rest and annual leave, to breaks and maximum weekly working time. Article 2 provides the following definitions of the expressions working time and rest period: 1. working time means any period during which the worker is working, at the employers disposal and carrying out his activity or duties, in accordance with national laws and/or practice; 2. rest period means any period which is not working time. There then follows Chapter 2, which is headed minimum rest periods other aspects of the organisation of working time. The way working time is to be organised is then set out in articles 3 to 7. Article 3, which is headed Daily rest, states that the member states shall take the measures necessary to ensure that every worker is entitled to a minimum daily rest period of 11 consecutive hours per 24 hour period. Article 4, which is headed Breaks, states that member states shall take the measures necessary to ensure that, where the working day is longer than six hours, every worker is entitled to a rest break, the details of which shall be laid down in collective agreements or agreements between the two sides of industry or, failing that, by national legislation. Article 5, which is headed Weekly rest period, states that member states shall take the measures necessary to ensure that, per each seven day period, every worker is entitled to a minimum uninterrupted period of 24 hours plus the 11 hours daily rest referred to in article 3. Article 6, which is headed Maximum weekly working time, states that member states shall take the measures necessary to ensure that, in keeping with the need to protect the safety and health of workers, the average working time of each seven day period, including overtime, does not exceed 48 hours. Pausing there, one can see that the time that is available within the working week is to be organised in such a way as to ensure (i) that every worker whose working day is longer than six hours is entitled during the day to a rest break, (ii) that every worker is entitled to a minimum period which is not working time of 11 consecutive hours of daily rest during each 24 hour period and (iii) that every worker is entitled during each seven day period to a minimum uninterrupted rest period of 24 hours as well as 11 consecutive hours of daily rest in each 24 hour period. Each period must therefore be measured separately from each other. They cannot intrude upon each other or overlap. Article 17 provides in paragraph 3(a) that derogations may be made from, among others, articles 3, 4 and 5 in the case of activities where the workers place of work and his place of residence are distant from one another, including offshore work, or where the workers different places of work are distant from one another. In that event, paragraph 2 of article 17 requires that the workers concerned are afforded equivalent periods of compensatory rest or, if in exceptional cases for objective reasons this is not possible, that they are afforded appropriate protection. It was agreed that in the appellants' case the first two days of each period of their field break is accounted for as compensatory rest, to make up for the fact that they work a 12 hour shift each day during their two weeks offshore. Article 7 is headed Annual leave. As article 17 makes clear, it cannot be derogated from. It is in these terms: 1. Member states shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/or practice. 2. The minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated. The words consecutive and uninterrupted which qualify the periods of daily rest in article 3 and weekly rest in article 5 do not appear here. So article 7 does not require that the weeks of annual leave must be taken consecutively or that those weeks cannot be interrupted. The units of time referred to in recital 5 of the preamble (days, hours and/or fractions thereof) do not include weeks. But the text of articles 5 and 6 shows that the word weekly, which appears in the heading to those articles, refers to a seven day period. Article 21 of the WTD, which deals with workers on board seagoing fishing vessels, also refers to a seven day period, as does article 22. In this context the reference in article 7 to four weeks, rather than to 28 days, would seem prima facie to mean four uninterrupted seven day periods, but the conditions of the granting of such leave are left to national legislation and/or practice. As a period of leave is not a period which is working time, as defined in article 2, it must be taken to be what that article defines as a rest period. It is an annual period of rest: see recital 5. There is one other point. Mr Linden QC for the appellants said that the right to paid annual leave had a qualitative dimension. It was not just a matter of calculating, as a matter of arithmetic, how much time the worker was to have in a given year. The word leave was not defined in the WTD, but it was more than just rest. Reducing the matter to a simple arithmetical exercise would defeat the safety and health purpose of the annual leave provision and ignore the point that the compulsory rest periods are the minimum periods that are required. His submission, as I understood it, was that the field breaks did not have the quality that would enable any periods within them to be enjoyed as periods of annual leave. He used it to support his basic point that, as these periods onshore were not part of the appellants working time, they could not count towards their annual leave entitlement. I do not think that a qualitative requirement, as an additional test of whether a given period can be accounted as rest within the cycles of time that are identified, is to be found in the wording of the WTD. It is true that the safety and health of workers lies at the heart of the rules that it lays down. But there is no indication anywhere that it was concerned about the quality of the minimum periods of rest, other than to make it clear in the definition of rest period that it means a period which is not working time. The periods that it has identified must be taken in themselves to meet the objects stated in the preamble. The plain indication of its wording is that the exercise that must be carried out is indeed simply one of counting up the relevant hours, days or seven day periods and ensuring that the worker is not required to work during those periods. For example, conditions offshore vary from installation to installation and from time to time. The quality of the rest that can be enjoyed will vary. It may be disturbed by the noise and vibration that are part and parcel of offshore operations. But so long as the worker is given not less than 11 consecutive hours each day which is not working time, the requirements of article 3 will have been satisfied. Relevant provisions of the WTR The purpose of the WTR was to implement the provisions of the WTD. Its provisions must be interpreted, so far as possible, in conformity with the wording and purposes of the Directive: Litster v Forth Dry Dock and Engineering Co Ltd 1989 SC (HL) 96, 101, 105; [1990] 1 AC 546, 554, 559 per Lord Keith of Kinkel and Lord Oliver of Aylmerton; Marleasing SA v La Comercial Internacional de Alimentacin SA (Case C 106/89) [1990] ECR I 4135, para 9. So they are of secondary importance in this case. They are nevertheless relevant, as they set out the domestic rules that must be complied with in conformity with the obligations set out in the WTD. Regulation 2(1) sets out the meaning that is to be given to various words and phrases, among which are the following: rest period, in relation to a worker, means a period which is not working time, other than a rest break or leave to which the worker is entitled under these Regulations. working time, in relation to a worker, means (a) any period during which he is working, at his employers disposal and carrying out his activity or duties, (b) any period during which he is receiving relevant training, and (c) any additional period which is to be treated as working time for the purpose of these Regulations under a relevant agreement. Regulation 2(2) provides that in the absence of a definition in the Regulations, words and expressions used in particular provisions which are also used in corresponding provisions of the WTD have the same meaning as they have in those corresponding provisions. The word leave is not defined in the WTR, but it is not defined in the WTD either. It is left to take its meaning from the context. Like the expression rest break, it is a period which is not working time. This accords with the fact that a period which is not working time is defined by article 2 of the WTD as a rest period: see para 14, above. The rules about daily rest, weekly rest periods and rest breaks are set out in regulations 10, 11 and 12 in terms which, without reproducing exactly the language of the WTD, reflect its requirements. They also contain some additions. For example, regulation 11, which deals with the weekly rest period, allows the employer to provide the worker with either two uninterrupted rest periods each of not less than 24 hours within each 14 day period or one uninterrupted rest period of not less than 48 hours in each such 14 day period in place of the entitlement to an uninterrupted rest period of 24 hours in each seven day period during which he works for the employer. Regulation 13, as amended, which sets out the entitlement to annual leave, contains the following provisions: (1) Subject to paragraph (5) [which is not relevant for present purposes], a worker is entitled to four weeks annual leave in each leave year. (9) Leave to which a worker is entitled under this regulation may be taken in instalments, but (a) it may only be taken in the leave year in respect of which it is due, and (b) it may not be replaced by a payment in lieu except where the workers employment is terminated. Regulation 15 makes provision for the dates on which annual leave may be taken under regulation 13. This is where the conditions for the granting of such leave, referred to in article 7 of the WTD, are to be found. The basic rules are set out in paragraph (1). They are that a worker may take leave to which he is entitled on such days as he may elect by giving notice to his employer in accordance with paragraph (3), but that this is subject to any requirement imposed on him by his employer under paragraph (2). Paragraph (2) provides: A workers employer may require the worker (a) to take leave to which the worker is entitled ; or (b) not to take such leave, on particular days, by giving notice to the worker in accordance with paragraph (3). Paragraph (3) states that a notice under paragraph (1) or (2) may relate to all or any part of the leave to which a worker is entitled in any leave year, must specify the days on which leave is or is not to be taken and, where the leave on a particular day is to be in respect of only a part of a day, its duration. It contains provisions about the date before which notice is to be given to the employer or the worker, as the case may be. Regulation 21 takes advantage of the provisions about derogation in article 17 of the WTD. It provides that regulations 10, 11 and 12 do not apply in relation to a worker, among others, whose activities are such that his place of work and place of residence are distant from one another. Regulation 24 provides that where the application of any provision of the Regulations is excluded by regulation 21 and a worker is accordingly required by his employer to work during a period which would otherwise be a rest period or rest break, his employer shall wherever possible allow him to take an equivalent period of compensatory rest. This accords with what is to be found in article 17 of the WTD: see para 17, above. The appellants case Mr Lindens case was based on the proposition that leave could not be taken out of the periods when the appellants were on field break because they were not required by their contracts to work during those periods. These weeks were, as it was put, theirs already. It was inherent in the concept of leave that the worker was being released from the obligation to work. As they were not required to work during their field breaks, there were no periods within them for which they required to be given leave in order to remain onshore. This gave meaning to the concept of leave, and it was how the bargain between the parties should be interpreted. It was more than just rest. It was the workers right to say to his employer that, although his employer required him to work during a given period, he wanted to take his annual leave and to be released from the obligation to work during that period so that he could do so. He submitted that the importance of the purpose for which the right to leave was given was illustrated by Merino Gomez v Continental Industrias del Caucho SA (Case C 342/01) [2005] ICR 1040. The problem that arose in that case was a conflict between the Community law right to maternity leave on the one hand and the statutory right to annual leave under the Spanish implementation of article 7 of the WTD on the other. The ECJ held that the entitlement to paid annual leave was not to be regarded as having been met where the worker had been absent on maternity leave, as the purposes of these two entitlements was different. In paras 29, 30 and 32 the court said (omitting its references to previous case law): 29. The entitlement of every worker to paid annual leave must be regarded as a particularly important principle of Community social law from which there can be no derogations and whose implementation by the competent national authorities must be confined within the limits expressly laid down by Directive 93/104 [the then current working time Directive]. It is significant in that connection that that Directive also embodies the rule that a worker must normally be entitled to actual rest, with a view to ensuring effective protection of his health and safety, since it is only where the employment relationship is terminated that article 7(2) permits an allowance to be paid in lieu of paid annual leave. 32. The purpose of the entitlement to annual leave is different from that of the entitlement to maternity leave. Maternity leave is intended, first, to protect a womans biological condition during and after pregnancy and, secondly, to protect the special relationship between a woman and her child over the period which follows pregnancy and childbirth. 30. Mr Linden referred also to Stringer v Revenue and Customs Comrs (Joined Cases C 520/06 and C 350/06) [2009] ICR 932, in which the issue was whether workers continued to accrue an entitlement to paid annual leave whilst absent on long term sickness and were entitled to take it during periods of absence on sick leave. He submitted that the judgment identified the qualitative nature of paid annual leave, which was different from sick leave. After recalling what had been said about annual leave in Gomez, paras 29 and 30, the Grand Chamber said this in para 25 of its judgment: It is common ground that the purpose of the entitlement to paid annual leave is to enable the worker to rest and to enjoy a period of relaxation and leisure. The purpose of the entitlement to sick leave is different. It is given to the worker so that he can recover from being ill. But it did not add anything to its previous jurisprudence on this matter. There was no indication here or in Gomez that the quality of any periods of time that were set aside for rest affected the question whether, in terms of their duration or the time that was selected, they were sufficient for the purposes of the WTD. In Pereda v Madrid Movilidad SA (Case C 277/08) [2009] ECR 1 8405, recalling what had been said about this in Gomez and Stringer, the ECJ again said that the purpose of the entitlement to annual leave was to enable the worker to rest and enjoy a period of relaxation and leisure: see paras 18 21. Mr Linden drew attention to the fact that the claimant in that case was under a 52 week contract that required him to work all the year round. He said that this was to be contrasted with the facts of this case, where the contract to work was what he described as a 26 week contract and there was no obligation to work for the other 26 weeks. But there was no suggestion in the Pereda case that the scheduled leave period did not count towards the statutory minimum annual leave entitlement because it was a period when the workers would not otherwise be working. It is to be noted too that the court said in para 22 that the scheduling of leave according to the rules and procedures of national law could take account of the various interests involved, including the overriding reasons relating to the interests of the undertaking. In the appellants case, it is the overriding interests of the employers that has led to the working pattern being organised in a way that requires their workers to work throughout the 14 days when they are offshore and to have their periods of rest and relaxation, other than breaks and the daily rest, during their field break onshore. Reference was also made to Sumsion v BBC (Scotland) [2007] IRLR 678, which the employment tribunal attempted to distinguish from the present case. The BBC sought to discharge its obligation to Mr Sumsion by requiring him to take every Saturday off as a leave day to make up his annual leave under regulation 13 of the WTR. His contract referred to the fact that his services would be required for up to six turns of duty per week, and that he was to be entitled to six days leave to be taken on any sixth non scheduled days in a week. The employment tribunal held in Sumsion that the BBC was not in breach of the WTR by requiring him to take his leave on Saturdays, and its decision was upheld by the EAT. In this case the employment tribunal said that the period of leave which Mr Sumsion was given was one when there was an obligation to work, whereas in the case of the field break out of which the respondents said leave should be taken there was no such obligation and never had been: para 289. I would not draw that distinction. It seems to me that the arrangements in both cases were essentially the same. It was known from the outset that the periods during which the employer was insisting leave should be taken were periods when the workers would not be required to work. That said, the facts of that case were, as Lord Eassie pointed out in para 50 of his opinion, somewhat special. It was a short term contract under which it could be said, as the EAT in that case concluded, that the employee had elected for his Saturdays to be taken as leave days under regulation 15 with the result that it was open to his employers to request him to do so. The case was also decided in the light of the decision of the Court of Appeal in Inland Revenue Commissioners v Ainsworth [2005] EWCA Civ 441, [2005] ICR 1149 before that decision was in effect set aside by the ECJs ruling in that case: see Stringer v Revenue and Customs Comrs [2009] ICR 932. And the device of requiring the worker to take his leave on Saturdays (the Saturday problem) does not arise in the case of the offshore workers. For all these reasons I do not think that the EATs decision in Sumsion offers any assistance to the solution of the problem that is before us in this case. It is worth noting however that in para 26 of its judgment in that case the EAT recognised that there might be cases in which, if the whole facts and circumstances were examined, it could be demonstrated that the employer, in nominating Saturday as a leave day, was not affording any real leave at all. Discussion I do not think that is right to describe the contract in this case, as Mr Linden sought to do, as a 26 week contract. The fact is that the appellants were under contract with their employers for the whole of each year. Their working pattern was organised in such a way that working time was limited to the 26 weeks when they were offshore. But their contractual relationship with their employers continued irrespective of where they were at any given time. They had continuity of employment throughout the year. The fact that their pattern of working was a repeating shift pattern was a product of that contractual relationship. The critical question is how that repeating shift pattern falls to be viewed for the purposes of the WTD. How is it to be determined whether the rules that it lays down for what recital 5 of the preamble refers to as daily, weekly and annual periods of rest are satisfied? As I have already explained (see para 21, above), I do not think that the quality of the periods that are set aside during each cycle determines whether the minimum requirements have been satisfied. I accept that the purpose of the entitlement to annual leave is to enable the worker to rest and enjoy a period of relaxation and leisure, as the ECJ has repeatedly made clear. But the WTD has met that purpose by laying down the minimum periods of rest that must be given in each cycle. As the ECJ said in Gomez [2005] ICR 1040, para 30, the fact that rest means actual rest is demonstrated by the rule that it is only where the employment relationship is terminated that article 7(2) permits an allowance to be paid in lieu of paid annual leave. But the ECJ has not said that a pre ordained rest period, when the worker is free from all obligations to the employer, can never constitute annual leave within the meaning of that article. I would hold therefore that rest period simply means any period which is not working time: see article 2. Any period includes every such period irrespective of where the worker is at that time and what he is doing, so long as it is a period when he is not working. I think it is plain that any period when the appellants are on field break onshore will fall into that category. The employment tribunal recognised in para 286 of its judgment that there was an element of circularity in the appellants argument: ie, is it that a particular period cannot be said to be leave because it is a period when there is no obligation to work, or is it that there is only no obligation to work because the period in question has already been designated as leave? It referred to the case of teachers in non term time and tradesmen in the trades fortnight as examples of the latter where the period when annual leave could be taken had already been designated. But it did not try to resolve this apparent anomaly, as it did not see these cases as giving rise in practice to any difficulty. The solution which it favoured, contrary to what happened in practice in those cases, seemed to it to be founded on the common sense proposition that the workers entitlement to each of the measures provided for by the WTR required to be real, in the sense that they genuinely provided a break from what would otherwise be an obligation to work or to be available to work. But the facts of this case do not support the idea that the field break is not a genuine break or otherwise unreal. Nor has there been any suggestion that the pattern of working has had, or is liable to have, an adverse effect on the appellants health or safety. For these reasons I would hold that the respondents are entitled to insist that the appellants must take their paid annual leave during periods when they are onshore on field break. In my opinion this is permitted by regulation 13 of the WTR, read in conformity with article 7 of the WTD. Other problem cases Attention was drawn in the course of the argument to two other problem cases which it was said might give rise to difficulty. The first was the case of teachers, already mentioned by the employment tribunal, who are required to take their annual leave during non term time. Various other cases fall into this category, such as professional footballers, staff who work in the devolved legislatures such as the Scottish Parliament and in the Parliament at Westminster and people who work full time during the season in the tourist industry. They are people who are left, for the most part, with no option but to take their paid annual leave during periods when they are not required to work. But the problem in their case disappears if, as I would hold, there is no objection to their being required to take their annual leave during those periods. The other problem was referred to as the Saturday problem, which is illustrated by the case of Sumsion. It was said to arise from the ability of employers under regulation 15 of the WTR to designate days within the week when the worker would not otherwise be working as annual leave. Carried to its extreme this could result in workers who worked a five day week, Sundays being treated as the weekly rest period, being required to take their annual leave each Saturday. This would exhaust the possibility of there ever being whole weeks in the year when annual leave could be taken. A literal reading of the employers rights under regulation 15(2) suggests that this course might be open to him. It would obviously be an abuse of the system as the EAT indicated in Sumsion v BBC (Scotland) [2007] IRLR 678, para 26. But the suggestion was that it was an abuse which could not be prevented. This raises a different problem from that which arises in the case of the offshore workers. The question is not whether a worker can be required to take annual leave during a period when he would not otherwise have been working but whether the worker can be forced to take his entitlement to annual leave in periods which are shorter than one week. But it is not a problem that has to be answered in this case. There seems to me to be much to be said for the view that, when article 7 of the WTD is read together with the purposes identified in the preamble and in the light of what the ECJ said in Gomez [2005] ICR 1040, para 30, the entitlement is to periods of annual leave measured in weeks, not days. The worker can opt to take all or part of it in days, if he chooses to do so. But the employer cannot force him to do so. But I do not need to reach a concluded view on this point, and I have not done so. Reference Mr Linden submitted that the meaning that was to be given to the expression annual leave in article 7 of the WTD was not so obvious as to leave no room for reasonable doubt and that, if the court was not persuaded that the appeal should be allowed, the issue should be referred to the CJEU for a preliminary ruling under article 267 of the Treaty on the Functioning of the European Union. Various other issues were listed in his written case as requiring a reference. I am not persuaded that a reference is necessary in this case on any of the questions that have been listed. We must be mindful of our responsibility as a court against whose decisions there is no judicial remedy under national law. But the ruling in Srl CILFIT v Ministry of Health (Case 283/81) [1982] ECR 3415 permits us to decline to make a reference if a decision on the point is not necessary to enable the court to give judgment or the answer to the question is acte clair. I do not think that the meaning to be given to article 7, for the purposes of this judgment, is open to any reasonable doubt. The wording and structure of the WTD plainly favours the respondents argument, and I can find nothing in any of the judgments of the ECJ to which we were referred that casts doubt on the meaning which I think should be given to it. I would refuse the request for a reference. Conclusion I would dismiss the appeal. I would affirm the interlocutor of the Extra Division of the Court of Session.
+The appellant is a limited partnership formed by Mr Alistair Erskine and his wife as a vehicle for entering into a commercial contract with the respondents. These proceedings were brought by the appellant on the basis that it was induced to enter into the contract by a misrepresentation which was fraudulent or in any event negligent. The appellant sought the reduction of the contract and damages. After proof the Lord Ordinary, Lord Hodge, found that Mr Erskine was the directing mind of the appellant, and that he had decided to enter into the contract in reliance upon a negligent misrepresentation contained in an email sent to him some weeks before the appellant was formed. The allegation of fraud was found not to have been established: [2010] CSOH 62. The latter point has not been pursued further. Nor has the present appeal concerned the question whether the remedy of reduction may be available. The issue with which we are concerned is whether the appellant was induced to enter into the contract by a negligent misrepresentation and, if so, is in principle entitled to recover damages. The Lord Ordinary focused upon the legal situation as at the time when the email in question was sent. He approached the case as one where A (the appellant, through Mr Erskine acting as its agent) had relied upon a representation made by B (the respondents) to C (Mr Erskine acting as an individual), and where the question was whether B had owed a duty of care to A at the time when the representation was made to C. Applying the principles set out in Caparo Industries plc v Dickman [1990] 2 AC 605, the Lord Ordinary held that the appellant could not recover damages because it had not been in existence at the time when the email was sent. Although the respondents had owed a duty of care to Mr Erskine, no such duty could in his view have been owed at that time to the appellant, since a non existent entity could not hold any right or be owed any duty. Both parties appealed against the Lord Ordinarys decision. Before the Inner House, it was conceded on behalf of the respondents that the Lord Ordinary had erred in considering that the non existence of the appellant at the time when the email was sent was necessarily an insuperable obstacle to the existence of a duty of care: it was accepted that in appropriate circumstances a duty of care could be owed to a class of persons, some of whom might not then be in existence. In the present case however, it was submitted, at the time when the email was sent there was no one other than Mr Erskine whose reliance upon it could reasonably have been foreseen. In those circumstances, there had therefore been no proximity between the appellant and the respondents. It followed, applying Caparo, that no duty of care had been owed by the respondents to the appellant. Those submissions were accepted by the Second Division: [2011] CSIH 81; 2012 SC 240. Their discussion of the case again proceeded on the assumption that the relevant question was whether, at the time when the email was sent to Mr Erskine, the respondents had owed a duty of care to the appellant. Their Lordships did not address the respondents cross appeal, which challenged the Lord Ordinarys finding that a duty of care had been owed to Mr Erskine. In the present appeal, the issues were identified by the parties as being, first, whether, on the assumption that the respondents owed a duty of care in negligence to Mr Erskine, such a duty of care was owed to the appellant; and secondly, whether the assumption upon which the first issue proceeded was correct. The case was again approached as one where A had relied upon a representation made by B to C, and where the relevant question was whether B had owed a duty of care to A. It was again assumed that that question had to be answered as at the time when the email was sent to Mr Erskine. The authorities relied upon were again Caparo and more recent English and Commonwealth authorities in which the Caparo principles were applied. The question focused in the printed cases, put shortly, was whether the Caparo principles could be regarded as satisfied as at the time when the email was sent, on the basis that the appellant was the alter ego of Mr Erskine, and the contract between the appellant and the respondents was the same as the contract which the respondents had had in contemplation when they made the statement to Mr Erskine. There is however a question as to whether the basis upon which the case has been approached by the courts below, and by the parties in their printed cases, is correct. Is this truly a case in which A relied upon a representation made by B to C? Was the representation made only at the time when the email was sent? Or is this a case where, as was argued before the Lord Ordinary, there was a continuing representation, which was capable of remaining in effect until a contract was concluded? If so, in the circumstances of this case, was the contract concluded between the parties on the basis of a continuing representation made by the respondents to the appellant? If so, did the respondents assume a responsibility towards the appellant for the accuracy of the representation? If these questions are answered affirmatively, then the case is not concerned with the circumstances in which a third party may sue in damages for economic loss suffered as a result of relying upon a representation of which it was not the addressee, but with the recovery of damages where a party to a contract was induced to enter into it by a negligent misrepresentation made to it by the other party to the contract. In Scots law, that involves a consideration of section 10 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 (the 1985 Act) and of the authorities in which that provision has been discussed. The questions which I have posed in para 5, and the area of the law which I have mentioned in para 6, were not discussed by the courts below or by the parties in their printed cases, but were raised during the hearing of the present appeal. Counsel for the respondents accepted that there would be no unfairness in the courts considering these matters; and, in the circumstances, the parties were permitted to make additional submissions in writing. Before addressing these matters, it is necessary first to consider the relevant facts as found by the Lord Ordinary. The relevant facts The respondents are the owners of a grouse moor at Castle Grant, near Grantown on Spey, over which commercial shooting takes place. Recognising that there required to be substantial investment in the moor in order to increase the number of grouse, and being unwilling to undertake that investment themselves, they sought to attract a tenant. The matter was taken forward by their employee and chief executive, Mr Sandy Lewis, and by a chartered surveyor, Mr Jonathan Kennedy, who was engaged to advise them. In May 2006 Mr Erskine learned that a lease of the moor might be available, and entered into discussions with Mr Kennedy. He was sent the proposed terms of a lease. He did not however pursue his interest. The respondents then entered into discussions with another prospective tenant, Mr Paddy McNally. In the course of those discussions, Mr McNally expressed concern about possible over shooting of the moor during the 2006 season. In order to reassure Mr McNally that the respondents had considered the capacity of the moor to bear the shooting planned for that season, Mr Lewis sent his adviser an email dated 4 August 2006, in which he gave information about the grouse counts carried out on the moor earlier that year and the estimated grouse population of the moor, extrapolated from the counts. The areas of the moor in which the counts were carried out were not however representative of the moor as a whole, but were the parts of the moor which were considered to be the most heavily populated by grouse. As a result, the estimated grouse population, as stated in the email, was well in excess of the actual population. In the event, Mr McNally decided not to proceed with the transaction. On Mr McNallys withdrawal, Mr Kennedy contacted Mr Erskine in early September 2006 in order to pursue the possibility of his taking a lease of the moor. After taking part in a shoot and making a further visit to the moor, Mr Erskine became concerned that the shooting planned for that season would leave an inadequate breeding population on the moor. He expressed his concern in an email to Mr Kennedy, in which he said that he was not qualified to quantify the damage which the shooting was doing to the grouse stocks but thought that it was not insignificant. Mr Kennedy forwarded the email to Mr Lewis, stating in his covering message that there was no doubt in his mind that the estate had been overshot, and that this had undoubtedly had an effect on the letting of the moor and might have made it impossible. Mr Lewis replied by email on 29 September, stating: I have sent a separate email re the grouse programme which you may wish to pass on to Alastair Erskine. The separate email sent by Mr Lewis to Mr Kennedy, which I will refer to as the critical email, did not form part of the chain of messages initiated by Mr Erskines email, and did not have the appearance of responding to any concern expressed about over shooting. Its subject was Grouse Bags, and it began by stating: Now that we are well through with the grouse season, I thought it may be appropriate to recap on how we set this years programme for Castle Grant and where we are to date. The following information was provided to you at the beginning of August. Mr Lewis then repeated the information which had originally been sent in the email of 4 August 2006. The email concluded: I am very happy for you to pass this on to Alastair Erskine if you feel this would be helpful to him. On 2 October 2006 Mr Kennedy forwarded the critical email to Mr Erskine, as Mr Lewis had suggested. Mr Erskine decided to proceed with the transaction, and instructed his solicitors, Anderson Strathern, to conclude the lease in the name of a limited liability partnership. On 10 October Anderson Strathern informed the respondents that Mr Erskine intended to use a new limited liability partnership to take the tenancy. Discussions continued between Mr Erskine and Mr Lewis, who was aware of Mr Erskines intention to incorporate the appellant as a vehicle for the lease. The appellant was incorporated on 16 November 2006. The lease was signed on various dates between 8 December 2006 and 18 January 2007. Mr Erskine subsequently discovered that the counting areas were not representative of the moor as a whole, that the grouse population was smaller than he had believed, and that it would in consequence take longer for the population to recover to the point where shooting could take place at the level which he had intended. He considered that Mr Lewis had deliberately misled him in the critical email in order to induce him to take on the lease, and brought the present proceedings on that basis. The Lord Ordinary accepted that the critical email contained a material misrepresentation, namely an implicit representation that the counts were representative of the population of grouse on the moor. He found that Mr Lewis had acted honestly but negligently. He had had no basis for making the representation and did not check his facts before doing so. He had been aware of Mr Erskines concern that there had been overshooting, and of the importance to an incoming tenant of an adequate population on which to build. The Lord Ordinary stated (paras 104 105): The purpose of the representation was to give reassurance to Mr Kennedy and Mr Erskine that the 2006 shooting programme was justified and that it would leave a substantial surplus of birds on the moor, in order to maintain Mr Erskines interest in entering into the lease The managers of the estate had, or would be perceived to have, access to a much more detailed knowledge of the quality of their moor than any other party. In response to expressed concerns about the 2006 shooting programme and the availability of a sufficient end of season surplus, Mr Lewis chose to provide reassurance in his representations. The Lord Ordinary also accepted that the representation had induced Mr Erskine to choose to enter into the lease. Was the representation of a continuing nature? The law relating to the effect of representations upon a contract proceeds on the basis that a representation made in the course of pre contractual discussions may produce a misapprehension in the mind of the other party which continues so as to have a causative effect at the time when the contract is concluded. It is on that basis that a misrepresentation may lead to the setting aside of the contract as being vitiated by error or fraud. The capacity of a representation to have a continuing effect was noted by Lord Cranworth, when rejecting what he described as a very desperate argument that a representation could not justify the setting aside of a bond because it was made some time before the bond was executed, in Smith v Kay (1859) 7 HL Cas 750, 769: It is a continuing representation. The representation does not end for ever when the representation is once made; it continues on. The pleader who drew the bill, or the young man himself, in stating his case, would say, Before I executed the bond I had been led to believe, and I therefore continued to believe . A similar explanation can be found in the judgment of Lord Wright MR in With v OFlanagan [1936] Ch 575, which was another action for the rescission of a contract. Under reference both to English authorities concerned with the law of contract, and to a Scottish authority concerned with the law of reparation (the case of Brownlie v Miller (1880) 7 R (HL) 66; Brownlie v Campbell (1880) 5 App Cas 925, which I shall discuss shortly), his Lordship observed at p 584 that a representation made as a matter of inducement to enter into a contract is to be treated as a continuing representation, and added at pp 584 585: This question only occurs when there is an interval of time between the time when the representation is made and when it is acted upon by the party to whom it was made, who either concludes the contract or does some similar decisive act; but the representation remains in effect and it is because that is so, and because the court is satisfied in a proper case on the facts that it remained operative in the mind of the representee, that the court holds that under such circumstances the representee should not be bound. The law relating to reparation for harm suffered as a result of the conclusion of a contract in reliance upon a misrepresentation made in the course of pre contractual discussions proceeds in this respect upon the same basis. As Smith J observed in the Australian case of Jones v Dumbrell [1981] VR 199, 203: When a man makes a representation with the object of inducing another to enter into a contract with him, that other will ordinarily understand the representor, by his conduct in continuing the negotiations and concluding the contract, to be asserting, throughout, that the facts remain as they were initially represented to be. And the representor will ordinarily be well aware that his representation is still operating in this way, or at least will continue to desire that it shall do so. Commonly, therefore, an inducing representation is a continuing representation, in reality and not merely by construction of law. As Smith J indicated by his use of the words ordinarily and commonly, whether a representation should be treated as continuing depends upon the facts of the individual case (see also Macquarie Generation v Peabody Resources Ltd [2000] NSWCA 361, paras 3 22, per Mason P). Where a misrepresentation does not have a continuing effect, for example because it is withdrawn or lapses, or because the other party discovers the true state of affairs before the contract is concluded, it cannot induce the other party to enter into the contract and therefore cannot affect its validity or give rise to a remedy in damages for any loss resulting from its conclusion. As Lord Brougham observed in Irvine v Kirkpatrick (1850) 7 Bell App (HL) 186, 237 238, in order that the misrepresentation may be of any avail whatever, it must inure to the date of the contract. If the other party discovers the truth before he signs the contract, the misrepresentation and the concealment go for just absolutely nothing. Whether the remedy sought is reduction of the contract or damages for the loss suffered as a result of entering into it, in either case a representation may therefore be treated by the law as having a continuing effect, rather than as being an event whose legal consequences are necessarily fixed at the time when the statement in question was made. The continuing effect of a pre contractual representation is reflected in a continuing responsibility of the representor for its accuracy. Thus a person who subsequently discovers the falsity of facts which he has innocently misrepresented may be liable in damages if he fails to disclose the inaccuracy of his earlier representation: Brownlie v Miller (1880) 7 R (HL) 66, 79; Brownlie v Campbell (1880) 5 App Cas 925, 950 per Lord Blackburn. The same continuing responsibility can be seen in the treatment of representations which are true when made, but which become false by the time the contract is entered into: see, for example, Shankland & Co v Robinson & Co 1920 SC (HL) 103, 111 per Lord Dunedin. The law is thus capable, in appropriate circumstances, of imposing a continuing responsibility upon the maker of a pre contractual representation in situations where there is an interval of time between the making of the representation and the conclusion of a contract in reliance upon it, on the basis that, where the representation has a continuing effect, the representor has a continuing responsibility in respect of its accuracy. In the present case, the representation contained in the critical email was undoubtedly of a continuing nature so long as Mr Erskine remained the prospective contracting party. The question then arises whether, in the circumstances of this case, the representation continued after the identity of the prospective contracting party changed, and, if so, whether the respondents assumed a responsibility towards the appellant for the accuracy of the representation. Did the representation, and responsibility for its accuracy, continue after the identity of the contracting party changed? In principle, the possibility that a representation may continue to be asserted, and may have a causative effect so as to induce the conclusion of the contract, is not necessarily excluded where, as in the present case, the contracting parties are not the original representor and representee. In such a case, it is possible that the inference can be drawn from the parties conduct that they proceeded with the negotiation and conclusion of the contract on the basis that the accuracy of the representation continued to be asserted by the representor, implicitly if not expressly, after the identity of the prospective contracting party had changed. In such circumstances the representation may have continued to have a causative effect, so as to induce the conclusion of the contract. Where the inference to be drawn is that a representation continued to be made until the contract was concluded, it may also be inferred that the risk of harm being suffered as a result of reliance upon it, in the event that it was inaccurate, continued to be foreseeable. In such circumstances, the representor may be taken to have assumed responsibility for the accuracy of the representation towards the contracting party who relied upon it, even though that person was not the original representee. No authority has been cited in which the court has considered the liability of a contracting party for a representation inducing the conclusion of the contract by someone other than the original representee. The decision of the House of Lords in Briess v Woolley [1954] AC 333 is however relevant. The case concerned a fraudulent misrepresentation made in the course of pre contractual discussions by a shareholder in a company. He was subsequently authorised by the other shareholders to continue the negotiations as their agent, and in due course a contract was concluded. The shareholders were held liable in damages to the other contracting party, notwithstanding that the representation had been made by the shareholder before he began to negotiate on their behalf. Lord Reid stated at p 349: The misrepresentations were continuing representations intended to induce the other party to make the contract, and when that party made the contract to his detriment, a cause of action arose, and in my opinion it arose against both the agent and the principal. The agent continued to be fraudulent after he was appointed. It was his duty, having made false representations, to correct them before the other party acted on them to his detriment, but he continued to conceal the true facts. Lord Tucker added at p 354: the duty of the agent, who has made the misrepresentation, to correct it cannot be regarded as only a personal obligation. If he has in the meantime been appointed agent with authority to make representations for the purpose of inducing a contract he, in his capacity as agent, is by his conduct repeating the representations previously made by him. The same principle should also apply in the converse situation, where the representation is made to (rather than by) the agent prior to the commencement of his agency. In such a situation, depending of course on the facts, the representor can equally be taken to be, by his conduct, implicitly repeating the representation previously made, and can therefore owe a duty in respect of the accuracy of the representation towards the agents principal. The case of Briess v Woolley concerned a misrepresentation which was fraudulent rather than negligent; and it preceded the case of Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465. Once it is accepted that a negligent misrepresentation can give rise to a remedy in damages, however, there is no reason why the approach adopted in Briess should not apply to negligent as well as to fraudulent misrepresentations which are made in order to induce the representee to enter into a contract. A negligent misrepresentation is equally capable of having a continuing effect up until the time when the contract is concluded, where the person by whom the representation is made, or to whom it is addressed, becomes the agent of the person by whom the contract is concluded. In the present case, the change in the identity of the prospective contracting party did not affect the continuing nature of the representation, or the respondents continuing responsibility for its accuracy. It appears from the Lord Ordinarys findings that the negotiations which had been under way between Mr Erskine and the respondents, in the course of which the critical email was sent, simply continued after it had become apparent that a limited liability partnership was to be used as a vehicle for Mr Erskines investment. Neither party drew a line under the previous discussions, after the appellant was formed, in order to begin afresh. Neither party disclaimed what had previously been said in the course of their discussions, or sought assurances that it could be relied upon as between the appellant and the respondents. The seeking of such an assurance would no doubt have appeared to those involved to be an unnecessary formality. As the Lord Ordinary found, the representation made in the critical email remained operative in the mind of Mr Erskine after he began to act in the capacity of an agent of the appellant, up until the time when the lease was executed on behalf of the appellant. The appellant was thus induced to enter into the contract by that representation. In continuing and concluding the contractual negotiations with the appellant, through its agent Mr Erskine, without having withdrawn the representation earlier made to Mr Erskine as an individual, the respondents by their conduct implicitly asserted to the appellant the accuracy of that representation; and they did so in a situation where it continued to be foreseeable that the representation would induce the other party to the negotiations to enter into a contract. They therefore assumed a responsibility towards the appellant for the accuracy of the representation. They therefore owed the appellant a duty of care, which they failed to fulfil. The recovery of damages where a party to a contract was induced to enter into it by a negligent misrepresentation The law in Scotland governing the recovery of damages, where a party to a contract was induced to enter into it by a negligent misrepresentation made by or on behalf of another party to the contract, involves a consideration of section 10 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 and of the authorities in which that provision has been discussed. Following the decision of the House of Lords in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, the Scottish courts accepted the general principle that damages could be recovered for economic loss suffered as a result of reliance upon a negligent misrepresentation, where the relationship between the person making the representation and the person relying upon it was of a kind which gave rise to a duty of care. The salient feature of that case, and of later analogous cases such as Smith v Eric S Bush [1990] 1 AC 831, which gave rise to such a duty, was identified by Lord Bridge of Harwich in Caparo Industries plc v Dickman [1990] 2 AC 605, 620 621: The salient feature of all these cases is that the defendant giving advice or information was fully aware of the nature of the transaction which the plaintiff had in contemplation, knew that the advice or information would be communicated to him directly or indirectly and knew that it was very likely that the plaintiff would rely on that advice or information in deciding whether or not to engage in the transaction in contemplation. In these circumstances the defendant could clearly be expected, subject always to the effect of any disclaimer of responsibility, specifically to anticipate that the plaintiff would rely on the advice or information given by the defendant for the very purpose for which he did in the event rely on it. So also the plaintiff, subject again to the effect of any disclaimer, would in that situation reasonably suppose that he was entitled to rely on the advice or information communicated to him for the very purpose for which he required it. Where a representation is made by one person to another in relation to the subject matter of a contract which they are contemplating entering into, the circumstances may plainly be of the kind described by Lord Bridge. Nevertheless, in a number of decisions at first instance, the Scottish courts treated such cases as an exception to the principle established by Hedley Byrne, on the basis that the doctrine of precedent required them to follow the decision of the Inner House in Manners v Whitehead (1898) 1 F 171. It had been held in that case, in the words of the headnote, that A person who is induced to enter into a contract by misrepresentations is not entitled to damages from the person making the representations, unless they are fraudulent. The decision reflected the view of the law then prevailing both in Scotland and in England (see Le Lievre v Gould [1893] 1 QB 491): a view from which the House of Lords departed in Hedley Byrne. This exception to the Hedley Byrne principle was illogical and unjust. It resulted in a situation where it was accepted that A could sue B where Bs negligent misrepresentation induced A to enter into a contract with C, provided there was a special relationship between A and B, but not where it induced A to enter into a contract with B himself (see, for example, Twomax Ltd v Dickson, McFarlane & Robinson 1982 SC 113). The Scottish Law Commission responded by recommending legislative reform. Its Report on Negligent Misrepresentation (Scot Law Com No 92, 1985) contained a draft Bill, which was enacted as section 10 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985. Section 10(1) provides: A party to a contract who has been induced to enter into it by negligent misrepresentation made by or on behalf of another party to the contract shall not be disentitled, by reason only that the misrepresentation is not fraudulent, from recovering damages from the other party in respect of any loss or damage he has suffered as a result of the misrepresentation; and any rule of law that such damages cannot be recovered unless fraud is proved shall cease to have effect. Section 10(1) is drafted in a negative form. It does not provide that a party to a contract who has been induced to enter into it by negligent misrepresentation made by or on behalf of another party to the contract is entitled to recover damages: it provides that such a person shall not be disentitled by reason only that the misrepresentation is not fraudulent, and that any rule of law that such damages cannot be recovered unless fraud is proved shall cease to have effect. Whether such a person is entitled to damages therefore depends on the common law, modified by section 10(1) only to the extent that recovery is not excluded by reason of the absence of fraud. The consequence is that entitlement to damages depends upon establishing the breach of a duty of care, since at common law it is the breach of a duty of care which renders a negligent misrepresentation wrongful. This approach reflects the Commissions identification of the mischief in the existing law as being the rule in Manners v Whitehead, as it was described: that is to say, the requirement to establish fraud. It considered, and rejected, the possibility that the Scottish legislation should be modelled upon section 2(1) of the Misrepresentation Act 1967: a complex provision which has the effect of dispensing with the need to establish a duty of care in English law where a person has entered into a contract after a misrepresentation has been made to him by another party to the contract, and as a result has suffered loss. The Commission considered that, in Scotland, the common law should continue to govern the question whether the circumstances were such as to give rise to a duty of care (para 3.2). The Commission noted that the relationship between parties in pre contractual discussions was one where the proximity between them, and the foreseeability of reliance upon representations, were particularly apparent (para 2.3), but considered that the existence of a duty of care should continue to be governed by the common law (para 3.2). There are indeed a variety of circumstances in which a duty of care might be absent: for example, where the representation was accompanied by an effective disclaimer of responsibility, or where the representation was subject to a time limit which had lapsed, or where reliance upon the representation was not reasonably foreseeable, or where the parties by their contract effectively excluded liability for negligent pre contractual representations, or where the contract itself governs the subject matter of the representation. Section 10(1) does not therefore impose a statutory liability for careless misrepresentations which have induced a party to enter into a contract, but removes the barrier which previously existed to the recovery of damages where a party had been induced to enter into a contract by a misrepresentation made in breach of a duty of care. This point does not emerge altogether clearly from the two authorities in which section 10(1) has been considered. In the first, Hamilton v Allied Domecq plc 2001 SC 829, the Lord Ordinary, Lord Carloway, was not assisted by the fact that he was not referred to any Scottish authorities on the subject of negligent misrepresentation but was instead referred to section 2(1) of the Misrepresentation Act 1967. His Lordship stated at para 17 that, as a result of section 10(1) of the 1985 Act, there was no need to enter into the field of Hedley Byrne type special relationships and whether a duty of care was owed: the statute provided the remedy, and its practical effect was that one contracting party had a duty to the other not to make negligent misrepresentations which induced the other to contract. That approach was followed by Lord Glennie in BSA International SA v Irvine [2010] CSOH 78. He stated at para 15 that, as a result of the section, it was enough to found a claim for damages that the representation was negligent: there was no need to import into the relationship of intending contractual parties concepts that had developed in the law of tort and delict to identify other situations in which a party might owe a duty of care to another as regards the accuracy of statements made by him. Lord Glennie added at para 16 that the issue was likely to be almost entirely academic, since the criteria for the imposition of a duty of care would invariably be satisfied when the misstatement was an operative misrepresentation, in the sense in which that expression had been used by Prof J M Thomson in his article, Misrepresentation, 2001 SLT 279: that is to say, an inaccurate statement of fact made in pre contractual discussions which induced the misrepresentee to enter into the contract and which would have induced a reasonable person to do so. I sympathise with the view that this issue will often be academic, for the reason given by Prof Thomson and adopted by Lord Glennie. The law does not impose a general duty of care in the conduct of contractual negotiations, reflecting the fact that each party is entitled, within the limits set by the law, to pursue its own interests. As the Supreme Court of Canada has observed, the prospect of causing deprivation by economic loss is implicit in the negotiating environment (Martel Building Ltd v Canada [2000] 2 SCR 860, para 51). It is also possible that a contract entered into between the parties may limit or exclude the scope for finding a duty of care in respect of pre contractual representations. Nevertheless, it has long been accepted that the relationship between the parties to contractual negotiations may give rise to such a duty in respect of representations which the representor can reasonably foresee are likely to induce the other party to enter into the contract, unless circumstances negativing the existence of such a duty, such as those mentioned in para 38, are present. It is therefore unnecessary in most cases to go back to the fundamental principles governing the existence of a duty of care, as set out in the tripartite test adopted in Caparo Industries plc v Dickman [1990] 2 AC 605, or to undertake an assessment of whether a special relationship existed. Questions as to the circumstances in which the relationship between parties negotiating a contract gives rise to a duty of care in respect of representations inducing the contract are not now of such a novel character as normally to require consideration from first principles. As I have explained, however, that does not mean that liability will necessarily exist where a party to a contract has been induced to enter into it by a negligent misrepresentation made by or on behalf of another party to the contract. Since section 10(1) does not create a statutory liability, the question whether the misrepresentation was made in breach of a duty of care still has to be answered, even if the answer may sometimes be obvious. In the present case, it is plain, on the Lord Ordinarys findings of fact, that a duty of care was owed by the respondents to Mr Erskine in respect of the representation contained in the critical email. For the reasons I have explained, a duty of care was also owed by the respondents to the appellant, when they negotiated and concluded the contract on the basis of the discussions previously held with Mr Erskine. The respondents acted in breach of that duty of care, and are therefore liable in damages for any loss suffered by the appellant as a result. The case will therefore have to return to the Court of Session for further procedure. Conclusion For these reasons, I would allow the appeal. LORD TOULSON I agree with the reasoning and conclusion of Lord Reed. I add my own shorter judgment because the case is in some respects novel. However, its solution requires no new principle. Once properly identified, the application of the relevant principles becomes straightforward, but they were perhaps obscured rather than illuminated by the way in which the case was presented below. The claim was for the reduction (ie setting aside) of the lease entered into between the claimant Cramaso, acting through the agency of Mr Erskine, as lessee, and the respondent trustees, as lessor, and for repayment of Cramasos associated expenses. Cramaso was created by Mr Erskine for the purpose of taking the lease, and he was its controller or, as the Lord Ordinary described him, its directing mind. The ground of Cramasos claim was that it had been induced to enter into the lease by a misrepresentation made either fraudulently or negligently by an agent of the trustees to Mr Erskine. The representation was made before Cramasos creation. The Lord Ordinary found that Mr Erskine had been induced to enter into the lease on behalf of Cramaso by a misrepresentation. He rejected the allegation that the misrepresentation had been made fraudulently, but he found that it had been made negligently. However, he granted absolvitor (ie dismissed the proceedings) on the ground that Cramaso had not come into the picture at the time when the misrepresentation was made to Mr Erskine. For that reason he concluded that (a) no duty of care was owed by the trustees to Cramaso at the time when the misrepresentation was made, and (b) Cramaso therefore had no cause of action against the trustees and no right to reduction of the lease. I part company with the Lord Ordinary, and the Second Division which upheld his judgment, at stage (b). In the courts below attention was concentrated on the legal position at the time of the representation, and this was regarded as decisive. In this court Mr Dewar QC refocused the argument in response to questions and comments from the bench. He switched from focusing on the time of the misrepresentation, and the question whether at that time the trustees duty of care might be defined so as to encompass a category of affected persons capable of including Cramaso on its later formation, to the different issue whether the absence of a duty of care owed to Cramaso at the time of the misrepresentation was fatal to its claim on the facts as found by the Lord Ordinary. The change of tack took Mr Sandison QC by surprise, but he fairly and properly accepted that there was no injustice in the court addressing the issue. Logically the first issue to consider is the challenge made by the trustees to the Lord Ordinarys finding that there was a negligent misrepresentation to Mr Erskine. The question was essentially one of fact on which the Lord Ordinary was entitled to find as he did. However, Mr Sandison did raise one point of law. He submitted that it was necessary for Cramaso to show that at the time of Mr Lewiss email dated 29 September 2006 to Mr Kennedy he knew or ought to have known that there was a high degree of probability that Mr Erskine would be sent the email and would rely upon it. Mr Sandison based that submission on passages in Caparo Industries plc v Dickman [1990] 2 AC 605 from the speeches of Lord Bridge at pp 620 621, Lord Oliver at p 638 and Lord Jauncey at pp 660 661. The submission is ill founded. In Caparo the court was considering the familiar situation in which it is alleged that D, the defendant, was negligent in a statement made to C, the claimant, upon which C relied in entering into a transaction with T, a third party. It is readily understandable that in that type of situation cogent grounds are needed to explain why D ought to have had C in his contemplation as somebody entitled to rely on Ds statement when considering whether to enter into a transaction with T. The situation where a statement is made during contractual negotiations by one prospective contracting party to another is quite different. Here, the statement made by Mr Lewis was intended for the attention of Mr Erskine in relation to the very transaction about which they were negotiating. Since Esso Petroleum Co Ltd v Mardon [1976] QB 801, 820, it has been established that the principle in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 is capable of applying to pre contractual representations. Lord Denning MR stated the principle as follows: if a man, who has or professes to have special knowledge or skill, makes a representation by virtue thereof to another be it advice, information or opinion with the intention of inducing him to enter into a contract with him, he is under a duty to use reasonable care to see that the representation is correct, and that the advice, information or opinion is reliable. If he negligently gives unsound advice or misleading information or expresses an erroneous opinion, and thereby induces the other side to enter into a contract with him, he is liable in damages. This is not necessarily an exhaustive statement of the circumstances in which a duty of care may arise in connection with a statement made in a pre contractual context. However, where the principle in Esso v Marden applies, there is no need for a court to go into issues of the kind discussed in Caparo and the various other authorities relied on by Mr Sandison, including Smith v Eric S Bush [1990] 1 AC 831, White v Jones [1995] 2 AC 207, Al Saudi Banque v Clark Pixley [1990] Ch 313 and Customs & Excise Commissioners v Barclays Bank plc [2007] 1 AC 181. Those were all cases where C claimed to have entered into a transaction with T in reliance on a representation by D and the courts wrestled with the problem how to determine whether D owed C a duty of care in relation to that transaction. In particular, the courts struggled with the question how the putative duty was to be defined so as to avoid, in Cardozo CJs memorable expression in Ultramares Corporation v Touche (1931) 174 NE 441, 444 liability in an indeterminate amount for an indeterminate time to an indeterminate class. No comparable problem arises in considering whether the trustees owed a duty of care to Mr Erskine when making a representation to him about the grouse moor which they were hoping that he would lease. Even, if Mr Sandisons primary submission on the Caparo point were right, it would in any event be immaterial what Mr Lewis may have considered to be the degree of probability that Mr Kennedy would pass on his email to Mr Erskine, since Mr Lewis invited Mr Kennedy to consider passing it on, which Mr Kennedy unsurprisingly did. It was marketing information provided by the trustees, through Mr Lewis, to their agent with a view to its being used in the lease negotiations. I turn to the point on which Cramasos claim foundered in the courts below. The issue is whether it is fatal to Cramasos claim that the negligent misrepresentation was made before Cramaso was formed or even mentioned. The formation of Cramaso made no difference to the subject matter of the negotiations or to the people involved in conducting them. What changed was the role of Mr Erskine. From being himself the prospective lessee, he became the agent of a company created and controlled by him for the purpose of taking the lease. The question which arises in these circumstances is whether the earlier misrepresentation is to be regarded as water under the bridge, a matter about which Cramaso could have no cause for complaint albeit that its factual effect was to induce Mr Erskine to go ahead with the transaction which was concluded by the execution of the lease, or whether the misrepresentation is to be regarded as having continued up to the time of the execution of the lease so as to entitle Cramaso to complain of it. As a matter of general principle, a representation made during contractual negotiations for the purpose of inducing a contract will ordinarily be regarded as continuing until the contract is actually concluded because it will generally be reasonable for the representee to continue to rely on it. There may be exceptions, for example where there has been a material change of circumstances which would make the representation irrelevant, but I can see no reason to depart from the general principle in the present case. It is unnecessary for me to refer to all the authorities to which Lord Reed has drawn attention. However, Briess v Woolley [1954] AC 333 is particularly relevant to the present case because of the part played at the time of the representation by a person who became the agent of one of the parties after the representation was made but before the contract was made. The plaintiffs entered into a contract to buy the shares of company X as a result of a fraudulent representation by R, who was Xs managing director. At the time of making the false representation R had no authority to negotiate a sale of the shares. He was subsequently authorised by Xs shareholders to act on their behalf in the matter. The plaintiffs sued the sellers. The plaintiffs won at first instance, lost in the Court of Appeal but won in the House of Lords. They lost in the Court of Appeal because it was held, at [1953] 2 QB 218, 222, that the misrepresentation had been made once and for all before R became the sellers agent for the purposes of the sale. The Court of Appeal also held that there was no ratification of Rs earlier conduct. Its conclusion on the latter point was upheld by the House of Lords, but the appeal succeeded on the basis that the false representation was to be regarded as a continuing representation. Mr Gerald Gardiner QC on behalf of the plaintiffs presented a simple argument. He submitted at p 335: If one effects a sale by ones agent, who signs the contract, one cannot ratify the contract and take the money payable under it while at the same time disclaiming the way in which the contract was brought about. Cramasos argument in the present case is essentially the same, namely that the trustees cannot disclaim the way in which the contract was brought about by their agent. Mr Gardiners submission was echoed in the speech of Lord Reid at p 349. He rejected: the contention that a principal can disclaim responsibility for fraudulent misrepresentations made by his agent which, although made before the agency commenced, to the agents knowledge continued to influence the other party after his appointment as agent and finally induced the other party to enter into the contract which the agent had been authorised to make and did make on behalf of his principal. The misrepresentations were continuing representations intended to induce the other party to make the contract, and when that party made the contract to his detriment, a cause of action arose, and in my opinion it arose against both the agent and the principal. Lord Tucker at pp 353 354 approved the statement of the trial judge that the law regarded the representations as continuing during the whole period between the time the representations were made and the time when they were finally acted upon. He said: It was contended by counsel for the respondents that when once the representations were made the wrongful act was complete although no action for damages would lie until the representee suffered damage. He argued that the representations were not continuing but the consequences of the original representation continued, and accordingly, provided that the representor was not the agent of the respondents when the original representation was made, they could not be held responsible because the consequences of that representation took effect at a time when the representor had become their agent. No authority for this proposition was cited, and it is, in my view, founded upon error. The tort of fraudulent misrepresentation is not complete when the misrepresentation is made. It becomes complete when the misrepresentation not having been corrected in the meantime is acted upon by the representee. Damage giving rise to a claim for damages may not follow or may not result until a later date, but once the misrepresentation is acted upon by the representee the tortious act is complete provided that the representation is false at that date. If false when made but true when acted upon there is no misrepresentation. In Spencer Bower on Actionable Misrepresentation, 2nd ed, p 77, article 73, it is stated: It is commonly said that the representation must be shown to have been false when made. But this is not quite correct. The only real issue is was it true or false when it was acted upon? In Halsburys Laws of England, 2nd ed, vol XX111, p 29, para 44, it is stated: Where there is an appreciable interval between the two dates above mentioned [ie date when made and date when acted upon], and the representation relates to an existing state of things, the representor is deemed to be repeating his representation at every successive moment during the interval, unless he withdraws or modifies it by timely notice to the representee in the meantime. I do not think the accuracy of these statements can be challenged. It is true that there does not appear to be any express authority which can be quoted as an example of the application of this principle to a case of principal and agent where the agency commences after the making of a representation which is allowed by the agent to continue uncorrected with knowledge of its falsity until acted upon. I agree, however, with Barry J, that the duty of the agent, who has made the misrepresentation, to correct it cannot be regarded as only a personal obligation. If he has in the meantime been appointed agent with authority to make representations for the purpose of inducing a contract he, in his capacity as agent, is by his conduct repeating the representations previously made by him. Although that was a case of a fraudulent misrepresentation, I cannot see that it makes a difference to the continuing nature of the representation whether it was fraudulent or negligent. It is, of course, true that a negligent misrepresentor is unlikely to be aware that he has been negligent, whereas the maker of a deliberately false statement will know what he has done. However, that does not affect the general proposition stated in Halsburys Laws which Lord Tucker cited with approval, and it is logical that it should not do so. What matters is the continuing potency of the representation as an inducing factor. The potency and duration of a representation do not depend on the honesty or dishonesty of its maker. In Briess v Woolley R was the representor, whereas in the present case Mr Erskine was the representee. But I do not see why that distinction should make any difference to the principle. The proper conclusion is that the representation was a continuing representation, which operated as an inducing factor on the mind of Mr Erskine after he became Cramasos agent, and Cramaso was entitled to rely on it, just as Cramaso (on the authority of Briess v Woolley) would have carried responsibility for the ongoing effect of a prior misrepresentation by Mr Erskine to the trustees. On that reasoning I would hold that the decisions of the lower courts were wrong.
+If a criminal who previously had leave to remain in this country is liable to deportation because of his offences, but cannot actually be deported because to remove him would infringe his rights under the European Convention for the Protection of Human Rights and Fundamental Freedoms, with the result that the deportation order is revoked, what is the status of his previous leave to remain? It is common ground that the making of a deportation order renders his leave to remain invalid. The question in this appeal is whether, if the deportation order is revoked, his leave revives or whether the Secretary of State is at that stage free to consider afresh what leave to grant to him. Mr George was born in Grenada in 1984 and came to this country when 11 in 1995. As at March 2000 he had been granted indefinite leave to remain here. Since then, however, he has been convicted on seven different occasions of offences, some relatively minor but some not. The convictions include five counts of supplying cocaine in January 2002, for which he was sentenced to three years detention in a Young Offenders Institution, driving whilst disqualified and without insurance in December 2003, which resulted in a sentence of eight weeks detention, and, on 7 April 2005, two counts of possession of, respectively, heroin and cocaine, with intent to supply, occasioning four years imprisonment. On the basis of these convictions, the Secretary of State judged that his deportation would be conducive to the public good. In January 2007 notice was duly served on him that a deportation order was to be made. There ensued a series of unsuccessful attempts to challenge that decision, in the Asylum and Immigration Tribunal and the High Court, which lasted until April 2008. When those rights of appeal were exhausted, the Secretary of State was able actually to make the deportation order of which advance notice had been given, and that order was made on 24 April 2008. Mr George, however, made further application to the Secretary of State contending that to deport him would infringe his article 8 rights to respect for his private and family life. He has a partner whom he has known since he was at school, and although they do not and have not lived together, they have a daughter born in 2005 who sees her father reasonably often and stays with him on occasion. The Secretary of State took the view that, balancing this level of family life against Mr Georges convictions, his deportation would not amount to a breach of article 8, and she refused to revoke the deportation order. However, after a number of intermediate stages of legal process, Mr Georges immigration appeal against that last decision was allowed by the immigration judge in a ruling promulgated on 31 March 2009. She held that, although the case was a borderline one, the balance between the conviction history and the family life had been struck wrongly by the Secretary of State. It is common ground that the effect of this decision was to revoke the deportation order on the grounds that to implement it would infringe Mr Georges article 8 rights to family life. Subsequently, Mr Georges solicitors called on the Secretary of State to confirm that he had indefinite leave to remain, but she refused to do so. Instead she granted him six months discretionary leave on 2 August 2013. This court was told that since that expired it has been replaced with a grant of three years discretionary leave. It appears that the Secretary of State is treating him as she treats a number of other immigrants, and is implementing what may turn out to be a pattern of successive grants of discretionary leave to remain and which may result, if all goes well, in that leave becoming indefinite, but not until something of the order of 10 years have passed. His case, however, is that his original indefinite leave to remain has revived when the deportation order was revoked. He advanced this case by way of application for judicial review of the Secretary of States decision not to reinstate indefinite leave to remain but instead to make grants of time limited leave. He failed before the judge but before the Court of Appeal succeeded by a majority. This is the appeal of the Secretary of State from the latter decision: [2013] 1 WLR 1319. The statutory provisions for deportation The statutory trail begins with the Immigration Act 1971 (the 1971 Act). Although it has been amended subsequently, the relevant provisions date from its enactment and have stood (save for immaterial adjustments) for 40 years. By section 3 it requires that those with no specific right of entry to the United Kingdom need leave to enter, which leave may be indefinite or time limited and may be subject to conditions. Section 3(5) and (6), together with section 5, contain the provisions for deportation. First, subsections 3(5) and (6) deal with when a person is liable to deportation. They say: (5) A person who is not a British citizen is liable to deportation from the United Kingdom if (a) the Secretary of State deems his deportation to be conducive to the public good; or (b) another person to whose family he belongs is or has been ordered to be deported. (6) Without prejudice to the operation of subsection (5) above, a person who is not a British citizen shall also be liable to deportation from the United Kingdom if, after he has attained the age of seventeen, he is convicted of an offence for which he is punishable with imprisonment and on his conviction is recommended for deportation by a court empowered by this Act to do so. Once a person is liable to deportation under these rules, one turns to section 5, which provides for the actual making of a deportation order: 5(1) Where a person is under section 3(5) or (6) above liable to deportation, then subject to the following provisions of this Act the Secretary of State may make a deportation order against him, that is to say an order requiring him to leave and prohibiting him from entering the United Kingdom; and a deportation order against a person shall invalidate any leave to enter or remain in the United Kingdom given him before the order is made or while it is in force. (2) A deportation order against a person may at any time be revoked by a further order of the Secretary of State, and shall cease to have effect if he becomes a British citizen. The final stage is provided for by section 5(5) and Schedule 3, which permits the Secretary of State to give directions for removal of those against whom a deportation order is in force, which directions may stipulate such matters as the manner of removal and form of travel. These deportation provisions remain in force and are the ones which applied to Mr George. It should, however, be noted that since the passing of the UK Borders Act 2007 (the 2007 Act), the commonest source of a decision to deport a convicted person lies in the provisions of section 32 of that Act, styled automatic deportation. The effect of this section is that (i) a non British citizen who (inter alia) is sentenced to a term of 12 months imprisonment or more is termed a foreign criminal, (ii) as such his deportation is deemed to be conducive to the public good for the purposes of section 3(5)(a) of the 1971 Act so that he is liable to deportation, and (iii) the making of a deportation order is mandatory rather than discretionary, and irrevocable, unless specific exceptions apply, of which one is that removal would entail infringement of Convention rights. It follows that in Mr Georges case: i) once the Secretary of State had decided under section 3(5)(a) of the 1971 Act that his deportation would be conducive to the public good, he became liable to deportation; the notice served on him in January 2007 warned him of an impending deportation order in consequence; (ii) at that stage his indefinite leave to remain continued extant but precarious, as it did throughout the 18 months or so following, during which unsuccessful attempts were made to challenge the decision that he was liable to deportation; this is consistent with the general scheme of the immigration appeals system, under which whilst appeals are pending suitable (if varying) provision is made to preserve the position in the interim; (iii) when in April 2008 the deportation order was made under section 5(1) of the 1971 Act the consequence was that his indefinite leave to remain was invalidated under the closing words of that subsection; (iv) the immigration judges ruling in March 2009 that his article 8 rights would be infringed by deportation was made on his appeal against the refusal by the Secretary of State to revoke the deportation order; the consequence is agreed to be that the deportation order was thereby revoked; (v) he remains liable to be deported, but an order for his deportation cannot be made in his present circumstances because it would entail an infringement of his Convention rights. The case for revival of indefinite leave to remain For Mr George, the carefully crafted submissions of Mr Knafler QC that his indefinite leave to remain revived when the deportation order was revoked can conveniently be considered under 2 headings: (a) it is said that as a matter of construction, section 5(1) and (2) of the 1971 Act mean that upon revocation the position reverts to the status quo ante, viz the indefinite leave revives; it is said that the position is made clear by considering other statutes (b) in pari materia, in particular section 76 of the Nationality, Immigration and Asylum Act 2002 (the 2002 Act), section 10 of the Immigration and Asylum Act 1999 (the 1999 Act), and the automatic deportation provisions of the 2007 Act (paragraph 7 above). Section 5(1) & (2) of the 1971 Act Mr Knaflers submission is that section 5(1) prescribes three consequences of a deportation order a direction to leave, a prohibition on return and the invalidation of any existing leave to remain. Accordingly, he says, revocation under section 5(2) reverses all three consequences. This, however, does little more than assume what it seeks to prove. His three consequences of a deportation order are in any event of differing character; the first two require obedience by action or omission on the part of the individual, whereas the third is a statement of a legal effect. The wording of these two sections does not by itself provide a conclusive answer to the question of whether revocation of a deportation order operates to revive leave to remain which the making of the order invalidated. If anything, the wording tends to suggest that revocation operates as from the moment it occurs, that is to say is prospective rather than retrospective. It is from that moment onwards that the individual is no longer under an obligation to leave, and is free to return. Consistently with that, one might expect that the invalidation of leave which has occurred through the making of the deportation order is not undone. Mr Knaflers associated submission is that the words shall cease to have effect in section 5(2) govern both revocation and the different trigger of the individual becoming a British citizen. Even if they did, that does not help answer the question what is meant by cease to have effect, which could bear either a prospective or retrospective meaning, albeit it more strongly suggests the former. But in any event, it is quite clear that these words are associated only with the citizenship trigger and not with revocation. It makes perfectly good sense for the subsection to distinguish between them since the first depends on the act of the Secretary of State (or the Immigration Judge on appeal) whereas the latter is independent of any act of hers. The wording of section 5(2) may by itself be capable of bearing the meaning that revocation reverses the legal effect of the deportation order and thus revives leave to remain, but if that had been the intent, one might have anticipated the statute saying so. What is, however, completely clear is that it has been treated from the outset by relevant persons operating or commenting upon the Act as meaning that revocation did not undo the invalidation of leave to remain which had been achieved by section 5(1). The body of evidence of this is considerable. It includes the following. (i) Draft Immigration Rules were prepared contemporaneously with the passage through Parliament of the 1971 Act (Immigration Rules: Control after Entry (Cmnd 4610) as amended by Cmnd 4792); these were considered by both Houses prior to the completion of the Acts legislative progress; the draft rules included paragraph 58 which stated in terms: Revocation of the deportation order does not entitle the person concerned to re enter the United Kingdom; it renders him eligible to qualify for admission under the immigration rules. (ii) That provision was then repeated at paragraph 66 of the substantive Statement of Immigration Rules for Control after Entry (HC 510), which was laid before Parliament on 23 October 1972. (iii) Every subsequent Statement of Changes in Immigration Rules has contained the same proposition in identical terms, including the current one (1994) (HC 395) at paragraph 392; all have been laid before Parliament pursuant to section 3(2) of the 1971 Act, under the negative resolution procedure. (iv) Successive editions of Macdonalds Immigration Law and Practice in the United Kingdom from the first (1983) until the current 8th (2010) record this same proposition without question. If the wording were incapable of contrary reading, an error in its interpretation in the Rules, however long perpetuated, would not reverse its correct construction. But this wording is not clear. Moreover, the successive assumptions in the Rules about its meaning are very relevant when one comes to consider Mr Knaflers second submission, and in particular the terms of section 76 of the 2002 Act, which is the section which persuaded the majority of the Court of Appeal that he was right. Section 76 of the 2002 Act Prior to this provision indefinite leave to remain could not be removed except by a deportation order and the operation of section 5(1) of the 1971 Act. Section 76 gave the Secretary of State a new power to revoke a persons indefinite leave to remain, in three defined situations: (1) where a person is liable to deportation but cannot be deported for legal reasons, (2) where leave was obtained by deception such as would make the person liable to removal, but he cannot be removed for legal or practical reasons and (3) where he had, in specified circumstances, ceased to be the refugee which he previously had been. Section 76(1) deals with the first situation: The Secretary of State may revoke a person's indefinite leave to enter or remain in the United Kingdom if the person (a) is liable to deportation, but (b) cannot be deported for legal reasons. The argument which was accepted by the majority of the Court of Appeal was that this enactment, which is part of the same statutory body of immigration law as the 1971 Act, must have been passed on the assumption that it contained the only power by which such a persons leave to remain could be removed. Mr George and others like him are people who are liable to deportation but cannot be deported for legal reasons. That in turn meant, it was held, that the revocation of a deportation order in the case of such a person must have had the effect of reviving any leave to remain which he had. Otherwise, so the argument ran, there would be no need for section 76(1). It is certainly true that the two statutes are part of the same body of immigration law and should be construed consistently with one another so far as possible, although the speed and intensity of legislative change in this field undoubtedly leaves open the real possibility that not every provision is consistent with every other. It is also clear, and conceded by the Secretary of State, that section 76(1) would apply to Mr George. It does not, however, follow that there was no point in enacting section 76(1) unless revocation of a deportation order revived leave to remain. In the case of Mr George the legal bar to his deportation was only upheld after the deportation order had been made. But there will be many others who cannot be deported for similar legal reasons but in whose case this is apparent from the moment when they became liable to deportation. There may be many convicted persons who would be deported but for obvious Convention rights bars, perhaps because the conditions in the home country would infringe article 3, or because the convict has very long standing and strong article 8 rights. The legal bar to deportation may be recognised without dispute by the Secretary of State. In such a case, section 76(1) adds the power, which otherwise did not exist, to revoke indefinite leave to remain. The case for the existence of such a power is clear. A human rights claim may well prevent actual deportation, but the individual concerned is, by definition, a person whose presence is no longer conducive to the public good. If a deportation order cannot be made, it may make good sense to alter his status from indefinite leave to remain to limited or, more likely, conditional leave, which may give scope for control of his activities in the public interest. Although the 2007 Act was not in existence when section 76 was enacted, its scheme for automatic deportation provides another example of a case when section 76 would be available without there being any deportation order to be revoked. If the Secretary of State determines that section 32(5) of the 2007 Act applies to render an individual liable to deportation, it is not the making of a deportation order but the antecedent decision that the provisions of the Act apply which is appealable: see section 82(3A) of the 2002 Act, inserted by section 35(3) of the 2007 Act. So, if challenge were made to that decision, and were upheld on human rights grounds, there would be no deportation order to be revoked, but the individuals indefinite leave to remain could be removed and replaced with a different kind of leave by acting under section 76. A second powerful reason for rejecting the argument based upon section 76, perhaps not fully ventilated before the Court of Appeal, lies in the history set out at paragraph 12 above. The whole basis of the decision of the Court of Appeal was that section 76 demonstrates that Parliament assumed that the effect of section 5 of the 1971 Act was to revive leave to remain if a deportation order was revoked. But the history demonstrates that Parliament cannot have done so; on the contrary, the assumption at the time was the opposite. A third reason was identified by Stanley Burnton LJ, dissenting in the Court of Appeal. Quite apart from the case of the individual who remains in the United Kingdom and cannot be deported for legal reasons, he considered that there may be other situations in which revocation of a deportation order is appropriate. One suggested case is where a person has been successfully deported and applies subsequently for limited leave to make a brief visit, perhaps to relatives, and perhaps in circumstances where it is appropriate to grant the application on compassionate grounds. Such a person could not simply return, because the deportation order under which he was removed would prevent it. The Secretary of State would need to revoke the deportation order and make a fresh grant of limited or conditional leave. She could not use section 76 to do this, because such a person would not be someone who could not be deported for legal reasons. Stanley Burnton LJ reasoned that Parliament could not have intended that in such a situation the revocation of the deportation order would have the effect of reviving an indefinite leave to remain. This scenario gave rise to a complex debate as to whether there exist other powers by which the Secretary of State might achieve the same end, in particular by invoking article 13(7) of the Immigration (Leave to Enter and Remain) Order 2000 (SI 2000/1161) (the 2000 Order). This Order first preserved leave which would otherwise have been treated under section 3(4) of the 1971 Act as lapsed by reason of travel outside the common travel area, and then created by article 13(7) a discretionary power to cancel it when it was only in force because thus preserved. It is possible that this power might now be used in the scenario contemplated by Stanley Burnton LJ, although only if paragraph 321A of the Immigration Rules were first amended, for that rule presently restricts the use of article 13(7) to specific situations which do not include this scenario. But what matters is what section 5(2) of the 1971 Act meant when it was enacted. At that time the 2000 Order had not seen the light of day and there could be no question of applying article 13(7). The law was, under section 3(4) of the same 1971 Act, that: A person's leave to enter or remain in the United Kingdom shall lapse on his going to a country or territory outside the common travel area (whether or not he lands there), unless within the period for which he had leave he returns to the United Kingdom in circumstances in which he is not required to obtain leave to enter; but, if he does so return, his previous leave (and any limitation on it or conditions attached to it) shall continue to apply. This provision cannot be read, in the context of the 1971 Act where it appears, as applying to a person deported under section 5. If it did, there would be no need for section 5(1) to make any provision at all for the deportation order to invalidate the leave to remain. Nor, even if the effect of section 5(2) is to revive a former leave to remain if a deportation order is revoked, could this section bite at removal under the order since the formerly existing leave would at that stage be invalidated by section 5(1) and there would be nothing to lapse. It may be uncertain how much Stanley Burnton LJs scenario was in anyones mind at the time of the passing of the 1971 Act, so its impact on the construction question which arises in this case is perhaps limited. But the possibility that the Secretary of State might wish to revoke a deportation order of someone, either present in the United Kingdom or not, and to replace it with limited or conditional leave, must have existed then as well as now, irrespective of any question of Convention rights obstructing removal. This part of the reasoning of Stanley Burnton LJ therefore does provide some limited additional support for the argument that section 5(2) should not be read as meaning that on revocation of a deportation order any formerly held leave to remain revives. In the Court of Appeal, Sir Stephen Sedley observed at para 32 that if section 76 was the only route available to the Secretary of State to remove leave to remain in the circumstances of a case such as the present, that would mean that the individual would have a right of appeal (under section 82 of the 2002 Act). Whilst that is correct, it cannot assist on the meaning of section 5(2) as at 1971 since section 76 did not then exist. Nor does the prospect of such a right of appeal fortify the case for such as Mr George. Anyone faced with a deportation order already has ample right of appeal and against an order which will invalidate his leave to remain as the history of this case illustrates. There is no occasion for a legitimate claim to a further appeal. Sir Stephen also observed at para 32 that if the Secretary of State was right, a person such as Mr George would be left in limbo, being irremovable yet having no leave to remain. That also does not assist. The Secretary of State accepts that some leave must be granted if removal is impossible, and has in fact made such grants to Mr George. In any event, there would equally be a limbo if the powers under section 76 were exercised. For these reasons, the argument from section 76 does not avail Mr George. Section 10 of the 1999 Act Section 10 gives the Secretary of State power to direct summary removal of specific categories of people where, essentially, their leave to remain is seriously flawed. The two principal categories are those who have failed to observe a condition of their leave (who accordingly are outside the leave granted) and those who obtained it by deception. The other two categories are those whose position is as a dependent family member of someone being removed under this same section and those who have ceased to be refugees within the meaning of section 76(3) of the 2002 Act (supra at paragraph 13). The effect of removal directions is, by section 10(8) (as substituted by section 48 of the Immigration, Asylum and Nationality Act 2006), to invalidate the leave to remain. Thus the language employed mirrors that of section 5(1) of the 1971 Act. Mr Knafler contends that in this section a withdrawal or revocation of the removal directions would clearly revive the leave to remain and that accordingly the same must apply to revocation of a deportation order under section 5 of the 1971 Act. The precise meaning of section 10(8) is not before this court and it would be wrong to attempt to decide it in the absence of facts raising the issue. Much might depend on the circumstances of any withdrawal and what if any alternative step the Secretary of State attempted or purported to take. But it should not be assumed either that the effect of the section is that withdrawal of the removal directions would reinstate the leave to remain, unaltered, or that, if it would, the same was the rule created 28 years earlier by section 5 of the 1971 Act for the different situation of a deportation order made because the presence of the individual is not conducive to the public good. The appeal rights of those affected by section 10 summary removal directions and those facing deportation are quite different. In any event, it is unsafe to reason from a different regime enacted 28 years afterwards to the meaning of the 1971 Act. Automatic deportation under the 2007 Act Mr Knafler suggests that unless section 5(2) of the 1971 Act involves revival if the deportation order is revoked, a person who successfully appeals automatic deportation will still have his leave to remain invalidated; hence, he submits, section 5(2) must involve revival. The argument runs as follows. (A) In a non automatic case an appeal against a decision (under section 3(5) of the 1971 Act) that a persons deportation is conducive to the public good, and thus that a deportation order will follow, is appealable under section 82(2)(j) of the 2002 Act and whilst the appeal is pending no deportation order can be made: see section 79(1) of that Act; (B) when the 2007 Act scheme was introduced the decision which was made appealable is not the making of the deportation order but the antecedent decision that the individual is caught by the automatic deportation rules: section 82(3A) of the 2002 Act, as introduced by section 35 of the 2007 Act; (C) at the same time section 79 of the 2002 Act was modified by the introduction of subsections (3) and (4) which provide that the usual prohibition on making a deportation order whilst an appeal is pending does not apply but that during that time there is an exception to the rule under section 5(1) of the 1971 Act that it invalidates the leave to remain; (D) therefore it is possible that the individual could succeed in his appeal, establish that he is not caught by the automatic deportation rules, but yet there may be a deportation order which will have the effect, once the appeal is over and no longer pending, of invalidating his leave to remain. This may or may not be a possible scenario. The import of the 2007 Act needs to be resolved on facts arising from it and not hypothetically on a case to which it has no application. That the legislation is not as a whole entirely cohesive is demonstrated by the fact that in a non automatic case, the appeal may be against either the decision to make a deportation order or against a refusal to revoke the order itself if matters have advanced that far; the appealable decisions are described in section 82(2)(j) and (k). If the postulated automatic deportation case is a possible scenario, it would not of course apply except where (a) a deportation order was made, as it need not be, and (b) the effect of a successful appeal is to induce its revocation. There are, in any event, very limited grounds on which an appeal against automatic deportation of a foreign criminal can be mounted. The principal ones in practice may well be that Convention rights prevent deportation (exception 1 pursuant to section 33(2) of the 2007 Act). It is not necessarily anomalous or wrong that a foreign criminal who would be deported but for a Convention bar should have his indefinite leave to remain invalidated and that the Secretary of State should be able to regulate his status in this country by means of limited or conditional leave (see below). It is not possible to reason from a single suggested scenario under an Act of 2007 to the true meaning of a statute passed 36 years earlier. Conclusion The terms of section 5 of the 1971 Act are, as words, capable either of importing revival of leave or of not doing so. Revival is not their natural meaning, because the natural meaning is that revocation takes effect when it happens and does not undo events occurring during the lifetime of the deportation order. Revival is a significant and far reaching legal concept, and it is much more likely that it would have been specifically provided for if it had been intended. The reasoning of the Court of Appeal, from section 76 of the 2002 Act, cannot be supported. Whilst statutes in pari materia should be construed consistently if possible, a later statute is not a reliable guide to the meaning of an earlier one, especially in a field such as immigration where social and political pressures have led to fast moving changes in the legislation. In particular, the history of the treatment of section 5(2) of the 1971 Act in successive rules laid before Parliament both before and ever since the 1971 Act was passed shows very plainly that there cannot have been a legislative assumption that revival was its effect. The contrary construction, involving no question of revival, is entirely consistent with the scheme of the 1971 Act (and indeed subsequent statutes) on the topic of deportation. The position of Mr George is not analogous to someone with a pending appeal. His status as a person liable to deportation has long since been established; his appeal challenging it failed long ago. Persons are liable to be deported, under any of the procedures which may apply, because their presence in the United Kingdom is judged not to be conducive to the public good. That is true of Mr George. If it turns out that there is a legal obstacle to actual removal, for example because of Convention rights which cannot be infringed, that does not alter the fact he is a person whose presence is not conducive to the public good. There is no legal symmetry in indefinite leave to remain co existing with the status of someone whose presence is not conducive to the public good. It makes perfectly good sense, whilst the legal obstacle remains, for the Secretary of State to be in a position to re visit the terms of leave to enter. Moreover, the legal obstacle is not necessarily, or even usually, permanent. If it arises from conditions in the individuals home country, those conditions may change or he may come into favour with the authorities when previously he was not. If it arises from his family connections in the United Kingdom, those may easily change. If someone in his position cannot at present be deported because to do so would infringe his article 8 rights, and if indefinite leave to remain were thereupon to revive, he would remain irremovable if he turned his back on his family, or they on him, as may not infrequently occur. Whilst there may be different routes by which the Secretary of State could now achieve a similar result, for example via section 76 of the 2002 Act, it is clear that this was also the coherent result of the 1971 Act, from the time that it was enacted. On its correct construction, section 5(2) of the 1971 Act does not mean that if the deportation order is revoked, the invalidation by section 5(1) of leave to remain is retrospectively undone and the previous leave to remain does not revive. Mr George remains liable to deportation, even though it cannot at present be carried out. His position in the United Kingdom must be regularised, but that does not entail a recognition of indefinite leave to remain. The Secretary of States grant to him of successive limited leaves is perfectly proper. Whether or not it may become appropriate after the passage of time to re grant indefinite leave is a matter for her. For those reasons, the appeal of the Secretary of State should be allowed and the order of the judge dismissing the claim for judicial review should be reinstated.
+It is rare for the Supreme Court to entertain an appeal that relates exclusively to costs, but this appeal raises an important issue of principle in relation to the liability of a local authority to pay the costs of a party to care proceedings. The proceedings related to two children, whose parents were separated. The children made allegations of sexual abuse by their father and six other men in which the fathers parents (the grandparents) had colluded. These allegations were included by the appellant (the Council) in the schedule of matters relied upon in the care proceedings as meeting the threshold criteria for a care order under section 31(2) of the Children Act 1989. The grandparents were joined as interveners, as were five of the six men. The judge conducted a discrete fact finding hearing which occupied a total of five and a half weeks between February and December 2009. The lengthy findings that he then made exonerated the grandparents and five of the other six interveners. Four of the five men who intervened qualified for legal aid (the fifth represented himself), but the grandparents relatively modest income disentitled them from this. The grandfather was aged 67. He is a retired fireman. The grandmother was aged 63 and worked, as she still does, as a part time bookkeeper. His pension and her earnings together amount to about 25,000 a year. The grandparents borrowed 55,000 from a building society, of which they spent 52,000 on legal advice and representation at the hearing. They cannot hope to pay this off in less than 15 years. In these circumstances the grandparents applied for an order that the Council pay their costs. It was and is common ground that the Council could not be criticised for advancing in the care proceedings the allegations made against the grandparents. The judge, His Honour Judge Dowse, summarised the basis of their application for costs as based on the apparently inequitable fact that they have largely succeeded in defending the allegations made against them but must bear their own costs. The judge dismissed their application. He did so on the basis that it was not usual to order costs in a child case against a party unless that partys conduct has been reprehensible or its stance unreasonable. In support of that proposition the judge cited authorities that included the judgments of Wilson J in Sutton London Borough Council v Davis (No 2) [1994] 1 WLR 1317 and Wilson LJ in In re J (Costs of Fact Finding Hearing) [2009] EWCA Civ 1350; [2010] 1 FLR 1893. The judge expressed the view that it was unacceptable that more and more people in the position of the grandparents were faced with potentially life changing allegations without being able to gain some financial assistance from the State. The grandparents appealed to the Court of Appeal, consisting of Wilson and Munby LJJ and Coleridge J. The appeal was allowed: [2010] EWCA Civ 1585. Wilson LJ gave the leading judgment. He held that Judge Dowse had failed to appreciate the true purport of his judgment in In re J, which was favourable rather than adverse to the grandparents application for costs. Permission to appeal to this Court was given on terms that, whatever the result, the grandparents entitlement to recover their costs from the Council would not be disturbed. Permission to intervene was granted to the Children and Family Court Advisory and Support Service (CAFCASS) and to the Grandparents Association. It is a remarkable fact, and ironic in an appeal about costs, that all counsel are appearing pro bono. We would like to express our gratitude for the assistance that they have given. The Family Procedure Rules 2010 On 6 April 2011 the Family Procedure Rules 2010 (SI 2010/2955) (FPR) came into force. They apply to family proceedings in the High Court, County Courts and Magistrates Courts. Part 28 deals with costs. It is common ground that Part 28 of FPR consolidates the previous law relating to costs, including the relevant provisions of the Family Proceedings Rules 1991 (SI 1991/1247) and that it does not change the law in relation to costs that is applicable to this appeal. In these circumstances it is sensible to consider the issues raised by this appeal within the context of those Rules. objective, which is defined in FPR 1.1, which provides: FPR 1.2, which is new, requires the court to give effect to the overriding 1.1 The overriding objective (1) These rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly, having regard to any welfare issues involved. (2) Dealing with a case justly includes, so far as is practicable (a) ensuring that it is dealt with expeditiously and fairly; (b) dealing with the case in ways which are proportionate to the nature, importance and complexity of the issues; (c) ensuring that the parties are on an equal footing; (d) saving expense; and (e) allotting to it an appropriate share of the courts resources, while taking into account the need to allot resources to other cases. FPR 28.3 makes special provision for costs in financial remedy proceedings. Paragraph (5) provides that the general rule in financial remedy proceedings is that the court will not make an order requiring one party to pay the costs of another party. This is subject to paragraph (6) which permits the court to make such an order when it considers it appropriate to do so because of the conduct of a party in relation to the proceedings. Paragraph (5) is a particular example of the departure in family proceedings from the general rule applicable in civil proceedings that the unsuccessful party will be ordered to pay the costs of the successful party: CPR 44.3(2)(a). FPR 28.1 provides that The court may at any time make such order as to costs as it thinks just. This is not an unfettered discretion, for FPR 28.2 makes applicable to family proceedings, other than financial remedy proceedings, the majority of the rules in relation to costs of the CPR. The most significant of the rules excluded is the general rule that costs follow the event, quoted above in CPR 44.3(2). In the context of this appeal, the most relevant of the rules that are applicable are included in the following provisions of CPR 44.3: (4) In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including (a) the conduct of all the parties; (b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and (c) any payment into court or admissible offer to settle made by a party which is drawn to the courts attention, and which is not an offer to which costs consequences under Part 36 apply. (5) The conduct of the parties includes (a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction (Pre Action Conduct) or any relevant pre action protocol; (b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; (c) the manner in which a party has pursued or defended his case or a particular allegation or issue; and (d) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim. (4)(b) is relevant in relation to a regime where the general rule in (2)(a) applies. For this reason we do not see that it has any direct relevance to family proceedings. (4)(c) can have no relevance to public law proceedings and can thus be disregarded in the present case. The other rules are simply examples of circumstances that will be relevant when considering the result that justice requires in the individual case. In family proceedings, however, there are usually special considerations that militate against the approach that is appropriate in other kinds of adversarial civil litigation. This is particularly true where the interests of a child are at stake. This explains why it is common in family proceedings, and usual in proceedings involving a child, for no order to be made in relation to costs. The reasons for departing from the principle that costs normally follow the event differ, however, depending upon the nature of the family proceedings. On this appeal it is necessary to identify the policy considerations that should inform the approach to costs that is required in the interests of justice in care proceedings. Reasons for making no order for costs in family proceedings that are not relevant in the present case The Court has been referred to a number of authorities dealing with costs in family proceedings. In order to see the wood from the trees it is helpful to remove from the forest the timber that does not bear on the issues raised by this appeal. The following reasons for not awarding costs in family proceedings are not relevant: i) In ancillary relief proceedings each partys liability for costs will be taken into consideration when making the substantive award. This approach has the advantage of discouraging the parties from running up unnecessary costs see Baker v Rowe [2009] EWCA Civ 1162; [2010] 1 FCR 413, paras 20 to 23 per Wilson LJ. iii) ii) Orders for costs between the parties will diminish the funds available to meet the needs of the family see Gojkovic v Gojkovic [1992] Fam 40, 57, per Butler Sloss LJ and R v R (Costs: Child Case) [1997] 2 FLR 95, 97, per Hale J. (This could, of course, be a good reason not to award costs against a family member in care proceedings). It is undesirable to award costs where this will exacerbate feelings between two parents, or more generally between relations, to the ultimate detriment of the child: see B (M) v B (R) (Note) [1968] 1 WLR 1182, 1185 per Willmer LJ; Sutton London Borough Council v Davis (No 2) [1994] 1 WLR 1317, 1319 per Wilson J. (Once again this could be a good reason not to award costs against a family member). Unreasonable conduct CPR 44.3(5) is as relevant in care cases as it is in other kinds of family proceedings. Where a local authority has caused costs to be incurred by acting in a way which was unreasonable justice may well require that the local authority pay the costs in question. Examples of such cases include: In re R (Care: Disclosure: Nature of Proceedings) [2002] 1 FLR 755; In re X (Emergency Protection Orders) [2006] 2 FLR 701; Coventry City Council v X, Y and Z (Care Proceedings: Costs) [2011] 1 FLR 1045. The principle underlying these decisions has no relevance to the present case, for it has not been suggested that the conduct of the local authority was in any respect unreasonable. Precedent CAFCASS have submitted that this case is the first occasion upon which a local authority has been ordered to pay costs in public law proceedings in the absence of any criticism of its conduct. CAFCASS is well placed to make that submission and no case to the contrary has been cited to us. In In re M (Local Authoritys Costs) [1995] 1 FLR 533 a local authority applied for permission to refuse contact between two children and their parents. The magistrates refused the application and ordered the local authority to pay the fathers costs. On appeal Cazalet J set aside that order, holding that there should be no order as to costs. Citing the decision of Wilson J in Sutton London Borough Council v Davis he observed at p 541 that it would be unusual for a court to make an order for costs in a child case where a partys conduct had not been reprehensible or that partys stance had not been beyond the band of what was reasonable. He added at p 544: As a matter of public policy it seems to me that where there is the exercise of [a] nicely balanced judgment to be made by a local authority carrying out its statutory duties, the local authority should not feel that it is liable to be condemned in costs if, despite acting within the band of reasonableness (to adopt the words of Wilson J), it may form a different view to that which a court may ultimately adopt. The reasoning of the Court of Appeal The chain of reasoning of Wilson LJ in this case has its origin in his decision in Sutton London Borough Council v Davis. The local authority had refused to register a childminder, who successfully appealed to the magistrates, who awarded costs in her favour. The local authority appealed against the costs order. In doing so the authority urged the court to apply, by analogy, the principle that costs are not usually ordered in child cases. Wilson J accepted that this was a proposition applied for many years in the Family Division. He gave the following explanation for that proposition at p 1319: Where the debate surrounds the future of a child, the proceedings are partly inquisitorial and the aspiration is that in their outcome the child is the winner and indeed the only winner. The court does not wish the spectre of an order for costs to discourage those with a proper interest in the child from participating in the debate. Nor does it wish to reduce the chance of their co operation around the future life of the child by casting one as the successful party entitled to his costs and another as the unsuccessful party obliged to pay them. The proposition applies in its fullest form to proceedings between parents and other relations; but it also applies to proceedings to which a local authority are a party. Thus, even when a local authoritys application for a care order is dismissed, it is unusual to order them to pay the costs of the other parties. But the proposition is not applied where, for example, the conduct of a party has been reprehensible or the partys stance has been beyond the band of what is reasonable: Havering London Borough Council v S [1986] 1 FLR 489 and Gojkovic v Gojkovic [1992] Fam 40, 60C D. Wilson J then dealt with the facts. He observed that the local authority had erred in concluding that the respondent was not fit to mind children, but held that their stance in relation to Mrs Davis was neither reprehensible nor unreasonable. Wilson J went on to reject the analogy with care proceedings, and dismissed the appeal. His reasons at pp 1319 1320 were as follows: In care proceedings the local authority and all other parties come into court in order to assist it in choosing the programme for the childs future which will best serve his or her welfare. In the case of Mrs Davis the local authority made an incorrect decision as to her fitness. She had a right to be registered and they infringed it. Mrs Davis afforded them the opportunity to review their decision by lodging an objection pursuant to section 77(3) of the Children Act 1989. But they resolved that the decision should stand. In order to establish her right to be registered, Mrs Davis had to appeal to the magistrates court. The proceedings were adversarial and the local authority lost the argument. Such were the circumstances for application of the principle that costs should follow the event. Far from being satisfied that the justices were plainly wrong to decide that the local authority should pay the costs of Mrs Davis, I consider that they were right. This judgment confirmed that it was not the normal practice to award costs in child care cases. It contained, however, the seeds of what was to follow, for in effect Wilson J applied the general common law rule that costs follow the event in adversarial cases. In re J (Children) [2009] EWCA Civ 1350 involved contact proceedings between a mother and father. The district judge held a fact finding hearing to resolve allegations of violence made by the mother and denied by the father. Most of the mothers allegations were held to be established and she sought the costs of the hearing. The district judge refused her application and made no order as to costs. The mother appealed to the county court. She invited the judge to draw a distinction between the fact finding hearing and that part of the hearing that related to the welfare of the children. The judge declined to do so. He held that the father had not acted unreasonably in giving evidence in opposition to the mother and dismissed her appeal. On appeal to the Court of Appeal, Wilson LJ, giving the only reasoned judgment, held that the circuit judge had been wrong not to adopt a compartmentalised approach. He held at para 17: The order for a bespoke fact finding hearing was surely to consign the determination of the mother's allegations into a separate compartment of the court's determination of the father's application for an order for contact. It went almost without saying, although the circuit judge chose to say it, that the optimum outcome of the contact application could be determined only by reference to the findings made at the fact finding hearing; but the effect of the direction for a separate fact finding hearing was that the costs incurred by the mother in relation to that hearing can confidently be seen to be wholly referable to her allegations against the father. There was, in that sense, a ring fence around that hearing and thus around the costs referable to it. Those costs did not relate to the paradigm situation to which the general proposition in favour of no order as to costs applies. Wilson LJ went on to hold that the husband had not acted irrationally and that a proper exercise of the courts discretion did not depend upon why he chose to deny allegations that he must have known were true. He remarked that issues of fact arose in most disputed cases in relation to children and that his decision in the instant case should not be taken as an indication that it was appropriate to make an order for costs in the vast run of such cases. He held, however, that the mothers case fell into a separate and unusual category. It was devoted exclusively to consideration of the serious and relevant allegations made by the mother against the father, most of which were established. In these circumstances he held that the proper order was for the father to pay two thirds of the mothers costs of the hearing. This decision could have been justified on the ground that the costs in question had been caused by the fathers unreasonable refusal to admit the facts that were ultimately proved against him, but Wilson LJs reasoning appears to have been simply that a party who makes allegations of fact against another party that prove to be unfounded, or who challenges allegations of fact that prove to be well founded, should be liable for the costs of resolving those issues, whether his conduct was reasonable or not. We turn to the decision of Wilson LJ in the present case. He held that Judge Dowse had erred in relying upon In re J to justify applying the general proposition that no order for costs should be made in a child case. He had failed to appreciate that the true purport of In re J was that the general proposition should not be applied in relation to the costs of a fact finding hearing. Wilson LJ rejected the submission made on behalf of the Council that the general proposition against awarding costs in care proceedings applied. He held at para 18: I consider that, where in care proceedings a local authority raise, however appropriately, very serious factual allegations against a parent or other party and at the end of a fact finding hearing the judge concludes that they have not established them, the general proposition is not in play. In that situation he held that the judge should approach the question of costs with a clean sheet. As to the approach that the judge should then follow, Wilson LJ cited at para 20 the statement that he had made in ancillary relief proceedings that were not concerned with a child, Baker v Rowe [2010] 1 FCR 413, para 25: Even where the judge starts with a clean sheet, the fact that one party has been unsuccessful, and must therefore usually be regarded as responsible for the generation of the successful partys costs, will often properly count as the decisive factor in the exercise of the judges discretion. He added at para 21: In my view the facts that the grandparents were faced with allegations of the utmost severity, that accordingly it had been reasonable for them to stretch their economy to the utmost in order to secure for themselves a professional defence against them and that in the event the result was an exoneration, were all matters which should have been of great, indeed in my view of decisive, importance to a judge who was about to write on a clean sheet. The relevance of a split hearing Care proceedings usually involve allegations of misconduct by some person, typically a parent who is looking after the child, but often, as in this case, of other persons. Those against whom allegations are made are likely to wish to challenge them. The parents primary concern may be not to lose care of the child. Others may simply be concerned to clear their names. The object of the proceedings is to reach the decision that is in the best interests of the child. The procedure for achieving this in this jurisdiction is adversarial. The proceedings are brought by the local authority. The parents and the child or children concerned are made respondents. Those against whom allegations of misconduct are made may be joined, either on their own application or at the initiative of the court, as interveners. Before deciding what is in the best interests of the child it is sometimes necessary to resolve issues of fact. The court will normally require the local authority to set out the findings of fact that it seeks to establish in order to show that the threshold requirements for making a care order laid down by section 31(2) of the Children Act 1989 are satisfied. The decision to have a split hearing of care proceedings is essentially one of case management. It is taken by the court. The position was clearly spelt out by Lady Hale in In re B (Children)(Care Proceedings: Standard of Proof) (CAFCASS intervening) [2008] UKHL 35; [2009] AC 11: 74. Care proceedings are not a two stage process. The court does have two questions to ask. Has the threshold been crossed? If so, what will be best for the child? But there are many cases in which a court has two or more questions to ask in the course of a single hearing. The same factual issues are often relevant to each question. Or some factual disputes may be relevant to the threshold while others are relevant to the welfare checklist: it may be clear, for example, that a child has suffered an injury while in the care of the mother, but whether the father or stepfather has a drink problem and has been beating the mother up is extremely relevant to the long term welfare of the child. 75. The purpose of splitting the hearing is not to split the two questions which the court must answer. It is to separate out those factual issues which are capable of swift resolution so that the welfare professionals have a firm foundation of fact upon which to base their assessments of family relationships and parenting ability: see In re S (Care Proceedings: Split Hearing) [1996] 2 FLR 773. A fact finding hearing is merely one of the case management possibilities contemplated by the new Public Law Outline There is no point in splitting the issues if the facts cannot be determined relatively quickly, still less if it is unlikely to result in clear cut findings to help the professionals in their work. 76. But the finding of those facts is merely part of the whole process of trying the case. It is not a separate exercise. And once it is done the case is part heard The decision to have a split hearing cannot affect the principles to be applied by the court when dealing with costs, although it may have a practical impact on the courts decision. The first part of a split hearing isolates specific issues of fact. For the local authority and the court the resolution of those issues is a stepping stone to the final decision in relation to the welfare of the child or children concerned. So far as interveners are concerned, their interests in the proceedings may be restricted to the findings that are made at the first hearing. Having a split hearing makes it much easier to identify both the manner in which the issues of fact have been resolved and the costs reasonably incurred by the parties in relation to the issues affecting them. It follows that, if it is correct in principle to award costs in relation to individual issues of fact, this can much more readily be done where there has been a split hearing. Indeed the exercise may well be one that it is not practical, and therefore not desirable, to undertake where there has not been a split hearing. Courts are, however, accustomed to making a special award of costs in relation to a discrete issue that forms part of a single hearing. This appeal raises an issue of principle in relation to that practice in the context of care proceedings. The issue of principle The issue of principle raised by this appeal is whether in care proceedings a local authority should be liable to pay an interveners reasonable costs in relation to allegations of fact, reasonably made by the authority against the intervener, which have been held by the court to be unfounded. The principle advanced by Cazalet J that I have quoted at para 14 has continued to be applied in cases not involving split hearings subsequent to the decision in In re J. Thus in Coventry City Council v X, Y and Z (Care Proceedings: Costs) [2011] 1 FLR 1045 at para 192 His Honour Judge Bellamy ruled that it was still an appropriate test to apply. In Kent County Council v Mother and others [2011] EWHC 1267 (Fam) Baker J rejected an application for costs against a local authority by an intervener who had been wholly exonerated in a fact finding hearing that was the first part of a split hearing. He did so on the ground that the impetus for making the allegations against the intervener had been that of the court not the local authority. The principle applied by Cazalet J appears to mirror the approach in proceedings under the Court of Protection Rules 2007 (SI) 2007/1744). Rule 157 provides that where proceedings concern a protected persons welfare the general rule is that there will be no order as to the costs of the proceedings or of that part of the proceedings that concern his personal welfare. Rule 159 permits departure from the general rule if the circumstances so justify. In G v E and Manchester City Council and F [2010] EWHC 3385 (Fam) Baker J awarded costs against a local authority that had been guilty of misconduct that he held justified departure from the general rule. He observed at para 40: Parties should be free to bring personal welfare issues to the Court of Protection without fear of a costs sanction. Local authorities and others who carry out their work professionally have no reason to fear that a costs order will be made. It is only local authorities who break the law, or who are guilty of misconduct that falls within the meaning of rule 159, that have reason to fear a costs order. Local authorities who do their job properly and abide by the law have nothing to fear. These comments were endorsed on appeal by Hooper LJ: [2011] EWCA Civ 939, at para 17. The statement of principle of Wilson LJ that we have quoted at para 23 above is at odds with the principle applied by Cazalet J and the judges who have followed him, giving rise to the issue that we have set out at para 29. Should local authorities be protected from liability to costs in care cases? The duties imposed on local authorities often require them to initiate public law proceedings. The Court of Appeal has recently considered, in the context of cases where claims are conceded, whether different principles apply in the case of public authorities in proceedings in the Administrative Court. The court held that the position should be no different for litigation in the Administrative Court from what it is in general civil litigation see M v Croydon London Borough Council [2012] EWCA Civ 595. There is no general principle that protects a local authority that has acted reasonably in the course of its duties from liability for costs in public law proceedings. Are there special considerations that apply in family proceedings involving children? At para 12 we have identified a number of circumstances in which there is good reason for not applying the general rule that costs follow the event to family proceedings. They are all circumstances in which orders for costs might have consequences that conflicted with the object of the individual proceedings. They have no application to the position of a local authority that has caused costs to be incurred by making allegations that have proved to be unfounded. Submissions Miss Bazley QC for the Council advanced a broad argument of policy in support of the Councils appeal. Local authorities have limited funds. Their costs in relation to care proceedings are met from their Childrens Services budgets. There are many other claims on this budget. Miss Bazley submitted that if local authorities are to be at risk of paying the costs of those against whom they reasonably make allegations in care proceedings, this is likely to inhibit them from doing so, to the general detriment of children at risk. More generally, the child services provided would suffer as a result of this additional financial burden. Miss Bazley produced in support of her submissions the results of what might be described as an amateur survey carried out by junior counsel and Bar students into the attitudes of 28 local authorities to the risk of liability to costs in care cases. Although no objection was made to this material, we do not consider that it would be appropriate to base conclusions upon it. No evidence is needed, however, to support the proposition that if local authorities are to become liable to pay the costs of those that they properly involve in care proceedings this is going to impact on their finances and the activities to which these are directed. The Court can also take judicial notice of the fact that local authorities are financially hard pressed, as demonstrated by the fact that their counsel have appeared before us without payment. Miss Bazleys submissions were supported by CAFCASS. They made the further point that if costs are to be awarded against local authorities who fail to make good allegations reasonably made, costs are likely to be awarded against interveners who are held wrongfully to have challenged allegations made against them, which is likely to result in a reluctance to intervene, to the detriment of the conduct of care cases. Although the Grandparents are no longer at risk, Mr Hirst who appeared for them, advanced their case with vigour. He accepted that there was a general principle that costs should not be awarded in cases involving children, but argued that Wilson LJ had been correct not to apply this principle to fact finding hearings. Interveners in such hearings would be concerned principally in clearing their names. The issue was not what was in the best interests of the child but whether the facts alleged by the local authority were true. Local authorities who failed on that issue should, in justice, pay the interveners costs. Mr Hale, who appeared for the Grandparents Association, did not put the distinction between a single hearing and a split hearing at the forefront of his argument and, indeed, some parts of his written case did not support that distinction. Thus he submitted at para 47 that whether the fact finding was listed separately or together with the welfare determination made no discernable difference and at para 48 that not every fact finding hearing would lead to an order for costs. All other factors and considerations were in play. Mr Hale focussed primarily on general considerations of policy. He submitted that there was no reason of public policy for treating local authorities differently from other parties in public law proceedings. The suggestion that potential liability to costs would fetter their performance of their public duties was anecdotal and unjustified. Justice would best be served by giving the court an unfettered discretion in relation to costs. In a case such as the present it would be an affront to natural justice to leave the interveners to pay their own costs. Discussion The question of whether it is just to make an award of costs against a public authority must be distinguished from the question of whether a litigants costs should be publicly funded. The former question is for the court; the latter for the legislature. Whether a litigants costs should be publicly funded involves issues in relation to access to justice and the requirements of article 6 of the European Convention of Human Rights. Mr Hale invoked that article in support of his argument that where allegations made against an intervener are not made out, the local authority which advanced those allegations should be liable for the interveners costs. We consider that this argument was misconceived. The requirements to provide public funding in the interests of access to justice and of compliance with article 6 apply at the outset of legal proceedings, not when they are concluded, in the light of the result. The Funding Code prepared by the Legal Services Commission pursuant to section 8 of the Access to Justice Act 1999 makes provision for public funding in proceedings under, inter alia, section 31 of the Children Act 1989. The effect of the code is that children, parents and those with parental responsibility are granted funding without reference to means, prospects of success or reasonableness, but such funding is not available to interveners who are joined in such proceedings: see volume 3C 427 of the Legal Services Commission Manual. There may be a case for saying that this results in injustice in the case of interveners in the position of the grandparents in the present case, but it does not follow that justice demands that any deficiency in the provision of legal aid funding should be made up out of the funds of the local authority responsible for the care proceedings. If in principle a local authority should be liable for the costs of interveners against whom allegations have been reasonably made that are held unfounded, then this liability should arise whether or not the interveners are publicly funded. In the present case, the five men who intervened and were exonerated should also have sought and been awarded costs. The burden of costs awarded against local authorities in such circumstances is likely to be considerable. When considering whether it is just to make an award of costs against a local authority in circumstances such as those of the present case it is legitimate to have regard to the competing demands on the limited funds of the local authority. In the context of care proceedings it is not right to treat a local authority as in the same position as a civil litigant who raises an issue that is ultimately determined against him. The Children Act 1989 imposes duties on the local authority in respect of the care of children. If the local authority receives information that a child has been subjected to or is likely to be subjected to serious harm it has a duty to investigate the report and, where there are reasonable grounds for believing that it may be well founded, to instigate care proceedings. In this respect the role of a local authority has much in common with the role of a prosecuting authority in criminal proceedings. It is for the court, and not the local authority, to decide whether the allegations are well founded. It is a serious misfortune to be the subject of unjustified allegations in relation to misconduct to a child, but where it is reasonable that these should be investigated by a court, justice does not demand that the local authority responsible for placing the allegations before the court should ultimately be responsible for the legal costs of the person against whom the allegations are made. Since the Children Act came into force, care proceedings have proceeded on the basis that costs will not be awarded against local authorities where no criticism can be made of the manner in which they have performed their duties under the Act. Wilson LJ in In re J at para 19 disclaimed any suggestion that it was appropriate in the vast run of these cases to make an order for costs in whole or in part by reference to the courts determination of issues of historical fact. But, as I have indicated, there is no valid basis for restricting his approach in that case to findings in a split hearing. The principle that he applied would open the door to successful costs applications against local authorities in respect of many determinations of issues of historical fact. The effect on the resources of local authorities, and the uses to which those resources are put would be significant. For these reasons we have concluded that the general practice of not awarding costs against a party, including a local authority, in the absence of reprehensible behaviour or an unreasonable stance, is one that accords with the ends of justice and which should not be subject to an exception in the case of split hearings. Judge Dowses costs order was founded on this practice. It was sound in principle and should not have been reversed by the Court of Appeal. Accordingly we allow this appeal and restore Judge Dowses order, on the basis that it shall not be relied upon to deprive the grandparents of the costs to which the Court of Appeal held that they were entitled.
+The law of vicarious liability is on the move. So stated Lord Phillips of Worth Matravers in Various Claimants v Catholic Child Welfare Society [2012] UKSC 56; [2013] 2 AC 1, generally known as Christian Brothers, at para 19. The question raised by the current case, and by the parallel case of WM Morrison Supermarkets plc v Various Claimants [2020] UKSC 12, is how far that move can take it. Two elements have to be shown before one person can be made vicariously liable for the torts committed by another. The first is a relationship between the two persons which makes it proper for the law to make the one pay for the fault of the other. Historically, and leaving aside relationships such as agency and partnership, that was limited to the relationship between employer and employee, but that has now been somewhat broadened. That is the subject matter of this case. The second is the connection between that relationship and the tortfeasors wrongdoing. Historically, the tort had to be committed in the course or within the scope of the tortfeasors employment, but that too has now been somewhat broadened. That is the subject matter of the Morrisons case. The facts The issue before us is whether Barclays Bank is vicariously liable for the sexual assaults allegedly committed between 1968 and about 1984 by the late Dr Gordon Bates on some 126 claimants in this group action. Dr Bates was a medical practitioner practising in Newcastle upon Tyne. According to his sons evidence, he had a portfolio practice. Some of it was as an employee in local hospitals. Some of it was doing medical examinations for emigration purposes. Some of it was doing miscellaneous work for insurance companies, a mining company and a government board. Some of it was doing medical assessments and examinations of employees or prospective employees, originally for Martins Bank, and later for Barclays Bank following their merger in 1969. This was, however, a comparatively minor part of his practice. He also wrote a newspaper column. Applicants for jobs at Barclays who were successful at interview would be told that they would be offered a job, subject to passing a medical examination and obtaining satisfactory results in their GCE examinations. The purpose of the examination was to show that they were medically fit for working in the Bank and could be recommended for life insurance at ordinary rates as required by the Banks pension scheme. The Bank arranged the appointments with Dr Bates, told the applicants when and where to go, and provided him with a pro forma report to be filled in. This was headed Barclays Confidential Medical Report and signed by Dr Bates and the applicant. Dr Bates was paid a fee for each report. He was not paid a retainer by the Bank. If the report was satisfactory, the job offer would be confirmed, subject to examination results. At that time, the Bank was recruiting young people, many of them female. Many of the claimants were teenagers at the time, some aged 16, going for their first jobs on leaving school. The examinations took place in Dr Bates home in Newcastle. A room in the house had been converted into a consulting room. The claimants were always alone in the room when they were examined by the doctor, although some attended on their own and some were accompanied by other family members. It is alleged that Dr Bates sexually assaulted them in the course of those examinations, by inappropriate examination of their breasts and/or digital contact with or penetration of their anus or vagina. Dr Bates died in 2009 and his estate (worth over half a million pounds) has been distributed. He cannot be sued by the claimants but neither can the Bank claim contribution from him should any of these actions succeed. This litigation began in 2015 and a group litigation order was made in 2016. The managing judge, Nicola Davies J, ordered a trial of the preliminary issue of whether the Bank is vicariously liable for any assaults that Dr Bates is proved to have perpetrated in the course of medical examinations carried out at the Banks request. On 26 July 2017, Nicola Davies J held that Barclays is vicariously liable for any assaults proved: [2017] EWHC 1929 (QB); [2017] IRLR 1103. On 17 July 2018, the Court of Appeal dismissed Barclays appeal: [2018] EWCA Civ 1670; [2018] IRLR 947. The Bank now appeals to this court. The parties cases The parties respective positions can be simply put. As Lord Bridge of Harwich stated in D & F Estates Ltd v Church Comrs [1989] AC 177, 208 (echoing the words of Widgery LJ in Salsbury v Woodland [1970] 1 QB 324, 336), It is trite law that the employer of an independent contractor is, in general, not liable for the negligence or other torts committed by the contractor in the course of the execution of the work. The Bank argues that, although recent decisions have expanded the categories of relationship which can give rise to vicarious liability beyond a contract of employment, they have not so expanded it as to destroy this trite proposition of law, which has been with us since at least the decision of Baron Parke in Quarman v Burnett (1840) 6 M & W 499, 151 ER 509. The claimants, on the other hand, argue that the recent Supreme Court cases of Christian Brothers, Cox v Ministry of Justice [2016] UKSC 10; [2016] AC 660, and Armes v Nottinghamshire County Council [2017] UKSC 60; [2018] AC 355, have replaced that trite proposition with a more nuanced multi factorial approach in which a range of incidents are considered in deciding whether it is fair, just and reasonable to impose vicarious liability upon this person for the torts of another person who is not his employee. That was the approach adopted both by the trial judge and the Court of Appeal in this case. It will be apparent, therefore, that it is necessary to examine those three decisions in some detail, along with their precursor, the decision of the Court of Appeal in E v English Province of Our Lady of Charity [2012] EWCA Civ 938; [2013] QB 722, some four months before the decision in the Christian Brothers case, as well as some later cases. As it happens, I sat on all three of the Supreme Court cases and agreed with the leading judgment in each; Lord Reed sat on Cox and Armes, in each of which he delivered the leading judgment; Lord Kerr sat on Christian Brothers and Armes and agreed with the leading judgment in each. The recent decisions The recent expansion in the law of vicarious liability began with the House of Lords decision in Lister v Hesley Hall Ltd [2001] UKHL 22; [2002] 1 AC 215. The owners of a childrens home were held vicariously liable for the sexual abuse perpetrated by their employee, the warden. It was thus concerned with stage two of the enquiry the connection between the employment and the wrongdoing and not with stage one. Nevertheless, it proved influential in later cases, partly because of the willingness to expand the law, and partly because of the prominence it gave to some important decisions of the Supreme Court of Canada, which had placed emphasis on the policy considerations underlying the law. Although their lordships did not endorse all of those policy considerations, they did adopt the same test as had been adopted in Canada. Furthermore, some of those policy considerations found their way into the later cases dealing with stage one of the enquiry. In Bazley v Curry [1999] 2 SCR 534, the owners of a childrens home were held vicariously liable for sexual abuse committed by one of their employees in the home. The fundamental question was whether the wrongful act was sufficiently related to the conduct authorised by the employer to justify imposing vicarious liability. This was generally appropriate where there was a significant connection between the creation or enhancement of the risk and the wrongdoing. Vicarious liability would then serve the policy aims of providing an adequate remedy and deterring the risk. Once engaged in a business it was fair that the employer be made to pay for the generally foreseeable risks of that business. In contrast, in Jacobi v Griffiths [1999] 2 SCR 570, a childrens club was not vicariously liable for the acts of an employee which took place in the employees home outside working hours. It was not enough that his employment in the club gave him the opportunity to make friends with the children. The first English case to consider directly whether the enquiry at stage one might expand beyond the relationship of employee and employer was Es case. This built upon the earlier decision in Viasystems (Tyneside) Ltd v Thermal Transfer (Northern) Ltd [2005] EWCA Civ 1151; [2006] QB 510. Severe flood damage had been caused to a factory, where air conditioning was being installed, by the negligence of a fitters mate; the fitter and his mate had been supplied on a labour only basis by the third defendant to the second defendant to whom some of the work had been sub contracted; the Court of Appeal held both the second and third defendants jointly vicariously liable. May LJ relied on the fact that both were in a position to control the fitters mate. Rix LJ, on the other hand, said that he would hazard the view that what one is looking for is a situation where the employee in question, at any rate for relevant purposes, is so much a part of the work, business or organisation of both employers that it is just to make both employers answer for his negligence (para 79). Thus was vicarious liability extended to a person who was not in law the employer of the tortfeasor. In Es case, the claimant alleged that while living in a childrens home run by a Roman Catholic order of nuns she had been sexually abused by a priest appointed by the local diocesan bishop. The issue was whether the trust which stood in the place of the bishop could be vicariously liable for the priests wrongdoing. The priest was not an employee of the bishop or the diocese. Nevertheless, it was held that his relationship with the bishop was sufficiently akin to employment to make it fair and just to hold the bishop vicariously liable. Significantly, Ward LJ, who gave the leading judgment, did not question the traditional distinction between an employee and an independent contractor. Rather, he asked himself what was the essence of each of those roles and then asked whether the relationship between the priest and the bishop was closer to that of an employee or to that of an independent contractor. He summed up the difference thus (para 70): an employee is one who is paid a wage or salary to work under some, if only slight, control of his employer in his employers business for his employers business. The independent contractor works in and for his own business at his risk of profit or loss. By that test, the relationship between priest and bishop was sufficiently akin to employment to make it fair and just to hold the bishop liable. Next came the Christian Brothers case. This raised issues at both stage one and stage two of the enquiry but much more prominently at stage one. The claimants had been inmates at a residential school owned by the Catholic Child Welfare Society (referred to as the Middlesbrough defendants), which also employed the teachers. Some of the teachers, and the head teacher, were members of the Institute of Christian Brothers. Serious physical and sexual abuse was alleged against some of the brothers. The issue was whether the Institute could be vicariously liable, jointly with the Middlesbrough defendants. In para 35, Lord Phillips of Worth Matravers listed a number of policy reasons usually making it fair, just and reasonable to impose vicarious liability upon an employer for the torts committed by an employee in the course of his employment: the tort will have been committed as a result of activity the employees activity is likely to be part of the the employer is more likely to have the means to (i) compensate the victim than the employee and can be expected to have insured against that liability; (ii) being taken by the employee on behalf of the employer; (iii) business activity of the employer; (iv) the employer, by employing the employee to carry on the activity will have created the risk of the tort committed by the employee; (v) been under the control of the employer. the employee will, to a greater or lesser degree, have These are policy reasons, closely related to the policy reasons derived from the Canadian cases and Lister v Hesley Hall. But, as Lord Hobhouse of Woodborough stressed in that case, at para 60, an exposition of the policy reasons for a rule (or even a description) is not the same as defining the criteria for its application. Legal rules have to have a greater degree of clarity and definition than is provided by simply explaining the reasons for the existence of the rule and the social need for it, instructive though that may be. This passage was cited by Ward LJ in Es case, para 54, followed by this: My own view is that one cannot understand how the law relating to vicarious liability has developed nor how, if at all, it should develop without being aware of the various strands of policy which have informed that development. On the other hand, a coherent development of the law should proceed incrementally in a principled way, not as an expedient reaction to the problem confronting the court. There appears to have been a tendency to elide the policy reasons for the doctrine of the employers liability for the acts of his employee, set out in para 35 of Christian Brothers, with the principles which should guide the development of that liability into relationships which are not employment but which are sufficiently akin to employment to make it fair and just to impose such liability. This may have arisen because of what Lord Phillips said, at para 47: At para 35 above, I have identified those incidents of the relationship between employer and employee that make it fair, just and reasonable to impose vicarious liability on a defendant. Where the defendant and the tortfeasor are not bound by a contract of employment, but their relationship has the same incidents, that relationship can properly give rise to vicarious liability on the ground that it is akin to that between an employer and an employee. That was the approach adopted by the Court of Appeal in Es case [2013] QB 722. I do not believe that by his reference to those incidents Lord Phillips was saying that they were the only criteria by which to judge the question. This is for two reasons. First, in Es case, Ward LJ had adopted the test of akin to employment but he had not asked himself whether those five incidents were present. He had conducted a searching enquiry into whether the relationship between the priest and the bishop was more akin to employment than to anything else. Secondly, when it came to applying the akin to employment test in the Christian Brothers case, Lord Phillips did not address himself to those five incidents but to the detailed features of the relationship. Thus: 56. In the context of vicarious liability the relationship between the teaching brothers and the institute had many of the elements, and all the essential elements, of the relationship between employer and employees. (i) The institute was subdivided into a hierarchical structure and conducted its activities as if it were a corporate body. (ii) The teaching activity of the brothers was undertaken because the provincial directed the brothers to undertake it. True it is that the brothers entered into contracts of employment with the Middlesbrough defendants, but they did so because the provincial required them to do so. (iii) The teaching activity undertaken by the brothers was in furtherance of the objective, or mission, of the institute. (iv) The manner in which the brother teachers were obliged to conduct themselves as teachers was dictated by the institutes rules. 57. The relationship between the teacher brothers and the institute differed from that of the relationship between employer and employee in that: (i) The brothers were bound to the institute not by contract, but by their vows. (ii) Far from the institute paying the brothers, the brothers entered into deeds under which they were obliged to transfer all their earnings to the institute. The institute catered for their needs from these funds. 58. Neither of these differences is material. Indeed they rendered the relationship between the brothers and the institute closer than that of an employer and its employees. I have quoted these paragraphs at length to show that he was answering the questions by reference to the details of the relationship, and its closeness to employment, rather than by reference to the five policy reasons in para 35. It is significant that, shortly after the decision in Christian Brothers, this court decided the case of Woodland v Swimming Teachers Association [2013] UKSC 66; [2014] AC 537, in which it was held that a school had a non delegable duty of care towards the pupils for whom it arranged compulsory swimming lessons with an independent contractor. Lord Sumption said this, at para 3: The boundaries of vicarious liability have been expanded by recent decisions of the courts to embrace tortfeasors who are not employees of the defendant, but stand in a relationship which is sufficiently analogous to employment: Various Claimants v Catholic Child Welfare Society [2013] 2 AC 1. But it has never extended to the negligence of those who are truly independent contractors, such as Mrs Stopford appears to have been in this case. Lord Sumption not only saw the Christian Brothers case as adopting the sufficiently analogous to employment test but also as casting no doubt on the conventional distinction between employees, and those analogous to employees, and independent contractors. The next case was Cox v Ministry of Justice [2016] UKSC 10; [2016] AC 660. The issue was whether the prison service could be vicariously liable for injuries caused to a prison catering manager by the negligence of a prisoner who was working under her direction on prison service pay. There was no contract of employment between the prison and the prisoners. Nevertheless, applying the Christian Brothers case, this court held that the prison was vicariously liable. It is fair to say that Lord Reed did focus on the five policy factors identified by Lord Phillips. He pointed out that they are not all of equal significance. Factor (i), deep pockets, is not in itself a principled reason to impose liability, although the absence of any other source of compensation may sometimes be taken into account (para 20). Factor (v), control, does not have the significance which once it did. In todays world an employer is likely to be able to tell an employee what to do but not (at least always) how to do it. But the absence of even this vestigial degree of control would point against liability (para 21). That left three interrelated factors: (ii) that the tort was committed as a result of activity undertaken by the tortfeasor on behalf of the defendant; (iii) that the activity was part of the business activity of the defendant; and (iii) that by employing the tortfeasor to do it, the defendant created the risk of his committing the tort (para 22). He summed up the principle thus (para 24): The result of this approach is that a relationship other than one of employment is in principle capable of giving rise to vicarious liability where harm is wrongfully done by an individual who carries on activities as an integral part of the business activities carried on by a defendant and for its benefit (rather than his activities being entirely attributable to the conduct of a recognisably independent business of his own or of a third party), and where the commission of the wrongful act is a risk created by the defendant by assigning those activities to the individual in question. (Emphasis supplied) Lord Reed went on to refer to Lord Phillips citation of Es case and the sufficiently akin to employment test (para 26) and to his application of that test to the facts of the Christian Brothers activities (para 27). He emphasised that this new general approach was not special to cases of alleged sexual abuse (para 29). He repeated the distinction between integrated activities and activities entirely attributable to the conduct of a recognisably independent business of the tortfeasor or some other person (para 29). And he pointed out that references to business and enterprise did not mean that the employers activities had to be commercial in nature (para 30). He had no difficulty in concluding that the prison service was vicariously liable for the prisoners tort. It seems to me obvious that in Cox the result was bound to be the same whether it was expressed in terms of the test stated in para 24 of Lord Reeds judgment or in terms of the sufficiently akin to employment test. Indeed, the case for vicarious liability for torts committed by prisoners in the course of their work within the prison seems to me a fortiori the case for vicarious liability for the work done by employees for their employers. There is nothing in Lord Reeds judgment to cast doubt on the classic distinction between work done for an employer as part of the business of that employer and work done by an independent contractor as part of the business of that contractor. The last, and perhaps the most difficult, case is Armes v Nottinghamshire County Council [2017] UKSC 60; [2018] AC 855. The issue was whether the County Council could be vicariously liable for physical and sexual abuse allegedly carried out by two of the foster parents with whom the claimant was placed by the County Council while in their care. Lord Reed repeated his analysis in Cox, prefacing his account with the statement that, while the classic example of a relationship justifying the imposing of vicarious liability was employer and employee, as explained in Cox and Christian Brothers the doctrine can also apply where the relationship has certain characteristics similar to those found in employment (para 54). In applying the five incidents identified in those cases, he placed more emphasis on the lack of any other source of compensation if there were no vicarious liability and on the extent of the control exercised by the local authority over the foster parents care for the children (para 62). In applying the three inter related factors, he held that the relevant activity of the local authority was the care of children committed to the local authoritys care (para 59). The foster parents were an integral part of the local authoritys organisation of its childcare services, carried on for the benefit of the local authority (para 60). By placing the children in foster care, the local authority had created the risk of the harm being done (para 61). Significantly, having examined the relationship between the foster parents and the local authority in some detail, he concluded that the foster parents cannot be regarded as carrying on an independent business of their own (para 59). There is nothing, therefore, in the trilogy of Supreme Court cases discussed above to suggest that the classic distinction between employment and relationships akin or analogous to employment, on the one hand, and the relationship with an independent contractor, on the other hand, has been eroded. Two cases decided by common law courts since Christian Brothers and Cox have reached the same conclusion. In Kafagi v JBW Group Ltd [2018] EWCA Civ 1157, Singh LJ stated that the development from employment to something akin to employment had not undermined the conventional distinction between a contract of employment and a contract for services (para 21). The defendant company had a contract with a local authority to collect their council tax debts. It sub contracted the work to a registered bailiff, the alleged tortfeasor, who ran his own business and could pick and choose what work to do (para 50), had his own insurance (para 52) and could work for other clients (para 53). Their relationship was not akin to employment (para 56). In Ng Huat Seng v Mohammad [2017] SGCA 58, the owners of a property had engaged the tortfeasor as an independent contractor to carry out demolition works at their premises. It was argued that the recent decisions had undermined the distinction between employees and independent contractors. The Singapore Court of Appeal (their final court) held that the two cases did not present a new analytical framework. Rather (para 63): while we accept that the Christian Brothers case and Cox recognise that the doctrine of vicarious liability can be applied outside the strict confines of an employment relationship, it becomes evident, when one examines these judgments more closely, that their essential contribution was to fine tune the existing framework underlying the doctrine so as to accommodate the more diverse range of relationships which might be encountered in todays context. These relationships, when whittled down to their essence, possess the same fundamental qualities as those which inhere in employer employee relationships, and thus make it appropriate for vicarious liability to be imposed. Further (para 64): Indeed, we do not see how vicarious liability, the normative foundation of which rests on the theory that it is fair, just and reasonable to hold a defendant liable for the acts of the tortfeasor on the ground that the tortfeasor is in fact engaged in the defendants enterprise, could possibly be extended to tortious acts committed by an independent contractor, who, by definition, is engaged in his own enterprise. There is simply nothing fair, just and reasonable about imposing secondary liability on a defendant in such a situation. The question therefore is, as it has always been, whether the tortfeasor is carrying on business on his own account or whether he is in a relationship akin to employment with the defendant. In doubtful cases, the five incidents identified by Lord Phillips may be helpful in identifying a relationship which is sufficiently analogous to employment to make it fair, just and reasonable to impose vicarious liability. Although they were enunciated in the context of non commercial enterprises, they may be relevant in deciding whether workers who may be technically self employed or agency workers are effectively part and parcel of the employers business. But the key, as it was in Christian Brothers, Cox and Armes, will usually lie in understanding the details of the relationship. Where it is clear that the tortfeasor is carrying on his own independent business it is not necessary to consider the five incidents. Application in this case Clearly, although Dr Bates was a part time employee of the health service, he was not at any time an employee of the Bank. Nor, viewed objectively, was he anything close to an employee. He did, of course, do work for the Bank. The Bank made the arrangements for the examinations and sent him the forms to fill in. It therefore chose the questions to which it wanted answers. But the same would be true of many other people who did work for the Bank but were clearly independent contractors, ranging from the company hired to clean its windows to the auditors hired to audit its books. Dr Bates was not paid a retainer which might have obliged him to accept a certain number of referrals from the Bank. He was paid a fee for each report. He was free to refuse an offered examination should he wish to do so. He no doubt carried his own medical liability insurance, although this may not have covered him from liability for deliberate wrongdoing. He was in business on his own account as a medical practitioner with a portfolio of patients and clients. One of those clients was the Bank. Comment Until these recent developments, it was largely assumed that a person would be an employee for all purposes employment law, tax, social security and vicarious liability. Recent developments have broken that link, which may be of benefit to people harmed by the torts of those working in the gig economy. It would be tempting to align the law of vicarious liability with employment law in a different way. Employment law now recognises two different types of worker: (a) those who work under a contract of employment and (b) those who work under a contract whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual (Employment Rights Act 1996, section 230(3)). Limb (b) workers enjoy some but by no means all the employment rights enjoyed by limb (a) workers. It would be tempting to say that limb (b) encapsulates the distinction between people whose relationship is akin to employment and true independent contractors: people such as the solicitor in Bates van Winkelhof v Clyde and Co LLP [2014] UKSC 32; [2014] 1 WLR 2047, or the plumber in Pimlico Plumbers Ltd v Smith [2018] UKSC 29; [2018] ICR 1511. Asking that question may be helpful in identifying true independent contractors. But it would be going too far down the road to tidiness for this court to align the common law concept of vicarious liability, developed for one set of reasons, with the statutory concept of worker, developed for a quite different set of reasons. Conclusion I would allow this appeal and hold that the Bank is not vicariously liable for any wrongdoing of Dr Bates in the course of the medical examinations he carried out for the Bank.
+This appeal arises from a sorry case of a serious failure by an air tour operator to see that proper provision was made for the needs of a disabled passenger, contrary to the requirements of the Civil Aviation (Access to Air Travel for Disabled Persons and Persons with Reduced Mobility) Regulations 2007 (SI 2007/1895) (the UK Disability Regulations). The UK Disability Regulations implement Regulation (EC) No 1107/2006 of the European Parliament and the Council concerning the rights of disabled persons and persons with reduced mobility when travelling by air (the EC Disability Regulation). The issue is whether a court may award damages for a claimants discomfort and injury to feelings caused by a breach of the UK Disability Regulations. The conclusion of the courts below was that any such award is precluded by the Montreal Convention, as adopted in the EU by the Montreal Regulation (or, to use its full title, Council Regulation (EC) No 2027/97 on air carrier liability in the event of accidents, as amended by Parliament and Council Regulation (EC) No 889/2002). The appeal has been brought with the backing of the Equality and Human Rights Commission and it has the additional support of the Secretary of State for Transport as an intervener. The parties Mr Christopher Stott is paralysed from the shoulders down and is a permanent wheel chair user. He has double incontinence and uses a catheter. When travelling by air, he depends on his wife to manage his incontinence since he cannot move round the aircraft. He also relies on her to help him to eat and to change his sitting position. Thomas Cook Tour Operators Ltd is a well known tour operator which provides overseas package holidays and flights to many destinations. It is an air carrier with an operating licence granted by a Member State of the EU and therefore subject to the obligations imposed on Community air carriers by the EC Disability Regulation. The facts I take the following summary of the facts from the judgment of the trial judge, Recorder Atherton, delivered on 19 January 2011 in the Manchester County Court: 4. On 12 September 2008 Mr Stott booked with the defendant to fly from East Midlands Airport to Zante, departing 22 September and returning 29 September 2008. Soon after making the booking on the internet he telephoned the defendant's helpline to advise that he had booked and paid to be seated next to his wife on both flights. He called the helpline again on 19 September and was assured that he and his wife would be seated together. 5. The outward flight went reasonably according to plan but sadly the return journey did not. Mr and Mrs Stott encountered many difficulties at the airport in Zante. At check in they were told they would not be seated together. In response to their protestations the supervisor eventually told them that their problem would be sorted out at the departure gate. When they arrived at the departure gate their expectations were unfulfilled. They were told that other passengers had already boarded and the seat allocations could not be changed. 6. When boarding the aircraft from an ambulift, matters got much worse. As he entered the aircraft, Mr Stott's wheelchair overturned and he fell to the cabin floor. Those present appeared not to know how to deal with the situation. Mr Stott felt extremely embarrassed, humiliated and angry and his wife, who had recently suffered serious ill health herself, was also very distressed at the chaotic scenes. 7. Eventually Mr Stott was assisted into his aisle seat in the front row and his wife was seated behind him. This arrangement caused them considerable difficulties in that it was difficult for Mrs Stott to assist her husband with his catheterisation, catheter bags, food and movement during the three hour twenty minute flight. The defendant's cabin crew apparently made no attempt to ease their difficulties. They made no requests of other passengers to enable Mr and Mrs Stott to sit together. From time to time during the flight she had to kneel or crouch in the aisle to attend to her husband's personal needs and inevitably she obstructed the cabin crew and other passengers as they made their way up and down the aisle. It was, therefore, a very unhappy experience for them. The claim 8. Mr Stott brought a claim under the UK Disability Regulations for a declaration that the respondents treatment of him was in breach of its duty under the EC Disability Regulation, in that it had failed to make all reasonable efforts to give his wife a seat next to him, together with damages including aggravated damages. The recorder made such a declaration, and there has been no appeal against it. He found that Mr Stott had suffered injury to his feelings, for which he said that he would have awarded 2,500 as compensation (taking into account the duration of the flight), if it had been open to him to do so. However, he concluded that he had no power to make such an award, by reason of the Montreal Convention. The Court of Appeal upheld the recorders decision in a judgment delivered by Maurice Kay LJ, with which Sullivan LJ and Dame Janet Smith agreed ([2012] EWCA Civ 66). Both courts expressed their sympathy for Mr Stott but they considered that the law was clear. UK Disability Regulations The UK Disability Regulations were made by the Secretary of State for Transport under section 2(2) of the European Communities Act 1972. As the explanatory note states, they provide for the enforcement of the rights set out in the EC Disability Regulation. The UK Disability Regulations are short. Regulation 3 makes it an offence for an air carrier, an agent of an air carrier or a tour operator to contravene an obligation imposed by any of a number of articles of the EC Disability Regulation, and regulation 4 provides penalties for such offences. In the present case the respondent has not been prosecuted, but on the recorders finding it was guilty of an offence carrying a potential fine not exceeding level 5 on the standard scale. The maximum level 5 fine on summary conviction is currently 5,000: Criminal Justice Act 1982, as amended, section 37. There will be no maximum limit when the Legal Aid, Sentencing and Punishment of Offenders Act 2012, section 85, comes into effect. Regulation 9 is headed Compensation claims by disabled persons etc. It provides: (1) A claim by a disabled person or a person with reduced mobility for an infringement of any of his rights under the EC Regulation may be made the subject of civil proceedings in the same way as any other claim in tort or (in Scotland) in reparation for breach of statutory duty. (2) For the avoidance of doubt, any damages awarded in respect of any infringement of the EC Regulation may include compensation for injury to feelings whether or not they include compensation under any other head. (3) Proceedings in England, Wales or Northern Ireland may be brought only in a county court. (4) Proceedings in Scotland may be brought only in a sheriff court. (5) The remedies available in such proceedings are those which are available in the High Court or (as the case may be) the Court of Session. EC Disability Regulation The general purpose of the EC Disability Regulation is apparent from the following paragraphs of the preamble: (1) The single market for air services should benefit citizens in general. Consequently, disabled persons and persons with reduced mobility, whether caused by disability, age or any other factor, should have opportunities for air travel comparable to those of other citizens. Disabled persons and persons with reduced mobility have the same right as all other citizens to free movement, freedom of choice and non discrimination. This applies to air travel as to other areas of life. (4) In order to give disabled persons and persons with reduced mobility opportunities for air travel comparable to those of other citizens, assistance to meet their particular needs should be provided at the airport as well as on board aircraft, by employing the necessary staff and equipment. In the interests of social inclusion, the persons concerned should receive this assistance without additional charge. (15) Member States should supervise and ensure compliance with this Regulation and designate an appropriate body to carry out enforcement tasks. This supervision does not affect the rights of disabled persons and persons with reduced mobility to seek legal redress from courts under national law. (18) Member States should lay down penalties applicable to infringements of this Regulation and ensure that those penalties are applied. The penalties, which could include ordering the payment of compensation to the person concerned, should be effective, proportionate and dissuasive. Article 1 provides: 1. This Regulation establishes rules for the protection of and provision of assistance to disabled persons and persons with reduced mobility travelling by air, both to protect them against discrimination and to ensure that they receive assistance. 2. The provisions of this Regulation shall apply to disabled persons and persons with reduced mobility, using or intending to use commercial passenger air services on departure from, on transit through, or on arrival at an airport, when the airport is situated in the territory of a Member State to which the Treaty applies. Article 7 provides: 1. When a disabled person or person with reduced mobility arrives at an airport for travel by air, the managing body of the airport shall be responsible for ensuring the provision of the assistance specified in Annex I in such a way that the person is able to take the flight for which he or she holds a reservation, provided that the notification of the person's particular needs for such assistance has been made to the air carrier or its agent or the tour operator concerned at least 48 hours before the published time of departure of the flight. This notification shall also cover a return flight, if the outward flight and the return flight have been contracted with the same air carrier. 2. Where use of a recognised assistance dog is required, this shall be accommodated provided that notification of the same is made to the air carrier or its agent or the tour operator in accordance with applicable national rules covering the carriage of assistance dogs on board aircraft, where such rules exist. 3. If no notification is made in accordance with paragraph 1, the managing body shall make all reasonable efforts to provide the assistance specified in Annex I in such a way that the person concerned is able to take the flight for which he or she holds a reservation. 4. The provisions of paragraph 1 shall apply on condition that: (a) the person presents himself or herself for check in: (i) at the time stipulated in advance and in writing (including by electronic means) by the air carrier or its agent or the tour operator, or (ii) if no time is stipulated, not later than one hour before the published departure time, or (b) the person arrives at a point within the airport boundary designated in accordance with article 5: (i) at the time stipulated in advance and in writing (including by electronic means) by the air carrier or its agent or the tour operator, or (ii) if no time is stipulated, not later than two hours before the published departure time. Article 10 provides: An air carrier shall provide the assistance specified in Annex II without additional charge to a disabled person or person with reduced mobility departing from, arriving at or transiting through an airport to which this Regulation applies provided that the person in question fulfils the conditions set out in article 7(1), (2) and (4). The assistance specified in Annex II includes: Where a disabled person or person with reduced mobility is assisted by an accompanying person, the air carrier will make all reasonable efforts to give such person a seat next to the disabled person or person with reduced mobility. This was the obligation which the respondent breached. Article 12 provides: Where wheelchairs or other mobility equipment or assistive devices are lost or damaged whilst being handled at the airport or transported on board aircraft, the passenger to whom the equipment belongs shall be compensated, in accordance with rules of international, Community and national law. Although article 12 is not applicable in the present case, since Mr Stotts wheelchair was not damaged, it has a broader relevance inasmuch as the reference to compensation in accordance with rules of international law clearly embraces the Montreal Convention. Articles 14 to 16 provide for three methods of enforcement. Article 14 provides for each Member State to designate an enforcement body or bodies. In the UK the designated body is the Civil Aviation Authority. Article 15 provides for the establishment of complaints procedures. Article 16 provides: The Member States shall lay down rules on penalties applicable to infringements of this Regulation and shall take all the measures necessary to ensure that those rules are implemented. The penalties provided for must be effective, proportionate and dissuasive. The Member States shall notify those provisions to the Commission and shall notify it without delay of any subsequent amendment affecting them. Montreal Convention The full title of the Montreal Convention is the Convention for the Unification of Certain Rules for International Carriage by Air. It was agreed at Montreal on 28 May 1999. The EU is a signatory. The predecessor of the Montreal Convention was signed at Warsaw on 12 October 1929 (the Warsaw Convention). It was amended in 1955 at the Hague, but the amended Convention continued to be known by its original name. The Montreal Convention replaced the Warsaw Convention but followed its general structure. Its purpose according to the preamble was to modernize and consolidate the Warsaw Convention and related instruments. There is no material difference in their scope of application, as defined in each case in article 1. Each begins by stating that the Convention applies to all international carriage of persons, baggage or cargo performed by aircraft for reward. Chapter III of the Warsaw Convention was headed Liability of the carrier. The heading of the same chapter in the Montreal Convention has the additional words and extent of compensation for damage. In chapter III of the Warsaw Convention, article 17 dealt with liability for death or injury to passengers as a result of an accident sustained on board the aircraft or in the course of embarkation or disembarkation, and article 18 dealt with liability for damage to or loss of any registered luggage or goods. In chapter III of the Montreal Convention liability for death or bodily injury is dealt with in article 17.1 in materially identical terms to article 17 of the Warsaw Convention. Loss of or damage to a passengers baggage is dealt with in article 17.2 to 17.4, and loss of or damage to cargo are dealt with in article 18, but the differences are matters of detail. There are also broadly parallel provisions for liability for damage occasioned by delay in the carriage of passengers, baggage or cargo. Two features of the Conventions are of critical relevance. First, there are limits to the type of injury or damage which is compensable and the amount of compensation recoverable. Bodily injury (or lsion corporelle) has been held not to include mental injury, such as post traumatic stress disorder or depression (Morris v KLM Royal Dutch Airlines [2002] UKHL 7; [2002] 2 AC 628). The same would apply to injury to feelings. Secondly, there is an exclusivity provision. The exclusivity provision in the Warsaw Convention was contained in article 24: 1. In the cases covered by articles 18 and 19 any action for damages, however founded, can only be brought subject to the conditions and limits set out in this Convention. 2. In the cases covered by article 17 the provisions of the preceding paragraph also apply, without prejudice to the questions as to who are the persons who have the right to bring suit and what are their respective rights. The effect of this provision was considered by the House of Lords in Sidhu v British Airways plc [1997] AC 430, to which I will refer in more detail. 29: In the Montreal Convention the exclusivity provision is contained in article In the carriage of passengers, baggage and cargo, any action for damages, however founded, whether under this Convention or in contract or in tort or otherwise, can only be brought subject to the conditions and such limits of liability as are set out in this Convention without prejudice to the question as to who are the persons who have the right to bring suit and what are their respective rights. In any such action, punitive, exemplary or any other non compensatory damages shall not be recoverable. The effect is the same as that of article 24 of the Warsaw Convention, except for the addition of the sentence specifically excluding punitive, exemplary or other non compensatory damages. Article 29 is the rock on which Mr Stotts claim for damages foundered. Montreal Regulation The Montreal Convention has effect in the UK by different routes depending on whether the carrier is a Community air carrier. Generally the Montreal Convention has force in the UK by virtue of section 1 of the Carriage by Air Act 1961 as amended, but not in relation to Community air carriers to the extent that the Montreal Regulation has force in the UK: section 1(2) of the 1961 Act. The Montreal Regulation has direct effect in the UK by virtue of section 2 of the European Communities Act 1972. The Montreal Regulation followed the conclusion of the Montreal Convention. Its purpose, as stated in an explanatory memorandum issued by the Commission, was to ensure full alignment between the Montreal Convention and community law. To that end, article 3.1 states: The liability of a Community air carrier in respect of passengers and their baggage shall be governed by all provisions of the Montreal Convention relevant to such liability. The Montreal Convention therefore has effect in the UK in relation to Community air carriers through that article. The exclusivity principle In Sidhu the House of Lords considered the question whether a passenger who sustained damage in the course of international carriage by air due to the fault of the carrier, but had no claim against the carrier under article 17 of the Warsaw Convention, was left without a remedy. It concluded that this was so. Lord Hope gave the only speech. He analysed the history, structure and text of the Convention, and he reviewed the domestic and international case law. He explained that the Convention was a package. It gave to passengers significant rights, easily enforceable, but it imposed limitations. He held that the whole purpose of article 17, read in its context, was to prescribe the circumstances that is to say, the only circumstances in which a carrier would be liable to the passenger for claims arising out of his international carriage by air. To permit exceptions, whereby the passenger could sue outside the Convention for losses sustained in the course of international carriage by air, would distort the whole system, even in cases for which the Convention did not create any liability on the part of the carrier. This interpretation has been accepted and applied in many other jurisdictions. In the USA the leading authority is the decision of the Supreme Court in El Al Israel Airlines Ltd v Tseng 525 US 155 (1999). The plaintiff was subjected to an intrusive security search at John F Kennedy International Airport in New York before she boarded a flight to Tel Aviv. She sued the airline under New York tort law for damages for psychosomatic injury. The Supreme Court had previously held in Eastern Airlines Inc v Floyd 499 US 530 (1991) that mental or psychic injuries unaccompanied by physical injuries were not compensable under article 17, but the plaintiff argued that her claim in respect of the treatment which she suffered before embarkation was not within the reach of the preemptive effect of the Convention. The Court of Appeals for the Second Circuit accepted that argument. In its judgment it expressed the fear that if the Convention had the preclusive effect for which the airline contended, it would follow, for example, that a passenger injured by a malfunctioning escalator in the airlines terminal would have no remedy against the airline even if it had recklessly disregarded its duty to maintain the escalator in proper repair. The Supreme Court reversed the decision of the Court of Appeals in an opinion delivered by Justice Ginsburg (Justice Stevens dissenting). Applying the principle that an international treaty must be interpreted not as if it were a domestic instrument, but so as to accord with the courts understanding of the shared expectations of the contracting parties, Justice Ginsburg referred to the French text of article 24 of the Warsaw Convention (the earlier equivalent of article 29 of the Montreal Convention): (1) Dans les cas prevus aux articles 18 et 19 toute action en responsabilite, a quelque titre que ce soit, ne peut etre exercee que dans les conditions et limites prevues par la presente Convention. (2) Dans les cas prevus a l'article 17, s'appliquent egalement les dispositions de l'alinea precedent, sans prejudice de la determination des personnes qui ont le droit d'agir et de leurs droits respectifs. Tseng argued that les cas prevus a larticle 17 meant those cases in which a passenger could actually maintain a case for relief under article 17. El Al argued, with the support of the US government as amicus curiae, that the expression referred generically to all personal injury cases stemming from occurrences on board an aircraft or in embarking or disembarking. So read, article 24 would preclude a passenger from asserting any air transit personal injury claims under local law, including claims that failed to satisfy article 17s liability conditions (perhaps because the injury did not result from an accident or because the accident did not result in physical injury or manifestation of injury). The court judged that the governments interpretation of article 24 was more faithful to the Conventions text, purpose and overall structure. Its reasoning process accorded with that of the House of Lords in Sidhu, to which Justice Ginsburg referred, at pp 175 176: Decisions of the courts of other Convention signatories corroborate our understanding of the Convention's preemptive effect. In Sidhu, the British House of Lords considered and decided the very question we now face concerning the Convention's exclusivity when a passenger alleges psychological damages, but no physical injury, resulting from an occurrence that is not an accident under Article 17. See [[1997] AC 430, 441, 447]. Reviewing the text, structure, and drafting history of the Convention, the Lords concluded that the Convention was designed to ensure that, in all questions relating to the carrier's liability, it is the provisions of the Convention which apply and that the passenger does not have access to any other remedies, whether under the common law or otherwise, which may be available within the particular country where he chooses to raise his action. Ibid. Courts of other nations bound by the Convention have also recognized the treaty's encompassing preemptive effect. The opinions of our sister signatories, we have observed, are entitled to considerable weight. [Air France v] Saks, 470 US at 404 (internal quotation marks omitted). The text, drafting history, and underlying purpose of the Convention, in sum, counsel us to adhere to a view of the treaty's exclusivity shared by our treaty partners. The court put to rest the Court of Appeals fear that such a conclusion would mean that a passenger who had an accident in the terminal building through the negligence of the person responsible for its maintenance might be left without a remedy. Justice Ginsburg observed that the Conventions preemptive effect on local law extended no further than the Conventions own substantive scope, and that a carrier would be indisputably subject to liability under local law for injuries arising outside that scope, for example, for passenger injuries occurring before the operation of embarking. In King v American Airlines Inc 284 F 3d 352 (2002) the Court of Appeals for the Second Circuit considered the question whether discrimination claims could properly be regarded as generically outside the Conventions substantive scope, so that a claim for compensation under local law would not be affected by the Convention. The assumed facts were that the plaintiffs were bumped from an overbooked flight because of their race. Upholding an order for the dismissal of the claim, the court held that discrimination claims under local law which arose in the course of embarking on an aircraft were preempted by the Convention. The argument advanced unsuccessfully by the plaintiffs was that discrimination claims fell outside the scope of the Convention because of their qualitative nature. Sotomayor CJ (now Justice Sotomayor of the US Supreme Court), delivering the opinion of the court, emphasised that the preemptive scope of the Convention depends not on the qualitative nature of the act or omission giving rise to the claim but on when and where the salient event took place: Article 17 directs us to consider when and where an event takes place in evaluating whether a claim for an injury to a passenger is preempted. Expanding upon the hypothetical posed by the Tseng Court, a passenger injured on an escalator at the entrance to the airport terminal would fall outside the scope of the Convention, while a passenger who suffers identical injuries on an escalator while embarking or disembarking a plane would be subject to the Convention's limitations. Tseng, 525 US at 171. It is evident that these injuries are not qualitatively different simply because they have been suffered while embarking an aircraft, and yet article 17 plainly distinguishes between these two situations.' [Original emphasis] The aim of the Warsaw Convention is to provide a single rule of carrier liability for all injuries suffered in the course of the international carriage of passengers and baggage. As Tseng makes clear, the scope of the Convention is not dependent on the legal theory pled nor on the nature of the harm suffered. See Tseng, 525 US at 171 (rejecting a construction of the Convention that would look to the type of harm suffered, because it would encourage artful pleading by plaintiffs seeking to opt out of the Convention's liability scheme when local law promised recovery in excess of that prescribed by the treaty); Cruz v Am Airlines, 338 US App DC 246, 193 F3d 526, 531 (DC Cir 1999) (determining that fraud claim was preempted by Article 18, because the events that gave rise to the action were so closely related to the loss of [plaintiffs'] luggage . as to be, in a sense, indistinguishable from it). The judge noted that in a number of cases US District Courts had addressed the issue whether discrimination claims were preempted by the Convention and had all reached a similar view. She concluded her judgment with some broader observations which have a resonance in the present case: Plaintiffs raise the specter that our decision will open the doors to blatant discrimination aboard international flights, invoking images of airline passengers segregated according to race and without legal recourse. They suggest that, despite Article 24's plain mandate that the Warsaw Convention preempts any cause of action, however founded, we should nonetheless carve out an exception for civil rights actions as a matter of policy. This we decline to do. It is our responsibility to give the specific words of the treaty a meaning consistent with the shared expectations of the contracting parties. Saks, 470 US at 399. It is not for the courts to rewrite the terms of a treaty between sovereign nations. Cf Turturro, 128 F Supp 2d at 181 (The Convention massively curtails damage awards for victims of horrible acts [of] terrorism; the fact that the Convention also abridges recovery for . discrimination should not surprise anyone.). Moreover, while private suits are an important vehicle for enforcing the anti discrimination laws, they are hardly the only means of preventing discrimination on board aircraft. Federal law provides other remedies. Responsibility for oversight of the airline industry has been entrusted to the Secretary of Transportation. The Kings could, therefore, have filed a complaint with the Secretary. 49 USC 46101. The FAA prohibits air carriers, including foreign air carriers, from subjecting a person to unreasonable discrimination. Id 41310(a). The Secretary has the authority to address violations of FAA provisions, including the power to file civil actions to enforce federal law. Id 46106. It does not follow from the preemption of the Kings' private cause of action that air carriers will have free rein to discriminate against passengers during the course of an international flight. Sidhu and Tseng have been followed by the Federal Court of Australia in South Pacific Air Motive Pty Ltd v Magnus 157 ALR 443 (1998), the Court of Appeal of Hong Kong in Ong v Malaysian Airline System Berhad [2008] HKCA 88, the Federal Court of Appeal of Canada in Air Canada v Thibodeau [2012] FCA 246 and the High Court of Ireland in Hennessey v Aer Lingus Ltd [2012] IEHC 124. Sidhu was similarly followed by the Court of Appeal of New Zealand in Emery Air Freight Corpn v Nerine Nurseries Ltd [1997] 3 NZLR 723. The same principle has been recognised by the Supreme Court of Germany (Bundesgerichtshof), 15 March 2011, Urteil Az X ZR 99/10. The arguments Mr Robin Allen QC submitted that since the Montreal Convention has effect within the EU via the Montreal Regulation, it is a question of European law whether the courts below were right to hold that Mr Stotts claim for damages for breach of the UK Disability Regulations was incompatible with the Convention. He submitted that Mr Stotts claim is unaffected by the Montreal Regulation because its subject matter was outside both the substantive scope and the temporal scope of the Regulation. The argument on the first point was summarised succinctly in the appellants written case as follows: Applying the Vienna Convention, the [Montreal Convention] is not in any sense concerned with giving access to air travel to disabled persons. Rights conferred in order to ensure equal access to air travel for disabled people (and remedies granted for breach of those rights) are simply not to use Lord Hopes language in Sidhu areas with which [the Convention] deals. For this reason, it is submitted that it would be a mistake to use the MC to limit the rights and obligations that Union legislation imposes in relation to such access. The argument on the second point was based on the recorders finding that the airlines failure to make all reasonable efforts to seat Mr Stott next to his wife began prior to embarkation. In support of his argument Mr Allen relied on a number of European authorities. He accepted that none of them was conclusive in relation to the present case, but he submitted that the court ought to refer the following questions to the Court of Justice of the European Union (CJEU): (a) Whether the right to compensation for breach of duties to take reasonable steps to assist disabled persons in the context of air travel (which the Union legislator specifically contemplated in the EC Disability Regulation), like the rights to compensation conferred by Regulation 261/2004, should be regarded as falling within a different regulatory framework from, or as complementary to, the MC (rather than in conflict with it); (b) Whether compensation awarded in respect of breaches of the duties imposed by the EC Disability Regulation both on board the aircraft and earlier, like compensation for delay awarded under Regulation 261/2004, simply operates at an earlier stage than the system which results from the Montreal Convention; (c) Whether a member state which confers a right to compensation under its domestic law for failures by the providers of goods and services to take reasonable steps to accommodate the needs of disabled persons is obliged by the principles of equivalence and/or effectiveness, when implementing the EC Disability Regulation, to provide a similarly favourable remedy for similar failures in the context of air travel amounting to breaches of that Regulation; (d) How that obligation to provide an effective remedy for breaches of the EC Disability Regulation is to be reconciled with the exclusivity principle contained in the MC in circumstances where:(a) the remedy is provided to give effect to the right to equal access to air travel, which is itself derived from the fundamental anti discrimination rights conferred by the Charter and (b) the MC was never intended to, and does not, deal with the question of access to air travel. Mr Allen submitted that these questions are important and unresolved. The answers to them are not so obvious as to leave no scope for any reasonable doubt. Article 267 therefore requires a reference from this court, as the UKs final court of appeal, to the CJEU. Mr Daniel Beard QC, on behalf of the Secretary of State, concentrated on the temporal argument. He submitted that on the recorders findings of fact, liability for breach of the UK Disability Regulations arose prior to embarkation, and therefore it was plain that Mr Stotts claim was not preempted by the Montreal Convention. In his submission, there was no need for a reference to the CJEU and the appeal should be allowed. Mr John Kimbell, on behalf of the respondent, pointed out that the particulars of injury to feelings pleaded in Mr Stotts particulars of claim related to his treatment during the process of embarkation and during the flight, which made him feel humiliated and for which he claimed damages. It was for such injury to his feelings, occasioned during the embarkation and flight, that the recorder assessed the appropriate monetary compensation, subject to the question whether it was permissible. Mr Kimbell submitted that this was the gravamen of the claim, and that it fell within the temporal scope of the Montreal Convention. The claim for damages for such injury to feelings under the UK Disability Regulations was therefore preempted by article 29 of the Montreal Convention, as that article (or rather its predecessor) had been interpreted in Sidhu. He observed that the court was not being asked to reconsider the correctness of the decision in Sidhu, which has moreover received uniform international support. He submitted that the legal basis of Mr Stotts claim for damages under domestic law was irrelevant (as properly recognised, for example, in King v American Airlines). All that mattered was that it was a claim for damages referable to the treatment of Mr Stott in the course of his international carriage by air. Accordingly, he submitted that on the established authorities the decision of the Court of Appeal upholding the recorder was plainly right, and there was no cause for a reference to the CJEU. European case law Mr Allen relied on a line of cases in which the CJEU has considered the compatibility of the Montreal Regulation with the provisions of another EU Regulation, No 261/2004, requiring compensation and assistance to passengers in the event of denial of boarding, cancellation or long delays of flights. Article 5 concerns cancellation. Article 6 concerns delay. Each requires the passengers to be offered various forms of assistance, such as hotel accommodation where necessary, and to be paid compensation in accordance with article 7. The compensation payable under article 7 is at a standard rate (which varies according to the length of the flight), regardless of the personal circumstances of the passengers and the amount of any actual loss suffered by them individually. The most recent decision is that of the Grand Chamber in Nelson v Deutsche Lufthansa AG (Joined Cases C 581/10 and C 629/10), [2013] 1 CMLR 1191. Reiterating the courts reasoning in earlier cases beginning with R (IATA and ELFAA) v Department of Transport (Case C 344/04)[2006] ECR I 403, the court held that the scheme established by Regulation 261/2004 for standardised redress was a form of protection supplementary to, and not incompatible with, the Montreal Convention because it did not affect the right of a passenger to bring a claim for compensation for individual damage suffered by him or the limitations imposed by the Convention on the right to redress on an individual basis. Analysis It is convenient to begin by clearing the ground. There is no dispute about the meaning of the EC Disability Regulation or its compatibility with the Montreal Convention, to which the EU is a party and which is incorporated into the Montreal Regulation. The EC Disability Regulation imposes obligations on air carriers and others who operate in the air services market to provide equal access to such services for disabled persons and others with reduced mobility for any reason. It leaves enforcement to the Member States. It requires Member States to lay down rules on penalties for infringement but it does not require such penalties to include financial compensation. There is similarly no dispute about the meaning of the UK Disability Regulations or their compatibility with the Montreal Convention. If the airline is right in its contention that Mr Stotts claim for damages is precluded by article 29 of the Montreal Convention, it follows that the wording of regulation 9(2) is misleading, because it states (supposedly for the avoidance of doubt) that any damages awarded in respect of any infringement of the EC Regulation may include compensation for injury to feelings. It has rightly not been argued that regulation 9(2) should be read as purporting to create a power to award such damages, if it would be inconsistent with article 29, for that would be ultra vires. The effect of regulation 9 is to make it clear that the Regulations are capable of giving rise to an action for breach of statutory duty, for which damages are unrestricted by the Regulation, but it does not (and could not) remove any limitation resulting from the Montreal Convention. The European case law does not assist Mr Stott. The question in the cases about Regulation (EC) 261/2004 was whether the scheme of standardised remedial measures was compatible with the Montreal Convention. The court recognised that any claim for damages on an individual basis would be subject to the limits of the Convention (IATA para 42). Mr Stotts claim is for damages on an individual basis. To summarise, this case is not about the interpretation or application of a European regulation, and it does not in truth involve a question of European law, notwithstanding that the Montreal Convention has effect through the Montreal Regulation. The question at issue is whether the claim is outside the substantive scope and/or temporal scope of the Montreal Convention, and that depends entirely on the proper interpretation of the scope of that Convention. The governing principles are those of the Vienna Convention on the Law of Treaties. If the issue concerned the compatibility of the Regulation with the Convention (as in Nelson) it would indeed involve a question of European law, but no such question arises and there is no basis for supposing that the Montreal Convention should be given a different European meaning from its meaning as an international convention. On the contrary, it was the acknowledged purpose of the Regulation to ensure full alignment between the Convention as an international instrument and community law. The temporal question can be answered by reference to the facts pleaded and found. The claim was for damages for the humiliation and distress which Mr Stott suffered in the course of embarkation and flight, as pleaded in his particulars of claim and set out in paras 6 to 8 of the recorders judgment. The particulars of injury to Mr Stotts feelings and the particulars of aggravated damages related exclusively to events on the aircraft. In the course of argument it was suggested that Mr Stott had a complete cause of action before boarding the aircraft based on his poor treatment prior to that stage. If so, it would of course follow that such a pre existing claim would not be barred by the Montreal Convention, but that was not the claim advanced. Mr Stotts subjection to humiliating and disgraceful maltreatment which formed the gravamen of his claim was squarely within the temporal scope of the Montreal Convention. It is no answer to the application of the Convention that the operative causes began prior to embarkation. To hold otherwise would encourage deft pleading in order to circumvent the purpose of the Convention. Many if not most accidents or mishaps on an aircraft are capable of being traced back to earlier operative causes and it would distort the broad purpose of the Convention explained by Lord Hope in Sidhu to hold that it does not apply to an accident or occurrence in the course of international carriage by air if its cause can be traced back to an antecedent fault. Should a claim for damages for ill treatment in breach of equality laws as a general class, or, more specifically, should a claim for damages for failure to provide properly for the needs of a disabled passenger, be regarded as outside the substantive scope of the Convention? As to the general question, my answer is no for the reasons given by Sotomayor CJ in King v American Airlines. I agree with her analysis that what matters is not the quality of the cause of action but the time and place of the accident or mishap. The Convention is intended to deal comprehensively with the carriers liability for whatever may physically happen to passengers between embarkation and disembarkation. The answer to that general question also covers the more specific question. Mr Allen submitted that the consequences were unfair, because if Mr Stott and his wife had not been misled at the check in desk into believing that their seating problem would be sorted out at the departure gate, they would never have proceeded and they would have been able to recover damages for their loss. The complaint is just, but that is not a sufficient reason to reinterpret the Convention. The underlying problem is that the Warsaw Convention long pre dated equality laws which are common today. There is much to be said for the argument that it is time for the Montreal Convention to be amended to take account of the development of equality rights, whether in relation to race (as in King v American Airlines) or in relation to access for the disabled, but any amendment would be a matter for the contracting parties. It seems unfair that a person who suffers ill treatment of the kind suffered by Mr Stott should be denied any compensation. Under the law as it stands, a declaration that the carrier was in breach of the UK Regulations is likely to be small comfort to a passenger who has had Mr Stotts experience, but I draw attention, as did Sotomayor CJ at the end of her opinion in King v American Airlines, to the fact that there are other possible means of enforcement. It is for the Civil Aviation Authority to decide what other methods of enforcement should be used, including possible criminal proceedings. Conclusion The embarrassment and humiliation which Mr Stott suffered were exactly what the EC and UK Disability Regulations were intended to prevent. I share the regret of the lower courts that damages are not available as recompense for his ill treatment and echo their sympathy for him, but I agree with the reasoning of their judgments and would dismiss this appeal. I would not make a reference to the CJEU for two reasons. As I have explained, I do not consider that the questions of interpretation of the Montreal Convention on which the appeal turns are properly to be regarded as questions of European law merely because the Convention takes effect via the Montreal Regulation. Secondly and in any event, I consider the answer to be plain. LADY HALE Mr and Mrs Stott have both been treated disgracefully by Thomas Cook and it is hardly less disgraceful that, for the reasons given by Lord Toulson, the law gives them no redress against the airline. The apparently adamant exclusion, in article 29 of the Montreal Convention, of any liability for damages other than that specifically provided for in the Convention, while perhaps unsurprising in a trade treaty, is more surprising when the fundamental rights of individuals are involved. Some treaties make express exception for anything which conflicts with the fundamental rights protected within a member state, but the Montreal Convention does not. Whatever may be the case for private carriers, can it really be the case that a State airline is absolved from any liability in damages for violating the fundamental human rights of the passengers it carries? The most obvious example is an airline which requires black or female passengers to sit at the back of the plane while white or male passengers sit at the front (and thus nearer to the exit). This would be unconstitutional in most civilised countries. Indeed, there is a respectable argument that race (but not sex) discrimination is not only contrary to customary international law, as well as to many international human rights instruments, but also contravenes a peremptory norm of international law which is binding on all states (see R (European Roma Rights Centre) v Immigration Officer at Prague Airport (United Nations High Comr for Refugees intervening) [2004] UKHL 55, [2005] 2 AC 1, per Lord Steyn at para 46). If it were, then any treaty conflicting with that norm at the time of its conclusion would be void, at least to that extent, by virtue of article 53 of the Vienna Convention on the Law of Treaties; and if a new peremptory norm of international law emerges, then any existing treaty which is in conflict with that norm becomes void and terminates, at least to that extent, by virtue of article 64 of the Vienna Convention. More important still, it might be thought, is the prohibition of torture. This is indeed a peremptory norm. There is a respectable case to be made that what happened to Mr Stott on board the plane amounted to inhuman or degrading treatment within the meaning of article 3 of the European Convention on Human Rights (see, for example, the case of Price v United Kingdom (2002) 34 EHRR 1285, concerning the conditions in which a severely disabled woman was held in police custody). It seems extraordinary that a State should be able to subject a passenger to such treatment with impunity. However, it may well be that the prohibition of cruel, inhuman and degrading treatment has not yet reached the status of a peremptory norm in general international law, even though torture in the narrower sense defined in the Torture Convention of 1984 has done so. None of this was ventilated before us, no doubt for the good reason that Thomas Cook is not a State airline. The extent to which international law imposes positive obligations upon States to protect individuals against violations of their fundamental rights by non state actors is controversial. There may or may not be something in the issues I have raised. But the question of whether there are indeed any limits to the apparently adamant exclusion in article 29 of the Montreal Convention may well require ventilation in another case or another place. At the very least, as Lord Toulson says, the unfairness of the present position ought to be addressed by the parties to the Convention. Small comfort though it may be to them, both Mr and Mrs Stott, with the support not only of the Equality and Human Rights Commission but also of the responsible department of the United Kingdom government, have done us all a service by exposing a grave injustice to which the international community should now be turning its attention.
+The council appeals against the decision that it is liable to pay compensation under section 106 of the Building Act 1984, for loss to a business on Hastings Pier arising from its closure during 2006 under the councils emergency powers. The respondent (Manolete) pursued the claim as assignee of Stylus Sports Ltd (Stylus), which owned and operated the business at the relevant time, but went into liquidation in late 2011. The only issue in the appeal is whether Stylus was itself in default within the meaning of that section, so precluding it from making a claim. The statutory provisions As explained more fully by Jackson LJ in the Court of Appeal ([2014] 1 WLR 4030, [2014] EWCA Civ 562, 46 paras 46ff), the 1984 Act is one of a sequence of public health statutes, going back to the 19th century, which among other matters have dealt with the regulation of new buildings and the control of dangerous structures. The 1984 Act draws together a number of such provisions, including building regulations (Part I), supervision of construction work other than by local authorities (Part II), and Other provisions about buildings (Part III). Within Part III, and relevant to this case, are section 77 (Dangerous building) and 78 (Dangerous building emergency measures). Section 77 enables the council to apply to the magistrates court in relation to a building or structure which is in such a condition, or is used to carry such loads, as to be dangerous. Under subsection (1), the court may either (a) where danger arises from the condition of the building or structure, order the owner to execute work necessary to obviate the danger or to demolish it, or (b) where danger arises from overloading of the building or structure, make an order restricting its use until a magistrates court, being satisfied that any necessary works have been executed, withdraws or modifies the restriction. By section 77(2)(b) if the person against whom an order is made under subsection (1)(a) above fails to comply with the order within the time specified, the local authority may execute the order and (b) recover the expenses reasonably incurred by them in doing so from the person in default. Under section 78 (directly relevant to this case), where it appears to the authority that a building or structure or part of it is in such a state, or is used to carry such loads, as to be dangerous, and that immediate action should be taken to remove the danger, they may take such steps as may be necessary for that purpose, having given notice if reasonably practicable to the owner and occupiers. Compensation is governed by section 106 (in Part IV of the Act): (1) A local authority shall make full compensation to a person who has sustained damage by reason of the exercise by the authority, in relation to a matter as to which he has not himself been in default, of any of their powers under this Act. (emphasis added) By section 106(2) any dispute arising as to the fact of damage, or as to the amount of compensation is to be determined by arbitration. section 106 must be read with section 78(7): In the context of a claim resulting from emergency action under section 78, (7) Where in consequence of the exercise of the powers conferred by this section the owner or occupier of any premises sustains damage, but section 106(1) below does not apply because the owner or occupier has been in default (a) the owner or occupier may apply to a magistrates court to determine whether the local authority were justified in exercising their powers under this section so as to occasion the damage sustained, and (b) if the court determines that the local authority were not so justified, the owner or occupier is entitled to compensation, and section 106(2) and (3) below applies in relation to any dispute as regards compensation arising under this subsection. The default on which the council relies includes alleged breaches (actual or prospective) of the duties imposed by the Occupiers Liability Act 1957 and the Health and Safety at Work etc Act 1974. In short the former (by section 2) imposes on occupiers of premises the common duty of care; that is a duty to take such care as in all the circumstances of the case is reasonable to see that the visitor will be reasonably safe in using the premises for the purposes for which he is invited or permitted by the occupier to be there. The latter, by section 2, imposes on an employer the duty to ensure, so far as is reasonably practicable, the health, safety and welfare at work of all his employees, and in particular to maintain any place of work (including means of access and egress) in a condition that is safe and without risks to their health. The facts The history of the pier structure is described in the report by engineers for the council (the Gifford report) in June 2006, which led directly to their decision to close the pier: The original Hastings Pier was opened in 1872. It was built to a length of 277m with its timber deck bearing on wrought iron lattice trusses, all supported on three rows of cast iron screw piles via cast iron columns; the columns were braced with wrought iron ties secured with cast iron clamps. The width varied from 13.6m at the Central Section to 60m at Head and 39.6m at the landward end. Repairs utilising steel trusses and steel columns have been undertaken at various times since following a fire in 1917 to the Pier Head, partial demolition (sectioning) and actual bomb damage during the 1939 45 war, and widening to both sides of the Pier They commented on the general state of the pier: Experience has shown the typical life of Victorian piers to be approximately 100 years; during this time continual maintenance would have been required, including the replacement [of] some critical elements. After this time, major reconstruction works would be required if continued use of the pier were to be viable. The general condition of Hastings Pier fits this pattern. In recent years the freehold of the pier was owned by Ravenclaw Investments Incorporated (Ravenclaw), a company registered in Panama, and managed on their behalf by Boss Management UK Ltd (Boss). Stylus occupied two units, C2 and C15, close to the entrance to the pier at the northern (town) end. They operated a bingo hall in unit C2 and an amusement arcade in unit C15. The units were held respectively under leases from Ravenclaw dated 14 August 2001 and 10 October 2001. The premises as so leased were confined generally to the internal non structural walls, and internal surfaces, and specifically excluded any main structural parts of the premises or of the building (Schedule 1). Ravenclaw as landlord was responsible for repair and when necessary renewal of the structure including the support structure of the pier. In 2004 Stylus became concerned about the structural integrity of the pier. They commissioned a full structural engineering survey of the pier by Hamill Davies Limited. The report (the HDL report), produced in September 2004, was provided both to Ravenclaw and in January 2005 to the council. It advised that urgent work was required to repair piles at the far end of the pier (some distance beyond the Stylus units). This should be done ideally within the next two months to avoid the worst of the winter weather; and the deck area supported by these piles should be closed to the public until this work is completed. They also advised that future work should be carried out to the structure of the pier in the area of the Stylus units. Of this they said: With regard to the remaining work it is understood that this cannot be undertaken immediately. However this work should be completed within one year, with regular monitoring of the defective areas until this can be achieved. Unless this is carried out we judge there to be an unacceptable risk to the public. There is no evidence of action by Ravenclaw or the council to remedy the structural defects in response to this report, other than some limited work by Ravenclaw in the winter of 2005 2006. Meanwhile the public continued to use the pier, and the pier facilities (including the bingo hall and the amusement arcade) remained open for business. In early April 2006 a council officer inspected the underside of the pier, when a section of tension cord fell from the pier. The council commissioned Gifford to report on the structural stability of the pier. Their brief included appraisal of its structural integrity and any potential risks to the public. The areas chosen were those that would be subjected to the greatest crowd loading in the event of mass evacuation of the buildings, ie the designated escape routes (report para 1.3). In May 2006 the council tried without success to compel Ravenclaw to commission a full structural assessment of the Pier. On 15 June 2006 they asked Boss, as agents for Ravenclaw, to close off the pier beyond the front facade, but that request was not complied with. The Gifford report, received by the council on 16 June 2006, identified serious structural defects, and recommended a full structural survey as a matter of urgency. It recommended by way of immediate restrictions a) Access resulting in the potential for crowd loading on the Central Section and beyond should be prohibited until either, as a minimum, the presently identified defects in the area of the Central Section bounded by Columns 197 216 211 200 have been rectified or alternative safe access routes have been provided. b) Access by shop tenants or others for the purpose of maintenance need not be restricted. (para 6.1) The columns there identified were beneath the Stylus premises. On 16 June the Council exercised its emergency powers under section 78 of the 1984 Act to close the pier to the public from the front facade onwards. A barrier was erected across the frontage with a notice saying danger keep out. A letter was delivered on the same day to tenants of units on the pier stating that the pier was being closed from the main entrance building onwards, including the Bingo Hall and Amusement arcade. The letter indicated that the council had had concerns about the pier for some time and had served notice on the owners requiring them to carry out a survey of the structure. It continued: In recent days the council has become aware that major events were still being booked for the Pier ballroom; two of these have been booked for July and one in August. As a result of its concerns over the Pier structure the Council commissioned consulting engineers Gifford of Southampton to look at a specific area of concern under the main covered walkway around the main facade entrance. This inspection was carried out yesterday. It has been established that at least five trusses have failed in this area. Our consultant is of the opinion that it is unsafe to allow large numbers of people onto the Pier. This area provides the only method of access onto and off the Pier. Any emergency affecting the rest of Pier, including the ballroom, requiring evacuation would mean crowds of people walking over the area where we have been specifically advised that crowds are unsafe. As a result the council has had no option other than to use its emergency powers to close much of the Pier immediately. The letter noted that, despite previous attempts to resolve the situation, the Pier management were continuing to plan for large events. On the same day the council applied to Hastings Magistrates Court under section 77(1)(b) of the 1984 Act. The initial hearing at the Magistrates Court took place on 21 June 2006. A representative of Stylus attended and asked to be included in the proceedings. After adjournments, at the substantive hearing on 12 September the court made an order under that section prohibiting public access to the pier until the necessary remedial works had been carried out. Meanwhile, in July 2006 Stylus instructed HDL to undertake an inspection of the area beneath its units. It also instituted proceedings against Ravenclaw to require them to carry out the works of repair under the lease, and obtained summary judgment, but that was not complied with by Ravenclaw. In May 2007 Stylus began itself to carry out the necessary remedial works under its own premises. Those having been completed, the magistrates court on 4 July 2007 varied its order so as to permit public access to its premises. On 8 November 2006 Stylus had notified the council of its intention to claim compensation under section 106(1) of the 1984 Act, for losses allegedly suffered as a result of the closure of the pier between 16 June and 12 September 2006. In late 2011 Stylus went into liquidation, and in January 2012 the liquidator of Stylus assigned Stylus claim against the Council to Manolete, the present respondents. The present proceedings in the Technology and Construction Court (begun under CPR Part 8, on the basis that there would be no substantial dispute of fact) sought a declaration that the council were liable to pay compensation: [2013] EWHC 842 (TCC); [2013] 2 EGLR 17. The proceedings below Before Ramsey J the council raised a number of defences including the one now in issue, which he summarised: That the Council is not liable under section 106 of the 1984 Act because the claimant was in default for the purposes of that section because of the breach of section 2 of the Occupiers Liability Act 1957 and/or because it took a lease of the Pier past the end of its design life from a company registered outside the jurisdiction and was aware by the very latest in 2004 that there were serious problems with the structure of the Pier but took no adequate steps to ensure the Pier was repaired or the public excluded. (para 14) He noted that in submissions the council had relied also on the duties under the Health and Safety at Work etc Act 1974. He rejected the defence, holding that the reference to default should be read as default in respect of obligations imposed by the 1984 Act itself. In support he cited authorities under previous statutes using the same expression, in particular Neath Rural District Council v Williams [1951] 1 KB 115. He added: If that is not so and if it were necessary to see whether a party was in breach of any provision of other statutes, as is submitted here, then the scope of enquiry would be large and would require investigation of further factual matters to determine whether there was a default in terms of those statutes. (para 46) He also rejected a separate defence that, absent section 78, Stylus would have had no action in tort in any event. That is no longer in issue. In the Court of Appeal [2014] 1 WLR 4030 Jackson LJ agreed that default was limited to default under the 1984 Act. He reviewed at length the legislative history, dating from the Metropolitan Buildings Act 1844. He noted that compensation provisions, substantially in the same form as section 106, had appeared in the Public Health Acts of 1875 and 1936. He referred to Hobbs v Winchester Corpn [1910] 2 KB 471, which he read as treating the words in default as directed to default under the Act of 1875. However, he accepted the submission of counsel for the authority that in both the 1875 and 1936 Act it should be read as extending also to related statutes: He points out that in many instances a building owner would be in breach of local Building Acts and Improvement Acts. If the local authority intervened in order to protect public safety, it would be absurd if the building owner could recover compensation under section 308. I accept that submission. In my view the default proviso in the 1875 Act was referring to a default under the 1875 Act or related Acts. (para 52 emphasis added) However, the same extension was not required under the 1984 Act, because There are no local byelaws or parallel statutes directed to the same subject matter as the 1984 Act. The 1984 Act and the Regulations made under it are comprehensive. (para 76) A narrow construction was supported also by looking at the statute as a whole: Where the same phrase occurs more than once it should generally be construed in the same way on each occasion The phrase in default occurs in three significant places in the 1984 Act, namely in section 77(2)(b), section 78(7) and section 106(1). In both sections 77(2)(b) and sections 78(7) default has a narrow meaning. It clearly refers to a failure to perform obligations under the 1984 Act. This circumstance is a pointer towards construing default in section 106 narrowly, namely as meaning breach of an obligation under the 1984 Act. (paras 74 75) In agreement with the judge he concluded: The phrase in default in section 106 of the 1984 Act means in breach of an obligation arising under the 1984 Act. The provision does not require the court or the arbitrator to conduct a wide ranging review of other legislation and the common law in order to see whether the claimant is in breach of any duties arising outside the 1984 Act. (para 79) The court had some sympathy for the argument that the council should not be obliged to compensate Stylus for being prevented from admitting the public to dangerous premises. But, given that the true culprit Ravenclaw was beyond the reach of enforcement procedures, the court was faced with the familiar problem of deciding which of the surviving parties should bear the loss, the answer to which depended on the statutory scheme. He added: [Stylus] has acted responsibly at all stages. It did its utmost to compel the landlord to carry out remedial works. Ultimately it stepped into the breach and did the works itself. If the local authority had wished to avoid liability to pay compensation under section 106, it could have brought proceedings under section 77 of the 1984 Act sooner and thereby avoided the need to take emergency action under section 78. Finally, on this point, [the councils] general arguments will still be available at the quantum hearing before the arbitrator. The local authority will be entitled to argue that even if it had not fenced off the pier, [Stylus] could have made little use of its two units. (paras 81 82) Finally he considered and rejected a separate argument on behalf of the council that the claim was precluded by the ex turpi causa principle, on the basis that to admit the public would have been contrary to its statutory responsibilities: the motivation for the local authoritys closure of the pier to the public on 16 June 2006 was the likelihood of large crowds accessing the pier on and after 17 June for reasons unconnected with [Stylus] business. As at 16 June 2006 [Stylus] had not incurred liability to any member of the public for breach of the Occupiers Liability Act 1957. Nor can I see any basis for saying that [Stylus] had committed any breach of the statutory duties which it owed to its employees under the Health and Safety at Work etc Act 1974 . (paras 91 92) In his view, the default proviso was the control mechanism which eliminates claims that are unacceptable on grounds of public policy. It left no room for the application of the ex turpi causa rule (para 94). He added: 95. Having said that, I do accept that the structural condition of the pier will be relevant to the quantum of the claim. The local authority will be entitled to argue in the arbitration due to be held under section 106(2) that the loss of profit caused by the local authoritys conduct must be substantially reduced by reason of the structural condition of the pier. Indeed the local authority would be entitled to argue that the quantum is reduced to nil, although on the evidence which I have seen that outcome seems unlikely. The submissions in summary In this court Mr Gasztowicz QC for the council submits that the courts were wrong to treat the word default as confined to default under the 1984 Act. That is supported both by ordinary meaning of the word and by the legislative history. The authorities referred to by the judge and the Court of Appeal do not lead to a different conclusion. Stylus was in default in the relevant sense because it was in breach of its obligations under the 1957 Act and 1974 Acts in relation to the very matter in relation to which the statutory power was exercised, namely the admission of the public to premises which when they were admitted were dangerous (to them and employees) (printed case p 30) He relies in particular on Stylus own evidence which showed that: i) It had received the September 2004 HDL report showing that urgent repairs were necessary to protect the public, including work in the Stylus area of the pier, which if not carried out within at most a year from September 2004 would mean there would be an unacceptable risk to the public; ii) No further report had been obtained giving a different assessment on the state of the Pier in this area two years on; iii) Notwithstanding the contents of the report the necessary work was not done prior to closure. Although the primary responsibility for repair lay with the freeholders, Stylus had the ability to carry them out in default (Granada Theatres Ltd v Freehold Investment (Leytonstone) Ltd [1959] 1 Ch 592, 608), as indeed it did following the court order. By continuing to invite the public to its premises it was causing loading by the public resulting in them and its employees being made subject (in the words of the HDL report) to unacceptable risk. For Manolete, Mr Bowdery QC (who did not appear below) supports the view of the courts below on the interpretation of the word default, but submits also that the appeal fails on the facts. As the Court of Appeal held, the council was unable to show that Stylus was in default of any legal obligation under either of the statutes relied on or otherwise. Furthermore, there was nothing to show that the council had ever regarded Styluss use of its own premises as dangerous to the public or its employees, following its receipt of the HDL report in early 2005. As the correspondence showed, and the Court of Appeal found, the motivation for the use of emergency powers was the prospect of large crowds at events unconnected with the use of the Stylus premises. Discussion With respect to the courts below, while recognising the somewhat different emphasis of the arguments in this court, there is a danger of over complication. If one takes the words of section 106(1) at face value, they do not appear to pose any great difficulty either of interpretation or of application to the facts of this case. The section gives a right to compensation to a person who has sustained damage by reason of the exercise of any of the authoritys powers under the Act in relation to a matter as to which he has not himself been in default. This raises two questions: Is that a matter as to which the claimant has been in default? i) What was the matter in relation to which the authority has exercised its powers? ii) It is important to keep in mind that the relevant power is the power to take emergency action under section 78. The claim is for loss resulting from that emergency action, not from the order of the magistrates court, which itself carries no right to compensation. That is why the claim is limited to the period from the date of closure until the order made on 12 September. This point gains emphasis from section 78(7). Even a claimant in default (in the relevant sense) is not precluded from seeking compensation, if the court determines that the authority were not justified in using their emergency power, rather than first seeking an order from the magistrates under section 77. The right to compensation provides an important check on the unbridled use of that emergency power under section 78, in respect of which (unlike section 77) there is no right of objection or recourse to the court. The councils decision to act under section 78 in this case is not itself in issue. But it is necessary to identify the matter which led it to take such emergency action, rather than applying first to the magistrates court. That is clearly identified by the evidence, in particular the letter sent to the tenants at the time. It was not the general state of the pier, nor even the specific repairs identified in the HDL report on which Mr Gasztowicz relies. The council had been aware of those matters at least since the receipt of that report in 2005, but had not thought it necessary to close the pier, nor to take any legal action against Stylus at that stage. If they had wished to do so, there appears no reason why they could not have applied to the court for the appropriate order, giving Stylus the opportunity to make representations. No issue of compensation would have then arisen. As is clear from the councils letter to tenants, the matter which triggered the action in June 2006 was the state of the pier combined with fear of possible collapse from crowd loading during the events planned for that month, particularly the risk of overloading in an emergency evacuation. Stylus was not legally responsible for the state of the pier, nor was it responsible for the events which triggered the councils action. Whatever may have been its position as respects its clients and employees, it was not in default as to the matter which led to the councils use of section 78. On this simple basis, in my view, the company is entitled to succeed. That conclusion makes it strictly unnecessary to address the view of the courts below that default in section 106 referred only to default under the 1984 Act itself. However, the council, no doubt supported by others with like responsibilities, is understandably concerned as to the potential implications of this limitation for future cases. There seem to have been four main points leading to this conclusion: (i) the legislative history, (ii) other references to default in the 1984 Act, (iii) the wide scope of the factual inquiry implicit in the alternative approach, and (iv) various authorities under the predecessor statutes. None of these considerations in my view supports the conclusion. The first three points can be dealt with shortly. The legislative history tends if anything to support the opposite view. The use over more than 100 years of the same formula in statutes which, though covering the same general subject matter, included a varying range of powers, makes it unlikely that it was linked specifically to the particular provisions of each statute. Jackson LJ was forced to accept that the similar formula in the Public Health Acts 1875 (section 308) and 1936 (section 278) must be read as extending to default under related Acts, such as local Building Acts and Improvement Acts (paras 52, 55). I agree, but related is an imprecise term, not supported by anything in the wording of the section itself. Once that extension is accepted, it is difficult to understand why it should not extend to other forms of legal default. Secondly, the other references to default referred to by Jackson LJ do not assist. In section 77(2)(b), the default in question is specified by the section itself, that is failure to comply with the magistrate courts order. That throws no light on its meaning where it is not so limited. Section 78(7) is related directly to section 106 and poses the same issue as is now before us. Thirdly, the courts concern as to the wide ranging nature of the factual inquiry implied by the authoritys suggested approach is understandable, but it does not arise if the inquiry is limited in the way I have suggested above. As to the authorities, the only one referred to by the Court of Appeal was Hobbs v Winchester Corpn [1910] 2 KB 471, which related to the equivalent compensation provision in the 1875 Act (section 308). Meat had been seized under section 116 of the 1875 Act as unfit for human consumption. Although the butcher was acquitted of any offence under section 117 of that Act, on the grounds that he was unaware that it was unfit for consumption, it was found that he was nonetheless in default for the purpose of section 308, so that his claim for compensation failed. Since the only default relied on by the authority was default under the 1875 Act, that case throws no light on the nature of the default which might be relevant in other cases. Mr Bowdery relies also on Place v Rawtenstall Corpn (1916) 86 LJKB 90, under a provision in a local Act giving the authority a defence from civil liability for damage caused in exercise of their statutory powers in default of the owner or other person required to do such work, and in the absence of negligence: section 257 of the Rawtenstall Corporation Act 1907 (emphasis added). The authority had served notice under that Act requiring the claimant to convert a pail closet on his premises into a water closet and to connect it to a sewer. He failed to comply, and the authority carried out the work themselves, but did so by carrying out a larger project serving some other houses. In doing so, they used pipes larger than would have been needed by the claimant, thus causing subsidence to his property. It was held that the authority could not rely on his default to defeat his claim for damages. The judgment confirmed the essential principle that statutes interfering with common law rights should be strictly construed, and that it was for the authority to establish that the work which they have done is strictly work done in default of the owner. The problem for the authority was that the work was not limited to the work the owner would have done to carry out the work for his own house, but comprised much more. There was no finding that the damage was only caused by the work which Mr Place was required to do (pp 92 94 per Scrutton J). That seems to me a decision turning on its own particular facts, which throws no light on the meaning of the word default in the present context. I should also mention two authorities referred to in argument on the word default in the provisions relating to statutory nuisances under the 1875 and 1936 Acts. Clayton v Sale Urban District Council [1926] 1 KB 415 concerned action by the authority in respect of an alleged statutory nuisance caused by flooding. Under section 94 of the 1875 Act they could serve an abatement notice on the person by whose act default or sufferance the nuisance had arisen. The authority argued that the nuisance had arisen by the default of the owner, in failing to repair the bank. It was argued that there could not be default by the owner within the meaning of the section unless there had been a breach of an obligation arising independently of the section from an agreement or otherwise, and that he was not under any agreement or covenant or otherwise to construct or to repair the flood bank (pp 423 424). This argument was rejected. Lord Hewart CJ said: In my opinion the act, default, or sufferance referred to in section 94 of the Public Health Act 1875, is an act, default, or sufferance related to the nuisance which it is sought to abate, and default no less than sufferance within the meaning of that section can occur without the breach of an obligation arising from contractual agreement. (p 425) He referred to the common law duty of the owner of a vacant piece of land to prevent that land from being a public nuisance (citing Attorney General v Tod Heatley [1897] 1 Ch 560, 566). Contrary to Mr Bowderys submissions, that is to my mind clear authority at that level that the word default in a comparable context was not confined to default under the statute itself. Neath Rural District Council v Williams [1951] 1 KB 115 concerned the equivalent provision of the 1936 Act (section 93). A watercourse on the defendants land had become silted by natural causes and caused flooding. Section 259(1)(b), under which a watercourse in such a condition was a statutory nuisance, was subject to a proviso that no liability was imposed on any person other than the person by whose act or default the nuisance arises or continues. It was held that, absent any relevant legal duty on him under statute or at common law to take positive action to remove the nuisance, the defendant was not in default. In the words of the headnote: in the case of a natural stream a landowner had no duty at common law to keep the bed clear by removing obstructions which might arise from natural causes, and the proviso to (section 259(1)) was designed to prevent any additional duty from being cast on the landowner Lord Goddard CJ expressed some doubt about the actual decision in Clayton but felt able to distinguish it on the basis that it was concerned with the words act, default or sufferance whereas the proviso to section 259(1)(b) referred only to act or default (p 126). However, he did not doubt the proposition that default could arise from breach of a duty outside the Act itself. Ramsey J, at para 43, referred to a passage in the judgment of Lord Goddard CJ, who said: I do not think that in this case default could mean merely doing nothing, unless an obligation to do something were imposed by the Act. There was no act of the defendants which caused the obstruction either to arise or to continue In the present case, on the facts found by the justices, there is nothing to show that the defendants did anything which caused this obstruction to arise or to continue; nor do I think that there is anything which can properly be called a default on their part (pp 126 127, emphasis added). This passage cannot be taken as implying that only a duty under the 1936 Act itself was thought relevant. It must be read in the context of the judgment as a whole, in which the possibility of a common law duty had previously been discussed and dismissed (pp 120, 123). I conclude that there is nothing in the factors relied on in the courts below which requires the words in default to be limited to default under the 1984 Act. They were right in my view to hold that the authority had no defence in principle to the claim for compensation, not because (as they held) there was no default under the 1984 Act, but because it was not default by Stylus which led to the emergency action under section 78. It is important to emphasise that this conclusion does not limit in any way the issues which may be taken into account by the arbitrator in assessing compensation attributable to that action, including the statutory and common law responsibilities of Stylus to its clients and employees. As Jackson LJ indicated (para 95), it will be open to the authority to argue that the consequent loss of profit to the business must be substantially reduced due to the structural condition of the pier and the implications it would have had for the continuation of its business quite apart from the effects of the emergency notice. Mr Gasztowicz drew our attention to an earlier paragraph of Jackson LJ (para 79) which might suggest a more limited role for the arbitrator. Having agreed with the judge that the phrase in default means in breach of an obligation under the 1984 Act, he added: The provision does not require the court or the arbitrator to conduct a wide ranging review of other legislation and the common law in order to see whether the claimant is in breach of any duties arising outside the 1984 Act. (emphasis added) I do not fully understand the inclusion in that passage of a reference to the arbitrator, as well as the court. In so far as it implies a limitation on the scope of the arbitrators function it is inconsistent with the later paragraph to which I have referred, and which in my view expresses the correct position. For these reasons, albeit differing in some respects from those of the courts below, I would dismiss the appeal.
+The first issue on this appeal is whether a statutory limitation period, which would otherwise bar the claim of the four appellants against the three respondents for damages for participation in an unlawful cartel, failed to comply with the European legal principles of effectiveness and legal certainty. If it was, the second issue is what if any effect that has on the application of that limitation period as between parties to civil litigation, in which it has now been held that the limitation period applies as a matter of domestic law to bar the claim. I will refer to the appellants and the respondents respectively as BCL and BASF. The cartel related to the supply of vitamins within the European Union. By Commission Decision COMP/E 1/37.512 of 21 November 2001, the European Commission found that the cartel infringed Article 81 of the EC Treaty (now TFEU 101) and imposed fines accordingly. Members of the cartel had until 31 January 2002 to appeal against the Commissions decisions. In the event, on 31 January 2002, only BASF appealed, and BASF only appealed against the fine levied. Notice of its appeal was published in the Official Journal on 4 May 2002 (C109/49). The Commissions Decision to which the appeal related was only published in the Official Journal of the European Communities on 10 January 2003. The Court of First Instance on 15 March 2006 reduced the fine imposed on BASF. The deadline for any further appeal by BASF to the European Court of Justice expired on 25 May 2006 without any further appeal being lodged. Under the Limitation Act 1980, section 2, BCL had six years to bring an action for tort in the High Court, running or almost certainly running (as Mr Vajda QC for BCL accepted in the notice of appeal and his oral submissions) from 21 November 2001. However, on 20 June 2003 section 47A of the Competition Act 1998, as inserted by section 18(1) of the Enterprise Act 2002, came into force, giving BCL the alternative possibility of a claim for damages in proceedings brought before the Competition Appeal Tribunal. The possibility was exercisable under certain conditions, the effect of which, as now conclusively established by the Court of Appeal, is that the time for bringing such a claim expired on 31 January 2004, two years after the time allowed for appeal against the Commissions decision on infringement, without any possibility of extension. No High Court proceedings were brought, but proceedings were in January 2004 issued in the Tribunal against other cartel members. The first intimation by BCL to BASF of any intended claim was on 21 November 2006, and proceedings were not issued in the Tribunal by BCL against BASF until 12 March 2008. BASF responded by contending that the claim was time barred. Reversing the Tribunal, the Court of Appeal held on 22 May 2009 that the claim was time barred and could proceed, if at all, only with an extension of time, [2009] EWCA Civ 434. The Tribunal on 19 November 2009 assumed that it had power to grant an extension, but declined to do so on the merits, [2009] CAT 29. The Court of Appeal held on 12 November 2010 that the Tribunal had no power to extend time under United Kingdom law: BCL Old Co Ltd v BASF SE (No 2) [2010] EWCA Civ 1258, [2011] Bus LR 428. It held further that European law did not override the United Kingdom time bar or require a power to extend to be treated as existing. On this basis, the merits of any application for an extension, if there had been such a power, became irrelevant. With the Supreme Courts permission, BCL now appeals to the Supreme Court against the Court of Appeals decision of 12 November 2010, but solely on the issue of European law. The UK legislative scheme The detailed legislative scheme is for convenience set out in the Annex to this judgment. For immediate purposes, it is sufficient to draw attention to the following features. First, BCLs right to claim damages in proceedings before the Tribunal under subsection (5) of section 47A did not arise until a decision (in this case by the Commission) had established that the relevant prohibition in question has been infringed. Then it was, under subsection (8), postponed, though subject to a discretion in the Tribunal, during any period during which proceedings against the Commission decision might be instituted in the European Court of Justice and, if any such proceedings were instituted, during the period before those proceedings were determined. Second, by virtue of Rule 31 of the Competition Appeal Tribunal Rules 2003 (SI 2003/1372) made under the Act, any such claim for damages required to be made within two years of the later of the end of that period or the date on which the cause of action accrued. The issues in greater detail BCLs main submission in the Tribunal and the Court of Appeal was that the limitation period for its claim against BASF in the Tribunal only began to run on 25 May 2006; that is, two years after the end of the period during which BASF could have lodged a further appeal in relation to the fine imposed on it. This submission was based on the proposition that the decision [which] has established that the relevant prohibition has been infringed, to which subsections (5) and (6) of section 47A of the Act refer and against which subsection (8) contemplates that proceedings might be brought in the European Court, embraced not merely the Commissions decision that there had been an infringement but also its decision as to the penalty to be imposed for the infringement. The Tribunal (Barling J, Ann Kelly and Michael Davey) on 25 September 2008 accepted this submission: [2008] CAT 24. It considered that other sections of the Act offered little assistance and that findings on penalty could be relevant to the nature and extent of any infringement. On 22 May 2009 the Court of Appeal (Waller, Lloyd and Richards LJJ) [2009] EWCA Civ 434 in a judgment given by Richards LJ took a different view of the plain and ordinary meaning of the statutory language and the natural reading of the section (paras 26 28 and 33). It regarded this as drawing a clear distinction between decisions as to infringement and as to penalty. It considered that the Tribunals concerns as to any overlap between decisions on infringement and penalty were over stated, and did not consider that they could in any event justify a departure from the sections natural meaning. No further appeal followed. The distinction between decisions on infringement and penalty decisions has been taken up and applied more recently by the Court of Appeal in its judgment in Deutsche Bahn AG v Morgan Crucible Co plc [2012] EWCA Civ 1055, to which the Supreme Court was referred, without submissions, after the oral hearing of this appeal. On the basis of Richards LJs remarks on 22 May 2009, the existence of a power to extend time was conceded by BASF for the purposes of the applications decided by the Tribunal on 19 November 2009, [2009] CAT 29. The Tribunal (Vivien Rose QC, The Hon Anthony Lewis and Dr Arthur Pryor CB) therefore assumed that it had power under rules 19 and 44 to extend the time limit under rule 31. But reservations were made as to the right to challenge the existence of any such power in the Court of Appeal. When the matter came before the Court of Appeal (Maurice Kay V P, Lloyd and Sullivan LJJ) on 12 November 2010, [2010] EWCA Civ 1258, the challenge to the existence of any power to extend time succeeded and no further appeal was permitted. Whether BCL would have been better off if the challenge had failed would have depended upon whether it could have disturbed the Tribunals conclusion that it was not in any event appropriate to exercise any power to extend. BCLs submission now is that the operation of the two year limitation period (in particular as regards its commencement) and the lack of any power to extend the limitation period were legally uncertain matters, which rendered it excessively difficult for BCL to pursue its claim against BASF in time. BCL point out that, where a specialist tribunal like the Competition Appeal Tribunal exists, the principle of effectiveness applies to proceedings before that tribunal, even if recourse to the ordinary courts remains available: Case C 268/06 Impact v Minister for Agriculture and Food [2008] ECR I 2483, para 51. Mr Brealey QC for BASF does not take issue with this. To explain why BCL did not in fact bring proceedings against BASF in January 2004 at the same time as proceedings were brought against other cartel members, BCL refers to a paragraph in a witness statement by its solicitor, Mr Edward Perrott, stating: 17 We considered bringing a claim against BASF at that point. It was discussed with Counsel and the conclusion from these discussions was that we were precluded from bringing the claims until the BASF appeal, about which we knew little, had been decided by the European Court. In the Court of Appeal on 12 November 2010, Lloyd LJ observed, with justification, at para 56, that It seems unlikely that the advice was in fact that they could not bring proceedings against BASF at that time. For Counsel to have said that he or she would have had to have ignored the words otherwise than with the permission of the Tribunal in section 47A(5)(b), the words without permission in section 47A(7) and (8), and rule 31(3). The exiguous account given by BCL of its thinking and of the advice received (from counsel not instructed on the present appeal) makes it difficult to say more, even assuming it to be relevant to try to do so. The European principles of effectiveness and legal certainty The principles of effectiveness and legal certainty on which Mr Christopher Vajda QC for BCL relies are well recognised. Mr Vajda referred in particular to Case C 453/99 Courage Ltd v Crehan [2002] QB 507, [2001] ECR I 6297, Case C 445/06 Danske Slagterier v Germany [2009] ECR I 2119 and Case C 456/08 Commission v Ireland [2010] ECR I 859 as well as the pithy statement by Advocate General Sharpston in Case C 512/08 European Commission v France, para 50. In Courage Ltd v Crehan the question was whether a publican who was party to a standard form of exclusive purchase obligation lease which infringed the then Article 85 (the precursor to Article 81) could claim damages against the brewery imposing the obligation or was precluded by virtue of the domestic law maxim ex turpi causa non oritur actio. The European Court held that Article 85 precluded any rule of national law which barred such a claim on the sole ground that the claimant was a party to the unlawful agreement (though the application of such a rule could be appropriate in a case where the claimant bore significant responsibility for the distortion of competition: para 31). It was (para 29) for national courts to lay down the detailed procedural rules governing actions for safeguarding rights which individuals derive directly from Community law, provided that such rules are not less favourable than those governing similar domestic actions (principle of equivalence) and that they do not render practically impossible or excessively difficult the exercise of rights conferred by Community law (principle of effectiveness) In Danske Slagterier Danish pig exporters, Danske Slagterier, brought an action against the Federal Republic for breach of European law in imposing certain import restrictions. The German courts held the cause of action to have become time barred after three years, applying by analogy the limitation period applicable under the German Civil Code BGB paragraph 852 to tort claims. The Court of Justices judgment records (para 30) that Danske Slagterier has bemoaned the lack of clarity in the legal position in Germany as to the national limitation rule applicable to claims seeking reparation on account of State liability for breach of Community law, stating that this question has not yet been dealt with by any legislative measure or any decision of the highest court, while academic legal writers are also divided on the issue as several legal bases are possible. In its view, application, for the first time and by analogy, of the time limit laid down in Paragraph 852 of the BGB to actions for damages against a State for breach of Community law would infringe the principles of legal certainty and legal clarity as well as the principles of effectiveness and equivalence. The Court regarded a three year limitation period as reasonable (para 32), but said that: 33. in order to serve their purpose of ensuring legal certainty, limitation periods must be fixed in advance. A situation marked by significant legal uncertainty may involve a breach of the principle of effectiveness, because reparation of the loss or damage caused to individuals by breaches of Community law for which a Member State can be held responsible could be rendered excessively difficult in practice if the individuals were unable to determine the applicable limitation period with a reasonable degree of certainty. Significantly for the present case, it continued: 34. It is for the national court, taking account of all the features of the legal and factual situation at the time material to the main proceedings, to determine, in light of the principle of effectiveness, whether the application by analogy of the time limit laid down in Paragraph 852(1) of the BGB to claims for reparation of loss or damage caused as a result of the breach of Community law by the Member State concerned was sufficiently foreseeable for individuals. It is to be noted that Danske Slagterier was a case brought against the Federal Republic. Any infringement of the principle of effectiveness could therefore be visited directly on the other party to the proceedings, by in particular refusing to allow it to rely upon the time limit or, in appropriate circumstances, awarding damages against it for any loss flowing from any enforcement of the time limit. Commission v Ireland arose from a challenge to the award to Celtic Roads Group (CRG) of a contract for the construction of the Dundalk Western Bypass by the Irish National Roads Authority (NRA), a statutory body with the overall responsibility for the planning and supervision of works for the construction and maintenance of national roads. SIAC Construction Ltd (SIAC), a member of a rival consortium (EuroLink), was informed on 14 October 2003 that the NRA had decided to designate CRG as the preferred tenderer, in terms indicating that this meant that the NRA would be proceeding with discussions with CRG, but that, if they broke down, it might still enter into discussions with EuroLink. However, on 9 December 2003 the NRA decided to award the contract to CRG, and on 5 February 2004 it signed a contract with CRG accordingly. Proceedings were commenced by SIAC on 8 April 2004, on the basis that their time for bringing an action started to run on 5 February 2004. But the proceedings were dismissed by the Irish High Court on 16 July 2004, as out of time under Order 84A(4) of the Courts Rules. Order 84A(4) provided: An application for the review of a decision to award or the award of a public contract shall be made at the earliest opportunity and in any event within three months from the date when grounds for the application first arose unless the Court considers that there is good reason for extending such period. The Irish High Court held that any action had to be brought no later than three months from 14 October 2003. The Commission pursued a complaint against Ireland on the ground that it had in two respects breached the Council Directives regulating the award of public works contracts and the remedies required thereby, notably Directive 89/665/EEC, as amended by Directive 92/50/EEC, and Directive 93/37/EEC, as amended by Directive 97/52/EC. First, the NRA had failed to notify SIAC promptly and in good time before contracting with CRG of its decision to award the contract to CRG, to enable SIAC to mount its challenge. Secondly, and materially for present purposes, Ireland was in breach by maintaining in force Order 84A(4) of the Rules of the Superior Courts, in the version resulting from Statutory Instrument No 374 of 1998, in so far as it gives rise to uncertainty as to which decision must be challenged through legal proceedings and as to how periods for bringing an action are to be determined. The Court held that both these alleged heads of infringement were established. With regard to the second head, the Court reiterated that national limitation periods are as such permissible, but applied the principles of effectiveness and legal certainty in holding that the period prescribed by Order 84A(4) infringed European law. It did this in a series of paragraphs which it is necessary to set out in full, because the language of the English version differs somewhat between paragraphs, with the result that each side has selected the formulation best suiting its case and maintained that it is clear that this reflects the true principle. If, perish the thought, any real uncertainty exists about what the Court of Justice meant, Mr Vajda submits that the question should, under the CILFIT criteria, be sent to Luxembourg to achieve clarity (see Case C 283/81 Srl CILFIT v Ministry of Health [1982] ECR 3415). The relevant paragraphs read as follows: 53 On the other hand, national limitation periods, including the detailed rules for their application, should not in themselves be such as to render virtually impossible or excessively difficult the exercise of any rights which the person concerned derives from Community law (Lmmerzahl, paragraph 52). 54 Order 84A(4) of the RSC provides that an application for the review of a decision to award or the award of a public contract must be made within a specified period. 55 However, as occurred in the dispute which gave rise to the High Courts judgment of 16 July 2004, the Irish courts may interpret that provision as applying not only to the final decision to award a public contract but also to interim decisions taken by a contracting authority during the course of that public procurement procedure. If the final decision to award a contract is taken after expiry of the period laid down for challenging the relevant interim decision, the possibility cannot be excluded that an interested candidate or tenderer might find itself out of time and thus prevented from bringing an action challenging the award of the contract in question. 56 According to the Courts settled case law, the application of a national limitation period must not lead to the exercise of the right to review of decisions to award public contracts being deprived of its practical effectiveness (see, to that effect, Case C 470/99 Universale Bau and Others [2002] ECR I 11617, paragraph 72; Case C 327/00 Santex [2003] ECR I 1877, paragraphs 51 and 57; and Lmmerzahl, paragraph 52). 57 As observed by the Advocate General in point 51 of her Opinion, only if it is clear beyond doubt from the national legislation that even preparatory acts or interim decisions of contracting authorities at issue in public procurement cases start the limitation period running can tenderers and candidates take the necessary precautions to have possible breaches of procurement law reviewed effectively within the meaning of Article 1(1) of Directive 89/665 and to avoid their challenges being statute barred. 58 Accordingly, it is not compatible with the requirements of Article 1(1) of that directive if the scope of the period laid down in Order 84A(4) of the RSC is extended to cover the review of interim decisions taken by contracting authorities in public procurement procedures without that being clearly expressed in the wording thereof. 59 Ireland disagrees with this finding, contending that the application of such a period for challenging interim decisions corresponds to the objectives of Directive 89/665, in particular the requirement of rapid action. 60 It is true that Article 1(1) of Directive 89/665 requires Member States to ensure that decisions taken by contracting authorities may be reviewed effectively and as rapidly as possible. In order to attain the objective of rapidity pursued by that directive, Member States may impose limitation periods for actions in order to require traders to challenge promptly preliminary measures or interim decisions taken in public procurement procedures (see, to that effect, Universale Bau and Others, paragraphs 75 to 79; Case C 230/02 Grossmann Air Service [2004] ECR I 1829, paragraphs 30 and 36 to 39; and Lmmerzahl, paragraphs 50 and 51). 61 However, the objective of rapidity pursued by Directive 89/665 must be achieved in national law in compliance with the requirements of legal certainty. To that end, Member States have an obligation to create a legal situation that is sufficiently precise, clear and foreseeable to enable individuals to ascertain their rights and obligations (see, to that effect, Case C 361/88 Commission v Germany [1991] ECR 1 2567, paragraph 24, and Case C 221/94 Commission v Luxembourg [l996] ECR 1 5669, paragraph 22). 62 The abovementioned objective of rapidity does not permit Member States to disregard the principle of effectiveness, under which the detailed methods for the application of national limitation periods must not render impossible or excessively difficult the exercise of any rights which the person concerned derives from Community law, a principle which underlies the objective of ensuring effective review proceedings laid down in Article 1(1) of Directive 89/665. 63 The extension of the limitation period under Order 84A(4) of the RSC to interim decisions taken by contracting authorities in public procurement procedures in a manner which deprives the parties concerned of their right of review satisfies neither the requirements of legal certainty nor the objective of effective review. Interested parties must be informed of the application of limitation periods to interim decisions with sufficient clarity to enable them effectively to bring proceedings within the periods laid down. The failure to provide such information cannot be justified on grounds of procedural rapidity. 64 Ireland submits that the Irish courts interpret and apply Order 84A(4) of the RSC in conformity with the requirements of Directive 89/665. This argument refers to the significant role played by case law in common law countries such as Ireland. 65 It should be noted in this regard that, according to the Court's settled case law, although the transposition of a directive into domestic law does not necessarily require the provisions of the directive to be reproduced in precisely the same words in a specific, express provision of national law and a general legal context may be sufficient, it is nevertheless necessary that that legal context be sufficiently clear and precise as to enable the parties concerned to be fully informed of their rights and, if necessary, avail themselves of those rights before the national courts (judgment of 29 October 2009 in Case C 474/08 Commission v Belgium, paragraph 19 and case law cited). 66 Order 84A(4) of the RSC, however, does not satisfy those requirements inasmuch as it allows national courts to apply, by analogy, the limitation period which it provides for challenges to public contract award decisions to challenges to interim decisions taken by contracting authorities in the course of those procurement procedures, in respect of which no express provision was made by the legislature for that limitation period to apply. The resulting legal situation is not sufficiently clear and precise to exclude the risk that concerned candidates and tenderers may be deprived of their right to challenge decisions in public procurement matters handed down by a national court on the basis of its own interpretation of that provision. 67 It follows that the first part of the second head of claim is well founded. Resuming the effect of these cases: in Courage Ltd v Crehan the European Court was concerned with an English law rule which rendered recourse impossible, but pointed out that it was also impermissible for a rule of law to render the exercise of European legal rights excessively difficult. In Danske Slagterier the Court was concerned with the latter situation, and held it to apply where it was not ascertainable with a reasonable degree of certainty or not sufficiently foreseeable whether a limitation period applied. The same test, whether a national rule renders it impossible or excessively difficult to exercise European rights is stated and restated in paragraphs 53 and 62 in Commission v Ireland. In paragraphs 61, 65 and 66 the Court joins this with references to the need for Member States to create a legal situation which is sufficiently, precise, clear and foreseeable or sufficiently clear and precise to enable individuals to ascertain and avail themselves of their rights, and (in that case) to exclude the risk of their being deprived of the right to challenge a public procurement decision by a decision handed down by a national court on the basis of its own interpretation of its Rules. In paragraph 58 the Court summarised its conclusion in Commission v Ireland as being that it was not compatible with the Directive if the scope of the period laid down in Order 84A(4) was extended to cover the review of interim decisions . without that being clearly expressed in the wording thereof. All these statements of principle in Commission v Ireland appear readily reconcilable. The requirement is that the true effect or interpretation should be sufficiently foreseeable or clear. Clarity was especially important and was emphasized in the context of Commission v Ireland because Order 84A(4) on its face allowed review within three months of either the decision to award or the award of a public contract. It would have been hard to anticipate, without clear warning, that time for a challenge to the latter would run from the former. Under the equivalent English Rule of Court, which was in effectively identical terms to the Irish, it had been established at the highest level by May 2002 that a challenge to a grant of planning permission could be made within three months of the grant, and need not be brought within three months of any earlier resolution conditionally authorizing the grant: R (Burkett) v Hammersmith and Fulham LBC [2002] UKHL 23, [2002] 1 WLR 1593, per Lord Slynn para 5 and Lord Steyn para 42. The English courts would not have taken the same limiting view of Order 84A(4) as the Irish High Court did. Where a rule like Order 84A(4) points on its face to a course being open to a litigant, it is necessary for it to be made clear if a contrary result is intended. Less easily reconcilable in paragraph 57 of the English text is the endorsement by the Court of Advocate General Kokotts statement that only if it is clear beyond doubt from the national legislation that even preparatory acts or interim decisions . start the limitation period running can tenderers and candidates take the necessary precautions to have possible breaches of procurement law reviewed effectively and to avoid their challenges being statute barred. In its own terms, and without any supporting reference in the Advocate Generals opinion or the Courts judgment, it appears more an explanation of the effect of the established test in the particular circumstances of Commission v Ireland than a statement of a new legal test. That is consistent with what is said in paragraph 18 above about the obvious need, in the light of the apparent meaning of Order 84A(4), to make it clear if time for all complaints was in fact intended to run from the date of any preparatory act or interim decision. But paragraph 57 has been relied upon by Mr Vajda for BCL as establishing, or explaining, the relevant test as being whether the commencement and operation of the limitation period, as held by the Court of Appeal, were clear beyond doubt. Mr Vajda points out that in Commission v Ireland, in contrast to Danske Slagterier, the Court of Justice had to determine for itself whether the principles of effectiveness and legal certainty had been infringed, and he submits that this was the test it applied. Other language versions do not appear to me to lend real support to Mr Vajdas case on this point. In the French, the equivalent words to the English only if it is clear beyond doubt from the national legislation that . are ce nest que lorsquil ressort clairement de la lgislation nationale que .; in the German, they are nur . wenn aus den nationalen Rechtsvorschriften klar hervorgeht, dass .; in the Dutch, they are zijn slechts wanneer uit de nationale wettelijke regeling duidelijk blijkt dat ., and in the Portugese, they are s se resultar claramente da legislao nacional que . These versions all emphasise the need for clarity, nothing more, without reference to excluding doubt. The Spanish version slo cuando resulte inequvocamente posible de la legislacin nacional que . uses a word inequvocamente with the sense of unequivocally, but this is attached to the word posible. The Italian reads solo laddove dalla normativa nazionale risulti in maniera inequivoca che . , and on its face therefore endorses a need for an unequivocal provision. But the general tenor of these other language versions is that clarity was to be expected if Order 84A(4) was to be understood (contrary to its natural meaning) as barring claims which were not made within three months of any relevant preliminary act or interim decision. That, in the particular context, was understandable, for reasons already explained, but it does not mean that the Court of Justice was in paragraph 57 substituting a new test for that expressed in previous case law or elsewhere in its same judgment. If clarity beyond doubt were the appropriate general test, then any doubt presumably, any reasonably arguable question about the running of the limitation period or, more generally, about the way in which national law implements European law would infringe the principles of effectiveness and legal certainty. That is, unless and until a court presumably the final appellate court had resolved the doubt, one way or the other. The wide ranging significance of such a principle for national law barely needs mention. There could also be implications for European law. Any point of European law, which was open to doubt under the relevant Union instrument and which, when an issue arose in proceedings, would require a reference to the Court of Justice under the CILFIT criteria, might also be said to involve a breach of the European legal principles of effectiveness and legal certainty. Be that as it may be, it is hard to envisage that the European Court envisaged anything of this sort in paragraph 57 of its judgment in Commission v Ireland. Nor did Advocate General Sharpston consider that the European Court had done so. In her opinion in Commission v France, para 50, she said this: 50. It is true that the Court has consistently held that the right of individuals to rely on directly effective provisions of the Treaty before national courts is only a minimum guarantee and is not sufficient in itself to ensure the full and complete implementation of the Treaty. (34) It is likewise established that, in order to guarantee legal certainty, Member States must create a legal situation that is sufficiently precise, clear and foreseeable to enable individuals to ascertain their rights and obligations. (35) Her endnote 35 referred in support of the second sentence to paragraph 61 in Commission v Ireland and the case law cited there. When considering what test may be appropriate, some relevance might be suggested to attach to the relief available for any infringement of the principles of effectiveness and legal certainty. If the only remedy is against the State for introducing a law which is uncertain in its impact, that might make it easier to accept a broader principle of certainty than if the remedy is, as claimed by the present appeal, against the other party to civil litigation. But that approach is of no assistance to BCL on this appeal, in which the State is not involved. Mr Vajdas case is that a party in BASFs shoes can establish its right to rely on a time bar under national law, by a decision which BCL can no longer challenge as a matter of national law, and yet fail because the State had not left it clear beyond doubt what the legal position regarding limitation was at the time when the limitation period was (as now established) running. If that were the European legal position (which I do not believe it is: see paragraphs 44 to 47 below), it might militate in favour of a narrow view of the principle of legal certainty. For present purposes, however, I shall ignore any such argument in favour of a narrower principle of effectiveness and legal certainty, but at the same time ignore the fact that BASF is distinct from and may not be answerable for any failings of the State. On this basis, the considerations which I have so far identified lead me to conclude that the English language text of paragraph 57 should not be taken literally or read out of context. The Court cannot have intended to substitute a new test for the well established test of excessive difficulty which applies where the legal position was not sufficiently clear and precise, ascertainable with a reasonable degree of certainty or reasonably foreseeable. The European Court of Justices judgment in Commission v Ireland must be read as a whole. So read, I do not consider that there is any doubt about the appropriate test or any need to refer a question to the Court of Justice on it. I add that, as will appear, even if one were to adopt a simple test of clarity, it would not change the outcome of this appeal. In reality, however, any distinction between on the one hand clarity and on the other sufficient or reasonable clarity is elusive. At the high point of his submissions, Mr Vajda was in effect arguing for absolute certainty, beyond any doubt, as a test. But, as Oliver Wendell Holmes once said, Certainty generally is illusion, and repose is not the destiny of man. The true test is more flexible and more reflective of the real world. Mr Brealey QC for BASF also referred to decisions of the European Court of Human Rights on the concepts of right of access to a court, rules prescribed by law and legal certainty. It is not necessary for the opinion which I have formed to rely on the reasoning in these decisions. But I agree that they are of interest, in showing how that Court understands concepts which one would expect to parallel those adopted in Luxembourg regarding legal effectiveness and certainty. In Stubbings v United Kingdom (1996) 23 EHRR 213, the Court of Human Rights accepted as unproblematic a decision of the House of Lords (Stubbings v Webb [1993] AC 498) overruling the Court of Appeal on a difficult limitation point and interpreting the fixed six year time limit under section 2 of the Limitation Act 1980 as applicable to deliberate assaults including rape and indecent assault committed against a child. (The difficulty is evidenced by the fact that, 15 years later, the House departed from this decision and held instead in A v Hoare [2008] AC 844 that deliberate torts fell within the flexible knowledge based rule in section 11.) In Sunday Times v United Kingdom (1979) 2 EHRR 245 the newspaper submitted that the English law of contempt was too vague and uncertain, and its extension by some members of the House of Lords to public prejudgement of the outcome of proceedings novel, to the extent that it was not reasonably foreseeable or therefore prescribed by law within Article 10 of the Convention. The Court of Human Rights said that: 49. In the Court's opinion, the following are two of the requirements that flow from the expression 'prescribed by law'. First, the law must be adequately accessible: the citizen must be able to have an indication that is adequate in the circumstances of the legal rules applicable to a given case. Secondly, a norm cannot be regarded as a 'law' unless it is formulated with sufficient precision to enable the citizen to regulate his conduct: he must be able if need be with appropriate advice to foresee, to a degree that is reasonable in the circumstances, the consequences which a given action may entail. Those consequences need not be foreseeable with absolute certainty: experience shows this to be unattainable. Again, whilst certainty is highly desirable, it may bring in its train excessive rigidity and the law must be able to keep pace with changing circumstances. Accordingly, many laws are inevitably couched in terms which, to a greater or lesser extent, are vague and whose interpretation and application are questions of practice. In the upshot the submission of uncertainty was rejected, with the Court saying: 52. To sum up, the Court does not consider that the applicants were without an indication that was adequate in the circumstances of the existence of the 'prejudgment principle'. Even if the Court does have certain doubts concerning the precision with which that principle was formulated at the relevant time, it considers that the applicants were able to foresee, to a degree that was reasonable in the circumstances, a risk that publication of the draft article might fall foul of the principle. The further cases of Vogt v Germany (1995) 21 EHRR 205 and Sahin v Turkey (2005) 44 EHRR 99 contain statements by the Court of Human Rights confirming that the mere fact that a legal provision is capable of more than one construction does not mean that it does not meet the requirement implied in the notion prescribed by law (Vogt, para 48) or that it fails to meet the requirement of foreseeability for the purposes of the Convention (Sahin, para 91). In my opinion, the approach of the Court of Human Rights confirms the view which I consider that the Court of Justice would take in relation to suggestions that the existence of arguable doubt or of a need for interpretation is of itself sufficient to render national law insufficiently foreseeable or to make it excessively difficult for the subjects of the law to know their position. Was the commencement of the limitation period sufficiently foreseeable? Taking the statutory provisions by themselves, I have no doubt about the answer to the question whether the commencement of the two year limitation period was sufficiently foreseeable. The Court of Appeals analysis was impeccable and it was in my opinion well justified in speaking of the plain and ordinary meaning of the statutory language and of the legal position as clear. The Competition Act uses throughout clear language, speaking repeatedly of a decision . that the [or a] prohibition has been infringed: see e.g. sections 31, 32, 36, 46 and 47A. Such a decision is explicitly distinguished in section 36(1) from a requirement imposed by the OFT on an undertaking which is a party to the agreement to pay the OFT a penalty in respect of the infringement and in section 46(3)(i) from a decision . as to the imposition of any penalty under section 36 or as to the amount of any such penalty. On a correct reading, an appeal to the Court of First Instance (now the General Court) will take issue with either or both of the decisions on infringement and on penalty. It is a question of analysis which it does. If an appeal which is nominally directed only against the penalty levied in fact takes issue with the existence or nature of the infringement, it may involve an appeal against infringement as well penalty. In the present case, it is accepted that BASFs appeal was against, and only against, the fine imposed on it. Mr Vajda showed us the summary of the nature of BASFs appeal published in the Official Journal on 4 May 2002 (which was not apparently put before the Court of Appeal), and suggested that it left unclear the actual nature of the appeal. But he confirmed that he did not seek to raise any new suggestion to the effect that BCL had been misled on that score, and also that he did not challenge the finding of fact made by the Tribunal on 19 November 2009 that (para 29) BCL knew that BASF was not challenging the finding of infringement in its appeal to the Court of First Instance. The Official Journal summary was relied upon simply as forensic support for BCLs case that the line between decisions on infringement and penalty can be unclear with the implication that it could not have been envisaged with any certainty that the Competition Act and Rules drew such a line. On this, I would disagree. The Act and Rules were and are to my mind clear in drawing that precise distinction. Whatever the issues that might arise in particular cases as to whether there had been an appeal against liability as well as penalty, there is no suggestion in the present case that BASF did in fact appeal against liability or that BCL was misled into thinking that it had. I am also unimpressed by BCLs reliance on the fact that it did not itself commence legal proceedings either in the High Court or before the Tribunal within what has been established to have been the available limitation period. An individual partys conduct cannot serve as an assay of the clarity or otherwise of statutory provisions. In any event, the account of the relevant thinking and of the advice which is said to have led to it is so exiguous and to some extent puzzling that I could not attach to it any real significance in this context. But Mr Vajda also points to a number of Tribunal decisions, some of which he submits reached conclusions or pointed in an opposite sense to those now established as correct. The first is Emerson Electric Co v Morgan Crucible Company plc [2007] CAT 28, which followed from a Commission decision dated 3 December 2003 establishing an infringement involving six concerns. Three of the concerns (SGL Carbon AG, Schunk GmbH and Schunk Kohlenstofftechnik GmbH and Le Carbone Lorraine SA SGL, Schunk and Carbone) lodged appeals with the Court of First Instance, seeking annulment of the Decision and/or cancellation or reduction of the fine imposed. Morgan Crucible, the whistle blower which had been granted immunity from any fine, lodged no appeal. On 9 February 2007 Emerson, an alleged victim of the cartel, made a claim for damages against Morgan Crucible in the Tribunal at a time when the appeals by the other cartel members were still outstanding. The Tribunal (Marion Simmons QC, Adam Scott TD and Vindelyn Smith Hillman) held on 17 October 2007 that the two year limitation period under section 47A(8)(b) had not yet commenced, because (para 64): the phrase if any such [EC] proceedings are instituted in subsection (8) clearly indicates that as long as any proceedings have been brought in the European Court, permission of the Tribunal is required to bring a monetary claim under section 47A. It also said (paras 70 71) that the word decision in section 47A(8) could not be read in a restrictive sense as referring to that part of [it] which is the subject of the appeal to the [European Court], rather than to the whole of the Commissions decision. The proceedings against Morgan Crucible were, on this basis, premature, unless Tribunal permission could be obtained for their early pursuit under section 47A(5)(b). But the Tribunal also considered, on an opposite hypothesis and assuming the two year limitation period to have expired, whether the Tribunal had power to extend the time for commencement of proceedings. It expressed the view obiter that it did, under Rule 19(2)(i). The Tribunal decision of 28 April 2008 recites ([2008] CAT 8, para 4) that permission was then granted to the Emerson claimants under section 47A(5)(b) to bring premature proceedings against Morgan Crucible. Permission was also sought to bring such proceedings against SGL, Schunk and Carbone. It was submitted that their outstanding appeals were, in fact, merely against the level of the fines imposed. The Tribunal in its decision of 28 April 2008 proceeded on the basis that the appeals appear to be primarily concerned with the imposition and/or level of the fine imposed by the Commission (para 90) and that the facts upon which the Commission had based its statement of objections (the original complaint regarding the existence of a cartel) were substantially uncontested (para 93). But it noted that there were challenges to the scope of the infringement found by the Commission which could affect the damages claims (paras 90 91) and considered it impossible to draw a bright line between different appeals against an infringement decision, saying that each case must depend on its facts (para 88). On the facts before it, it refused permission to the Emerson claimants to bring early proceedings against SGL, Schunk and Carbone. At a later date, 17 October 2008, the Tribunal (with Barling J in the chair instead of Marion Simmons QC, who had in the meantime sadly died) ordered that the Emerson claimants should pay 50% of the defendants costs incurred by the claimants unsuccessful applications: [2008] CAT 28. On 25 September 2008 the present case came before the Tribunal in a different composition consisting of Barling J, Ann Kelly and Michael Davey [2008] CAT 24 for determination of the issue whether the two year period for commencement of BCLs claim had begun to run at the end of January 2002 (the last date for an appeal by BASF against the Commissions decision that it had infringed Article 81) or whether its commencement was postponed until BASFs appeal against the fine imposed on it was determined on 15 March 2006. In the former case the claim brought by BCL against BASF on 12 March 2008 was out of time, in the latter case it was in time. The Tribunal took the latter view, pointing again to the possibility that an appeal on the level of fine might be relevant to and determined by the nature and extent of the infringement being penalized (paras 34 37). It found reinforcement for its view in the previous Tribunal decisions in Emerson Electric. On 22 May 2009 the Court of Appeal reversed the Tribunals decision of 25 September 2008: paragraphs 4 and 7 above. On 12 November 2010 the Court of Appeal held that the Tribunal did not have the power to extend time for the commencement of proceedings which had been assumed by the Tribunal when it refused on the facts to exercise any such power on 19 November 2009: paragraphs 4 and 8 above. The domestic legal position resulting from the course of events outlined in paragraphs 32 to 36 is now unchallenged and unchallengeable. But it took time and a process of appeals to reach this position. Does that mean that English law lacked the requisite legal certainty, that its requirements or effect were not sufficiently foreseeable or that it was excessively difficult for BCL to take advantage of the possibility of making a claim for damages against BASF? The first point to note is that the line of decisions which I have identified began on 17 October 2007 with the first Emerson decision by the CAT. By then the two year period for a claim for damages before the Tribunal was long expired (on 31 January 2004). There remained just over a month of the six year period for the bringing of a High Court claim for damages, a course which BCL do not in fact appear at any stage to have contemplated. There is no suggestion that BCL considered or relied upon the first Emerson Electric decision in the period between 17 October and 21 November 2007. Nor could they sensibly have done so. The Tribunal in Emerson Electric was not directly addressing the present issue, which is whether the decision of the Commission referred to in section 47A(8) includes both its decision on infringement and any decision on fine. Further, the Tribunals decision, on the point which it had to decide, was, in the Courts view, erroneous and at the very least obviously vulnerable to challenge on appeal. The word any has and can have no such general significance as the Tribunal appears to have attached to it. Either the decision establishing that the relevant prohibition has been infringed refers to the particular proposed defendant (so that an appeal by another concern against the finding of infringement is irrelevant) or it refers to all concerns implicated in the alleged infringement (in which case an appeal by one may postpone the time for a follow on claim for damages against another who has not appealed). The Court of Appeal in Deutsche Bahn AG v Morgan Crucible Co plc [2012] EWCA Civ 1055, after close consideration of these alternative analyses, came down firmly in favour of the latter. The Supreme Court, as noted in paragraph 7 above, has not heard submissions on this conclusion. It was not relevant to do so. What is unchallenged and unchallengeable is that an appeal by an involved concern against a fine alone is not in any sense a relevant appeal which can postpone the time for a follow on claim against that (or any other) concern which has not appealed against the finding of infringement made against it. The Tribunal decisions considered in paragraphs 32 to 38 above were irrelevant to BCLs actual conduct. But do they demonstrate objectively the existence of such uncertainty in English law as to infringe the relevant European legal principles? Clearly, it is unfortunate if Competition Appeal Tribunals arrive at conclusions on the commencement of a limitation period and on the power to grant an extension of time which are held erroneous on appeal to the Court of Appeal. But an appellate system is there to remedy error and to establish the correct legal position. I do not accept that its ordinary operation is the hallmark of a lack of legal certainty or effectiveness. The language and effect of the Competition Act were subsequently, and rightly, held by the Court of Appeal to be clear. The Emerson Electric and BCL Tribunals gave the words any and decision significance which they could not bear. They also failed to interpret section 47A in the context of the statute and its other sections read as a whole. It was by any standard readily foreseeable that an opposite view would be taken on appeal. The Tribunal decisions do not in my view lead to a conclusion that English law was insufficiently certain or that it made the bringing of a claim in time excessively difficult. At the very least, the risks of not bringing proceedings against BASF by 31 January 2004 were or should have been evident. These conclusions are sufficient to resolve the present appeal so far as it relates to the alleged uncertainty of the starting date of the two year limitation period. But I add that it was also open to BCL to issue Tribunal proceedings, and, if they were held to be premature, to request the Tribunals permission for their early commencement under section 47A(8)(b). Mr Vajda pointed in this connection to the costs order made against the Emerson claimants on 17 October 2008 following their unsuccessful application to begin early proceedings against SGL, Schunk and Carbone. But that was long after the expiry of all limitation periods in the present case. The reality is that, if BCL had in January 2004 taken the steps to protect its position which one would have expected, it would not have confined itself to an application to bring early proceedings under section 47A(8)(b), but would have maintained that the two year period for proceedings against BASF had begun in January 2002, and would, if necessary, have pursued that point to the Court of Appeal, where it would have won upon it. Was the lack of any power to extend sufficiently foreseeable? Again, I have no doubt that it was. Part II of the Competition Appeal Tribunal Rules deals with appeals to the Tribunal. Within Part II, Rule 19 headed Directions is the first in a block of rules headed Case management. Its entire subject matter is directed to the management of proceedings which are on foot and being pursued. In that context it is plain that it says nothing about the commencement of proceedings. The reference to directions . as to the abridgement or extension of any time limits, whether or not expired says nothing to indicate that it could cover time limits for the commencement of proceedings. The fact that it refers to abridgement as well as extension of time does however underline the implausibility of its suggested application to time limits for commencing the proceedings in which Rule 19 allowed directions to be given. Abridgement occurs in the course of proceedings. It is inconceivable that the time for commencement of proceedings could be abridged. Just as, if not more, significantly, the topic of commencement of proceedings is in Part II covered in another block of rules, of which Rule 8(2) expressly permits the extension of the time limit for appeal proceedings in circumstances shown to the Tribunal to be exceptional. Part IV headed Claims for damages incorporates by reference Rule 19 by virtue of both Rule 30 and Rule 44, which is the first of another block of rules headed Case management. Rule 44 makes no mention of Rule 8. Rule 30 makes expressly clear that Rule 8 is not applicable to Part IV claims for damages, and there is no equivalent power to extend in Part IV. Accordingly, it is plain that the Secretary of State in making the Rules deliberately decided that there should be no power to extend time for the commencement of claims for damages in, as opposed to appeals to, the Tribunal. The Tribunals contrary view was first expressed in Emerson Electric on 17 October 2007. It was understandably asserted to be correct by BCL before the Court of Appeal in April/May 2009, and Richards LJs judgment adopts that assumption, which was in turn adopted by the Tribunal in BCL on 19 November 2009. But, when the point was argued, the Court of Appeal held the contrary, noting the points which I have already made, and various other points. In my opinion, it is impossible to suggest that this interpretation of the Rules was not sufficiently foreseeable or clear. Again, the fact that a Tribunal arrives at an erroneous conclusion which is corrected on appeal cannot mean that the law is uncertain to a point making it excessively difficult to take advantage of its provisions. Again, it is not and could not be suggested that the Tribunals decision of 17 October 2007 was instrumental in any course of action which BCL actually did or did not take. For these reasons, I reject BCLs case that the English legal position regarding the commencement of the relevant two year period for a claim for damages under section 47A and Rule 31 of the Competition Appeal Tribunal Rules and regarding the possibility of seeking an extension of time were insufficiently foreseeable or clear and made it excessively difficult for BCL to commence and pursue such a claim in time. In my view, the contrary is the case. Absolute certainty is not the test, but it was eminently and sufficiently foreseeable that the English legal position would be established on both points to the effect which the Court of Appeal held. I would, if necessary, also go further and, in company with the Court of Appeal, describe the legal position as clear on a careful reading of the relevant Act and Rules. It is for the domestic court to determine whether, in the particular legal and factual situation, the principles of effectiveness and legal certainty were satisfied: Danske Slagterier, para 34, cited in paragraph 12 above. In my view, they were here. There is therefore no basis for any reference to the Court of Justice on this aspect. BCLs appeal in these circumstances fails and must be dismissed. Appropriate relief where the principles of effectiveness and legal certainty are breached It is unnecessary, in the light of the above, to decide what relief might have been appropriate, had the conclusion been that the principles of effectiveness and/or legal certainty had in any respect been breached. However, I shall briefly address this subject. If the effect of a statute made by Parliament and of a statutory instrument made by the Secretary of State under statute is unclear in a way which breaches the European legal principle of effectiveness or legal certainty, the State is in breach of its European legal obligations, and liable accordingly, as Commission v Ireland illustrates. It is quite another matter to suggest that another party to civil litigation is deprived of the right to rely upon legal provisions which, once construed in a manner resolving any uncertainty, are shown to exist for their benefit. That the party sued was a member of a cartel infringing Article 81 does not alter its prima facie entitlement to rely upon any limitation period contained in the relevant legislation. Limitation periods are periods of repose intended to benefit those who are liable as well as the entirely innocent. Otherwise, they would have no point, and it would always be necessary to try every case. I find it impossible to think that European law requires the setting aside as between civil parties of a limitation defence, which a defendant, who is independent of the State, has successfully established under domestic law, on the ground that its existence or scope under domestic law was uncertain until the court decision establishing it. For a successful party other than the State to be deprived in this way of the fruits of victory on limitation would mean that there was little point in raising the limitation defence in the first place. No one would then ever know with clarity what the true legal position was. The national limitation period would be deprived of effectiveness and national law of legal certainty. Some confirmation that this is not the European legal position is, I think, also provided by the nature of the proceedings and the decision in Commission v Ireland itself. The Commission there brought proceedings against Ireland because of the application of a limitation provision of previously uncertain effect in proceedings between SIAC and the NRA, a statutory body. The complaint was not that the Irish courts acted contrary to European law in giving effect to the limitation provision. But it should have been, were it the European legal position that legal uncertainty invalidates a limitation period as between parties to civil litigation, as Mr Vajda contends. The judgment did not proceed on that basis either. Rather, it, like the complaint, accepted the validity as between the parties of the limitation provision in the sense determined by the Irish High Court. But it declared the Irish State to be in breach of the Directives dealing with public works and remedies by maintaining in force Order 84A(4) of the Rules of the Superior Courts . in so far as it gives rise to uncertainty as to which decision must be challenged through legal proceedings and as to how periods for bringing an action are to be determined. The limitation provision was, in short, treated as valid between the parties, but the State was in breach for maintaining it in force in uncertain terms. On this basis, if (contrary to my view) BCL were to have any complaint, it would lie against the United Kingdom, and not affect BASFs right to rely upon the limitation period to which it has established its entitlement in the Court of Appeal in the present proceedings. While it does not arise, I would, if necessary, have regarded this point as sufficiently free of any reasonable doubt to be acte clair and inappropriate for reference to the Court of Justice. Conclusion Part I of the Competition Act 1998 prohibits by section 2 agreements between undertakings or decisions or concerted practices of undertakings which affect trade and have as their object or effect the prevention, restriction or distortion of competition within the UK (the Chapter I prohibition) while section 18 prohibits abuse of dominant position (the Chapter II prohibition). Under section 25, contained in Chapter III of Part I of the Act, the Office of Fair Trading (OFT) was given power to investigate any such agreement as was mentioned in section 2, as well as any agreement which may affect trade between European Community Member States and have as its object or effect the prevention, restriction or distortion of competition within the Community, while section 31 defines a decision made as a result of any such investigation as meaning a decision of the OFT that a Chapter I or II prohibition or the prohibition in Article 81(1) or 82 has been infringed. The Act continues: 32(1) If the OFT has made a decision that an agreement infringes the Chapter I prohibition or that it infringes the prohibition in Article 81(1), it may give to such person or persons as it considers appropriate such directions as it considers appropriate to bring the infringement to an end. 36(1) On making a decision that an agreement has infringed the Chapter I prohibition or that it has infringed the prohibition in Article 81(1), the OFT may require an undertaking which is a party to the agreement to pay the OFT a penalty in respect of the infringement. Chapter IV, containing sections 45 to 49 of the Act, includes section 46 permitting any party to an agreement in respect of which the OFT has made a decision to appeal to the Tribunal against, or with respect to, the decision, and defines decision as follows: (3) In this section decision means a decision of the OFT (a) as to whether the Chapter I prohibition has been infringed, (b) as to whether the prohibition in Article 81(1) has been infringed, (c) as to whether the Chapter II prohibition has been infringed, (d) as to whether the prohibition in Article 82 has been infringed, (e) cancelling a block or parallel exemption, (f) withdrawing the benefit of a regulation of the Commission pursuant to Article 29(2) of the EC Competition Regulation, (g) not releasing commitments pursuant to a request made under section 31A(4)(b)(i), (h) releasing commitments under section 31A(4)(b)(ii), (i) as to the imposition of any penalty under section 36 or as to the amount of any such penalty, and includes a direction under section 32, 33 or 35 and such other decisions under this Part as may be prescribed. 2. Section 47A of the Competition Act 1998 applies, by virtue of subsection (1), to any claim for damages as a result of the infringement of a relevant prohibition. Subsection (3) then disapplies any limitation period that would apply in court proceedings, while subsection (4) provides for a claim to which section 47A applies to be made in proceedings brought before the Tribunal, subject to this time limit: (5) But no claim may be made in such proceedings (a) until a decision mentioned in subsection (6) has established that the relevant prohibition in question has been infringed; and (b) otherwise than with the permission of the Tribunal, during any period specified in subsection (7) or (8) which relates to that decision. 3. Subsection (6) lists various categories of decision by the OFT, the Tribunal or the European Commission that a specified prohibition . has been infringed (or, in one case involving the Commission, a finding made). The relevant provision for present purposes is in subsection (6)(d): a decision of the European Commission that the prohibition in Article 81(1) or Article 82 of the Treaty has been infringed. Subsections (7) and (8) identify various periods during which one or more appeals may be made in relation to the various categories of decision listed in subsection (6), and during which any claim for damages under section 47A depends accordingly, under subsection (5)(b), on the Tribunals permission for its pursuit. Subsection (8) is presently relevant: (8) The periods during which proceedings in respect of a claim made in reliance on a decision or finding of the European Commission may not be brought without permission are (a) the period during which proceedings against the decision or finding may be instituted in the European Court; and (b) if any such proceedings are instituted, the period before those proceedings are determined. Subsection (9) provides that, in determining any claim under section 47A the Tribunal is bound by any decision mentioned in subsection (6) which establishes that the prohibition in question has been infringed. 4. The Competition Appeal Tribunal Rules 2003, which came into force under, and on the same day (20 June 2003) as, section 47A of, the Competition Act 1998 read: PART IV CLAIMS FOR DAMAGES Application of rules to claims for damages 30. The rules applicable to proceedings under sections 47 A and 47B of the 1998 Act (claims for damages) are those set out in this Part, and in Part I, Part II (except for rules 8 to 16) and Part V of these rules. COMMENCEMENT OF PROCEEDINGS Time limit for making a claim for damages 31. (1) A claim for damages must be made within a period of two years beginning with the relevant date. (2) The relevant date for the purposes of paragraph (1) is the later of the following (a) the end of the period specified in section 47A(7) or (8) of the 1998 Act in relation to the decision on the basis of which the claim is made; (b) the date on which the cause of action accrued. CASE MANAGEMENT Case management generally 44. (1) In determining claims for damages the Tribunal shall actively exercise the Tribunal's powers set out in rules 17 ., 18., 19 (Directions) . 5. Rule 19 appears in Part II of the Rules headed Appeals and dealing with appeals to the Tribunal. The initial block of Rules in Part II is headed Commencing Appeal Proceedings, and it commences with rule 8(1). Rule 8(1) requires any appeal to be made within two months of notification or publication of the disputed decision and Rule 8(2) continues: The Tribunal may not extend the time limit provided under paragraph (1) unless it is satisfied that the circumstances are exceptional. Rule 19 is the first in a block of rules headed Case Management. It provides: Directions 19. (1) The Tribunal may at any time, on the request of a party or of its own initiative, at a case management conference, pre hearing review or otherwise, give such directions as are provided for in paragraph (2) below or such other directions as it thinks fit to secure the just, expeditious and economical conduct of the proceedings. (2) The Tribunal may give directions (a) as to the manner in which the proceedings are to be conducted, including any time limits to be observed in the conduct of the oral hearing; (b) that the parties file a reply, rejoinder or other additional pleadings or particulars; (c) for the preparation and exchange of skeleton arguments; (d) requiring persons to attend and give evidence or to produce documents; (e) as to the evidence which may be required or admitted in proceedings before the Tribunal and the extent to which it shall be oral or written; (f) as to the submission in advance of a hearing of any witness statements or expert reports; (g) as to the examination or cross examination of witnesses; (h) as to the fixing of time limits with respect to any aspect of the proceedings; (i) as to the abridgement or extension of any time limits, whether or not expired; (j) to enable a disputed decision to be referred back in whole or in part to the person by whom it was taken; (k) for the disclosure between, or the production by, the parties of documents or classes of documents; (l) for the appointment and instruction of experts, whether by the Tribunal or by the parties and the manner in which expert evidence is to be given; (m) for the award of costs or expenses, including any allowances payable to persons in connection with their attendance before the Tribunal; and (n) for hearing a person who is not a party where, in any proceedings, it is proposed to make an order or give a direction in relation to that person. (3) The Tribunal may, in particular, of its own initiative (a) put questions to the parties; (b) invite the parties to make written or oral submissions on certain aspects of the proceedings; (c) ask the parties or third parties for information or particulars; (d) ask for documents or any papers relating to the case to be produced; (e) summon the parties' representatives or the parties in person to meetings. For these reasons, I would dismiss BCLs appeal.
+On a Tuesday afternoon in July 2008 Mrs Elizabeth Robinson, described by the Recorder as a relatively frail lady then aged 76, was walking along Kirkgate, a shopping street in the centre of Huddersfield, when she was knocked over by a group of men who were struggling with one another. Two of the men were sturdily built police officers, and the third was a suspected drug dealer whom they were attempting to arrest. As they struggled, the men knocked into Mrs Robinson and they all fell to the ground, with Mrs Robinson underneath. She suffered injuries as a result. The principal question which has to be decided in this appeal is whether the officers owed a duty of care to Mrs Robinson. The other important question is whether, if they did, they were in breach of that duty. Mr Recorder Pimm held that the officers had been negligent, but that police officers engaged in the apprehension of criminals were immune from suit. The Court of Appeal held that no duty of care was owed, and that, even if the officers had owed Mrs Robinson such a duty, they had not acted in breach of it: [2014] EWCA Civ 15. As will appear, the simple facts of this case have given rise to proceedings raising issues of general importance. Most of those issues can be decided by applying long established principles of the law of negligence. The fact that the issues have reached this court reflects the extent to which those principles have been eroded in recent times by uncertainty and confusion. The facts The events leading to Mrs Robinsons accident began when DS Neil Willan spotted Mr Ashley Williams apparently dealing drugs in a park in the centre of Huddersfield. He did not attempt to arrest Williams immediately, as Williams was young and physically fit, and Willan thought that he was unlikely to be able to arrest him without his running away. He called for backup, and DC Ian Green and DS Damian Roebuck then made their way to join him. Williams went to a bookmakers on Kirkgate, and Willan followed him inside. He decided not to attempt an arrest inside the shop, as there were people there whom he recognised, and he was concerned that attempting an arrest would endanger both his own safety and that of the customers and staff. Williams then left the shop and stood outside it. Green and Roebuck then arrived, and another officer, PC Dhurmea, arrived soon afterwards. Like Willan, they were in plain clothes. Willan and Roebuck formed a plan to arrest Williams while he was standing outside the bookmakers. The plan involved Willan and Dhurmea approaching Williams from one direction, taking hold of him and effecting the arrest, while Roebuck and Green were positioned in the opposite direction, to prevent his escape and assist once Willan and Dhurmea had taken hold of him. Willan and Dhurmea positioned themselves up the street from the bookmakers, while Green and Roebuck took up a position some distance down the street. Kirkgate was moderately busy at the time with pedestrians and traffic. Mrs Robinson was one of a number of pedestrians walking along the pavement. She passed Willan and Dhurmea, and then Williams, very shortly after two other pedestrians. Almost immediately after she passed Williams, and when she was within a yard of him, Willan and Dhurmea approached him. Mrs Robinson was then in their line of sight. The officers took hold of Williams and attempted to arrest him. Williams resisted arrest. As the men tussled, they moved towards Mrs Robinson and collided with her. The initial contact was between her and Williams, who backed into her. She fell over, and the men fell on top of her. Roebuck and Green arrived three seconds later and assisted in arresting Williams. The proceedings before the Recorder Mrs Robinson issued proceedings for damages for personal injury, on the basis first of the negligence of the officers, and secondly assault and trespass to the person occasioned by DS Willan. The latter aspect of the claim is no longer in issue. Following a hearing on liability, the Recorder dismissed the claim. In relation to the facts, the Recorder relied on CCTV footage of the incident, together with the evidence of DS Willan, DS Roebuck and DC Green concerning the planning of the arrest. He accepted Willans evidence that the officers had identified the risk that Williams would try to run away, and regarded it as significant. Willan also said that he was aware of the potential for harm to members of the public if Williams tried to escape. His evidence was that in any situation it was necessary to consider the risk to those in the vicinity. He said that if it had appeared to him that someone was in harms way, he would have walked past Williams without effecting the arrest. The Recorder noted that that was in accordance with the risk assessment guidance provided to police officers in relation to arrests in drugs cases, to which he had been referred in the evidence. Willan said that he had not been aware of Mrs Robinsons presence when he attempted to arrest Williams. Willan also gave evidence that there was some urgency in effecting the arrest. He had seen Williams taking the drugs from a bag secured around his neck. It was important to arrest him while he still had drugs in his possession. Without the drugs, there was unlikely to be sufficient evidence for a successful prosecution. DS Roebuck said that it had taken him and DC Green about three seconds to get from the place where they had taken up position prior to the attempted arrest to the scene where the other three men were on top of Mrs Robinson. He said that suspects like Williams could have recognised them as police officers if they had been any closer. The Recorder did not accept that evidence, which was unsupported by any other evidence. As far as appeared from the evidence, Roebuck and Green would, he found, just have been two men walking along the street. In the light of the evidence, the Recorder found that the decision to arrest Williams at the time and place selected by the officers involved a foreseeable risk that Mrs Robinson would be injured. She was in very close proximity to Williams at that moment, she was an elderly lady, and there was a significant and foreseeable risk that he would try to escape. In the view of the Recorder, the officers had acted negligently. First, Willan accepted that he ought to have been taking care for the safety of members of the public in the vicinity. Although Mrs Robinson had just walked past Williams and was within a yard of him, Willan did not notice her. That was prima facie in breach of his duty of care. Secondly, in view of the known risk that Williams would try to escape, the officers could have waited and selected a safer opportunity to effect the arrest. Thirdly, there was a clear need for all four officers to be present if the arrest was to be carried out safely with pedestrians passing. Roebuck and Green had however been too far away to assist their colleagues until several seconds had passed. The risk could have been minimised if they had been closer at the time when the arrest was attempted. The Recorder held, however, that the decision in Hill v Chief Constable of West Yorkshire [1989] AC 53 had conferred on the police an immunity against claims in negligence. In the light of the decision of the Court of Appeal in Desmond v Chief Constable of Nottinghamshire Police [2011] EWCA Civ 3; [2011] PTSR 1369, that immunity was not confined to cases of omission. It therefore applied in the present case. The proceedings in the Court of Appeal In the Court of Appeal, Hallett LJ considered that the Caparo test [Caparo Industries plc v Dickman [1990] 2 AC 605, 617 618] applies to all claims in the modern law of negligence (para 40). In consequence, [t]he court will only impose a duty where it considers it right to do so on the facts (ibid). The general principle was that most claims against the police in negligence for their acts and omissions in the course of investigating and suppressing crime and apprehending offenders will fail the third stage of the Caparo test (para 46). That is to say, [i]t will not be fair, just and reasonable to impose a duty (ibid). That is because the courts have concluded that the interests of the public will not be best served by imposing a duty [on] to individuals (ibid). The answer to counsels rhetorical question, what would the public think if the police, in the process of arresting criminals, could injure innocent members of the public with impunity, was that provided the police act within reason, the public would prefer to see them doing their job and taking drug dealers off the street (para 47). One might observe that if the police are not under a duty of care, then it is irrelevant to the issue whether they act within reason or not. On the other hand, if they act with reasonable care, then they will not be in breach of a duty of care, even if an innocent member of the public is injured. Hallett LJ accepted that the authorities suggested that there might be a number of possible exceptions to the general principle: cases of outrageous negligence, cases which did not relate to core functions, and cases where police officers had assumed responsibility for a claimant. The present case did not fall into any of those categories. It was a paradigm example of why the courts are loath to impose a duty towards individual members of the public on the police engaged in their core functions (para 51). Hallett LJ added that, even if counsel for Mrs Robinson had been correct in her argument that there was no immunity from liability where police officers caused direct physical harm to members of the public, it was in any event clear that Williams was responsible for the harm. This was therefore a claim based on the officers failure to prevent Williams from harming Mrs Robinson: in the language used in other cases, it concerned an omission, rather than a positive act. Such a claim fell at the first hurdle: it was not fair, just or reasonable to impose liability on those facts. Furthermore, Hallett LJ considered that there was no proximity between Mrs Robinson and the police officers, notwithstanding that she had been injured when they fell on top of her. It was not enough to find that there was a reasonably foreseeable risk of her being physically injured in the course of carrying out the arrest. Hallett LJ also added that, had it been necessary, she would have felt obliged to overturn the Recorders finding of negligence. In that regard, she criticised him for acting as if he were an expert in the arrest and detention of suspects. In her own view, DS Willan could not afford to wait. He was bound to attempt the arrest or risk losing the suspect and the evidence. The delay of three seconds in the other two officers reaching the scene was hardly worthy of criticism. Arnold J delivered a concurring judgment, and Sullivan LJ agreed with Hallett LJ. The issues The issues arising from the judgments below and the parties submissions can be summarised as follows: (1) Does the existence of a duty of care always depend on the application of the Caparo test to the facts of the particular case? (2) Is there a general rule that the police are not under any duty of care when discharging their function of investigating and preventing crime? Or are the police generally under a duty of care to avoid causing reasonably foreseeable personal injuries, when such a duty would arise in accordance with ordinary principles of the law of negligence? If the latter is the position, does the law distinguish between acts and omissions: in particular, between causing injury, and protecting individuals from injury caused by the conduct of others? (3) positive act? (4) Did the police officers owe a duty of care to Mrs Robinson? (5) finding that the officers failed in that duty? (6) her injuries caused by that breach? If so, was the Court of Appeal entitled to overturn the Recorders If the latter is the position, is this an omissions case, or a case of a If there was a breach of a duty of care owed to Mrs Robinson, were (1) Caparo The proposition that there is a Caparo test which applies to all claims in the modern law of negligence, and that in consequence the court will only impose a duty of care where it considers it fair, just and reasonable to do so on the particular facts, is mistaken. As Lord Toulson pointed out in his landmark judgment in Michael v Chief Constable of South Wales Police (Refuge and others intervening) [2015] UKSC 2; [2015] AC 1732, para 106, that understanding of the case mistakes the whole point of Caparo, which was to repudiate the idea that there is a single test which can be applied in all cases in order to determine whether a duty of care exists, and instead to adopt an approach based, in the manner characteristic of the common law, on precedent, and on the development of the law incrementally and by analogy with established authorities. Caparo was decided in the aftermath of Lord Wilberforces attempt in Anns v Merton London Borough Council [1978] AC 728, 751 752 to lay down an approach which could be applied in all situations in order to determine the existence of a duty of care. That approach had two stages: first, it was necessary to decide whether there was a prima facie duty of care, based on the foreseeability of harm, and secondly, in order to place limits on the breadth of the first stage, it was necessary to consider whether there were reasons of public policy for excluding or restricting any such prima facie duty. That approach had major implications for public authorities, as they have a multitude of functions designed to protect members of the public from harm of one kind or another, with the consequence that the first stage enquiry was readily satisfied, and the only limit to liability became public policy. Anns led to a period during which the courts struggled to contain liability, particularly for economic loss unassociated with physical damage or personal injury, and for the acts and omissions of public authorities. Commenting extra judicially during that period, Lord Oliver of Aylmerton said that what has been seen as a principle of prima facie liability has been prayed in aid in subsequent cases to justify claims for damages which have become progressively more divorced from common sense and as placing on the defendant a burden, sometimes virtually insurmountable, of showing some good reason in policy why he should not be held liable: Judicial Legislation: Retreat from Anns, Third Sultan Azlan Shah Law Lecture (1988). It was in the context of the retreat from Anns that emphasis was placed in a number of cases on the concept of proximity, and on the idea that it must be fair to impose a duty of care on the defendant. In Caparo, Lord Bridge of Harwich noted that, since Anns, a series of decisions of the Privy Council and the House of Lords, notably in judgments and speeches delivered by Lord Keith of Kinkel (including his speech in Hill v Chief Constable of West Yorkshire), had emphasised the inability of any single general principle to provide a practical test which can be applied to every situation to determine whether a duty of care is owed and, if so, what is its scope (p 617). It is ironic that the immediately following passage in Lord Bridges speech has been treated as laying down such a test, despite, as Lord Toulson remarked in Michael, the pains which he took to make clear that it was not intended to be any such thing: What emerges [from the post Anns decisions] is that, in addition to the foreseeability of damage, necessary ingredients in any situation giving rise to a duty of care are that there should exist between the party owing the duty and the party to whom it is owed a relationship characterised by the law as one of proximity or neighbourhood and that the situation should be one in which the court considers it fair, just and reasonable that the law should impose a duty of a given scope upon the one party for the benefit of the other. But it is implicit in the passages referred to that the concepts of proximity and fairness embodied in these additional ingredients are not susceptible of any such precise definition as would be necessary to give them utility as practical tests, but amount in effect to little more than convenient labels to attach to the features of different specific situations which, on a detailed examination of all the circumstances, the law recognises pragmatically as giving rise to a duty of care of a given scope. (pp 617 618; emphasis added) Lord Bridge immediately went on to adopt an incremental approach, based on the use of established authorities to provide guidance as to how novel questions should be decided: I think the law has now moved in the direction of attaching greater significance to the more traditional categorisation of distinct and recognisable situations as guides to the existence, the scope and the limits of the varied duties of care which the law imposes. We must now, I think, recognise the wisdom of the words of Brennan J in the High Court of Australia in Sutherland Shire Council v Heyman (1985) 60 ALR 1, 43 44, where he said: It is preferable, in my view, that the law should develop novel categories of negligence incrementally and by analogy with established categories . (p 618) It was that approach, and not a supposed tripartite test, which Lord Bridge then proceeded to apply to the facts before him. Applying the approach adopted in Caparo, there are many situations in which it has been clearly established that a duty of care is or is not owed: for example, by motorists to other road users, by manufacturers to consumers, by employers to their employees, and by doctors to their patients. As Lord Browne Wilkinson explained in Barrett v Enfield London Borough Council [2001] 2 AC 550, 560, Once the decision is taken that, say, company auditors though liable to shareholders for negligent auditing are not liable to those proposing to invest in the company . that decision will apply to all future cases of the same kind. Where the existence or non existence of a duty of care has been established, a consideration of justice and reasonableness forms part of the basis on which the law has arrived at the relevant principles. It is therefore unnecessary and inappropriate to reconsider whether the existence of the duty is fair, just and reasonable (subject to the possibility that this court may be invited to depart from an established line of authority). Nor, a fortiori, can justice and reasonableness constitute a basis for discarding established principles and deciding each case according to what the court may regard as its broader merits. Such an approach would be a recipe for inconsistency and uncertainty, as Hobhouse LJ recognised in Perrett v Collins [1999] PNLR 77, 90 91: It is a truism to say that any case must be decided taking into account the circumstances of the case, but where those circumstances comply with established categories of liability, a defendant should not be allowed to seek to escape from liability by appealing to some vaguer concept of justice or fairness; the law cannot be re made for every case. Indeed, the previous authorities have by necessary implication held that it is fair, just and reasonable that the plaintiff should recover in the situations falling within the principles they have applied. It is normally only in a novel type of case, where established principles do not provide an answer, that the courts need to go beyond those principles in order to decide whether a duty of care should be recognised. Following Caparo, the characteristic approach of the common law in such situations is to develop incrementally and by analogy with established authority. The drawing of an analogy depends on identifying the legally significant features of the situations with which the earlier authorities were concerned. The courts also have to exercise judgement when deciding whether a duty of care should be recognised in a novel type of case. It is the exercise of judgement in those circumstances that involves consideration of what is fair, just and reasonable. As Lord Millett observed in McFarlane v Tayside Health Board [2000] 2 AC 59, 108, the court is concerned to maintain the coherence of the law and the avoidance of inappropriate distinctions if injustice is to be avoided in other cases. But it is also engaged in a search for justice, and this demands that the dispute be resolved in a way which is fair and reasonable and accords with ordinary notions of what is fit and proper. In the present case, Hallett LJ cited the decision of this court in Smith v Ministry of Defence (JUSTICE intervening) [2013] UKSC 41; [2014] AC 52 as an example of a decision in which there was a focus on the three ingredients mentioned by Lord Bridge. That was however a case raising a novel legal issue, relating to the provision of protective equipment to soldiers on active duty, and the scope of combat immunity: it did not concern an established category of liability. Hallett LJ also relied on a passage in the speech of Lord Steyn in Marc Rich & Co AG v Bishop Rock Marine Co Ltd [1996] AC 211, 235, in which he remarked that the elements of foreseeability and proximity as well as considerations of fairness, justice and reasonableness are relevant to all cases. That was a case concerned with the loss of a ship and its cargo as a result of negligent advice, in which the reasoning was essentially directed to considerations relevant to economic loss. As Hobhouse LJ observed in Perrett v Collins at p 92: Marc Rich should not be regarded as an authority which has a relevance to cases of personal injury or as adding any requirements that an injured plaintiff do more than bring his case within established principles. If a plaintiff is attempting to establish some novel principle of liability, then the situation would be different. It was in any event made clear in Michael that the idea that Caparo established a tripartite test is mistaken. Properly understood, Caparo thus achieves a balance between legal certainty and justice. In the ordinary run of cases, courts consider what has been decided previously and follow the precedents (unless it is necessary to consider whether the precedents should be departed from). In cases where the question whether a duty of care arises has not previously been decided, the courts will consider the closest analogies in the existing law, with a view to maintaining the coherence of the law and the avoidance of inappropriate distinctions. They will also weigh up the reasons for and against imposing liability, in order to decide whether the existence of a duty of care would be just and reasonable. In the present case, however, the court is not required to consider an extension of the law of negligence. All that is required is the application to particular circumstances of established principles governing liability for personal injuries. Addressing, then, the first of the issues identified in para 20 above, the existence of a duty of care does not depend on the application of a Caparo test to the facts of the particular case. In the present case, it depends on the application of established principles of the law of negligence. (2) The police (i) Public authorities in general Before focusing on the position of the police in particular, it may be helpful to consider the position of public authorities in general, as this is an area of the law of negligence which went through a period of confusion following the case of Anns, as explained in paras 22 23 above. That confusion has not yet entirely dissipated, as courts continue to cite authorities from that period without always appreciating the extent to which their reasoning has been superseded by the return to orthodoxy achieved first in Stovin v Wise [1996] AC 923 and then, more fully and clearly, in Gorringe v Calderdale Metropolitan Borough Council [2004] UKHL 15; [2004] 1 WLR 1057. At common law, public authorities are generally subject to the same liabilities in tort as private individuals and bodies: see, for example, Entick v Carrington (1765) 2 Wils KB 275 and Mersey Docks and Harbour Board v Gibbs (1866) LR 1 HL 93. Dicey famously stated that every official, from the Prime Minister down to a constable or collector of taxes, is under the same responsibility for every act done without legal justification as any other citizen: Introduction to the Study of the Law of the Constitution 3rd ed (1889), p 181. An important exception at common law was the Crown, but that exception was addressed by the Crown Proceedings Act 1947, section 2. Accordingly, if conduct would be tortious if committed by a private person or body, it is generally equally tortious if committed by a public authority: see, for example, Dorset Yacht Co Ltd v Home Office [1970] AC 1004, as explained in Gorringe, para 39. That general principle is subject to the possibility that the common law or statute may provide otherwise, for example by authorising the conduct in question: Geddis v Proprietors of Bann Reservoir (1878) 3 App Cas 430. It follows that public authorities are generally under a duty of care to avoid causing actionable harm in situations where a duty of care would arise under ordinary principles of the law of negligence, unless the law provides otherwise. On the other hand, public authorities, like private individuals and bodies, are generally under no duty of care to prevent the occurrence of harm: as Lord Toulson stated in Michael, the common law does not generally impose liability for pure omissions (para 97). This omissions principle has been helpfully summarised by Tofaris and Steel, Negligence Liability for Omissions and the Police (2016) 75 CLJ 128: In the tort of negligence, a person A is not under a duty to take care to prevent harm occurring to person B through a source of danger not created by A unless (i) A has assumed a responsibility to protect B from that danger, (ii) A has done something which prevents another from protecting B from that danger, (iii) A has a special level of control over that source of danger, or (iv) As status creates an obligation to protect B from that danger. As that summary makes clear, there are certain circumstances in which public authorities, like private individuals and bodies, can come under a duty of care to prevent the occurrence of harm: see, for example, Barrett v Enfield London Borough Council and Phelps v Hillingdon London Borough Council [2001] 2 AC 619, as explained in Gorringe at paras 39 40. In the absence of such circumstances, however, public authorities generally owe no duty of care towards individuals to confer a benefit upon them by protecting them from harm, any more than would a private individual or body: see, for example, Smith v Littlewoods Organisation Ltd [1987] AC 241, concerning a private body, applied in Mitchell v Glasgow City Council [2009] UKHL 11; [2009] AC 874, concerning a public authority. That is so, notwithstanding that a public authority may have statutory powers or duties enabling or requiring it to prevent the harm in question. A well known illustration of that principle is the decision of the House of Lords in East Suffolk Rivers Catchment Board v Kent [1941] AC 74. The position is different if, on its true construction, the statutory power or duty is intended to give rise to a duty to individual members of the public which is enforceable by means of a private right of action. If, however, the statute does not create a private right of action, then it would be, to say the least, unusual if the mere existence of the statutory duty [or, a fortiori, a statutory power] could generate a common law duty of care: Gorringe, para 23. A further point, closely related to the last, is that public authorities, like private individuals and bodies, generally owe no duty of care towards individuals to prevent them from being harmed by the conduct of a third party: see, for example, Smith v Littlewoods Organisation Ltd and Mitchell v Glasgow City Council. In Michael, Lord Toulson explained the point in this way: It is one thing to require a person who embarks on action which may harm others to exercise care. It is another matter to hold a person liable in damages for failing to prevent harm caused by someone else. (para 97) There are however circumstances where such a duty may be owed, as Tofaris and Steele indicated in the passage quoted above. They include circumstances where the public authority has created a danger of harm which would not otherwise have existed, or has assumed a responsibility for an individuals safety on which the individual has relied. The first type of situation is illustrated by Dorset Yacht, and in relation to the police by the case of Attorney General of the British Virgin Islands v Hartwell [2004] 1 WLR 1273, discussed below. The second type of situation is illustrated, in relation to the police, by the case of An Informer v A Chief Constable [2013] QB 579, as explained in Michael at para 69. In Anns, however, it was decided that a local authority owed a duty of care at common law, when exercising its power to inspect building works, to protect the ultimate occupier of the building from loss resulting from defects in its construction. The House of Lords thus held a public authority liable at common law for a careless failure to confer a benefit, by preventing harm caused by another persons conduct, in the absence of any special circumstances such as an assumption of responsibility towards the claimant. It added to the confusion by importing public law concepts, and the American distinction between policy and operational decisions, into questions concerning duties arising under the law of obligations. Although the decision was overruled in Murphy v Brentwood District Council [1991] 1 AC 398 on a limited basis (relating to the categorisation of the type of harm involved), its reasoning in relation to these matters was not finally disapproved until Stovin v Wise. The position was clarified in Gorringe v Calderdale Metropolitan Borough Council, which made it clear that the principle which had been applied in Stovin v Wise in relation to a statutory duty was also applicable to statutory powers. Lord Hoffmann (with whom Lord Scott of Foscote, Lord Rodger of Earlsferry and Lord Brown of Eaton under Heywood agreed) said that he found it difficult to imagine a case in which a common law duty could be founded simply on the failure, however irrational, to provide some benefit which a public authority had power (or a public law duty) to provide (para 32). He was careful to distinguish that situation from cases where a public authority did acts or entered into relationships or undertook responsibilities giving rise to a duty of care on an orthodox common law foundation (para 38). However, until the reasoning in Anns was repudiated, it was not possible to justify a rejection of liability, where a prima facie duty of care arose at the first stage of the analysis from the foreseeability of harm, on the basis that public bodies are not generally liable for failing to exercise their statutory powers or duties so as to confer the benefit of protection from harm. Instead, it was necessary to have recourse to public policy in order to justify the rejection of liability at the second stage. That was accordingly the approach adopted by the House of Lords and the Court of Appeal in a series of judgments, including Hill. The need to have recourse to public policy for that purpose has been superseded by the return to orthodoxy in Gorringe. Since that case, a public authoritys non liability for the consequences of an omission can generally be justified on the basis that the omissions principle is a general principle of the law of negligence, and the law of negligence generally applies to public authorities in the same way that it applies to private individuals and bodies. Equally, concerns about public policy cannot in themselves override a liability which would arise at common law for a positive act carried out in the course of performing a statutory function: the true question is whether, properly construed, the statute excludes the liability which would otherwise arise: see Gorringe at para 38 per Lord Hoffmann. That is not to deny that what might be described as policy considerations sometimes have a role to play in the law of negligence. As explained earlier, where established principles do not provide a clear answer to the question whether a duty of care should be recognised in a novel situation, the court will have to consider whether its recognition would be just and reasonable. (ii) The police in particular Turning to consider specifically the position of the police (helpfully discussed in Purshouse, Arrested development: Police negligence and the Caparo test for duty of care (2016) Torts Law Journal 1), Lord Toulson explained in the case of Michael at paras 29 35 that the police owe a duty to the public at large for the prevention of violence and disorder. That public law duty has a number of legal consequences. For example, the police cannot lawfully charge members of the public for performing their duty (Glasbrook Bros Ltd v Glamorgan County Council [1925] AC 270), and a police officer who wilfully fails to perform his duty may be guilty of a criminal offence (R v Dytham [1979] QB 722). Some members of the public may have standing to enforce the duty, for example in proceedings for judicial review (R v Commissioner of Police of the Metropolis, Ex p Blackburn [1968] 2 QB 118), but in doing so they are not enforcing a duty owed to them as individuals. In relation to the question whether, and in what circumstances, a private law duty of care might be owed by the police to particular individuals, Lord Toulson discussed in Michael the case of Hill, and in particular the speech of Lord Keith, with whom Lord Brandon of Oakbrook, Lord Oliver and Lord Goff of Chieveley agreed. Since it is apparent from the judgments below in the present proceedings, and from the submissions to this court, that Lord Keiths reasoning continues to be misunderstood, it is necessary to consider it once more. For the purposes of the present case, the most important aspect of Lord Keiths speech in Hill is that, in the words of Lord Toulson (Michael, para 37), he recognised that the general law of tort applies as much to the police as to anyone else. What Lord Keith said was this: There is no question that a police officer, like anyone else, may be liable in tort to a person who is injured as a direct result of his acts or omissions. So he may be liable in damages for assault, unlawful arrest, wrongful imprisonment and malicious prosecution, and also for negligence. (p 59; emphasis supplied) The words like anyone else are important. They indicate that the police are subject to liability for causing personal injury in accordance with the general law of tort. That is as one would expect, given the general position of public authorities as explained in paras 32 33 above. Lord Keiths dictum is vouched by numerous authorities. Those which he cited were Knightley v Johns [1982] 1 WLR 349, where a police officer who attended the scene of a road accident carelessly created an unnecessary danger to the claimant, and Rigby v Chief Constable of Northamptonshire [1985] 1 WLR 1242, where police officers attending a siege at a gunsmith's shop, where a psychopathic intruder had armed himself and was firing from the building, carelessly caused damage to the premises in the course of an attempt to end the siege, by firing a CS gas canister into the building in the absence of fire fighting equipment. That decision, cited with approval in Hill and in later authorities, is inconsistent with any supposed rule that the police owe no duty of care in respect of action taken in the course of suppressing crime. Lord Keith also referred to the decision in Dorset Yacht, where prison officers who brought young offenders on to an island and then left them unsupervised, when it was reasonably foreseeable that they would attempt to escape, and in doing so cause damage to property, were held to be in breach of a duty of care. Other examples concerning the police include Attorney General of the British Virgin Islands v Hartwell, where police authorities were held to have been negligent in entrusting a firearm to an officer who was still on probation and had shown signs of mental instability, and cases such as Frost v Chief Constable of South Yorkshire Police [1999] 2 AC 455, in which police forces, although not technically employers, have been treated as owing the same common law duty as employers to take reasonable care for the safety of their officers. There are also numerous cases concerned with road accidents involving police cars, such as Marshall v Osmond [1983] QB 1034, where Sir John Donaldson MR observed that the duty owed by a police driver to a suspected criminal whom he was pursuing was the same duty as that owed to anyone else, namely to exercise such care and skill as is reasonable in the circumstances. One might also mention Alcock v Chief Constable of South Yorkshire Police [1992] 1 AC 310, where the House of Lords accepted, applying principles developed in cases concerning private individuals and bodies, that a duty of care was owed by the police, when they were responsible for crowd control at a football match, to persons who suffered psychiatric injuries as a result of deaths and injuries sustained by members of the crowd, subject to those persons being sufficiently proximate in time and space to the incident, and to their having a sufficiently close relationship to the dead and injured. These cases are not anomalous exceptions to the general absence of a duty of care, and cannot all be explained as falling within particular categories of the kind listed by Hallett LJ in the present case: cases of outrageous negligence, cases which did not relate to core functions, and cases where police officers had assumed responsibility for a claimant. The cases of Rigby v Chief Constable of Northamptonshire and Marshall v Osmond, for example, are plainly inconsistent with any supposed rule that the police owe no duty of care when engaged in their core operational activities, or that outrageous negligence or an assumption of responsibility must be established. On the contrary, these cases are examples of the application to the police of the ordinary common law duty of care to avoid causing reasonably foreseeable injury to persons and reasonably foreseeable damage to property. There are also examples concerned with other torts, such as Ashley v Chief Constable of Sussex Police (Sherwood intervening) [2008] AC 962, where relatives of a suspected drug dealer who had been shot dead by a police officer during a raid were held to have a cause of action for damages for battery (liability for negligence having been conceded), Minio Paluello v Commissioner of Police of the Metropolis [2011] EWHC 3411 (QB), where a protestor who suffered serious injuries when being pulled up from the ground by a police officer with excessive force was found entitled to damages for assault, and McDonnell v Commissioner of Police of the Metropolis [2015] EWCA Civ 573, where a claim for damages by a suspected drug dealer for assault arising from the use of excessive force during his arrest failed only on its facts. On the other hand, as Lord Toulson noted in Michael (para 37), Lord Keith held that the general duty of the police to enforce the law did not carry with it a private law duty towards individual members of the public. In particular, police officers investigating a series of murders did not owe a duty to the murderers potential future victims to take reasonable care to apprehend him. That was again in accordance with the general law of negligence. As explained earlier, the common law does not normally impose liability for omissions, or more particularly for a failure to prevent harm caused by the conduct of third parties. Public authorities are not, therefore, generally under a duty of care to provide a benefit to individuals through the performance of their public duties, in the absence of special circumstances such as an assumption of responsibility. This was recognised by Lord Toulson in Michael. As he explained: The refusal of the courts to impose a private law duty on the police to exercise reasonable care to safeguard victims or potential victims of crime, except in cases where there has been a representation and reliance, does not involve giving special treatment to the police . The question is therefore not whether the police should have special immunity, but whether an exception should be made to the ordinary application of common law principles. (paras 115 116) As previously explained, however, the reasoning by which Lord Keith arrived at the same conclusion as Lord Toulson reflects the period during which the case was decided, when Anns continued to be influential. Following the two stage approach to liability set out in Anns, Lord Keith considered first the argument that a duty of care arose in consequence of the foreseeability of harm to potential victims if the murderer was not apprehended. In that regard, Lord Keith emphasised that the foreseeability of harm was not in itself a sufficient basis for the imposition of a duty of care, and introduced the concept of proximity as a further ingredient. He concluded that there was no ingredient or characteristic giving rise to the necessary proximity between the police and the claimants daughter (who was one of the murderers victims), and that the circumstances of the case were not capable of establishing a duty of care owed towards her by the police. As Lord Toulson remarked in Michael (para 42), if Lord Keith had stopped at that point, it is unlikely that the decision would have caused controversy. However, having observed that what he had said was sufficient for the disposal of the appeal, Lord Keith went on to discuss the application of the second stage of the approach laid down in Anns: namely, whether there were reasons of public policy why an action should not lie in circumstances such as those of the present case (p 63). He concluded that there were such reasons, and expressed the view that the Court of Appeal had been right to take the view that the police were immune from an action of this kind (pp 63 64). It is important to note that this part of Lord Keiths speech was unrelated to a determination of whether the police were liable for negligence resulting in personal injury, where anyone else would be subject to liability under ordinary principles of the law of tort. He had already confirmed the existence of liability in those circumstances, as explained at paras 45 46 above. His comments about public policy were concerned with a different question, namely whether the police generally owe a duty of care to individual members of the public, in the performance of their investigative function, to protect them from harm caused by criminals: a question to which, on the principles established prior to Anns and subsequently reinstated in Stovin v Wise, Gorringe and Michael, as explained in paras 34 37 and 39 above, the answer was plainly no. In relation to that issue, the decision in Hill has now to be understood in the light of the later authorities. In Michael, in particular, Lord Toulson (with whom Lord Neuberger, Lord Mance, Lord Hodge and I agreed) reached the same conclusion as in Hill, but did so primarily by applying the reasoning in Stovin v Wise and Gorringe. Policy arguments were considered when addressing the argument that the court should create a new duty of care as an exception to the ordinary application of common law principles (see, in particular, paras 116 118). Lord Toulson concluded that, in the absence of special circumstances, there is no liability in cases of pure omission by the police to perform their duty for the prevention of violence (para 130). The case of Hill is not, therefore, authority for the proposition that the police enjoy a general immunity from suit in respect of anything done by them in the course of investigating or preventing crime. On the contrary, the liability of the police for negligence or other tortious conduct resulting in personal injury, where liability would arise under ordinary principles of the law of tort, was expressly confirmed. Lord Keith spoke of an immunity, meaning the absence of a duty of care, only in relation to the protection of the public from harm through the performance by the police of their function of investigating crime. Arguing against that conclusion, counsel for the respondents relied particularly on five authorities as supporting the existence of a general immunity. The first was the decision of the House of Lords in Calveley v Chief Constable of the Merseyside Police [1989] AC 1228, in which police officers who had been suspended pending the completion of disciplinary proceedings sought damages in respect of an alleged failure to conduct the proceedings expeditiously. They claimed to have suffered damage to their reputation, depression, and a loss of earnings. They alleged that they were owed a duty by the investigating officers to exercise proper care and expedition in the conduct of the investigation. It was argued that a police officer investigating a suspected crime owes a duty of care to the suspect and that the same principle applied to the investigation of a disciplinary offence. The House of Lords rejected the argument. Lord Bridge pointed out that the claims in negligence foundered on the rocks of elementary principle (p 1238). The losses claimed, so far as non financial, were not reasonably foreseeable, and the financial claims ran up against the formidable obstacles in the way of liability in negligence for purely economic loss. Lord Bridge added that all other considerations apart, it would be contrary to public policy to prejudice the fearless and efficient discharge by police officers of their vitally important public duty of investigating crime by requiring them to act under the shadow of a potential action for damages for negligence by the suspect. Reliance was placed on the latter dictum, but it is of no assistance to the respondent in the present case. Lord Bridges remark has to be understood in its context. The case sought to establish a novel type of liability relating to the manner in which an investigation was conducted. Lord Bridges reference to policy considerations was directed to that claim: he was not addressing the question whether the police may owe a duty of care to avoid causing reasonably foreseeable physical injury in the course of their operations. The second authority relied on was the judgment of Steyn LJ in Elguzouli Daf v Commissioner of Police of the Metropolis [1995] QB 335. The issue in the appeal was whether the Crown Prosecution Service owed a duty of care to a person it was prosecuting to act with reasonable diligence in obtaining and acting on scientific evidence which showed him to be innocent. The Court of Appeal held that no such duty was owed. Steyn LJ observed that the question raised was a novel one, which in the light of Caparo had to be considered by analogy with established categories of liability. In that regard, the case of Hill was considered instructive. Steyn LJ noted that the issue in that case was whether a claim against the police for a negligent failure to apprehend a violent criminal was sustainable. He summarised the effect of the second part of Lord Keiths speech as being that the House of Lords further held, as a second and separate ground of decision, that as a matter of public policy the police were immune from actions of negligence in respect of their activities in the investigation and suppression of crime (p 347). Steyn LJ added that it did not follow that the police might not be liable where there was some form of assumption of responsibility. The decision in Elguzouli Daf has been cited with approval on many occasions, and its correctness was recently confirmed by this court in SXH v Crown Prosecution Service (United Nations High Commissioner for Refugees intervening) [2017] UKSC 30; [2017] 1 WLR 1401. But Steyn LJs summary of the effect of the second part of Lord Keiths speech in Hill might convey a misleading impression if taken out of context. Steyn LJ can hardly have meant that the police enjoyed a blanket immunity in respect of anything done in the course of their activities in the investigation and suppression of crime, given his reliance on Lord Keiths speech in Hill. As already explained, Lord Keith confirmed the liability of the police for personal injuries in accordance with the ordinary law of tort, and cited the decision in Rigby v Chief Constable of Northamptonshire with approval. Thirdly, reliance was placed on the speech of Lord Steyn in Brooks v Commissioner of Police of the Metropolis [2005] UKHL 24; [2005] 1 WLR 1495. In that case, the claimant sought damages in respect of a psychiatric illness which he claimed to have suffered in consequence of his insensitive treatment by officers investigating an incident in which he had been assaulted and a friend of his had been murdered. The issue before the House of Lords was whether it was arguable that the police owed him a duty of care (a) to take reasonable steps to assess whether he was a victim of crime and, if so, to accord him reasonably appropriate protection and support, (b) to take reasonable steps to afford him the protection, assistance and support commonly afforded to a key eye witness to a serious crime of violence, and (c) to afford reasonable weight to the account given by him and to act on the account accordingly. The House held that it was not. The correctness of that conclusion is not in question. On ordinary principles, behaviour which is merely insensitive is not normally actionable, even if it results in a psychiatric illness. Lord Steyn recognised that this was a novel type of claim, to which Lord Bridges observations in Caparo applied. As in Elguzouli Daf, he based his approach to the question whether it would be right to recognise a duty of care of the kind alleged on Lord Keiths speech in Hill. He cited first Lord Keiths confirmation of the liability of the police for the negligent infliction of personal injuries in accordance with the general law of tort. He went on to cite the part of Lord Keiths speech concerning whether the police owed a duty of care to future victims in the performance of their investigative function. In the passage on which reliance was placed, he stated (para 30): A retreat from the principle in Hills case would have detrimental effects for law enforcement. Whilst focusing on investigating crime, and the arrest of suspects, police officers would in practice be required to ensure that in every contact with a potential witness or a potential victim time and resources were deployed to avoid the risk of causing harm or offence. Such legal duties would tend to inhibit a robust approach in assessing a person as a possible suspect, witness or victim. By placing general duties of care on the police to victims and witnesses the polices ability to perform their public functions in the interests of the community, fearlessly and with despatch, would be impeded. It would, as was recognised in Hills case, be bound to lead to an unduly defensive approach in combating crime. As Lord Toulson noted in Michael, by endorsing the principle in the Hill case in the terms that he did, Lord Steyn confirmed that the functions of the police which he identified were public law duties and did not give rise to private law duties of care in the absence of special circumstances, such as an assumption of responsibility. Nothing in his reasoning is inconsistent with the existence of a duty of care to avoid causing physical harm in accordance with ordinary principles of the law of negligence. Lord Steyn plainly had no intention of undermining the confirmation in Hill that the police were under such a duty of care. The passage cited was directed towards a different issue. Fourthly, reliance was placed on Smith v Chief Constable of Sussex Police [2008] UKHL 50; [2009] AC 225, one of two appeals which the House of Lords heard together, the other being Van Colle v Chief Constable of the Herefordshire Police (Secretary of State for the Home Department intervening). The case of Smith concerned the question whether, where a person had informed the police that he had received threats of violence, the police then owed him a duty of care to prevent the threats from being carried out. Applying the established principles discussed earlier, the answer was no, in the absence of special circumstances such as an assumption of responsibility, and the House of Lords so held. The House was not however referred to the line of authority including East Suffolk Rivers Catchment Board v Kent, Stovin v Wise and Gorringe, which would have provided a basis for deciding the case; nor did it rely on the equivalent body of authority concerned with omissions by private individuals and bodies, such as Smith v Littlewoods Organisation Ltd. Those were the bases on which a very similar issue was subsequently decided in Michael. In Smith v Chief Constable of Sussex Police, the majority of the House were in agreement that, absent special circumstances such as an assumption of responsibility, the police owed no duty of care to individuals affected by the discharge of their public duty to investigate offences and prevent their commission. Lord Hope, with whose reasoning the other members of the majority agreed, followed the approach adopted in Brooks in the passage cited in para 61 above, and emphasised the risk that the imposition of a duty of care of the kind contended for would inhibit a robust approach in assessing a person as a possible suspect or victim. He acknowledged that [t]here are, of course, cases in which actions of the police give rise to civil claims in negligence in accordance with ordinary delictual principles, and cited Rigby as an example (para 79). Lord Phillips of Worth Matravers CJ summarised the core principle to be derived from Hill and Brooks as being that in the absence of special circumstances, the police owe no common law duty of care to protect individuals against harm caused by criminals. Lord Brown approached the matter in a similar way, concluding that, in the absence of an assumption of responsibility towards the eventual victim, the police generally owe no duty of care to prevent injuries deliberately inflicted by third parties, when they are engaged in discharging their general duty of combating and investigating crime. None of the speeches is inconsistent with the existence of a duty of care to avoid causing physical harm in accordance with ordinary principles of the law of negligence. Fifthly, reliance was placed on the judgment of the Court of Appeal, delivered by Sir Anthony May P, in Desmond v Chief Constable of Nottinghamshire Police. The issue in the case was whether the chief constable owed a duty of care when providing information to the criminal records bureau about the claimant, so as to enable the bureau to respond to a request for an enhanced criminal record certificate, made in connection with a job application. The chief constable was under a statutory duty to provide such information as was in his opinion relevant and ought to be included in the certificate. It was argued that the chief constable had made an error of judgement in deciding that certain information was relevant and ought to be included, with the result that the job application had been unsuccessful. The claim was for damages in respect of financial loss, stress and anxiety. The court correctly identified the relevant legal principles as being those laid down in East Suffolk River Catchment Board v Kent, Stovin v Wise and Gorringe, and concluded that no duty of care was owed. Reliance was however placed by counsel on an earlier part of the judgment, in which the court considered the cases on which the judge below had based his approach Hill, Elguzouli Daf, Brooks, and Smith v Chief Constable of Sussex Police and explained why, in its view, they did not provide an answer to the case at hand. The court summarised the principle to be derived from those decisions as being that in the absence of special circumstances, the police and the Crown Prosecution Service do not generally in the interests of the whole community owe individual members of the public, be they victims, witnesses or those who are prosecuted, a common law duty of care in undertaking and performing their operational duties of investigating, detecting, suppressing and prosecuting crime (para 31). The court went on to state that that principle might not apply in exceptional circumstances at the margins; to an ordinary case where, for instance, in a road accident the police cause personal injury or physical damage by negligent driving; nor to cases where on particular facts a police officer is taken to have assumed responsibility to an individual claimant (para 32). That summary of the law appears to treat the police as being generally under no duty of care when undertaking and performing their operational duties, other than in special circumstances. It does not reflect the acceptance of the House of Lords in Hill, reflected also in later cases such as Frost, Alcock and Smith v Chief Constable of Sussex Police, that the police are generally under a duty of care to avoid causing personal injury where such a duty would arise according to ordinary principles of the law of negligence. Nor can a case such as Rigby be distinguished as an exceptional case at the margins: it was treated both in Hill and in Smith v Chief Constable of Sussex Police not as an anomaly, but as an instance of a wider principle. In short, while it is not suggested in the present case that the decision in Desmond was wrong, the particular passage relied on is not an accurate summary of the law. On examination, therefore, there is nothing in the ratio of any of the authorities relied on by the respondent which is inconsistent with the police being under a liability for negligence resulting in personal injuries where such liability would arise under ordinary principles of the law of tort. That is so notwithstanding the existence of some dicta which might be read as suggesting the contrary. points made by Lord Hughes in his judgment: In relation to this discussion, it is necessary to respond briefly to some of the 1. I do not suggest that the discussion of policy considerations in cases such as Hill, Brooks and Smith should be consigned to history. But it is important to understand that such discussions are not a routine aspect of deciding cases in the law of negligence, and are unnecessary when existing principles provide a clear basis for the decision, as in the present appeal. I would not agree with Lord Hughess statement that they are the ultimate reason why there is no duty of care towards victims, suspects or witnesses imposed on police officers engaged in the investigation and prevention of crime. The absence of a duty towards victims of crime, for example, does not depend merely on a policy devised by a recent generation of judges in relation to policing: it is based on the application of a general and long established principle that the common law imposes no liability to protect persons against harm caused by third parties, in the absence of a recognised exception such as a voluntary assumption of responsibility. 2. The courts are not policy making bodies in the sense in which that can be said of the Law Commission or government departments. But the exercise of judgement about the potential consequences of a decision has a part to play when the court is asked to decide whether a novel duty of care exists, together with a consideration of existing principles and of the need for the law to develop coherently and incrementally: see para 24 above. 3. Hill, Brooks and Smith were all cases in which novel types of claim were made. Hill was also decided at a time when, following Anns, policy arguments were particularly prominent in judicial reasoning, and when the principle in East Suffolk Rivers Catchment Board, which could otherwise have provided a solution, had been rejected. Brooks and Smith were cases in which existing principles pointed strongly towards the rejection of a duty of care, but since those principles were challenged or argued to be subject to exceptions which would accommodate the instant case, it is entirely understandable that the House of Lords referred to policy considerations as supporting their conclusion. 4. The distinction between careless acts causing personal injury, for which the law generally imposes liability, and careless omissions to prevent acts (by other agencies) causing personal injury, for which the common law generally imposes no liability, is not a mere alternative to policy based reasoning, but is inherent in the nature of the tort of negligence. For the same reason, although the distinction, like any other distinction, can be difficult to draw in borderline cases, it is of fundamental importance. The central point is that the law of negligence generally imposes duties not to cause harm to other people or their property: it does not generally impose duties to provide them with benefits (including the prevention of harm caused by other agencies). Duties to provide benefits are, in general, voluntarily undertaken rather than being imposed by the common law, and are typically within the domain of contract, promises and trusts rather than tort. It follows from that basic characteristic of the law of negligence that liability is generally imposed for causing harm rather than for failing to prevent harm caused by other people or by natural causes. It is also consistent with that characteristic that the exceptions to the general non imposition of liability for omissions include situations where there has been a voluntary assumption of responsibility to prevent harm (situations which have sometimes been described as being close or akin to contract), situations where a person has assumed a status which carries with it a responsibility to prevent harm, such as being a parent or standing in loco parentis, and situations where the omission arises in the context of the defendants having acted so as to create or increase a risk of harm. 5. The argument that most cases can be equally analysed in terms of either an act or an omission, sometimes illustrated by asking whether a road accident is caused by the negligent drivers act of driving or by his omission to apply the brakes or to keep a good lookout, does not reflect the true nature and purpose of the distinction, as explained above. The argument was answered by Lord Hoffmann in Stovin v Wise (p 945): One must have regard to the purpose of the distinction as it is used in the law of negligence, which is to distinguish between regulating the way in which an activity may be conducted and imposing a duty to act upon a person who is not carrying on any relevant activity. To hold the defendant liable for an act, rather than an omission, it is therefore necessary to be able to say, according to common sense principles of causation, that the damage was caused by something which the defendant did. If I am driving at 50 miles an hour and fail to apply the brakes, the motorist with whom I collide can plausibly say that the damage was caused by my driving into him at 50 miles an hour. 6. In relation to the cases discussed in Lord Hughess para 114, it follows from the foregoing explanation of the distinction between acts and omissions that Hill and Smith were concerned with omissions, as in each case the claimant sought to have the police held liable for death or personal injuries which had been caused not by the police but by a third party. Calveley, Elguzouli Daf and Brooks, on the other hand, were concerned with positive acts, but were cases in which a duty of care was held not to exist for other reasons, as explained earlier. In Calveley, the plaintiffs sought to have the police held liable for economic loss and other harm which they had caused by subjecting the plaintiffs to disciplinary proceedings which were unduly prolonged. In Elguzouli Daf, the plaintiffs sought to have the Crown Prosecution Service held liable for a loss of liberty which they had caused by subjecting the plaintiffs to criminal proceedings which were unduly prolonged. In Brooks, the claimant sought to have the police held liable for a mental illness which they had caused by treating him inconsiderately. 7. So far as the cases discussed in Lord Hughess paras 115 117 are concerned, Goldman v Hargrave [1967] 1 AC 645 and Thomas Graham Ltd v Church of Scotland 1982 SLT (Sh Ct) 26 concerned the responsibilities of an occupier of land in respect of dangers to his neighbours property which arise on his land: responsibilities which can be understood as arising from his exclusive right of possession. Michael was clearly concerned with an omission, as Lord Toulsons judgment made clear: the police were sought to be made liable for the death of a woman at the hands of a third party. Barrett v Enfield London Borough Council, as explained in Gorringe at para 39, was a case where there was an assumption of parental responsibilities. Phelps v Hillingdon London Borough Council, as explained in Gorringe at para 40, concerned a relationship which involved an implied undertaking to exercise reasonable care, akin to the relationship between doctor and patient. Returning, then, to the second of the issues identified in para 20 above, it follows that there is no general rule that the police are not under any duty of care when discharging their function of preventing and investigating crime. They generally owe a duty of care when such a duty arises under ordinary principles of the law of negligence, unless statute or the common law provides otherwise. Applying those principles, they may be under a duty of care to protect an individual from a danger of injury which they have themselves created, including a danger of injury resulting from human agency, as in Dorset Yacht and Attorney General of the British Virgin Islands v Hartwell. Applying the same principles, however, the police are not normally under a duty of care to protect individuals from a danger of injury Is this case concerned with an omission or with a positive act? In the light of that conclusion, the remaining issues in the case are relatively which they have not themselves created, including injury caused by the conduct of third parties, in the absence of special circumstances such as an assumption of responsibility. straightforward and can be dealt with comparatively briefly. (3) The role of the police in the accident in which Mrs Robinson was injured is not comparable to that of the defendant in the examples commonly given of pure omissions: for example, someone who watches and does nothing as a blind man approaches the edge of a cliff, or a child drowns in a shallow pool. Nor, to cite more realistic examples, is it comparable to that of the police authority in Hill, which failed to arrest a murderer before a potential future victim was killed, or the police authority in Michael, which failed to respond to an emergency call in time to save the caller from an attack. In such cases the defendant played no active part in the critical events. Nor is this a case in which the chief constable is sought to be made liable for the conduct of a third party. Lord Reids observation in Dorset Yacht (at p 1027) is apposite: the ground of liability is not responsibility for the acts of the escaping trainees; it is liability for damage caused by the carelessness of these officers in the knowledge that their carelessness would probably result in the trainees causing damage of this kind. In the present case, the ground of action is liability for damage caused by carelessness on the part of the police officers in circumstances in which it was reasonably foreseeable that their carelessness would result in Mrs Robinsons being injured. Her complaint is not that the police officers failed to protect her against the risk of being injured, but that their actions resulted in her being injured. In short, this case is concerned with a positive act, not an omission. (4) Did the police officers owe a duty of care to Mrs Robinson? It was not only reasonably foreseeable, but actually foreseen by the officers, that Williams was likely to resist arrest by attempting to escape. That is why Willan summoned assistance in the first place, before attempting to arrest Williams, and why it was decided that DS Roebuck and DC Green should be positioned on the opposite side of Williams from Willan and Dhurmea, so as to block his escape route. The place where the officers decided to arrest Williams was a moderately busy shopping street in a town centre. Pedestrians were passing in close vicinity to Williams. In those circumstances, it was reasonably foreseeable that if the arrest was attempted at a time when pedestrians especially physically vulnerable pedestrians, such as a frail and elderly woman were close to Williams, they might be knocked into and injured in the course of his attempting to escape. That reasonably foreseeable risk of injury was sufficient to impose on the officers a duty of care towards the pedestrians in the immediate vicinity when the arrest was attempted, including Mrs Robinson. (5) Was the Court of Appeal entitled to overturn the Recorders finding that the officers had failed in their duty of care? The Court of Appeal was correct to emphasise the importance of not imposing unrealistically demanding standards of care on police officers acting in the course of their operational duties. That is most obviously the case where critical decisions have to be made in stressful circumstances with little or no time for considered thought. This point has long been recognised. For example, in Marshall v Osmond, concerned with a police driver engaged in the pursuit of a suspect, Sir John Donaldson MR stated, as noted at para 47 above, that the officers duty was to exercise such care and skill as is reasonable in all the circumstances. He went on to state that those were no doubt stressful circumstances, and that although there was no doubt that the officer made an error of judgment, he was far from satisfied that the officer had been negligent (p 1038). The same point was made, in a context closer to that of the present case, by May LJ in Costello v Chief Constable of Northumbria [1999] ICR 752, 767, where he remarked that liability should not turn on . shades of personal judgment and courage in the heat of the potentially dangerous moment. It is also necessary to remember that a duty to take reasonable care can in some circumstances be consistent with exposing individuals to a significant degree of risk. That is most obviously the case in relation to the police themselves. There are many circumstances in which police officers are exposed to a risk of injury, but in which such exposure is consistent with the taking of reasonable care for their safety. Equally, there may be circumstances which justify the taking of risks to the safety of members of the public which would not otherwise be justified. A duty of care is always a duty to take such care as is reasonable in the circumstances. In the present case, the Recorders finding of negligence was based on a number of matters. It is unnecessary to consider them all, as at least one of them clearly did not involve imposing on the officers an unrealistically high standard of care. The Recorder accepted DS Willans evidence that the officers were aware that there was a significant risk that Williams would try to run away, and that he was aware of the potential for harm to members of the public in that event. Willan also gave evidence that it was necessary to consider the risk to those in the vicinity, and that if it had appeared to him that someone was in harms way, he would have walked past Williams without effecting the arrest. The Recorder noted that that was in accordance with the relevant guidance provided to police officers. Although Mrs Robinson had just walked past Williams and was within a yard of him, in full view of the officers, Willan simply failed to notice her. The Recorder was entitled to find negligence on that basis alone, regardless of the soundness of his other criticisms of how the arrest was carried out. Willan accepted that he ought to have been taking care for the safety of members of the public in the immediate vicinity. If he had been taking such care, he would have noticed Mrs Robinson: she was immediately in front of him, next to Williams. This was not a situation in which Williams had to be arrested at that precise moment, regardless of the risk that a passer by might be injured: on Willans evidence, if he had noticed that someone was in harms way, he would not have made the arrest at that moment. (6) Were Mrs Robinsons injuries caused by the officers breach of their duty of care? The chain of events which resulted in Mrs Robinsons being injured was initiated by DS Willans and PC Dhurmeas attempt to arrest Williams. It was their taking hold of him which caused him to attempt to struggle free, and it was in the course of the resultant tussle between the three men that Mrs Robinson was knocked over and injured. In these circumstances, it is impossible to argue that the chain of causation linking the attempt to arrest Williams to Mrs Robinsons being injured was interrupted by Williams voluntary decision to resist arrest, which resulted in his knocking into her. The voluntary act of a third party, particularly when it is of a criminal character, will often constitute a novus actus interveniens, but not when that act is the very one which the defendant was under a duty to guard against: see, for example, Dorset Yacht and Attorney General of the British Virgin Islands v Hartwell. It would be absurd to say that the officers owed Mrs Robinson a duty of care not to arrest Williams when she was in the immediate vicinity, because of the danger that she might be injured if he attempted to escape, and then to hold that his attempted escape broke the chain of causation between their negligently arresting him when she was next to him, and her being injured when he attempted to escape. In short, Mrs Robinson was injured as a result of being exposed to the very danger from which the officers had a duty of care to protect her. Conclusion For these reasons, I would allow the appeal, hold that the Chief Constable is liable in damages to Mrs Robinson, and remit the case for the assessment of damages. LORD MANCE: I have read with benefit the judgments prepared by Lord Reed and Lord Hughes in this case. I agree that the case is one of positive conduct by the police in instigating an arrest on public pavement, which caused injury to Mrs Robinson, an otherwise uninvolved passer by. Having watched the excellent CCTV recording and compared it with the judges findings, I confess to the same doubt as Lord Hughes about the judges finding of negligence. The pavement was quite busy, the relevant suspects were for the first time stationary, and Mrs Robinson might appear to have passed by and to be at a little distance, by the time the police seized what they obviously thought was the opportune moment. However, like Lord Hughes and bearing in mind the evidence accepted by the judge as set out by Lord Reed in his para 77, I do not on balance consider that this is a case where an appellate court should interfere with the judges conclusions, after hearing all the evidence. As Lord Reed demonstrates, it is unnecessary in every claim of negligence to resort to the three stage analysis (foreseeability, proximity and fairness, justice and reasonableness) identified in Caparo Industries Ltd v Dickman [1990] 2 AC 605. There are well established categories, including (generally) liability for causing physical injury by positive act, where the latter two criteria are at least assumed. The concomitant is that there is, absent an assumption of responsibility, no liability for negligently omitting to prevent damage occurring to a potential victim. This also provides a rationale for the general rule that the police and CPS have no liability for failure, by efficient investigation or pursuit of an actual or potential offence, to prevent a subsequent victim from suffering physical injury at the hands of a third party for whose acts the State is not responsible: Michael v Chief Constable of South Wales Police [2015] UKSC 2; [2015] AC 1732, paras 114 130 and 137. Economic loss also falls outside the established category of liability for physical injury, but an assumption of responsibility for economic loss will, as discussed in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, likewise satisfy the latter two Caparo criteria. Outside any established category, the law will proceed incrementally, and all three stages of the Caparo analysis will be material. It would be unrealistic to suggest that, when recognising and developing an established category, the courts are not influenced by policy considerations. No one now suggests that the common law has not changed since the Saxon era, merely to be revealed from time to time by an increasingly perceptive judiciary. As Lord Reid said famously in The Judge as Law maker: There was a time when it was thought almost indecent to suggest that judges make law they only declare it . But we do not believe in fairy tales any more: 12 Journal of the Society of Public Teachers of Law 22 (1972); see also Lord Goffs comments on the declaratory theory of the common law in Kleinwort Benson Ltd v Lincoln County Council [1999] 2 AC 349, 377 379. The courts are not a Law Commission, but, in recognising the existence of any generalised duty in particular circumstances they are making policy choices, in which considerations such as proximity and fairness, justice and reasonableness must inhere. Landmark examples are Donoghue v Stevenson [1932] UKHL 100; [1932] AC 562, in relation to physical injury, and Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, in circumstances where there has been an assumption of responsibility to give accurate information upon which it is foreseeable that the recipient will rely to its economic benefit or detriment. The key to the application of the above principles is to ascertain whether or not a particular situation falls within an established category. Lord Reed treats physical loss resulting foreseeably from positive conduct as constituting axiomatically such a category, whatever the precise circumstances. I accept that principle as generally correct: see eg Alcock v Chief Constable of South Yorkshire [1992] 1 AC 310, 396F G, per Lord Keith. But I am not persuaded that it is always a safe guide at the margins. I note that Lord Oliver went no further in Caparo than to say that, in the context of loss caused by physical damage, the existence of the nexus between the careless defendant and the injured plaintiff can rarely give rise to any difficulty: p 632F. He went on to identify Hill, so far as concerns the alternative ground of that decision, as a case where, in any ordinary meaning of the words, a relationship of proximity (in the literal sense of closeness) exists but where the law, whilst recognising the fact of the relationship, nevertheless denies a remedy to the injured party on the ground of public policy: p 633D E. Lord Reed says that Smith v Ministry of Defence [2013] UKSC 41; [2014] AC 52 was a case where it was appropriate to apply the three stage Caparo approach because it raised a novel legal issue, relating to the provision of protective equipment to soldiers on active duty, and the scope of combat immunity: it did not concern an established category of liability. But, why not? Combat immunity, where it applies, is, I suggested at para 114, itself not so much an entirely separate principle as the result of a general conclusion that it is not fair, just or reasonable to regard the Crown or its officers, soldiers or agents as under a duty of care to avoid injury or death in their acts or omissions in the conduct of an active military operation or act of war. And, however that may be, a reading of the judgments shows that no distinctions were there drawn between acts and omissions, either generally or in the specific context of the discussion which is to be found on prior authority, including Hill v Chief Constable of West Yorkshire [1989] AC 53, Elguzouli Daf v Commissioner of Police for the Metropolis [1995] QB 335, Stovin v Wise [1996] AC 923, Brooks v Commissioner of Police for the Metropolis [2005] 1 WLR 1495 and Van Colle v Chief Constable of the Hertfordshire Police [2009] AC 225: see Smiths case at eg paras 82 83, 95 96 and 97, per Lord Hope and paras 108 109, 114, 117 and 136, per Lord Mance (dissenting). Lord Carnwaths (dissenting) judgment at paras 157 170 is also of interest, for noting that the issue was a novel one, and that the closest analogy consisted in the above line of cases about police responsibility, again without drawing any distinction between acts and omissions. The case was a novel one, not because it fell outside the general category of negligent acts or omissions allegedly causing physical loss, but because it was not (yet) established that the established category embraced the particular types of acts or omissions alleged and the circumstances in which soldiers might suffer from them. Indeed, it was accepted on all sides that combat immunity meant that the established category was not on any view completely unqualified, and the question arose in that respect what scope the courts should, as a matter of policy, attach to the principle of combat immunity. A similar difficulty arises in fitting other authorities which Lord Reed accepts as correctly decided into any absolutely fixed legal mould. The cases of Hill and Smith v Chief Constable of Sussex Police [2008] UKHL 50; [2009] AC 225 can, I agree, be rationalised as cases of omission, but that was not how they were reasoned. The case of Calveley v Chief Constable of the Merseyside Police [1989] AC 1228 involved a claim by police officers for pursuing disciplinary proceedings with insufficient expedition, thereby, it was alleged, causing them physical loss, which was held to be unforeseeable, and economic loss of a kind, which is, in the absence of any assumption of responsibility, generally irrecoverable. But again Lord Bridge buttressed his conclusion with general statements about the need to shield the police from the pursuit of claims in relation to their investigative activity, without distinction between acts and omissions. In Elguzouli Daf there were two similarly based claims, but the consequences of the CPSs failure to pursue their investigation with sufficient expedition were alleged to be that the claimants remained in custody for some 22 and 85 days respectively. In the absence of any specific assumption of responsibility, the Court of Appeal held that policy factors argued against the recognition of a duty of care owed by the CPS to those it prosecutes: p 349B C, per Steyn LJ, who went on: While it is always tempting to yield to an argument based on the protection of civil liberties, I have come to the conclusion that the interests of the whole community are better served by not imposing a duty of care on the CPS. As Morritt LJ put it at p 352G H, policy considerations similar to those which weighed with Lord Keith in Hills case excluded any general duty to use reasonable care in the institution and conduct of criminal proceedings. The reasoning contains no hint of a categorical distinction between acts and omissions. A year later, the House had before it in Marc Rich & Co AG v Bishop Rock Marine Co Ltd [1996] 1 AC 211 a claim by cargo owners against a classification society by whose alleged negligence the carrying vessel was allowed to continue on her voyage after temporary repairs to a crack in her hull, which then caused the loss of both vessel and cargo. Cargo owners primary submission was that, this being a case of physical damage to property in which the plaintiff had a proprietary or possessory interest, the only requirement was proof of reasonable foreseeability. The House rejected this categorically, in the following passage from Lord Steyns speech, p 235D H): Counsel for the cargo owners submitted that in cases of physical damage to property in which the plaintiff has a proprietary or possessory interest the only requirement is proof of reasonable foreseeability. For this proposition he relied on observations of Lord Oliver of Aylmerton in Caparo Industries Plc v Dickman [1990] 2 AC 605, 632C 633D. Those observations, seen in context, do not support his argument. They merely underline the qualitative difference between cases of direct physical damage and indirect economic loss. The materiality of that distinction is plain. But since the decision in Dorset Yacht Co Ltd v Home Office [1970] AC 1004 it has been settled law that the elements of foreseeability and proximity as well as considerations of fairness, justice and reasonableness are relevant to all cases whatever the nature of the harm sustained by the plaintiff. Saville LJ explained at 1077[D E]: . whatever the nature of the harm sustained by the plaintiff, it is necessary to consider the matter not only by inquiring about foreseeability but also by considering the nature of the relationship between the parties; and to be satisfied that in all the circumstances it is fair, just and reasonable to impose a duty of care. Of course, these three matters overlap with each other and are really facets of the same thing. For example, the relationship between the parties may be such that it is obvious that a lack of care will create a risk of harm and that as a matter of common sense and justice a duty should be imposed. Again in most cases of the direct infliction of physical through loss or injury carelessness, it is self evident that a civilised system of law should hold that a duty of care has been broken, whereas the infliction of financial harm may well pose a more difficult problem. Thus the three so called requirements for a duty of care are not to be treated as wholly separate and distinct requirements but rather as convenient and helpful approaches to the pragmatic question whether a duty should be imposed in any given case. In the end whether the law does impose a duty in any particular circumstances depends upon those circumstances, . That seems to me a correct summary of the law as it now stands. It follows that I would reject the first argument of counsel for the cargo owners. (italics added for emphasis) While both the House and Saville LJ (as he was) were happy to accept that in most cases of the direct infliction of physical loss or injury through carelessness, liability was self evident, they were cautious to warn against absolute rules in that respect. Elguzouli Daf was, as Lord Reed notes, para 59, followed and applied in SXH v Crown Prosecution Service [2017] UKSC 30; [2017] 1 WLR 1401, where the complaint was that the CPS had acted unreasonably in prosecuting an asylum seeker, leading to her detention for some months. Lord Toulson giving the majority judgment said: 38. The duty of the CPS is to the public, not to the victim or to the suspect, who have separate interests. To recognise a duty of care towards victims or suspects or both, would put the CPS in positions of potential conflict, and would also open the door to collateral interlocutory civil proceedings and trials, which would not be conducive to the best operation of the criminal justice system. Similar considerations are relevant when considering the applicability of article 8 in the context of a decision to prosecute. A decision to prosecute does not of itself involve a lack of respect for the autonomy of the defendant but places the question of determining his or her guilt before the court, which will itself be responsible for deciding ancillary questions of bail or remand in custody and the like. The claim here was clearly for a positive act, causing excessive detention. Finally, Lord Reed dismisses Brookss case on the basis that it concerned police behaviour which was merely insensitive and so not normally actionable, even if it results in a psychiatric illness: para 60. But the starting point for the Houses consideration of the case was that Mr Brooks had, as a key witness to the fatal attack on Stephen Lawrence on 22 April 1993, suffered from a very serious post traumatic stress disorder until the spring of 1998, and that this had been severely exacerbated or aggravated as a result of the polices failure to treat him lawfully: para 10. Lord Steyn said in this connection that: In particular the matter must be considered on the basis that Mr Brooks has suffered personal injury (in the form of an exacerbation of or aggravation of the post traumatic stress that was induced by the racist attack itself) in consequence of the negligence of the officers and that injury of this type was reasonably foreseeable. (para 16) That being the basis on which the matter fell to be considered, the appellant advanced the argument that Hills case could be distinguished. The House disposed of that argument tersely as follows, para 32: The only suggested distinction ultimately pursued was that in Hills case the police negligence was the indirect cause of the murder of the daughter whereas in the present case the police directly caused the harm to Mr Brooks. That hardly does justice to the essential reasoning in Hills case. In any event, Calveley , Elguzouli Daf , and Kumar were cases of alleged positive and direct negligence by the police. The distinction is unmeritorious. According to the Houses decision in Alcocks case, what is necessary in order to recover damages for negligently caused psychiatric injury is not only foreseeability, but also proximity. Both requirements appear clearly to have been present in Brooks case. In the event, Lord Steyn also treated the third stage of the Caparo test (fairness, justice and reasonableness) as applicable. But it is clear that the House decided the case by reference to a general principle derived from the cases of Hill, Calveley and Elguzouli Daf, and not on the basis of any general distinction between either physical and psychiatric injury or acts or omission. Rather, it decided the case on the basis that, outrageous negligence aside, the police owe no duty of care not to cause by positive act or omissions harm to victims of serious crime, or witnesses to serious crime, with whom they have contact; and it rejected categorically any distinction between indirect causation of the murder of an innocent victim, due to failure properly to investigate past offences against other victims (Hills case) and harm directly caused to Mr Brooks (Brookss case itself): paras 18 and 32. What I think emerges from this examination of past authority is that it is not possible to state absolutely that policy considerations may not shape police or CPS liability in a context where the conduct of the police may perfectly well be analysed as positive, rather than simply as involving some form of omission. It is at least clear that extended detention and psychiatric injury, due to the polices or CPSs positive acts or omissions, will be treated as outside any otherwise generally established category of liability for negligence. As to the present appeal, I also think that there was open to the law a genuine policy choice whether or not to hold the police responsible on a generalised basis for direct physical intervention on the ground, causing an innocent passer by physical injury, in the performance of their duties to investigate, prevent and arrest for suspected offending by some third person(s). In my opinion, that policy choice should now be made unequivocally in the sense indicated by Lord Reed. In Hills case Lord Keith stated (p 59B C), that: There is no question that a police officer, like anyone else, may be liable in tort to a person who is injured as a direct result of his acts or omissions. So he may be liable in damages for assault, unlawful arrest, wrongful imprisonment and malicious prosecution, and also for negligence. Lord Keith then cited as instances where liability for negligence has been established two authorities: Knightley v Johns [1982] 1 WLR 349 and Rigby v Chief Constable of Northamptonshire [1985] 1 WLR 1242. Neither comes particularly close to the present case, and indeed, in reasoning to some extent echoed in the present Court of Appeal decision, the Court of Appeal (Leveson and Toulson LJJ) in Desmond v Chief Constable of Nottinghamshire Police [2011] EWCA Civ 3; [2011] PTSR 1369, identified the modified core principle in Hill as meaning that: Absent special circumstances, the police do not owe individual members of the public a common law duty of care in undertaking their operational duties of investigating, detecting, suppressing and prosecuting crime: para 31. But it recognised that the modified core principle in Hill may not apply in exceptional circumstances at the margins. It gave as examples of where it would not apply cases of negligent driving by the police and of assumption of responsibility. It also identified as further examples the two cases mentioned by Lord Keith. As to those two cases, the former concerned police (mis)management of the aftermath of a relatively mundane traffic accident, by giving instructions to an officer to ride against the traffic flow in a tunnel, as a result of which he suffered personal injury. The latter concerned police failure to re equip themselves with fire fighting equipment, before taking the drastic step, with a view to forcing the intruders arrest, of firing an incendiary canister into a building in which an intruder had broken with a gun. The present case concerns in contrast a quite delicate operational decision involving coordination between four officers, with a view to the arrest of suspected drug dealers, in a public place. It can be suggested that this raises special considerations, negativing any duty of care. But in my view we should not accept that suggestion. Rather we should now recognise the direct physical interface between the police and the public, in the course of an arrest placing an innocent passer by or bystander at risk, as falling within a now established area of general police liability for positive negligent conduct which foreseeably and directly inflicts physical injury on the public. On that basis, I would also allow this appeal and restore the judges judgment. LORD HUGHES: The question of law The general question of importance in this appeal is when the police do or do not owe a legal duty of care to individuals in the course of performing their public functions of investigating and preventing crime. It is important that the question is posed in those terms. It may have become a convenient shorthand to express the decisions of the House of Lords and this court in Hill v Chief Constable of West Yorkshire, Brooks v Commissioner of Police of the Metropolis, Smith v Chief Constable of Sussex Police and Michael v Chief Constable of South Wales in terms of a rule of police immunity. That may not be surprising since Lord Keith did at one point in Hill refer to the police as immune from an action of the kind there brought. Whether convenient or not, that shorthand is misleading, as Lord Toulson explained in Michael at para 44. Whatever the answer to the question posed, the police do not enjoy some immunity from liability which otherwise would arise. Like others, however, they do not owe a duty of care to avoid harm or damage in every situation where such harm or damage can be foreseen. The general rule of law of tort is that the foreseeability of harm is a necessary but not a sufficient condition for liability. So in all the many situations and relationships which may result in damage, the question becomes: when is the defendant under a legal duty of care to the claimant to take reasonable steps to avoid it. For the reasons very clearly set out by Lord Reed at paras 21 30 it is neither necessary nor appropriate to treat Caparo Industries v Dickman [1990] 2 AC 605 as requiring the application of its familiar three stage examination afresh to every action brought. Where the law is clear that a particular relationship, or recurrent factual situation, gives rise to a duty of care, there is no occasion to resort to Caparo, at least unless the court is being invited to depart from previous authority. The four cases of Hill, Brooks, Smith and Michael make it clear that they do not touch on the liability of police officers if by positive negligent act they cause physical harm to individuals or damage to property. That is apparent from: i) the approval in those cases of the decisions in Rigby v Chief Constable of Northamptonshire (negligent use of a CS gas canister in an attempt to force an armed psychopath from a shop in which he had gone to ground) and Knightley v Johns (negligent organisation of traffic in an emergency situation); and ii) subsequent cases, that: the explicit statement by Lord Keith in Hill at 59B, approved in There is no question that a police officer, like anyone else, may be liable in tort to a person who is injured as a direct result of his acts or omissions. (although see below for consideration of omissions). There are other examples of recognition of the duty of care which police officers owe not by positive negligent act to cause physical harm. They include Marshall v Osmond (a car chase) and Ashley v Chief Constable of Sussex Police (where negligent shooting of a suspected criminal was conceded). The principal cases, however, also contain explicit statements of the vital policy considerations which impose limits on the duties of care which the police owe to individuals when engaged in their public function of investigating and preventing crime. The analysis begins with Lord Keith in Hill. With the express agreement of three other members of the court, and a concurring speech by the fifth, he said at 63A: That is sufficient for the disposal of the appeal. But in my opinion there is another reason why an action for damages in negligence should not lie against the police in circumstances such as those of the present case, and that is public policy Potential existence of such liability may in many instances be in the general public interest, as tending towards the observance of a higher standard of care in the carrying on of various different types of activity. I do not, however, consider that this can be said of police activities. The general sense of public duty which motivates police forces is unlikely to be appreciably reinforced by the imposition of such liability so far as concerns their function in the investigation and suppression of crime. From time to time they make mistakes in the exercise of that function, but it is not to be doubted that they apply their best endeavours to the performance of it. In some instances the imposition of liability may lead to the exercise of a function being carried on in a detrimentally defensive frame of mind. The possibility of this happening in relation to the investigative operations of the police cannot be excluded. Further it would be reasonable to expect that if potential liability were to be imposed it would be not uncommon for actions to be raised against police forces on the ground that they had failed to catch some criminal as soon as they might have done, with the result that he went on to commit further crimes. While some such actions might involve allegations of a simple and straightforward type of failure for example that a police officer negligently tripped and fell while pursuing a burglar others would be likely to enter deeply into the general nature of a police investigation, as indeed the present action would seek to do. The manner of conduct of such an investigation must necessarily involve a variety of decisions to be made on matters of policy and discretion, for example as to which particular line of inquiry is most advantageously to be pursued and what is the most advantageous way to deploy the available resources. Many such decisions would not be regarded by the courts as appropriate to be called in question, yet elaborate investigation of the facts might be necessary to ascertain whether or not this was so. A great deal of police time, trouble and expense might be expected to have to be put into the preparation of the defence to the action and the attendance of witnesses at the trial. The result would be a significant diversion of police manpower and attention from their most important function, that of the suppression of crime. Closed investigations would require to be reopened and retraversed, not with the object of bringing any criminal to justice but to ascertain whether or not they had been competently conducted. Lord Templeman added this at 65: Moreover, if this action lies, every citizen will be able to require the court to investigate the performance of every policeman. If the policeman concentrates on one crime, he may be accused of neglecting others. If the policeman does not arrest on suspicion a suspect with previous convictions, the police force may be held liable for subsequent crimes. The threat of litigation against a police force would not make a policeman more efficient. The necessity for defending proceedings, successfully or unsuccessfully, would distract the policeman from his duties. This action is in my opinion misconceived and will do more harm than good. In Brooks at para 28 Lord Steyn qualified that part of what Lord Keith had said about the best endeavours of police officers, saying that a more sceptical approach to the carrying out of all public functions was necessary. His qualification was shared by Lord Bingham at paras 3 and 4 and by Lord Nicholls at para 6. But notwithstanding that reservation, Lord Steyn, with whom Lord Rodger and Lord Brown fully agreed, otherwise fully endorsed the reasoning of Lord Keith. At para 30 he held that the core principle of Hill had remained unchallenged for many years. He went on: It is, of course, desirable that police officers should treat victims and witnesses properly and with respect: compare the Police (Conduct) Regulations 2004 (SI 2004/645). But to convert that ethical value into general legal duties of care on the police towards victims and witnesses would be going too far. The prime function of the police is the preservation of the Queens peace. The police must concentrate on preventing the commission of crime; protecting life and property; and apprehending criminals and preserving evidence : A retreat from the principle in Hills case would have detrimental effects for law enforcement. Whilst focusing on investigating crime, and the arrest of suspects, police officers would in practice be required to ensure that in every contact with a potential witness or a potential victim time and resources were deployed to avoid the risk of causing harm or offence. Such legal duties would tend to inhibit a robust approach in assessing a person as a possible suspect, witness or victim. By placing general duties of care on the police to victims and witnesses the polices ability to perform their public functions in the interests of the community, fearlessly and with despatch, would be impeded. It would, as was recognised in Hills case, be bound to lead to an unduly defensive approach in combating crime. As Lord Steyn pointed out (para 19), there can be no doubt that Lord Keiths analysis represented the alternative ground of decision for, and part of the ratio decidendi of, Hill. In the same case, Lord Bingham, at para 4, said of the suggested duties of care to witnesses which were advanced by the claimant, But these are not duties which could be imposed on police officers without potentially undermining the officers performance of their functions, effective performance of which serves an important public interest. That is, in my opinion, a conclusive argument in the Commissioners favour. And at para 5 Lord Nicholls held that These duties would cut across the freedom of action the police ought to have when investigating serious crime. In Smith Lord Bingham dissented on the extent of the duty of care owed to those who complained to the police about risks from another identified person and advanced what he termed a liability principle recognising a duty of care in narrow circumstances. But notwithstanding that opinion, he reviewed the policy considerations voiced by Lord Keith in Hill and by the House in Brooks and, except for the reservation entered in Brooks which is explained above, he did not question them: see paras 48 52. The majority of the House expressly endorsed the policy considerations subject to the same reservation. At para 74 Lord Hope addressed Lord Binghams opinion that the limited liability which he would have imposed was not inconsistent with the policy factors, and that the observations in Hill and Brooks were to be read in the context of the duties there contended for. He held that they were not so limited: In my opinion however it is clear from Lord Steyns opinion, read as a whole, that he was laying down a principle of public policy that was to be applied generally. In para 22 he referred to his own judgment in Elguzouli Daf v Comr of Police of the Metropolis [1995] 1 QB 335. That was, as he said, a different case altogether, as it raised the question whether the Crown Prosecution Service (CPS) owed a duty of care to those whom it was prosecuting. But he relied on the case by analogy. In holding in Elguzouli Daf that policy factors argued against the recognition of a duty of care owed by the CPS to those whom it prosecutes, he said this at p 349: While it is always tempting to yield to an argument based on the protection of civil liberties, I have come to the conclusion that the interests of the whole community are better served by not imposing a duty of care on the CPS. In my view, such a duty of care would tend to have an inhibiting effect on the discharge by the CPS of its central function of prosecuting crime. It would in some cases lead to a defensive approach by prosecutors to their multifarious duties. It would introduce a risk that prosecutors would act so as to protect themselves from claims of negligence. 75. The phrase the interests of the whole community was echoed in the last sentence of the passage which I have quoted from Lord Steyns opinion in Brooks. There is an echo too in Brooks of the warning against yielding to arguments based on civil liberties: see the first sentence of that quotation where he warns against a retreat from the core principle. The point that he was making in Brooks, in support of the core principle in Hill, was that the principle had been enunciated in the interests of the whole community. Replacing it with a legal principle which focuses on the facts of each case would amount, in Lord Steyn's words, to a retreat from the core principle. We must be careful not to allow ourselves to be persuaded by the shortcomings of the police in individual cases to undermine that principle. That was the very thing that he was warning against, because of the risks that this would give rise to. As Ward LJ said in Swinney v Chief Constable of Northumbria Police Force [1997] QB 464, 487, the greater public good outweighs any individual hardship. A principle of public policy that applies generally may be seen to operate harshly in some cases, when they are judged by ordinary delictual principles. Those are indeed the cases where, as Lord Steyn put it, the interests of the wider community must prevail over those of the individual. 76. The risk that the application of ordinary delictual principles would tend to inhibit a robust approach in assessing a person as a possible suspect or victim, which Lord Steyn mentioned in the last sentence of the passage that I have quoted from his opinion in Brooks, is directly relevant to cases of the kind of which Smiths case is an example Police work elsewhere may be impeded if the police were required to treat every report from a member of the public that he or she is being threatened with violence as giving rise to a duty of care to take reasonable steps to prevent the alleged threat from being executed. Some cases will require more immediate action than others. The judgment as to whether any given case is of that character must be left to the police. I do not find it possible to approach Hill and Brooks as cases that turned on their own facts. The fact that Lord Steyn applied the decision in Hill to the facts of Brooks, which were so very different, underlines the fact that Lord Steyn was indeed applying a core principle that had been unchallenged for many years. That principle is, so it seems to me, that in the absence of special circumstances the police owe no common law duty of care to protect individuals against harm caused by criminals. The two relevant justifications advanced for the principle are (i) that a private law duty of care in relation to individuals would be calculated to distort, by encouraging defensive action, the manner in which the police would otherwise deploy their limited resources; (ii) resources would be diverted from the performance of the public duties of the At para 89 Lord Phillips observed that public policy has been at the heart of consideration whether a duty of care is owed by police officers to individuals. After reviewing the policy factors he concluded at para 97: police in order to deal with claims advanced for alleged breaches of private law duties owed to individuals. At para 108 Lord Carswell said this: Lastly, Lord Brown added, at paras 131 133 The factor of paramount importance is to give the police sufficient freedom to exercise their judgment in pursuit of their objects in work in the public interest, without being trammelled by the need to devote excessive time and attention to complaints or being constantly under the shadow of threatened litigation. Over reaction to complaints, resulting from defensive policing, is to be avoided just as much as failure to react with sufficient speed and effectiveness. That said, one must also express the hope that police officers will make good use of this freedom, with wisdom and discretion in judging the risks, investigating complaints and taking appropriate action to minimise or remove the risk of threats being carried out. 131. Fourthly, some at least of the public policy considerations which weighed with the House in Hill and Brooks to my mind weigh also in the present factual context. I would emphasise two in particular. 132. First, concern that the imposition of the liability principle upon the police would induce in them a detrimentally defensive frame of mind. So far from doubting whether this would in fact be so, it seems to me inevitable. If liability could arise in this context (but not, of course, with regard to the polices many other tasks in investigating and combating crime) the police would be likely to treat these particular reported threats with especial caution at the expense of the many other threats to life, limb and property of which they come to learn through their own and others endeavours. They would be likely to devote more time and resources to their investigation and to take more active steps to combat them. They would be likely to arrest and charge more of those reportedly making the threats and would be more likely in these cases to refuse or oppose bail, leaving it to the courts to take the responsibility of deciding whether those accused of making such threats should remain at liberty. The police are inevitably faced in these cases with a conflict of interest between the person threatened and the maker of the threat. If the police would be liable in damages to the former for not taking sufficiently strong action but not to the latter for acting too strongly, the police, subconsciously or not, would be inclined to err on the side of over reaction. I would regard this precisely as inducing in them a detrimentally defensive frame of mind. Similarly with regard to their likely increased focus on these reported threats at the expense of other police work. 133. The second public policy consideration which I would emphasise in the present context is the desirability of safeguarding the police from legal proceedings which, meritorious or otherwise, would involve them in a great deal of time, trouble and expense more usefully devoted to their principal function of combating crime. This was a point made by Lord Keith of Kinkel in Hill and is of a rather different character from that made by Lord Steyn in para 30 of his opinion in Brooks see para 51 of Lord Binghams opinion. In respectful disagreement with my Lord, I would indeed regard actions pursuant to the liability principle as diverting police resources away from their primary function. Not perhaps in every case but sometimes certainly, the contesting of these actions would require lengthy consideration to be given to the deployment of resources and to the nature and extent of competing tasks and priorities. In Michael Lord Toulson (at para 121) was inclined to accord force to criticism of the fear of defensive policing. But he held that it was possible to imagine that liability might lead to police forces changing their priorities, and that it was hard to see it as in the public interest that the determination of priorities should be affected by the risk of being sued. He added that the one thing of which any court could be sure is that the payment of compensation would have to come from police budgets, at the expense of spending on policing unless an increase in budgets from the public purse were to ensue. It should be acknowledged that it is sometimes asserted that that part of the policy considerations which related to the danger of defensive policing lacks hard evidence. That may technically be so, since there has not existed the kind of duty of care which would test it in practice. But like Lord Brown in Smith I for my part would regard that risk as inevitable. It can scarcely be doubted that we see the consequences of defensive behaviour daily in the actions of a great many public authorities. I do not see that it can seriously be doubted that the threat of litigation frequently influences the behaviour of both public and private bodies and individuals. However that may be, the several statements of the policy considerations, especially in three different decisions of the House of Lords, are simply too considered, too powerful and too authoritative in law to be consigned to history, as I do not understand Lord Reed to suggest that they should be. Nor do I see it as possible to treat them as no more than supporting arguments. As all of them, and especially the speech of Lord Hope set out at para 10 above, make clear, the statements are intended as ones of general principle. No doubt Hill was decided at a time when Anns v Merton London Borough Council was understood to provide the test for the existence of a duty of care. But the error of Anns was exposed at the latest in 1991 in Murphy v Brentwood Council, whilst Brooks and Smith were decided in 2005 and 2008 respectively. In any event, the error of Anns lay chiefly in its effective imposition of an often impossible burden on a defendant to demonstrate that public policy ought to negate the existence of a duty of care. The relevance of considerations of public policy, such as those so fully adumbrated in Hill, Brooks and Smith, and the fact that they may indeed demonstrate that a duty of care is not owed, remains unchanged by the different formulation in Caparo. In Michael (at para 97) Lord Toulson helpfully brought into the analysis the general reluctance of English law to impose liability in tort for pure omissions. Smith v Littlewoods Organisation Ltd [1987] AC 241, to which he referred, is a good example. There, the claimant suggested that the occupiers of a disused cinema, awaiting demolition and reconstruction as a shop, owed a duty to exclude vandals from getting in, so that they were liable to neighbours when the vandals started a fire which spread to adjoining properties. That was, no doubt, a case of pure omission, and was so analysed by Lord Goff, although not by the majority of the House of Lords, through Lord Mackay. It is clear that the reluctance of the common law to impose liability in tort for pure omissions is another reason why the police do not owe a duty of care to individuals who turn out to be the victims of crime (as in Hill or Smith) or to witnesses (as in Brooks) or to suspects (as in Calveley v Chief Constable of Merseyside and Elguzouli Daf ). But analysis in terms of omissions cannot be the only, or sufficient, reason why such duties of care are not imposed, nor why there is very clearly no duty owed to individuals in the manner in which investigations are conducted. There are at least two reasons why this is so. First, the rule against liability for omissions is by no means general. In Smith v Littlewoods Organisation Ltd Lord Goff identified at any rate several situations where such liability is imposed. One is where there has been an assumption of responsibility towards the claimant. The law readily finds such an assumption in many common situations, such as employment, teaching, healthcare and the care of children, and imposes liability for omitting to protect others. It could equally readily do so in the case of police officers with a general public duty to protect the peace, but it does not. Another was epitomised by Goldman v Hargrave and by Thomas Graham Ltd v Church of Scotland 1982 SLT (Sh Ct) 26, a case very similar to Littlewoods where the occupier knew of previous incursions by third parties and where Lord Goff accepted that liability was rightly imposed for omission to keep them out. If the occupation of land is treated as imposing liability for an omission, the law could, and might, have said that the same applies to police officers where they are aware of the risk posed by (or to) those they are investigating, but it does not. For the same reasons, the question whether a statutory public duty gives rise to a private duty or not is a fluid one. Stovin v Wise and Gorringe are examples where no private duty of care was held to exist. Barrett v Enfield London Borough Council, decided after Stovin v Wise, accepted at least in principle the possibility of such a duty in relation to the different statutory scheme there in question. Secondly, there is no firm line capable of determination between a case of omission and of commission. Some cases may fall clearly on one side of the line, and Hill may have been one of them. But the great majority of cases can be analysed in terms of either. Michael could be said to be a case of omission to respond adequately to the 999 call. But it was argued for the claimant as a case of a series of positive acts, such as, for example, misreporting the complaint when passing it from one police force to another. Barrett v Enfield London Borough Council was a case of mixed acts (allegedly negligent placements) and omissions (to arrange adoption). Phelps v Hillingdon London Borough Council similarly involved allegedly negligent examination, also a positive act. The ultimate reason why there is no duty of care towards victims, or suspects or witnesses imposed on police officers engaged in the investigation and prevention of crime lies in the policy considerations examined above and, in the end, in the clear conclusion, as expressed by Lord Hope in Smith (see para 10 above) that the greater public good requires the absence of any duty of care. Likewise the policy considerations will be directly relevant to any suggestion that a duty of care exists towards individuals such as victims, witnesses or suspects via the route of foreseeable risk of psychiatric harm. The law remains uncertain about when a claimant can properly be regarded as a primary or a secondary victim for the purposes of recovering damages for psychiatric harm: see Frost v Chief Constable of South Yorkshire Police [1999] 2 AC 455, McLoughlin v Grovers [2001] EWCA Civ 1743 per Hale LJ as she then was, and Alcock v Chief Constable of South Yorkshire Police [1992] 1 AC 310. But it is clear that no duty of care towards victims of crime, witnesses or suspects can be erected on the back of foreseeability of psychiatric harm, and the reason clearly lies in the policy considerations. Thus whilst there remains a duty of care imposed on police officers not by positive action to occasion physical harm or damage to property which ought reasonably to be avoided, there is no duty of care towards victims, witnesses or suspects in the manner of the investigation of offences or the prevention of crime. That also means that there is no duty of care to protect individuals from harm caused by the criminal acts of third parties. Of course, where action is brought on the basis of physical harm done by positive act of the police, it will succeed if but only if negligence is proved. As Lord Reed explains at para 75, policing may sometimes involve unavoidable risk to individuals. It may very often involve extremely delicate balancing of choices. Crowd control, hostage situations, violent outbreaks of crime and the allocation of scarce resources where there are large numbers of persons with the potential to offend, even at the terrorist level, are simply examples. Sometimes decisions may have to be made under extreme pressure; at other times they may remain very difficult notwithstanding time for analysis, and there may be a high level of risk that they turn out to be wrong. The question is always not whether, with hindsight, the decision was wrong, but whether in all the circumstances it was reasonable. The present case I agree that the present case is one of positive act, namely arresting the suspect, which directly caused physical harm. It matters not that the suspect was the first to be in physical contact with the claimant given that the collision with her was by him plus two of the policemen. I confess that I have pondered hard about the finding of negligence. That the suspect might run away was known, but the limited risk that he not only would do so, but also would cannon into a pedestrian if he did, had to be balanced against the duty to effect an arrest promptly. Many might regard the decision when to effect the arrest as a marginal one. But it is important that appellate courts do not second guess trial judges who have had the opportunity to hear the witnesses in person, as well as to examine the CCTV in the light of the way the case is argued. It does not seem to me that even if one were to entertain doubts about how one might oneself have decided the issue, it can be right to displace the finding of the trial judge unless there is error of principle. It is impossible to say that the judge was not entitled to attach the significance he did to the fact that Mr Willan had lost sight of the claimant at the moment he moved in. In those circumstances I would allow the appeal and restore the finding of the trial judge. The case must be remitted to the court of trial for the still outstanding assessment of damages.
+This appeal concerns the interpretation of sections 103 and 106 of the Income and Corporation Taxes Act 1988 (ICTA) which imposed a charge to corporation tax on post cessation receipts from a trade, profession or vocation. The provisions were later rewritten in the Corporation Tax Act 2009. The receipts in question came about as follows. Over many years companies within the Littlewoods corporate group paid the Commissioners for Her Majestys Revenue and Customs (HMRC) substantial sums as value added tax (VAT) on an incorrect understanding of the law. HMRC later repaid the sums, which had been incorrectly paid, to a nominated member of the corporate group together with interest on those sums as required by sections 78 and 80 of the Value Added Tax Act 1994 (VATA 1994). At earlier stages in the proceedings, the dispute concerned HMRCs claim to tax several companies within the group on both repayments and also interest on those repayments, which in aggregate amounted to over 630m. Now the only question is whether a repayment of overpaid VAT of 124,963,600 is liable to corporation tax in the hands of the appellant, Shop Direct Group (SDG). SDG challenges the judgment of the Court of Appeal, upholding the determinations of the First tier Tribunal and the Upper Tribunal, that it is liable to corporation tax on the receipt of that sum. The prior law In order to understand the purpose of sections 103 and 106 of ICTA it is necessary to look at the prior law. In short, until Parliament intervened by enacting sections 32 34 of the Finance Act 1960, sums which a taxpayer received as income from his trade, profession or vocation after he had ceased to trade or carry on his profession or vocation escaped taxation. Case law established that the sums did not change their character after the discontinuance; their source was unchanged. The courts treated those sums as the fruit of the trade or profession or as its fruit or aftermath. The sums were held not to be taxable under Cases I or II of Schedule D because the trade, profession or vocation was not being carried on in the tax year in which the sums were received. As a result, an astute taxpayer might choose to retire so that he received such income post cessation and thus tax free. Similarly, as the case law shows, if the taxpayer were unfortunate and died before he had received income arising from his trade, profession or vocation, the receipts were not taxed as income in the hands of his personal representatives, heirs or assignees. In 1930 Rowlatt J set out the basic principle in Bennett v Ogston (1930) 15 TC 374, in a passage which the House of Lords approved in the later cases to which I refer below. He said (at p 378): When a trader or a follower of a profession or vocation dies or goes out of business and there remain to be collected sums owing for goods supplied during the existence of the business or for services rendered by the professional man during the course of his life or his business, there is no question of assessing those receipts to income tax; they are the receipts of the business while it lasted, they are arrears of that business, they represent money which was earned during the life of the business and are taken to be covered by the assessment made during the life of the business, whether that assessment was made on the basis of bookings or on the basis of receipts. Thus in Brown v National Provident Institution [1921] AC 222 the tax paying companies escaped tax on profits derived from transactions conducted in the preceding year because they did not carry on the trade in the tax year in which they received the profit generating sums. In Stainers Executors v Purchase [1952] AC 280, 23 TC 367, after the actor and film producer, Leslie Howard had been killed by enemy action in 1943, his executors received income from films, which he had produced or in which he had acted. The Crown argued that the sums had assumed a different character after his death and could no longer be treated as profits and gains of his profession. The House of Lords rejected this argument and held that the source of the payments was Mr Howards professional activity. Lord Simonds stated (at p 289) that they retained the essential quality of being the fruit of his professional activity and Lord Asquith of Bishopstone (at p 290) described the payments as the fruit or aftermath of the professional activities of Mr Leslie Howard during his lifetime. The House of Lords confirmed this approach in relation to royalties received after the death of an author in Carson v Cheyneys Executor [1959] AC 412. Tax legislation thus left the door wide open to tax avoidance so long as the taxpayer could, by choosing when to discontinue a business, escape tax on post cessation receipts. The statutory provisions Parliament sought to close that door by enacting the predecessors of the provisions which are the subject of this appeal, initially in sections 32 34 of the Finance Act 1960, and imposed a charge to tax on post cessation receipts primarily under Case VI of Schedule D. Later, sections 103 to 110 of ICTA became the relevant provisions for both income tax and corporation tax. Since the statutory provisions relating to income tax were separated from those relating to corporation tax in 2005, the ICTA provisions were amended to relate only to corporation tax. Section 103 of ICTA, as it was worded in 2007 2008 at the time of the relevant transaction, stated so far as relevant: (1) Where any trade, profession or vocation carried on wholly or partly in the United Kingdom the profits of which are chargeable to tax has been permanently discontinued, corporation tax shall be charged under Case VI of Schedule D in respect of any sums to which this section applies which are received after the discontinuance. (2) Subject to subsection (3) below, this section applies to the following sums arising from the carrying on of the trade, profession or vocation during any period before the discontinuance (not being sums otherwise chargeable to tax) (a) where the profits for that period were computed by reference to earnings, all such sums in so far as their value was not brought into account in computing the profits for any period before the discontinuance, and (b) where the profits were computed on a conventional basis (that is to say, were computed otherwise than by reference to earnings) any sums which if those profits had been computed by reference to earnings, would not have been brought into the computation for any period before the discontinuance because the date on which they became due, or the date on which the amount due in respect thereof was ascertained, fell after the discontinuance. (emphasis added) In this case sub section (2)(a) is relevant as the trading companies computed their profits by reference to earnings. The only other provision which it is necessary to set out is section 106 of ICTA (as amended by section 882 of, and paragraph 85 of Schedule 1 to, the Income Tax (Trading and Other Income) Act 2005) which governs the charge to tax in some, but not all, of the circumstances in which the rights to receive payments which are post cessation receipts are transferred. Section 106(1) addresses the circumstance of a transfer for value and provides: Subject to subsection (2) below, in the case of a transfer for value of the right to receive any sum to which section 103, 104(1) or 104(4) applies, any corporation tax chargeable by virtue of either of those sections shall be charged in respect of the amount or value of the consideration (or, in the case of a transfer otherwise than at arms length, in respect of the value of the right transferred as between parties at arms length), and references in this Chapter to sums received shall be construed accordingly. The subsection quantifies the charge to tax on the transferor of the right. Thus, for example, if a company, which was entitled to receive royalties from films or books, permanently discontinued its business and assigned the right to receive those royalties to a third party at full market value, the assigning company would be liable to corporation tax under section 103 on its profits calculated by reference to the value it received as consideration for the assignment. Subsection (2) of section 106 addresses the circumstance where, under sections 110(2)(a) and 337 of ICTA, there is a deemed discontinuance of a trade caused by a change in the persons carrying on the business. It provides: Where a trade, profession or vocation is treated as permanently discontinued by reason of a change in the persons carrying it on, and the right to receive any sum to which section 103 or 104(1) applies is or was transferred at the time of the change to the company carrying on the trade, profession or vocation after the change, corporation tax shall not be charged by virtue of either of those sections, but any sum received by that company by virtue of the transfer shall be treated for corporation tax purposes as a receipt to be brought into the computation of the profits of the trade, profession or vocation in the period in which it is received. So, if the transferee, while it is carrying on its trade, receives sums which are post cessation receipts of the former trade, section 103 does not apply to the transferees receipt. Instead, the subsection treats those receipts by the successor company as part of its trade, brings them into the computation of its profits in the period in which they are received and subjects them to a charge under Case I of Schedule D. The effect of subsection (2) can be seen in relation to income tax on a partnership, before it was re worded to apply only to corporation tax. It superseded the decision of the House of Lords in Crompton v Reynolds 33 TC 288, [1952] 1 All ER 888. In simplified form the facts of that case were as follows. A partnership of cotton brokers as originally constituted had as an asset of their business a debt owed by a customer incurred in the course of their trade. A change in the membership of the partnership gave rise to a technical dissolution of the old partnership and the new partnership acquired the assets and liabilities of the old partnership. The new partnership subsequently collected the debt and escaped income tax on it because the House of Lords held that the collection of the debt was not part of the new partnerships trading operation and thus was not assessable to tax under Case I of Schedule D. Section 106(2) closed the loophole by treating such collection of a prior partnerships debt as a trading receipt of the new partnership. The factual background As I have said, the case now concerns only one repayment of 124,963,600 of overpaid VAT which HMRC made in the tax year 2007 2008. It was referred to as VAT Repayment 2 or VRP2 in the decision of the First tier Tribunal and the judgments of the Upper Tribunal (Asplin J) and of the Court of Appeal and I will use the same term to describe it. The overpayments arose because VAT was wrongly calculated when goods were sold to agents of the supplier with a discount for commission. The complex facts are set out in full in the decision of the First tier Tribunal (Judge Roger Berner and Miss Sandi ONeill) [2012] UKFTT 128 (TC)). I can therefore present them briefly. The relevant supplies were made by companies in the group of companies between 1978 and 1996. In presenting the appeal counsel grouped the relevant supplies and the repayments relating to those supplies (which were components of VRP2) as follows. The supplies were made by: (i) SDG (then named John Noble Ltd) between 1 January 1986 and 31 December 1987 (VRP2A(i)); (ii) Reality Group Ltd (RGL) between 1 April and 30 September 1996 (VRP2A(ii)); (iii) Kay & Co Ltd (Kay & Co) between 1 January 1978 and 30 September 1996 and Abound Ltd (Abound) between 1 April 1978 and 30 September 1996 (VRP2B); and (iv) GUS plc or RGL between 1 January 1978 and 31 March 1996 (VRP2C). The VAT had been paid in relation to those supplies by the representative member of the group of companies under section 43 of VATA 1994, which until 11 February 1992 was GUS Merchandise Corporation Ltd and between then and 6 August 1997 was Kay & Co Ltd. By the time VRP2 was paid in 2007, each of the companies which had made the relevant supplies had permanently discontinued its trade. It is not necessary to set out the complex facts of the reorganisations of businesses within the group of companies in any detail. The relevant transfers may be summarised as follows: (i) the trade of SDG was transferred to RGL on 1 June 1991; (ii) the trade of GUS plc was transferred to RGL on 1 April 1996 but the transferors right to receive a VAT repayment, which became VRP2C, was retained; (iii) the trades of Kay & Co and Abound were transferred to RGL on 1 April 1997 but the transferors rights to VAT repayments, which became VRP2B, were retained; (iv) the trade of RGL was transferred to SDG on 25 November 2000; and (v) finally, after March UK Ltd (March) had acquired from GUS plc various companies, including SDG, RGL, Kay & Co and Abound, on 27 May 2003, the trade of SDG was transferred to Shop Direct Home Shopping Ltd (SDHSL) on 28 October 2005. No documentation vouching the transfers in (i) and (iv) above was available to the First tier Tribunal but the tribunal inferred and found as fact that in each case the whole of the trade was transferred, including the transferors right to VAT repayments. On 24 June 2003 GUS plc, which had become the representative member of the VAT group on 20 May in that year, made a claim for repayment of VAT under section 80 of VATA 1994 from HMRC. The claim included the various payments which led to the repayment which has been described as VRP2. The person entitled to receive the repayments under section 80 of VATA 1994 was the representative member of the VAT group. But the First tier Tribunal held that the benefit of the repayment was accepted as belonging to the appropriate companies acquired by March. The tribunal did not have evidence of how the GUS group operated its treasury function but inferred that the trading companies had had to account to the representative member to fund the VAT due on their trading and that the representative member had to account to them for any repayments of VAT. Argos Ltd (Argos) became the representative member of the VAT group on 9 October 2006. Because, by the time HMRC paid VRP2 in September 2007, Argos had been transferred to another group of companies under Home Retail Group plc (HRG), it was necessary for the interested parties to enter into agreements to determine which entity within the corporate group which was not being sold should receive the repayments from Argos, which was acting as the groups representative member. March, GUS plc and HRG agreed that the solicitors, Weil, Gotshal & Manges (WGM), be appointed agents of Argos and this was done. WGM were also appointed the agent of SDG to receive VRP2 as part of the administrative arrangements for the receipt of this payment from HMRC. Argos gave an irrevocable instruction to HMRC to pay all VAT repayments to WGM. To secure its position, HMRC obtained (a) an undertaking from SDG that it would repay VRP2 and the statutory interest thereon in specified circumstances and (b) releases from Kay & Co, RGL and Abound in relation to their entitlement (if any) to receive any repayment when the GUS home shopping business was sold to March in May 2003. On Marchs direction, WGM paid an amount equal to VRP2 to a Jersey registered company, L W Corporation Ltd (LWC), which March had made SDGs parent company on 25 October 2006. SDG, which had been dormant since October 2005, had become an unlimited company on 30 January 2007 and so did not have to file its accounts in Companies House but only with HMRC. This enabled it to avoid publicity regarding the receipt of VRP2 and the interest thereon. Amounts equal to the sums paid to LWC were recognised as an exceptional item in the profit and loss account of SDG and as an inter company receivable due from LWC on SDGs balance sheet. SDG thus received VRP2. Consistently with this presentation in SDGs accounts, the First tier Tribunal held that SDG received VRP2 as beneficial owner at the time of receipt. The tribunal interpreted Marchs agreed arrangements with GUS plc and HRG as an acknowledgement that SDG was entitled to VRP2. There was no suggestion in the findings of fact that any other company ever questioned SDGs right to receive VRP2. In my view the inference that SDG was beneficially entitled to VRP2 was obvious. The proceedings below After HMRC amended the corporation tax self assessments of the companies, including SDG, which received the various VAT repayments, the recipient companies appealed those assessments. The First tier Tribunal in a decision dated 14 February 2012 dismissed each of the appeals. On 19 April 2013 Asplin J sitting as a judge of the Upper Tribunal (Tax and Chancery Chamber) dismissed the appeal. SDG alone appealed to the Court of Appeal in respect of its assessment to corporation tax on VRP 2 and the related statutory interest. In a judgment dated 11 March 2014, which Briggs LJ wrote and with which Rimer LJ and Sir Stanley Burnton agreed, the Court of Appeal dismissed the appeal: [2014] EWCA Civ 255; [2014] STC 1383. SDG applied for permission to appeal to this court and was permitted to appeal in relation to VRP2 only. The issues now in dispute Mr David Goldberg QC for SDG submitted that the maximum sum (if any) on which SDG should be charged corporation tax was the sum of about 200,000 which related to the supplies that SDG itself had made in 1986 and 1987 and which was VRP2A(i) in para 10 above. He advanced three reasons in support of this contention. First, he submitted that section 103 of ICTA imposed a tax charge only on the original trader (ie the person from whose pre discontinuation trading the sum arises). As SDG did not carry on the trades which produced the bulk of VRP2, it was not liable to corporation tax on VRP2 except, possibly, for VRP2A(i). Secondly, if the receipt of a sum equivalent to VRP2 arose from an intra group transfer to SDG without any assignment of rights to it, section 103 did not impose a charge. Thirdly and alternatively, if the receipt of that sum were the result of a transfer to SDG of the right to the receipt, section 103 did not impose a charge and, in any event, section 106 precluded any charge to tax on SDG. Mr Malcolm Gammie QC for HMRC challenged this analysis on every count. He submitted (a) that it was illegitimate to read into section 103 any restriction that confined the charge to the original trader, (b) that section 106(1) applied only to transfers for value (which did not occur in this case) and (c) that section 106(2) did not apply unless the company to whom a trade was transferred received the transferors post cessation profits while it, the transferee, was trading (which also did not occur in this case). He pointed out that SDG and the other group companies had led no evidence of the intra company transactions and had been content to rely on an agreed statement of facts. It was not open to SDG to seek to undermine the First tier Tribunals findings of fact by inviting the court to make contrary inferences as to the nature of the intra group transactions. Analysis Section 6 of ICTA provided that corporation tax shall be charged on profits of companies. Section 8 of that Act provided that a company shall be chargeable to that tax on all its profits wherever arising, and section 9 provided that the amount of any income shall for purposes of corporation tax be computed in accordance with income tax principles, all questions as to the amounts which are or are not to be charged to tax as a persons income being determined in accordance with income tax law and practice. Section 18 of ICTA set out Schedule D which imposed a charge to tax on the annual profits or gains arising or accruing to any person residing in the United Kingdom from any trade, profession or vocation. Section 18(3) set out the Cases of Schedule D. Case I charged tax in respect of any trade carried on in the United Kingdom or elsewhere. Case VI, which section 103 brings into play, provided for tax in respect of any annual profits or gains not falling under any other Case of Schedule D . Finally, section 18(4) of ICTA provided: The provisions of Schedule D and of subsection (2) above are without prejudice to any other provision of the Tax Acts directing tax to be charged under Schedule D or under one or other of the Cases set out in subsection (3) above, and tax directed to be so charged shall be charged accordingly. Section 103 was one such provision. Against this background the first question is whether section 103, which I have set out in para 6 above, contains an implicit restriction so that the charge to tax on post cessation receipts falls only on the former trader, whose trade was the source of the income, as Mr Goldberg submitted. In my view the answer to that question is no, for the following three principal reasons. First, there is nothing in the words of section 103(1) or (2) which necessitates such implication. The charge to tax is clear: where a trade has been permanently discontinued, corporation tax shall be charged under Case VI on sums arising from the carrying on of the trade during any period before the discontinuance. Section 103(1) required only that the sums are received after the discontinuance. The section specified the source of the sums which fell within the charge but imposed no further restriction on the charge. In particular, it imposed no limit on who was the recipient of the sums and thus liable to the charge. Secondly, the mischief which section 103 addressed is clear. Its predecessor, section 32(2) of the Finance Act 1960, contained the same phrase, sums arising from the carrying on of the trade . The phrase referred in my view to the sums which the prior case law called the fruit of the trade. Section 32 of the 1960 Act addressed the circumstance, which I have discussed in paras 3 and 4 above, of sums from an otherwise taxable source escaping tax as a result of the permanent discontinuance of a trade. Like Briggs LJ (at para 29 of his judgment) I interpret the provision and its statutory successors as bringing into the Schedule D Case VI charge to tax the fruit of the discontinued trade not only in the hands of the former trader, his personal representatives and heirs but also in the hands of those to whom the rights to the post cessation receipts have been assigned or who are otherwise entitled to receive and keep the sums. The mischief was the loophole created by the need for a continuing source in the year of receipt. The purpose of section 103 was to make sure that sums which a person received, which arose from a discontinued trade and which were not otherwise taxed, were brought into a charge to tax. The statutory innovation was to impose the Case VI charge, absent that continuing source, on the recipient of the sums. No sound reason of policy has been suggested for confining the charge to the former trader and his personal representatives. Thirdly, neighbouring provisions in ICTA drew a distinction between the person chargeable to tax and the person who had previously carried on the trade, giving rise to the inference that the former person was not confined to the latter. Thus section 105, which provided for allowable deductions in the calculation of the section 103 charge, referred in subsection (1) in its pre 2005 form to computing the tax charge under section 103 in respect of sums received by any person and in its later form to sums received by any company. It listed as the allowable deductions both losses and expenses which the former trader (the person by whom [the trade] was carried on) would have deducted if the trade had not been discontinued and also capital allowances to which the former trader (the person who carried on the trade) was entitled before the discontinuance. Had Parliament intended that the section 103 charge should fall only on the former trader, there would have been no need to distinguish between any person on the one hand and the former trader on the other. Section 105(4) before 2005 also used the phrase any person in relation to an analogous charge to tax after a change of basis under section 104. Section 108 as initially enacted allowed the person by whom the trade had been carried on to elect to carry back the charge so that the sum in question was treated as if it had been received on the date of the discontinuance. The way the opening of the section was worded is illuminating. It provided the election was available: Where any sum is (a) chargeable to tax by virtue of section 103 or 104, and (b) received in any year of assessment beginning not later than six years after the discontinuance or, as the case may be, change of basis by the person by whom the trade, profession or vocation was carried on before the discontinuance or change, or by his personal representatives In my view again this wording suggests that there is a general charge to tax under section 103 and that the former trader (or his personal representative) is not the only recipient who falls within that charge. Parliament had no reason to spell out in (b) that the sum had to be received by the former trader or his representatives if that was inherent in section 103. Mr Goldberg also submitted that SDGs receipt of a sum equal to VRP2 did not have a former trade as its source but was the result of an intra group arrangement which was either a transfer for no consideration of that sum or a transfer for no consideration of the rights to VRP2. He posed the question, what is the receipt from? and submitted that the correct answer was the transfer of either the sum or the right. He referred to Hochstrasser v Mayes [1960] AC 376 and Abbott v Philbin [1961] AC 352 in support of the contention that regard must be had to the most proximate cause of the receipt. I do not accept this submission. In my view those cases have no bearing. They concern the charge to tax under Schedule E on the remuneration of an employee. I accept Mr Gammies submission that in the context of Schedule E the relevant statutory question focused on the character of the receipt in the employees hands. Rule 1 of the Schedule spoke of a charge on a person having or exercising an office or employment in respect of salaries perquisites or profits whatsoever therefrom (emphasis added). The question was whether the employee has received money or moneys worth representing remuneration for his services. By contrast, under section 103 the focus was on the original source of the receipt. The decisions and arrangements within the VAT group of companies about the specific company which was to receive the repayment did not alter the original source of the receipt. The question was whether the sum received arose from the discontinued trade before its discontinuance. Section 106(1), which I have set out in para 7 above, also supports a wide interpretation of the scope of the section 103 charge. Contrary to Mr Goldbergs submission, I cannot read the subsection as covering all transfers whether for value or for no consideration (other than the transfer of the right to receive the post cessation payments when there is a deemed discontinuance of the trade under subsection (2)). The opening words of subsection (1) show that the subsection relates to transfers for value. Where the transfer is at arms length, the transferor is charged under section 103 by reference to the stipulated consideration. The words in parenthesis substitute market value where the transfer is not at arms length. It is true that it may appear anomalous that the subsection governs a transfer for a nominal value, say 50 pence, in a transaction otherwise than at arms length but not a transfer for no consideration. But that is what the section says. Further, the anomaly is more apparent than real if, as I consider, section 103 imposes a charge on the gratuitous transferee. Thus, for example, section 103 when it extended to the individual taxpayer would have applied to an author who on his retirement assigned for value the future royalties arising from his work. Having chosen to capitalise his future income flow, he would be taxed at the market value of that income flow as at the date of transfer rather than on his future receipts as and when received. But where, on his retirement, he assigned the future royalties to his spouse or friend for no consideration, section 103 would tax the receipts when they are received by the transferee. That to my mind is a rational regime. Section 106(2), which I have set out in para 8 above, deals with the circumstance that a trade is treated as having been discontinued by reason of a change of the persons carrying it on and at the same time the right to receive the post cessation receipts is transferred to the company that carries on the trade thereafter. The rule is set out in the phrase: corporation tax shall not be charged by virtue of either [section 103 or 104], but any sum received by that company by virtue of the transfer shall be treated for corporation tax purposes as a receipt to be brought into the computation of the profits of the trade in the period in which it is received. I construe the words after the conjunction but as the trigger for disapplying sections 103 and 104. Like Briggs LJ, I adopt a purposive analysis. I do not accept that Parliament intended to create a large class of post cessation receipts which the transferee could release from a charge to tax by the simple expedient of discontinuing its trade or by creating a deemed discontinuation by transferring its trade to another person while reserving to itself the right to receive those receipts. That was the mischief which led to the enactment of sections 32 to 34 of the Finance Act 1960 in the first place. In my view this subsection takes effect only if the transferee receives those sums while it is trading. If it does, the transferee is taxed under Case I of Schedule D. If it does not receive the sums or if it receives them after it has ceased trading, section 103 applies to impose a charge on the recipient. In summary, (i) the basic rule in section 103 is that sums arising from the carrying on of the trade before discontinuance are, if received after discontinuance, charged to tax under Case VI of Schedule D; (ii) there is no restriction in section 103 itself on who the recipient of those fruits of the trade may be; (iii) section 106(1) quantifies the section 103 charge at the amount of the consideration or the market value of the rights to such sums when the former trader transfers its rights to those future receipts for value and the subsection imposes the charge on the former trader; and (iv) section 106(2) disapplies section 103 and substitutes Case I of Schedule D only if the transferee company is carrying on the continuing business when it receives the fruits of the trade, which is deemed to have been discontinued. It is necessary now to apply that analysis to the facts as found by the First tier Tribunal. Before so doing, I record that SDG did not argue before the First tier Tribunal that section 106(1) had the effect of imposing a charge to tax on an entity other than SDG. The Court of Appeal refused to allow SDG to run such an argument. I also am satisfied that it would not be fair to allow the argument to be advanced at this late stage. It involves SDG inviting the court to make inferences from findings of fact which were not directed to the argument it now wishes to advance. SDG did not lead any evidence about the various intra group transfers. It may be that SDG did not have the necessary evidence to explain how it was arranged that it should receive VRP2. But SDG had the burden of overturning the challenged assessment and did not lead evidence to achieve that. The court must therefore apply the law to the facts as found by the First tier Tribunal. In any event, SDGs principal case before this court was that there must have been an intra group transfer or transfers of the component parts of VRP2 the sum of money to it for no consideration and that there was no transfer to it of the rights to repayment which made up VRP2. If that is what occurred, or if there had been a transfer of the rights for no consideration, it would not assist SDGs appeal as section 106(1) would not apply to impose a charge on the transferor or transferors in the absence of a sale. Turning to the First tier Tribunals findings of fact, it is clear from the summary in para 11(ii) above that on the transfer of the trade of GUS plc in 1996, the entitlement to a VAT repayment arising from the discontinued trade, which became VRP2C, was not transferred. Similarly, Kay & Co and Abound retained their equivalent entitlements when their trades were transferred to RGL in 1997 (para 11(iii) above). Those entitlements became VRP2B. There is no explanation as to how those entitlements resulted in VRP2C and VRP2B being paid to SDG. There is no suggestion that either the transfer of the trade of SDG to RGL (para 11(i) above) or the later transfer of RGLs trade to SDG (para 11(iv) above), both of which may have relevance to the two components of VRP2A, was for value. Accordingly, section 106(1) is of no relevance to these transactions and no tax falls to be charged on the various transferors. Further, there was no evidence and no findings that any of the intra group transfers which may have occurred in order to transfer the right to receive VRP2 to SDG involved transfers for value. Again, section 106(1) has no application. Section 106(2) also is of no relevance. While the trade of SDG was transferred to SDHSL in 2005 (para 11(v) above), none of the repayments of VAT were made to SDHSL. That is the end of the matter. It is therefore not necessary to address Mr Goldbergs challenge to the finding by the First tier Tribunal that the transfer of SDGs trade to SDHSL did not include the entitlement to the VAT repayments, which was based on his construction of the transfer agreement between SDG and SDHSL in 2005. What is clear from the findings (viz paras 13 and 14 above) is that March organised the groups affairs so that VRP2 would be paid by HMRC to SDG via the solicitors, WGM, and that HMRC protected itself against other possible claimants by obtaining releases. SDG, as the First tier Tribunal found, received VRP2 as its beneficial owner. It received sums arising from the carrying on of the trade of the companies enumerated in para 11 above during periods before the discontinuance and the sums were not otherwise chargeable to tax. VRP2 accordingly is subject to a charge to corporation tax in the hands of its recipient, SDG. Conclusion Before concluding, I would like to acknowledge the admirable decision of the First tier Tribunal in this case, which involved grappling with many more factual and legal issues than this court has had to address. I would dismiss the appeal.
+This is an interlocutory appeal in a criminal case which concerns the correct construction of section 92(1) of the Trade Marks Act 1994 (the 1994 Act). The appellants are a limited company and two individuals connected with its management. They are indicted for, inter alia, offences of unauthorised use of trade marks, contrary to section 92(1)(b) and (c) of the 1994 Act. No trial has yet been held, and the Crown case remains at this point a matter merely of allegation, which may or may not be proved. At a preparatory hearing in the Crown Court, they advanced a submission that part of what was alleged was, on any view, outside the terms of section 92 and no offence. Both the trial judge and the Court of Appeal (Criminal Division) rejected that submission. They renew it in this court. What is alleged is that the defendants are engaged in the bulk importation and subsequent sale of goods such as clothes and shoes. The goods, or many of them, are said to bear what appear to be the trade marks of well known brands, such as Ralph Lauren, Adidas, Under Armour, Jack Wills, Fred Perry or similar. The goods were manufactured abroad, in countries outside the EU. Some of the goods in the possession of the defendants are said to have been manufactured by people who were neither the trade mark proprietor, nor authorised by the proprietor to make them. This first category of goods, the appellants describe as counterfeits in the true sense. A significant portion of the remainder of the goods are, however, ones where there had originally been an authorisation of manufacture by the registered trade mark holder, whether by subcontract, licence or otherwise, but whose sale had not been authorised by him. They were thus sold, bearing the trade mark, without the consent of the owner of the mark. The causes of the non authorisation of sale might be, it is said, various. Some garments might deliberately have been made by the factories in excess of the numbers permitted by the trade mark owner, so that the balance could be sold for their own benefit. Some might have been made in excess of the order without that original ulterior intention (indeed perhaps as precautionary spare capacity planned and approved by the trade mark owner), but then have been put on the market without his consent. Some might have been made under a permission which was cancelled by the trade mark owner; that in turn might include cases where the trade mark owner was dissatisfied with the quality and not prepared to have the goods put on the market as if their own, but cancellation might not be limited to that cause. Those are not exhaustive of the possibilities. These latter various types of goods are described by the appellants as goods appearing on the grey market. It is common ground that neither the indictment nor the way the Crown puts its case distinguishes between these various different provenances. That led to submissions that the indictment would turn out either to be bad for duplicity or to be misleading, and at risk of producing verdicts which it was difficult to interpret. Thus was the point now at issue identified. In short, it is common ground that: (i) before there can be a criminal offence of unauthorised use of a trade mark there must be an infringement of that mark which would be unlawful as a matter of civil law; see R v Johnstone [2003] UKHL 28; [2003] 1 WLR 1736; and (ii) the sale, or the possession in the course of trade, of goods of any of the various provenances set out in para 5 above, would amount to an infringement of trade marks, giving rise to civil liability. But the appellants case is that whilst any of the various provenances set out would involve civil liability, it is only in the case of what they describe as true counterfeits that there is any criminal offence. They say that goods which were originally manufactured with the permission of the trade mark proprietor, but which are ones where he has not authorised the sale, are not true counterfeits and are not within the statute. Section 92(1) does not apply, they contend, to goods put on the grey market. The resolution of this contention depends on the true construction of section 92(1) of the 1994 Act. It says: 92. (1) A person commits an offence who with a view to gain for himself or another, or with intent to cause loss to another, and without the consent of the proprietor (a) applies to goods or their packaging a sign identical to, or likely to be mistaken for, a registered trade mark, or (b) sells or lets for hire, offers or exposes for sale or hire or distributes goods which bear, or the packaging of which bears, such a sign, or (c) has in his possession, custody or control in the course of a business any such goods with a view to the doing of anything, by himself or another, which would be an offence under paragraph (b). Subsection 92(5) adds a reverse onus statutory defence: (5) It is a defence for a person charged with an offence under this section to show that he believed on reasonable grounds that the use of the sign in the manner in which it was used, or was to be used, was not an infringement of the registered trade mark. The appellants contention focuses on the use of the expression such a sign in subsection (1)(b). That refers back, they say, to subsection (1)(a). And by referring back to (1)(a), they say, it means that (b) applies only to goods where the relevant sign (ie trade mark) has been applied without the consent of the proprietor. Any goods in the grey market category have had the trade mark originally applied with the consent of the proprietor. It is only the sale which the proprietor has not authorised. Therefore, they say, those goods are not ones to which paragraph (a) of the subsection could apply. It follows, they contend, that they are not, when it comes to paragraph (b), goods which bear such a sign. It may readily be agreed that the expression such a sign in section 92(1)(b) refers back to the sign described in the immediately preceding paragraph (a). The difficulty comes when one is asked to read such a sign as incorporating the words without the consent of the proprietor which appear in the first few lines of the section before (a), and also the requirement that the sign has been applied to the goods (without such consent), which is the central component of the offence under (a). This is simply not a possible construction of section 92(1). There is no difficulty, on the ordinary reading of paragraphs (a) and (b), in seeing what the reference back to such a sign in (b) imports from (a). Such a sign in (b) plainly means a sign such as is described in (a). The sign described in (a) is a sign which is identical to, or likely to be mistaken for, a registered trade mark. Signs (or trade marks) having any of the provenances described in para 5 above are squarely within this description. So called grey market goods are caught by the expression. The offences set out in paragraphs (a), (b) and (c) of section 92 are, as a matter of plain reading, not cumulative, but separate. It is not necessary that one has been committed (by someone) before one can say that the next in line has been. The mental element of a view to gain or the intent to cause loss is applicable to all three. So is the element that the use made of the sign is without the consent of its proprietor. Paragraph (a) then makes it an offence to apply such a mark, without consent and with the relevant mental element. Paragraph (b) makes it an offence to sell (etc) goods with such a mark, without the consent of the proprietor and with the necessary mental element. Paragraph (c) does the same for the preparatory offence of possession in the course of business with a view to behaviour which would be an offence under (b), again without the consent of the proprietor and with the relevant mental element. Subparagraph (c) thus involves anticipation (but not necessarily the commission) of an offence under (b). Of course, a person may commit all three offences, or different people may commit all three between them. But that is not necessary. Each stands alone. The appellants reading of paragraph (b) is, by contrast, strained and unnatural. It does not simply reach back to (a) but to the general words of the section which precede it. It requires one to read sign in (a), which is incorporated into (b), as which bears a sign, so applied, or at least as such a sign, so applied. This being so, there is no ambiguity or obscurity in the language such as would justify the court, pursuant to Pepper v Hart [1993] AC 593, in investigating the contents of Parliamentary debate at the time of the passage of the Bill which became the 1994 Act. Nor can it be suggested that the ordinary (or literal) reading of the Act gives rise to absurdity. It should be recorded, moreover, that the appellants realistically did not contend that there had been the kind of clear ministerial statement which amounted to a definitive identification of what the Bill was intended to achieve. The most that is contended for is that the passage of the Bill was marked by several references to the desirability of punishing counterfeiting. No doubt it was. But there is not suggested to be any point at which Parliament, or any individual speaker, confronted the suggested difference between fake goods (which the appellants here describe as true counterfeits) and grey market goods. Still less is there any point at which it can be suggested that Parliament plainly confined itself to criminalising fake goods and abjured the criminalising of grey market goods. In support of their contention that such a distinction was plainly intended, the appellants referred to observations made by Lord Nicholls and Lord Walker in R v Johnstone upon the differences between counterfeit goods, pirated goods, and bootlegged goods. Those observations arose, however, in the context of the case in which they were spoken. The defendant was charged with offences against section 92(1)(c). The offences were said to have arisen out of his possession for sale of compilation compact discs comprising songs which had covertly been recorded at concerts given by well known artistes. The compact discs referred to the artistes by name, track by track, and the artiste had in each case registered his name as a trade mark. The issue was whether the use of the name was, in the particular circumstances, one which might be taken by the buying public as an indication of authorised origin of the disc, as distinct from identifying the singer. That was a question of fact, but unless it was demonstrated that the use of the name would be taken as an indication of origin, there would be no civil liability for trade mark infringement, and the decision of the House was that in that event there could be no criminal liability either. It was in that context that Lord Nicholls referred at paragraph 1 to counterfeit goods as cheap imitations of the authentic article; that was said to distinguish that case from pirated music, which is music marketed without any trade mark, although recorded from a trade marked disc, and from bootlegged music, which is what Mr Johnstone had. Likewise, Lord Walker, at para 59, referred to counterfeiting as an expression generally used to include unauthorised sale, under a well known trade mark, of goods not made or authorised by the proprietor. Neither of their Lordships was addressing what is here said to be the critical difference between fake goods and unauthorised goods on the grey market. Their observations came, moreover, years after the passage of the 1994 Act, and could not have been in mind at the time of its passing. The appellants are correct that, in the context of goods which a proprietor voluntarily puts into the European single market with his trade mark attached, section 12 of the 1994 Act, transposing article 7 of Directive 89/104/EEC, has the effect that further objection to the use of the mark is limited to special cases, such as changes or impairments to the goods. But that is true whichever of the rival constructions of section 92 is correct. Where it applies, this concept of exhaustion means that there is no infringement of the mark as a matter of civil law, and thus no criminal offence. But this sheds no light on the correct construction of section 92. The appellants further drew attention to the wording of the predecessor of section 92, section 58A of the Trade Marks Act 1938. This had provided: 58A.(l) It is an offence, subject to subsection (3) below, for a person (a) to apply a mark identical to or nearly resembling a registered trade mark to goods, or to material used or intended to be used for labelling, packaging or advertising goods, or (b) hire, or distribute to sell, let for hire, or offer or expose for sale or goods bearing such a mark, or (i) (ii) material bearing such a mark which is used or intended to be used for labelling, packaging or advertising goods, or (c) to use material bearing such a mark in the course of a business for labelling, packaging or advertising goods, or to possess in the course of a business goods or (d) material bearing such a mark with a view to doing any of the things mentioned in paragraphs (a) to (c), when he is not entitled to use the mark in relation to the goods in question and the goods are not connected in the course of trade with a person who is so entitled. (3) A person commits an offence under subsection (1) or (2) only if (a) he acts with a view to gain for himself or another, or with intent to cause loss to another, and (b) he intends that the goods in question should be accepted as connected in the course of trade with a person entitled to use the mark in question; and it is a defence for a person charged with an offence under subsection (1) to show that he believed on reasonable grounds that he was entitled to use the mark in relation to the goods in question. This section provided, in subsection (3), for a more stringent test of mental element than does the present section 92. The appellants invite us to conclude that the earlier, more stringent, mental element may have had the practical effect of confining criminal liability to cases of their category of true counterfeits, and they say that a change in that effect is not demonstrated to have been intended by the 1994 Act. The difficulty with that is that whilst it is certainly true that the mental element was more stringent, the 1938 Act would still have caught so called grey market goods, for paragraph (1)(b) clearly applied to goods which were sold when sale was unauthorised, whether or not the original application of the mark had been permitted. Moreover, it is noticeable that the construction now contended for of section 92(1)(b) could not have been applied to section 58A(1)(b) without considerable difficulty, for the words giving effect to the element of absence of consent of the trademark proprietor did not appear at the beginning of the section as they now do, but only at the end; hence it would have been even more problematical to suggest that such a mark imported them. It is plain enough that the inversion of the order of the words was a grammatical rather than a substantive variation. Nor is there any reason to strain the language of section 92(1)(b) so as to exclude the sale of grey market goods. That is not because of the consequentialist arguments pressed on us by the Crown. It is doubtful that (absurdities or impossibilities apart) difficulties in assembling evidence can ordinarily affect the construction of a criminal statute. Moreover, some of the supposedly adverse consequences of such a construction which were put before us on behalf of the Crown would be as likely to ensue even on the correct interpretation of the Act set out above. The possible difficulty of distinguishing, where there has been an overrun, between the goods marketed with the proprietors authority and those which were a backdoor venture on the part of the manufacturer and subsellers, might as well arise on both constructions; no doubt in many cases the circumstances of the exit from the factory and of the subsequent sales will often be telling. Likewise it is far from clear that there will be greater difficulty occasioned by the appellants suggested construction than by the correct one in the case of convincing fakes. In both cases the defendant may occasionally be in a position to assert that he was taken in and thus reasonably believed that no infringement was involved. Such a defence, if advanced, must be met on its merits, which will no doubt involve investigation of, inter alia, the circumstances in which the defendant acquired the goods and the inquiries which he did or did not make. But, these consequentialist arguments apart, it is, on any view, unlawful for a person in the position of the defendants to put grey goods on the market just as it is to put fake ones there. Both may involve deception of the buying public; the grey market goods may be such because they are defective. The distinction between the two categories is by no means cut and dried. But both are, in any event, clear infringements of the rights of the trade mark proprietor. Defendants who set out to buy up grey market goods to make a profit on re sale do so because the object is to cash in on someone elses trade mark. If such be proved, they have scant claim to a beneficent construction of the Act. As it is, its ordinary reading plainly means that, unless they have the statutory defence, they have committed an offence. In the alternative, the appellants contend that the Crowns construction of section 92(1) involves a disproportionate breach of their rights under article 1, Protocol 1 to the European Convention on Human Rights. It may be accepted that it is perfectly possible that the imposition of a criminal sanction might be disproportionate where a civil law sanction is not. But persons in the position of these defendants have no proprietary right in the trade marks. They do have a right in the goods which they have bought, but the 1994 Act does not stop them selling them, except if they wish to do so whilst still with the misleading and infringing trade mark attached. The 1994 Act does not, therefore, deprive the defendants of any property which they have. The most it does is to regulate their use or the manner of their disposal of the goods, which is permitted under the second paragraph of article 1 in the general interest, which must include a general interest in the protection of trade marks. There is in any event nothing disproportionate in the 1994 Act penalising sales when the infringing trade mark is still attached, nor in imposing a criminal sanction on those who might otherwise calculate that the risk of liability in damages is worth taking. That is a perfectly legitimate balance to draw between the rights of the proprietor to protect his valuable trademark and goodwill, and those of the person who wishes to sell goods which he has bought. For these several reasons, these appeals must be dismissed and the trial may proceed accordingly.
+It has been hard wired into the mind of many family lawyers in England and Wales that, were a parent to remove a child from a state in which they were habitually resident to another state with the settled intention that they would cease to reside in that first state and make their home in that second state, the child would be likely to lose habitual residence in the first state immediately upon the removal and, until later acquiring habitual residence in the second state, would be likely not to be habitually resident anywhere. The absence of habitual residence anywhere places a child in a legal limbo. The main question raised by this appeal, which arguably the lower courts were not free to answer, is whether the expectation of family lawyers about the point at which habitual residence is lost requires adjustment in the light of this courts recent adoption of the European concept of habitual residence. The courts answer to this question should enable it to determine whether the lower courts were correct to conclude that, on the relevant date, the child at the centre of this appeal was in the limbo to which I have referred. The child is B, a girl, who was born in April 2008 and so is now aged seven. The women who are the two central parties to this appeal were living in England in a same sex relationship from 2004 to 2011. Other than biologically, B is the product of their relationship. The respondent is the biological mother of B and her father is an unknown sperm donor of Asian ethnicity. The appellant has strong claims also to be described as a mother. Nevertheless, in order to avoid confusion, it is better to refer to the central parties as the appellant and the respondent respectively. The appellant, who continues to live in England, is a British national, aged 35, of Indian ethnicity. The respondent is a British national, aged 45, of Pakistani ethnicity. B, likewise, is a British national. On 3 February 2014 the respondent took B to live in Pakistan, where they have remained ever since. On 13 February 2014, aware that the respondent had removed B from her home but unaware that she had taken her abroad, the appellant issued an application under the Children Act 1989 (the 1989 Act) for leave to apply for what were then still described as orders for shared residence of B or for contact with her. On 6 June 2014, having learnt that the respondent had taken her to Pakistan, the appellant also applied for orders that B should be made a ward of court and be returned to England. On 31 July 2014 Hogg J dismissed both of the appellants applications: [2014] EWHC 3017 (Fam). And on 6 August 2015 the Court of Appeal (Sir James Munby P, Black and Underhill LJJ), by a judgment of the court delivered by Black LJ, dismissed her appeal: [2015] EWCA Civ 886. In 2000, prior to her relationship with the appellant, the respondent had begun to investigate the possibility of her conceiving a child by artificial means and in 2001 she had made unsuccessful attempts to do so. In 2004 their relationship began and they set up home together; but they never entered into a civil partnership. In 2005 and 2006, as a couple, they together explored that same possibility. At their joint request, a licensed hospital administered two cycles of intrauterine insemination (IUI) to the respondent but the treatment was unsuccessful. Then they made a joint application to their local authority for assessment as potential adopters. Six months later, however, at the instigation of the appellant, who did not feel ready to be a parent, they withdrew their candidacy. Ultimately, in April 2007, they applied to another licensed hospital for the respondent to have further IUI treatment under the National Health Service. I see no reason, wrote the counsellor, why this couple should not be treated. On this occasion the treatment was successful and in April 2008 B was born. Shortly prior to Bs birth the appellant and the respondent had bought a house in their joint names. They lived there together with B until December 2011, when in acrimonious circumstances their relationship finally broke down and the appellant left. Upon Bs birth the respondent gave up work for a year. The appellant took two weeks of paternity leave and a further two weeks of holiday, whereupon she resumed full time employment. Most of Bs care was undertaken by the respondent but, when she got home, the appellant helped to care for her, for example to give her a bath and put her to bed; and at weekends, as co parents, they took B out, in particular to visit members of their families. Living within easy reach of them were the appellants parents, the respondents parents and her two sisters, together with various young cousins of B. She became close to these relations, who all remain resident in England today. When in 2009 the respondent resumed work, the appellants parents looked after B for two days each week but, when she began to attend a nursery, their care of her was reduced to one day each week. When she began to talk, B began to call the respondent mama and the appellant mimi. On behalf of B, the respondent wrote Mothers Day cards to the appellant; on one of them she wrote I cant believe how lucky I am to have you as my Mama. Following her departure from the family home, the appellant continued to pay half the mortgage instalments referable to it and to make other payments which she describes as for Bs maintenance and which the respondent describes as her continuing contribution to utility bills. The respondent accuses the appellant of withdrawing from many aspects of parenting, for example in relation to Bs schooling; but on any view the appellant pressed for contact with B and on any view the respondent was to some extent resistant to it. Over the following two years the respondent progressively reduced the level of the appellants contact with B from six hours every week in the first few months, to three hours every fortnight in the following year and then to only two hours every three weeks in the year prior to the move to Pakistan. The appellant was not content with the reduction in her contact with B, nor with the ostensible difficulties placed by the respondent in the way of her seeing B on a number of the pre arranged days. Bad tempered emails passed between them. By November 2012 the appellant was inviting the respondent, albeit unsuccessfully, to join her at family mediation. Then, in October 2013, the appellant wrote to the respondent a letter before action. She expressed concern about the effect on Bs emotional wellbeing of the minimal contact which the respondent had allowed to take place between them and she invited her to consent to a shared residence order, pursuant to which B would stay with the appellant on three nights each fortnight and for further periods during school holidays. The respondent does not appear to have replied to the letter. Meanwhile the respondent had begun privately to consider whether to take B to live in Pakistan, where, according to her, certain unidentified members of her wider family remain. In June 2013 she had been made redundant and life had become particularly difficult for her. In November 2013 she went alone to Islamabad and there she discussed with a friend the possibility of entry into a business partnership with him and looked at a possible school for B. In December 2013, following her return to England, the respondent secretly decided to move there with B as soon as possible. Also in December 2013 the respondent took B on holiday to Morocco. On the first occasion of contact following their return B handed a Moroccan card to the appellant. On the card B had written To mimi I missed you so much love [B] and she had drawn hearts and kisses. At around that time the respondent at last agreed to attend a mediation session with the appellant. It took place on 15 January 2014. The respondent made no mention of her imminent departure with B to Pakistan and it is hard to avoid the conclusion that the session was a charade. It was agreed that the next session would take place on 5 February 2014. The last occasion of direct contact between the appellant and B took place on 26 January 2014. According to the appellant, B told her that she was moving and that she was scared that the appellant would not be able to find her. The next occasion of contact was fixed to take place three weeks later, namely on 16 February 2014. Late in January, by email, the appellant asked the respondent to agree to change the date. There was no reply. On 7 February the appellant sent a further email. It bounced back. The appellant discovered that the respondents facebook and twitter pages had been closed. Then, on 8 February, the appellant received a letter from the respondent. It had been posted by someone in England on 6 February. In it the respondent gave no indication of the whereabouts of herself and B. She wrote Ive enclosed the house key as I have now moved our communication has been so strained and stressful I will be in touch in a few weeks, once we settle, to establish what you have decided to do about the house. The respondents removal of B to Pakistan on 3 February 2014 was lawful. The absence of the appellants consent did not vitiate it. The appellant has never been Bs legal parent. Had the insemination which led to Bs conception occurred after 6 April 2009, and had the respondent so agreed in writing, the appellant would have been treated in law as Bs parent: sections 43 and 44 of the Human Fertilisation and Embryology Act 2008. Had she thereupon been registered as a parent, the appellant would also have acquired parental responsibility for B: section 4ZA(1)(a) of the 1989 Act. Alternatively, if the appellant had secured a shared residence order referable to B prior to 3 February 2014, she would have acquired parental responsibility for her under the former version of section 12(2) of the 1989 Act. In the event, however, she never had parental responsibility for B. Later the respondent was to give the following evidence, which Hogg J accepted, about the circumstances of herself and B in Pakistan in the weeks following their arrival on 4 February 2014: (a) (b) she arrived in Islamabad on a visa which entitled her to remain with B in Pakistan for about three months; she stayed with B in the home of her potential business partner for about the first three weeks; (c) on 10 February she began working in partnership with him; (d) on 18 February she registered B at an English speaking school (being other than the one which she had previously considered), at which on the following day B began to attend; (e) on 19 February she entered into an agreement to rent a two bedroom flat for one year with effect from 1 March; (f) on (presumably) 1 March she moved with B into the flat; and (g) on 18 April she was issued with a National Identity Card which entitled her to reside with B in Pakistan indefinitely. On 24 July 2014, five days before the beginning of the hearing before Hogg J, the appellant spoke to B by telephone. Since then there have been five further occasions of contact by telephone. No other contact has taken place between them since the move to Pakistan. PROCEEDINGS When on 13 February 2014 the appellant issued her application under the 1989 Act, she remained unaware of Bs whereabouts so she also issued an application under section 33 of the Family Law Act 1986 for orders that specified public authorities should disclose to the court all their information relating to Bs whereabouts. An order was made against the Child Benefit Office but it yielded no relevant information. In April 2014, still unaware of the whereabouts of the respondent and B, the appellant secured an order for substituted service of her applications upon the respondent, namely by post to the address of her parents. The respondent says that in his mind her father had somehow been able to avoid directly confronting her sexuality, her intimate relationship with the appellant and the circumstances of Bs conception; and that, when he opened the envelope, he was deeply shocked and angry about what he perceived to be the respondents dishonour of the family. There may well be grounds for criticising the appellant for having invited the court to order that the substituted service should be at the parents address as opposed, for example, at the address of one of the respondents sisters. At all events the service led to the respondents instruction of English solicitors who, on 9 May 2014, informed the appellants solicitors that the respondent and B had gone to Pakistan. Later the respondent divulged that she and B were in Islamabad but, for reasons unexplained to the court, she has never disclosed their precise address there. The appellants belated discovery that B was abroad led her, on 6 June 2014, to issue a further application, namely for orders to be made by the High Court in the exercise of its inherent jurisdiction over B, as a British subject, that she be made a ward of court and be at once brought back to England. On 9 June 2014, apprised of the fact that the respondent disputed the courts jurisdiction to make any of the orders sought by the appellant, Moylan J directed that the issue of jurisdiction be determined at a hearing beginning on 29 July 2014 and he ordered that the respondent should attend it in person. By a recital to his order, Moylan J also invited the respondent to reflect upon the practical availability of any forum, other than in England and Wales, in which she and the appellant might safely and realistically resolve their disputes. In due course, having presumably reflected upon it, the respondent averred that the correct jurisdiction in which to raise any issues in relation to B was that of Pakistan. Four days before the hearing fixed to begin on 29 July 2014, Peter Jackson J heard an application by the respondent to vary the order that she should attend it in person. She asserted that her father had been so outraged by what he had learnt from the court documents as to have threatened to break her legs and that, were she to come to England, she would be at risk of physical harm, perhaps even of death, at his hands or at those of the local community. Instead the respondent offered to give evidence at the substantive hearing by video link. On the undertaking of the appellant not to inform the respondents family that the hearing was about to take place, the judge refused the respondents application and made a further order for her attendance in person. Nevertheless the respondent refused to comply with the orders for her attendance before Hogg J in person. She did not even give evidence to her by video link. She gave evidence only by telephone. On 31 July 2014, following receipt of evidence relevant to jurisdiction from the appellant in the witness box as well as from the respondent by telephone, Hogg J gave judgment. It was, as she noted, common ground that prior to 3 February 2014 the respondent and B had been habitually resident in England. Notwithstanding her inability to have observed the respondent during cross examination about her motives, Hogg J found that, when departing for Pakistan on that date, the respondent had genuinely intended to make a new life for herself and for B there and that her motivation had not been to evade the appellants increasing demands to be allowed to play a fuller role in Bs life. So she held that the respondent had thereupon lost her own habitual residence in England. She accepted that the appellant had been a significant person in Bs life, particularly prior to the breakdown of the relationship between the two women; that the appellant still had much to offer B; and that B had said that she would miss the appellant and had wished to remain in touch with her. But, asked Hogg J, was Bs wish to remain in touch with the appellant enough to sustain a continuation of her habitual residence in England? Her answer was no. Accordingly she held that B had also lost her English habitual residence on 3 February 2014 and thus that the court had no jurisdiction to determine the application issued by the appellant on 13 February 2014 pursuant to the 1989 Act. It was nevertheless probable, observed the judge, that neither the respondent nor B had acquired habitual residence in Pakistan by that date. Then Hogg J addressed the appellants application for the exercise of her inherent jurisdiction over B as a British subject. She noted the appellants central contention that, in the light of societys attitude in Pakistan towards homosexual acts, she would not be able even to present her case, as a same sex parent, to the courts there; and the appellants wider contentions that, as a lesbian, the respondent was putting herself and B at risk by living in Pakistan and that, while B needed in due course to develop a fuller understanding of the circumstances of her conception and early home life, she would, were the respondent to have told her the truth about them, put herself at risk even by speaking about them in Pakistan. The judge, however, accepted that the respondent was well aware of the difficulties which would attend her entry into a same sex relationship in Pakistan. The judge held that the jurisdiction over a British subject who was neither habitually resident nor present in England and Wales should be exercised only if the circumstances of the case were dire and exceptional and that those of the present case did not so qualify. This case before me, concluded Hogg J, is at heart one of contact in the old fashioned terminology and about making arrangements for seeing a significant person in [Bs] life. Then she observed that, had the respondent made an application for permission to remove B to Pakistan, it would have stood a very good chance of success and that there would have been plans, if not orders, for the appellant to have indirect contact. With respect to Hogg J, others might attribute a somewhat lower chance of success to the respondents hypothetical application; and counsel have been unable satisfactorily to explain the judges apparent suggestion that the extent of Bs contact with the appellant for which the court would have provided would have been no more than indirect. In the appellants appeal to the Court of Appeal against the orders of Hogg J the Reunite International Child Abduction Centre (Reunite) was permitted to intervene. By its judgment, the court concluded that Hogg J had been entitled to hold that on 3 February 2014 B had lost her English habitual residence. It also concluded that, although the attenuation, or even the ultimate loss, of her relationship with the appellant would be a real detriment to B, the circumstances were not so exceptionally grave as to justify exercise of the inherent jurisdiction by reference to her nationality. The Court of Appeal correctly observed that there was no direct evidence to substantiate the appellants asserted inability to present her case to the courts of Pakistan. But it surveyed a mass of general material about the attitude of society in Pakistan to same sex relationships and concluded from it that, although the issue of sexual relations between women was unexplored territory in law, there was in Pakistan pervasive societal and state discrimination, social stigma, harassment and violence against both gay men and lesbian women, together with a lack of effective protection by the state against the activities of non state actors. So the Court of Appeal proceeded on the basis not challenged by the respondent in the course of this further appeal that courts in Pakistan would be unlikely to recognise that the appellant had any relationship with B which would entitle her to relief and that therefore she would have no realistic opportunity to advance her claim there. CONSEQUENCE The consequence of the conclusions reached in the lower courts, in both of them by judges of great experience in the field of family law, is that applications intended to secure for B a continuing relationship with the woman who, with the respondents consent, has acted as one of her parents and who, even for the two years following the separation, managed to maintain a significant, loving presence in her life have been dismissed without any appraisal of Bs welfare; without any knowledge of her current situation; without any collection of her wishes and feelings; and in circumstances in which no such applications can be entertained in any other court. Is it correct that, by the clandestine removal of her to Pakistan, the respondent has placed Bs interests beyond all judicial oversight? The Court of Appeals affirmative answer is arresting. It demands this courts close scrutiny. HABITUAL RESIDENCE (a) Principle A childs habitual residence in a state is the internationally recognised threshold to the vesting in the courts of that state of jurisdiction to determine issues in relation to him (or her). Article 8 of Council Regulation (EC) No 2201/2003 (Regulation B2R) provides that the courts of an EU state shall have jurisdiction in matters of parental responsibility over a child habitually resident there at the time when the court is seised. By way of exception, article 12 confers jurisdiction on a state which has other links with the child but only where the parties have accepted its jurisdiction. Article 13 provides that, where a childs habitual residence cannot be established (which means where the child is not habitually resident in any EU state) and where article 12 does not apply, jurisdiction vests in the courts of the state in which the child is present. Article 14, entitled Residual jurisdiction provides that, where no court of a member state has jurisdiction under the preceding articles, jurisdiction shall be determined by the laws of each state. A childs habitual residence is also the thread which unites the provisions of the Hague Convention on the Civil Aspects of International Child Abduction 1980 (the 1980 Convention). This Convention applies to a child habitually resident in a contracting state immediately before his wrongful removal or retention: article 4. It is the law of that state which dictates whether his removal or retention was wrongful: article 3(a). It is that state to which, subject to exceptions, other contracting states must order the child to be returned: article 12. Under the Hague Convention on Jurisdiction etc 1996 it is, again, the courts of the contracting state of the childs habitual residence which, as against other contracting states, has jurisdiction to make orders for his protection: article 5(1). Regulation B2R extends beyond the identification of jurisdiction as between EU states themselves. It binds each EU state irrespective of whether the other state with potential jurisdiction is an EU state. Thus the Family Law Act 1986 (the 1986 Act) now provides, by section 2(1)(a), that an order under section 8 of the 1989 Act may be made only if the court has jurisdiction under Regulation B2R or if other conditions, irrelevant for present purposes, are satisfied. By her application issued on 13 February 2014 the appellant applied for leave to apply for orders under section 8 of the 1989 Act and the result is that the court has jurisdiction to determine her application only if B was habitually resident in England and Wales on the date of its issue. Two consequences flow from the modern international primacy of the concept of a childs habitual residence. The first is that, as Reunite submits to this court and as the respondent broadly accepts, it is not in the interests of children routinely to be left without a habitual residence. In that event the machinery of international instruments designed to achieve an orderly resolution of issues relating to them does not operate as primarily intended. Indeed, if they are unilaterally removed from a state in which they were not habitually resident, those aggrieved by their removal can have no recourse to the 1980 Convention. In In re F (A Minor) (Child Abduction) [1992] 1 FLR 548, 555, Butler Sloss LJ accepted that for that reason it was important that, where possible, a child should have an habitual residence. Indeed, in his article entitled The Concept of Habitual Residence in the Juridical Review 1997, p 137, Dr Clive, the great Scottish family law jurist, wrote at p 143 that with the increasing importance of habitual residence as a connecting factor, it is not sensible to have a situation in which people are routinely without a habitual residence. In the absence of the habitual residence of children anywhere, Regulation B2R provides a fall back jurisdiction based on their presence. But, in the context of adult disputes about them, the presence of children in a particular state on a particular day is an unsatisfactory foundation of jurisdiction because, by moving them from one state to another, one of the adults can so easily invoke a favourable jurisdiction or pre empt invocation of an unfavourable one. The second consequence is that the interpretation in the courts of England and Wales of the concept of habitual residence should be consonant with its international interpretation: see the judgment of the Court of Justice of the European Union (the CJEU) in Proceedings brought by A [2010] Fam 42, para 34. Its traditional interpretation in England and Wales has been substantially influenced by the stance adopted by one or both of the parents, often at the expense of focus on the childs own situation. By way of example, our courts had accepted a proposition that one parent with parental responsibility could not achieve a change in the childs habitual residence without the consent of the other parent with parental responsibility: Re M (Abduction: Habitual Residence) [1996] 1 FLR 887, 892 E H and 896 B. This court has now held that proposition to be wrong: In re R (Children) [2015] UKSC 35; [2016] AC 760. By way of another example, our old law largely proceeded by reference to a proposition that a childs habitual residence would necessarily follow the habitual residence of the parent with whom he lived: see the discussion of it in In re LC (Children) [2014] UKSC 1; [2014] AC 1038, para 33. But it was held in the LC case, at paras 34 to 37, that the international interpretation of habitual residence required that proposition to be relaxed. The present case requires the court to turn its attention to a third aspect of the concept of a childs habitual residence, namely the circumstances in which he loses it, and to ask itself whether the longstanding domestic analysis of those circumstances, yet again heavily dependent on parental intention, is consonant with the modern international concept. The domestic analysis to which I have referred is to be found in the decision of the House of Lords in In re J (A Minor) (Abduction: Custody Rights) [1990] 2 AC 562. The facts have some similarities with those of the present case although the latter has features which may more strongly militate against any immediate loss of the childs habitual residence upon removal. On 21 March 1990 the mother removed the child, aged two, from Australia, where he had been habitually resident, to England with the intention of permanently residing here. She did so without the knowledge of the father who also resided in Australia but who, not having been married to the mother, had at that time no rights of custody in relation to the child. So the mothers removal of him was not wrongful within the meaning of the 1980 Convention. On 12 April 1990, however, an Australian judge conferred rights of custody on the father. So was the mothers retention of the child in England after that date wrongful within the meaning of the 1980 Convention? It was wrongful only if the child had continued to be habitually resident in Australia on that date. The appellate committee held that, while he had not by then acquired habitual residence in England, he had lost his habitual residence in Australia upon his removal three weeks earlier. It is well known that, in giving the only substantive speech in the J case, Lord Brandon of Oakbrook made, at pp 578 579, four preliminary points. The first was that the expression habitual residence should be given its natural meaning. The second was that an issue about a persons habitual residence in a particular country was one of fact. The fourth, which may remain correct notwithstanding the decision in the LC case, was that the habitual residence of a child aged only two who was in the sole lawful custody of his mother would be the same as hers. It is the validity of Lord Brandons third point, for which he cited no authority, that is central to the present appeal. Hogg J quoted it in full. Lord Brandon said: The third point is that there is a significant difference between a person ceasing to be habitually resident in country A, and his subsequently becoming habitually resident in country B. A person may cease to be habitually resident in country A in a single day if he or she leaves it with a settled intention not to return to it but to take up long term residence in country B instead. Such a person cannot, however, become habitually resident in country B in a single day. An appreciable period of time and a settled intention will be necessary to enable him or her to become so. During that appreciable period of time the person will have ceased to be habitually resident in country A but not yet have become habitually resident in country B. In the light of his third and fourth points Lord Brandon concluded as follows: The mother had left Western Australia with a settled intention that neither she nor J should continue to be habitually resident there. It follows that immediately before 22 March 1990, when the retention of J in England by the mother began, both she and J had ceased to be habitually resident in Western Australia. (emphasis supplied) The analysis by the CJEU of the concept of a childs habitual residence is located in its judgments in Proceedings brought by A, cited in para 31 above, and in Mercredi v Chaffe [2012] Fam 22. In Proceedings brought by A the issue for determination in Finland was whether children taken into care in November 2005 had then been habitually resident there. They had lived with their mother in Sweden for four years until the summer of 2005, when they had returned to Finland, where they had lived on campsites and not been sent to school. The courts ruling, at p 69, was as follows: 2. The concept of habitual residence under article 8(1) of [Regulation B2R] must be interpreted as meaning that it corresponds to the place which reflects some degree of integration by the child in a social and family environment. To that end, in particular the duration, regularity, conditions and reasons for the stay on the territory of a member state and the familys move to that state, the childs nationality, the place and conditions of attendance at school, linguistic knowledge and the family and social relationships of the child in that state must be taken into consideration. The court had also suggested, at para 40, that the intention of the parents to settle permanently with the child in another member state, manifested by certain tangible steps such as the purchase or lease of a residence there, might indicate what, perhaps significantly, the court chose to describe as a transfer of habitual residence. In the Mercredi case the issue for determination in England and Wales was whether a baby aged two months, lawfully removed by the French mother from the UK to La Runion, remained habitually resident here five days later when the English court became seised of the British fathers application. The CJEU carefully followed its ruling in Proceedings brought by A but, by reference to the different facts, chose also to stress, at paras 53 and 56, that the analysis of the social and family environment of a pre school child would differ from that of a school age child and would include consideration of the geographic and family origins of the parent who had effected the move and of the family and social connections of that parent and the child with the state to which they had moved. In A v A (Children: Habitual Residence) [2013] UKSC 60; [2014] AC 1, this court held that the criterion articulated in the two European authorities (some degree of integration by the child in a social and family environment), together with the non exhaustive identification of considerations there held to be relevant to it, governed the concept of habitual residence in the law of England and Wales: para 54(iii) and (v) of Lady Hales judgment, with which all the members of the court (including Lord Hughes at para 81) agreed. Lady Hale said at (v) that the European approach was preferable to the earlier English approach because it was focussed on the situation of the child, with the purposes and intentions of the parents being merely one of the relevant factors. It is worthwhile to note that the new criterion requires not the childs full integration in the environment of the new state but only a degree of it. It is clear that in certain circumstances the requisite degree of integration can occur quickly. For example article 9 of Regulation B2R, the detail of which is irrelevant, expressly envisages a childs acquisition of a fresh habitual residence within three months of his move. In the J case, cited above, Lord Brandon suggested that the passage of an appreciable period of the time was required before a fresh habitual residence could be acquired. In Marinos v Marinos [2007] EWHC 2047 (Fam); [2007] 2 FLR 1018, para 31, Munby J doubted whether Lord Brandons suggestion was consonant with the modern European law; and it must now be regarded as too absolute. In A v A, cited above, at para 44, Lady Hale declined to accept that it was impossible to become habitually resident in a single day. But do the two European authorities assist in identifying the object of central relevance to this appeal, namely the point at which habitual residence is lost? Yes, in two ways. The first is indirect. Recital 12 to Regulation B2R states: The grounds of jurisdiction in matters of parental responsibility established in the present Regulation are shaped in the light of the best interests of the child, in particular on the criterion of proximity. By proximity, the court clearly meant the practical connection between the child and the country concerned: Lord Hughes in A v A, cited above, at para 80(ii). In its analysis of the concept of habitual residence the CJEU, both in Proceedings brought by A at para 35 and in the Mercredi case at paras 46 and 47, stressed the significance of recital 12. Of course it does not follow that the court can construe a childs habitual residence by reference to the result which best serves his interests. The effect of the recital is more subtle and more limited yet nevertheless significant: where interpretation of the concept of habitual residence can reasonably follow each of two paths, the courts should follow the path perceived better to serve the interests of children. Or, to be more specific to the facts of the present case: if interpretation of the concept of habitual residence can reasonably yield both a conclusion that a child has an habitual residence and, alternatively, a conclusion that he lacks any habitual residence, the court should adopt the former. The second is arrestingly direct. In her Opinion in Proceedings brought by A Advocate General Kokott said: 45. It is also conceivable in exceptional cases that during a transitional stage there will no longer be habitual residence in the former state while the status in the new state has not yet crystallised into habitual residence. Precisely for such a case, article 13 of [Regulation B2R] confers a residual jurisdiction on the courts of the member state in which the child is present. In its judgment in the same case the court said: 43. However, it is conceivable that at the end of [the integration] assessment it is impossible to establish the member state in which the child has his habitual residence. In such an exceptional case, and if article 12 . is not applicable, the national courts of the member state in which the child is present acquire jurisdiction . pursuant to article 13(1) . The courts reference to a situation in which it is impossible to establish the childs habitual residence might at first sight seem ambiguous. Is it referring to a situation in which the child has an habitual residence somewhere but the evidence does not enable the court to identify the state in which he has it? The answer is clearly no. The court is referring to a situation in which a child has no habitual residence. The court is expressly indorsing para 45 of the Advocate Generals Opinion (note its repetition of her words conceivable and exceptional) but is recasting her point within the slightly ambiguous language of article 13 of B2R, namely where a childs habitual residence cannot be established. In A v A, cited above, Baroness Hale, at para 54(viii), referred to para 45 of the Advocate Generals Opinion and to para 43 of the courts judgment in Proceedings brought by A and observed that it was possible for a child to have no habitual residence. Lord Hughes, at para 80(ix), indorsed the European courts conclusion by saying that the circumstances in which a child had no habitual residence would be exceptional. I conclude that the modern concept of a childs habitual residence operates in such a way as to make it highly unlikely, albeit conceivable, that a child will be in the limbo in which the courts below have placed B. The concept operates in the expectation that, when a child gains a new habitual residence, he loses his old one. Simple analogies are best: consider a see saw. As, probably quite quickly, he puts down those first roots which represent the requisite degree of integration in the environment of the new state, up will probably come the childs roots in that of the old state to the point at which he achieves the requisite de integration (or, better, disengagement) from it. One of the well judged submissions of Mr Tyler QC on behalf of the respondent is that, were it minded to remove any gloss from the domestic concept of habitual residence (such as, I interpolate, Lord Brandons third preliminary point in the J case), the court should strive not to introduce others. A gloss is a purported sub rule which distorts application of the rule. The identification of a childs habitual residence is overarchingly a question of fact. In making the following three suggestions about the point at which habitual residence might be lost and gained, I offer not sub rules but expectations which the fact finder may well find to be unfulfilled in the case before him: the deeper the childs integration in the old state, probably the less fast (a) his achievement of the requisite degree of integration in the new state; (b) the greater the amount of adult pre planning of the move, including pre arrangements for the childs day to day life in the new state, probably the faster his achievement of that requisite degree; and (c) were all the central members of the childs life in the old state to have moved with him, probably the faster his achievement of it and, conversely, were any of them to have remained behind and thus to represent for him a continuing link with the old state, probably the less fast his achievement of it. Lord Brandons third preliminary point in the J case, set out in para 34 above, should no longer be regarded as correct; and Hogg J fell into error in being guided by it. As exemplified by the terms in which Lord Brandon applied it to the facts of that case, also set out in para 34, his analysis of a childs habitual residence afforded to parental intention a dispositive effect inconsistent with the child focussed European concept now adopted in England and Wales; and the result of his analysis was to consign a large number of children to the limbo of lacking any habitual residence in circumstances in which the modern law expects such a result to be exceptional, albeit conceivable. It is nevertheless fruitless to inquire whether the conclusion of the appellate committee about the childs loss of habitual residence in Australia within three weeks of his move would remain valid today. (b) Application It follows that, in asking whether Bs wish to remain in touch with the appellant was enough to sustain a continuation of her habitual residence in England on 13 February 2014, Hogg J should now be seen to have asked herself far too narrow a question. The question is whether B had by then achieved the requisite degree of disengagement from her English environment; and highly relevant to the answer will be whether she had by then achieved the requisite degree of integration in the environment of Pakistan. In my opinion each of the following factors might contribute to a conclusion that B had by that date achieved the requisite degree of disengagement from her English environment: (a) B went to Pakistan with the respondent, who was her biological mother, her primary carer and the person who alone had parental responsibility for her; (b) Bs removal to Pakistan was lawful; (c) B knew that she was going to live in Pakistan; (d) part of Bs ethnic heritage was in Pakistan and certain members of her wider family, albeit unidentified, apparently remain living there; (e) the respondent took B to Pakistan in the genuine belief that they would have a better life there and with the intention that they would settle there; and (f) two months earlier the respondent had conducted a reconnoitre of possible arrangements for their future life in Islamabad. In my opinion each of the following factors might contribute to a conclusion that B had not by that date achieved the requisite degree of disengagement from her English environment: she had never previously set foot in Pakistan; (a) B had lived in England throughout the five years of her life; (b) (c) her language was English and she barely spoke Urdu; (d) she was a British subject; the appellant, who was a central figure in Bs life, indeed probably the (e) second most important figure, had been left behind in England; (f) Bs removal was effected without the appellants knowledge, still less approval; (g) B was aware that her removal was to be kept secret from the appellant; (h) B retained significant emotional links with the appellant and feared that she would miss her following the move to Pakistan; (i) other important adult figures in Bs life, in particular both sets of grandparents and two aunts, together with various young cousins, had also been left behind in England; (j) the home in which B had lived throughout her life had not been sold and remained available for her immediate re occupation with the respondent; (k) by 13 February 2014 B had been present in Pakistan for only nine days; (l) at that time she and the respondent had the right to remain there for only about three months; (m) they were then staying temporarily with a friend of the respondent; (n) no independent accommodation had by then been secured by the respondent; and (o) B was not then even attending school in Pakistan nor even registered with a school there. (c) Conclusion I conclude that, taken cumulatively, the factors set out in para 50 are stronger than those set out in para 49 and compel a conclusion that on 13 February 2014 B retained habitual residence in England. Accordingly the appellants application issued on that date under the 1989 Act can and should proceed to substantive determination. The judge may wish to consider whether to make B a party to the application, acting by a childrens guardian, and, if so, whether to invite the guardian to instruct an independent social worker to interview B in Pakistan and to explore the circumstances of her life there. Were the courts eventual conclusion to be that it was in Bs interests to return to England, either occasionally, in order to spend time with the appellant here, or even permanently, in order to reside here again whether mainly with the respondent or otherwise, its order could include consequential provision under section 11(7)(d) of the 1989 Act for the respondent to return her, or cause her to be returned, to England for such purposes. NATIONALITY There is accordingly no need to consider whether, on the footing that she had no jurisdiction to determine the appellants application under the 1989 Act, Hogg J was entitled to decline to exercise her inherent jurisdiction to make B, as a British subject, a ward of court and to order (or even to consider whether to order) the respondent to return her, at any rate on a temporary basis, to England. In A v A, cited above, this court held that the prohibition comprised in sections 1(1)(d), 2(3) and 3(1) of the 1986 Act against making an order in wardship proceedings for the care of, or contact with, a British child neither habitually resident nor present in England and Wales did not preclude a bare order for his return to England: para 28 (Lady Hale, with whom the other members of the court agreed). This court has received extensive submissions from both of the central parties and from each of the three interveners about the proper exercise of the courts power or indeed the discharge of its alleged duty to exercise its inherent jurisdiction where no other jurisdiction exists in which the welfare of a British child can be addressed. With apologies to the solicitors and counsel who, all unremunerated, have laboured to craft them, I decline to lengthen this judgment by addressing almost all of these submissions. I do, however, agree with Lady Hale and Lord Toulson when, in para 60 below, they reject the suggestion that the nationality based jurisdiction falls for exercise only in cases at the extreme end of the spectrum. I consider that, by asking, analogously, whether the circumstances were sufficiently dire and exceptional to justify exercise of the jurisdiction, Hogg J may have distracted herself from addressing the three main reasons for the courts usual inhibition about exercising it. In para 59 below Lady Hale and Lord Toulson identify those reasons and I agree that arguably none of them carries much force in the present case. To my mind the most problematic question arises out of the likelihood that, once B was present again in England pursuant to an order for her return, the appellant would have issued an application for orders relating to care of her or contact with her. The question would be whether in such circumstances an order for her return would improperly have subverted Parliaments intention in enacting the prohibitions comprised in sections 1(1)(d), 2(3) and 3(1) of the 1986 Act. Or, in such circumstances, should the interests of the child prevail and indeed would Parliament have so intended? THE DISSENTING JUDGMENTS In para 65 below Lord Sumption complains that the only proposed ground for allowing the appeal is that it is highly unlikely, albeit conceivable that one habitual residence will be lost before another is acquired. There, with respect, Lord Sumption misunderstands my judgment. What I suggest in para 45 above is that the modern concept of habitual residence operates in the expectation that an old habitual residence is lost when a new one is gained. The mere unlikelihood of the correctness of an outcome favoured by a judge would be a disgraceful ground for allowing an appeal. The ground for allowing this appeal is that the modern concept of habitual residence identifies the point of its loss as being the stage when the person achieves the requisite degree of disengagement from the old environment (para 48 above); that intention, in this case parental intention, is no longer dispositive in this respect (para 47 above); that highly relevant to the persons achievement of that requisite degree of disengagement is his achievement of the requisite degree of integration in the new environment (para 48 above); and that, by application of the modern concept, B had not lost her habitual residence in England by 13 February 2014 (para 51 above). In para 72 below Lord Sumption quotes from para 44 of the Opinion of Advocate General Kokott in Proceedings brought by A, cited above. Might I suggest that inadvertently Lord Sumption has in this regard been too selective? The Advocate General suggests: 44. all the circumstances of the individual case must be taken into account where there is a change of place. An indication that the habitual residence has shifted may in particular be the corresponding common intention of the parents to settle permanently with the child in another state. The parents intention may manifest itself, for example, in external circumstances such as the purchase or lease of a residence in the new state, notifying the authorities of the new address, establishing an employment relationship, and placing the child in a kindergarten or school. As a mirror image, abandoning the old residence and employment and notifying the authorities of departure suggest that habitual residence in the former state is at an end. I have set the words quoted by Lord Sumption in italics. My understanding, however, is that in para 44 the Advocate General recommends a composite consideration of all the circumstances both in the new environment and, as a mirror image, in the old environment in order to determine whether habitual residence has shifted from the latter to the former. She does not suggest consideration only of severance of links with the old environment with a view to determining whether, even if no new habitual residence has been gained, the old one has been lost. For it is only in the next paragraph that she turns to that possibility. Both Lord Sumption at para 70 and Lord Clarke at para 92 consider that it makes no sense to regard a person as habitually resident in England and Wales if she is not resident there at all because she has left it to live permanently elsewhere. With respect, my view is different. For me it makes no sense to regard a persons intention, in this case a parents intention, at the moment when the aeroplane leaves the ground as precipitating, at that moment, a loss of habitual residence. At all events, and more importantly, I remain clear that such is not the modern law. LADY HALE AND LORD TOULSON: We agree fully with Lord Wilsons reasoning and conclusion on the issue of habitual residence. He has described the identification of a childs habitual residence as overarchingly a question of fact (para 46). At the risk of appearing pedantic, we would prefer to describe it as a mixed question of fact and law, because the concept is a matter of law but its application is a matter of fact. We do not, however, understand Lord Wilson to be laying down a rule of law that a child must always have an habitual residence: rather that, as a matter of fact, the loss of an established habitual residence in a single day before having gained a new one would be unusual. In this particular case, although the respondent said that her intentions were permanent, looked at from the childs point of view, on the relevant date they had been in Pakistan for only nine days, they had no home there, and she had not yet been entered into a school. Had the respondent then changed her mind and decided that the move was a bad idea, it is unlikely that a court would have held that the habitual residence of either of them had changed during those few days. Lord Wilsons conclusion on the issue of habitual residence makes it unnecessary to reach a decision on the hypothetical question whether it would have been right for the court to exercise its jurisdiction founded on Bs nationality if she had no habitual residence at the time when these proceedings began. It is not in doubt that the restrictions on the use of the inherent or parens patriae jurisdiction of the High Court in the Family Law Act 1986 do not exclude its use so as to order the return of a British child to this country: this court so held in A v A (Children: Habitual Residence) [2013] UKSC 60; [2014] AC 1. The Court of Appeal devoted a large proportion of their judgment to this aspect of the case. Their approach is summed up in para 45: Various words have been used down the years to describe the kind of circumstances in which it may be appropriate to make an order only under extraordinary circumstances, the rarest possible thing, very unusual, really exceptional, dire and exceptional at the very extreme end of the spectrum. The jurisdiction, it has been said must be exercised sparingly, with great caution and with extreme circumspection. We quote these words not because they or any of them are definitive they are not but because, taken together, they indicate very clearly just how limited the occasions will be when there can properly be recourse to the jurisdiction. Lord Wilson has listed a number of important issues to which that question would have given rise and which must wait for another day. It is, however, one thing to approach the use of the jurisdiction with great caution or circumspection. It is another thing to conclude that the circumstances justifying its use must always be dire and exceptional or at the very extreme end of the spectrum. There are three main reasons for caution when deciding whether to exercise the jurisdiction: first, that to do so may conflict with the jurisdictional scheme applicable between the countries in question; second, that it may result in conflicting decisions in those two countries; and third, that it may result in unenforceable orders. It is, to say the least, arguable that none of those objections has much force in this case: there is no applicable treaty between the UK and Pakistan; it is highly unlikely that the courts in Pakistan would entertain an application from the appellant; and it is possible that there are steps which an English court could take to persuade the respondent to obey the order. The basis of the jurisdiction, as was pointed out by Pearson LJ in In re P (GE) (An Infant) [1965] Ch 568, at 587, is that an infant of British nationality, whether he is in or outside this country, owes a duty of allegiance to the Sovereign and so is entitled to protection. The real question is whether the circumstances are such that this British child requires that protection. For our part we do not consider that the inherent jurisdiction is to be confined by a classification which limits its exercise to cases which are at the extreme end of the spectrum, per McFarlane LJ in In re N (Abduction: Appeal) [2012] EWCA Civ 1086; [2013] 1 FLR 457, para 29. The judgment was ex tempore and it was not necessary to lay down a rule of general application, if indeed that was intended. It may be that McFarlane LJ did not so intend, because he did not attempt to define what he meant or to explain why an inherent jurisdiction to protect a childs welfare should be confined to extreme cases. The judge observed that niceties as to quite where the existing extremity of the jurisdiction under the inherent jurisdiction may be do not come into the equation in this case (para 31). There is strong reason to approach the exercise of the jurisdiction with great caution, because the very nature of the subject involves international problems for which there is an international legal framework (or frameworks) to which this country has subscribed. Exercising a nationality based inherent jurisdiction may run counter to the concept of comity, using that expression in the sense described by US Supreme Court Justice Breyer in his book The Court and the World (2015), pp 91 92: the court must increasingly consider foreign and domestic law together, as if they constituted parts of a broadly interconnected legal web. In this sense, the old legal concept of comity has assumed an expansive meaning. Comity once referred simply to the need to ensure that domestic and foreign laws did not impose contradictory duties upon the same individual; it used to prevent the laws of different nations from stepping on one anothers toes. Today it means something more. In applying it, our court has increasingly sought interpretations of domestic law that would allow it to work in harmony with related foreign laws, so that together they can more effectively achieve common objectives. If a child has a habitual residence, questions of jurisdiction are governed by the framework of international and domestic law described by Lord Wilson in paras 27 to 29. Conversely, Lord Wilson has identified the problems which would arise in this case if B had no habitual residence. The very object of the international framework is to protect the best interests of the child, as the CJEU stressed in Mercredi. Considerations of comity cannot be divorced from that objective. If the court were to consider that the exercise of its inherent jurisdiction were necessary to avoid Bs welfare being beyond all judicial oversight (to adopt Lord Wilsons expression in para 26), we do not see that its exercise would conflict with the principle of comity or should be trammelled by some a priori classification of cases according to their extremity. LORD SUMPTION (dissenting) (with whom Lord Clarke agrees): Introduction I regret that I am unable to agree with the opinion of the majority. The reason, in summary, is that while the test for what constitutes habitual residence is a question of law, whether it is satisfied is a question of fact. The judge directed herself in accordance with all the relevant authorities. She heard the evidence of both ladies in addition to reviewing a substantial volume of other material. She found as a fact that the child lost her habitual residence in the United Kingdom on 3 February 2014, when she left the United Kingdom with the Respondent to start a new life in Pakistan with no intention of returning. That finding was upheld by the Court of Appeal. It followed that the child was not habitually resident in the United Kingdom on 13 February when these proceedings were begun, even though by then she was probably not yet sufficiently integrated into the life of Pakistan to have acquired habitual residence there. The sole ground on which it is now proposed to set the judgment aside is that it is highly unlikely, albeit conceivable that habitual residence will be lost before a new habitual residence has been acquired. I remain uncertain whether this is said to be a principle of law or a proposition of fact. So far as it is a principle of law, it appears to me to be wrong. So far as it is a proposition of fact, the judge addressed all the relevant considerations in making her findings. It is said that this result leaves the child in a jurisdictional limbo because on that footing she has no habitual residence anywhere. In my opinion, there is no jurisdictional limbo. Habitual residence is the primary test for jurisdiction, but it is not the only one. In English and EU law, in the absence of an ascertainable habitual residence, jurisdiction may be founded on the presence of the child. No attempt has been made to prove that the law of Pakistan is any different, and I would be very surprised if it was. The real objection to the courts of Pakistan is not that they lack jurisdiction but that they are likely to disapprove of same sex relationships and will not necessarily recognise a non genetic family relationship. That is a source of legitimate concern to the English courts, but it is not a basis on which they are entitled to claim jurisdiction. Loss of habitual residence I will deal first with the suggestion that there is something wrong in principle with a finding that a former habitual residence has been lost before a new one has been obtained. The habitual residence of a child is the primary basis of jurisdiction in member states of the European Union, by virtue of article 8 of Council Regulation (EC) 2201/2003. In Proceedings brought by A (Case C 523/07) [2010] Fam 42, the Court of Justice held that this meant that the presence of the child within the jurisdiction of a state must be: not in any way temporary or intermittent and that the residence of the child reflects some degree of integration in a social and family environment. In particular, the duration, regularity, conditions and reasons for the stay on the territory of a member state and the familys move to that state, the child's nationality, the place and conditions of attendance at school, linguistic knowledge and the family and social relationships of the child in that state must be taken into consideration. As the Advocate General pointed out in para 44 of her opinion, the parents intention to settle permanently with the child in another member state, manifested by certain tangible steps such as the purchase or lease of a residence in the host member state, may constitute an indicator of the transfer of the habitual residence. Another indicator may be constituted by lodging an application for social housing with the relevant services of that state. (paras 38 40) This statement was substantially repeated in Mercredi v Chaffe (Case C 497/10PPU) [2012] Fam 22, and was adopted by this court as part of the domestic law of England in A v A (Children: Habitual Residence) [2014] AC 1. Recital (12) of the Council Regulation recites that the grounds of jurisdiction in matters of parental responsibility established in the present Regulation are shaped in the light of the best interests of the child. In the context of article 12 of the Regulation, the Court of Justice has recently drawn attention to this recital in E v B (Case C 436/13) [2015] Fam 162, para 45. But its value, as both the recital and the judgment make clear, is as a guide the interpretation of the Regulations jurisdictional rules. It explains why the social integration test of habitual residence has been adopted. Now that it has been adopted, the task of the courts is to apply it. The recital is not a licence to treat questions of jurisdiction as discretionary or to import legal qualifications into the essentially factual exercise of determining where a child is socially integrated and where she is not. A person may be resident in a country without being habitually resident there. It is inherent in the concept of a habitual residence that in many, probably most cases, a new residence may not become habitual until some time has elapsed. The same is true of the integration test for habitual residence which has been adopted by EU and English law. Integration into the social and family environment of a new place of residence cannot always be achieved at once. However, it is self evidently easier to lose a habitual residence at once. This is because the severance of old links is a unilateral act. It can be achieved faster than the acquisition of new ones which involve the engagement of other people and institutions. It makes no sense to regard a person as habitually resident in the United Kingdom if she is not resident there at all because she has left it to live permanently elsewhere. The fact that there is a house in the United Kingdom which could be reoccupied or that there are friends or relations in the United Kingdom to which the child could return are irrelevant if (as the judge accepted) the child had been lawfully and permanently removed from the country. Of course this does mean that there may be a period during which the child, although resident in a particular country is not habitually resident anywhere. Other jurisdictional tests, such as presence within the jurisdiction, nationality or domicile would have had the advantage of allowing a seamless transition from one status to another. But the law has not adopted these tests. Instead it has adopted a test which by its nature is liable to produce a hiatus. This is simply an inescapable consequence of the concept of a habitual residence in a case where a child migrates from a familiar to an unfamiliar place. The courts have had no difficulty in accepting these as obvious propositions of fact. Advocate General Kokott in Proceedings brought by A (Case C 523/07) acknowledged that abandoning the old residence and employment and notifying the authorities of departure suggest that habitual residence in the former state is at an end (para 44) and that in exceptional cases during a transitional stage there will no longer be habitual residence in the former state while the status in the new state has not yet crystallised into habitual residence (para 45). She thought that such situations would be exceptional, but in the nature of things they can be no more exceptional than the facts which give rise to them. In In re J (A Minor) (Abduction: Custody Rights) [1990] 2 AC 562, 578 579, Lord Brandon, speaking for a unanimous appellate Committee, observed that: there is a significant difference between a person ceasing to be habitually resident in country A, and his subsequently becoming habitually resident in country B. A person may cease to be habitually resident in country A in a single day if he or she leaves it with a settled intention not to return to it but to take up long term residence in country B instead. The courts have more recently expressed reservations about parts of this passage, mainly because it tends to overstate the difficulty of acquiring a new habitual residence. As Baroness Hale observed in A v A (Children: Habitual Residence), supra, at para 44, this is best seen as helpful generalisations of fact, which will usually but not invariably be true. That is of course because habitual residence is a question of fact, as Lord Brandon himself had pointed out immediately before the passage cited. She went on, in the same paragraph, to adopt that part of Lord Brandons generalisation which is directly relevant to the present case: I would not accept that it is impossible to become habitually resident in a single day. It will all depend on the circumstances. But I would accept that one may cease to be habitually resident in one country without having yet become habitually resident in another. If an old habitual residence cannot be lost until a new one has been acquired, it must therefore be by virtue of some rule of rule of law by which regardless of the facts the severance of the childs links with her former habitual residence is somehow deemed in law to be suspended pending the acquisition of a new habitual residence. Yet it is far from clear to me how this is to be reconciled with what is an essentially a factual enquiry, as every court which has hitherto considered this question has emphasised. In A v A, at para 39 Baroness Hale deprecated the tendency of the courts to overlay the factual concept of habitual residence with legal constructs. These observations were later repeated by Baroness Hale in In re L (A Child) (Custody: Habitual Residence) [2014] AC 1017 at paras 20 21, and more recently by Lord Reed, with whom every other member of this court agreed, in the Scottish case of In re R (Children) [2016] AC 76, para 17. The judgment of the Court of Appeal, delivered by Black LJ, put the point, at para 29, in terms which I cannot improve upon: The arguments advanced by the appellant and also on behalf of the intervener, Reunite, appeared at times to amount to an invitation to swathe habitual residence in sub principles, or glosses, or comments, in a way which would fly in the face of the determinedly factual approach of the European jurisprudence and the Supreme Court. So, for example, we were invited to say that it would only be in exceptional cases that a child would lose one habitual residence before acquiring another it may be that there will turn out to be relatively few cases in which the habitual residence of a child does not transfer seamlessly from one country to another, but if so, that will be because the facts tend to be that way and not because the courts impose upon themselves the artificial discipline of only finding it otherwise in exceptional circumstances. A jurisdictional limbo? The notion that there must be a seamless transfer of habitual residence is a classic legal construct, which has no place in the essentially factual enquiry involved in identifying a childs habitual residence. The reason given by the majority for adopting that notion is not that it is factually impossible, or virtually so, for a child to have no habitual residence. Their reason is that it is legally undesirable because it produces a jurisdictional limbo. However it may be described by its authors, I find it impossible to regard this as anything other than a proposition of law. And I respectfully suggest that it is not correct. Article 13 of the Council Regulation provides for residual jurisdiction to lie with the courts of the country where the child is present in a case where a childs habitual residence cannot be established. As Advocate General Kokott pointed out at para 45 of her advice in Proceedings brought by A, supra, article 13 was included precisely in order to cover the situation where a former habitual residence has been lost but the childs status in her new home has not yet crystallised into habitual residence. A similar provision appears in article 6(2) of the 1996 Hague Convention on Jurisdiction, Applicable Law, Recognition, Enforcement and Co operation in Respect of Parental Responsibility and Measures for the Protection of Children. Jurisdiction based on presence is also provided for by sections 2 and 3 of the Family Law Act 1986 in cases where neither the Council Regulation nor the 1996 Hague Convention applies, and it serves the same function in that context. For this reason, there is no need for a principle of seamless transfer except in cases where the child has been removed to a state (if indeed there is such a state) where there is no jurisdiction founded on the presence of the child within its territory. It may well be true, as Lord Wilson observes (para 30), that jurisdiction based on presence is unsatisfactory because in a case where a child has no habitual jurisdiction it allows an adult to move a child to a jurisdiction thought to be favourable to his or her case. However, in the first place, adults can do that anyway. Secondly, for better or for worse that is what the Regulation, the Conventions and the Act provide. And third, the English courts have no right under the Family Law Act to assert jurisdiction simply on the ground that they do not approve of the law or practice which would be applied in the courts of the country where the child is located. So far as this is a problem, the solution to it is not to construct an artificial habitual residence in the place which the child has left for good. It is for the English courts to be more ready than they have traditionally been to recognise that a new habitual residence can be rapidly acquired. The Council Regulation assumes that it will normally have been acquired in three months: see article 11(7); and in A v A Baroness Hale declined to assume that it could not be acquired in a single day. It should be noted that the present issue would not arise in a case where the child was wrongfully removed in breach of rights of any persons rights of custody. This is because article 10 of the Council Regulation confers jurisdiction on courts of the country where the child was habitually resident immediately before his removal. There are similar provisions in article 4 of the 1980 Hague Convention on the Civil Aspects of International Child Abduction and article 7 of the 1996 Hague Convention. The fact that the child may have no habitual residence for a period after his removal is therefore irrelevant. The appellants difficulty in this case is that she had no parental rights at the time of the childs departure from the United Kingdom. She was not registered as a parent at birth. There was no civil partnership, no adoption, no parental rights agreement and no court order recognising her status with regard to the child. The judge found that the respondent was not trying to escape from the jurisdiction of the English court. She was in law the childs sole parent who was absolutely entitled to exercise her parental rights by removing her to Pakistan. Although Lord Wilson characterises the removal as secret and clandestine, the judge made no finding of underhand conduct which could warrant these pejorative epithets. The Judges findings The judge directed herself in accordance with the observations of Lord Brandon in In re J, so far as these were approved and explained by the Supreme Court in A v A and In re L. She concluded that the child was too young to have a habitual residence other than that of the woman who had always been her primary carer and on whom she was wholly dependent. That seems an obvious conclusion in the case of a five year old child, but at the very least it was a permissible one. I do not understand the majority to dissent from it. The judge then set out at paras 27 28 her reasons for concluding that the habitual residence of both of them in the United Kingdom was lost when they left for Pakistan: 27. The mother said she left this jurisdiction to make a new life in Pakistan. She had actually been thinking about it seriously since July of last year. She made her fact finding trip in November following which she made a decision. She had the support of her family. They knew what she was about. She and [B] said their goodbyes to school, to the family. They left their home, packed up their possessions and the mother sent a letter with the keys of the house to the applicant. She is admittedly still paying her share of the mortgage to preserve her share of the asset, that matter has yet to be resolved between the two ladies. She had the intention to set up a new life. She had lost her job. She was finding it financially difficult to be in this country even when she was working and she had laid the ground for a new life in Pakistan. It is important to note what she did immediately upon arrival in Pakistan. Until the end of April she was unaware of the applicants application to this court, but the mother found herself a new home and a school for the child to which they both moved in on 19 February, just 15 days after their arrival. They had previously been staying with friends. She had work already upon her arrival, at which she has continued, and she made an application for an ID card, which she obtained before she became aware of these proceedings. 28. As I have said, I am not satisfied she was running away as alleged by the applicant, and I accept her intention that she intended to create a new life for herself and for [B] in Pakistan. On that basis, she lost her habitual residence here. Next the judge considered the perception of the child. Without making any finding about the appellants evidence that the child wished to keep in touch with her, the judge held that even if she did, that did not mean that her habitual residence remained in the United Kingdom after 3 February 2014: The mother is the sole legal parent and in moving her she had planned a life away from this country. It was not a wrongful removal. She was exercising her parental responsibility. [B]s wish to remain in touch is something that I must consider. It does not necessarily mean that the child has to remain in the country. There are many children throughout the world who remain in touch with families or members of a family or even friends when they are relocated by their parents. This is another relocation and a child wishing to remain in touch with a significant person. In my view her wish to remain in touch with the applicant does not justify making or continuing an individual habitual residence in this country when the mother has abandoned her own. This is a classic evaluative judgment on a question of fact with which this court should in principle decline to interfere, just as the Court of Appeal declined to do so. If it was legally possible for the respondent and the child to terminate their previous habitual residence in the United Kingdom before their residence in Pakistan became habitual, then it is difficult to envisage a clearer case of it than this one. That leaves only the possibility that it might not be legally possible to create such a hiatus. But the authorities in this court which show that it is legally possible are consistent, recent and in my respectful opinion plainly right. Inherent jurisdiction The inherent jurisdiction of the High Court with respect to children originated in an age where the civil courts had no statutory family jurisdiction. It is based on the concept of a quasi parental relationship between the sovereign and a child of British nationality. It enables the courts to make a British child a ward of court, even if the child is outside the jurisdiction when the order is made. The continued existence of an inherent jurisdiction in an age of detailed and comprehensive statutory provision is something of an anomaly. The basis of the jurisdiction is, moreover, difficult to reconcile with the content of the statutory rules about jurisdiction. It is based on nationality, whereas the statutory rules are based on habitual residence and presence. Nonetheless, its survival was implicitly recognised by sections 1(1)(d) and 2(3) of the Family Law Act 1986, which prohibited the exercise of the jurisdiction so as to give care of a child to any person or provide for contact with or the education of a child, unless either the court had jurisdiction under the Council Regulation or the 1996 Hague Convention or, if neither of these applied, the child is present or habitually resident in the United Kingdom. Its survival in other cases was acknowledged by this court in A v A, supra, subject to the proviso that its exercise would call for extreme circumspection (paras 63, 65). The case law, which fully bears out that proviso, is summarised in the judgment of the Court of Appeal, and I will not repeat that exercise here. The appellant in the present case invites the court, on the footing that there is no statutory jurisdiction, to use its inherent jurisdiction to order the return of the child to the United Kingdom. Such orders have been made in two classes of case, both of which can broadly be described as protective. The first comprises abduction cases before the enactment of a statutory jurisdiction to deal with them. The second comprises cases where the child is in need of protection against some personal danger, for example where she has been removed for the purpose of undergoing a forced marriage or female genital mutilation. All of the modern cases fall into this last category. A dissenting judgment is not the place for a detailed examination of the ambit of the inherent jurisdiction. Nor is such an examination required in order to determine this appeal. For present purposes, it is enough to make three points. First, the jurisdiction is discretionary, and should not be overturned in the absence of some error of principle or misunderstanding of the facts, unless the judge has reached a conclusion that no judge could reasonably have reached. The judge declined to exercise the jurisdiction because the appellant had been entitled to exercise her parental rights by taking the child to Pakistan and there was no reason to regard the child as being in danger there. In those circumstances, the admitted detriment to the child in being deprived of face to face contact with the appellant could not justify requiring the respondent to bring the child back. The Court of Appeal reached the same conclusion for substantially the same reason. The situation, they said (para 53), falls short of the exceptional gravity where it might indeed be necessary to consider the exercise of the inherent jurisdiction. I agree with this, but on any view I think that it was a view that a judge could reasonably take. Secondly, the inherent jurisdiction should not be exercised in a manner which cuts across the statutory scheme. If, as Lady Hale and Lord Toulson suggest, the use of the inherent jurisdiction is not reserved for exceptional cases, the potential for it to cut across the statutory scheme is very considerable. I have no doubt that it would do so in this case. In the first place, it would fall to be exercised at a time when the child will have been with her mother in Pakistan for at least two years, and will probably have become habitually resident there. Secondly, it seems plain that if an application under the inherent jurisdiction had been made by, say, an aunt or a sister of the respondent, there could be no ground for acceding to it. It is necessary to make this point in order to remind ourselves that it is to protect her relationship with the child on the basis that she should be regarded as a co parent that the appellant is invoking the inherent jurisdiction of the court. The real object of exercising it would be to bring the child within the jurisdiction of the English courts (i) so that the court could exercise the wider statutory powers which it is prevented by statute from exercising while she is in Pakistan, and (ii) so that they could do so on different and perhaps better principles than those which would apply in a court of family jurisdiction in Pakistan. Thirdly, this last point is reinforced by the consideration that the appellants application in the English courts is for contact and shared residence. This is not relief which the statute permits to be ordered under the inherent jurisdiction, in a case where there is no jurisdiction under the Council Regulation or the 1996 Hague Convention. I do not accept that the inherent jurisdiction can be used to circumvent principled limitations which Parliament has placed upon the jurisdiction of the court. For these reasons, in addition to those given by the judge and the Court of Appeal, I do not think that an order for the childs return could be a proper exercise of the courts powers. Third, if there were grounds for believing the child to be in danger, or some other extreme facts justifying the exercise of the inherent jurisdiction, it would no doubt be possible in the exercise of the courts inherent jurisdiction to direct an independent assessment of the situation of the child in Pakistan. Unless the facts were already clear, that would be the least that a court should do before it could be satisfied that she should be compulsorily returned to this country. In the present case, that assessment would also have to take account of the impact on the child of her removal for the second time of her life from a place where she is by now presumably settled, as well as the impact on her of the disruption of her primary carers life which would be involved in requiring her to abandon her life and job in Pakistan to return to a country where she has no job, is estranged from her family and has no desire to reside. But we are not in that territory. The courts below have held that there are no such grounds, and we have no basis on which to disagree with them. The mere absence of statutory jurisdiction in the English courts cannot possibly be a reason for exercising the inherent jurisdiction. On the contrary, in a case like this it is a reason for not doing so. Given that the inherent jurisdiction exists to enable the English court to exercise the sovereigns protective role in relation to children, from what is it said that B needs to be protected? As I understand it, the suggestion is that she needs to be protected from the presumed unwillingness of the courts of Pakistan to recognise the status of the appellant in relation to the child in the way that the English court would now do if they had statutory jurisdiction. I cannot regard this as a peril from which the courts should rescue the child by the exercise of what is on any view an exceptional and exorbitant jurisdiction. Disposition For these reasons, I would dismiss the appeal. LORD CLARKE: essentially for the reasons he gives. Habitual Residence Hogg J held that B lost her habitual residence here when she was taken to Pakistan and the Court of Appeal held that there was no reason to interfere with that conclusion. Hogg J is a very experienced family lawyer. So too are at least two members of the Court of Appeal, namely Munby P and Black LJ, who gave the judgment of the court to which all three members contributed. My principal reason for preferring the opinion of Lord Sumption to that of the majority is that there is, in my opinion, no principled basis for holding that the decision of Hogg J was wrong, either in law or on the facts. She was entitled to reach the conclusions which she did and the Court of Appeal were right to dismiss the appeal from her decision. In short I agree with Lord Sumptions conclusion at para 80 that Hogg Js judgment is a classic evaluative judgment on a question of fact with which this court should decline to interfere, just as the Court of Appeal declined to do. In this appeal I have reached the same conclusions as Lord Sumption, In particular, after setting out her conclusions of fact at paras 26 to 28, Hogg J was in my opinion entitled to hold (as she did at para 29) that, when the mother lost her habitual residence on leaving the United Kingdom, so did B. I agree with Lord Sumption that there is nothing wrong in principle with a finding that a former habitual residence has been lost before a new one has been obtained. All depends upon the facts of the particular case. On the facts here I agree with him (at para 96) that it is self evidently easier to lose a habitual residence at once than acquire a new one and that it makes no sense to regard a person as habitually resident in the United Kingdom if she is not resident at all because she has left to live permanently elsewhere. Finally, I agree with him that if, as Hogg J held here, the child had been lawfully and permanently removed from the country, the fact that there is a house in the UK which could be reoccupied or there are friends and relations to whom the child could return is irrelevant. In para 28 of the judgment in the Court of Appeal, after referring to a number of recent cases including A v A (Children: Habitual Residence) [2013] UKSC 60; [2014] AC 1, Black LJ said this: The European formulation of the test (to be found in Proceedings brought by A [2010] Fam 42 at para 2, as quoted in A v A at para 48) is the correct one, namely that the concept of habitual residence must be interpreted as meaning that it corresponds to the place which reflects some degree of integration by the child in a social and family environment. The inquiry is a factual one, requiring an evaluation of all relevant circumstances in the individual case. It focuses upon the situation of the child, with the purposes and intentions of the parents being merely among the relevant factors. It should not be glossed with legal concepts. And, as Lord Reed observed at para 18 of In re R (Children) [2015] UKSC 35; [2015] 2 WLR 1583, when the lower court has applied the correct legal principles to the relevant facts, its evaluation will not generally be open to challenge unless the conclusion which it reached was not reasonably open to it. I respectfully agree. Black LJ then set out her para 29, which is quoted with approval by Lord Sumption. Finally, in para 30 she expressed the view that Hogg Js approach to habitual residence was in line with the authorities. She then specifically (and correctly) considered Bs position separately from that of her mother and concluded: [Hogg J] described in her judgment the situation in this country and the situation in Pakistan in such a way as to show that she had looked both at what P was leaving and what was awaiting her in Pakistan. In short, she applied the proper principles to the relevant facts and there is no reason to interfere with her finding that P lost her habitual residence here when she left for Pakistan. Again, I agree. For these reasons, which are essentially the same as those given by Lord Sumption, namely that neither Hogg J nor the Court of Appeal erred in fact or law, I would have dismissed the appeal on the habitual residence point. Inherent jurisdiction I agree with Lord Sumption that the appeal on this ground should also be dismissed. I do so for essentially the same reasons as on the habitual residence point, namely that Hogg J made no error of fact or law and that the Court of Appeal correctly so held. I agree with Lady Hale and Lord Toulson that the court must approach the use of the inherent jurisdiction with great caution and circumspection for the reasons they give. However, I agree with Lord Sumption that on the facts of this case it should not use the inherent jurisdiction to order B to be returned to the jurisdiction in order to enable it to exercise its statutory jurisdiction in circumstances in which it would not otherwise have that jurisdiction. This is not to say that there may not be circumstances in which it would be appropriate for the English court in another case to consider the welfare of the child more generally without requiring his or her return to the jurisdiction, at any rate in the first instance. As ever, all will depend on the circumstances.
+This case concerns the enforcement of confiscation orders made by the Crown Court upon conviction. As well as various statutory mechanisms for enforcement via the appointment of receivers, successive confiscation statutes have adopted the scheme of making confiscation orders enforceable as if they were fines imposed by the Crown Court. That involves using the powers of the Magistrates Court, which is the court which can, if payment is not made, issue a warrant committing the non paying defendant to prison. When making the confiscation order (as when imposing a fine), the Crown Court is required by statute to fix a default term of imprisonment to be served if the defendant does not pay. In a simple case of non payment, the magistrates will usually issue a warrant committing the defendant to prison for the period which the Crown Court fixed as the default term, and that term has to be served consecutively to any sentence passed for the substantive offences which led to the making of the confiscation order. There are, however, two possible adjustments which may have to be considered. The first is interest. The second is part payment. The present appeal concerns how these two adjustments fall to be made when they coincide. Because the confiscation order made in this case, and the enforcement action taken in consequence, happened some time ago, this case falls to be decided upon legislation now repealed and replaced. It is not, however, of merely historical interest. Although the drafting of later legislation has not been identical, the issue raised by this appeal arises in much the same way under the current legislation, the Proceeds of Crime Act 2002. Put shortly, the issue is this. If between the making of the confiscation order by the Crown Court and the issue of a warrant by the magistrates committing the defendant to prison, part payment has been made, but also interest has accrued, what does the statutory scheme say about how credit is to be given for the part payment? Is the term of imprisonment ordered by the magistrates to be reduced, by reason of the part payment, by reference to the total net sum outstanding (including interest), or is reduction for part payment to be calculated by reference only to the principal sum payable under the confiscation order? It is trite, but important, to say at the outset that the question is not what scheme might be thought desirable, but rather what the convoluted statutes actually mean. It is also relevant to note that although the issue makes a difference of 11 days in the present case, in the context of a defendant sentenced originally to a term of 25 years for his substantive offences, it will apply to a large number of prisoners, and may fall for decision not only by courts, but also by prison governors who have to determine release dates. The facts Mr Gibson was convicted of drug trafficking offences on 21 May 1999 and sentenced to 25 years imprisonment. On 29 March 2000 at the confiscation hearing, he was ordered to pay a little over 5.4m; that meant that it had been determined by the judge that his benefit was not less than that sum and that he had assets from which that sum might be realised. He was given 12 months to pay, and the judge fixed the term of six years imprisonment in default of payment. Interest therefore ran from the expiry of the 12 months to pay. He paid nothing until 4 May 2007, when 12,500 was paid, it would appear via a receiver appointed to realise his assets. A month later, he appeared before the magistrates for consideration of a warrant of commitment. The magistrates deducted seven days from the six year term in default, to take account of the recent part payment. As at that time, interest had lifted the net sum outstanding, allowing for the part payment, to 8.1m. Subsequently, later in 2007 and in 2011, two further realisations were achieved by his receiver, which produced payments of 12,500 and 65,370. The prison authorities, and through them the Secretary of State for Justice, calculated the reduction in the six year default term on the basis of the proportion which these payments bore to the 8.1m outstanding at the time of his committal. That produced reductions of three days and 21 days, totalling 24 days. If the arithmetic had been applied instead to an outstanding figure confined to the original 5.4m, something like 11 extra days reduction would have been made. The issue in the present appeal is whether he was entitled to those 11 extra days. Interest on confiscation orders Uniquely amongst orders for payment of money made by criminal courts, confiscation orders carry interest. They have done so since the early 1990s: see section 15 of the Criminal Justice (International Co operation) Act 1990 and section 9 of the Proceeds of Crime Act 1995, which introduced the rule respectively in relation to drugs offences and to other forms of crime. Interest has been set, by successive statutes, at the same rate as is prescribed from time to time for civil judgment debts under section 17 of the Judgments Act 1838. The interest provisions relevant to the present case were contained in section 10 of the Drug Trafficking Act 1994 (the Drug Trafficking Act), as in force at the relevant time: 10. Interest on sums unpaid under confiscation orders. (1) If any sum required to be paid by a person under a confiscation order is not paid when it is required to be paid (whether forthwith on the making of the order or at a time specified under section 139(1) of the Powers of Criminal Courts (Sentencing) Act 2000) that person shall be liable to pay interest on that sum for the period for which it remains unpaid; and the amount of the interest shall for the purposes of enforcement be treated as part of the amount to be recovered from him under the confiscation order. (2) The Crown Court may, on the application of the prosecutor, increase the term of imprisonment or detention fixed in respect of the confiscation order under subsection (2) of section 139 of the 2000 Act (as it has effect by virtue of section 9 of this Act) if the effect of subsection (1) above is to increase the maximum period applicable in relation to the order under subsection (4) of that section. (3) The rate of interest under subsection (1) above shall be the same rate as that specified in section 17 of the Judgments Act 1838 (interest on civil judgment debts). For present purposes, the key provisions are: (1) the concluding words of section 10(1), by which the interest is to be treated for the purposes of enforcement as part of the amount to be recovered under the confiscation order; and section 10(2), which enables a Crown Court judge to re fix, and (2) increase, the default term if the addition of accrued interest takes the sum outstanding into a higher bracket in the relevant schedule of permissible default terms. If the statutory scheme had stopped at this point, there would no doubt have been a powerful argument for saying that for all enforcement purposes interest is simply added to the original confiscation order. But this apparently fairly simple provision has to be considered in its place in the much more complex statutory scheme under which the magistrates powers of commitment to prison are made applicable to confiscation orders. The application of the magistrates powers of commitment In common with other confiscation statutes, the Drug Trafficking Act referred enforcement by committal to prison to the Magistrates Court. By the time of the 2007 commitment proceedings in this case, section 9 provided: 9. Application of procedure for enforcing fines. (1) Where the Crown Court orders the defendant to pay any amount under section 2 of this Act, sections 139(1) to (4) and 140(1) to (3) of the Powers of Criminal Courts (Sentencing) Act 2000 (powers of Crown Court in relation to fines and enforcement of Crown Court fines) shall have effect as if that amount were a fine imposed on him by the Crown Court. The provisions there referred to in the (essentially consolidating) Powers of Criminal Courts (Sentencing) Act 2000 (the 2000 Sentencing Act) were previously contained in sections 31 and 32 of the Powers of Criminal Courts Act 1973, to which section 9 in its original form referred. In the courts below all parties, and thus the courts, proceeded on the basis that the 1973 provisions were the relevant ones. It was common ground before this court that the 2000 Act provisions had become the relevant ones by the time of the commitment proceedings in this case. The difference does not matter, because although the wording is not identical, it is agreed that the effect of the two sets of provisions is the same. It follows that section 9 of the Drug Trafficking Act referred one on to sections 139 and 140 of the 2000 Sentencing Act, which are about fines. So far as material, they provided as follows: 139. Powers and duties of Crown Court in relation to fines and forfeited recognizances. (1) Subject to the provisions of this section, if the Crown Court imposes a fine on any person or forfeits his recognizance, the court may make an order (a) allowing time for the payment of the amount of the fine or the amount due under the recognizance; (b) directing payment of that amount by instalments of such amounts and on such dates as may be specified in the order; (c) [applicable only to recognizances] (2) Subject to the provisions of this section, if the Crown Court imposes a fine on any person or forfeits his recognizance, the court shall make an order fixing a term of imprisonment or of detention under section 108 above (detention of persons aged 18 to 20 for default) which he is to undergo if any sum which he is liable to pay is not duly paid or recovered. 140. Enforcement of fines imposed and recognizances forfeited by Crown Court. (1) Subject to subsection (5) below, a fine imposed or a recognizance forfeited by the Crown Court shall be treated for the purposes of collection, enforcement and remission of the fine or other sum as having been imposed or forfeited (a) by a magistrates court specified in an order made by the Crown Court, or if no such order is made, by the magistrates (b) court by which the offender was committed to the Crown Court to be tried or dealt with or by which he was sent to the Crown Court for trial under section 51 or 51A of the Crime and Disorder Act 1998, and, in the case of a fine, as having been so imposed on conviction by the magistrates court in question. (2) Subsection (3) below applies where a magistrates court issues a warrant of commitment on a default in the payment of a fine imposed by the Crown Court; or a sum due under a recognizance forfeited by the (a) (b) Crown Court. In such a case, the term of imprisonment or detention (3) under section 108 above specified in the warrant of commitment as the term which the offender is liable to serve shall be (a) 139(2) above, or (b) if that term has been reduced under section 79(2) of the Magistrates Courts Act 1980 (part payment) or section 85(2) of that Act (remission), that term as so reduced, the term fixed by the Crown Court under section notwithstanding that that term exceeds the period applicable to the case under section 149(1) of the Customs and Excise Management Act 1979 (maximum periods of imprisonment in default of payment of certain fines). Subsection (5), referred to in section 140(1), removes from the magistrates the power to remit part of a fine if the fine was imposed by the Crown Court. A similar stipulation against remission is additionally specifically applied to confiscation orders by section 9(4)(a) of the Drug Trafficking Act. It follows that the statutory scheme for the enforcement of confiscation orders proceeded then, as it does now, by a process of successive referrals. First, section 9 of the Drug Trafficking Act makes the confiscation order enforceable as if it were a fine imposed by the Crown Court. That refers one on to the 2000 Sentencing Act, by which a fine imposed by the Crown Court is by section 140(1) treated for enforcement purposes as if it had been imposed by the magistrates, and thus so is a confiscation order. But the magistrates general powers in relation to their own fines are not in the 2000 Sentencing Act; they are found in the Magistrates Courts Act 1980, to which one is thus further referred on. It is in the Magistrates Courts Act 1980 (section 76) that the magistrates power to commit to prison for failure to pay a fine is found, together with an alternative power to issue a warrant of distress (now re named a warrant of control). And it is in the Magistrates Courts Act 1980 that the only provision dealing with part payments is found. That is section 79 which at the time material to these magistrates proceedings read as follows: 79. Release from custody and reduction of detention on payment. (1) Where imprisonment or other detention has been imposed on any person by the order of a magistrates court in default of payment of any sum adjudged to be paid by the conviction or order of a magistrates court or for want of sufficient distress to satisfy such a sum, then, on the payment of the sum, together with the costs and charges, if any, of the commitment and distress, the order shall cease to have effect; and if the person has been committed to custody he shall be released unless he is in custody for some other cause. (2) Where, after a period of imprisonment or other detention has been imposed on any person in default of payment of any sum adjudged to be paid by the conviction or order of a magistrates court or for want of sufficient distress to satisfy such a sum, payment is made in accordance with rules of court of part of the sum, the period of detention shall be reduced by such number of days as bears to the total number of days in that period less one day the same proportion as the amount so paid bears to so much of the said sum, and the costs and charges of any distress levied to satisfy that sum, as was due at the time the period of detention was imposed. (3) In calculating the reduction required under subsection (2) above any fraction of a day shall be left out of account. The problem of part payments Many of the difficulties which have beset the present case arise out of the fact that the enforcement of confiscation orders is thus achieved by applying to them statutory provisions which were not designed for them. In particular, the process of referrals just described has the effect that a confiscation order is treated for enforcement as if it was a fine imposed by the magistrates. But there is a very important difference in practice as between fines imposed by magistrates and fines (and confiscation orders) imposed by the Crown Court. In the case of the former, the magistrates do not fix a default term when imposing the fine. Instead, they approach the matter of imprisonment in default only after default has occurred. By then, of course, it will be known whether the default is total or partial, and the term imposed under the warrant of commitment can be, and ordinarily is, adjusted accordingly, thus in effect giving credit for part payments made before the commitment process is undertaken. Section 79(1) and (2) then deal with the situation if whole (subsection (1)) or part (subsection (2)) payment is made after the warrant of commitment is issued. But in the case of Crown Court fines and confiscation orders, section 139(2) of the 2000 Sentencing Act mandates the fixing of an anticipatory default term at the time the fine or order is imposed. It follows that something is required to cope with part payments made after the Crown Court order and before the Magistrates proceedings, as well as with payments made after the latter. This difference of practice led the courts below to analyse section 79(2) as assuming the standard magistrates practice and thus to conclude that the references in that subsection to a period of imprisonment having been imposed in default of payment were references to the act of the magistrates in issuing the warrant of commitment. That in turn gave rise to the difficulty that, on that basis, section 79(2) would say nothing about how to deal with part payments made in a Crown Court case between the Crown Court order and the later magistrates proceedings, and there was no other provision which filled the gap. The Court of Appeal understandably concluded that such part payments had to be taken into account, and to give effect to that conclusion it read two additional words into section 79(2) so that it read Where, before or after a period of imprisonment has been imposed : see [2017] 1 WLR 1115, para 51. On the very helpful further argument which this court has had from counsel on both sides, it is now clear that section 79 does not, when it speaks of a period of imprisonment imposed in default of payment, necessarily refer only to the magistrates proceedings. That will of course be the position when the default term is imposed in the ordinary case of magistrates deciding whether or not to issue a warrant of commitment some time after default has occurred. But even then, the magistrates are entitled to issue the warrant and postpone its execution on terms, usually no doubt requiring prompt payment and perhaps by instalments. Section 77(2) of the Magistrates Courts Act 1980 specifically so provides. It follows that even in the case of an exclusively magistrates case, there may be a warrant of commitment without immediate imprisonment. Before this court, the parties were agreed that in the case of a Crown Court confiscation order or fine, the period of imprisonment in default of payment is imposed for the purposes of section 79 when the Crown Court discharges its statutory duty under section 139(2) of the 2000 Sentencing Act and fixes the (anticipatory) term in default. That is clearly the position where the period of imprisonment in default is imposed by the magistrates court, since section 79(1) specifically says that on full payment the default term ceases to have effect whether or not the person has been committed to prison, thus providing for the case permitted by section 77(2) where a warrant of commitment has been issued, but not yet executed. It also follows from section 150 of the Magistrates Courts Act, to which the courts below were not referred. That definition section provides: imprisonment means pass a sentence of impose imprisonment or fix a term of imprisonment for failure to pay any sum of money, or for want of sufficient distress to satisfy any sum of money, or for failure to do or abstain from doing anything required to be done or left undone. This construction is also necessary to make sense of section 140(3) of the 2000 Sentencing Act, to which the courts below were not referred. This section is in more expansive form than its predecessor, section 32 of the Powers of Criminal Courts Act 1973. It makes clear by subsection 140(3)(b) that the default term fixed by the Crown Court may already have been reduced under section 79(2) of the Magistrates Court Act 1980 before the magistrates undertake the assessment of the length of any warrant of commitment. Lastly, this construction is clearly assumed by the Magistrates Courts Rules 1981 (SI 1981/552), to which the courts below were again not referred. These rules provide for the persons to whom part or full payment may be made for the purposes of section 79(2). By rule 55(1)(a) the designated officer of the court may receive such payment unless there has been issued a warrant of commitment, whereas if there is such a warrant, the payment must be made by rule 55(1)(c) or (d) either to a constable holding it (for execution) or the prison governor. That again demonstrates that payments which fall within section 79(2) can be made before a warrant of commitment is issued, although clearly they can only be made after the default term has been imposed. Thus the default term in the case of Crown Court orders must be the term that court imposed at the time of making its order. Does section 79(2) include interest in its starting point? That leads one to the issue in the present case. If the court which imposes the default term is, for the purposes of section 79(2), the Crown Court in the case of a confiscation order, which is the correct starting point for the arithmetical giving of proportionate credit for part payment? Is it the sum stated in the order as originally made by the Crown Court, or is it that sum plus any interest which has accrued by the time the exercise is conducted by the magistrates? In the present case, is it 5.4m or is it 8.1m? For the Secretary of State, Mr Perry QC powerfully submits that it must be the original sum plus interest. The plain purpose of the various statutory provisions for interest, including section 10 of the Drug Trafficking Act, is, he submits, that interest is treated for any enforcement purpose as added to the confiscation order and is expressly made part of the amount to be recovered from [the defendant] under the confiscation order. So, it is said, the references in section 79(2) to the term set in default of payment of any sum adjudged to be paid must, by what he refers to as a necessary statutory fiction, be references to the sum fixed by the original confiscation order plus interest. That is to do no more, he argues, than is already provided for in section 79(2) for the costs and charges of any distress which has been levied, which are expressly added to the principal sum outstanding. Those also, he submits, will in the case of a Crown Court order, necessarily have been incurred after the default term was fixed by that Court. He points to the plain intention, gathered from section 10(1), that interest is to be paid, and to the fact that in the case of a criminal who is in default of payment of the principal sum, civil means of enforcement of interest are unlikely to be effective. He rightly reminds us that a confiscation order is premised on the proposition that the defendant has the means to pay, so that any default is his election. If circumstances change in a way which reduces his ability to pay, the various confiscation statutes provide a procedure for application for a certificate of inadequacy and consequent downward reduction in the amount of the confiscation order. Those arguments may well reflect, in a purposive manner, the kind of regime for which the successive statutory referrals might have provided. The difficulty with them lies in the operative words of section 79(2), which are the only ones which provide for the treatment of part payments. They say expressly that the days to be deducted are to be the number which bear the same proportion to the total default term imposed (by the Crown Court) as the part payments bear to so much of the said sum as was due at the time the period of detention was imposed. If the Secretary of States argument is to be accepted, the words at the time the period of detention was imposed have to be done no little violence. At the time the Crown Court imposed the default term, there was as yet no interest accrued at all. We have concluded that this straining of the wording of section 79(2) cannot be justified in circumstances where it would adversely impact on the period of imprisonment to which a person would be subject. Penal legislation is construed strictly, particularly where the penalty involves deprivation of liberty. The words of section 79(2) do not provide clearly for a period of imprisonment calculated on the basis for which the Secretary of State contends; on the contrary, they suggest the natural construction that the starting point for the arithmetical calculation of reduction in days of imprisonment is the sum outstanding at the time of the Crown Court order. Nor is the Secretary of States construction warranted by the example of the reference in section 79(2) to the costs and charges of distress, where such have been incurred. Since section 79(2) was plainly not drafted with confiscation, or for that matter Crown Court fines, in mind, the reference is adequately explained by the orthodox case of the magistrates first issuing a warrant for distress and only subsequently fixing the default term for non payment; in such a case the reference to the sum outstanding at the time the period of detention was imposed makes perfectly good sense. In any event, the addition of such costs and charges is expressly provided; that does not mean that an equivalent provision can be read in as a consequence of a provision in a different statute, namely section 10(1) of the Drug Trafficking Act. A scheme under which the period of imprisonment served in default of payment in full of the amount specified in the confiscation order is based on the entire amount outstanding, including interest, may or may not be what the framers of the confiscation legislation might have wished for or intended if the point had been considered. However, because the means adopted took the form of statutory reference (and re reference) to provisions which were drafted for a different purpose and without confiscation in mind, they have not achieved that effect. If it is desired that they should do so, express legislation will be needed. It is also of some relevance that the practical consequences of the Secretary of States proposed construction would, without specific machinery, be difficult to work out. Interest accrues daily, so the net amount outstanding would also vary daily. That difficulty may be met by a calculation geared to the particular day (or days) on which any part payment is made. But additionally, this construction would have the effect of progressively reducing the incentive to make part payment, as interest rises, because the days credited for such part payment would progressively reduce. Nor would such a scheme provide any consequences at all for the not uncommon defendant who simply makes no payment whatever. Conclusion For these reasons we would allow the appeal.
+This appeal challenges the validity of two patents, which seek to confer a monopoly over the creation of a range of types of transgenic mouse. The subject matter, genetic engineering for medical purposes, is of great technical complexity, but the legal question which falls for determination in this court may be quite shortly stated. It is a general requirement of patent law both in this country and under the European Patent Convention (EPC) that, in order to patent an inventive product, the patentee must be able to demonstrate (if challenged) that a skilled person can make the product by the use of the teaching disclosed in the patent coupled with the common general knowledge which is already available at the time of the priority date, without having to undertake an undue experimental burden or apply any inventiveness of their own. This requirement is labelled sufficiency. It is said that the invention must be enabled by the teaching in the patent. Patent protection is sometimes claimed for a single product, but sometimes for a range of products. Whether the patent claims one or the other is a question of construction of the claim (or claims) in the patent. In the latter case the sufficiency requirement has usually been expressed as meaning that the invention must be enabled over the whole of the range of products for which the claim is made. In the present case both the trial judge (the late Henry Carr J) and the Court of Appeal construed the relevant claim as extending to a range of products (transgenic mice) answering a certain description. The judge held that the teaching in the patent did not enable any type of mouse within the range to be made, let alone mice across the whole of the relevant range. The Court of Appeal held, to the contrary, that the teaching in the patent, coupled with the available common general knowledge as at the priority date, did enable some types of mouse within the range to be made, but not all types across the whole range. There is no appeal against that essentially factual finding. But they held that the sufficiency requirement was nonetheless satisfied, because the invention for which protection was claimed amounted to an inventive, indeed ground breaking, general principle, such that every type of mouse with the specified characteristics would display the particular benefits which the invention was designed to achieve, benefits which would not be displayed by any types of mouse outside the specified range. The invention constituted by the specified characteristics was therefore sufficiently enabled across the whole scope of the claim, and matched the contribution which the disclosure of the invention made to the article The question for this court is therefore whether a product patent, the teaching of which enables the skilled person only to make some, but not all, of the types of product within the scope of the claim, passes the sufficiency test where the invention would contribute to the utility of all the products in the range, if and when they could be made. This is a pure question of law, but an understanding of its implications requires at least a bare summary of the technical context in which it arises. A full description of the technical context may be found in the judgments of the courts below. The Technical Background in Outline By the priority date, which was 16 February 2001, it was well recognised that antibodies (also known as immunoglobulins) could be used for treatment of disease in humans, by way of augmentation of, or in substitution for, antibodies produced by the patients own immune systems. Since the development of antibodies is a natural process shared by mammals generally, and since ethical constraints prevented the use of fellow humans as platforms for antibody development, mice had been identified as suitable platforms for the development of antibodies suitable for use in treatment of humans, and were already in use for that purpose by the priority date. Two main problems inhibited the use of mice for that purpose. The first was that humans tend to reject murine antibodies. The second was that if human antibody genes are genetically implanted in mice, so that the mice then produce human antibodies coded from those genes, then the mice suffer from a reduced immune response, and therefore reduced development of suitable antibodies in response to antigens, which seriously impairs their efficiency as platforms for antibody development. In the jargon of this litigation, this rendered the mice immunologically sick. The solution, which is the innovative idea at the heart of this case, was to develop a hybrid (chimeric) antibody gene structure, consisting in part of human and in part of murine elements, created by insertion into the genome of the mouse. Mammalian antibodies are proteins which all share a characteristic structure consisting of four polypeptide chains, two identical heavy chains and two identical light chains bonded in a Y formation. Each chain has a constant region, so named because it does not vary in its segments, called C segments, and a variable region, in which the segments vary between different antibodies. In both mice and humans the variable regions consist, in the light chains, of V (variable) and J (joining) segments and, in the heavy chains, of V, D (diversity) and J segments. Production of antibodies is one of the major functions of B cells. The natural development of specific antibodies in humans and mice involves a complex process of rearrangement among the segments in the variable regions, within the B cells which are created in the bone marrow. During this stage of development, each B cell acquires a B cell receptor on its surface. As a result of different combinations of the V, D and J segments, B cells are created with a variety of B cell receptors. As all the antibodies made by one B cell are identical, it is necessary to produce a diversity of B cells in order to have a diversity of antibodies. The degree of variety is important, because the body faces invasion by a wide variety of antigens associated with disease. The effectiveness of the bodys immunological response against a specific antigen depends upon the body producing a B cell whose receptor happens to be capable of binding to that antigen. The chances of that happening are increased the greater the number of different B cells (with different receptors) which the body produces. Repeated rearrangements of the V, D and J segments (known as somatic gene rearrangement or V(D)J recombination) through combinatorial use of a number of different gene segments coding for the polypeptide chains means that a huge variety of antibodies can be generated eventually. Where a B cell does encounter an antigen to which it binds, it is activated and induced to divide and differentiate. Repeated cell divisions give rise to sizeable clones that depend on antigen recognition for their survival. B cells that are unable to bind the antigen simply die. Those that do bind the antigen can be taken and subjected to other processes to produce antibodies in quantities which can be introduced into humans to combat or vaccinate against that particular antigen. It was generally understood, at least as at the priority date, that these processes of rearrangement were likely to be optimised, and the range of potential and effective antibodies increased, if the antibody genes implanted in the mice had as many as possible of the human V, D and J segments included within them. A typical human heavy chain gene locus has around 125 V segments (each different from the others), 27 D segments and nine J segments in the variable region. If the V and J segments in the light chains gene loci are factored in as well, the number of possible combinations which may be made from the human antibody gene loci is about 1.5m. The hybrid gene structure at the heart of the present dispute was designed to combine within one antibody gene structure the murine constant region and the whole of the human variable region. That was indeed what the patents in issue taught. But the judge found that the formidable difficulties in producing such a hybrid gene structure could not be surmounted at all by the combination of the existing common general knowledge and the disclosure in the patents. By contrast, the Court of Appeal found that it could be done, by a combination of the prior knowledge and the disclosure in the patents, but only so as to produce a hybrid gene structure with a small sub set of the 125 human V segments in the variable region (on the appellants estimate between two and six V segments), and an unspecified number of human D and J segments. Transplantation of the whole of the human variable region into a hybrid gene structure has since been achieved but only with the benefit of further inventive processes not forming part of the disclosure of the patents or the prior article The name given to this type of hybrid gene structure, containing the murine constant region and all or part of the human variable region is the Reverse Chimeric Locus. Once created in the mouse genome, it operated as the code for the production of a variety of hybrid antibodies which, when the B cells which contain the relevant coding are isolated and removed, could then have the murine constant regions removed and replaced with human equivalents before mass production and use in humans for therapy. The Patents in Issue The foregoing bare outline of the technical background makes it possible to understand the relevant claims of the patents in issue, to the limited extent necessary for the resolution of the single issue of law before this court. The dispute relates to two patents obtained by the respondent, Regeneron Pharmaceuticals Inc, each with a priority date of 16 February 2001, and each with substantially the same disclosure for the purpose of justifying different claims. They are European Patent (UK) No 1 360 287 (the 287 Patent) and European Patent (UK) No 2 264 163 (the 163 Patent). The 163 Patent is a divisional of the 287 Patent. The challenge to validity arose because Regeneron alleged infringement by Kymab Ltd of claim 1 in the 163 Patent and claims 5 and 6 of the 287 Patent by the offer to the pharmaceutical industry of its own Kymouse, a transgenic mouse with a Reverse Chimeric Locus some of which included the whole of the human variable segments in both the heavy and the light chain loci. The judge found infringement proved, but that all three claims were invalid for insufficiency. It was common ground before this court that the outcome for the validity of all three claims turns on the validity of claim 1 of the 163 Patent (Claim 1), which reads as follows: A transgenic mouse that produces hybrid antibodies containing human variable regions and mouse constant regions, wherein said mouse comprises an in situ replacement of mouse VDJ regions with human VDJ regions at a murine chromosomal immunoglobulin heavy chain locus and an in situ replacement of mouse VJ regions with human VJ regions at a murine chromosomal immunoglobulin light chain locus. This is of course a product claim, seeking a monopoly for the making (at first sight a strange but serviceable word to use of an animal) of a genetically engineered mouse having the characteristics described in the claim. The characteristics related both to what such a mouse does (namely produce the hybrid antibodies described) and to what is contained in its genome, namely the Reverse Chimeric Locus, achieved by a process of in situ replacement of the murine variable regions in both the light and heavy chain gene loci with the corresponding but of course different human variable regions. The claim seeks protection for the making and exploitation of any type of mouse having those characteristics. Since the description of what the mouse does is more loosely worded than the description of what lies within its genome, it is the latter description which mainly controls the breadth of the claim. All issues as to the construction of Claim 1, ie as to what it means, were resolved in the courts below, and none are subject to appeal in this court. There were, for example, issues as to the meaning of in situ replacement, which no longer matter. But there was a more important issue about whether Claim 1 described a single type of mouse or a range of types which the courts below also resolved, in favour of the range, arising from the meaning of the phrase with human VDJ regions in the heavy chain locus, and the phrase with human VJ regions in the light chain locus. Did this mean (only) all the segments in the VDJ and VJ regions, or did it include any of them? Looking at the V segments, did this capture only a mouse with all 125 human V segments, or also a mouse with only one such segment, and therefore mice with any number of V segments between one and 125? Both the judge and the Court of Appeal concluded that the quoted phrase meant both all and any. It was this interpretation which led them both to conclude that Claim 1 extended to a range of qualifying types of mice, rather than to a single type. Taking the V segments in the heavy chain locus as the best example, the range was denominated by reference to the number, between one and 125, of the human V segments introduced into the mouses genome as part of the human variable region. The conclusion that Claim 1 sought to protect the making of a range of transgenic mice was not in dispute on this appeal, even though every type (or embodiment) within the range would necessarily have a form of Reverse Chimeric Locus as part of its genome. The fact that there is such a range is the foundation for the agreed identification of the legal issue before this court, since the question, as framed above, makes no sense if there is not a relevant range with different types or embodiments within it. There was nonetheless a sharp difference in this court between the parties submissions on the relevance or otherwise of the existence of this range to the question of sufficiency. For the appellant it was submitted that the range was of the highest importance because of its effect upon the ability of a particular type of mouse to produce a wide variety of B cells, and hence its potential to deliver a broad stream of useful antibodies. A mouse fitted with only (say) four V segments from the human variable region gene locus would produce only a small fraction of the variety of B cells that would be produced by a mouse fitted with the entire 125 V segments in the human variable region gene locus. That at least (as the judge found) was the assumption made by the skilled person as at the priority date, even though research and development since 2001 have called into question to some extent the assumption that the full range of 125 V segments is necessary to optimise the desirable combinatorial possibilities needed for there to be a reasonable prospect of delivery of useful antibodies. For the respondent it was submitted that the existence of this range was irrelevant, because the unique advantage conferred by the use of a Reverse Chimeric Locus, namely a cure for the immunological sickness of the recipient mouse, worked across the whole range, regardless of the amount of the human variable region DNA inserted into the murine genome, because it was the product of the retention in the hybrid gene structure of the murine constant region genes. In a functional sense, both these submissions are to an extent literally true, on the facts found by the courts below. The amount of human variable region DNA inserted into the murine genome does substantially affect the usefulness of the mouse fitted with the Reverse Chimeric Locus as (to use the judges summary) a platform for therapeutic antibody discovery. More to the point that was the general understanding at the time of the priority date, and the patents in issue did not teach the contrary. But the ground breaking invention encapsulated and disclosed in the Reverse Chimeric Locus would (and eventually did) deliver a solution to murine immunological sickness across the whole of the range captured by Claim 1, making all of them better platforms than mice which had (as previously) been fitted with fully human antibody gene structures. That analysis does not of itself lead to a conclusion that the range which is denominated by reference to the amount of human variable segments in the hybrid gene structure is irrelevant, for sufficiency purposes. One can imagine an obviously irrelevant range, such as mice which are large and small, of differing colours, or having tails of varying length. No one would say that Claim 1 fails for insufficiency because it includes mice with very short tails (which it does) merely because it does not teach how to make such mice. The quality and diversity of the stream of antibodies which the mouse exists to produce is, so far as is known, wholly unaffected by the length of its tail. The question whether the range denominated by the amount of human segments in the variable region within the Reverse Chimeric Locus is relevant for sufficiency purposes is best answered from the terms of Claim 1 itself. The claim is to mice which produce a stream of antibodies with human variable regions, and the disclosure more generally shows that this stream is for eventual use (after further engineering and mass production) in treating disease in humans. True it is that the particular ground breaking contribution achieved by the invention of the Reverse Chimeric Locus is the delivery of a means of preventing (or greatly reducing) murine immunological sickness, to which the range of embedded human variable segments is irrelevant, but murine immunological health is not an end in itself. It is a means to a different end. Sufficiency the Basic Principle Sufficiency is one of the established tools by which is measured the correspondence, or lack of it, between the protection afforded by the claim and the technical contribution to the art made by the disclosure of the invention in the patent. The other main tools are novelty, inventive step and industrial application: see Actavis Group PTC EHF v ICOS Corpn [2019] UKSC 15; [2019] Bus LR 1318, para 57 per Lord Hodge. The essence of the bargain between the patentee and the public is that the patentee dedicates the invention to the public by making full disclosure of it, in return for a time limited monopoly over its use. The benefit afforded to the public is not merely the disclosure, but the ability to work the invention after the expiry of the monopoly by the use of the disclosure. Where the invention enables patentees to make a particular product, and they seek a monopoly over the making and exploitation of the product (which is what a product claim does), they must disclose enough in the teaching of the patent to enable the public also to make the product. In that context work the invention means make the product: see Generics (UK) Ltd v H Lundbeck A/S [2008] EWCA Civ 311; [2008] RPC 19, para 30 per Lord Hoffmann. If the patentee were able to obtain a product monopoly without disclosing how to make the product, the public would get nothing of substance in return for the grant of the monopoly. Furthermore, other inventors would be deterred from conducting the research and development in fact necessary to take advantage of the inventive idea for the benefit of society as a whole, since during the period of the monopoly they could derive no benefit from their own inventiveness. Similar basic principles apply to the patenting of processes, but such distinctions as there may be do not call for examination here. Disclosure does not, of course, have to enable the product to be made by any member of the public, or solely by using the teaching in the patent. The law creates, distinctly for each patent under scrutiny, a notional skilled person or (as here) skilled team who must be enabled to make the product by the combination of the teaching in the patent, the general technical knowledge available at the priority date, and a reasonable (ie not burdensome) element of experimentation. But the skilled person is not expected to be inventive or even, as is sometimes said, imaginative: see Rockwater Ltd v Technip France SA [2004] RPC 46, paras 7 and 10 per Jacob LJ. Sufficiency Enablement across the Range Starting to apply those basic principles to the question before the court, is disclosure sufficient if the teaching in the patent enables only some but not all of the products within the claimed range to be made? Subject to de minimis exceptions, the instinctive answer would be: surely not. If in principle the patentee should be entitled to a monopoly only over the making of a product which the teaching in the patent enables the skilled person to make, why should not the same principle apply to every product type within the relevant range for which a monopoly is sought? The essential patent bargain is not satisfied in relation to products in that part of the range which cannot be made, using the teaching in the patent. This analysis may be tested by a simple example. Suppose that five types of product (types A to E) were all claimed to be more efficient or useful than their predecessors by the application to their manufacture of the same new invention. The patentee made separate claims in relation to each type, all supported by the same disclosure. Each claim would be subjected to the sufficiency test: could a product of that type be made by use of the teaching in the patent, coupled with the existing common general knowledge? Suppose that types A and B could but C, D and E could not. Then claims A and B would be valid, and the remainder invalid. But now suppose that all five types were covered by the more compendious wording of a single claim. Would this enable the patentee also to obtain a monopoly for the making of types C, D and E? Surely not. The Court of Appeal did not doubt this analysis as a general rule, but concluded that it would defeat the implementation of the essential patent bargain if applied to a case in which the invention amounted to a principle of general application, which would yield the relevant increase in efficiency or usefulness across a range of potential product types if they incorporated the invention, as and when they could be made, even if only a few could be made as at the priority date by using the teaching in the patent. In bare outline their reasoning was as follows. The patent bargain requires that the reward given to the patentee should be commensurate with the contribution which the invention makes to the article An invention which consists of a new generally applicable principle may contribute to the art by its use, not only in products which can currently be made, but equally in products which will only be capable of being made in the future, after further inventive research and development. To limit the patentee strictly to a monopoly over the products which can immediately be made would be to deprive the patentee of any reward for the public benefit which will be derived from the use of that same invention in future types of product. In a fast moving field, where new products quickly outperform their predecessors so as to render them obsolete, the reward of a monopoly limited to those immediately capable of being made would be short lived and illusory. Accordingly the invention should be regarded as sufficiently enabled across the range if it can be seen that it will in due course benefit all products in the range, provided that, as at the priority date, the teaching in the patent enables at least one type to be made immediately. Since the Reverse Chimeric Locus would be likely to deal with murine immunological sickness in mice whose genomes were fitted with all or any amount of the human variable segments, up to and including the whole of the human variable region, its invention was one of those principles of general application which should be regarded as enabled across the whole range contemplated by Claim 1. A monopoly over the making and exploitation of the whole range would correspond with the contribution made by the Reverse Chimeric Locus to the article This is a sophisticated and internally logical process of reasoning, which certainly would tend to increase the rewards obtainable by inventors in a complex, rapidly developing field like genetic engineering for use in treatment of disease. The question is whether it is part of the law or, perhaps, a legitimate development of it. The requirement for sufficiency is now enshrined in article 83 of the EPC as follows (in its English version): The European patent application shall disclose the invention in a manner sufficiently clear and complete for it to be carried out by a person skilled in the article This is replicated in section 14(3) of the Patents Act 1977 as follows: The specification of an application shall disclose the invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the article Article 100(b) of the EPC makes it a ground of opposition that: the European patent does not disclose the invention in a manner sufficiently clear and complete for it to be carried out by a person skilled in the art; This is reflected in section 72(1)(c) of the Act which provides as a ground for revocation that: the specification of the patent does not disclose the invention clearly enough and completely enough for it to be performed by a person skilled in the article By section 130(7) of the Act, provisions including section 72(1): are so framed as to have, as nearly as practicable, the same effects in the United Kingdom as the corresponding provisions of the European Patent Convention, the Community Patent Convention and the Patent Co operation Treaty have in the territories to which those Conventions apply. Those terse statements of the sufficiency requirement in articles 83 and 100(b) of the EPC and in sections 14(3) and 72(1)(c) of the Act offer no particular illumination in the present debate. Rather the answer is to be found in the European and UK authorities on sufficiency, which were subjected to intensive review both by the Court of Appeal and in submissions to this court. The interpretative objective is to strive for consistency between European and UK patent law: see Generics (UK) Ltd v H Lundbeck A/S [2009] RPC 13, para 86 per Lord Neuberger of Abbotsbury. A chronological review of the relevant decisions of the Technical Board of Appeal of the European Patent Office (EPO) begins with Unilever/Stable Bleaches (T 226/85) ECLI:EP:BA:1987:T022685.19870317, decided in March 1987. The appeal included opposition on the ground of insufficiency. At para 2 the Board provided this general summary of the sufficiency requirement: An attack on the ground of insufficiency under article 100(b) EPC is, of course, based on article 83 EPC which requires that the disclosure of the invention must be sufficiently clear and complete for it to be carried out by the person skilled in the article It is understood that this means that substantially any embodiment of the invention, as defined in the broadest claim, must be capable of being realised on the basis of the disclosure. That case was not specifically about a claim for a range of products, or an assertion that the invention disclosed a generally applicable principle. But such a claim and assertion were directly in issue in Exxon/Fuel Oils (T 409/91) EP:BA:1993:T040991.19930318, decided in March 1993. This has come to be seen as the leading case on the subject of sufficiency across a range. In Generics v Lundbeck (supra) at para 21 Lord Walker of Gestingthorpe described the requirement that the invention be enabled across the whole of the claim as the Exxon principle. At certain temperatures, wax crystals suspended in diesel fuel tend to clog fuel filters in diesel engines. Exxon claimed a monopoly over fuel oils which, within specified temperatures, had wax crystals having an average particle size of less than 4,000 nm. This was challenged on the basis that the claimed range was from 1 nm to 3,999 nm, but the teaching in the patent did not enable fuel oil to be produced (by the insertion of additives) with a wax crystal size below 1,000 nm. This was a relevant range because the smaller the crystal the more easily it would pass through a filter. The sufficiency challenge was eventually met by amending the claim to exclude crystal size below 1,000 nm (although it still failed for other reasons, under article 84 of the EPC). But Exxon sought to defend the claim by asserting that the invention embodied a general principle, applicable across the whole claimed range, that small crystals do not clog filters. Prior to amendment of the claim the sufficiency challenge was upheld, in these terms, at para 2: In other words, in the present case there is absolutely no doubt that all these claims must be so construed as to relate to fuel oils containing wax crystals smaller than 1,000 nanometres. The appellant has admitted that no way of obtaining such fuel oils was disclosed or could be found in the body of relevant common general knowledge. However, in the Boards judgment, in order to fulfil the requirement of article 83 EPC, the application as filed must contain sufficient information to allow a person skilled in the art, using his common general knowledge, to carry out the invention within the whole area that is claimed. Later, at para 3.5, the sufficiency requirement was defined as meaning that: the disclosure of the claimed invention is only sufficient if it enables the skilled person to obtain substantially all embodiments falling within the ambit of the claims At para 3.6 the Board directly addressed the submission that the invention disclosed a general principle, and decided that, even if it did, that made no difference. They said that the claim must fail: regardless of whether or not the alleged principle to avoid the so called cold filter plugging (or clogging) by reducing the size of the wax crystals would be novel and inventive. Despite the very different subject matter there is an obvious similarity between the claimed range in the Exxon case (wax crystals from 3,999 nm down to 1 nm) and the claimed range in the present case (from all the segments in the human variable region locus down to just one V, D and J segment in the heavy chain locus and one V and J segment in the light chain locus). Although the lower the better in Exxon contrasts with the higher the better in the present case, it is a feature of both cases that the invention was not enabled by the disclosure in the patent at the more beneficial end of the range. It is noteworthy that the descriptions of the sufficiency requirement in these EPO cases use the adverb substantially to qualify the strictness of the requirement, meaning that it is a requirement of substance, which may on a de minimis basis still be satisfied where there are or may be a tiny or inconsequential number of embodiments which are not enabled. But the enablement shortfall in the present case is, as already explained, much greater than anything which could be saved by that qualification. In Unilever/Detergents (T 435/91) ECLI:EP:BA:2008, decided in March 1994, the Board described the requirement that the invention be enabled across the whole of the claim as a rule of general application to all inventions, as follows: In the Boards judgment the criteria for determining the sufficiency of the disclosure are the same for all inventions, irrespective of the way in which they are defined, be it by way of structural terms of their technical features or by their function. In both cases the requirement of sufficient disclosure can only mean that the whole subject matter that is defined in the claims, and not only a part of it, must be capable of being carried out by the skilled person without the burden of an undue amount of experimentation or the application of inventive ingenuity. The Board shed some useful light on what the specification in a patent must do if it is to qualify as a general principle which enables an invention across a broad claim. It must disclose: a technical concept fit for generalisation which makes available to the skilled person the host of variants encompassed by the respective functional definition of the . claim. A similar analysis of the contribution which a general concept may make to sufficiency across a range is to be found in Mycogen/Modifying plant cells (T 694/92) ECLI:EP:BA:1996, decided in May 1996, at p 19. The key for present purposes is that the general concept or principle must actually make the embodiments within the claim available. It is not enough for the general inventive concept or principle to make all those variants, if and when they become available, fit or better than their predecessors for beneficial or efficient use. Henry Carr J had this well in mind when he said in the present case (at para 257): I do not accept that all embodiments within the claim are unified by a single principle of a reverse chimeric locus. This is not a principle that enables the method to be performed, rather it is the result of successfully carrying out the method. He was speaking mainly of process rather than product claims at that point, but the principle is the same for both. In relation to Claim 1 he could equally have said that the Reverse Chimeric Locus was not a principle that enables the products to be made, rather it is the result of successfully making the products. Lord Pannick QC, Adrian Speck QC and Justin Turner QC for the respondent relied on three EPO cases which, they submitted, supported the Court of Appeals analysis in the present case. The earliest, Genentech I/Polypeptide expression (T 292/85) ECLI:EP:BA:1988, was decided in January 1988. The Board upheld a patent claiming processes and resulting products which produced a uniform stream of specified polypeptides by the use as input components of a range of bacteria, plasmids and regulons, wide enough to embrace types which had yet to be made available under the then state of the article The Examining Division had rejected the patent because, in its view, the specification did not enable embodiments containing such future input components to be made. The Board of Appeal stated, to the contrary: 3.1.2 There is, however, in the opinion of the Board, no such requirement in the European Patent Convention, nor is such principle established in normal patent practice within the Contracting States. The suggested features in the claims are essentially functional terms in this particular context, in spite of structural connotations, and may cover an unlimited number of possibilities. It follows that the features may generically embrace the use of unknown or not yet envisaged possibilities, including specific variants which might be provided or invented in the future. The Board continued: In appropriate cases, such as the present, it is only possible to define the invention (the matter for which protection is sought article 84 EPC) in a way which gives a fair protection having regard to the nature of the invention which has been described, by using functional terminology in the claims. 3.1.3 What is also important in the present case is the irrelevancy of the particular choice of a variant within the functional terms bacteria, regulon or plasmid. It is not just that some result within the range of polypeptides is obtained in each case but it is the same polypeptide which is expressed, independent of the choice of these means . 3.1.5 Unless variants of components are also embraced in the claims, which are, now or later on, equally suitable to achieve the same effect in a manner which could not have been envisaged without the invention, the protection provided by the patent would be ineffectual. Thus it is the view of the Board that an invention is sufficiently disclosed if at least one way is clearly indicated enabling the skilled person to carry out the invention. At first sight, and taken out of context, (for which see paras 42 and 53 below) the first and last of those quoted passages might appear to provide powerful support for the respondents case. But an attempt to rely upon them for a similar purpose was made and firmly rejected in Unilever/Detergents (T 435/91). At pp 10 11 the Board said: In particular, it is not adequate to take the finding in point 3.1.5 of Decision T 292/85 (OJ EPO 1989, 275) out of its context. It is not only stated there, as quoted by the respondent, that an invention is sufficiently disclosed if at least one way of carrying out the invention is clearly indicated enabling the skilled person to carry out the invention, but in the next sentence it is made clear that any non availability of some particular variants of a functionally defined component feature of the invention is immaterial to sufficiency as long as there are suitable variants known to the skilled person through the disclosure or common general knowledge which provide the same effect for the invention . Moreover, in respect of the functional expression suitable bacterium it was pointed out that the applicability of the claimed method to any kind or most species of bacteria has not been effectively challenged. Similar findings of fact concerned the remaining functional definitions in the considered claim Unilever/Detergents was one of the EPO cases cited above where the requirement that the specification should enable all embodiments across the whole range of the claim was firmly asserted. The Board plainly did not regard that requirement as necessitating any departure from the decision in the Polypeptide case although, if such a departure was the only way of reconciling them, the law ought now to be taken as laid down by the Detergents case and by the Exxon case which applied the requirement to facts closely allied with those of the present case. But the Polypeptide and Detergents cases can be reconciled. In the former the claims were (necessarily in the Boards view) framed by reference to function, and sought to protect products and processes which in fact achieved that function when applied to a broad range of input variables, none of which were themselves embodiments of the claim. In the Detergents case (as the headnote explains) the claim was again made by reference to function, but the patent failed to disclose any general technical principle by which the skilled person could achieve the desired result across the whole range of claimed embodiments. Furthermore the range of the input variables which could be used to work the invention in the Polypeptide case was held to be irrelevant. For reasons already explained, Claim 1 in the present case is of the kind which falls within the Detergents and Exxon line of EPO authority. Mention should briefly be made of two EPO decisions which followed and applied the Polypeptide case. The first, decided in June 1988, is Nabisco/Micro organisms (T 361/87) ECLI:EP:BA:1988. A claim to protect a means of preparing fructose was challenged for sufficiency on the ground that a certain type of input variable falling within the claim only became available to persons skilled in the art after the priority date. The challenge was rejected in part by application of the cited passage in the Polypeptide case, but also because the description contained sufficient teaching to enable the invention to be used with that new input element, once available. The decision takes the matter no further for the purposes of the present case than does the Polypeptide case. The second, more recent, case is Novartis II/Transgenic plant (G 1/98) ECLI:EP:BA:1999, decided by the Enlarged Board in December 1999. The decision makes brief reference to both the Polypeptide and Nabisco cases as demonstrating that the requirement that the claim be enabled across the full range of the claim is not without exception. Save that it suggests that those earlier cases should not simply be regarded as having been overruled by the Detergents and Exxon line of EPO authority, it sheds little further light on the necessary distinction between the two. Reference was also made to the decision of the German Federal Supreme Court in Dipeptidyl Peptidase Inhibitoren (X ZB 8/12). It was about a medical use patent, rather than a product claim. It sought to protect a method of using a range of known substances for lowering the blood glucose level in mammals, in a manner which would be simple, cost efficient and not too burdensome on the patient, by comparison with methods already known. As in the Polypeptide case it was held not to be fatal to the validity of the patent that it applied to a range of known input substances and extended to substances not yet available. Neither the outcome nor the language used by the court (at paras 19 20) takes the matter any further than either the Polypeptide or Nabisco cases, when read in the context of a medical use claim. It is convenient at this point to explain why the present case falls on the Detergents/Exxon side of this line. The reason why Claim 1 fails to enable the skilled person to make mice with Reverse Chimeric Loci across the whole range of the human variable regions of the hybrid antibody gene structure is not because any of the V, D and J segments had yet to be discovered or mapped by the priority date, or even because any of them could not be inserted into mice. The whole of the human variable region gene locus had already been mapped. It could be (and had been) inserted into mice, but only when attached to the human constant region genes, thereby causing murine immunological sickness. The problem facing those skilled in the art at the priority date was that there was no known way, even using the teaching in the patents, to combine more than a very small part of the human variable region gene locus with the endogenous murine constant region gene locus, in the same hybrid gene structure. It took several years, and significant further inventive steps, before methods were developed sophisticated enough to accommodate the whole of the human variable and murine constant region genes in a single hybrid gene structure. Thus the inventive shortfall at the priority date lay not in the range of possible inputs to which the invention could be applied, but in the inability to create a Reverse Chimeric Locus involving the whole (or anything more than a very small part of) the human variable region. It was truly a shortcoming in the invention itself, which, as at the priority date, limited its use to only a small part of the relevant range within the scope of Claim 1. In sharp contrast the inventions in the Polypeptide line of cases did disclose a sufficient general principle which, without any further inventive step, would enable the skilled person to work the relevant invention by using, as input elements, examples of those components described generally in the claims, which were unavailable as at the priority date, in order to make products across the scope of the claim. The fact that the claim permitted alternative examples of input elements, as yet unavailable at the priority date, is the exception to the requirement for enablement across the whole scope of the claim to which the Enlarged Board made brief reference in the Novartis II decision. A study of the relevant UK cases reveals a similar approach to the existence and nature of this exception to the Exxon principle. The earliest, and perhaps best known, are the decisions of the Court of Appeal and the House of Lords in Biogen Inc v Medeva plc [1995] RPC 25 and [1997] RPC 1. It was, like the present, a case about genetic engineering, but the claim sought to protect a genetic molecule rather than a whole mouse. The claim was that the molecule would, if inserted into a suitable host cell, cause the cell to make antigens of the Hepatitis B virus. Both the Court of Appeal and the House of Lords held that the claim failed, inter alia for insufficiency, but for different reasons. Apart from the holding that sufficiency is to be tested as at the priority date (a rule which is not in dispute in this appeal) the case is of importance for present purposes only because of the reliance placed by the parties on different dicta by Hobhouse LJ (in the Court of Appeal) and Lord Hoffmann (in the House of Lords) about the sufficiency requirement and the principles of UK law to be derived from the main EPO decisions cited above. It is, again, important not to take the dicta out of context. In the Court of Appeal Hobhouse LJ addressed the submission, accepted by the trial judge, that the sufficiency requirement was satisfied whenever the patentee demonstrated that the invention enabled one embodiment of the claimed range to be made. Having cited extensively from the Exxon case, and held that it correctly represented UK law, he continued, at pp 98 99: The disclosure must be sufficient to enable the whole width of the claimed invention to be performed. What will suffice to satisfy this criterion will vary depending upon the nature of the claim that has been made. It is essential to apply the test having regard to the extent of the claim. It is not the law that the disclosure of a single embodiment will always satisfy the requirement regardless of the width of the claim. Having noted counsels attempt to limit his submission to cases where the patent related to the invention of a principle, he continued: The disclosure must be wide enough to enable the man skilled in the art to perform the claimed invention across its full width not just by reference to one type of antigen or one type of host. The plaintiff had a choice as to how widely it would draw its claim. If it chose to draw it widely, it must accept the co relative obligation to make a correspondingly wide disclosure. If it is unable to make that disclosure, that shows that it is seeking to claim an invention to which it is not entitled. In the House of Lords Lord Hoffmann described the submission that enablement of a single embodiment was sufficient (rejected by Hobhouse LJ) as having originated from a misunderstanding of the meaning of the Polypeptide case by Aldous J (who was the trial judge in Biogen) in Chiron Corpn v Organon Teknika Ltd (No 3) [1994] FSR 202. At pp 48 49 he set out his own understanding of the Polypeptide case as follows: In other words, the applicants had invented a general principle for enabling plasmids to control the expression of polypeptides in bacteria and there was no reason to believe that it would not work equally well with any plasmid, bacterium or polypeptide. The patent was therefore granted in general terms. He continued: In fact the Board in Genentech I/Polypeptide expression was doing no more than apply a principle of patent law which has long been established in the United Kingdom, namely, that the specification must enable the invention to be performed to the full extent of the monopoly claimed. If the invention discloses a principle capable of general application, the claims may be in correspondingly general terms. The patentee need not show that he has proved its application in every individual instance. On the other hand, if the claims include a number of discrete methods or products, the patentee must enable the invention to be performed in respect of each of them. Thus if the patentee has hit upon a new product which has a beneficial effect but cannot demonstrate that there is a common principle by which that effect will be shared by other products of the same class, he will be entitled to a patent for that product but not for the class, even though some may subsequently turn out to have the same beneficial effect: see May & Baker Ltd v Boots Pure Drug Co Ltd (1950) 67 RPC 23, 50. On the other hand, if he has disclosed a beneficial property which is common to the class, he will be entitled to a patent for all products of that class (assuming them to be new) even though he has not himself made more than one or two of them. He continued by treating the Exxon case as reinforcing the established principle of UK law which he had earlier described. In the event Lord Hoffmann decided that the patent failed for insufficiency because it disclosed only one method of working the invention, whereas there were other methods available to the skilled person. He did not disagree with Hobhouse LJs analysis of the law. At p 51 he concluded: This shows that there is more than one way in which the breadth of a claim may exceed the technical contribution to the art embodied in the invention. The patent may claim results which it does not enable, such as making a wide class of products when it enables only one of those products and discloses no principle which would enable others to be made. Or it may claim every way of achieving a result when it enables only one way and it is possible to envisage other ways of achieving that result which make no use of the invention. (my underlining) Both the Court of Appeal and the respondent in the present case placed great emphasis on the reference by Lord Hoffmann to a common principle by which products in a class may share the same beneficial effect, as if this was separate and additional to the case of a general principle which enables a whole class of products to be made. He did so by reference to the May & Baker Ltd v Boots Pure Drug Co Ltd (1950) 67 RPC 23 case, where a beneficial therapeutic effect was said to be of the essence of the claim. But the case before him and the submission with which he was dealing were all about the question whether the disclosure needed to enable all, or only some, of the embodiments of a claimed range to be made, as he acknowledged in the last of the passages quoted (and underlined) above. In Kirin Amgen Inc v Hoechst Marion Roussel Ltd [2005] RPC 9, the trial judge had cited Lord Hoffmanns concept of a general principle of beneficial effect in Biogen. Lord Hoffmann commented, at p 202 (para 112): This gave rise to a good deal of argument about what amounted to a principle of general application. In my opinion there is nothing difficult or mysterious about it. It simply means an element of the claim which is stated in general terms. Such a claim is sufficiently enabled if one can reasonably expect the invention to work with anything which falls within the general term. For example, in Genentech I/Polypeptide expression (T 292/85) [1989] OJ EPO 275, the patentee claimed in general terms a plasmid suitable for transforming a bacterial host which included an expression control sequence to enable the expression of exogenous DNA as a recoverable polypeptide. The patentee had obviously not tried the invention on every plasmid, every bacterial host or every sequence of exogenous DNA. But the Technical Board of Appeal found that the invention was fully enabled because it could reasonably be expected to work with any of them. Lord Hoffmanns reference to the Polypeptide case as an example shows that he was not thinking in terms of general beneficial effect. By reasonably expect the invention to work in relation to a product claim he meant reasonably expect the product to be able to be made. This is clear from dicta of his, sitting in the Court of Appeal, in the third of the UK cases, Generics (UK) Ltd v H Lundbeck A/S [2008] RPC 19. Two product claims were rejected by the trial judge for insufficiency, because the patent disclosed only one of a number of methods of making the products, following Biogen. Lord Hoffmann, with whom Jacob and Smith LJJ agreed, reversed him. At paras 29 30 he said: In order to decide whether the specification is sufficient, it is therefore first necessary to decide what the invention is. That must be found by reading and construing the claims, in which the inventor identifies what he claims to be his invention. As the Board of Appeal of the European Patent Office said in Exxon/Fuel Oils (T 409/91) [1994] OJ EPO 653, para 3.3, It is the definition of the invention in the claims that needs support. Section 60(1) of the Act makes it clear that a claim may be either to a product or a process. In the case of a product claim, performing the invention for the purposes of section 72(1)(c) means making or otherwise obtaining the product. In the case of a process claim, it means working the process. A product claim is therefore sufficiently enabled if the specification discloses how to make it. There is nothing to say that it must disclose more than one way. At paras 34 36 he continued: Thus, as a matter of construction, the House of Lords interpreted the claim as being to a class of products which satisfied the specified conditions, one of which was that the molecule had been made by recombinant technology. That expression obviously includes a wide variety of possible processes. But the law of sufficiency, both in the United Kingdom and in the EPO, is that a class of products is enabled only if the skilled man can work the invention in respect of all members of the class. The specification might show that this has been empirically demonstrated or it might disclose a principle which can reasonably be expected to apply across the class: see T 292/85 Polypeptide expression/Genentech [1989] OJ EPO 275; T 409/91 Exxon/Fuel Oils [1994] OJ EPO 653; Kirin Amgen Inc v Hoechst Marion Roussel Ltd [2005] RPC 9, para 112. But the specification in Biogen described only one method of making the molecule by recombinant technology and disclosed no general principle. It was easy to contemplate other methods about which the specification said nothing and which would owe nothing to the matter disclosed. In my opinion, therefore, the decision in Biogen is limited to the form of claim which the House of Lords was there considering and cannot be extended to an ordinary product claim in which the product is not defined by a class of processes of manufacture. It is true that the House in Biogen endorsed the general principle stated by the Board of Appeal in Exxon/Fuel Oils (T 409/91) [1994] OJ EPO 653, that: the extent of the patent monopoly, as defined by the claims, should correspond to the technical contribution to the art in order for it to be supported or justified. The judge said that in holding claim 1 insufficient, he was applying this principle. But then he treated the relevant technical contribution to the art as being the inventive step, namely a way of making the enantiomer. That, I respectfully consider, was a mistake. When a product claim satisfies the requirements of section 1 of the 1977 Act, the technical contribution to the art is the product and not the process by which it was made, even if that process was the only inventive step. The House of Lords dismissed the appeal. Lord Walker placed emphatic reliance upon the Exxon case as the leading statement of the law on sufficiency in relation to a product claim. At para 20 he said: The disclosure must be such as to enable the invention to be performed (that is, to be carried out if it is a process, or to be made if it is a product) to the full extent of the claims. Analysis Reflection upon those European and UK authorities yields the following principles: i) The requirement of sufficiency imposed by article 83 of the EPC exists to ensure that the extent of the monopoly conferred by the patent corresponds with the extent of the contribution which it makes to the article ii) In the case of a product claim, the contribution to the art is the ability of the skilled person to make the product itself, rather than (if different) the invention. iii) Patentees are free to choose how widely to frame the range of products for which they claim protection. But they need to ensure that they make no broader claim than is enabled by their disclosure. iv) The disclosure required of the patentee is such as will, coupled with the common general knowledge existing as at the priority date, be sufficient to enable the skilled person to make substantially all the types or embodiments of products within the scope of the claim. That is what, in the context of a product claim, enablement means. v) A claim which seeks to protect products which cannot be made by the skilled person using the disclosure in the patent will, subject to de minimis or wholly irrelevant exceptions, be bound to exceed the contribution to the art made by the patent, measured as it must be at the priority date. vi) This does not mean that the patentee has to demonstrate in the disclosure that every embodiment within the scope of the claim has been tried, tested and proved to have been enabled to be made. Patentees may rely, if they can, upon a principle of general application if it would appear reasonably likely to enable the whole range of products within the scope of the claim to be made. But they take the risk, if challenged, that the supposed general principle will be proved at trial not in fact to enable a significant, relevant, part of the claimed range to be made, as at the priority date. vii) Nor will a claim which in substance passes the sufficiency test be defeated by dividing the product claim into a range denominated by some wholly irrelevant factor, such as the length of a mouses tail. The requirement to show enablement across the whole scope of the claim applies only across a relevant range. Put broadly, the range will be relevant if it is denominated by reference to a variable which significantly affects the value or utility of the product in achieving the purpose for which it is to be made. viii) Enablement across the scope of a product claim is not established merely by showing that all products within the relevant range will, if and when they can be made, deliver the same general benefit intended to be generated by the invention, regardless how valuable and ground breaking that invention may prove to be. Application of those principles to the facts of the present case shows clearly that Claim 1 fails for insufficiency. At the priority date the disclosure of the two patents, coupled with the common general knowledge, did not enable transgenic mice to be made with a Reverse Chimeric Locus containing more than a very small part of the human variable region gene locus. The extent to which that variable region of the human antibody gene structure could be included in the hybrid antibody gene structure was, at that date, understood to be a very important factor affecting the diversity of useful antibodies capable of being discovered by the use of transgenic mice, so that the range thus denominated was a relevant range for sufficiency purposes, even though it did not affect the immunological health of the transgenic mouse. Thus the claim to a monopoly over the whole of that range went far beyond the contribution which the product made to the art at the priority date, precisely because mice at the more valuable end of the range could not be made, using the disclosure in the patents. A comparison between those principles and those applied by the Court of Appeal reveals that they did not correctly apply the law as it stands, for the following reasons. First, I cannot accept their summary of the essential patent bargain. In the case of a product claim, the contribution to the art is the product which is enabled to be made by the disclosure, not the invention itself. Patents are about products and processes, not pure ideas. Secondly, I do not accept their conclusion that an invention may be enabled in relation to a particular type of product falling within the scope of the claim even if it does not permit the skilled person to make it. They thought it was enough that the benefits which the invention unlocked (in terms of preventing murine immunological sickness) would in due course be realised over the whole range, if and when all embodiments within the range could be made. In practical terms they upheld a monopoly over that part of the range of products answering the broad description in Claim 1 which was likely to be of most benefit to medical genetic engineering, at a time when the disclosure in the patent only enabled the skilled person to make products over a very small part of the range, and at the least beneficial end of the range denominated by the amount of the human variable region gene locus incorporated in the hybrid gene structure. It is now known that the type of mouse fitted with a Reverse Chimeric Locus which actually does serve as the gold standard in the art has the whole of the human variable region gene locus as part of its hybrid antibody gene structure. Yet the Court of Appeal would have upheld a monopoly for its manufacture and exploitation when the disclosure in the patent, coupled with the common general knowledge, would not have enabled a skilled person to make such a mouse at all. The ability of both the appellant and the respondent to make such a mouse now depends upon further (and different) inventions separately made by each of them some years after the priority date. Nor is the Court of Appeals analysis to be regarded as a legitimate development of the law. The sufficiency requirement, namely that the disclosure in the patent should enable substantially all products within the scope of a product claim to be made by the skilled person as at the priority date, is part of the bedrock of the law, worked out over time both in the UK and by the EPO, which is essential to prevent patentees obtaining a monopoly which exceeds their contribution to the article To water down that requirement would tilt the careful balance thereby established in favour of patentees and against the public in a way which is not warranted by the EPC, and which would exceed by a wide margin the scope for the development of the law by judicial decision making in a particular Convention state. It may well be, as the Court of Appeal clearly thought, that the consequence of confining the patentee with a ground breaking invention to protection only over a range of products which the invention currently enables to be made at the priority date will give the patentee scant and short lived reward for their efforts and ingenuity, viewed in particular with the benefit of hindsight. The Court of Appeal put this point forcefully to counsel for Kymab at the hearing in October 2017, and the transcript discloses that little was said in response by way of mitigation. A little more was attempted in this court in the appellants reply, but it would not be a useful exercise to engage with it. What matters is that it is settled law, in relation to a product claim, that sufficiency requires substantially the whole of the range of products within the scope of the claim to be enabled to be made by means of the disclosure in the patent, and this both reflects and applies the principle that the contribution to the art is to be measured by the products which can thereby be made as at the priority date, not by the contribution which the invention may make to the value and utility of products, the ability to make which, if at all, lies in the future. I would therefore allow the appeal. LADY BLACK: (dissenting) I differ from the view of the majority and would have dismissed this appeal for reasons which I will set out shortly. I should first explain that, in what follows, in order to express myself as clearly as possible, I have at times consciously used simplified descriptions of the scientific concepts to which I need to refer. The issue raised by the appeal Lord Briggs says, at para 5, that the legal question that arises is whether a product patent, the teaching of which enables the skilled person to make some, but not all, of the types of product within the scope of the claim, passes the sufficiency test where the invention would contribute to the utility of all the products in the range, if and when they could be made. It is useful to bear in mind also how the issue was formulated by the parties in the Statement of Facts and Issues for this court, which was as follows: Is it a requirement for a valid patent under article 83 EPC that the description enables the skilled reader (at the date of the Patent) to make products across the whole scope of the claim, or is it enough that they could make products within only a limited part of that range, provided that all the products within the scope of the claim (if and when they could be made) would use the invention? The nature of the claims The Court of Appeal described claim 1 of the 287 patent as a method claim directed to the modification of an endogenous immunoglobulin heavy chain locus in a mouse ES cell such that murine V, D and J gene segments are replaced by human V, D and J segments and the locus produces hybrid antibodies containing human variable regions and mouse constant regions (para 114), the method having four steps as described in para 115. Claims 5 and 6 of the 287 patent were described as product by process claims (para 121). The issues in the appeal have been considered through the medium of claim 1 of the 163 patent, so it is worth setting that out again here. It is a claim to: A transgenic mouse that produces hybrid antibodies containing human variable regions and mouse constant regions, wherein said mouse comprises an in situ replacement of mouse VDJ regions with human VDJ regions at a murine chromosomal immunoglobulin heavy chain locus and an in situ replacement of mouse VJ regions with human VJ regions at a murine chromosomal immunoglobulin light chain locus. The Court of Appeal said of this claim that it is directed to a transgenic mouse in which there has been in situ replacement of mouse V, D and J regions on the heavy chain by human V, D and J regions; and in which there has been in situ replacement of mouse V and J regions on the light chain by human V and J regions (para 125). It then observed (para 126) that the claim contains no requirement that any particular size of DNA fragment is inserted or replaced; nor is there any limit to the number of steps by which the claim requirements may be met. Further, the reference to V, D and J regions must mean one or more V, D and J segments respectively. The Court of Appeal agreed with the judge that the claim was: not confined to a single product. It includes mice in which different amounts of mouse V, D and J regions (of the heavy chain) and mouse V and J regions (of the light chain) have been replaced with human V, D and J regions and V and J regions, respectively. So it includes, for example, a mouse in which one V, one D, and one J region (of the heavy chain) and one V and one J region (of the light chain) have been replaced and mice in which several such regions have been replaced. (para 127(i)) and that it: extends to a mouse in which the entire murine variable gene locus has been replaced with the entire human variable gene locus. (para 127(iv)) Henry Carr Js determination and how it fared in the Court of Appeal Henry Carr J made two key decisions which formed the foundation for the rest of his conclusions. First, he had to determine the proper construction of the claims in issue, in particular what was meant by in situ replacement in claim 1 of the 287 Patent. He accepted Regenerons proposed construction of the words, as did the Court of Appeal. No construction issue has been pursued before this court. Secondly, Henry Carr J had to make findings as to the feasibility of putting the invention into practice, which he did focussing specifically on claim 1 of the 287 Patent. He rejected the approaches proposed, for varying reasons, concluding that the whole subject matter defined in the claim was not capable of being performed at the priority date without undue burden and without invention (para 257). He considered that the difficulty did not relate to some hypothetical puzzle at the edge of the claim, but rather to the central disclosure of the specification, and the amounts of genetic sequence of which it contemplates the deletion and insertion. None of the methods disclosed would have worked, and the task could not have been achieved, if it could be achieved at all at the priority date, without a great deal of creative thinking. On appeal from the trial judge, Regeneron argued that it was in fact possible for a skilled team to have implemented the reverse chimeric locus without undue effort by means of minigenes. The Court of Appeal was persuaded that this was correct. It was satisfied that the use of minigenes was part of the common general knowledge, and said (para 200): In our judgment and given the idea of the reverse chimeric locus, it would have been obvious to the skilled team and technically feasible to produce a transgenic mouse that would produce hybrid antibodies containing human variable regions and mouse constant regions, and in which mouse V, D and J segments had been replaced with human V, D and J segments in the mouse immunoglobulin heavy chain gene locus, and mouse V and J segments had been replaced with human V and J segments in the immunoglobulin light chain gene locus. Given that it differed from Henry Carr J in this respect, the Court of Appeal inevitably had a different starting point for its consideration of the central legal issue of whether the claim was enabled across its whole scope. As the Court of Appeals finding of technical feasibility has not been challenged before us, we share the Court of Appeals starting point. But it is nevertheless important to note the following observation that Henry Carr J made at para 257, and to which Lord Briggs refers at para 38, with approval: I do not accept that all embodiments within the claim are unified by a single principle of a reverse chimeric locus. This is not a principle that enables the method to be performed, rather it is the result of successfully carrying out the method. The Court of Appeals determination of the enablement issue Having reviewed various decisions of the Technical Boards of Appeal of the EPO and of the domestic courts, the Court of Appeal turned at para 250 to the application of the law to the instant case. This involved, inter alia, a consideration of the nature and extent of the contribution to the art that the disclosure of the invention had made, which Regeneron submitted Henry Carr J had failed to appreciate properly. The Court of Appeal noted that the claim is drawn in general language and is of broad scope, but that: each of the mice it encompasses has the reverse chimeric locus, that is to say, it is a mouse which produces hybrid antibodies containing human variable regions and mouse constant regions, and in which mouse V, D and J segments have been replaced with human V, D and J segments at a chromosomal immunoglobulin heavy chain locus, and mouse V and J segments have been replaced with human V and J segments at a chromosomal immunoglobulin light chain locus. (para 254) It observed that the disclosure of the reverse chimeric locus was a major contribution to the art for it provided the answer to a significant problem which those working in the field had faced, namely that transgenic mice produced by conventional methods were immunologically sick [whereas those] with the reverse chimeric locus do not suffer from this deficiency (para 255). It proceeded to characterise the invention as a principle of general application, supporting that conclusion as follows (para 256): The character of this invention is therefore such that any transgenic mouse which falls within the scope of the claim and so produces hybrid antibodies containing the human variable regions and mouse constant regions will benefit from the technical contribution the disclosure of the 163 patent has made to the art, and will do so irrespective of the antigen which is used to challenge the mouse. The court then noted, at paras 257 to 259, that it was satisfied that the ability of the skilled team to implement the teaching of the 163 patent had been established. It was also noted that the mice produced would have had only a subset of the human V gene segments, although they would have had an immunological response close to that of wild type mice. The court continued (para 260): These points, taken together, strongly suggest to us that the 163 patent does disclose the invention clearly enough and completely enough for it to be performed by a person skilled in the article The character of the invention is one of general application. It applies to any mouse challenged with any antigen and the benefit it confers will be shared by every mouse falling within the scope of the claim. The skilled team would reasonably expect the invention to work across the scope of the claim and that expectation would be correct. What is more, there is nothing in the claim which could have been envisaged without the invention and, were protection to be limited to only those embodiments which could have been made at the priority date without undue effort, the protection provided by the patent would have rapidly become ineffectual. A further passage is of importance, taken from the following paragraphs in which the court examines the implications of it not being possible to perform, precisely, elements of what was described in the examples. In explaining why this did not render the patent insufficient, the court recalled that the law does not require a patentee to enable each and every embodiment of a claimed invention, but recognises that a claim may encompass inventive improvements of what is described and that a specification is not insufficient merely because it does not enable the person skilled in the art to make every such invention. It then continued (para 265): It is important, however, that any such improvement is still a way of working the original invention. In this case we have no doubt that this is the case: there is no mouse falling within the scope of claim 1 of the 163 patent which does not embody the reverse chimeric locus and enjoy the benefits it brings. Claim 1 of the 163 patent was therefore found not to exceed the contribution to the art which the disclosure of its specification made, the extent of the patent monopoly corresponding to the technical contribution and being adequately enabled across its scope (para 267). The 287 patent was seen to be subject to very similar considerations. Here too, the invention was found to be one of general application, being a methodology of making the reverse chimeric locus in which successful integrations using LTVECs are detected by using the MOA assay (para 272). Claims 1, 5 and 6 of that patent were also adequately enabled across its scope (paras 273 and 274). It is useful to note particularly what the Court of Appeal said, at the end of its judgment, in summarising what it saw as the reasons why its conclusion was different from that of the very experienced first instance patent judge. It seems to me that this short summary reveals what is at the heart of the Court of Appeals reasoning. It said: we are satisfied that, in assessing the sufficiency of the disclosure of the patents, [the judge] did not attach sufficient weight to the character of the invention as claimed in each of the claims in issue, the contribution that its disclosure made to the art and the need to confer a fair degree of protection on the patentee. (para 275) The approach of the majority in this court The majority in this court would allow the appeal, holding that the Court of Appeal failed to apply the law correctly and should have concluded that Regenerons claims failed for insufficiency. In essence, this is because the disclosure of the patents did not enable the making of a mouse which incorporated any more than a small part of the human variable region, yet claimed a monopoly including mice incorporating a far greater quantity of the human variable region. In the majoritys view, the claims therefore fail to satisfy the requirement that substantially the whole range of products within the scope of the claim be enabled. Discussion It is common ground between the parties, established in the authorities, and acknowledged in Lord Briggs judgment (see for example para 56(vi)), that an invention may disclose a principle of general application. It is also common ground between the parties (and again see Lord Briggs judgment at para 56(vi)) that there is no exception from the ordinary principles of enablement for such inventions; the invention must be enabled across its full scope, as with any other invention. It is when it comes to characterising this claim, determining what its scope is, and deciding whether it is enabled across that full scope that the argument arises. The claim is framed in terms of the mouse, specifying what it does (produces the hybrid human/mouse antibodies), and what it has in it (the reverse chimeric locus). As the trial judge said, and the Court of Appeal reiterated, it is not confined to a single product in that it includes mice in which different amounts of the mouse variable regions have been replaced, extending to a mouse with the entire murine variable region replaced with the entire human variable gene locus. It is the existence of this range of mice that leads the majority of my colleagues to conclude that, as only a limited amount of replacement was possible at the priority date, the claim was insufficient. But this was not the view of the Court of Appeal, and it is important to attempt to isolate the point at which the two approaches diverge. As I have already foreshadowed, it seems to me that there is little, if any, real disagreement with the Court of Appeals statement of the legal principles. It is in the application of them that the paths diverge. Lord Briggs says, at para 58, that the Court of Appeal did not correctly apply the law as it stands, having failed to recognise that the contribution to the art is the product which is enabled to be made by the disclosure, not the invention itself, and having erroneously concluded that it was enough that the benefits unlocked by the invention would in due course be realised over the whole range if and when all embodiments could be made. The Court of Appeals characterisation of the claim was informed by the principle that (to use the Board of Appeals formulation in Unilever/Detergents (T 435/91)) the protection covered by a patent should correspond to the technical contribution to the art made by the disclosure of the invention described therein. This principle, and the other principles that are relevant to determining sufficiency, can only be applied having close regard to the facts of the particular case, and the authorities make clear that an assessment of sufficiency does depend very much upon the nature of the individual invention and the facts of the particular case, see for example Unilever/Detergents (T 435/91), para 2.2.1. The Court of Appeal here recognised the general language used in the claim and its broad scope (Court of Appeal judgment, para 254), and we know that it had well in mind that it extended to a mouse with its entire variable gene locus replaced with the entire human variable gene locus (ibid, para 127). It focussed its analysis firmly on the reverse chimeric locus. The disclosure of the reverse chimeric locus was, it observed, a major contribution to the art because it solved the problem of immunological sickness (ibid, para 255). Every mouse encompassed in the claim will have the reverse chimeric locus, or, as the court put it at para 256 will benefit from the technical contribution the disclosure of the 163 patent has made to the article Every such mouse will, in the terms of the issue stated by the parties in the Statement of Fact and Issues, use the invention. This is what led the court to characterise the claim as a principle of general application (ibid, para 256). For sufficiency, it was necessary for the skilled team to be able to produce transgenic mice incorporating the reverse chimeric locus and producing hybrid antibodies, and this they could do, producing mice which would have had a near wild type response (ibid, para 264). That the claim encompassed inventive improvements (more human variable region incorporated) did not make it insufficient as any such improvement was still a way of working the original invention (ibid, para 265). Lord Briggs, seeking to concentrate attention upon the fact that this is a product claim, and to emphasise that patents are about products and not about ideas, chooses terms which focus rather upon the mice containing the reverse chimeric locus (mice fitted with a reverse chimeric locus as Lord Briggs terms them at para 58). This difference of terminology is perhaps of less significance than the spotlight that he trains upon the range of the mice, extending from mice fitted with a reverse chimeric locus incorporating a subset of the human variable region (feasible at the time of the claim) to mice fitted with a reverse chimeric locus incorporating the whole human variable region (achievable now but not at the time of the claim). It is this focus on the quantum of replaced material in the reverse chimeric locus, rather than on the reverse chimeric locus as a general principle, that leads to a different conclusion about sufficiency from that reached by the Court of Appeal. Given that I am alone in my disagreement with my colleagues, I can see little to be gained by a lengthy exegesis on the issues arising in the appeal. As I see it, and as perhaps appears from my exploration of the differences between the approach of this court and that of the Court of Appeal, the case turns upon how this particular claim is characterised, and how the law is applied to the particular facts of this case. I do not perceive the errors in the Court of Appeals approach that have been identified by the majority, and I would not have interfered with their conclusion that the claim here relates to a principle of general application. It still has to be enabled across its scope, but seen in this way, it is so enabled, being deployed in each mouse across the range, irrespective of the quantum of human material incorporated. Furthermore, it can also be said that protection across the range coincides with the technical contribution of the patents which was to solve the problem of immunological sickness, or putting it (loosely) another way, to facilitate the making of immunologically efficient mice.
+This appeal raises an interesting but complicated question as to the meaning of the GLA Roads and Side Roads (Transfer of Property etc) Order 2000 (SI 2000/1552) (the Transfer Order) made by the Secretary of State in exercise of powers conferred by section 405 and following of the Greater London Authority Act 1999 (the GLA Act). By that Act Parliament reorganised local government in London and created the Greater London Authority (GLA) under a directly elected Mayor of London. The GLA performs its strategic transport and road traffic functions through the appellant Transport for London (TfL), which became the highway authority for those public highways in London designated as GLA roads, in the GLA Roads Designation Order 2000 (SI 2000/1117) (the Designation Order). Previously those highways had been the responsibility of individual London borough councils as local highway authorities including, for their respective areas, the respondents London Borough of Southwark and the City of London Corporation (the Councils). As its name implies, the Transfer Order provided for the transfer from local highway authorities to TfL of specified property and liabilities relating to highways designated as GLA roads by the Designation Order. The present dispute concerns, in particular, the meaning of the following provisions in article 2 of the Transfer Order (article 2): (1) Subject to paragraph (2) and article 4 below, on the operative date there are hereby transferred to Transport for London in relation to each GLA road the highway, in so far as it is vested in the former (a) highway authority; (b) on the designation date, it was vested the property mentioned paragraph (3) in so far as, (i) in the former highway authority for the purposes of their highway functions in relation to the GLA road (3) The property referred to in paragraph (1)(b) is (a) land, other than land (i) vested in the former highway authority for the purpose of being used for the storage of material required wholly or mainly for the maintenance and improvement of other highways; (ii) where the former highway authority is a relevant authority, held by that authority for the improvement or development of frontages to the highway, or of land adjoining or adjacent to the highway; . The dispute arose, and was directed to be determined as a preliminary issue, in an arbitration held under article 8 of the Transfer Order. At its heart, the appeal is about what is transferred by the words in paragraph (1)(a) of article 2: the highway, in so far as it is vested in the former highway authority. The question is whether that phrase captures everything which the former authority owns in the vertical plane bounded by the road, which may include all the airspace above and all the subsoil below the surface of the road, or only that part which is necessary for the operation, maintenance and repair of the road, ie a slice of the airspace and a slice of the underlying subsoil. The Secretary of States drafting team adopted, as their model for article 2, the content of section 265 of the Highways Act 1980 (section 265) which provides for the transfer of property and liabilities upon a highway becoming, or ceasing to be, a trunk road. Although not part of that Act, article 2 therefore forms part, at least by inheritance, of what counsel fairly described as the rich tapestry of the highways legislation in England and Wales. In Farrell v Alexander [1977] AC 59, at 73, Lord Wilberforce said: self contained statutes, whether consolidating previous law, or so doing with amendments, should be interpreted, if reasonably possible, without recourse to antecedents, and that the recourse should only be had when there is a real and substantial difficulty or ambiguity which classical methods of construction cannot resolve. Goodes v East Sussex County Council [2000] 1 WLR 1356 was a case about the Highways Act 1980, and its predecessor, the Highways Act 1959. After citing Lord Wilberforces well known dictum, Lord Hoffmann continued, at p 1360H: It seems to me quite impossible, in construing the Act of 1959, to shut ones eyes to the fact that it was not a code which sprang fully formed from the legislative head but was built upon centuries of highway law. The provisions of the Act itself invited reference to the earlier law and in some cases were unintelligible without them. See also, to much the same effect: Cusack v Harrow London Borough Council [2013] UKSC 40; [2013] 1 WLR 2022, per Lord Carnwath at para 19 and per Lord Neuberger at paras 64 65. Lord Wilberforces wise words have lost none of their force, in an era which has seen an exponential increase in the complexity of legislation. It is hard enough on the law abiding public that legislation is often unintelligible without the assistance of skilled lawyers. It is even worse if its meaning requires, in addition, the assistance of a legal historian. None the less, this is a case, as were the Goodes and Cusack cases, where neither the analysis of the dispute as to statutory meaning, nor the appropriate solution to it, can be undertaken without substantial recourse to the history of English and Welsh highways law and in particular legislation. Even the innocent sounding word highway is itself capable of having a range of different meanings, dependent upon the context in which it is used. The Statutory History The word highway has no single meaning in the law but, in non technical language, it is a way over which the public have rights of passage, whether on foot, on horseback or in (or on) vehicles. At common law, at least prior to 1835, there was, generally speaking, no necessary connection between those responsible for the maintenance and repair of a public highway and those with a proprietary interest in the land over which it ran. Prima facie the inhabitants of the parish through which the highway ran would be responsible for its repair, but they were not a corporate body suitable to hold ownership rights in relation to it: see Sauvain on Highway Law (5th ed, 2013) at para 3 05. As he puts it: It was left to statute, therefore, to create an interest in land which was to be held by the body on whom the duty to repair had fallen. Parliament began this task, in a rudimentary way, in section 41 of the Highways Act 1835, continued it in section 68 of the Public Health Act 1848, section 96 of the Metropolis Management Act 1855 and section 149 of the Public Health Act 1875. They all provided for a form of automatic vesting of a property interest in the land over which the highway ran in favour of the body responsible for its maintenance and repair. A basic feature of the conveyance or transfer of freehold land by reference to an identified surface area is that, unless the context or the language of the grant otherwise requires or provides (eg by a reservation of minerals), its effect is to vest in the transferee not only the surface of the ground, but the subsoil down (at least in theory) to the centre of the earth and the air space up (at least in theory) into the heavens. Viewed in the vertical plane, the transferee acquires ownership not only of the slice on the surface but of the whole of the space above it, and the ground below it. But a series of 19th century cases beginning with Coverdale v Charlton (1878) 4 QBD 104 and culminating in the decision of the House of Lords in Tunbridge Wells Corpn v Baird [1896] AC 434, established that the successive statutory provisions for the automatic vesting of proprietary interests in highways in the bodies responsible for their maintenance and repair operated in a much more limited way than would a simple conveyance or transfer of the freehold. First, it was a determinable, rather than absolute, fee simple, which would end automatically if the body responsible for its repair ceased to be so responsible (eg if the road ceased to be a public highway): see Rolls v Vestry of St George the Martyr, Southwark (1880) 14 Ch D 785. Secondly it was inalienable, for so long as that responsibility lasted. Thirdly, and most importantly for present purposes, statutory vesting conferred ownership only of that slice of the land over which the highway ran, viewed in the vertical plane, as was necessary for its ordinary use, including its repair and maintenance. Following the example of counsel, I shall call this the Baird principle. That slice of the vertical plane included, of course, the surface of the road over which the public had highway rights, the subsoil immediately beneath it, to a depth sufficient to provide for its support and drainage, and a modest slice of the airspace above it sufficient to enable the public to use and enjoy it, and the responsible authority to maintain and repair it, and to supervise its safe operation. That lower slice was famously labelled the top two spits in Tithe Redemption Commission v Runcorn Urban District Council [1954] 1 Ch 383 at 407. A spit is a spades depth. Although colourful, that phrase says nothing about the necessary airspace above the surface. Again following counsels example, I prefer the phrase zone of ordinary use. It is common ground that the zone of ordinary use is a flexible concept, the application of which may lead to different depths of subsoil and heights of airspace being vested in a highway authority, both as between different highways and even, over time, as affects a particular highway, according to differences or changes in the nature and intensity of its public use. A simple footpath or bridleway might only require shallow foundations, and airspace of up to about ten feet, to accommodate someone riding a horse. By contrast a busy London street might require deep foundations to support intensive use, and airspace sufficient to accommodate double decker buses, and even the overhead electric power cables needed, in the past, by trolley buses and, now, by urban trams. The Baird principle was developed so as to limit, in the vertical plane, the defeasible freehold interest automatically vested in the body responsible for the repair of a highway. This was because, in a series of leading judgments, the court regarded this statutory vesting as a form of expropriation of private property rights without compensation, and was therefore concerned to limit its effect strictly to that which was necessary to achieve the Parliamentary objective, that is conferring upon highway authorities sufficient property to enable them to perform their statutory duties of the repair, maintenance and operation of highways. Thus for example, in Coverdale v Charlton, Bramwell LJ said (at p 116) that it would be monstrous if the highway authority thereby acquired rights in valuable minerals below the surface. In Rolls v Vestry of St George the Martyr, Southwark James LJ in a celebrated passage at p 796 said, of section 149 of the Public Health Act 1875: It seems to me very reasonable then to interpret this enactment in a way which gives everything that is wanted to be given to the public authority for the protection of the public rights without any unnecessary violation of the rights of the landowner. In Tunbridge Wells Corpn v Baird Lord Halsbury LC said, after approving every word of what James LJ had said in the passage quoted above: That the street should be vested in them as well as under their control, may be, I suppose, explained by the idea that as James LJ points out, it was necessary to give, in a certain sense, a right of property in order to give efficient control over the street. It was thought convenient, I presume, that there should be something more than a mere easement conferred upon the local authority, so that the complete vindication of the rights of the public should be preserved by the local authority; and, therefore, there was given to them an actual property in the street and in the materials thereof. It is intelligible enough that Parliament should have vested the street qua street and, indeed, so much of the actual soil of the street as might be necessary for the purpose of preserving and maintaining and using it as a street. At p 442 Lord Herschell said: My Lords, it seems to me that the vesting of the street vests in the urban authority such property and such property only as is necessary for the control, protection and maintenance of the street as a highway for public use. The modern successor currently in force, to the 19th century legislation to which those authorities refer, is section 263 of the Highways Act 1980. It provides, so far as is relevant, as follows: Vesting of highways maintainable at public expense. (1) Subject to the provisions of this section, every highway maintainable at the public expense together with the materials and scrapings of it, vests in the authority who are for the time being the highway authority for the highway. (2) Subsection (1) does not apply to a highway with respect to the vesting of which, on its becoming or ceasing to be a trunk road provision is made by section 265 below, It was, rightly, common ground between counsel that the Baird principle is firmly embedded in section 263. Apart from the section numbers, this provision for automatic vesting was taken, word for word, from section 226 of the Highways Act 1959. In its 1959 Report, the Committee of Consolidation on Highway Law, chaired by Lord Reading, which had been asked to consider the then draft bill, and whether amendments not of substantial importance to existing legislation should be made, clearly understood the rationale for the application of the Baird principle to what became section 226 (then clause 225), at para 135. They said: The enactments reproduced in the clause have frequently been considered by the courts and it has been held that they vest in the highway authority the property in the surface of the highway and in so much of the actual soil below and the air above as may be reasonably required for its control, protection and maintenance as a highway. Of rather more recent origin are those statutory antecedents to what is now section 265 of the Highways Act 1980, which make provision for the transfer of property and liabilities in connection with the designation of a highway as a trunk road, and the revocation of any such designation. These provisions respond, not to the need to vest in a highway authority rights formerly enjoyed by private owners of the land, but rather to the need to transfer such rights (and liabilities) from one highway authority to another where the changed status of the highway causes a change in the identity of the public body responsible for its maintenance, repair and operation. Prior to 1929 there was no specific statutory provision for this purpose. In Finchley Electric Light Co Ltd v Finchley Urban District Council [1903] 1 Ch 437 the question was whether the defendant as local highway authority could restrain the running of a power cable by the plaintiff at a height of 34 feet above Regents Park Road in London. The council had acquired property rights in relation to the road by automatic vesting under section 149 of the Public Health Act 1875 (a direct statutory predecessor of what is now section 263), the previous owners having been turnpike trustees, who had acquired it for the construction of a road. The fact that the councils predecessors in title were turnpike trustees did not permit the Court of Appeal to do otherwise than apply the Baird principle to the automatic vesting achieved by section 149, even though the turnpike trustees had acquired their title by conveyance in unqualified terms, so as to have been the owners of the whole of the vertical plane above and below the location of the road. Collins MR said: It seems to me that the standard which determines this question is, not how much the owner has to give, but how much the local authority under the Public Health Act have the right to take. A hesitant start towards a more bespoke regime for transfers of property between successive highway authorities was made in section 29 of the Local Government Act 1929, in relation to main roads (renamed county roads) for which, thereafter, county councils rather than local councils were to be responsible. Section 29 affords little assistance for present purposes because it appears to provide for the vesting only of the materials of the road and the drains belonging to it, leaving the vesting of property in the land itself (including the airspace above it) to the then provision for automatic vesting, in the Public Health Act 1875. A more ambitious property transfer scheme was undertaken in relation to newly designated trunk roads by section 7 of the Trunk Roads Act 1936. It provided as follows: Transfer of property and liabilities. (1) When a road becomes a trunk road, then, subject to the provisions of this section, of the property which immediately before the date on which the road became a trunk road was vested in the former highway authority for the purposes of their functions in relation to the road there shall, as from that date, be transferred to, and vest in, the Minister, by virtue of this section, the following property, that is to say: The road and any land (not being land vested in the former highway authority for the purpose of being used for the storage of materials required wholly or partly for the maintenance, repair or improvement of other roads or land acquired for the improvement or development of frontages or of land abutting on or adjacent to the road); This was the provision in force in relation to trunk roads when the Reading Committee came to review the consolidating and amending Highways Bill in 1959. Clause 229 of the Bill (which became, without amendment, section 228 of the 1959 Act) provided as follows: Transfer of property and liabilities on change of status of highway. (1) Where a highway becomes a trunk road, then, subject to the provisions of this section, there shall, as from the date on which the highway becomes a trunk road, be transferred to the Minister by virtue of this section (a) the highway, in so far as, immediately before said date, it was vested in the former highway authority, and (b) the property mentioned in the next following subsection, being property which, immediately before the said date, was vested (i) in the former highway authority for the purposes of their functions in relation to the highway, or in a council for the purposes of functions (ii) in relation to the highway under any enactment to which this section applies, and the highway and other property so transferred shall by virtue of this section vest in the Minister: (2) The property referred to in paragraph (b) of the foregoing subsection is (a) land, other than land vested in the former highway authority for (i) the purpose of being used for storage of materials required wholly or mainly for the maintenance or improvement of other highways, or (ii) acquired for improvement or development frontages to the highway, or of land adjoining or adjacent to the highway It will be immediately apparent that there are significant linguistic similarities and differences between section 7 of the 1936 Act and section 228 of the 1959 Act. What was previously called the road is now called the highway. Whereas, in the 1936 Act, the transfer both of the road and other property (including land) was all regulated by the condition that it had been vested in the former highway authority for the purposes of their functions in relation to the highway that condition is, in the 1959 Act, applied in the same language to other property including land, but not in express terms to the highway. Rather, the condition relating to the highway itself is that it is transferred in so far as, immediately before the said date, it was vested in the former highway authority. There is also, in section 228(6), a provision for reverse transfer where a trunk road ceases to be a trunk road but it is not suggested that this significantly affects the present dispute. Nothing in the Reading report (which includes a short commentary on what was then clause 227) suggests that the Committee thought that these changes to the language and layout of the provisions for transfer of property in relation to trunk roads effected any material change to the substance of those provisions. The wording of section 228 of the 1959 Act was carried forward into what is now section 265 of the 1980 Act with very little alteration. The phrase and the highway and other properties so transferred shall by virtue of this section vest in the Minister has been removed. As already noted, article 2 of the Transfer Order takes as its model the provisions of section 265, again with no amendment which has any consequence in relation to the present dispute. It was, more or less, common ground that since article 2 had been drafted on the basis of the model constituted by section 265, it was to that section that recourse had to be made to resolve the dispute as to the meaning of the article. Analysis The question for determination on this appeal, which is more focussed than the more widely drawn preliminary issues, is whether the provision in article 2(1)(a) for the transfer to TfL of the highway in relation to a GLA road, and the identical provision in section 265(1)(a) in relation to a trunk road, is governed by the Baird principle so as, in every case, to limit the property transferred within the vertical plane above and below the highway to the zone of ordinary use. The appellant TfL claim that it is not so limited. The respondent Councils say that it is. This would be an arid academic question if the only way in which local authorities (including the respondent Councils) could ever acquire property rights in relation to highways was by automatic vesting under section 263 and its predecessors. If that were so, the former highway authorities would only own the zone of ordinary use, and nothing in the airspace above it or the soil below it could ever be transferred, either under section 265(1)(a) or under article 2(1)(a). But local highway authorities may also acquire, and the Councils certainly have acquired, property rights in relation to highways by other means. They include compulsory purchase and acquisition by private treaty, which is completed in both cases by conveyance or transfer. Furthermore, local authorities may come to have property rights in relation to highway land for purposes other than highways purposes, and may acquire such rights, again, by compulsory or voluntary purchase, by means of conveyance or transfer. In the generality of such cases (save, that is, where there is a reservation of part of the vertical plane in the conveyance, or where the transferor does not own the whole of it) the local authority will acquire ownership of the whole of the vertical plane, not just the zone of ordinary use. Local authorities may also come to have ownership rights in relation to highways by being or becoming adjoining owners: see below. Furthermore, the ownership of airspace above, and subsoil below, the zone of ordinary use relating to a highway may, particularly in Central London, be of substantial commercial value. Buildings are commonly constructed across a highway in the airspace above that part needed for its use as such. The ground beneath highways is often intensively used for other purposes, such as underground railway stations, public lavatories and even, under the approach to Blackfriars bridge, a shooting gallery. Similarly, ownership of the airspace and subsoil, even where not yet used for buildings or other structures, may have substantial development value. These complexities are well illustrated in the admirable award of the arbitrator Mr John Male QC, and in the supporting materials. There is nothing new about disputes concerning highway ownership arising from commercial motivation. The question in the very earliest case, Coverdale v Charlton, was whether the highway authority had a sufficient proprietary right in the surface of the highway to let it for pasturage, sufficient to enable the plaintiff as lessee to bring proceedings for interference with it. It was sufficient for the courts affirmative conclusion that the highway authority did own the surface of the highway, so that the vertical plane issue in the present case did not arise. TfLs case, which was broadly accepted both by the arbitrator Mr John Male and, on the first appeal, by Mann J, may be summarised in this way. The purpose of the Transfer Order, as part of a scheme under which TfL replaced the Councils as highway authority in relation to GLA roads was, at least in relation to property rights, to place TfL squarely in the shoes of those Councils. Accordingly, whatever part of the vertical plane was owned by the Councils on the operative date, transferred under article 2(1)(a) to TfL. From the generality of this conclusion the arbitrator made this exception. Where particular layers or slices of subsoil and/or airspace (for example, certain structures) may have received or acquired a separate identity by the operative date, such that they could not properly be called parts of the highway, ownership in those slices would not pass to TfL. This qualification is recorded in paragraph 265.2(1)(c) of his award. On appeal, Mann J recorded a more significant concession made by Mr Morshead QC on behalf of TfL, namely that its claim related to land acquired for or appropriated to highway purposes: see para 56 of his judgment. At common law (and subject to any statutory vesting) the owner of land adjoining a highway is taken to be the owner of the subsoil beneath it and the airspace above it ad medium filum ie as far as the centre line of the highway. If the same person owns the adjoining land on both sides of the highway, then prima facie that person owns the whole of the vertical plane defined by the highway, outside the zone of ordinary use. As the judge explained, the specific purpose of TfLs concession, quoted above, was to renounce any claim to a transfer of parts of the vertical plane above and below a GLA road where the Councils ownership of it derived from its status as the owner of adjoining land. The Councils case, which was broadly accepted by the Court of Appeal, may be summarised as follows. The purpose of the Transfer Order, like the purpose of all provisions for statutory vesting of property in highway authorities, was to vest in TfL only those ownership rights in the vertical plane of the highway which were necessary to enable it to perform its functions as highway authority. Thus the Baird principle applied to article 2 just as much as it did to statutory vesting under section 263 and to transfer of property relating to trunk roads under section 265. That was apparent from the fact that in all those instances, the drafter defined the property transferred as the highway, which had by the time of the Transfer Order come to have a clear and consistent meaning, limited to the zone of ordinary use. Further, any more generous interpretation of article 2(1)(a) would expropriate from the Councils valuable property rights, particularly in Central London, without compensation to their ratepayers. Accordingly, article 2(1)(a) transfers as the highway only the zone of ordinary use, leaving the Councils as continuing owners of anything else which they owned on the operative date within the vertical plane. The question really boils down to this: does the Baird principle apply to article 2? In respectful disagreement with the Court of Appeal, I do not regard article 2 or, for that matter, section 265, as governed or constrained by the Baird principle. My reasons follow. In my judgment article 2(1)(a) transfers to TfL ownership of all that part of the vertical plane relating to a GLA road vested in the relevant council on the operative date, but only to the extent that ownership was then vested in the council in its capacity as former highway authority. That is, in my view, the true meaning of the phrase the highway, in so far as it is vested in the former highway authority. It follows that: i) rights held by the Councils in the vertical plane of a highway as adjoining owner, for purposes other than highway purposes, do not pass under article 2(1)(a). This is because they are not held by the Council in its capacity as highway authority. ii) rights originally acquired for purposes other than highway purposes, or appropriated to those other purposes by the operative date, do not pass under article 2(1)(a). This is so whether or not some non highway structure has by then been constructed. If acquisition or appropriation for non highway purposes has occurred by the operative date, it matters not that the relevant purpose has yet to be fulfilled, so that the relevant part of the vertical plane remains undeveloped. iii) rights originally acquired for highway purposes in the vertical plane, for example by conveyance on compulsory acquisition for highway purposes, do pass under article 2(1)(a), even if they extend beyond the zone of ordinary use, provided that they have not, by the operative date, been appropriated to some non highway use outside the zone of ordinary use. iv) All these consequences, and in particular the first, flow from the true construction of article 2, rather than merely by way of TfLs concession as recorded by Mann J. It may be that sub paragraph (ii) of the above summary differs a little from the reasoning of the arbitrator. This is because, whereas he regarded a non highway structure actually built in the vertical plane (like an over flying building of underground public lavatory) as falling outside the definition of highway for all purposes, he did not (at least expressly) also regard the acquisition or appropriation of part of the vertical plane for non highway purposes as sufficient on its own to take that part, even if undeveloped, out of the property transferred under article 2(1)(a). Meaning of highway The Court of Appeal concluded that highway as used in article 2 and section 265 had a clear common law meaning, limited in the vertical plane to the zone of ordinary use. I respectfully disagree. The word highway is not a defined term, either in the 1980 Act, in the Transfer Order, or in the GLA Act. There is a limited explanation, in section 328 of the 1980 Act that: In this Act, except where the context otherwise requires, highway means the whole or a part of a highway other than a ferry or waterway. This is largely circular so far as concerns the core meaning of highway and, in any event, subject to context. It does not follow that the interpreter is therefore required to find some uniform meaning of the word highway wherever it is used, either in the relevant legislation or, as the Court of Appeal thought, at common law. There is in my view no single meaning of highway at common law. The word is sometime used as a reference to its physical elements. Sometimes it is used as a label for the incorporeal rights of the public in relation to the locus in quo. Sometimes, as here, it is used as the label for a species of real property. When used within a statutory formula, as here, the word necessarily takes its meaning from the context in which it is used. In agreement with counsel and with the Court of Appeal, I do consider that the meaning of article 2 is to be found by an examination of the meaning of the almost identically worded section 265. This is not merely because of the linguistic similarity between those two provisions, but because the whole of the structure for the transfer of property and liabilities in the Transfer Order is closely modelled on the pre existing structure of the provisions in section 265 relating to trunk roads. It is tempting but, in my view, wrong to assume that, where sections 263 and 265 both refer to highway as a label for real property rights which are to be vested in a highway authority, the word highway must therefore have precisely the same meaning in both sections. This is not merely because the word appears as part of two quite differently worded provisions. Rather, it is because, although now lying almost side by side in a consolidating statute, the two sections have completely different ancestry, and serve two very different purposes. As already noted, section 263 takes away from private ownership only those rights in the vertical plane of the highway which are necessary to enable the highway authority to perform its statutory functions of operation, maintenance and repair. By contrast, section 265 merely transfers rights in the vertical plane already owned by one public authority to a successor public authority, so that the successor can stand in the shoes of its predecessor so far as ownership is concerned. This is, in particular, apparent from the way in which the Bill which became the Trunk Roads Act 1936 was described to Parliament by the then Minister for Transport at its second reading. Speaking of clause 7, he said: The basis for the transfer is, as laid down in clause 7, that the Minister should take over the road and all properties and liabilities attaching to it In the House of Lords the Earl of Erne, speaking for the Government, described the objectives of the Bill as follows: The principle on which the Bill is based is to make a clean transfer of responsibility As already explained, section 7 of the Trunk Roads Act 1936 is the original progenitor of what is now section 265, having been significantly re worded in 1959 as section 228 of the Highways Act 1959, without any apparent intention thereby to effect any change of substance in its meaning. There is no reason why the Baird principle should apply so as to restrict the nature or extent of property being transferred between two public highway authorities, one of which is stepping into the shoes of the other. The only limitation which does need to be imposed is one which restricts the rights transferred to those enjoyed by the former highway authority in its capacity as such. If the former authority enjoys rights in the vertical plane of the highway in some other capacity, such as adjoining owner, or for other public purposes, there is no sensible reason why those rights should be transferred to its successor as highway authority, merely because of the happenstance that they were vested in the former authority on the operative date. Full effect to that qualification upon the extent of the rights transferred is given if the words in section 265(1)(a) in so far as, immediately before the operative date, it was vested in the former highway authority are taken as meaning vested in the former highway authority in its capacity as such. When this way of interpreting section 265(1)(a), and the similarly worded article 2(1)(a), was suggested by the court to Mr Morshead for TfL, he acknowledged, upon reflection although not by way of concession, that this might well be correct. By contrast, the respondent Councils case, that highway in section 265 and article 2 can never mean more than the zone of ordinary use, makes the words which immediately follow, quoted above, redundant. A highway authority always has vested in it the zone of ordinary use, because of section 263, so the qualification beginning with the words in so far as then becomes meaningless. Multi layering Both the arbitrator and Mann J were powerfully affected by a perception of the unattractive consequences of the Councils construction, under what may be labelled as multi layering of the vertical plane. Where a local highway authority had acquired land by compulsory purchase (or private treaty) for the purpose of building a road, and thereby had the whole of the vertical plane conveyed or transferred to it, the effect of the Councils construction of section 265 and article 2 would be, for the first time, to split that vertical plane between two successive highway authorities, one owning the top slice and the bottom slice, and the other owning the middle slice constituted by the zone of ordinary use. As the arbitrator put it, at para 104: With all due respect to the Councils, I cannot see what rational purpose is served by there being two public bodies owning different layers of what was formerly owned by one single public body. I agree. The Court of Appeal acknowledged that this was a consequence of its interpretation but noted that multi layering of the vertical plane was already endemic within Central London, and that it was an insufficient factor to overcome what it regarded as the plain meaning of the word highway. In my view, where the transposition of the settled meaning of a word from one section to another section of a complex consolidating statute produces an irrational result, that is a powerful reason for treating the word as having different meanings in those different contexts. Furthermore, although article 2 only has effect in London, section 265 has effect in urban and rural areas alike. It is of course true that some layering of the vertical plane is inevitable in relation to highways, both in rural and urban areas. For example, it occurs whenever there is automatic vesting under section 263. But in such a case the layering arises between a public authority on the one hand and private owners on the other, for reasons which are not irrational. Equally, and particularly in the modern urban environment, there may be layering of the vertical plane between different public authorities, such as those responsible for highways, sewers and underground railways. Again, this is for reasons which have a rational purpose. By contrast, the irrationality identified by the arbitrator is that arising from two different highway authorities owning parts of the vertical plane in the same highway. To that I would add that, on the Councils case, by virtue of the transfer of highway functions from one to the other, the former authority, which held rights in the vertical plane only as highway authority, continues to enjoy those rights while it has no further statutory responsibilities to discharge in its capacity as such. It is difficult to identify any sensible purpose served by such an outcome. I acknowledge also that my interpretation of article 2(1)(a), which limits the rights transferred to those transferred by the former highway authority in its capacity as such, will also lead to layering of the vertical plane in some cases where it did not previously exist. This will occur, for example, where the former authority is an adjoining owner (with rights ad medium filum) or where the former authority has rights in part of the vertical plane for other statutory purposes, such as sewerage or the operation of underground railways. But again, there is nothing irrational about layering of that kind. Section 266A The Court of Appeal was significantly influenced in its reasoning by a perception of the difficulties which might flow from TfLs interpretation of article 2, in conjunction with section 266A of the Highways Act 1980. Mr Elvin QC for the respondent Councils pressed the same point upon us in his own excellent and succinct submissions. Section 14B of the 1980 Act empowers the Mayor of London to direct that a highway or proposed highway shall become or cease to be a GLA road. Section 266A provides for transfer of property and liabilities upon such an event. It contains provisions which broadly reflect article 2(1)(b) and (3) of the Transfer Order, for the transfer of property including land, but contains no equivalent to article 2(1)(a) providing expressly for the transfer of the highway itself. Mr Elvin submits that this must mean that in such a case, rights in the highway itself are transferred only under section 263, subject of course to the Baird principle. Thus, if TfLs interpretation of article 2(1)(a) is correct, TfL would receive more of the vertical plane upon the original designation of a GLA road under the Designation Order than it would have to give back under section 266A if that designation was subsequently revoked under section 14B, an irrational outcome which cannot have been intended. I agree that this would be a surprising and probably unintended outcome, but not that it is the consequence of the omission of an express reference to the highway in section 266A. In my judgment, a preferable view may be that when a highway becomes or ceases to be a GLA road by virtue of an order made under section 14B, rights in the nature of real property in the vertical plane of the highway pass under section 266A(4)(a) as land. It is preferable to Mr Elvins construction because a conclusion that rights in the highway itself only pass by virtue of section 263 would introduce the Baird principle into a context (transfer between successive public highway authorities) to which it has no sensible application. I accept that this requires the word land to be given a different, larger, meaning in section 266A than it has in article 2, but this is simply because its narrower meaning in article 2 is necessitated by the separate express treatment of rights in the highway as real property; ie as land. It is another example of identical words having different meanings as necessitated by their different contexts. I need express no final view on the interpretation of section 266A because it is not directly in issue in this case. Its later date means that it cannot be an aid to the interpretation of section 265, which was the model chosen for article 2, rather than the differently framed section 266A. The Baylis case Mr Elvin sought also to derive assistance from dicta of Mr Lewison QC (as he then was) in Secretary of State v Baylis (Gloucester) Ltd (2000) 80 P & CR 324, in a judgment with which the Court of Appeal agreed. The issue in the Baylis case did relate to what had by the time of the trial become a trunk road, but it had nothing to do with the extent of rights in the vertical plane of a highway transferred between highway authorities under what is now section 265. The dispute was about whether the strip of land in dispute, which adjoined the physical surface of the road, had ever been dedicated to the public as part of a highway, and that turned upon the true construction of a written agreement between the then owner and the county council. The adjacent highway (for which the dedicated strip was to facilitate an improvement) had later been designated a trunk road, but that had no consequence for the determination of the dispute. In an otherwise unimpeachable summary of the effect of land becoming part of a highway, Mr Lewison said: The effect of trunking a highway is that the highway vests in the Minister (now the Secretary of State). The extent of such vesting is such part of the land as is necessary for the highway authority to perform its statutory functions. It has been described as the top two spits. It did not matter in that case whether the Secretary of State received the top two spits (or as I would prefer to call it the zone of ordinary use) or the whole of the vertical plane. Furthermore the former highway authority had never obtained more than the zone of ordinary use, because its title depended upon automatic vesting under what is now section 263, following dedication. I therefore respectfully disagree with that small (and obiter) part of Mr Lewisons succinct summary of the relevant highways law, for the detailed reasons which I have given. Expropriation A final reason why the Court of Appeal was persuaded that transfers under article 2 should be subject to the Baird principle of necessity was that, otherwise, the residents and ratepayers of the respondent Councils would be deprived, without compensation, of more property than was necessary to fulfil the purpose of constituting TfL as the relevant highway authority. I have not been persuaded by this analogy. In every case of a transfer between highway authorities, whether under section 265 or article 2, the former authority is being relieved of its responsibilities for operation, maintenance and repair of the relevant highway, and all associated liabilities (subject to certain exceptions). The transfer of property held by the former highway authority in its capacity as such is simply the quid pro quo for that relief from responsibility. The ratepayers get the full financial benefit of that relief from responsibility. There may be cases where the value of the transferred ownership of the vertical plane exceeds the financial burden of the responsibilities, eg where the vertical plane outside the zone of ordinary use has development value. That may be part of the reason for this long and costly litigation. But usually it will have no such excess value. The meaning of article 2 and section 265 cannot vary as between one highway and another by reference to such infinitely variable economic comparisons. Burden of Proof While acknowledging that article 2(1)(a) of the Transfer Order might best be interpreted as subject to the limitation that rights in the highway should have been vested in the former highway authority in its capacity as such, Mr Morshead for TfL submitted that there should, nonetheless, be a strong presumption that all rights in the vertical plane as were in fact vested in the former highway authority on the operative date were vested in it in that capacity. It would be, he said, for the former authority (here the respondent Councils) to prove otherwise, the burden being firmly upon them. I can see no good reason why any such presumption or burden of proof should be identified as flowing from the true interpretation of article 2. The papers lodged with the court on this appeal demonstrate that the resolution of these vertical plane issues in the context of highways in Central London, where they cannot be agreed, is an intensely fact sensitive and complex task. As already explained, the Councils will have acquired rights in the vertical plane in a variety of different ways, and it will be necessary to analyse both the extent of the rights acquired, and the capacity in which the Council acquired those rights. Sometimes the GLA road has a non GLA highway running over or under it. There are frequently buildings and other structures encroaching upon the vertical plane of the highway, outside the zone of ordinary use. The arbitrator should not be saddled with a presumption as to the outcome of that difficult factual analysis, one way or the other. The Lateral Plane It was mentioned by counsel, and in the statement of agreed facts and issues, that the resolution of the dispute in this appeal would also have consequences in the lateral plane, rather than only the vertical plane, of land defined by a highway. That may be so, but all the argument before this court has been directed to the vertical plane. Nothing in this judgment should be taken as implying any view about lateral plane issues, which were not explored. Conclusion For the above reasons, I consider that this appeal should be allowed. The interpretation which I conceive to be correct differs in some small respects from that adopted by the arbitrator and indeed by Mann J, in dismissing the first appeal. Furthermore the questions as originally framed in the preliminary issues determined by the arbitrator have since narrowed. It will therefore be necessary to receive submissions about the precise form of order which this court should now make in relation to the preliminary issues which are the subject of this appeal.
+This is an appeal brought by Mohammed Gul against a decision of the Court of Appeal (Criminal Division) dismissing an appeal against his conviction for dissemination of terrorist publications contrary to section 2 of the Terrorism Act 2006 (the 2006 Act), for which he was sentenced to a term of five years imprisonment (a sentence against which he also unsuccessfully appealed). The appeal raises the issue of the meaning of terrorism in section 1 of the Terrorism Act 2000 (the 2000 Act). The factual and procedural background The appellant was born in Libya in February 1988, but he has lived much of his life in this country and he is a British citizen. In February 2009, as a result of executing a search warrant at his house, police officers found videos on his computer uploaded onto various websites, including the YouTube website. These videos included ones that showed (i) attacks by members of Al Qaeda, the Taliban, and other proscribed groups on military targets in Chechnya, and on the Coalition forces in Iraq and in Afghanistan, (ii) the use of improvised explosive devices (IEDs) against Coalition forces, (iii) excerpts from martyrdom videos, and (iv) clips of attacks on civilians, including the 9/11 attack on New York. These videos were accompanied by commentaries praising the bravery, and martyrdom, of those carrying out the attacks, and encouraging others to emulate them. The case for the prosecution was that each of these videos constituted a terrorist publication within section 2(3), which the appellant had distribute[d] or circulate[d] within section 2(2)(a), and consequently he had committed an offence by virtue of section 2(1), of the 2006 Act. The appellants principal defence was that, although he did not agree with the targeting of and attacks on civilians, he believed that the use of force shown in the other videos was justified as it was being employed in self defence by people resisting the invasion of their country. At his first trial, the jury acquitted the appellant on four counts and was unable to agree on two other counts. A retrial in relation to those two counts (plus a further four counts added by the Crown by way of a voluntary bill) took place in front of HH Judge Paget QC with a jury at the Central Criminal Court. After the evidence, speeches and summing up, the jury retired to consider their verdict in the normal way on 22 February 2011. They then asked the judge for guidance on certain questions relating to the meaning of terrorism, which, after hearing submissions from counsel, he answered. One of the jurys questions was: Re: definition of terrorism in [section 1 of the 2000 Act], would the use of force by Coalition forces be classed as terrorism? In relation to that question, the judge gave the following direction: the use of force by Coalition forces is not terrorism. They do enjoy combat immunity, they are ordered there by our government and the American government, unless they commit crimes such as torture or war crimes . Later the same day, the jury asked a further question, which was in these terms: Please confirm that within Iraq/Afghanistan now there are governments in place there cannot now be said to be a conflict and therefore no combatant exemption from what would otherwise be a terrorist attack, ie IED on Coalition Forces. To simplify, would an IED attack (ignoring self defence) on Coalition Forces be a terrorist attack if carried out in 2008/9? The judge answered this question, after hearing submissions from counsel, in these terms: I have to apply the Terrorism Act and the definition of terrorism which is part of English law, and the answer is yes, it would. But it is ultimately for you to say. The jury then proceeded to convict the appellant on five of the six counts. The count on which he was acquitted related to a video which contained footage concerning the Israeli Palestinian conflict in Gaza. The judge directed the jury that, if Israel was involved in an incursion into Gaza which involved attacks on civilians, schools, hospitals and ambulances, and all that the appellant was encouraging was resistance to these attacks, the prosecution did not seek a conviction. The present appeal proceeded without considering whether, as a matter of law, the stance adopted by the prosecution was correct, and we do not propose to address it further. The judge sentenced the appellant to five years imprisonment, with appropriate allowance for time spent on remand. The appellant sought to appeal against his conviction on a number of grounds, only one of which is relevant for present purposes. That ground, which was expressed in various ways during the course of his appeal, is ultimately embodied in the question which the Court of Appeal certified to be a point of general public importance, namely: Does the definition of terrorism in section 1 of the Terrorism Act 2000 operate so as to include within its scope any or all military attacks by a non state armed group against any or all state or inter governmental organisation armed forces in the context of a non international armed conflict? The Court of Appeal (Sir John Thomas P, Silber and Kenneth Parker JJ) answered that question in the affirmative, and also rejected certain other grounds of appeal, as well as refusing to interfere with the sentence which the judge had imposed. Accordingly, the appellants appeal was dismissed [2012] EWCA Crim 280, [2012] 1 WLR 3432. The appellant now appeals to this court contending that the answer to the certified question should be in the negative. The Terrorism Acts 2000 and 2006 The 2000 Act Section 1 of the 2000 Act is headed Terrorism: Interpretation, and, as amended by the 2006 Act and the Counter Terrorism Act 2008, it provides as follows: (1) In this Act terrorism means the use or threat of action where (a) the action falls within subsection (2), (b) the use or threat is designed to influence the international governmental government or an organisation or to intimidate the public or a section of the public, and (c) the use or threat is made for the purpose of advancing a political, religious, racial or ideological cause. (2) Action falls within this subsection if it (a) involves serious violence against a person, (b) involves serious damage to property, (c) endangers a persons life, other than that of the person committing the action, (d) creates a serious risk to the health or safety of the public or a section of the public, or (e) is designed seriously to interfere with or seriously to disrupt an electronic system. (4) In this section (a) action includes action outside the United Kingdom, (b) a reference to any person or to property is a reference to any person, or to property, wherever situated, (c) a reference to the public includes a reference to the public of a country other than the United Kingdom, and (d) the government means the government of the United Kingdom, of a part of the United Kingdom or of a country other than the United Kingdom. (5) In this Act a reference to action taken for the purposes of terrorism includes a reference to action taken for the benefit of a proscribed organisation. Part II of the 2000 Act is concerned with proscribed organisations and Part III with terrorist property. Part III creates certain offences, such as (in sections 15 18) terrorist fundraising, using money and money laundering for terrorist purposes. It also imposes certain duties, such as a duty of disclosure in some circumstances, a duty not to tip off, and a duty to cooperate with the police and certain government agencies, such as the Serious Organised Crime Agency. It also granted certain powers to the police and such agencies, such as the right to detain, seize, and forfeit terrorist cash. Parts IV and V of the 2000 Act are respectively concerned with terrorist investigations and counter terrorist powers. Part V confers powers to stop and search (sections 44 47), to search individuals and premises (sections 42 43), and to arrest without warrant (section 41), and section 53 and Schedule 7 grant very wide powers to detain, interrogate, and confiscate in relation to people at ports and borders. Part VI of the 2000 Act is entitled Miscellaneous, and it creates a number of offences related to terrorism including weapons training in connection with terrorism (section 54), directing terrorist organisations (section 56), possession for terrorist purposes (section 57), collecting information for such purposes (section 58), and inciting terrorism abroad (section 59). Included in Part VI are sections 62 64. Section 62(1) provides that: If (a) a person does anything outside the United Kingdom as an act of terrorism or for the purposes of terrorism, and (b) his action would have constituted the commission of one of the offences listed in subsection (2) if it had been done in the United Kingdom, he shall be guilty of the offence. Subsection (2) states that the offences referred to in subsection (1) are offences under the Explosive Substances Act 1883, the Biological Weapons Act 1974, and the Chemical Weapons Act 1996. Section 63 of the 2000 Act renders it an offence for a person to conduct an activity outside the UK which would be an offence under sections 15 18 if carried out in the UK. Section 64 makes amendments to the Extradition Act 1989. Also in Part VI of the 2000 Act are sections 63A 63E, which were inserted by the Crime (International Co operation) Act 2003 (the 2003 Act). Section 63A provides that a UK national or UK resident commits an offence if he carries out abroad any activity which, if carried out in the UK would be an offence under, inter alia, sections 54 59. Sections 63B 63D, in very summary terms, provide that a person commits an offence when he carries out abroad certain specified actions which, if carried out in the UK, would amount to terrorism. Part VII of the 2000 Act is concerned with Northern Ireland. Part VIII is entitled General, and it includes, in sections 114 116, certain police powers in connection with counter terrorism, including the power to stop and search. Also in Part VIII is section 117, which, according to subsection (1), applies to almost all offences created by the 2000 Act; those offences to which it does not apply have no relevance for present purposes. Subsections (2) and (2A) of section 117 (the latter subsection having been added by the 2006 Act) are in these terms: (2) Proceedings for an offence to which this section applies (a) shall not be instituted in England and Wales without the consent of the Director of Public Prosecutions, and (b) shall not be instituted in Northern Ireland without the consent of the Director of Public Prosecutions for Northern Ireland. (2A) But if it appears to the Director of Public Prosecutions or the Director of Public Prosecutions for Northern Ireland that an offence to which this section applies has been committed outside the United Kingdom or for a purpose wholly or partly connected with the affairs of a country other than the United Kingdom, his consent for the purposes of this section may be given only with the permission (a) in the case of the Director of Public Prosecutions, of the Attorney General; and (b) in the case of the Director of Public Prosecutions for Northern Ireland, of the Advocate General for Northern Ireland. The 2006 Act The 2006 Act made some amendments to the 2000 Act, including the addition of or an international governmental organisation (an IGO) into section 1(1)(b). Part 1 of the 2006 Act creates certain further offences in relation to terrorism; in particular, sections 1 and 2 respectively created the new offences of Encouragement of terrorism and Dissemination of terrorist publications. Section 2 of the 2006 Act is in these terms: (1) A person commits an offence if he engages in conduct falling within subsection (2) and, at the time he does so (a) he intends an effect of his conduct to be a direct or indirect encouragement or other inducement to the commission, preparation or instigation of acts of terrorism; . or (c) he is reckless as to whether his conduct has an effect mentioned in paragraph (a) . (2) For the purposes of this section a person engages in conduct falling within this subsection if he (a) distributes or circulates a terrorist publication; . (e) transmits the contents of such a publication electronically; . (3) For the purposes of this section a publication is a terrorist publication, in relation to conduct falling within subsection (2), if matter contained in it is likely (a) to be understood, by some or all of the persons to whom it is or may become available as a consequence of that conduct, as a direct or indirect encouragement or other inducement to them to the commission, preparation or instigation of acts of terrorism; . (4) For the purposes of this section matter that is likely to be understood by a person as indirectly encouraging the commission or preparation of acts of terrorism includes any matter which (a) glorifies the commission or preparation (whether in the past, in the future or generally) of such acts; . [Subsections (5), (6), (7) and (8) amplify the preceding subsections; subsections (9) and (10) identify certain defences]. (11) A person guilty of an offence under this section shall be liable (a) on conviction on indictment, to imprisonment for a term not exceeding 7 years or to a fine, or to both; (13) In this section . publication means an article or record of any description that contains any of the following, or any combination of them (a) matter to be read; (b) matter to be listened to; (c) matter to be looked at or watched. Part 2 of the 2006 Act contains certain miscellaneous provisions, including the extension and modification of some of the powers granted by the 2000 Act, such as in relation to proscription, searches and investigations. Part 3 of the 2006 Act includes some supplementary provisions of which section 36 is significant for present purposes. That section is headed Review of terrorism legislation, and it provides as follows: (1) The Secretary of State must appoint a person to review the operation of the provisions of the Terrorism Act 2000 and of Part 1 of this Act. (2) That person may, from time to time, carry out a review of those provisions and, where he does so, must send a report on the outcome of his review to the Secretary of State . (3) . (4) That person must carry out and report on a review under this section at least once in every twelve month period . (5) On receiving a report under this section, the Secretary of State must lay a copy of it before Parliament. An outline of the issues Although the appellant was convicted of offences contrary to section 2 of the 2006 Act, the issue which has to be addressed involves the interpretation of section 1 of the 2000 Act, and, in particular, the meaning of the word terrorism. Terrorism is, of course, central to the offences in issue. In finding him guilty on the five counts, the jury must have been satisfied that the videos which the appellant uploaded satisfied the requirements of section 2(3)(a) of the 2006 Act. Thus, the jury must have concluded that the videos would have been understood by others to be encouraging or inducing them to commit, prepare or instigate acts of terrorism, and that the appellant had intended, or had been reckless as to, that consequence. The point which the Court of Appeal certified may be thought to be somewhat peripheral to the issues which confronted the jury. However the jury asked a question which gives rise to the point, and in this particular case it would be inappropriate to disregard it as irrelevant to the eventual verdict. If some or all of the activities shown in the uploaded videos, whose contents are briefly described in paras 2(i) to (iv) above, did not involve terrorism within the meaning of section 1 of the 2000 Act, it is possible that the appellant may have been acquitted on some or all of the five counts on which he was convicted. The case for the prosecution is that the definition of terrorism in section 1 of the 2000 Act, and, in particular, in subsections (1) and (2), is very wide indeed, and that it would be wrong for any court to cut it down by implying some sort of restriction into the wide words used by the legislature. On that basis, the appellant was rightly convicted and the answer to the certified question must be yes. The case for the appellant, as it developed in oral argument, had three strands. The first is that the 2000 Act, like the 2006 Act, was intended, at least in part, to give effect to the UKs international treaty obligations, and the concept of terrorism in international law does not extend to military attacks by a non state armed group against state, or inter governmental organisation, armed forces in the context of a non international armed conflict, and that this limitation should be implied into the definition in section 1 of the 2000 Act. The second, and closely connected, argument is that it would be wrong to read the 2000 or 2006 Acts as criminalising in this country an act abroad, unless that act would be regarded as criminal by international law norms. The third argument raised by the appellant is that, as a matter of domestic law and quite apart from international law considerations, some qualifications must be read into the very wide words of section 1 of the 2000 Act. Although it was advanced as an alternative argument to the contentions based on international law, we propose to start by addressing the appellants case based on the relevant statutory provisions by reference to the familiar domestic principles, and then to consider whether that meaning conflicts with international law. The appellants argument based on domestic law The definition of terrorism in section 1 of the 2000 Act is, at any rate on the face of it, very wide. That point was well made in R v F [2007] QB 960, paras 27 28: What is striking about the language of section 1, read as a whole, is its breadth. It does not specify that the ambit of its protection is limited to countries abroad with governments of any particular type or possessed of what we, with our fortunate traditions, would regard as the desirable characteristics of representative government. There is no list or Schedule or statutory instrument which identifies the countries whose governments are included in section 1(4)(d) or excluded from the application of the 2000 Act. Finally, the legislation does not exempt, nor make an exception, nor create a defence for, nor exculpate what some would describe as terrorism in a just cause. Such a concept is foreign to the 2000 Act. Terrorism is terrorism, whatever the motives of the perpetrators. Terrorist action outside the United Kingdom which involves the use of firearms or explosives, resulting in danger to life or creating a serious risk to the health or safety to the public in that country, or involving (not producing) serious personal violence or damage to property, or designed seriously to interfere with an electronic system, is terrorism Following these observations, the Court of Appeal in this case underlined the comprehensive scope and broad nature of the definition of terrorism in the 2000 Act: [2012] EWCA Crim 280, [2012] 1 WLR 3432, paras 16 and 52. The effect of section 1(1) of the 2000 Act is to identify terrorism as consisting of three components. The first is the use or threat of action, inside or outside the UK, where that action consists of, inter alia, serious violence, serious damage to property, or creating a serious risk to public safety or health section 1(1)(a), (2) and (4). The second component is that the use or threat must be designed to influence the government [of the UK or any other country] or an [IGO] or to intimidate the public section 1(1)(b) and (4). The third component is that the use or threat is made for the purpose of advancing a political, religious, racial or ideological cause section 1(1)(c). As a matter of ordinary language, the definition would seem to cover any violence or damage to property if it is carried out with a view to influencing a government or IGO in order to advance a very wide range of causes. Thus, it would appear to extend to military or quasi military activity aimed at bringing down a foreign government, even where that activity is approved (officially or unofficially) by the UK government. It is neither necessary nor appropriate to express any concluded view whether the definition of terrorism goes that far, although it is not entirely easy to see why, at least in the absence of international law considerations, it does not. For present purposes it is enough to proceed on the basis that, subject to these considerations, the definition of terrorism in section 1 in the 2000 Act is, at least if read in its natural sense, very far reaching indeed. Thus, on occasions, activities which might command a measure of public understanding, if not support, may fall within it: for example, activities by the victims of oppression abroad, which might command a measure of public understanding, and even support in this country, may well fall within it. The Crown argues that, particularly given the purpose of the 2000 Act, terrorism cannot be narrowly defined, if one is to allow for the many disparate forms which terrorism may take, and the inevitable changes which will occur in international relations, in political regimes in other countries, and in the UKs foreign policy. Accordingly, runs the argument, a very wide definition was deliberately adopted, but, recognising the risks of criminalising activities which should not be prosecuted, the 2000 Act has, through section 117, precluded any prosecution without the consent of the Director of Public Prosecutions (DPP) or, if the activities under consideration occurred abroad, the Attorney General. It is clear that it is very hard to define terrorism. Thus, Lord Lloyd of Berwick, who wrote an Inquiry into the Legislation against Terrorism (Cm 3420) which contained recommendations which were reflected in the 2000 Act, observed in a speech on the second reading of the Bill which later became that Act that there are great difficulties in finding a satisfactory definition of terrorism, and suspected that none of us will succeed. That view has been cited with agreement in reports produced by the two successive Independent Reviewers of the legislation appointed under section 36 of the 2006 Act, Lord Carlile of Berriew QC and Mr David Anderson QC. In reports produced in 2006 and 2007 Lord Carlile concluded that the statutory definition of terrorism was practical and effective and advised that, save for small amendments, the definition should remain as originally drafted. More specifically, he observed that the current definition in the Terrorism Act 2000 is consistent with international comparators and treaties, and is useful and broadly fit for purpose. Lord Carlile also stated that the discretion vested in the authorities to use or not to use the special laws is a real and significant element of protection against abuse of rights. Mr Anderson published his first report in June 2012, in which he referred to the definition in section 1 in the 2000 Act as complex and notable for its breadth. He pointed out that actions may amount to terrorism within the definition even when they might otherwise constitute lawful hostilities under international humanitarian law (e.g. acts of violent rebellion against oppressive governments). Mr Anderson recognised that the statutory definition left a large discretion to prosecutors, mitigated only by the requirement [for] consent under section 117 of the 2000 Act, together with other wide discretions. He went on to refer to the risk that strong powers could be used for purposes other than the suppression of terrorism as it is generally understood. He also observed that there was a case for shrinking the definition of terrorism, given that [a]s presently drafted, the definition is so broad as to criminalise certain acts carried out overseas that constitute lawful hostilities under international humanitarian law. In his recent second report, published in July 2013, Mr Anderson again referred to the definition, describing it as remarkably broad absurdly so in some cases, and went on discuss the issue very instructively. He pointed out that the consequence of the very broad definition was to grant unusually wide discretions to all those concerned with the application of the counter terrorism law, from Ministers exercising their power to impose executive orders to police officers deciding whom to arrest or to stop at a port and prosecutors deciding whom to charge, but went on to say that that the wide discretions appear for the most part to be responsibly exercised. He also expressed the view that any amendment to the definition would involve a root and branch review of the entire edifice of anti terrorism law, based on a clear headed assessment of why and to what extent it is operationally necessary to supplement established criminal laws and procedures, a review which he said that he would welcome. He also made the point that if special legal rules are to be devised in relation to it, they should be limited in their application, and justified on the basis of operational necessity. We turn to the consent requirement created by section 117 of the 2000 Act. In the general way the decision whether to initiate the prosecution of any crime, whether created by statute or common law, is subject to the well known prosecutorial discretion. Where the consent of the DPP or the Attorney General is required, their respective responsibilities are exercised for the unexceptionable purpose of ensuring that a prosecution should not be instigated nor proceed if this would not be in the public interest. However, the prosecutorial discretion was never intended, and as far as we can ascertain, it has never been suggested that it was ever intended, to assist in the interpretation of legislation which involves the creation of a criminal offence or offences. Either specific activities carried out with a particular intention or with a particular state of mind are criminal or they are not. The Crowns reliance on prosecutorial discretion is intrinsically unattractive, as it amounts to saying that the legislature, whose primary duty is to make the law, and to do so in public, has in effect delegated to an appointee of the executive, albeit a respected and independent lawyer, the decision whether an activity should be treated as criminal for the purposes of prosecution. Such a statutory device, unless deployed very rarely indeed and only when there is no alternative, risks undermining the rule of law. It involves Parliament abdicating a significant part of its legislative function to an unelected DPP, or to the Attorney General, who, though he is accountable to Parliament, does not make open, democratically accountable decisions in the same way as Parliament. Further, such a device leaves citizens unclear as to whether or not their actions or projected actions are liable to be treated by the prosecution authorities as effectively innocent or criminal in this case seriously criminal. Given that the consent requirement in section 117 is focused on the decision whether to consent to a prosecution, this approach to the construction of the 2000 Act has two further undesirable consequences. First, the lawfulness of executive acts such as detention, search, interrogation and arrest could be questioned only very rarely indeed in relation to any actual or suspected involvement in actual or projected acts involving terrorism, in circumstances where there would be no conceivable prospect of such involvement being prosecuted. Secondly, the fact that an actual or projected activity technically involves terrorism means that, as a matter of law, that activity will be criminal under the provisions of the 2000 and 2006 Acts, long before, and indeed quite irrespective of whether, any question of prosecution arises. We return to the language used in section 1 of the 2000 Act. Despite the undesirable consequences of the combination of the very wide definition of terrorism and the provisions of section 117, it is difficult to see how the natural, very wide, meaning of the definition can properly be cut down by this Court. For the reasons given by Lord Lloyd, Lord Carlile and Mr Anderson, the definition of terrorism was indeed intended to be very wide. Unless it is established that the natural meaning of the legislation conflicts with the European Convention on Human Rights (which is not suggested) or any other international obligation of the United Kingdom (which we consider in the next section of this judgment), our function is to interpret the meaning of the definition in its statutory, legal and practical context. We agree with the wide interpretation favoured by the prosecution: it accords with the natural meaning of the words used in section 1(1)(b) of the 2000 Act, and, while it gives the words a concerningly wide meaning, there are good reasons for it. We are reinforced in this view by the further consideration that the wide definition of terrorism was not ignored by Parliament when the 2000 Act was being debated. It was discussed by the Home Secretary who also, in answer to a question, mentioned the filter of section 117 (see Hansard (HC Deb) 14 December 1999, cols 159, 163). This is not a case in which it is appropriate to refer to what was said in Parliament as an aid to statutory interpretation, but it provides some comfort for the Crowns argument. Of rather more legitimate relevance is the fact that Parliament was content to leave the definition of terrorism effectively unchanged, when considering amendments or extensions to the 2000 Act, well after the 2007 report of Lord Carlile, which so clearly (and approvingly) drew attention to the width of the definition of terrorism see eg the Crime and Security Act 2010, the Terrorist Asset Freezing etc Act 2010 and the Terrorism Prevention and Investigation Measures Act 2011. In reaching our conclusion, we do not attach any weight to the provisions of section 117 of the 2000 Act as an aid to construction. It may well be that any concern which Parliament had about the width of the definition of terrorism in section 1(1) was mitigated by the existence of the statutory prosecutorial discretion, but, for the reasons given in paras 35 and 37 above, we do not regard it as an appropriate reason for giving terrorism a wide meaning. Accordingly, we conclude that, unless the appellants argument based on international law dictates a different conclusion, the definition of terrorism as in section 1 of the 2000 Act is indeed as wide as it appears to be. This would result in the certified question being answered yes. The appellants argument based on international law Introductory If the attacks on Coalition forces in Afghanistan and Iraq, and on military targets in Chechnya, shown on the seized videos would otherwise amount to terrorism as defined in section 1 of the 2000 Act, the appellant contends that this would be contrary to, or inconsistent with, the norms of international law. The appellant has two arguments in this connection. The first is that some provisions of the 2000 and 2006 Acts were enacted to give effect to the UKs international obligations arising under treaties concerned with the suppression of terrorism, and that terrorism should accordingly be given a meaning in those statutes which accords with the international law norm, and at any rate with the definition in the relevant international document to which effect is intended to be given. The second argument is that, as the 2000 and 2006 Acts criminalise certain terrorist actions committed outside the UK, the meaning of terrorism in those statutes should not be wider than what is accepted as an international norm. No international consensus as to terrorism These two arguments each face more than one insuperable obstacle. The common obstacle they both face is that there is no accepted norm in international law as to what constitutes terrorism. As this court observed in a judgment given by Lady Hale and Lord Dyson in Al Sirri v Secretary of State for the Home Department (United Nations High Commissioner for Refugees intervening) [2013] 1 AC 745, para 37, there is as yet no internationally agreed definition of terrorism and no comprehensive international Convention binding Member States to take action against it. Indeed, the reasoning in that case proceeded on the basis that the definition of terrorism in the 2000 Act was significantly wider than in article 1F(c) of the 1951 Convention relating to the Status of Refugees (the Geneva Convention) see para 36. The appellant seeks to meet this point through the contention that, whereas there is no international agreement as to the meaning of terrorism, there is a general understanding that it does not extend to the acts of insurgents or freedom fighters in non international armed conflicts. The short answer to this point is that, while there is significant support for such an idea, any such support falls far short of amounting to a general understanding which could be properly invoked as an aid to statutory interpretation. As the Court of Appeal said in para 35, while international law has developed so that the crime of terrorism is recognised in situations where there is no armed conflict, it has not developed so that it could be said there is sufficient certainty that such a crime could be defined as applicable during a state of armed conflict. Accordingly, as it went on to conclude in para 50, there is no rule of international law which requires this court to read down section 1 of the 2000 Act. The United Nations has attempted to identify a comprehensive definition of terrorism, but has so far failed. Indeed, it appears that one of the difficulties has been achieving agreement as to the very point at issue in this appeal. In 2007, the ad hoc committee established by General Assembly resolution 51/210 of 17 December 1996 suggested that it be agreed that the activities of armed forces during an armed conflict, as those terms are understood under international humanitarian law, which are governed by that law, are not governed by this Convention. However no consensus has been achieved, because various states delegations were concerned about (a) the right of peoples to self determination under international law; (b) the activities of armed forces in armed conflict; and (c) the activities of military forces of a State in peacetime, also taking into account related concerns about State terrorism to quote from the committees 2011 report. In early 2012, the General Assembly established a working group to finalise the drafting of a comprehensive international convention on terrorism, but, by the end of that year, the chair of the group reported that there were still disagreements, including as to the precise distinction between terrorism and legitimate struggle of peoples fighting in the exercise of their right to self determination. It is true that there are UN Conventions and Council of Europe Conventions concerned with counter terrorism, which define terrorism as excluding activities of armed forces during an armed conflict, but there is room for argument as to their precise effect, and, more importantly, it is quite impossible to suggest that there is a plain or consistent approach in UN Conventions on this issue. Thus, the Crown asserts that the UN has adopted fourteen counter terrorism treaties to date1, and of these fourteen treaties (i) seven state that the activities of armed forces during an armed conflict, as those terms are understood under international humanitarian law, which are governed by that law are not governed 1 1963 Convention on Offences and Certain Other Acts Committed on Board Aircraft; 1970 Convention for the Suppression of Unlawful Seizure of Aircraft; 2010 Protocol Supplementary to the Convention for the Suppression of Unlawful Seizure of Aircraft; 1971 Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation; 1973 Convention on the Prevention and Punishment of Crimes Against Internationally Protected Persons; 1979 International Convention against the Taking of Hostages; 1980 Convention on the Physical Protection of Nuclear Material; 1988 Protocol for the Suppression of Unlawful Acts of Violence at Airports Serving International Civil Aviation, supplementary to the Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation; 1988 Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation; 2005 Protocol to the Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation; 1988 Protocol for the Suppression of Unlawful Acts Against the Safety of Fixed Platforms Located on the Continental Shelf; 2005 Protocol to the Protocol for the Suppression of Unlawful Acts against the Safety of Fixed Platforms Located on the Continental Shelf; 1991 Convention on the Marking of Plastic Explosives for the Purpose of Detection; 1997 International Convention for the Suppression of Terrorist Bombings; 1999 International Convention for the Suppression of the Financing of Terrorism; 2005 International Convention for the Suppression of Acts of Nuclear Terrorism; 2010 Convention on the Suppression of Unlawful Acts Relating to International Civil Aviation; http://www.un.org/terrorism/instruments.shtml by this Convention, (ii) of the seven which have no such statement, six provide that the treaty does not exclude any criminal jurisdiction exercised in accordance with national law, and (iii) of the seven which include such a statement, at least five contain a provision substantially to the like effect. The appellant contends that the absence of an armed conflict exclusion from a treaty does not mean that that treaty applies in relation to an action at a time of armed conflict. However, it is not normally appropriate to imply a term into an international treaty, and, in any event, the absence of any such express exclusion is scarcely consistent with the contention that there is an internationally accepted norm such as the appellant suggests. Further, as this court pointed out in Al Sirri, para 68, an attack on [the International Security Assistance Force in Afghanistan] is in principle capable of being an act contrary to the purposes and principles of the United Nations, and such an attack therefore can constitute terrorism see para 3 of the same judgment. Consistently with this, there have been UN resolutions referring to the activities of Al Qaida and the Taliban as terrorism, notwithstanding allegations that their actions involved insurgents attacking forces of states and IGOs in non international armed conflict (eg UN Security Council resolutions 2041, 2069 and 2082 of 2012, and Council Decision 2011/486/CFSP of 1 August 2011). In addition, in international humanitarian law, it appears that insurgents in non international armed conflicts do not enjoy combatant immunity. Crawford in the Treatment of Combatants and Insurgents under the Law of Armed Conflict (2010), pp 78 79, says that international law does not immunize participation in non international armed conflict, and that there is nothing in the customary international law that replicates combatant immunity for persons who participate in non international armed conflicts, a view supported by Sivakumaran in The Law of Non International Armed Conflicts (2012), p 515. As for domestic legislation across the world, the Crown states in its argument, without challenge, that of a survey of 42 states it has identified with legislation which defines terrorism, (i) 28 do not exclude armed attacks, (ii) four explicitly include armed attacks, and (iii) seven explicitly exclude armed attacks (which includes the United States, although its position might be said to be ambivalent, as some of the relevant legislation is widely drawn without the exclusion). It is true that none of these legislative provisions explicitly refer to armed attacks during a time of armed conflict, but we would refer back to the point made at the end of para 48 above. Other problems faced by the appellants case It appears clear that sections 62 64 of the 2000 Act give effect to the UKs obligations under the International Convention for the Suppression of Terrorist Bombings 1997 and the International Convention for the Suppression of the Financing of Terrorism 1999. It is also fair to say that these two Conventions, particularly the latter, appear to have been drafted so as to exclude insurgent attacks on military forces in non international armed conflicts from their respective ambits. However, the notion that the meaning of terrorism in section 1 of the 2000 Act should be read down, because some of the activities which were rendered offences by that Act were criminalised as a result of the UKs obligations under the two Conventions, runs into two difficulties. First, there is no rule that the UK government cannot go further than is required by an international treaty when it comes to legislating the exercise is often known as gold plating. It is not as if there is anything in either the 1997 or the 1999 Convention which excludes a signatory state going further than the requirements of the Convention, or anything in the 2000 Act which suggests that Parliament intended to go no further. That is not to say that gold plating is never objectionable, but no argument was advanced on this appeal to suggest that there was any reason why it was objectionable in this case (save that considered and rejected in paras 44 51 above). Secondly, quite apart from this, if the wide definition of terrorism in section 1 of the 2000 Act has to be read down for the purposes of sections 62 64, there is no reason to read it down when it comes to any other provision of the Act or of the 2006 Act. In Al Sirri, para 36, this court appears to have approved, indeed to have relied on, the proposition that, if application of the wide definition of terrorism in section 1 of the 2000 Act led to another provision of the Act conflicting with the UKs obligations under the Geneva Convention, then the definition should be read down when applied to the provision in question, and not generally throughout the Act. To conclude otherwise would be a classic case of letting the tail wag the dog. The 2006 Act takes the appellants argument no further. It is true that some of its provisions give effect to the UKs obligations under the Council of Europe Convention on the Prevention of Terrorism 2005 and the International Convention for the Suppression of Acts of Nuclear Terrorism 2005. However, section 2 of the 2006 Act was not enacted to give effect to any international Convention, and, even if it had been and had gone further than the Convention concerned required, there is no reason why Parliament should not have gold plated the legislation, as already explained. The appellants reliance on the fact that there are provisions of the 2000 and 2006 Acts which criminalise various activities as terrorist offences even if committed abroad, runs into similar problems. Even if it were the case that, because of the need to take into account the UKs international law obligations, the wide definition of terrorism had to be read down when it comes to construing those provisions, that would be of no assistance to a defendant such as the appellant, who is a UK citizen being prosecuted for offences allegedly committed in this country. There is no reason to read down the wide definition of terrorism in a case such as this. The present case does not involve a defendant who has committed acts, which are said to be offences, abroad: the activities said to be offences were committed in the UK and by a UK citizen. That renders it unnecessary for us to consider whether, as there is no internationally agreed definition of terrorism, the Court of Appeal was right to decide that there is no reason why Parliament cannot criminalise acts of terrorism, as defined in section 1 of the 2000 Act, committed outside the UK. In reaching that decision, the Court of Appeal relied on the Permanent Court of International Justices statement in The SS Lotus 1927, PCIJ, Series A, No 10, para 48 that [r]estrictions upon the independence of states cannot be presumed given that the rules of law binding upon states emanate from their own free will as expressed in conventions or by usages generally accepted as expressing principles of law and established in order to regulate the relations between [states] or with a view to the achievement of common aims. Whilst various assumptions on which that decision was based have been modified or superseded by subsequent developments in international law, the Lotus principle [is] that states have the right to do whatever is not prohibited by international law, as is stated in the Max Planck Encyclopaedia of Public International Law, in its discussion of the case. The appellant contends that the mere fact that certain actions can be characterised as terrorism without offending international law does not mean that those actions can be criminalised by one state if they are carried out in another state. The appellant cites, for example, Brownlies Principles of Public International Law (8th ed 2012), p 458, which says if a state wishes to project its prescriptive jurisdiction extra territorially, it must find a recognised basis in international law for doing so. That raises a point of some importance and some difficulty, and it might be said to represent a shift in focus in international law. Given that we do not have to decide the issue, we should not do so in this appeal: it should await another case. Conclusion We would accordingly answer the certified question yes, and consequently we would dismiss this appeal. Before ending this judgment, we would make two further points of a general nature about the 2000 and 2006 Acts. First, we revert to the concern about the width of the definition of terrorism, as discussed in paras 28 29 and 33 37 above. In his first report, Mr Anderson QC made the point that the current law allows members of any nationalist or separatist group to be turned into terrorists by virtue of their participation in a lawful armed conflict, however great the provocation and however odious the regime which they have attacked. He went on to say that other definitions of terrorism choose to exclude activities sanctioned by international law from the reach of terrorist activity, citing the Canadian and South African Criminal Codes as examples. In his second report, Mr Anderson mentioned the potential application of the Terrorism Acts even to UK forces engaged in conflicts overseas, and referred to the fact that a recent Australian report recommend[ed] that Australian law be changed so as to provide that the relevant parts of the Criminal Code, as in Canada, do not apply to acts committed by parties regulated by the law of armed conflict. While acknowledging that the issue is ultimately one for Parliament, we should record our view that the concerns and suggestions about the width of the statutory definition of terrorism which Mr Anderson has identified in his two reports merit serious consideration. Any legislative narrowing of the definition of terrorism, with its concomitant reduction in the need for the exercise of discretion under section 117 of the 2000 Act, is to be welcomed, provided that it is consistent with the public protection to which the legislation is directed. The second general point is that the wide definition of terrorism does not only give rise to concerns in relation to the very broad prosecutorial discretion bestowed by the 2000 and 2006 Acts, as discussed in paras 36 37 above. The two Acts also grant substantial intrusive powers to the police and to immigration officers, including stop and search, which depend upon what appears to be a very broad discretion on their part. While the need to bestow wide, even intrusive, powers on the police and other officers in connection with terrorism is understandable, the fact that the powers are so unrestricted and the definition of terrorism is so wide means that such powers are probably of even more concern than the prosecutorial powers to which the Acts give rise. detain in port and at borders is left to the examining officer. The power is not subject to any controls. Indeed, the officer is not even required to have grounds for suspecting that the person concerned falls within section 40(1) of the 2000 Act (ie that he has committed an offence, or he is or has been concerned in the commission, preparation or instigation of acts of terrorism), or even that any offence has been or may be committed, before commencing an examination to see whether the person falls within that subsection. On this appeal, we are not, of course, directly concerned with that issue in this case. But detention of the kind provided for in the Schedule represents the possibility of serious invasions of personal liberty. Thus, under Schedule 7 to the 2000 Act, the power to stop, question and
+This appeal raises a short question of construction of shipbuilders refund guarantees given pursuant to six shipbuilding contracts (the Contracts). The Contracts, which were all dated 11 May 2007, were between each of the first to sixth claimants (the Buyers) and Jinse Shipbuilding Co Ltd (the Builder). Under the Contracts the Builder agreed to build and sell one vessel to each of the Buyers. The price of each vessel was US$33,300,000, payable in five equal instalments of US$6,660,000 due at specified points of time, with the final instalment payable on delivery.1 By Article X.8 of the Contracts it was a condition precedent to payment by the Buyers of the first instalment that the Builder would deliver to the Buyers refund guarantees relating to the first and subsequent instalments in a form acceptable to the Buyers financiers. As envisaged by Article X.8, by letter dated 22 August 2007 the respondent, Kookmin Bank (the Bank), issued six materially identical Advance Payment Bonds (the Bonds), one to each of the Buyers. The seventh claimant (the Assignee) is the assignee of the benefit of the Bonds. On 29 August 2007, the Buyers each paid the first instalment of US$6,660,000 due under the Contracts. On 29 September 2007, the first claimant paid the second instalment of US$6,660,000 under the contract to which it is a party. In 2008 the Builder experienced financial difficulties and in late January 2009 it entered into and/or became subject to a debt workout procedure under the Korean Corporate Restructuring Promotion Law 2007. On 25 February 2009 the Buyers wrote to the Builder notifying it that this development triggered Article XII.3 of the Contracts and demanding an immediate refund of all the instalments paid, together with interest at 7% per annum. The Builder refused to make any refund on the ground that Article XII.3 of the Contracts had not been triggered as alleged. The dispute between the Buyers and the Builder has been submitted to arbitration pursuant to Article XIV.3 of the Contracts. 1 There was subsequently a small reduction in the overall price and a corresponding reduction in the final instalment for each vessel but that is immaterial to the issues in the appeal. On 23 April 2009, the Buyers wrote to the Bank demanding repayment under the Bonds of the instalments paid under the Contracts. The Bank refused to pay. It did so initially on the ground that it was not obliged to pay pending resolution of the dispute between the Buyers and the Builder. That argument was subsequently rejected by Simon J (the Judge) and there was no appeal to the Court of Appeal against that part of his order: [2009] EWHC Civ 2624 (Comm). The Bank subsequently raised a separate, and logically prior, argument that, on their true construction, the Bonds did not cover refunds to which the Buyers were entitled pursuant to Article XII.3 of the Contracts. That argument was also rejected by the Judge, who gave summary judgment for the Assignee, but succeeded in the Court of Appeal, which gave summary judgment for the Bank against the Buyers and the Assignee. In the Court of Appeal Sir Simon Tuckey agreed with the Judge but the majority, comprising Thorpe and Patten LJJ, held the Banks argument to be correct: [2010] EWCA Civ 582. The orders of the Judge and the Court of Appeal were made on 29 October 2009 and 27 May 2010 respectively. The Court of Appeal refused permission to appeal. The Buyers appeal to this Court pursuant to permission granted by the Court. The issue is whether, on the true construction of paragraph 3 of the Bonds, the Buyers are entitled to payment under the Bonds in respect of refunds to which they are entitled under Article XII.3 of the Contracts. No one suggested that the successful parties should not have summary judgment in their favour. The Bonds I begin with the Bonds because it was common ground that all depends upon the true construction of the Bonds and that the terms and meaning of the Contracts are only relevant to the extent that they inform the true construction of the Bonds. The paragraphs in the letter comprising the Bonds were not numbered but both the Judge and the Court of Appeal referred to them by number for convenience of reference and I will do the same. As so numbered the relevant parts of each Bond were these: [1] We refer to the Contract entered into between the Builder and yourselves for the construction and delivery of the Vessel to be delivered before [31 July 2009]. Other terms and expressions used in this Bond shall have the same meaning as in the Contract, a copy of which has been provided to us. [2] Pursuant to the terms of the Contract, you are entitled, upon your rejection of the Vessel in accordance with the terms of the Contract, your termination, cancellation or rescission of the Contract or upon a Total Loss of the Vessel, to repayment of the pre delivery instalments of the Contract Price paid by you prior to such termination or a Total Loss of the Vessel (as the case may be) and the value of the Buyer's Supplies delivered to the Shipyard (if any) together with interest thereon at the rate of . (7%) per annum (or . (10%) per annum in the case of a Total Loss of the Vessel) from the respective dates of payment by you of such instalments to the date of remittance by telegraphic transfer of such refund. [3] In consideration of your agreement to make the pre delivery instalments under the Contract and for other good and valuable consideration (the receipt and adequacy of which is hereby acknowledged), we hereby, as primary obligor, irrevocably and unconditionally undertake to pay to you, your successors and assigns, on your first written demand, all such sums due to you under the Contract (or such sums which would have been due to you but for any irregularity, illegality, invalidity or unenforceability in whole or in part of the Contract) PROVIDED THAT the total amount recoverable by you under this Bond shall not exceed US $[26,640,000] . plus interest thereon at the rate of . (7%) per annum (or . (10%) per annum in the case of a Total Loss of the Vessel) from the respective dates of payment by you of such instalments to the date of remittance by telegraphic transfer of such refund. [4] Payment by us under this Bond shall be made without any deduction or withholding, and promptly on receipt by us of a written demand (substantially in the form attached) signed by two of your directors stating that the Builder has failed to fulfil the terms and conditions of the Contract and as a result of such failure, the amount claimed is due to you and specifying in what respects the Builder has so failed and the amount claimed. Such claim and statement shall be accepted by us as evidence for the purposes of this Bond alone that this amount claimed is due to you under this Bond. [5] Our liability under this Bond shall not be affected by (v) any insolvency, re organisation or dissolution of the Builder, or (vi) any other matter or thing which may operate to discharge or reduce our liability hereunder. The Bonds further provided that they were assignable, that they were governed by English law and that all disputes arising out of them were to be determined by the Commercial Court. The resolution of the issue between the parties depends upon the true construction of paragraph [3]. The Bank promised to pay on demand all such sums due to you under the Contract. The question is what was meant by such sums. Only two possibilities were suggested. The Buyers said (and the Judge and Sir Simon Tuckey held) that the expression such sums referred back to the pre delivery instalments in the first line. They said that the purpose of the Bond was to guarantee the refund of pre delivery instalments and that the promise was therefore to refund pre delivery instalments. By contrast the Bank said (and Thorpe and Patten LJJ held) that the expression such sums was a reference back to the sums referred to in paragraph [2], namely the repayment of the pre delivery instalments paid prior to a termination of the Contract or a Total Loss of the vessel and the value of the Buyers Supplies in the case of a Total Loss. On the Buyers analysis the Bond guaranteed pre delivery instalments which were repayable under Article XII.3 in the case of any insolvency event, whereas on the Banks analysis it did not. The Contracts It is common ground that the terms of the Contracts are relevant to the true construction of the Bonds. They are referred to in the Bonds and provide the immediate context in which the Bonds were entered into. They are thus plainly an important aid to the meaning of the Bonds. Article X of the Contracts provided, so far as material as follows: ARTICLE X: PAYMENT 5. REFUND BY THE BUILDER The payments made by the Buyer to the Builder prior to delivery of the Vessel shall constitute advances to the Builder. If the Vessel is rejected by the Buyer in accordance with the terms of this Contract, or if the Buyer terminates, cancels or rescinds this Contract pursuant to any of the provisions of this Contract specifically permitting the Buyer to do so, the Builder shall forthwith refund to the Buyer in US dollars, the full amount of total sums paid by the Buyer to the Builder in advance of delivery together with interest thereon as herein provided within thirty (30) banking days of acceptance of rejection. The interest rate of the refund shall be seven per cent (7%) per annum If the Builder is required to refund to the Buyer the installments paid by the Buyer to the Builder as provided in this Paragraph, the Builder shall return to the Buyer all of the Buyer's Supplies as stipulated in Article XIII which were not incorporated into the Vessel and pay to the Buyer an amount equal to the cost to the Buyer of those Buyer's Supplies incorporated into the Vessel. 6. TOTAL LOSS If there is a total loss or a constructive total loss of the Vessel prior to delivery thereof, the Builder shall proceed according to the mutual agreement of the parties hereto either: (a) to build another vessel in place of the Vessel so lost . provided that the parties hereto shall have agreed in writing to a reasonable cost and time for the construction or (b) to refund to the Buyer the full amount of the total sums paid by the Buyer to the Builder under the provisions of Paragraph 2 of this Article and the value of Buyer's Supplies delivered to the Shipyard, if any, together with interest thereon at the rate of ten percent (10%) per annum . If the parties hereto fail to reach such agreement within two (2) months after the Vessel is determined to be a total loss or constructive total loss, the provisions of (b) hereinabove shall be applied. 8. The Builder shall as a condition precedent to payment by the Buyer of the first installment deliver to the Buyer an assignable letter of guarantee issued by a first class Korean Bank . to Buyer's Financiers for the refund of the first installment, and at the same time, together with the letter of guarantee relating to the first installment, Builder shall also deliver to the Buyer an assignable letter of guarantee issued by a first class Korean Bank . for the refund of the respective installments following the way of the payment stipulated in this Article. The refund guarantees by the Builder to the Buyer shall be indicated pre delivery installments plus interest as aforesaid to the Buyer under or pursuant to paragraph 5 above in the form annexed hereto as Exhibit A which is yet to be agreed In the event that the Refund Guarantees, for all installments, have not been provided to the Buyer in a form acceptable to the Buyers financiers and have not been issued by an entity acceptable to REFUND GUARANTEE Buyers financiers, by the 31st of August 2007 then the Buyer may cancel this Contract without penalty on either side. It is common ground that no form of guarantee was in fact annexed to the Contracts. Article XII provided, so far as relevant: ARTICLE XII: BUILDERS DEFAULT 3. If the Builder shall apply for or consent to the appointment of a receiver, trustee or liquidator, shall be adjudicated insolvent, shall apply to the courts for protection from its creditors, file a voluntary petition in bankruptcy or take advantage of any insolvency law, or any action shall be taken by the Builder having an effect similar to any of the foregoing or the equivalent thereof in any jurisdiction, the Buyer may by notice in writing to the Builder require the Builder to refund immediately to the Buyer the full amount of all sums paid by the Buyer to the Builder on account of the Vessel and interest thereon at seven percent (7%) per annum on the amount to be refunded to the Buyer, computed from the respective date such sums were paid by the Buyer to the date of remittance of the refundable amount to the Buyer and immediately upon receipt of such notice the Builder shall refund such amount to the Buyer. Following such refund the Builder may, but shall not be obliged to, by notice in writing to the Buyer given within ten (10) business days terminate this contract. If the Builder does not so terminate the Contract the Buyer's obligation to pay further installments prior to delivery of the Vessel under Article X 2(a),(b),(c) and (d) shall be suspended and the full Contract price shall be paid to the Builder upon delivery of the Vessel in the manner contemplated by Article X paragraph 2(e). The Contracts contained a number of provisions which entitled the Buyer to cancel the contract, namely Articles III.1 and XII.1 (delay) and Article III.2(b), 3(c), 4(d) and 5(d) (insufficient speed, excessive fuel consumption, deficient deadweight or cargo capacity). Some of those provisions specifically entitled the Buyer to a refund of all advance payments following cancellation. Others did not, although in such cases Article X.5 would apply and have the same effect. The Contracts also contained in Article XIII further detailed provisions relating to Buyers Supplies. The correct approach to construction For the most part, the correct approach to construction of the Bonds, as in the case of any contract, was not in dispute. The principles have been discussed in many cases, notably of course, as Lord Neuberger MR said in Pink Floyd Music Ltd v EMI Records Ltd [2010] EWCA Civ 1429; [2011] 1 WLR 770 at para 17, by Lord Hoffmann in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, passim, in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 912F 913G and in Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101, paras 21 26. I agree with Lord Neuberger (also at para 17) that those cases show that the ultimate aim of interpreting a provision in a contract, especially a commercial contract, is to determine what the parties meant by the language used, which involves ascertaining what a reasonable person would have understood the parties to have meant. As Lord Hoffmann made clear in the first of the principles he summarised in the Investors Compensation Scheme case at page 912H, the relevant reasonable person is one who has 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. The issue between the parties in this appeal is the role to be played by considerations of business common sense in determining what the parties meant. Sir Simon Tuckey said at para 19 of his judgment that there was no dispute about the principles of construction and the Bank so submitted in its skeleton argument. However, I do not think that is quite correct. At para 18 Sir Simon identified the question of construction substantially as set out in para 9 above and said at para 19: There is no dispute about the principles of construction to be applied in order to answer this question. The court must first look at the words which the parties have used in the bond itself. The shipbuilding contract is of course the context and cause for the bond but is nevertheless a separate contract between different parties. If the language of the bond leads clearly to a conclusion that one or other of the constructions contended for is the correct one, the Court must give effect to it, however surprising or unreasonable the result might be. But if there are two possible constructions, the Court is entitled to reject the one which is unreasonable and, in a commercial context, the one which flouts business common sense. This follows from the House of Lords decisions in Wickman Machine Tools Sales Limited v Schuler AG [1974] AC 235, where at 251 Lord Reid said: The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result, the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make that intention abundantly clear. and The Antaios [1984] AC 191, where at 201 Lord Diplock said: If detailed and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense it must yield to business common sense. As I read his judgment, Patten LJ did not put the question in quite the same way. This can be seen from paras 35 to 44 of his judgment. At para 35 he referred to Sir Simon Tuckeys approach at para 19 (as quoted above). He also referred to para 18(iii) of the Judges judgment, where the Judge described the Banks construction of the Bond as having the surprising and uncommercial result of the guarantee not being available to meet the Builders repayment obligations in the event of insolvency. Patten LJ noted that the Judge appeared to have taken that into account as a factor in favour of the Buyers construction of paragraph [3] of the Bonds. Patten LJ added that the Judges approach was the same as that of Sir Simon Tuckey. Patten LJ then referred to the cases mentioned above and expressed his conclusion in principle thus at para 42: In this case (as in most others) the Court is not privy to the negotiations between the parties or to the commercial and other pressures which may have dictated the balance of interests which the contract strikes. Unless the most natural meaning of the words produces a result which is so extreme as to suggest that it was unintended, the Court has no alternative but to give effect it its terms. To do otherwise would be to risk imposing obligations on one or other party which they were never willing to assume and in circumstances which amount to no more than guesswork on the part of the Court. Finally, at paras 43 and 44, Patten LJ quoted from the speeches of Lord Wilberforce in Prenn v Simmonds [1971] 1 WLR 1381, 1384 5 and of Lord Hoffmann in Chartbrook at para 20, where they discussed the reason for the rule excluding evidence of pre contractual negotiations. In particular they stressed the irrelevance of the parties subjective intentions and noted that the mere fact that a term in the contract appears to be particularly unfavourable to one party or the other is irrelevant. As Lord Hoffmann put it, the term may have been agreed in exchange for some concession made elsewhere in the transaction or it may simply have been a bad bargain. I entirely accept those caveats. However, it seems to me to be clear that the principle stated by Patten LJ in para 42 is different from that stated by the Judge in his para 18(iii) and by Sir Simon Tuckey in para 19. It is not in my judgment necessary to conclude that, unless the most natural meaning of the words produces a result so extreme as to suggest that it was unintended, the court must give effect to that meaning. The language used by the parties will often have more than one potential meaning. I would accept the submission made on behalf of the appellants that the exercise of construction is essentially one unitary exercise in which the court must consider the language used and ascertain what a reasonable person, that is a person who has 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, would have understood the parties to have meant. In doing so, the court must have regard to all the relevant surrounding circumstances. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other. This conclusion appears to me to be supported by Lord Reids approach in Wickman quoted by Sir Simon Tuckey and set out above. I am of course aware that, in considering statements of general principle in a particular case, the court must have regard to the fact that the precise formulation of the proposition may be affected by the facts of the case. Nevertheless, there is a consistent body of opinion, largely collated by the Buyers in an appendix to their case, which supports the approach of the Judge and Sir Simon Tuckey. Where the parties have used unambiguous language, the court must apply it. This can be seen from the decision of the Court of Appeal in Co operative Wholesale Society Ltd vs National Westminster Bank plc [1995] 1 EGLR 97. The court was considering the true construction of rent review clauses in a number of different cases. The underlying result which the landlords sought in each case was the same. The court regarded it as a most improbable commercial result. Where the result, though improbable, flowed from the unambiguous language of the clause, the landlords succeeded, whereas where it did not, they failed. The court held that ordinary principles of construction applied to rent review clauses and applied the principles in The Antaios (Antaios Compania Naviera SA v Salen Rederierna AB) [1985] AC 191. After quoting the passage from the speech of Lord Diplock cited above, Hoffmann LJ said, at p 98: This robust declaration does not, however, mean that one can rewrite the language which the parties have used in order to make the contract conform to business common sense. But language is a very flexible instrument and, if it is capable of more than one construction, one chooses that which seems most likely to give effect to the commercial purpose of the agreement. The court also comprised Leggatt and Simon Brown LJJ. Simon Brown LJ at p 101 said that, having regard to the improbable result for which the landlords contended, only the most unambiguous of such clauses could properly be found to bear the landlords construction and that in the case of only one of the leases did the clause unambiguously achieve the improbable result for which the landlords contend. The case is of interest because Simon Brown LJ considered that, of the other three cases, one unambiguously failed to achieve the result sought by the landlords, whereas, of the other two, he said this at p 102: For my part, I would accept that the more obvious reading of both favours the landlords construction. I am persuaded, however, that they are capable of being, and therefore, for the reasons already given, should be, construed differently. That case is therefore an example of the adoption and application of the principle endorsed by the Judge and by Sir Simon Tuckey. See also International Fina Services AG v Katrina Shipping Ltd, The Fina Samco [1995] 2 Lloyd's Rep. 344, where Neill LJ said at page 350 it was necessary when construing a commercial document to strive to attribute to it a meaning which accords with business common sense. In 1997, writing extra judicially (Contract Law: Fulfilling the reasonable expectations of honest men) in 113 LQR 433, 441 Lord Steyn expressed the principle thus: Often there is no obvious or ordinary meaning of the language under consideration. There are competing interpretations to be considered. In choosing between alternatives a court should primarily be guided by the contextual scene in which the stipulation in question appears. And speaking generally commercially minded judges would regard the commercial purpose of the contract as more important than niceties of language. And, in the event of doubt, the working assumption will be that a fair construction best matches the reasonable expectations of the parties. I agree. He said much the same judicially in Society of Lloyds v Robinson [1999] 1 All ER (Comm) 545, 551: Loyalty to the text of a commercial contract, instrument, or document read in its contextual setting is the paramount principle of interpretation. But in the process of interpreting the meaning of the language of a commercial document the court ought generally to favour a commercially sensible construction. The reason for this approach is that a commercial construction is likely to give effect to the intention of the parties. Words ought therefore to be interpreted in the way in which a reasonable commercial person would construe them. And the reasonable commercial person can safely be assumed to be unimpressed with technical interpretations and undue emphasis on niceties of language. Similar assistance is at hand nearer at home. In Gan Insurance Co Ltd v Tai Ping Insurance Co Ltd [2001] CLC 1103, 1118 1119; [2011] EWCA Civ 1047; [2001] 2 All ER (Comm) 299, Mance LJ said: 13. Construction, as Sir Thomas Bingham MR said in Arbuthnott v Fagan [1995] CLC 1396 at p 1400 is thus a composite exercise, neither uncompromisingly literal nor unswervingly purposive. To para (5), one may add as a coda words of Lord Bridge in Mitsui Construction Co Ltd v A G of Hong Kong (1986) 33 BLR 14, cited in my judgment in Sinochem International Oil (London) Ltd v Mobil Sales and Supply Corp [2000] CLC 878 at p 885. Speaking of a poorly drafted and ambiguous contract, Lord Bridge said that poor drafting itself provides: no reason to depart from the fundamental rule of construction of contractual documents that the intention of the parties must be ascertained from the language that they have used interpreted in the light of the relevant factual situation in which the contract was made. But the poorer the quality of the drafting, the less willing the court should be to be driven by semantic niceties to attribute to the parties an improbable and unbusinesslike intention, if the language used, whatever it may lack in precision, is reasonably capable of an interpretation which attributes to the parties an intention to make provision for contingencies inherent in the work contracted for on a sensible and businesslike basis. 16 . in my judgment the subclause has no very natural meaning and is, at the least, open to two possible meanings or interpretations one the judge's, the other that it addresses two separate subject matters. In these circumstances, it is especially important to undertake the exercise on which the judge declined to embark, that is to consider the implications of each interpretation. In my opinion, a court when construing any document should always have an eye to the consequences of a particular construction, even if they often only serve as a check on an obvious meaning or a restraint upon adoption of a conceivable but unbusinesslike meaning. In intermediate situations, as Professor Guest wisely observes in Chitty on Contracts (28th edn) vol 1, para. 12 049, a balance has to be struck through the exercise of sound judicial discretion. More generally, in Homburg Houtimport BV v Agrosin Private Ltd: The Starsin [2004] 1 AC 715, para 10 Lord Bingham referred to the rule to which Lord Halsbury LC alluded in Glynn v Margetson & Co [1893] AC 351, 359, that a business sense will be given to business documents. The business sense is that which businessmen, in the course of their ordinary dealings, would give the document. Three other cases merit brief reference. The same approach was adopted by Arden LJ in In the Matter of Golden Key Ltd (In Receivership) [2009] EWCA Civ 636, paras 29 and 42 and by this Court in In Re Sigma Finance Corporation (in administrative receivership) [2009] UKSC 2; [2010] 1 All ER 571, where Lord Mance said at para 12 that the resolution of an issue of interpretation in a case like the present was an iterative process, involving checking each of the rival meanings against other provisions of the document and investigating its commercial consequences. Finally, it is worth setting out two extracts from the judgment of Longmore LJ in Barclays Bank plc v HHY Luxembourg SARL [2010] EWCA Civ 1248; [2011] 1 BCLC 336, paras 25 and 26: 25. The matter does not of course rest there because when alternative constructions are available one has to consider which is the more commercially sensible. On this aspect of the matter Mr Zacaroli has all the cards. 26. The judge said that it did not flout common sense to say that the clause provided for a very limited level of release, but that, with respect, is not quite the way to look at the matter. If a clause is capable of two meanings, as on any view this clause is, it is quite possible that neither meaning will flout common sense. In such circumstances, it is much more appropriate to adopt the more, rather than the less, commercial construction. In my opinion Longmore LJ has there neatly summarised the correct approach to the problem. That approach is now supported by a significant body of authority. As stated in a little more detail in para 21 above, it is in essence that, where a term of a contract is open to more than one interpretation, it is generally appropriate to adopt the interpretation which is most consistent with business common sense. For these reasons I prefer the approach of the Judge and Sir Simon Tuckey to that of Patten LJ, which is to my mind significantly different on this point. Application to the facts As indicated above, two possible interpretations of paragraph [3] of the Bonds were advanced. It was conceded on behalf of the Bank in the Court of Appeal that both constructions were arguable. I did not understand Mr Guy Philipps QC to resile from that position on behalf of the Bank in this Court. In any event, in my judgment there are indeed two possible interpretations. The strength of the Banks interpretation is that it is not easy to see the point of paragraph [2] of the Bonds if the Buyers interpretation of paragraph [3] is correct. On the other hand, the Buyers interpretation is straightforward. It is that, reduced to its essentials, the Banks promise in paragraph [3] was that in consideration of your [ie the Buyers] agreement to make the pre delivery instalments we hereby, as primary obligor, promise to pay to you, your successors and assigns, on your first written demand, all such sums due to you under the Contract . In the absence of paragraph [2] there could be no doubt that the reference to such sums was a reference to the pre delivery instalments at the beginning of paragraph [3]. That makes perfect sense because one would naturally expect the parties to agree (and the Buyers financiers to insist) that, in the event, for example, of the insolvency of the Builders, the Buyers should have security for the repayment of the pre delivery instalments which they had paid. The question is whether the presence of paragraph [2] leads to a different conclusion. It was submitted with force by Mr Philipps on behalf of the Bank that it did. He correctly submitted that paragraph [3] must be construed in its context and that part of the context was paragraph [2], which was of course the immediately preceding paragraph. He submitted that the only purpose there can have been for including paragraph [2] in the Bonds was to identify the scope of paragraph [3]. He further submitted that no other sensible explanation for the inclusion of paragraph [2] had been advanced on behalf of the Buyers. I accept the submission that no very good reason was advanced on behalf of the Buyers for the inclusion of paragraph [2] in the Bonds. The best they could do was to say that it was a preamble to the operative provision in paragraph [3], that it simply set out some of the Buyers rights under the Contracts and that it was not intended to identify the scope of the Banks liability under the Bonds. Patten LJ accepted at para 50 that the Buyers construction was arguable but said that, in his view, it was not the meaning that the document would convey to a reasonable person reading it with knowledge of the terms of the Contracts. This must I think mean that he took the view that, although it was arguable that it had that effect, it did not in fact do so. Otherwise the Buyers construction could not in any relevant sense have been said to be arguable and Patten LJ would surely not have described it as such. Patten LJ made this clear in para 51 (quoted below), where he described the alternative constructions as not being in any way evenly balanced. The position is thus that, although he regarded both constructions as arguable in the sense that the Bonds might convey either construction to a reasonable person reading the Bonds with knowledge of the terms of the Contracts, in his view the Banks construction was plainly to be preferred. If Patten LJ went further later in para 51, where he said that the fact that cover for the insolvency of the Builder was desirable did not justify a departure from what would otherwise be the natural and obvious construction of the bond, I respectfully disagree because I do not regard the Banks construction as being the natural and ordinary meaning of the Bonds. I have considered the competing arguments for myself and have concluded that they are much more finely balanced than suggested by Patten LJ and the Bank. In para 48 Patten LJ expressed the view that paragraph [2] of the Bonds reproduced the terms of Article X.5 and Article X.6 of the Contracts and therefore complied with Article X.8. In para 49 he concluded that the obvious purpose of paragraph [2] was to give the addressee of the Bonds a clear statement of the Builders obligations under the Contracts which are to be covered by the guarantee and one which is consistent with the terms of the Builders obligations to provide the bond under Article X.8 of the contract. For my part, I would not entirely accept that analysis. Paragraph [2] of the Bonds did reproduce the terms of Article X.5 and Article X.6 of the Contracts but it does not seem to me that it complied with the requirements of Article X.8. As I see it, Article X.8 did not provide for the terms in which the Bonds were to be issued. It provided that two letters of guarantee were to be provided, the first by a first class Korean Bank or Guarantee Insurance Company for the refund of the first instalment and the second issued by a first class Korean Bank or Guarantee Insurance Company acceptable to the Buyers financiers for the refund of the respective installments following the way of the payment stipulated in this Article. The first paragraph of Article X.8 included this: The refund guarantees by the Builder to the Buyer shall be indicated pre delivery instalments plus interest as aforesaid to the Buyer under or pursuant to paragraph 5 above in the form annexed hereto as Exhibit A which is yet to be agreed. In fact there was no form annexed to the Contracts, so it is far from clear what was meant by the sentence of the first paragraph of Article X.8 just quoted. As I see it, it was left that the parties would agree the final form of the Bonds referable to the second and subsequent instalments. Moreover both the identity of the issuer of the Bonds and the form of the Bonds were to be acceptable to the Buyers financiers. That was made clear by the second paragraph of Article X.8 which is quoted in para 11 above. I would accept the submission made on behalf of the Buyers that it is clear that neither Article X.5 nor Article X.8 was intended to set out all the circumstances in which the refund guarantees should operate. For example, there was no cross reference in Article X.8 to the Builders obligation under Article X.6 of the Contracts to refund the instalments paid in the event of actual or constructive total loss, although it is common ground that the Bonds did cover that obligation. In short, Article X.8 did not purport to dictate the final scope of the Bonds. In particular, it did not require that the guarantees should cover refund obligations only under Article X.5 and Article X.6 of the Contracts. There is a further curiosity in paragraph [2] of the Bonds. In describing the Buyers rights under the Contracts, it did not limit their rights to a refund of the pre delivery instalments of the price. It extended them to the case where the Buyers were entitled to the value of the Buyers Supplies delivered to the Shipyard (if any), although in so doing it failed accurately to reflect the contractual position in relation to termination as opposed to total loss, since under Article X.5 of the Contracts the obligation on termination was to return the Supplies, and only to (re)pay their value insofar as already incorporated into the Vessel. It would seem to follow from the Banks submission that para [2] defined the scope of the Banks obligations under para [3] that the expression all such sums due to you under the Contract included both the obligations to refund identified in para [2] and the obligation to pay the value of the Buyers Supplies (whatever that might cover). That was indeed the submission advanced in the Banks skeleton argument in the Court of Appeal. It is however a submission that is no longer advanced by either party. That is no doubt because the difficulty with it is that the Bonds were described as Advance Payment Bonds and the amount of each bond was US$26,640,000, which was the total amount of the second and subsequent instalments of the price, and because interest was only payable under para [3] of the Bonds from the respective dates of payment by [the Buyers] of such instalments, thus leaving no room for a right to payment of the value of Buyers Supplies under the Bonds. Sir Simon Tuckey took a different view of the construction of the critical clauses of the Bonds from that of Patten and Thorpe LJJ. He did so in para 28, where he was considering whether in the particular circumstances of the case the Judge should have had regard to considerations of commercial and business common sense. He said this: But should the judge's approach in this case have been more restricted as Mr Philipps contends? I do not think so. The title to Article X as a whole is "Payment" but it contains an assortment of different terms. Article X.8 is drafted on the basis that the form of guarantee which the parties contemplated would be annexed to the agreement. That would be the document to look at if one was trying to discover from the contract what the Buyer was looking for, not the reference back to Article X.5. This reference back is poorly drafted and quite capable of referring simply to the opening sentence of paragraph 5. It is difficult to construe it in a way which restricts the refund obligations which the bond was to cover, not least because there is no reference to the Article X.6 obligation to a refund following total or constructive loss of the vessel which both parties agree was to be covered by the bond. By the same token, no significance should be attached to the omission of the Article XII.3 refund obligation. Nor do I think there is anything in Mr Philipps' further point. On the happening of an Article XII.3 event the Buyer was entitled to a refund of its advance payments immediately. If that did not happen the contract was in a state of limbo: neither party could terminate at that stage. If the Builder did not proceed with the construction of the vessel, as would be extremely likely if it was insolvent, the Buyer could terminate for delay under Article XII.l but, under the terms of this article, only after 90 days plus 14 days notice. Only then could it call on the Bond. I cannot see how any Buyer (or its financiers) could possibly be satisfied with this as a remedy in the situation where the Builder was insolvent or nearly so. I agree with Sir Simon Tuckey and prefer his approach to that of the majority in the Court of Appeal. In all these circumstances, because of the difficulties in construing para [2] as setting out the sums due under the Bond, if I were focusing only on the language of the clause, I would be inclined to prefer the Buyers construction to that of the Bank. I note in passing in this regard that the construction advanced by the Bank was something of an afterthought. However, I recognize that, on the Buyers construction, it is not easy to see why paragraph [2] was included in the Bond at all, and that the Banks construction is arguable. This case is therefore a good example of the kind of case referred to in the authorities to which I have referred. Since the language of paragraph [3] is capable of two meanings it is appropriate for the court to have regard to considerations of commercial common sense in resolving the question what a reasonable person would have understood the parties to have meant. As noted at para 17 above, at his para 18(iii) the Judge described the Banks construction of the Bonds as having what he called the surprising and uncommercial result that the Buyers would not be able to call on the Bonds on the happening of the event, namely insolvency of the Builder, which would be most likely to require the first class security. I agree with Sir Simon Tuckey that an appellate court is entitled to take account of the fact that an experienced judge of the Commercial Court reached that conclusion. In any event, Sir Simon Tuckey expressed essentially the same view in strong terms at para 30: On the Bank's construction the Bonds covered each of the situations in which the Buyers were entitled to a return or refund of the advance payments which they had made under the contracts apart from the insolvency of the Builder. No credible commercial reason has been advanced as to why the parties (or the Buyers' financiers) should have agreed to this. On the contrary, it makes no commercial sense. As the judge said, insolvency of the Builder was the situation for which the security of an advance payment bond was most likely to be needed. The importance attached in these contracts to the obligation to refund in the event of insolvency can be seen from the fact that they required the refund to be made immediately. It defies commercial common sense to think that this, among all other such obligations, was the only one which the parties intended should not be secured. Had the parties intended this surprising result I would have expected the contracts and the bonds to have spelt this out clearly but they do not do so. I agree. Patten LJs view to the contrary is summarised at para 51: For the reasons which I have given, I do not regard the alternative constructions of paragraph (3) advanced on this appeal as being in any way evenly balanced. I also agree with Mr Philipps that it is impermissible to speculate on the reasons for omitting repayments in the event of insolvency from the bond. Although the judge is right to say that cover for such event was, objectively speaking, desirable, that is not sufficient in itself to justify a departure from what would otherwise be the natural and obvious construction of the bond. There may be any number of reasons why the Builder was unable or unwilling to provide bank cover in the event of its insolvency and why the Buyer was prepared to take the risk. This is not a case in which the construction contended for would produce an absurd or irrational result in the sense described in the cases I have referred to and merely to say that no credible commercial reason has been advanced for the limited scope of the bond does, in my view, put us in real danger of substituting our own judgment of the commerciality of the transaction for that of those who were actually party to it. As Hoffmann LJ put it, after quoting from Lord Diplocks speech in The Antaios [1985] AC 191, if the language is capable of more than one construction, it is not necessary to conclude that a particular construction would produce an absurd or irrational result before having regard to the commercial purpose of the agreement. See, for example, per Hoffmann LJ quoted at para 23 above, where he said: But language is a very flexible instrument and, if it is capable of more than one construction, one chooses that which seems most likely to give effect to the commercial purpose of the agreement. See also the quotation from Longmore LJ at para 29 above, where he said that, if a clause is capable of two meanings, it is quite possible that neither meaning will flout common sense, but that, in such a case, it is much more appropriate to adopt the more, rather than the less, commercial construction. In para 51 Patten LJ appears to have accepted that no credible commercial reasons were advanced for the limited scope of the Bonds being advanced by the Bank. Mr Philipps submitted that it was not necessary for the Bank to address the question but I have no doubt that if he or the Bank had been able to think of a credible reason for excluding repayments in the event of the Builders insolvency, such a reason would have been at the forefront of the Banks case. In these circumstances I would, if necessary, go so far as to say that the omission of the obligation to make such re payments from the Bonds would flout common sense but it is not necessary to go so far. I agree with the Judge and Sir Simon Tuckey that, of the two arguable constructions of paragraph [3] of the Bonds, the Buyers construction is to be preferred because it is consistent with the commercial purpose of the Bonds in a way in which the Banks construction is not. I note that Thorpe LJ was initially inclined to agree with the conclusions of the Judge but, in the event, agreed with Patten LJ without giving any independent reasons of his own. CONCLUSION For these reasons I would allow the appeal and restore the order of the Judge.
+This is the judgment of the Court, to which all members have contributed. The principal questions in this appeal are (a) whether article 8 of the European Convention on Human Rights (the Convention) requires a court, which is being asked to make an order for possession under section 143D(2) of the Housing Act 1996 (the 1996 Act) against a person occupying premises under a demoted tenancy, to have the power to consider whether the order would be necessary in a democratic society and (b) if so, whether section 143D(2) is compatible with article 8 of the Convention (article 8). In the result, the Court answers both questions in the affirmative, the first at paras 22 54, the second at paras 65 107 below. The appeal concerns a tenancy granted by a local authority, but observations relating to local authority landlords in this judgment apply equally to other social landlords to the extent that they are public authorities under the Human Rights Act 1998 (HRA). On the other hand, we should emphasise at the outset that nothing in this judgment is intended to bear on cases where the person seeking the order for possession is a private landowner. We briefly explain why at para 50 below. The background to the appeal: secure and demoted tenancies Most residential occupiers of houses and flats owned by local authorities are secure tenants under Part IV of the Housing Act 1985 (the 1985 Act). By virtue of section 84 of the 1985 Act, a secure tenant cannot be evicted unless the landlord establishes to the satisfaction of the court (a) that one of the grounds specified in schedule 2 to the 1985 Act (e g, non payment of rent or nuisance to neighbours) exists, and (b), except in some specified categories of case where suitable alternative accommodation is available, that it is reasonable to make an order for possession against the tenant. Even where the landlord establishes that these two requirements are satisfied, the court has a wide discretion under section 85 of the 1985 Act as to what order to make. It may refuse to make any order, it may adjourn the proceedings, it may make an outright possession order which takes effect on a specific day, or it may make a suspended possession order which will not take effect so long as, for instance, the tenant pays the rent or creates no nuisance. The secure tenancy regime was originally introduced by the Housing Act 1980 (the 1980 Act), but its provisions were consolidated in by Part IV of the 1985 Act. Certain types of tenancy are excluded from this regime, and they are set out in schedule 1 to the 1985 Act. Subsequently, amendments were made to the regime, most relevantly for present purposes by the 1996 Act and the Anti social Behaviour Act 2003 (the 2003 Act). The 2003 Act inserted a new section 82A into the 1985 Act (section 82A). This section gives the court the power to make a demotion order in respect of a secure tenancy. A demotion order results in a tenancy ceasing to be a secure tenancy and becoming, instead, a demoted tenancy. Section 82A(4) states that such an order may only be made if (a) the tenant (or someone living with him) has engaged, or has threatened to engage, in (i) housing related anti social conduct (as defined in section 153A of the 1996 Act) or (ii) conduct which consists of or involves using the premises for unlawful purposes (as explained in section 153B of the 1996 Act), and (b) it is reasonable to make the order. Section 82A makes it clear that the demoted tenancy is a new tenancy. The terms of the previous tenancy as to rent are carried across into the new tenancy, but the demotion results in much reduced rights of security of tenure for the tenant. Somewhat confusingly, the provisions dealing with the operation of the demoted tenancy regime were inserted as Chapter 1A of Part V of the 1996 Act. Subsection (1) of section 143B of that Act (section 143B) explains that, if a tenancy is demoted, the demotion will last for a year, unless the landlord brings possession proceedings within that year. If such proceedings are brought within the year and are not determined before the years end, the demoted tenancy continues until the proceedings are determined. If such proceedings are brought within the year and an order for possession is made, the tenancy ends. If no such proceedings are brought, or they are brought and they fail, then, at the end of the year, the demoted tenancy will become a secure tenancy. Subsection (1) of section 143D of the 1996 Act (section 143D) states that a landlord can only bring a demoted tenancy to an end by obtaining an order for possession from the court. Since it is central to the present appeal, section 143D(2) must be quoted in full: The court must make an order for possession unless it thinks that the procedure under sections 143E and 143F has not been followed. The effect of section 143E of the 1996 Act (section 143E) is that, before issuing possession proceedings against a demoted tenant, a local authority landlord must serve a notice (a Notice) informing him of (a) the fact that it has decided to seek possession, (b) the reasons why, (c) the date after which the proceedings will be issued, (d) the tenants right to request a review of the landlords decision (a Review), and (e) where to get legal advice. Section 143F of the 1996 Act (section 143F) entitles the tenant, within fourteen days of the Notice, to request a Review, in which case the local authority landlord is obliged to carry out a Review which complies with regulations made by the Secretary of State under section 143F(3) and (4), and then to inform the tenant of the outcome. Such regulations have been made in the Demoted Tenancies (Review of Decisions) (England) Regulations 2004 (SI 2004/1679). Section 143N of the 1996 Act states that the County Court has jurisdiction to determine questions arising, and to entertain proceedings brought, under, inter alia, sections 143B 143F, even if the only relief sought is a declaration. The procedures of the demoted tenancy regime are closely based on those of a regime first introduced by Chapter 1 of Part V of the 1996 Act. It enabled a local authority to grant a tenancy under which a new tenant had a one year probationary period before becoming a secure tenant. During that first year the tenancy is an introductory tenancy. The procedure governing the landlords right to claim possession during that probationary period is contained in sections 127, 128, and 129 of the 1996 Act, whose provisions are, mutatis mutandis, virtually identical to sections 143D, 143E, and 143F respectively. The procedural background to the appeal In November 1978 Manchester City Council (the Council) granted Cleveland Pinnock a tenancy of a house at 65 Meldon Road, Longsight (the property), where he has lived ever since with his partner, Christine Walker, and, from time to time, with all or some of their five children. In March 2005 the Council applied to the Manchester County Court for an order for possession of the property, or in the alternative a demotion order in respect of Mr Pinnocks secure tenancy. Each of these claims was based on the contention that all of Mr Pinnocks children and Ms Walker (but not Mr Pinnock) had been guilty of serious anti social behaviour, in breach of the covenants in Mr Pinnocks tenancy. The proceedings came before Recorder Scott Donovan, who heard considerable evidence and argument over a total of six days. In part, the length of the proceedings was due to the Council amending its case in relation to the relief it was seeking. The Recorder gave a full judgment on 8 June 2007. He concluded that a large number of serious allegations against Ms Walker and Mr Pinnocks children were well founded. He nevertheless decided that it would be truly draconian to make an order for possession, bearing in mind the length of the tenancy and Mr Pinnocks blameless life looked at from his own lack of direct involvement in criminal activity. However, he went on to say that [a]pplying the criteria of reasonableness, I am satisfied that a demotion of tenancy order is the most appropriate order and that compliance with the order is entirely within Mr Pinnocks and Christine Walkers own hands. The demotion order therefore took effect from 8 June 2007. On 6 June 2008, the day before the order would effectively have lapsed, the Council served a Notice under section 143E, which indicated that possession would be sought. The Notice had the effect pursuant to section 143B of prolonging the demoted tenancy, and of initiating the procedure envisaged in sections 143D, 143E and 143F. The Notice sought to justify the projected possession proceedings on the ground of further alleged incidents of anti social behaviour in the vicinity of the property involving two of Mr Pinnocks sons. Mr Pinnock exercised his right to seek a Review, which duly took place before a panel appointed by the Council (the Panel). In its decision of 3 July 2008, the Panel effectively upheld the Notice. The Council then issued a claim for possession which came before His Honour Judge Holman in the Manchester County Court. After a two day hearing, the Judge gave a full judgment on 22 December 2008. The upshot of his decision was that he made an outright order for possession of the property. Mr Pinnock appealed to the Court of Appeal, who dismissed his appeal: [2009] EWCA Civ 852. Mr Pinnock now appeals to this Court. The issues which arise on this appeal That simple description of the present proceedings rather masks the important and difficult issues to which they give rise. Those issues are apparent from the clear and careful judgments of Judge Holman, in the County Court, and of Stanley Burnton LJ (with whom Mummery and Lloyd LJJ agreed) in the Court of Appeal. Mr Pinnock wished to challenge the factual basis on which the Council had decided to seek possession and the Panel had decided to uphold the decision. He also contended that the making of an order for possession would violate his article 8 Convention rights. Judge Holman concluded that his role in this case was, as he put it, at para 60, limited to conducting a conventional judicial review of the Councils decision to bring the possession proceedings, and that his remit did not extend to resolv[ing] factual disputes. In particular, he could not entertain any argument based on article 8. Having accepted that he could review the Councils decision to bring and maintain the possession claim on normal judicial review principles, the Judge concluded that the Councils decision to prosecute the claim was rational. He accordingly made an outright order for possession. Stanley Burnton LJ agreed in the result, but, while largely agreeing with Judge Holmans analysis, he thought that the County Courts role was even more limited. He said this, [2009] EWCA Civ 852, at para 50: Section 143D of the 1996 Act restricts the county court to considering whether the procedure under sections 143E and 143F has been followed. If the court concludes the procedure has not been followed, it will not make an order for possession. If it has been followed, it must make the order. I emphasise the word procedure. The courts review is limited to matters of procedure, and the county court cannot review the substance or rationality of the landlords decision, or whether or not it is consistent with the tenants or other occupiers Convention rights. Stanley Burnton LJ nonetheless went on, helpfully, to consider whether he would have agreed with the Judges conclusion that the Councils decision to maintain a claim for possession was rational. He concluded that it was; indeed he thought that the Judge had taken rather a restrictive view of the relevant evidence which the Council could have taken into account. This appeal gives rise to four main issues, of increasing specificity. The first is whether the jurisprudence of the European Court of Human Rights (EurCtHR) requires that, before making an order for possession of property which consists of a persons home pursuant to a claim made by a local authority (or other public authority), a domestic court should be able to consider the proportionality of evicting that person from his home under article 8, and, in the process of doing so, to resolve any relevant factual disputes between the parties. We deal with that question in paras 22 54 below and answer it in the affirmative. The second issue (paras 55 64 below) is what this conclusion means in practice in relation to claims for possession, and related claims, in relation to residential property. The third issue (paras 65 107 below) is whether the demoted tenancy regime in the 1985, 1996 and 2003 Acts can properly be interpreted so as to comply with the requirements of article 8, or whether at least some aspects of that regime are incompatible with the occupiers article 8 Convention rights. The fourth issue (paras 108 132 below), which requires a fuller consideration of the facts of this case, is how the appeal should be disposed of in the light of the answers on the first three issues. First issue: what does the Convention require of the courts? The nature of the issue So far as relevant, article 8 of the Convention provides: 1. Everyone has the right to respect for his home . 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 the economic well being of the country, for the prevention of disorder or crime, or for the protection of the rights of others. It is also appropriate to refer to article 6, which, so far as relevant, provides: In the determination of his civil rights and obligations everyone is entitled to a fair hearing by an independent and impartial tribunal established by law. The argument on behalf of Mr Pinnock is as follows. (a) At any rate where the person seeking possession is a public authority, a court invited to make an order for possession of a persons home must be satisfied that article 8 is complied with. (b) Accordingly, in the present proceedings, Judge Holman had to satisfy himself that the order for possession which he was being invited to make complied with article 8. (c) Article 8, when read together with article 6, required the Judge, as the relevant independent tribunal, to be satisfied that the order for possession (i) would be in accordance with the law, and (ii) would be necessary in a democratic society i e, that it would be proportionate. (d) The order for possession was in accordance with the law since it was made pursuant to the provisions relating to demoted tenancies in the 1985 and 1996 Acts, which are in principle unobjectionable under article 8. (e) However, Mr Pinnock was not given the opportunity to raise with the court the question whether the order for possession was, in all the circumstances of this case, proportionate. Therefore article 8 was violated. (f) Further, in order to determine proportionality, the court should have had power to resolve for itself any issues of fact between the Council and Mr Pinnock, and to form its own view of proportionality, rather than adopting the traditional judicial review approach taken by the Judge. (g) Either the legislation should be interpreted to have the effect contended for in points (e) and (f), or this court should make a declaration of incompatibility. The issues identified in the argument for Mr Pinnock are by no means novel. It is therefore necessary for the Court to look briefly at the decisions of the House of Lords which deal with them and then, in a little more detail, at the relevant decisions of the EurCtHR. The House of Lords Cases In three relatively recent cases the House of Lords held that it was not open to a residential occupier, against whom possession was being sought by a local authority, to raise a proportionality argument under article 8. In other words, the House rejected points (e) and (f) in the outline of the argument for Mr Pinnock in para 23 above. Point (g) therefore did not arise. For this reason, the Court of Appeal and Judge Holman were bound to come to the conclusions which we have summarised in paras 19 and 20 above. The three decisions of the House of Lords are Harrow London Borough Council v Qazi [2003] UKHL 43; [2004] 1 AC 983, Kay v Lambeth London Borough Council [2006] UKHL 10; [2006] 2 AC 465, and Doherty v Birmingham City Council [2008] UKHL 57; [2009] 1 AC 367. In each of them the defendants were residential occupiers of properties owned by a local authority, but, for one reason or another, they were not secure tenants, and, having had any right to continue to occupy the respective properties brought to an end in accordance with domestic law, they were trespassers. So, in accordance with domestic law, the defendants could raise no defence to the local authoritys claim for possession. In each case, however, the defendants contended that they should be able to rely on the argument that, even though they were trespassers with no defence to a claim for possession under domestic law, they had the right to have the proportionality of the loss of their home taken into account by virtue of their article 8 Convention rights. No disrespect is intended to the impressive and careful reasoning in those three decisions when we say that, for present purposes, it is unnecessary to consider them in any detail. In Harrow v Qazi [2004] 1 AC 983 and in Kay v Lambeth [2006] 2 AC 465, albeit in each case by a bare majority, the House decided that, a defence which does not challenge the law under which the possession order is sought as being incompatible with article 8 but is based only on the occupiers personal circumstances should be struck out: Kay v Lambeth [2006] 2 AC 465, 516 517, para 110, per Lord Hope of Craighead, with whom Lord Scott of Foscote, Baroness Hale of Richmond and Lord Brown of Eaton under Heywood agreed. This observation applied to claims against trespassers, just as much as to claims against current or former tenants or licensees. At the end of the same paragraph Lord Hope explained that, following Wandsworth London Borough Council v Winder [1985] AC 461, in principle, it would be open to a defendant to challenge the decision of a local authority to recover possession as an improper exercise of its powers at common law on the traditional judicial review ground that it was a decision that no reasonable person would consider justifiable. In Doherty v Birmingham [2009] 1 AC 367 the law as stated in para 110 of Kay was substantially reaffirmed. On the article 8 point Lord Mance, however, dissented, at para 132, and Lord Walker of Gestingthorpe displayed less than whole hearted enthusiasm, at paras 107 108. The law on the judicial review point was affirmed by Lord Hope, Lord Walker, and Lord Mance, at paras 56, 123 and 157 respectively. Nevertheless, in the light of the developments in the Strasbourg jurisprudence which we describe below, the House developed the law by acknowledging that the traditional approach to judicial review would have to be expanded, particularly to permit the court to make its own assessment of the relevant facts: [2009] 1 AC 367, especially at p 416, para 68, per Lord Scott, and at p 443, para 138, per Lord Mance. In both Harrow v Qazi [2004] 1 AC 983 and Kay v Lambeth [2006] 2 AC 465, Lord Bingham of Cornhill (dissenting along with Lord Steyn in the former case, and with Lord Nicholls of Birkenhead and Lord Walker in the latter) accepted that it should be open, as a matter of principle, to a residential occupier, against whom a local authority is seeking possession, to raise an article 8 proportionality argument based on the facts of the particular case. However, in Qazi, [2004] 1 AC 983, at para 25, Lord Bingham said that, if this was right, the occasions on which a court would be justified in declining to make a possession order would be very highly exceptional. He effectively repeated this view in Kay v Lambeth [2006] 2 AC 465, 491 492, para 29, where he suggested that only in rare and exceptional cases would an article 8 proportionality challenge not be futile. The Strasbourg Jurisprudence Mr Pinnock contends that, exceptionally, it is appropriate for this nine judge court to depart from the majority view in these cases because there is now a consistent series of decisions of the EurCtHR which unambiguously supports the minority view in the earlier House of Lords decisions, and there is no good reason not to follow that series of decisions. We must therefore examine them. In Connors v United Kingdom (App no 66746/01), 27 May 2004 (2004) 40 EHRR 189, gypsies had initially been permitted to locate their caravan on a piece of land owned by a local authority, but their right of occupation was brought to an end because the local authority considered that they were committing a nuisance. The local authority then successfully brought summary proceedings for possession, on the ground that they were trespassers and had no right to remain in occupation of the land. Before the First Section of the EurCtHR the gypsies successfully contended that the proceedings violated their rights under article 8. Although the local authoritys decision to evict the gypsies was susceptible to judicial review, the EurCtHR considered, 40 EHRR 189, para 92, that this procedure was insufficient to satisfy the requirements of article 8 because the local authority was not required to establish any substantive justification for evicting [the gypsies], and on this point judicial review could not provide any opportunity for an examination of the facts in dispute between the parties. verbatim in subsequent decisions, the EurCtHR said: In a passage, 40 EHRR 189, paras 81 83, which has often been quoted 81. An interference will be considered necessary in a democratic society for a legitimate aim if it answers a pressing social need and, in particular, if it is proportionate to the legitimate aim pursued. While it is for the national authorities to make the initial assessment of necessity, the final evaluation as to whether the reasons cited for the interference are relevant and sufficient remains subject to review by the Court for conformity with the requirements of the Convention. 82. In this regard, a margin of appreciation must, inevitably, be left to the national authorities . This margin will vary according to the nature of the Convention right in issue, its importance for the individual and the nature of the activities restricted, as well as the nature of the aim pursued by the restrictions . Where general social and economic policy considerations have arisen in the context of article 8 itself, the scope of the margin of appreciation depends on the context of the case, with particular significance attaching to the extent of the intrusion into the personal sphere of the applicant. 83. The procedural safeguards available to the individual will be especially material in determining whether the respondent State has, when fixing the regulatory framework, remained within its margin of appreciation. In particular, the Court must examine whether the decision making process leading to measures of interference was fair and such as to afford due respect to the interests safeguarded to the individual by article 8. In Blei v Croatia (App no 59532/00), 29 July 2004 (2004) 41 EHRR 185, the First Section of the EurCtHR held that there had been no violation of the applicants article 8 rights in circumstances where her protected tenancy of her home had been terminated by the Croatian court on the ground that she had ceased to occupy it for 10 months during 1991 1992. Her case was that it had been her home since 1953, and that her absence had been attributable to armed conflict in Dalmatia, but it was held that it had been her personal decision to leave. The EurCtHR said, at 41 EHRR 185, para 65: State intervention in socio economic matters such as housing is often necessary in securing social justice and public benefit. In this area, the margin of appreciation available to the State in implementing social and economic policies is necessarily a wide one. The domestic authorities judgment as to what is necessary to achieve the objectives of those policies should be respected unless that judgment is manifestly without reasonable foundation. Although this principle was originally set forth in the context of complaints under article 1 of Protocol No 1 the State enjoys an equally wide margin of appreciation as regards respect for the home in circumstances such as those prevailing in the present case, in the context of article 8. Thus, the Court will accept the judgment of the domestic authorities as to what is necessary in a democratic society unless that judgment is manifestly without reasonable foundation, that is, unless the measure employed is manifestly disproportionate to the legitimate aim pursued. The case then went to the Grand Chamber, which held that, ratione temporis, the court had had no jurisdiction to hear it. The Grand Chamber said nothing, however, to cast doubt on what the First Section had said in the passage which we have quoted: [2006] ECHR 207. In McCann v United Kingdom (App no 19009/04), 13 May 2008 (2008) 47 EHRR 913 the County Court made an order for possession against a man who occupied his home as a joint tenant with his estranged wife, on the ground that the tenancy had been determined by a notice to quit which she had served at the request of the local authority landlord and without reference to her husband. The EurCtHR (Fourth Section) rejected the contention that the reasoning in Connors v UK 40 EHRR 189, paras 81 83, was confined only to cases involving the eviction of gypsies or cases where the applicant sought to challenge the law itself rather than its application in his particular case: 47 EHRR 913, para 50. The court continued: The loss of ones home is the most extreme form of interference with the right for respect for the home. Any person at risk of an interference of this magnitude should in principle be able to have the proportionality of the measure determined by an independent tribunal in the light of the relevant principles under [article 8], notwithstanding that, under domestic law, his right of occupation has come to an end. At para 54, the EurCtHR considered and rejected the contention that the grant of the right to the occupier to raise an issue under article 8 would have serious consequences for the functioning of the system or for the domestic law of landlord and tenant, citing and confirming the view of Lord Bingham in Kay v Lambeth [2006] 2 AC 465, 491 492, para 29, to the effect that only in very exceptional cases could an applicant succeed in raising an arguable case which would require a court to examine the issue. The court also said that in the great majority of cases, an order for possession could continue to be made in summary proceedings. In osi v Croatia (App no 28261/06), 15 January 2009 the Croatian state had obtained an order evicting the applicant from her home, which she had ceased to have any right to occupy as a matter of domestic law. After quoting and considering Connors v UK 40 EHRR 189, paras 81 83, the EurCtHR (First Section) pointed out, at para 21, that the national courts had based their decision exclusively on the [domestic] applicable laws and had thus confined themselves to finding that occupation by the appellant was without legal basis [and] made no further analysis as to the proportionality of the measure to be applied against the applicant. The court immediately went on to say that the Convention required that the eviction order was proportionate to the legitimate aim pursued, and that no legal provision of domestic law should be interpreted and applied in a manner incompatible with Croatias obligations under the Convention. In paras 22 and 23, the EurCtHR concluded that article 8 had been violated since the applicant [had not been] afforded [the] possibility of having the proportionality and reasonableness of the measure [viz, an order of court evicting her from her home] determined by an independent tribunal in the light of the relevant principles under article 8 . In Zehentner v Austria (App no 20082/02), 16 July 2009 the EurCtHR (First Section) had to consider the effect of article 8 in the context of an order evicting the applicant from her home following a judicial sale, after the making of the Austrian equivalent of a charging order. The procedural circumstances were rather unusual, but the court held, at para 54, that the judicial sale and the applicants eviction are to be seen as a whole. Importantly, for present purposes, at paras 52 59, the court reaffirmed the approach in Connors v UK 40 EHRR 189 and McCann v UK 47 EHRR 913. In particular, the court also stated, at para 59, that a person at risk of eviction from their home should be able to have the proportionality of the measure determined by an independent tribunal in the light of the relevant principles under article 8. In Pauli v Croatia (App no 3572/06), 22 October 2009 the EurCtHR (First Section) cited McCann v UK 47 EHRR 913 and reiterated, at para 43, that any person at risk of an interference with his right to home should in principle be able to have the proportionality and reasonableness of the measure determined by an independent tribunal notwithstanding that, under domestic law, he or she has no right to occupy a flat. The court went on to explain that this right does not arise automatically, but only if the issue is raised with the court by the person concerned. Finally, there is Kay v United Kingdom (App no 37341/06), 21 September 2010 in which the EurCtHR (Fourth Section) gave its judgment after the conclusion of the oral argument in this case. We then received written submissions on the decision from the parties. In that case the application was made to the Strasbourg court by the unsuccessful appellants in Kay v Lambeth [2006] 2 AC 465. They had no security of tenure in their homes and their defences to claims for possession brought by the local authority based on the contention that it was disproportionate to deprive them of their homes in the light of article 8 had been struck out. After carefully considering the various views expressed in the House of Lords in Kay v Lambeth [2006] 2 AC 465 and Doherty v Birmingham [2009] 1 AC 367, and the relevant decisions of the Court of Appeal, the EurCtHR stated, at paras 65 68, that the principles laid down in Connors v UK 40 EHRR 189 and McCann v UK 47 EHRR 913 applied. The EurCtHR then stated, at para 73: The Court welcomes the increasing tendency of the domestic courts to develop and expand conventional judicial review grounds in the light of article 8. A number of their Lordships in Doherty alluded to the possibility for challenges on conventional judicial review grounds in cases such as the applicants' to encompass more than just traditional Wednesbury grounds (see Lord Hope at para 55; Lord Scott at paras 70 and 84 to 85; and Lord Mance at paras 133 to 135 of the House of Lords judgment). However, notwithstanding these developments, the Court considers that at the time that the applicants cases were considered by the domestic courts, there was an important distinction between the majority and minority approaches in the House of Lords, as demonstrated by the opinions in Kay itself. In McCann, the Court agreed with the minority approach [in Kay v Lambeth [2006] 2 AC 465] although it noted that, in the great majority of cases, an order for possession could continue to be made in summary proceedings and that it would be only in very exceptional cases that an applicant would succeed in raising an arguable case which would require a court to examine the issue. Accordingly, in the next paragraph of its judgment, the EurCtHR concluded: In conclusion, the Kay applicants challenge to the decision to strike out their article 8 defences failed because it was not possible at that time to challenge the decision of a local authority to seek a possession order on the basis of the alleged disproportionality of that decision in light of personal circumstances. Accordingly, for the reasons given in McCann, the Court concludes that the decision by the County Court to strike out the applicant's article 8 defences meant that the procedural safeguards required by article 8 for the assessment of the proportionality of the interference were not observed. As a result, the applicants were dispossessed of their homes without any possibility to have the proportionality of the measure determined by an independent tribunal. It follows that there has been a violation of article 8 of the Convention in the instant case. The EurCtHR was therefore saying that, in so far as the law had subsequently been developed in Doherty v Birmingham [2009] 1 AC 367, this development could not be relied on by the United Kingdom in Kay v UK (App no 37341/06). Conclusion on the first issue From these cases, it is clear that the following propositions are now well established in the jurisprudence of the EurCtHR: (a) Any person at risk of being dispossessed of his home at the suit of a local authority should in principle have the right to raise the question of the proportionality of the measure, and to have it determined by an independent tribunal in the light of article 8, even if his right of occupation under domestic law has come to an end: McCann v UK 47 EHRR 913, para 50; osi v Croatia (App no 28261/06), para 22; Zehentner v Austria (App no 20082/02), para 59; Pauli v Croatia (App no 3572/06), para 43, and Kay v UK (App no 37341/06), paras 73 4. (b) A judicial procedure which is limited to addressing the proportionality of the measure through the medium of traditional judicial review (i e, one which does not permit the court to make its own assessment of the facts in an appropriate case) is inadequate as it is not appropriate for resolving sensitive factual issues: Connors v UK 40 EHRR 189, para 92; McCann v UK 47 EHRR 913, para 53; Kay v UK (App no 37341/06), paras 72 73. (c) Where the measure includes proceedings involving more than one stage, it is the proceedings as a whole which must be considered in order to see if article 8 has been complied with: Zehentner v Austria (App no 20082/02), para 54. (d) If the court concludes that it would be disproportionate to evict a person from his home notwithstanding the fact that he has no domestic right to remain there, it would be unlawful to evict him so long as the conclusion obtains for example, for a specified period, or until a specified event occurs, or a particular condition is satisfied. Although it cannot be described as a point of principle, it seems that the EurCtHR has also franked the view that it will only be in exceptional cases that article 8 proportionality would even arguably give a right to continued possession where the applicant has no right under domestic law to remain: McCann v UK 47 EHRR 913, para 54; Kay v UK (App no 37341/06), para 73. We have referred in a little detail to the EurCtHR jurisprudence. This is because it is important for the Court to emphasise what is now the unambiguous and consistent approach of the EurCtHR, when we have to consider whether it is appropriate for this Court to depart from the three decisions of the House of Lords. As we have already explained, the House of Lords decisions have to be seen against the backdrop of the evolving Strasbourg jurisprudence. So, for instance, the first of the House of Lords decisions, Harrow v Qazi [2004] 1 AC 983, came before any of the EurCtHR judgments. Kay v Lambeth [2006] 2 AC 465 was decided after Connors v UK 40 EHRR 189. But, viewed without the benefit of subsequent EurCtHR jurisprudence, the reasoning in Connors could have been interpreted as applying only to gypsies. Indeed one point made on the applicants behalf was that gypsies occupying sites owned by local authorities were not given any rights of security of tenure, unlike occupiers of flats or houses owned by local authorities, who were secure tenants. Although McCann v UK 47 EHRR 913 had been decided by the time of Doherty v Birmingham [2009] 1 AC 367, it would have been inappropriate for a five judge court, at least in the particular circumstances, to depart substantially from the decision of the seven judge court in Kay. Importantly, the judgments in osi v Croatia (App no 28261/06), Zehentner v Austria (App no 20082/02), Pauli v Croatia (App no 3572/06) and Kay v UK (App no 37341/06) were all given after the last of the three House of Lords decisions. This Court is not bound to follow every decision of the EurCtHR. Not only would it be impractical to do so: it would sometimes be inappropriate, as it would destroy the ability of the Court to engage in the constructive dialogue with the EurCtHR which is of value to the development of Convention law (see e g R v Horncastle [2009] UKSC 14; [2010] 2 WLR 47). Of course, we should usually follow a clear and constant line of decisions by the EurCtHR: R (Ullah) v Special Adjudicator [2004] UKHL 26; [2004] 2 AC 323. But we are not actually bound to do so or (in theory, at least) to follow a decision of the Grand Chamber. As Lord Mance pointed out in Doherty v Birmingham [2009] 1 AC 367, para 126, section 2 of the HRA requires our courts to take into account EurCtHR decisions, not necessarily to follow them. Where, however, there is a clear and constant line of decisions whose effect is not inconsistent with some fundamental substantive or procedural aspect of our law, and whose reasoning does not appear to overlook or misunderstand some argument or point of principle, we consider that it would be wrong for this Court not to follow that line. In the present case there is no question of the jurisprudence of the EurCtHR failing to take into account some principle or cutting across our domestic substantive or procedural law in some fundamental way. That is clear from the minority opinions in Harrow v Qazi [2004] 1 AC 983 and Kay v Lambeth [2006] 2 AC 465, and also from the fact that our domestic law was already moving in the direction of the European jurisprudence in Doherty v Birmingham [2009] 1 AC 367. Even before the decision in Kay v UK (App no 37341/06), we would, in any event, have been of the opinion that this Court should now accept and apply the minority view of the House of Lords in those cases. In the light of Kay, that is clearly the right conclusion. Therefore, if our law is to be compatible with article 8, where a court is asked to make an order for possession of a persons home at the suit of a local authority, the court must have the power to assess the proportionality of making the order, and, in making that assessment, to resolve any relevant dispute of fact. We emphasise that this conclusion relates to possession proceedings brought by local authorities. As we pointed out at para 4 above, nothing which we say is intended to bear on cases where the person seeking the order for possession is a private landowner. Conflicting views have been expressed both domestically and in Strasbourg on that situation. In Harrow v Qazi [2004] 1 AC 983 the views of Lord Bingham and Lord Steyn, at paras 23 and 26, can be contrasted with the view of Lord Hope, at para 52. In Belchikova v Russia (App no 2408/06, 25 March 2010), the application was held to be inadmissible, but the EurCtHR (First Section) seems to have considered that article 8 was relevant, even when the person seeking possession was a private sector landowner. Presumably, this was on the basis that the court making the order was itself a public authority. But it is not clear whether the point was in contention. In the rather older admissibility decision of Di Palma v United Kingdom (App no 11949/86) (1986) 10 EHRR 149, 155 156, the Commission seems to have taken a different view, but the point was only very briefly discussed. No doubt, in such cases article 1 of the First Protocol to the Convention will have a part to play, but it is preferable for this Court to express no view on the issue until it arises and has to be determined. Exceptionality It is necessary to address the proposition that it will only be in very highly exceptional cases that it will be appropriate for the court to consider a proportionality argument. Such a proposition undoubtedly derives support from the views expressed by Lord Bingham, and has been referred to with apparent approval by the EurCtHR in more than one case. Nevertheless, it seems to us to be both unsafe and unhelpful to invoke exceptionality as a guide. It is unhelpful because, as Lady Hale pointed out in argument, exceptionality is an outcome and not a guide. It is unsafe because, as Lord Walker observed in Doherty v Birmingham [2009] 1 AC 367, para 122, there may be more cases than the EurCtHR or Lord Bingham supposed where article 8 could reasonably be invoked by a residential tenant. We would prefer to express the position slightly differently. The question is always whether the eviction is a proportionate means of achieving a legitimate aim. Where a person has no right in domestic law to remain in occupation of his home, the proportionality of making an order for possession at the suit of the local authority will be supported not merely by the fact that it would serve to vindicate the authoritys ownership rights. It will also, at least normally, be supported by the fact that it would enable the authority to comply with its duties in relation to the distribution and management of its housing stock, including, for example, the fair allocation of its housing, the redevelopment of the site, the refurbishing of sub standard accommodation, the need to move people who are in accommodation that now exceeds their needs, and the need to move vulnerable people into sheltered or warden assisted housing. Furthermore, in many cases (such as this appeal) other cogent reasons, such as the need to remove a source of nuisance to neighbours, may support the proportionality of dispossessing the occupiers. In this connection, it is right to refer to a point raised by the Secretary of State. He submitted that a local authoritys aim in wanting possession should be a given, which does not have to be explained or justified in court, so that the court will only be concerned with the occupiers personal circumstances. In our view, there is indeed force in the point, which finds support in Lord Binghams comment in Kay v Lambeth [2006] 2 AC 465, 491, para 29, that to require the local authority routinely, from the outset, to plead and prove that the possession order sought is justified would, in the overwhelming majority of cases, be burdensome and futile. In other words, the fact that the authority is entitled to possession and should, in the absence of cogent evidence to the contrary, be assumed to be acting in accordance with its duties, will be a strong factor in support of the proportionality of making an order for possession. But, in a particular case, the authority may have what it believes to be particularly strong or unusual reasons for wanting possession for example, that the property is the only occupied part of a site intended for immediate development for community housing. The authority could rely on that factor, but would have to plead it and adduce evidence to support it. Unencumbered property rights, even where they are enjoyed by a public body such as a local authority, are of real weight when it comes to proportionality. So, too, is the right indeed the obligation of a local authority to decide who should occupy its residential property. As Lord Bingham said in Harrow v Qazi [2004] 1 AC 983, 997, para 25: [T]he administration of public housing under various statutory schemes is entrusted to local housing authorities. It is not for the court to second guess allocation decisions. The Strasbourg authorities have adopted a very pragmatic and realistic approach to the issue of justification. Therefore, in virtually every case where a residential occupier has no contractual or statutory protection, and the local authority is entitled to possession as a matter of domestic law, there will be a very strong case for saying that making an order for possession would be proportionate. However, in some cases there may be factors which would tell the other way. Second issue: the application of this conclusion in general The conclusion that, before making an order for possession, the court must be able to decide not only that the order would be justified under domestic law, but also that it would be proportionate under article 8(2) to make the order, presents no difficulties of principle or practice in relation to secure tenancies. As explained above, no order for possession can be made against a secure tenant unless, inter alia, it is reasonable to make the order. Any factor which has to be taken into account, or any dispute of fact which has to be resolved, for the purpose of assessing proportionality under article 8(2), would have to be taken into account or resolved for the purpose of assessing reasonableness under section 84 of the 1985 Act. Reasonableness under that section, like proportionality under article 8(2), requires the court to consider whether to order possession at all, and, if so, whether to make an outright order rather than a suspended order, and, if so, whether to direct that the outright order should not take effect for a significant time. Moreover, reasonableness involves the trial judge tak[ing] into account all the relevant circumstances in a broad common sense way: Cumming v Danson [1942] 2 All ER 653, 655, per Lord Greene MR. It therefore seems highly unlikely, as a practical matter, that it could be reasonable for a court to make an order for possession in circumstances in which it would be disproportionate to do so under article 8. The implications of article 8 being potentially in play are much more significant where a local authority is seeking possession of a persons home in circumstances in which domestic law imposes no requirement of reasonableness and gives an unqualified right to an order for possession. In such a case the courts obligation under article 8(2), to consider the proportionality of making the order sought, does represent a potential new obstacle to the making of an order for possession. The wide implications of this obligation will have to be worked out. As in many situations, that is best left to the good sense and experience of judges sitting in the County Court. The present appeal involves a type of case which arises relatively rarely, namely a claim for possession against a demoted tenant, and we heard relatively little in the submissions about other types of case. When it comes to possession proceedings, a demoted tenant is unusual in two respects: (a) he has already been the subject of proceedings which have resulted in the loss of statutory protection, and (b) he will have been given notice of the grounds on which possession is being sought, and an opportunity to challenge those grounds. The conjoined appeals in Salford City Council v Mullen [2010] EWCA Civ 336, which are due to be heard by this Court later this month, involve possession orders made in different and more common circumstances, namely the introductory tenancy regime (under Chapter 1 of Part V of the 1996 Act) and the homelessness regime (under Part VII of the 1996 Act). Those appeals may therefore provide a more appropriate vehicle for the giving of general guidance. Moreover, in relation to the homelessness regime, this Court will be able to consider whether any guidance can usefully be given to local authorities as to what course to take before seeking possession in cases where there is no provision for the kind of procedure envisaged in sections 143E and 143F of the 1996 Act. In the light of our decision in the present appeal the lawyers preparing for those appeals will have the opportunity to give particular attention to these aspects of the matter. Nevertheless, certain general points can be made, even at this stage. First, it is only where a persons home is under threat that article 8 comes into play, and there may be cases where it is open to argument whether the premises involved are the defendants home (e g where very short term accommodation has been provided). Secondly, as a general rule, article 8 need only be considered by the court if it is raised in the proceedings by or on behalf of the residential occupier. Thirdly, if an article 8 point is raised, the court should initially consider it summarily, and if, as will no doubt often be the case, the court is satisfied that, even if the facts relied on are made out, the point would not succeed, it should be dismissed. Only if the court is satisfied that it could affect the order that the court might make should the point be further entertained. Fourthly, if domestic law justifies an outright order for possession, the effect of article 8 may, albeit in exceptional cases, justify (in ascending order of effect) granting an extended period for possession, suspending the order for possession on the happening of an event, or even refusing an order altogether. Fifthly, the conclusion that the court must have the ability to assess the article 8 proportionality of making a possession order in respect of a persons home may require certain statutory and procedural provisions to be revisited. For example, section 89 of the 1980 Act limits the period for which a possession order can be postponed to 14 days, or, in cases of exceptional hardship, 42 days. And some of the provisions of CPR 55, which appear to mandate a summary procedure in some types of possession claim, may present difficulties in relation to cases where article 8 claims are raised. Again, we say no more on the point, since these aspects were not canvassed on the present appeal to any significant extent, save in relation to the legislation on demoted tenancies which we are about to discuss under the third issue. Sixthly, the suggestions put forward on behalf of the Equality and Human Rights Commission, that proportionality is more likely to be a relevant issue in respect of occupants who are vulnerable as a result of mental illness, physical or learning disability, poor health or frailty, and that the issue may also require the local authority to explain why they are not securing alternative accommodation in such cases seem to us well made. Third issue: the application of this conclusion to demoted tenancies Introductory As explained above, where an order for possession is made against a demoted tenant, such as Mr Pinnock, the court is involved at two different stages. The first stage, which arises if the landlord decides to apply for a demotion order, requires the court to decide whether to make such an order. The second stage, which arises if the landlord decides to make an application for an order for possession while the demotion order applies, requires the court to decide whether to make an order for possession. Each stage involves a significant and direct assault on the tenants right to occupy his home, and therefore engages article 8. So far as the first stage is concerned, before making a demotion order, the court must consider for itself the factual basis for making such an order. Moreover, the court can only make such an order once it is satisfied (a) that the facts which it investigates and determines justify the order under section 82A(4)(a), and (b) that it is reasonable to make the order under section 82A(4)(b). I therefore find it impossible to conceive of circumstances where the requirements of article 8 would not be satisfied by the plain words of the relevant statutory provisions. Greater problems arise, however, when one turns to the second stage where, as in this case, the court is asked to make an order for possession against a demoted tenant. The proper interpretation of section 143D(2) of the 1996 Act The first argument raised against the conclusion that the County Court judge who is asked to make an order for possession under section 143D(2) can carry out his own article 8 assessment of the proportionality of making such an order arises from the wording of the sub section. We have quoted it at para 10 above. The provision requires the court to make an order for possession, unless it thinks that the procedure under sections 143E and 143F has not been followed. If one construes that section in accordance with the traditional approach to interpretation, it is hard to see how the court could have the power either to investigate for itself the facts relied on to justify the decision to seek possession, or to refuse to make an order for possession if it considered that it would be disproportionate to do so. Therefore there is obvious force in the point that, in the absence of any article 8 Convention right, section 143D(2) would limit the court to satisfying itself that the procedural requirements of sections 143E and 143F had been complied with. Stanley Burnton LJ took that view in the Court of Appeal. At any rate, absent the HRA, the purpose of section 143D appears to be to deprive the courts of almost any ability to stand in the way of a landlord who had decided to seek possession against a demoted tenant. However, as the Convention requires the court to have the power to consider the proportionality under article 8 of making a possession order at the instance of a local authority in respect of a persons home, the effect of section 3(1) of the HRA is that section 143D(2) should be read as not excluding that power, if at all possible. Accordingly, it is necessary to examine the issue rather more critically. Clearly, the local authority, when deciding to bring possession proceedings against a demoted tenant under section 143E, and any Panel reviewing that decision under section 143F have a duty in domestic law to act rationally and to investigate the relevant facts fairly, as well as a duty under article 8 to consider proportionality, which includes investigating the relevant facts. Rightly, in our view, it is common ground that a court has jurisdiction, under normal judicial review principles, to satisfy itself that the local authority and Panel have indeed acted reasonably and have investigated the relevant facts fairly, when deciding to bring possession proceedings. From this it must follow that any decision by the local authority to continue possession proceedings is similarly susceptible to judicial review. At the same time, it is right to emphasise that it would almost always require a marked change of circumstances following a Panels decision to approve the proceedings, before an attempt could properly be made to judicially review the continuance of proceedings which were initially justified. In our judgment, once it is accepted that it is open to a demoted tenant to seek judicial review of a landlords decision to bring and continue possession proceedings, then it inevitably follows that, as a generality, it is open to a tenant to challenge that decision on the ground that it would be disproportionate and therefore contrary to article 8. Further, as we saw at paras 31 to 43 above, the EurCtHR jurisprudence requires the court considering such a challenge to have the power to make its own assessment of any relevant facts which are in dispute. We have already pointed out, at para 28 above, that Lord Scott and Lord Mance, in particular, reached this conclusion in Doherty v Birmingham [2009] 1 AC 367, paras, 68 and 138. The EurCtHR acknowledged this development in Kay v UK (App no 37341/06), para 73. In these circumstances we are satisfied that, wherever possible, the traditional review powers of the court should be expanded so as to permit it to carry out that exercise. In summary. Where it is required in order to give effect to an occupiers article 8 Convention rights, the courts powers of review can, in an appropriate case, extend to reconsidering for itself the facts found by a local authority, or indeed to considering facts which have arisen since the issue of proceedings, by hearing evidence and forming its own view. Much the more difficult question, however, is whether it is possible to read and give effect to section 143D(2) in a way that would permit the County Court judge to carry out this exercise. As we have pointed out at para 69 above, the purpose of the subsection appears to be to ensure that the court makes an order for possession in all cases except where it thinks that the procedure under sections 143E and 143F has not been followed. In other words, the purpose is to ensure that the court does nothing more than check whether the procedure has been followed. It could therefore be argued that holding that the court could assess the proportionality of the local authoritys decision to bring and to continue the possession proceedings would go against the whole import of the section and would amount to amending rather than interpreting it. We have come to the conclusion that we should reject that argument. In our view, if the procedure laid down in section 143E or 143F has not been lawfully complied with, either because the express requirements of that section have not been observed or because the rules of natural justice have been infringed, the tenant should be able to raise that as a defence to a possession claim under section 143D(2). After all, the tenants argument in such circumstances would be within the scope of the ambit of section 143D(2), namely that the procedure under sections 143E and 143F has not been [lawfully] followed, since lawfulness must be an inherent requirement of the procedure. It must equally be open to the court to consider whether the procedure has been lawfully followed, having regard to the defendants article 8 Convention rights and section 6 of the HRA. This approach is borne out by section 7(1) of the HRA which, so far as relevant, provides: A person who claims that a public authority has acted (or proposes to act) in a way which is made unlawful by section 6(1) may (b) rely on the Convention right or rights concerned in any legal proceedings. By virtue of this provision, an occupier who is the defendant in possession proceedings in the County Court and who claims that it would be incompatible with his article 8 Convention rights for him to be put out of his home must be able to rely on those rights in defending those proceedings. This approach fits with the observation of the EurCtHR in Pauli v Croatia (App no 3572/06), para 43, that the court need consider proportionality only if it is raised by the person whose article 8 rights are said to be infringed. We therefore consider that section 143D(2) should be read as allowing the court to exercise the powers which are necessary to consider and, where appropriate, to give effect to, any article 8 defence which the defendant raises in the possession proceedings. This approach to the interpretation of section 143D(2) also goes a long way towards disposing of Mr Ardens argument that, even if article 8 required this kind of review, the County Court does not have jurisdiction to carry it out. So, he suggested, the issue would have to be referred to the High Court, where it would presumably be assigned to the Administrative Court. In effect, section 7(1)(b) confers the necessary jurisdiction on County Court judges when it is necessary for them to deal with a defence which relies on an alleged breach of the defendants article 8 Convention rights. The same conclusion can be justified on the rather wider basis that, where a tenant contends that the decision of a local authority landlord to issue, or indeed to continue, possession proceedings can in some way be impugned, the tenant should be entitled to raise that contention in the possession proceedings themselves, even if they are in the County Court. This seems to us to follow from the decision of the House of Lords in Wandsworth v Winder [1985] AC 461, as cited and approved in the present context in Kay v Lambeth [2006] 2 AC 465, para 110, and again in Doherty v Birmingham [2009] 1 AC 367, paras 56, 123 and 157 (see para 28 above). This approach also derives strong support from the observations of Lord Bingham in Kay v Lambeth [2006] 2 AC 465, para 30. This second reason involves disapproving part of the reasoning of the Court of Appeal in Manchester City Council v Cochrane [1999] 1 WLR 809, by which, understandably, the Court of Appeal in this case appears to have regarded itself as bound. In Manchester City the Court of Appeal held that an introductory tenant could not raise a defence to a claim for possession when that defence was based on the contentions that (a) there had been no breaches of the tenancy agreement (the substantive ground relied on by the Council for bringing the instant proceedings), (b) the relevant Regulations had not been complied with, and (c) there had been a failure to comply with the rules of natural justice in the conduct of the review by the Panel. As a result of our conclusion on the first issue on this appeal, article 8 would require the court to be able to consider the facts, as well as proportionality, for itself. However, even in the absence of article 8, a court would have had power to consider whether a reasonable local authority and panel could have reached the conclusion that such breaches existed. Similarly, a court would have had power to consider whether the relevant Regulations had been followed, and whether the rules of natural justice had been followed. The question is whether that court could be the court hearing the possession claim, given that it is (virtually always) the County Court. In Manchester City [1999] 1 WLR 809, three reasons were given for concluding that the defences sought to be raised could not be pursued in the County Court. The first was that section 127(2) of the 1996 Act, which is in similar terms to section 143D(2), required the court to make an order for possession: [1999] 1 WLR 809, 818G 820B. That is, in substance, the view which we have rejected in paras 76 79 above. The second reason for the Court of Appeals conclusion in Manchester City was based on the contrast between section 127(2) and section 204 of the 1996 Act, in Part VII of the 1996 Act which is concerned with homelessness: [1999] 1 WLR 809, 820B C, 821H 822A. However, like Lord Fraser of Tullybelton in Wandsworth v Winder [1985] AC 461, 510A B, we would adopt the principle stated by Viscount Simonds in Pyx Granite Co Ltd v Ministry of Housing and Local Government [1960] AC 260, 286, that a citizens recourse to Her Majestys courts for the determination of his rights is not to be excluded except by clear words. The third reason for the Court of Appeals decision in Manchester City is discussed at [1999] 1 WLR 809, 820C 821E, and relies on the presumption that possession claims against demoted tenants could be procedurally derailed if tenants could raise public law points in the course of the possession proceedings. We do not consider that this presumption is correct. Indeed, the ability of a tenant to delay possession proceedings by raising a public law point would be greater if such points had to be taken in separate proceedings in the High Court. For these reasons we are satisfied that we should apply the approach of the House of Lords in Wandsworth v Winder [1985] AC 461. This permits us to confirm our earlier conclusion that section 143D(2) should be read as allowing the County Court to exercise the powers which are necessary to consider and, where appropriate, to give effect to, any article 8 defence which the defendant raises in possession proceedings brought in that court. Section 17(1)(a) of the Crime and Disorder Act 1998 A further difficulty which is said to stand in the way of the conclusion that the County Court judge can carry out a proportionality exercise is based on section 17(1)(a) of the Crime and Disorder Act 1998 (section 17), which provides Without prejudice to any other obligation imposed on it, it shall be the duty of each authority to which this section applies to exercise its various functions with due regard to the likely effect of the exercise of those functions on, and the need to do all that it reasonably can to prevent (a) crime and disorder in its area This section, Mr Arden rightly submitted on behalf of the Council, applied when, inter alia, a local authority was exercising its function as the landlord of its housing stock. He then went on to submit that the Councils duty under section 17 could conflict with its duty, by virtue of the occupiers article 8 Convention rights, to consider whether it would be proportionate to bring or continue possession proceedings against him. For instance, bringing such proceedings might be a reasonable way of preventing crime and disorder in the authoritys area, even though bringing those proceedings would be disproportionate when viewed in the particular context of the individual concerned. In our view, this argument is devoid of substance. In the first place, section 17 begins with the qualifying words Without prejudice to any other obligation imposed on it. Therefore, if the effect of the HRA is to impose an obligation on a local authority landlord to consider proportionality under article 8 before embarking on possession proceedings against a demoted tenant, section 17 is not inconsistent with, and does not undermine, that obligation. As far as the County Court is concerned, insofar as it is to be treated as reviewing the local authoritys decision to bring proceedings, the same point applies, and, insofar as it is to be treated as carrying out its own assessment, nothing in section 17 impinges on it. Secondly, section 17 requires a local authority to exercise its functions, paying due regard to the need to prevent crime and disorder. The section imposes no absolute obligation on an authority to do everything to reduce crime and disorder, irrespective of other persons rights or of its own other duties and it would be very surprising if it did. Accordingly, the furthest this point goes is to suggest that a local authority, when deciding to bring possession proceedings against a demoted tenant, should take into account its duty under section 17, as well as the article 8 Convention rights of the tenant and any other Convention rights that may be in play. That would also be a factor to be taken into account by the Panel when reviewing the local authoritys decision. Similarly, it would be a factor for the County Court judge to take into account when considering whether the local authority had acted proportionately. Section 6(2) of the Human Rights Act We have concluded that section 143D(2) of the 1996 Act can be read and given effect compatibly with the article 8 Convention rights of any occupiers of local authority housing. So no question of the application of section 6(2) of the HRA arises in that respect. Nor, indeed, did Mr Arden argue that section 6(2) would make it lawful for the local authority to disregard the occupiers article 8 Convention rights when deciding whether to bring possession proceedings against him. On the contrary, it was, rightly, common ground that a local authority must take into account a demoted tenants article 8 rights when taking possession proceedings under the 1996 Act. The same applied to a Panel reviewing that decision. But, as is plain from the speeches of Lord Walker and Lord Mance in Doherty v Birmingham City Council [2009] 1 AC 367, at paras 110 113 and 141 153, respectively, two passages at paras 86 and 114 in the speech of Lord Hope in Kay v Lambeth [2006] 2 AC 465, could be interpreted as indicating that section 6(2) did apply to the local authoritys decision as to whether to bring possession proceedings in the circumstances of those cases so as to make it lawful for the authority to disregard the occupiers article 8 Convention rights. The absence of any real debate on the point makes the present case an unsuitable vehicle for any wide ranging discussion of section 6(2). Nevertheless, we think it right to confirm that, in our view, the subsection has no application to the decision of a local authority as to whether to bring or continue possession proceedings against demoted tenants. Section 6 of the HRA provides: (1) It is unlawful for a public authority to act in a way which is incompatible with a Convention right. (2) Subsection (1) does not apply to an act if (a) as the result of one or more provisions of primary legislation, the authority could not have acted differently; or (b) in the case of one or more provisions of, or made under, primary legislation which cannot be read or given effect in a way which is compatible with the Convention rights, the authority was acting so as to give effect to or enforce those provisions. Plainly, subsection (2)(a) applies only where legislation imposes a duty to act. That provision is not relevant for present purposes since the local authority is under no statutory duty which would compel it to take possession proceedings against a demoted tenant. The statutory provision which relates to the bringing of possession proceedings against demoted tenants is section 143D(1) of the 1996 Act. It provides: (1) The landlord may only bring a demoted tenancy to an end by obtaining (a) an order of the court for the possession of the dwelling house, and (b) the execution of the order. In addition, as already explained, section 143E provides for the local authority to give notice of its decision to apply for an order for possession of the tenants house. Section 143F provides for the Panel to review that decision at the request of the tenant. It does not particularly matter on which of these provisions we choose to concentrate. But it can be assumed, for the purposes of the argument, that, when a local authority landlord decides to bring possession proceedings against a demoted tenant, the authority is acting so as to give effect to section 143D(1) within the meaning of section 6(2) of the HRA. Then the only question is whether section 143D(1) can be given effect in a way that is compatible with the demoted tenants article 8 Convention rights. If so, section 6(2) does not apply. For the reasons which we have already set out in detail, the answer is that section 143D(1) can unquestionably be given effect in a way that is compatible with the demoted tenants article 8 Convention rights. Most obviously, the local authority will give effect to section 143D(1) in a way that is compatible with those rights when it brings proceedings that are proportionate because the demoted tenant has, for instance, continued to act in a manner that causes a nuisance to his neighbours. That being so, section 6(2) of the HRA has no application to the decision of a local authority to bring or continue possession proceedings against a demoted tenant. In these circumstances, mutatis mutandis, the conclusion of Lord Mance in Doherty v Birmingham City Council [2009] 1 AC 367, 447, para 153, applies in the present situation: Accordingly, a local authority which fails to take into account Convention values when deciding whether or not to give any and if so what length of notice to quit cannot, in my opinion, be said to be acting so as to give effect to or enforce statutory provisions which are incompatible with the Convention rights. As the Council accept, the result therefore is that section 6(2) does not make it lawful for a local authority to fail to consider whether it would be proportionate to bring or continue such proceedings. The same must apply to a local authoritys decision to take possession proceedings against other occupiers who are not secure tenants. Conclusion on the third issue We are, accordingly, of the view that a County Court judge who is invited to make an order for possession against a demoted tenant pursuant to section 143D(2) can consider whether it is proportionate to make the order sought, and can investigate and determine any issues of fact relevant for the purpose of that exercise. It follows that the demoted tenancy regime in the 1996 Act is compatible with article 8. Having said that, there are two further points we should make. First, as already observed, there appears to be no express fetter on the nature of the grounds which a local authority can invoke for seeking possession against a demoted tenant. It would seem that, as in this case, local authorities seeking possession against demoted tenants in practice normally rely on repetitions of the type of incidents which gave rise to the demotion order. It may well be that the nature of the grounds upon which possession can be sought against demoted tenants is limited in that way, as a matter of law. However, that would involve implying some sort of limitation into the statute, as there is no express provision which would prevent a local authority relying on, say, the fact that it has a more deserving potential occupier of the premises in question. We say no more on the matter since the point does not arise in this appeal, and it was not the subject of any argument. Secondly, we have expressed reservations about the view that, in relation to possession claims generally, article 8 will assist an occupier only in highly exceptional circumstances. However, there are two features of possession claims under section 143D which enable us to express such a view in relation to these claims. First, the court will already have decided that it was reasonable (and therefore proportionate under article 8) to have made the demotion order, largely removing the tenants security of tenure. The court will have done this less than two years (and, no doubt, in some cases less than one year) before it is being asked to make an order for possession. The two sets of proceedings must be viewed as a whole for the purposes of article 8: Zehentner v Austria (App no 20082/02), para 54 (quoted at para 39 above). This highlights the fact that, while article 8 is still engaged at the second, possession order, stage, it would be difficult for the tenant successfully to invoke it, given that its requirements had been satisfied at the first, demotion order, stage. Secondly, as with introductory tenancies, the tenant will have been given the local authoritys reasons for deciding to seek possession. So he will have had the opportunity to challenge the decision and to have that challenge considered by the Panel. Fourth issue: application of these conclusions to the facts of this case For the reasons already explained, neither Judge Holman nor the Court of Appeal thought that they had jurisdiction either to consider whether the making of an order for possession in this case was necessary in a democratic society under article 8 (i e, whether it was proportionate to evict Mr Pinnock and Ms Walker from the property), or to resolve any disputes of fact between the parties in relation to that issue. As we have concluded that the Judge had jurisdiction to deal with both matters, there are two alternative courses that we could now take: we could address the proportionality issue ourselves, or we could remit the issue to the Manchester County Court. If we can take the former course, we should do so: it is more than three years since the demotion order was made in respect of Mr Pinnocks tenancy, and more than two years since these possession proceedings were started against him. Before they reached this court, they had already taken up three days of court time (plus the six hearing days before the Recorder who made the demotion order). However, we can only determine the issue of article 8 proportionality if we can do so without needing to hear further evidence. In order to consider which course to take, we must set out the relevant circumstances in a little more detail. After stating that, as the tenant, he was responsible for the behaviour of every person (including children) living in or visiting [his] home, Mr Pinnocks tenancy agreement contained covenants to the effect that neither he nor anyone residing with him would cause a nuisance, annoyance or disturbance to any other person or would harass any other person. Examples were given in the agreement of possible breaches of these covenants. They included offensive drunkenness and doing anything that interferes with the peace, comfort or convenience of others. The events which led the Recorder to conclude that a demotion order was justified were many and serious. In very summary terms, Anti Social Behaviour Injunctions (under section 152 of the 1996 Act) had been granted against Ms Walker and one of Mr Pinnocks sons, Clive, in 2003. Ms Walker had gone on to breach the injunction. Anti Social Behaviour Orders had been granted against another son, Devon, in 2002, and against his twin sons, Orreon and Orraine, in 2004. Each of them had been breached. Further, each of the five children had appeared before the criminal courts where they had been convicted of a variety of offences, including a racial Public Order Act offence, driving while disqualified and blackmail. The last of these involved the obtaining of some 1,000 by repeated, almost daily, threats of violence against a 16 year old youth. In a schedule to his judgment, the Recorder listed no fewer than 32 crimes or serious nuisances which were committed by Ms Walker and Mr Pinnocks five children between 1992 and 2006. There are some differences among the allegations relied on by the Council in its Notice served on 6 June 2008 under section 143E, the allegations relied on by the Panel which carried out the review pursuant to section 143F, the allegations relied on by Judge Holman, and the allegations relied on by the Court of Appeal. In our view, however, the Court of Appeals analysis of the relevant allegations was clearly correct. We would make three comments in relation to that analysis. First, there is nothing in the statutory provisions relating to the demoted tenancy regime which limits the particular grounds on which a local authority can rely when deciding to issue possession proceedings against a demoted tenant. Subject to the possible type of limitation discussed in para 106 above, we see no reason to restrict those grounds in a particular case, save by reference to rationality in domestic law and proportionality in the light of the Convention. This view is not based only on a reluctance to imply words or conditions into statutory provisions. It is also based on the point that, by demoting a tenancy, a court has decided that the tenant has forfeited any statutory protection for at least a year, and it seems wrong to imply a degree of protection back into the statute, unless it is necessary to do so e g, because the Convention requires it. We are therefore satisfied that a local authority is not limited to relying on matters which amount to breaches of the tenancy in question in order to justify a decision to issue and continue a claim for possession against a demoted tenant. Secondly, the Panel should be able to take into account all the available information when it assesses the justification for, and proportionality of, the local authority issuing a claim for possession against a demoted tenant. It seems obvious that before the Panel the tenant could raise events that happened after the Notice, and it is hard to see why the same should not apply to the landlord. In any event, if the tenant raises his article 8 Convention rights as a defence to possession proceedings, the court must consider all relevant issues. These must include a matter that arose after the date of the Notice. We are therefore satisfied that it is open to the Panel and to the court hearing the possession claim to take into account grounds which are not contained in the Notice. Thirdly, we can see no reason why the fact that a Notice contains a bad reason should destroy the landlords right to seek possession, unless, for instance, the bad reason somehow infects the good faith of the landlord. On that basis, the following matters are relied on as supporting the Councils decision to bring and maintain the possession proceedings against Mr Pinnock. First, on 22 September 2007, Clive Pinnock resisted arrest at the property and ran off. In due course he was convicted of resisting or obstructing a constable in the execution of his duty. Although this conduct was obviously an annoyance for the police officers involved, there was no evidence that it caused nuisance or annoyance to neighbours. Therefore it may not have constituted a breach of the tenancy agreement. Nevertheless, it was plainly relevant to the housing management functions of the Council. Further, as Stanley Burnton LJ pointed out, this behaviour was capable of causing nuisance or annoyance to any person. Secondly, Devon Pinnock pleaded guilty to causing death by dangerous driving, and driving a vehicle while disqualified and uninsured on 18 January 2008. A young woman died and two others were seriously injured in the incident which occurred 1.55 miles from the property. It is relevant to mention that Ms Walker blamed the police for the incident and did not accept that Devon was in any way responsible. As Stanley Burnton LJ said, this bore on whether she and Mr Pinnock were able and willing to exercise parental control over their children who lived at, or visited, the property so as to bring their anti social behaviour to an end. Thirdly, in February 2008, Orreon Pinnock committed a burglary of premises a few minutes walk from the property an offence which also involved an assault on a woman. He was convicted of this offence after the service of the Notice, but the Judge and the Court of Appeal rightly held that this was a relevant factor when deciding whether to issue and prosecute possession proceedings against Mr Pinnock. Judge Holman thought that the second incident (but only in so far as it involved Ms Walker blaming the police and excusing Devon) and the third incident could be relied on by the Council as a ground for justifying its claim for possession against Mr Pinnock. He therefore concluded, at para 70, that there was material before the review panel . entitling it to uphold the decision to terminate. To much the same effect, Stanley Burnton LJ said he could not see any basis for a finding that the review panels decision was one that no reasonable person could consider appropriate, and if the judge had had jurisdiction to review that decision I would have upheld his decision to uphold it: [2009] EWCA Civ 852, para 67. Mr Pinnocks case is that it would be disproportionate to evict him (now a pensioner) and Ms Walker (still in employment) from their home of over 30 years, given that none of their five children lives with them, and that there have been no further incidents since February 2008. In this connection Mr Drabble QC made a number of points which he said that the Panel, Judge Holman and the Court of Appeal had failed to take into account. None of the matters relied on, he said, constituted a breach of the tenancy agreement. Ms Walker had committed no nuisance, offence or harassment since 2003, and there was no suggestion that she or Mr Pinnock is likely to commit any nuisance or crime in the future. As for the children save for Orreon, they did not reside in the property at the date of the offences relied on. Further, any crime or nuisance which they might commit in the area in the future could not be attributable to the tenancy continuing, as they do not live in the property. For the same reason, Mr Pinnock could not be treated as responsible for their behaviour. Moreover, there was no evidence that the children were, or would be, particularly drawn to the area by their parents living at the property. In any event, other remedies such as Anti Social Behaviour Orders and Injunctions, and orders excluding the children from the area under section 153C of the 1996 Act, would be more effective deterrents. We see the force of these points. But, unless there is some dispute of fact which needs to be resolved, we are not persuaded that this is a case where the occupiers of the property have any real prospect of successfully relying on article 8 proportionality, or indeed on the contention that the decision of the Council to issue and maintain possession proceedings against them was unreasonable. The history of crime, nuisance and harassment on the part of those living at the property in the period leading up to the demotion order made in June 2007 was extraordinary in its extent and persistence. Were it not for Mr Pinnock being innocent of any such conduct on his own account, we doubt whether the Recorder would have thought it right to refuse the Councils original claim for possession. As it was, he made it clear that the demotion order represented what was very much a last chance for Mr Pinnock (and for Ms Walker). Despite this being their last chance, as we have explained, there were incidents at or near the property. Clive resisted arrest at the property and ran away from the police (of which he was convicted). Devon caused death by dangerous driving in the vicinity of the property and then ran away (of which he was convicted). Ms Walker refused to accept that Devon was in any way responsible for this and, instead, blamed the police. Orreon committed a burglary near the property (and was later imprisoned). In short, there were three serious incidents in a year, one in the property, two in its immediate vicinity. Mr Pinnocks children were responsible for all of them. Moreover, there is every sign that Ms Walker, at least, has learnt nothing. All this happened under the shadow of a demotion order. The argument that none of the children lives in the property any longer is of scant assistance to Mr Pinnock since his case is that none of them has lived there since the demotion order was made. Even if that is true, it is clear that the children visit the property, and, unfortunately, when they do, they appear to commit crimes and make a nuisance of themselves in the vicinity. Furthermore, there is no guarantee that at least some of the children will not stay at the property on a temporary, intermittent or permanent basis. For the Council to evict Mr Pinnock on such grounds may well seem to him harsh. However, in the light of the history, the demotion order, the interests of their neighbours, and the Councils right and duty to manage and allocate its housing stock, the decision cannot be characterised as unreasonable or disproportionate. If some of the children did in fact live in the property, then Mr Pinnock has been dishonest, and the Councils case is even stronger. In this connection it should be said that there is good reason to think that Devon did live in the property. Mr Pinnocks evidence to the Panel was that Devon had moved out about five years earlier, but that evidence had been given to, and rejected by, the Recorder not least because Devon had given the property as his address to the criminal courts in July 2005, June 2006, and March 2007. When he appeared in court on the charge of causing death by dangerous driving in January 2008, he again gave his address as the property. The only new evidence before the Panel disputing his residence at the property was a statement by the mother of his girlfriend. But she, too, said that he had ceased to live at the property four or five years previously. It is thus hard to see how any tribunal could conclude that he did not reside there, but, as the Judge said, the Panel ducked the issue of residence in their written decision. The fact that some (or even all) of the grounds justifying the rationality and proportionality of the Councils decision to seek possession may not have involved any breach of the tenancy agreement does not give rise to a problem. There is no requirement in the 1996 Act that they should, and, as already mentioned, there is no warrant for implying any such requirement into the statute. The fact that Mr Pinnock may not be responsible for the incidents is not of great significance: the order for possession was not sought or made to punish him. The fact that there may be other remedies to deal with the children is also of little force: rather than seeking ASBOs or ASBIs to keep them out of the vicinity, it is scarcely irrational or disproportionate to decide to remove their parents, whom they undoubtedly visit, even if (which is an unresolved issue) they do not live with them. Conclusion In these circumstances, it is unnecessary to remit this case for the question of proportionality to be determined. The only issues of fact which are in dispute are whether Devon lived at the property at the time he caused death by dangerous driving and whether Clives resisting his arrest actually caused any nuisance locally. For the reasons just given in para 128 above, it is unnecessary to decide whether Devon was living at the property at the relevant time. Equally, it is unnecessary to establish whether Clives action actually resulted in a nuisance: as Stanley Burnton LJ said, it is sufficient that he resisted arrest and that this could have caused a nuisance. Hilary Term [2011] UKSC 6 On appeal from: [2009] EWCA Civ 852 JUDGMENT Manchester City Council (Respondent) v Pinnock (Appellant) (no. 2) before Lord Phillips, President Lord Hope, Deputy President Lord Rodger Lord Walker Lady Hale Lord Brown Lord Mance Lord Neuberger Lord Collins JUDGMENT GIVEN ON 9 February 2011 Heard on 5, 6, 7 and 8 July 2010 Appellant Richard Drabble QC James Stark (Instructed by Platt Halpern) Intervener (Secretary of State for Communities and Local Government) Daniel Stilitz QC Ben Hooper (Instructed by Treasury Solicitor) Respondent Andrew Arden QC Jonathan Manning (Instructed by Manchester City Council ) Intervener (Equality and Human Rights Commission) Jan Luba QC (Instructed by Equality and Human Rights Commission) LORD NEUBERGER 1. Following the handing down of our judgment on 3 November 2010, the parties have made written submissions on two issues, namely the terms of the consequential order which the court should make, and the allocation of costs. The issue relating to the terms of the order gives rise to a point of a little difficulty and potentially more general application. It therefore seems right to set out our conclusions and reasons on the two issues in this short further judgment. Introductory 2. In summary terms, the facts giving rise to the appeal were as follows. Mr Pinnock was a demoted tenant of residential premises (and therefore had limited statutory protection), and his landlord, Manchester City Council, applied to the Manchester County Court for an order for possession against him. In a judgment given on 22 December 2008, His Honour Judge Holman rejected Mr Pinnocks contention that the court had to be satisfied that article 8 of the Convention was satisfied before making an order for possession, and therefore he did not consider whether it was proportionate to make an order for possession against Mr Pinnock. The Judge accordingly made an order requiring Mr Pinnock to deliver up possession of the premises on 12 January 2009. He also gave Mr Pinnock permission to appeal, and stayed enforcement of the possession order provided that the notice of appeal was served by 26 January 2009. 3. Mr Pinnock served a notice of appeal by that date, arguing that the Judge should have taken into account article 8, and therefore should have considered whether it was proportionate to order Mr Pinnock to deliver up possession of the premises. The Court of Appeal rejected his appeal, [2009] EWCA Civ 852; [2010] 1 WLR 713, and Mr Pinnock appealed to the Supreme Court. The Court of Appeal did not continue the stay imposed by the Judge, but the parties agreed that the possession order would not be enforced pending the outcome of the appeal to this court. 4. In our decision, [2010] UKSC 45; [2010] 3 WLR 1441, we held that the Judge and the Court of Appeal were wrong in taking the view that article 8 could not be raised by Mr Pinnock, and that, in those circumstances, there were two alternative courses that we could take: we could address the proportionality issue ourselves, or we could remit the issue to the Manchester County Court [2010] 3 WLR 1441, para 108. We then went on to decide that we would take the former course, because, for the reasons set out at [2010] 3 WLR 1441, paras 119 124 and 127 130, we were not persuaded that this is a case where the occupiers of the property have any real prospect of successfully relying on article 8 proportionality, or indeed on the contention that the decision of the Council to issue and maintain possession proceedings against them was unreasonable [2010] 3 WLR 1441, para 125. The form of order 5. At any rate at first sight, the terms of the order we should make seem to present no problem: the Judge made an order for possession, which the Court of Appeal upheld, which it can be said we have upheld, albeit for different reasons, and accordingly we should simply dismiss the appeal. However, the Council argues that this apparently simple course would produce an unjust result, which arises form the transitional provisions of the Housing and Regeneration Act 2008. 6. In this case, the order for possession made by Judge Holman took effect on 12 January 2009; under section 143D(3) of the Housing Act 1996 this meant that Mr Pinnocks demoted tenancy came to an end on that date. His status thereafter was that of a tolerated trespasser, as discussed in Austin v Southwark London Borough Council [2010] UKSC 28, [2010] 3 WLR 144. 7. Section 299 of, and schedule 11 to, the 2008 Act abolished the concept of tolerated trespass in relation to various types of tenancy, including demoted tenancies, by providing that, where an order for possession is made, the tenancy comes to an end on the date that the order is executed rather than (as was previously the position) the date on which the tenant is to give up possession pursuant to the order. In the case of demoted tenancies this was achieved by the insertion of a new subsection (1A) into section 143D of the 1996 Act see para 13 of schedule 11 to the 2008 Act. 8. These provisions of the 2008 Act, which were prospective in their effect, came into force on 20 May 2009 (pursuant to article 2 of the Housing and Regeneration Act 2008 (Commencement No.5) Order 2009 SI 2009/1261), some eighteen weeks after Judge Holmans order for possession took effect. If that order is confirmed, the effect will be, by virtue of paras 16, 19 and 26 of Schedule 11 to the 2008 Act, that on 20 May 2009, a new demoted tenancy will have been created in favour of the former tenant and tolerated trespasser. On the basis that that might indeed prove to be the position, the Council served a notice of proceedings under section 143E of the 1996 Act, in respect of which Mr Pinnock requested a review under section 143F (as explained at [2010] 3 WLR 1441, para 11). Further proceedings on that notice have been adjourned. 9. The Council contends that, although it has protected its position if we simply dismiss Mr Pinnocks appeal and effectively affirm the orders of the Judge and the Court of Appeal, it would be contrary to any rational legal principle to require the Council to incur the expense, effort and delay, as well as any possible uncertainty of outcome, of further possession proceedings against Mr Pinnock based on his new demoted tenancy, given the procedure that has already been undertaken, as described in [2010] 3 WLR 1441, paras 14 17. 10. Accordingly, the Council argues that we should vary Judge Holmans order to adjust the date on which he is to deliver up possession from 12 January 2009 to 21 May 2009. 11. Mr Pinnock does not challenge this proposal on its merits, but contends that, for two reasons, we have no jurisdiction to make the variation sought by the Council. The first reason is said to be that we cannot in 2011 retrospectively amend Judge Holmans order, made in December 2008, in order to deprive Mr Pinnock of a tenancy which statute gave to him on 20 May 2009; the second reason is that, by virtue of section 89(1) of the Housing Act 1980, Judge Holman was precluded from making an order for possession which took effect more than six weeks after 22 December 2008, when he made the order for possession, and we cannot amend Judge Holmans order in a way which would mean that, albeit retrospectively, it would conflict with that provision. 12. Mr Pinnock is right not to challenge the good sense of the Councils argument. There may be force in the two technical points that he takes, particularly the second, but there is no need for us to consider these. The wide terms of Rule 29(1) of the Supreme Court Rules 2009 permit us to adopt an alternative way of giving effect to the Councils justified concerns which is not open to such objections. 13. We propose to set aside the order for possession made by Judge Holman, and substitute a fresh order for possession to take effect on 10 March 2011. The effect of this will be to preserve Mr Pinnocks original demoted tenancy, which started on 8 June 2007 (as explained at [2010] 3 WLR 1441, para 16) and which has continued pending the resolution of these proceedings. It will come to an end when possession is obtained against him pursuant to our order for possession. 14. This course is consistent with the reasoning in our judgment. We decided that the Judge and the Court of Appeal had reached their conclusions on an erroneous basis, and accordingly we had to make our own assessment as to whether an order for possession should be made. Thus, we were effectively overruling the order for possession made and affirmed below, and were concluding that we should make our own order for possession. That is well demonstrated by the passage quoted from [2010] 3 WLR 1441, paras 108 and 125 quoted in para 4 above. If we had taken the course of remitting the case to the County Court, we would have set aside the original order for possession, and the County Court would in due course have made a fresh order for possession (for the reasons we gave at [2010] 3 WLR 1441, paras 119 130): it would be anomalous if a different result obtained because we decided that we could make the order for possession ourselves without remitting it. 15. In those circumstances, to set aside the orders below and make our own order for possession more accurately reflects our reasoning than simply dismissing Mr Pinnocks appeal. 16. Quite apart from this, it would seem rather curious if we could not make an order which achieves the outcome for which the Council contends. If the Judge had dismissed the claim for possession, and had been upheld in the Court of Appeal, our decision that an order for possession should be made would have led to no difficulties for the Council. It would seem a bit odd if the position of the Council were to be prejudiced by the fact that it in fact succeeded in both of the courts below. The costs 17. As to the issue of costs, the dispute, in summary terms, is as follows. The Council seeks an order for costs against Mr Pinnock, on the ground that, as between the parties, the ultimate issue was whether the Council was entitled to claim possession of the premises, and its claim succeeded at every stage, most importantly in this court. On the other hand, Mr Pinnock argues for an issue based approach, contending that the real issue between the parties, which resulted in most of the costs and justified the case coming to the Supreme Court, was whether he could rely on article 8, and, as he won on that point, the correct order is that the Council pays 50% of his costs, at least in the Supreme Court. 18. In our view, there should be no order for costs in the Supreme Court or in the Court of Appeal, and the order for costs made in favour of the Council in the County Court should stand. As to the order in the County Court, the Council claimed possession while Mr Pinnock resisted the claim, and the effect of our decision is that the claim succeeds, so an order for costs in favour of the Council should follow, absent a good reason to the contrary, and no such reason appears to exist. The decision to make no order for costs in the Court of Appeal and in this court is arrived at on a somewhat rough and ready basis, but it appears to us to reflect the relative degree of success enjoyed by each party on appeal, and therefore the overall justice of the position. The effect of the appeal process is that the Council has succeeded against Mr Pinnock on the ultimate issue between the parties, namely whether it is entitled to maintain its right to possession, whereas Mr Pinnock has succeeded against the Council in establishing a fundamental general principle, namely that article 8 can be relied on by someone whose home is the subject of a possession claim. Conclusion 19. In these circumstances, we set aside the order for possession made by Judge Holman, we make an order for possession to take effect on 10 March 2011, we make no order for costs in this court or the Court of Appeal, and the order for costs made by Judge Holman stands. No doubt the parties can agree any other terms of the order which are outstanding. We shall accordingly dismiss the appeal and uphold the order for possession made against Mr Pinnock, albeit for reasons that are rather different from those of Judge Holman and the Court of Appeal. Mr Pinnock is, and was, entitled to an opportunity of having the proportionality of the measure determined by a court, and, if necessary for that purpose, of having any relevant issue of fact resolved. That right was not acknowledged by the courts below (for wholly understandable reasons). We have, however, afforded him the opportunity to have the proportionality of the possession order considered. Having considered the issue, we are satisfied that it was proportionate to make the order, irrespective of the truth relating to the two possible issues of fact between Mr Pinnock and the Council.
+This is an application by the Attorney General for Northern Ireland to refer to this court what is claimed to be a devolution issue. The reference is made under paragraph 34 of Schedule 10 to the Northern Ireland Act 1998. In material part it provides: the Attorney General for Northern Ireland may refer to the Supreme Court any devolution issue which is not the subject of proceedings. By virtue of paragraph 1(b) of Schedule 10, a devolution issue includes a question whether a purported or proposed exercise of a function by a Minister or Northern Ireland department is, or would be, invalid by reason of section 24 of the 1998 Act. And section 24, among other things, provides (in subsection 1(a)) that a Minister or Northern Ireland department has no power to make, confirm or approve any subordinate legislation, or to do any act, so far as the legislation or act is incompatible with any of the rights under the European Convention on Human Rights (ECHR). By the Welfare Reform (Northern Ireland) Order 2015 (Commencement No 8 and Transitional and Transitory Provisions) Order 2017, the Secretary of State for Work and Pensions commenced a number of universal credit provisions for claims on or after 27 September 2017 where the claimant resides in an area known as No 1 relevant districts. Although it is for the Secretary of State to appoint the dates for commencement, he does so by a legislative technique which, the Attorney General contends, requires action by the Northern Ireland Department for Communities, which is one of the Northern Ireland ministerial departments. The 2017 Order defines the No 1 relevant districts as the postcodes specified in the table in the List of the No 1 Relevant Districts. It is the Department for Communities which must issue such lists. The same holds true for a second order made by the Secretary of State relating to No 3 relevant districts and No 2 relevant districts. The commencement order was drafted so that Universal Credit could come into effect if the Department published a list of postcodes, which postcodes together make up the district within which the benefit will commence. The basis for the Attorneys reference is his assertion that the universal credit provisions in question breach articles 8, 12 and 14 of the ECHR and article 1 of the first protocol to the ECHR and are therefore invalid per section 24 of the 1998 Act. The Attorney General submits that a devolution issue arises because the provision of lists by the Department for Communities is necessary in order to give effect to the Secretary of States commencement orders. The Department refutes this, contending that its role in issuing the relevant lists amounts to nothing more than providing administrative support to the Secretary of State. The commencement orders define the relevant territories by reference to lists of postcodes issued by the Department. The lists were not prepared, however, pursuant to any statutory or other power and do not have any independent legal force or effect, the Department says. They are incorporated by reference into the commencement orders and therefore have legal effects solely by reason of the act of the Secretary of State, not the act of the Department. Discussion Acts by the Secretary of State or by departments in Westminster do not come within the purview of section 24 of the 1998 Act. In order for a devolution issue to arise, therefore, it must be shown that an act has been carried out or a function has been discharged by a Northern Ireland Minister or a Northern Ireland department. Section 1(1) of the Northern Ireland (Welfare Reform) Act 2015 stated that Her Majesty could make provision for, inter alia, social security and child support maintenance in Northern Ireland by way of an Order in Council. Section 1(2) stipulated that such an Order in Council could confer power on the Secretary of State or a Northern Ireland department to make regulations relating to such payments. The Welfare Reform (Northern Ireland) Order 2015 was made on 9 December 2015, pursuant to the 2015 Act. Article 4 provides that until such date as appointed by the Secretary of State, a function conferred on a Northern Ireland department under the 2015 Order to make Regulations for social security and child support maintenance is to be exercised by the Secretary of State rather than by the Northern Ireland department. It also provides that any statutory provision relating to social security and child support maintenance may be exercised by the Secretary of State (as well as by the Northern Ireland department otherwise entitled to exercise the function). These provisions were deemed to be necessary because of disagreements over welfare reform among the Northern Ireland political parties. They were important, the department argued, because they concentrated the power to make regulations relating to welfare provision in the office of the Secretary of State. Actions taken by the Secretary of State could not constitute devolution issues. On one view, it would be anomalous that the provision of lists of postcodes, something entirely ancillary to the introduction of the welfare provision reforms, could be used as a hook on which to hang the argument that a devolution issue arose. The contrary view is that the provision of postcodes was indispensable to the effective introduction of the welfare reforms. Without them, the commencement orders could not operate. Conceivably, they could have been compiled by a Westminster department which would have rendered the act of preparing the lists immune from challenge as a devolution issue. But, in fact, they were not. A Northern Ireland department prepared the lists. Their existence was integral to the operation of the welfare reforms. The act of preparing the lists and providing them to the Secretary of State constituted an act for the purpose of section 24 of the 1998 Act. It is, I believe, important to recognise that the distinct prohibitions in section 24 are disjunctive. Thus, it is forbidden to make, confirm or approve any subordinate legislation, or to do any act, so far as the legislation or act is incompatible with any of the Convention rights. The section comprehends, therefore, not only the enactment of subordinate legislation but also acts which may be ancillary or even incidental to that enactment. On a theoretical or technical level, therefore, the compiling of lists of postcodes and providing them as a means of facilitating the introduction of the commencement orders is an act or the discharge of a function under paragraph 1(b) of Schedule 10 to the 1998 Act. Matters do not end there, however. Paragraph 2 of Schedule 10 to the 1998 Act provides that a devolution issue shall not be taken to arise in any proceedings merely because of any contention of a party to the proceedings which appears to the court or tribunal before which the proceedings take place to be frivolous or vexatious. It would be wrong to characterise the Attorneys application for a reference as frivolous or vexatious but it would be equally wrong to lose sight of two important and correlated aspects to the application. First, the application is not principally directed at the act of preparing the postcode lists on the basis that that act was incompatible with the ECHR. The avowed incompatibility is said to depend on its being shown that the introduction of Universal Credit is not compatible with the ECHR. The gravamen of the charge is not to the mode of introduction of the measure but to its impact. In Attorney General for Northern Irelands Reference [2019] UKSC 1, this court held that where precisely the same issue as the Attorney sought to refer to this court as a devolution issue arose in pending proceedings in Northern Ireland, it was not appropriate to accept the reference. This court must retain a discretion whether to deal with a reference on a devolution issue where that issue is to be raised in proceedings where the actual claimed incompatibility of the measure occupies centre stage, as opposed to its appearance via a side wind as here. And it is, of course, the case that this issue will come before this court on appeal from a decision of the English Court of Appeal (R (C) v Secretary of State for Work and Pensions [2019] EWCA Civ 615; [2019] 1 WLR 5687) which is due to be heard on 20 22 October 2020. It will be open to the Attorney to apply to intervene in that appeal. This leads to the second reason for refusing to accept the reference. The fundamental underpinning of the Attorneys case is that the introduction of Universal Credit in Northern Ireland is incompatible with the ECHR. It is not that a means of identifying the areas where it is to be introduced sequentially was incompatible. In this connection a passage from Reed and Murdoch: Human Rights Law in Scotland, 4th ed (2017) is instructive. At para 1.148 the authors state: Although the term act has been given a wide construction, there remains the critical question whether the act is incompatible with the Convention rights. what is meant by incompatible has proved to be a difficult question. Although it has been said on a number of occasions that the essence of the word incompatible is that there is an inconsistency between one thing and another, that explanation does not resolve all the difficulties that have arisen. Whether an act is inconsistent with a Convention right may not be obvious: it may not depend on a but for causal test or involve a remoteness test (ie whether any infringement of Convention rights will be the direct or proximate result of the act under challenge). Other approaches have been to ask whether the act under challenge is precluded by the Convention right in question, or whether the act involves an infringement of the Convention right. The latter formulations have the advantage of requiring analysis of the precise bearing of the Convention right, as understood in the Strasbourg and domestic jurisprudence, on the specific act under challenge, rather than falling back on concepts, such as those of causation or remoteness, borrowed from other areas of domestic law. The relative isolation of the act (in this case the compilation and the provision of the postcode lists) from the actual introduction of Universal Credit in the areas covered by them throws into stark relief the inappropriateness of regarding the preparation of the lists as an act sufficient to give rise to a devolution issue. Conclusion I would therefore refuse to accept the Attorneys application to refer this issue to the court under paragraph 34 of Schedule 10 to the 1998 Act.
+The appellant, Nottingham City Council (Nottingham), is the licensing authority for those houses in multiple occupation (HMOs) in its district which are licensable under Part 2, Housing Act 2004. This appeal concerns two HMOs, namely 44, Rothesay Avenue, Lenton, Nottingham NG7 1PU and 50, Bute Avenue, Lenton, Nottingham NG7 1QA. Both are owned by the second respondent, Trevor Parr Associates Ltd, which carries on the business of providing accommodation for students. The first respondent Dominic Parr is the managing director of the second respondent and the manager of the properties. Nottingham appeals against the decision of the Court of Appeal dated 29 March 2017, dismissing its appeal against the decision of the Upper Tribunal (Lands Chamber) dated 9 February 2016, dismissing its appeals against decisions of the First tier Tribunal dated 5 November 2014 (44, Rothesay Avenue) and 6 May 2015 (50, Bute Avenue) respectively, allowing the respondents appeal against the imposition by Nottingham of certain HMO licensing conditions. On this appeal to the Supreme Court the respondents have not appeared and have not been represented. In these circumstances, at the request of the Court an Advocate to the Court was appointed in order to argue the grounds for resisting the present appeal and we are grateful to Mr Martin Chamberlain QC for performing this role. In addition, the Secretary of State for Housing, Communities and Local Government (the Secretary of State) has intervened in this appeal. We are grateful to all counsel for their submissions. Legislation The Housing Act 2004, Part 2 replaced the previous law on HMOs which was to be found in the Housing Act 1985, Part XI (the 1985 Act). The 1985 Act defined an HMO as a house which is occupied by persons who do not form a single household but left the word household undefined. In Barnes v Sheffield City Council (1995) 27 HLR 719 the Court of Appeal set out a number of factors relevant to determining whether occupants were living together as a single household. It held that in the particular circumstances of that case a group of students sharing a house constituted a single household. The 1999 consultation paper, Licensing of Houses in Multiple Occupation England (DETR, 1999), which preceded the 2004 Act observed (section 2, para 24) that, as a result of this judgment, housing authorities were wary of attempting to use their HMO powers in shared houses, particularly those occupied by students. The 2004 Act was intended, inter alia, to extend the regulatory scheme of HMOs to include shared student accommodation, subject to certain exceptions. The 2004 Act introduced for the first time a system of licensing of HMOs authorising occupation of the house concerned by not more than a maximum number of households or persons specified in the licence (section 61(2)). A building or part of a building will qualify as an HMO if the living accommodation is occupied by persons who do not form a single household (section 254(2)(b), (3) and 4(c)) and if occupied by those persons as their only or main residence or they are to be treated as so occupying it (section 254(2)(c), (3) and 4(d)). Section 258 makes provision for determining when persons are to be regarded as not forming a single household for the purposes of section 254. They are to be so regarded unless they are members of the same family or their circumstances are of a description specified in regulations (section 258(2)). Such provision is made in the Licensing and Management of Houses in Multiple Occupation and Other Houses (Miscellaneous Provisions) (England) Regulations 2006 (SI 2006/373) (the 2006 Regulations). Section 259 makes provision for determining when persons should be treated as occupying premises as their only or main residence. In particular, a person is to be so treated, inter alia, if premises are occupied by the person as the persons residence for the purpose of undertaking a full time course of further or higher education (section 259(2)(a)). If an application for a licence is made to the local housing authority, it may grant a licence if it is satisfied as to the matters mentioned in section 64(3). Those requirements include that the house is reasonably suitable for occupation by not more than the maximum number of households or persons [specified in the application or decided by the authority] or that it can be made so suitable by the imposition of conditions under section 67 (section 64(1), (2), (3)(a)). Section 67 provides in material part: 67 Licence conditions (1) A licence may include such conditions as the local housing authority consider appropriate for regulating all or any of the following the management, use and occupation of the house (a) concerned, and (b) its condition and contents. (2) Those conditions may, in particular, include (so far as appropriate in the circumstances) (a) conditions imposing restrictions or prohibitions on the use or occupation of particular parts of the house by persons occupying it; (5) A licence may not include conditions imposing restrictions or obligations on a particular person other than the licence holder unless that person has consented to the imposition of the restrictions or obligations. (6) A licence may not include conditions requiring (or intended to secure) any alteration in the terms of any tenancy or licence under which any person occupies the house. Guidance At the material time, minimum sizes of bedrooms in HMOs were not prescribed in legislation. However, Nottingham issues guidance to its housing officers on the operation of this licensing system. For present purposes the relevant document is HMO Amenity Guidance 3 Space Provision for Licensable and Non Licensable HMOs. This states that in the case of bedrooms in single occupation in HMOs where there is adequate dining space elsewhere and where cooking facilities are not provided in the room the minimum space provision is eight square metres. A general note adds: The dimensions and areas specified shall normally be regarded as the minimum, particularly with regard to new proposals. However it is recognised that existing buildings cannot always achieve these minima. A degree of flexibility will sometimes be possible if other compensating features are present. Conversely it should be noted that irrespective of the dimensions, the shape and useable living space of any room is a determining factor in the calculation of the maximum number of people for which it is suitable. In carrying out its measurements Nottingham disregards all space with a floor to ceiling height of less than 1.53 metres. Nottingham participates with other housing authorities in the East Midlands in an organisation named East Midlands Decent and Safe Homes which also sets out amenity standards for HMOs in Amenity and Space in HMOs: A Landlords Guide (the East Midlands DASH Guide). This recommends adopting eight square metres as the minimum size for bedrooms of this sort but also states: The standards are usually regarded as a MINIMUM but are a guide only. Other factors or compensatory features will be taken into account when inspecting a property, therefore allowing for a degree of flexibility in certain circumstances. These factors could include the shape of the usable living space, or the needs and wishes of the occupants. (Original emphasis) The properties 44, Rothesay Avenue and 50, Bute Avenue are both terraced houses of traditional brick construction with a slate roof. Both are used for letting to students and in each case the attics have been converted into bedrooms. In each property the front attic bedroom has a sloping ceiling which reduces the area regarded by Nottingham as useable living space below eight square metres. At 44, Rothesay Avenue the front attic room has a total floor area of 9.75 square metres but, due to the sloping ceiling, only 5.89 square metres has a floor to ceiling height of 1.53 metres or more. The front attic room at 50, Bute Avenue has a floor area of approximately 11 square metres of which only 6.89 square metres has a floor to ceiling height of 1.53 metres or more. Both the Upper Tribunal and the Court of Appeal quoted the following description of the attic bedroom at 44, Rothesay Avenue by the First tier Tribunal: The area of the relevant bedroom having a height of less than 1.53m was utilised to accommodate a desk and for storage. The relevant room includes a double bed, desk, chest of drawers, bedside table, bookshelves and a built in wardrobe. The pitch of the roof slope was such that it appeared possible to use the desk without undue risk of collision and any such risk could be reduced further by placing the chair in the area beneath the pitched roof window thereby eliminating the risk of collision when rising from the chair. The head of the bed was fitted under that part of the room with reduced height. Risk of collision could be avoided by turning the bed through 180. The risk of collision when changing the bed linen could be avoided by pulling the bed out of the area with reduced headroom prior to performing the task. The assessment of the attic bedroom at 50, Bute Avenue was to similar effect. Nottinghams decisions and the appeals In each case Nottingham granted a new HMO licence which imposed a condition prohibiting the use of the attic bedroom for sleeping. The licence for 44, Rothesay Avenue provided: [T]he second floor front bedroom be prohibited for the use of sleeping. This room will not be allowed for the use for sleeping until it has provided by way of alteration, adaptation or extension a useable floor surface area of eight square metres within a minimum ceiling height of 1.53 metres below the sloping ceiling from the floor. (para 36) The licence for 50, Bute Avenue limited the number of persons permitted to occupy the HMO to a maximum of five and provided: The second floor front bedroom is not to be used as a sleeping room, except where it is let in combination with another room within the property in such a way as to provide the occupant with the exclusive use of two rooms. (para 38) This licence further provided that the restriction on sleeping in the room might be removed if alterations were carried out to increase the size of the room to eight square metres (excluding any area where the ceiling height is below 1.53m). In each case the respondents appealed to the First tier Tribunal against the imposition of these conditions. Each of the First tier Tribunals referred in its decision to the guidance issued by Nottingham and, in particular, to the general note quoted at para 7 above. Each considered that Nottinghams guidance on space provision was reasonable as general guidance but noted that some flexibility was permitted if other compensating features were present. Each considered that in each of the rooms the area with the reduced headroom was of some value for the uses described. Furthermore, each considered that in each of the HMOs the provision of communal living space was significantly larger than the minimum contemplated by Nottinghams requirements for additional living space. In each case the Tribunal regarded this over provision as a compensating feature which could be taken into account in applying Nottinghams own guidance. In each case the Tribunal concluded that the attic rooms were adequate as study/bedrooms where cohesive living is envisaged and that there were sufficient compensating features in the HMOs to make them suitable for student or similar cohesive occupation for six persons in six households. Accordingly, in the licence for 44, Rothesay Avenue the First tier Tribunal substituted an alternative condition, namely that: The second floor front bedroom may only be used for sleeping accommodation by a person engaged in full time education and who resides in the dwelling for a maximum period of ten calendar months over a period of one year. No similar condition was introduced by the First tier Tribunal which heard the appeal in relation to 50, Bute Avenue, but it justified its conclusion by stating that there are sufficient compensating features in the property to make it suitable for students or similar cohesive occupation for six persons in six households. In dismissing Nottinghams further appeal in that case, however, the Upper Tribunal directed that the same condition be included in the licence for 50, Bute Avenue. On appeal to the Upper Tribunal (Lands Chamber) both appeals were dismissed. Martin Rodger QC, Deputy President, referred to examples of guidance by local housing authorities modifying space standards for particular modes of occupation which, he considered, recognise that certain categories of occupier may wish to occupy accommodation in a particular way. The purpose of all conditions under section 67 was to ensure that the HMO is suitable for the number of persons permitted to occupy it and there was therefore nothing unlawful in formulating a condition applicable to a particular mode of occupation by a category of occupants if the house was suitable for them in greater numbers than it would be for a different mode of occupation. He rejected Nottinghams submission that the Act requires that an HMO must be capable of occupation by all potential occupants. Referring to the substituted condition in the case of 44, Rothesay Avenue, he observed that the condition was formulated on the basis that the property was one where cohesive living is envisaged and that by cohesive living the First tier Tribunal clearly had in mind the level of shared activity and social interaction to be expected in a shared house or Category B HMO, as described at greater length in the policy documents of other local authorities. In his view, the basic idea of a house shared by a number of individuals, not forming a family but who nevertheless wish to share communal living facilities and enjoy a significant level of social interaction, is readily understood. With regard to the terms of the condition he observed: I am satisfied that there is nothing unlawful in a condition restricting the use of sleeping accommodation in part of an HMO to a person in full time education, if the decision maker is satisfied that, looked at as a whole, the HMO is suitable for the number of households specified in the licence. An alternative condition, perhaps more closely reflecting the reason for permitting the use of a room smaller than would normally be acceptable, might require that the occupiers be members of a group who intend to share the communal living space, but I do not think the reference to students makes the condition unlawful. The Court of Appeal (Longmore, Lewison and Briggs LJJ) upheld the decision of the Upper Tribunal: [2017] PTSR 879. The Court of Appeal considered that the power to impose conditions permitted a condition defined by reference to the general characteristics and activities of an occupier. A restriction of occupation to occupation by students was a restriction on occupation by persons. The Court of Appeal rejected submissions that the condition imposed by the First tier Tribunal was irrational and incapable of effective enforcement. However, it varied the licences to include two further conditions: that the communal space on the ground floor, (i) comprising a kitchen/diner and living room area, be kept available for communal living space only; (ii) students engaged in full time education. that no bedrooms may be let to persons other than Nottingham now appeals to the Supreme Court, by leave granted by this Court, on the following grounds: Ground 1: The power to impose conditions under sections 64 and 67, Housing Act 2004, in order to make an HMO suitable for a particular number of households or persons, cannot be used so as to limit the class of persons for whom the HMO is suitable. Ground 2: The conditions imposed by the Tribunals and Court of Appeal are irrational and unenforceable. Ground 1 Submissions of the parties On behalf of Nottingham, Mr Andrew Arden QC submits that the conditions imposed seek to make an exception for full time students otherwise than in the circumstances permitted by the legislation. Section 64(3)(a) requires the authority to be satisfied that the house is reasonably suitable for occupation by not more than the maximum number of households or persons mentioned in subsection (4) or that it can be made so suitable by the imposition of conditions under section 67. In his submission the legislation, at this stage, is unequivocal and concerned only with numbers. Furthermore, section 67(2)(a) which permits conditions imposing restrictions or prohibitions on the use or occupation of particular parts of the house by persons occupying it does not permit conditions restricting who may occupy an HMO. The references elsewhere in the statute to the characteristics of occupants do not support setting conditions by reference to such characteristics. In the alternative, the proposed conditions here seek, contrary to the policy of the legislation, to introduce an exception to its operation for a category of persons or a defined set of circumstances. A condition which restricts the occupation of an HMO by reference to a class of occupier does not achieve the purpose of improving or maintaining standards and has the effect of making accommodation unavailable to a section of the rental market. That standards may be lowered for certain categories otherwise than as specified by Parliament is the antithesis of the legislative purpose. In the further alternative, treating occupation by students in this way is contrary to the statutory object of Part 2 of the 2004 Act which was intended in part to reverse the decision of the Court of Appeal in Barnes v Sheffield City Council. On behalf of the Secretary of State Mr Jonathan Moffett QC accepts that, in an appropriate case, section 67 does empower a housing authority to impose a condition on a licence which restricts the occupation of all or part of an HMO to occupation by a particular class of person. However, he submits that a housing authority may not, on the basis of such a condition, grant a licence for an HMO which authorises the HMO to be occupied by a greater number of households or persons than the authority would otherwise authorise. In particular, he criticises the approach of the Court of Appeal on the grounds that it allows for the application of different standards for different classes of person and assumes that a particular class of occupier will live in the HMO in a way that requires a lower standard of accommodation than other classes. He submits that section 64(3)(a) refers to conditions that make the house reasonably suitable for occupation by the maximum number of households or persons and does not refer to conditions that make the households or persons suitable to occupy the house. Mr Chamberlain, as Advocate to the Court, has at the Courts request advanced the submissions which might have been made by the respondents had they taken part in this further appeal. He submits that section 67 permits the imposition of the conditions in question here. First, he submits that the conditions imposed on the letting of each of the properties were, on their face, conditions regulating the use of the second floor front bedroom and were correctly characterised as such. However, Parliament chose to permit conditions regulating management, use and occupation of an HMO. On a natural reading, a condition regulating the occupation of a house is apt to include one that governs how or by whom it may be occupied. Contrary to the submissions of Nottingham, the Court of Appeal decision does not introduce an exception to the operation of the legislation for a category of persons or a defined set of circumstances, nor does it allow occupation at a lower standard than would otherwise have been permitted in the circumstance of the HMOs in question. Discussion Section 64(3)(a) indicates that the purpose of the imposition of conditions is to make a house reasonably suitable for occupation by not more than the maximum number of households or persons specified in the application or decided by the housing authority. The question as to what sort of conditions may be imposed is governed by section 67. Section 67(1)(a) provides that a licence may include such conditions as the local housing authority considers appropriate for regulating all or any of the management, use and occupation of the house concerned. Section 67(1) is followed in section 67(2) by a non exhaustive list of permitted conditions including in section 67(2)(a) conditions imposing restrictions or prohibitions on the use or occupation of particular parts of the house by persons occupying it. Considering these words in their natural meaning, they extend sufficiently widely to include the conditions with which we are concerned. I am persuaded that the words use and occupation in section 67(1) are not used as a composite term. Section 67(2)(a) refers disjunctively to the use or occupation of particular parts of the house. The inclusion of occupation in addition to use must have been intended to extend the scope of permissible conditions. It may well be, as Mr Chamberlain submits, that the conditions in respect of each of these houses related to the use of the attic bedrooms. However, it seems clear that they relate to the occupation of those rooms. As Mr Chamberlain put it, on a natural reading a condition regulating the occupation of a house is apt to include one that governs how or by whom it may be occupied. In my view, these conditions seek to regulate the occupation of particular parts of the house by persons occupying it and fall squarely within the natural meaning of section 67(2)(a). It is, however, necessary to stand back from the plain meaning of these provisions and to consider whether such a reading is consistent with the object of the legislation. In this regard it is significant that elsewhere in Part 2 of the 2004 Act the manner of occupation of a house and the general characteristics of occupants are considered relevant in contexts connected with HMOs and with housing standards generally. In some instances, the personal occupation or activities of an occupier will have a bearing on whether the legislation applies. Thus, for example, persons carrying out domestic services are regarded as occupying the same household as their employer if they are occupying rent free tied accommodation in the same building (2006 Regulations, regulation 3); a full time student is regarded as occupying accommodation as his only or main residence if it is occupied for the purpose of his full time course (section 259(2)(a)); and some religious communities are outside the HMO scheme if their principal occupation is prayer, contemplation, education or the relief of suffering (Schedule 14, paragraph 5). Therefore, in certain circumstances the operation of the legislative scheme will depend on the personal characteristics of the occupants or their activities. In the present case the Deputy President of the Upper Tribunal drew attention in his judgment to the fact that prior to the present legislation, under the 1985 Act, regard was had to the suitability of an HMO for occupation by a particular category of occupier. Thus, in 1986 the Institution of Environmental Health Officers published guidance on amenity standards for HMOs which distinguished between different categories of HMOs. In particular, Category A comprised houses occupied as individual rooms where there was some exclusive occupation and some sharing of amenities but each occupant lived otherwise independently of all others. Category B comprised houses occupied on a shared basis which would normally be occupied by members of a defined social group, for example students or a group of young single adults. In such houses the occupants each enjoyed exclusive use of a bedroom but would share other facilities including a communal living space. Having distinguished between these categories in this way on the basis of the manner of occupation, the guidance then went on to set out different specifications for each category. I note, moreover, that a revised version, the 1994 Amenity Standards, remained current until very recently and was available on the website of the successor body, the Chartered Institute of Environmental Health. A similar approach can be detected in certain guidance issued following the implementation of the current legislation. The Deputy President of the Upper Tribunal in his judgment in the present case drew attention to the East Midlands DASH Guide produced by housing authorities in the East Midlands including Nottingham (see para 8, above) which recognises that different facilities may be required for different modes of occupation. It provides that in HMOs where the occupants tend to live separately there should be a sink/wash hand basin within the living units. Similarly, there was before the Court of Appeal in the present case a note prepared by Mr Robert Fookes, counsel for the respondents, setting out extracts from the current guidance issued by a selection of housing authorities responsible for accommodation likely to be used by students attending Oxford, Cambridge and Russell Group universities. In half of these standards the housing authorities distinguish between students and other occupants. As the Deputy President of the Upper Tribunal observed, it is obvious that nothing in this guidance can change the meaning of the present legislation. Nevertheless, I agree with him that it provides a useful point of reference. It may be thought that, as a matter of common sense, the manner of occupation of a room and the type of occupant may have a bearing on the suitability of a particular room for a particular use and that this is reflected in the guidance referred to above. That guidance also supports the view that in practical terms the availability of communal living space may be capable of compensating for an undersized bedroom. However, the critical question is whether the approach reflected in such guidance is consistent with the present legislation. At the heart of the appeal on this ground lie two submissions by Mr Arden on behalf of Nottingham. First, he submits that the conditions in issue here seek, contrary to the policy of the legislation, to introduce an exception to its operation for a category of persons or a defined set of circumstances. It is clear that Part 2 of the 2004 Act is intended to apply to shared student houses. One purpose behind the 2004 Act was to reverse the effect of Barnes v Sheffield City Council as a result of which many shared student houses fell outside the scope of the 1985 Act. Express provision is made in section 259(2)(a) in respect of occupation for the purpose of undertaking a full time course of further or higher education and the effect of section 254(5) and Schedule 14, paragraph 4 is, by way of exception, to remove from this regulatory scheme certain buildings occupied by students. Contrary to Nottinghams submission, however, I do not consider that the three conditions with which we are concerned have the effect of undermining this purpose. These conditions do not remove shared student houses from the regulatory scheme. On the contrary, as the decisions of the First tier Tribunal in the present cases demonstrate, the standard of accommodation available in a shared student house will be inspected and subjected to rigorous examination and the house will be licensed as suitable for a stipulated number of occupants only if it is considered to be so suitable (if necessary subject to conditions) by the housing authority for the area or, on appeal, by a specialist tribunal. Secondly, Mr Arden submits that there is no doubt that the purpose in imposing the conditions in the present case was to allow occupation at a lower standard or by a greater number than would otherwise have been permitted in the circumstances of the HMOs in question. I should observe at this point that it is clear that Nottingham in bringing this appeal and the Secretary of State in intervening have clearly been motivated by a wish to ensure that HMOs provide acceptable living conditions, to protect the vulnerable or potentially vulnerable groups that tend to occupy HMOs and to avoid an interpretation of the legislation as a result of which lower standards are to be considered appropriate for particular groups such as students. That is commendable. However, I consider that their concern is unfounded. The imposition of conditions such as those imposed by the Tribunals and the Court of Appeal in the present case do not have that effect. It is entirely appropriate, when considering the suitability of accommodation in an HMO for a particular purpose, to have regard to the mode of occupation. If the house is to be occupied by a group living together cohesively, each having his or her own bedroom but sharing other facilities including a kitchen/diner and a living room, the availability of those additional facilities is a material consideration. In these circumstances the mode of occupation means that the shared facilities will benefit all the occupants and, as a result, this may compensate for a bedroom which is slightly smaller than the recommended minimum. By contrast, where occupants of an HMO each live independently of all others, sharing only bathroom, toilet and kitchen facilities, any communal living space made available will not benefit the occupants in the same way because of their different living arrangements. It seems to me to be entirely appropriate, therefore, that in considering the suitability of accommodation in an HMO regard should be had to the proposed mode of occupation. Furthermore, in appropriate cases effect may be given to such considerations by the imposition of conditions in the licence. This is not inconsistent with the statutory scheme. As the Deputy President of the Upper Tribunal pointed out in his judgment, certain types of accommodation may lend themselves to different styles of occupation and it would be surprising if the 2004 Act did not reflect that. The various guidelines referred to earlier in this judgment refer in different ways to the need for flexibility in their application. In that regard, account should be taken of the proposed mode of occupation where it is likely to influence the quality of the accommodation made available to the occupant. It must be emphasised that this does not permit the application of lower standards than would otherwise be applicable. On the contrary, it is simply that there will be certain circumstances in which, as a matter of common sense, it will be appropriate to have regard to the mode of occupation when applying the same objective standards which apply to all HMOs. For these reasons, I consider that the power to impose conditions under sections 64 and 67, Housing Act 2004, in order to make an HMO suitable for a particular number of households or persons, can be used so as to limit the class of persons for whom the HMO is suitable. Finally, I should draw attention to the fact that there exist other mechanisms to maintain standards of accommodation in HMOs, in particular the imposition of mandatory conditions under Schedule 4 of the 2004 Act. In this regard, I note that the Licensing of Houses in Multiple Occupation (Mandatory Conditions of Licences) (England) Regulations 2018 (2018 No 616) (the 2018 Regulations), came into force on 1 October 2018 and introduced additional mandatory conditions in respect of floor area. As a result a licence must now include a condition requiring the licence holder to ensure that the floor area of any room in the HMO used as sleeping accommodation by one person over ten years is not less than 6.51 square metres (paragraph 2, inserting Schedule 4, paragraph 1A(2)(a)). Ground 2 Submissions of the parties On behalf of Nottingham, Mr Arden submits that if there is a power to impose a condition based on a class of occupier, the conditions in the present case as directed by the Tribunals and the Court of Appeal are irrational, both in the conventional sense and in the sense that they are not effective to achieve their purpose, and incapable of enforcement. While the conditions are designed to secure occupation only by students, this, he submits, is not necessarily the same as cohesive living. The judgments below are said to have proceeded on the basis of an image of student life which is simply not true of all or necessarily most students, and this is an irrational basis for determining who may or may not occupy an HMO. The conditions go no further than setting up the possibility of sharing. In addition, it is said that the condition limiting occupation for a maximum period of ten calendar months over a period of one year is irrational. Either the rooms are or are not suitable to be used as sleeping accommodation all the year round. Nottingham objects that the condition that the attic rooms be occupied for only ten months over the course of a year could not practicably be monitored. It also maintains that while it is possible to ensure that occupants are all in full time education, that requirement cannot in practice be enforced. The Secretary of State has taken no position on this ground of appeal. Mr Chamberlain submits that, while not all students live in the same way, the proxy employed by the condition is sufficiently precise. Moreover, the First tier Tribunals which heard the initial appeals were well placed to judge whether cohesive living was the norm among students in the area where the properties were located. With regard to enforceability, he takes issue with Nottingham. Discussion I agree with the Court of Appeal that the conditions imposed by the Tribunals were deficient in that they failed to require any part of the HMO to be available for communal living and did not require the bedrooms other than the front attic bedrooms to be let to students. That deficiency is, however, cured by the further conditions introduced by the Court of Appeal. The reasoning of the First tier Tribunals and the Upper Tribunal in this case makes clear that the intention was to restrict occupation to students because they were considered to be a category of occupants who were likely to live in a cohesive manner. In the Upper Tribunal the Deputy President observed that by cohesive living the First tier Tribunal clearly had in mind the level of shared activity and social interaction to be expected in a shared house or Category B HMO, as described at greater length in the policy documents of other local authorities. The first issue for consideration under this ground is therefore, as Mr Chamberlain put it, whether a condition limiting the occupation of each of the houses to occupation by persons engaged in full time education is a sufficiently precise proxy for occupation by persons living together cohesively. All students are individuals and their respective activities and life styles will, no doubt, vary considerably. Nevertheless, it does seem to me that the normal state of affairs generally to be expected when students share a student house is that there will be a high level of social activity and social interaction among them and that they will all make extensive use of the shared living facilities. There can be no guarantee that any given student occupier will make full use of the shared facilities, but the availability of such facilities, emphasised by the Court of Appeal, coupled with the normal expectation of cohesive living in a student house makes it reasonable to adopt this proxy in this context. It is also significant that the members of the First tier Tribunals in these cases, with their experience of student accommodation in Nottingham, considered this a reasonable approach. While I agree with the Deputy President of the Upper Tribunal that an alternative condition, perhaps more closely reflecting its rationale, might require that all occupants be members of a group who intend to share the communal living space, the proxy adopted is sufficiently precise. Moreover, the alternative might give rise to difficulties of enforcement. The requirement that the attic rooms may only be occupied for ten months in each year was clearly intended to reinforce the requirement that occupation be by full time students. If the latter requirement is lawful, the former is strictly unnecessary. I consider that the requirement limiting occupation to ten months in each year is irrational. If a room is suitable for occupation for sleeping for ten months in the year, it is suitable for such occupation for the entire year. Moreover, full time students often require accommodation for the entire year. In these circumstances, it is unnecessary to consider whether this requirement is enforceable. I would vary the conditions imposed in respect of each property to delete the requirement that the attic rooms may only be occupied for ten months in each year. Finally, it is said on behalf of Nottingham that while it is possible to ensure that occupants are all in full time education, it is not in practice possible to enforce the requirement. Nottingham points to the 12 months assured shorthold tenancy agreements employed by the respondents. Each requires the tenant to ensure that the propertys strict purpose as a set of lets to students of the University is not prejudiced and also contains a clause which entitles the landlord to re enter if the tenant ceases to be a student of the university. However, Nottingham draws attention to the practical difficulties of evicting a tenant in these circumstances which, it is said, would make it practically impossible to enforce the conditions in the way envisaged by the legislation. I note that if a landlord tries but fails to evict tenants who have ceased to be full time students, for example because the court considers it unreasonable to make the order, the landlord may well have a reasonable excuse for permitting the occupants to remain and a defence under section 72(5) of the 2004 Act to the offence of failing to comply with the licence condition. However, the sanction of revocation of the licence will be available which, in itself, should be a sufficient sanction. Conclusion For these reasons, and subject to the deletion of the requirement of occupation for only ten months in each year, I consider that the conditions imposed by the Tribunals and the Court of Appeal, considered cumulatively, in respect of 44, Rothesay Avenue and 50, Bute Avenue, respectively, were entirely lawful. Accordingly, I would vary the conditions to delete the requirement of occupation for only ten months in each year but would otherwise dismiss the appeal.
+This appeal concerns the permitted uses of a retail store in Streatham in the area of the London Borough of Lambeth (the Council). Planning permission was originally granted by the Secretary of State in 1985, but the use was limited by condition to sale of DIY goods and other specified categories, not including food sales. Following implementation, the permitted categories were extended by later consents (under section 73 of the Town and Country Planning Act 1990), the most recent being in 2014 (the 2014 permission), which is in issue in this case. The second respondent sought a certificate from the Council determining that the lawful use of the store extended to sales of unlimited categories of goods including food. A certificate to that effect was refused by the Council, but granted by a planning inspector on appeal, and upheld by the lower courts. The Council, as local planning authority, appeals to this court. The planning history in more detail The original permission, granted by the Secretary of State on 17 September 1985 (the 1985 permission), was subject to a number of conditions, including: 6. The retail unit hereby permitted shall be used for the retailing of goods for DIY home and garden improvements and car maintenance, building materials and builders merchants goods and for no other purpose (including any other purpose in Class I of the Schedule to the Town and Country Planning (Use Classes) Order 1972 or in any provision equivalent to that Class in any statutory instrument revoking and re enacting that Order). The exclusion of use for other purposes, including those within Use Class 1, had the effect of excluding (inter alia) food sales. The following reason was given in the decision letter (para 16): Because the traffic generation and car parking requirements of certain types of large retail stores are substantially greater than those of the DIY unit proposed and could be excessive at this site, it is necessary to restrict the right to change to other types of retail unit On 30 June 2010, the Council granted a further planning permission (the 2010 permission) expressed to be for Variation of Condition 6 of the 1985 permission to allow for the sale of a wider range of goods as specified, not including food sales, and again excluding other uses within the relevant use class (now Class A1). Although it is common ground that this permission was granted under section 73, there was no specific reference to that section in the document, which referred simply to the 1990 Act. This permission included, as a separate condition 1, the same enumeration of permitted uses and exclusions as in the terms of the grant, and the following reason was given for the condition: In order to ensure that the level of traffic generation is such as to minimise danger, obstruction and inconvenience to users of the highway and of the accesses. There were in addition two new conditions which had not been in the 1985 permission: 2. Details of refuse and recycling storage to serve the development shall be submitted to and approved in writing by the Local Planning Authority prior to first commencement of any of the additional retail uses hereby permitted. The refuse and recycling storage facilities shall be provided in accordance with the approved details prior to commencement of the development and shall thereafter be retained as such for the duration of the permitted use. 3. A strategy for the Management of Deliveries and Servicing shall be submitted to and approved in writing by the Local Planning Authority prior to first commencement of any of the additional retail uses hereby permitted. Deliveries and servicing shall thereafter be carried out solely in accordance with the approved details. Reasons were given for each condition. The permission now in issue was granted on 7 November 2014. (The application is not before us.) In this case the grant referred in terms to section 73. It is necessary to set out the operative parts in full: DECISION NOTICE DETERMINATION OF APPLICATION UNDER SECTION 73 TOWN AND COUNTRY PLANNING ACT 1990 The London Borough of Lambeth hereby approves the following application for the variation of condition as set out below under the above mentioned Act Development At: Homebase Ltd 100 Woodgate Drive, London SW16 5YP For: Variation of condition 1 (Retail Use) of Planning Permission Ref: 10/01143/FUL (Variation of Condition 6 (Permitted retail goods) of planning permission Ref 83/01916 Granted on 30.06.2010. Original Wording: The retail use hereby permitted shall be used for the retailing of DIY home and garden improvements and car maintenance, building materials and builders merchants goods, carpets and floor coverings, furniture, furnishings, electrical goods, automobile products, camping equipment, cycles, pet and pet products, office supplies and for no other purpose (including the retail sale of food and drink or any other purpose in Class A1 of the Schedule to the Town and Country Planning (Use Classes) Order 1987 (as amended) or in any provision equivalent to that Class in any statutory instrument revoking and re enacting that Order). Proposed Wording: The retail unit hereby permitted shall be used for the sale and display of non food goods only and, notwithstanding the provisions of the Town and Country Planning (General Permitted Development) Order 1995 (or any Order revoking and re enacting that Order with or without modification), for no other goods. [I should note in passing that the reference in the revised form of condition to the General Development Order, rather than the Use Classes Order, appears to be a mistake, as Mr Lockhart Mummery QC for the third respondent suggested. Neither he nor any of the parties saw it as significant to the issues in the appeal.] Approved Plans Summary of the Reasons for Granting Planning Permission: In deciding to grant planning permission, the Council has had regard to the relevant policies of the development plan and all other relevant material considerations. Having weighed the merits of the proposals in the context of these issues, it is considered that planning permission should be granted subject to the conditions listed below. Conditions 1. The development to which this permission relates must be begun not later than the expiration of three years beginning from the date of this decision notice. Reason: To comply with the provisions of section 91(1)(a) of the Town and Country Planning Act 2. Prior to the variation her[e]by approved being implemented a parking layout plan at scale of 1:50 indicating the location of the reserved staff car parking shall be submitted to and approved in writing by the Local Planning Authority. The use shall thereafter be carried out solely in accordance with the approved staff car parking details. Reason: To ensure that the approved variation does not have a detrimental impact on the continuous safe an[d] smooth operation of the adjacent highway 3. Within 12 months of implementation of the development hereby approved details of a traffic survey on the site and surrounding highway network shall be undertaken within one month of implementation of the approved development date and the results submitted to the local planning authority. If the traffic generation of the site, as measured by the survey, is higher than that predicted in the Transport Assessment submitted with the original planning application the applicant shall, within three months, submit revised traffic modelling of the Woodgate Drive/Streatham Vale/Greyhound Lane junction for analysis. If the junction modelling shows that junction capacity is worse than originally predicted within the Transport Assessment, appropriate mitigation measures shall be agreed with the council, if required, and implemented within three months of the date of agreement. Reason: to ensure that the proposed development does not lead to an unacceptable traffic impact on the adjoining highway network There was no specific reference to conditions 2 and 3 of the 2010 permission. On 10 June 2015, the second respondent applied to the Council for a certificate of lawfulness of proposed use or development (under section 192 of the 1990 Act) for unrestricted use of the store. This was refused by the Council on 12 August 2015, but the appeal was allowed by the inspector by a decision letter dated 6 December 2016. The letter gave a certificate of lawfulness for use described as The use of the premises for purposes within Use Class Al of the Town and Country Planning (Use Classes) Order 1987 (as amended) without restriction on the goods that may be sold. The reason given was: No condition was imposed on [the 2014 permission] to restrict the nature of the retail use to specific uses falling within Use Class A1 The statutory framework It is unnecessary to set out the familiar provisions of the 1990 Act relating to the definition of development, and to the granting of planning permission. It is to be noted however that the extension of the categories of goods to be sold within the store did not in itself amount to development (within the meaning of 1990 Act section 55) requiring planning permission. The erection of the building and the commencement of sales under the 1985 permission no doubt involved both operational development and a material change of use. Thereafter a change to sale of other categories (at least those within the relevant class under the current Use Class Order) would not involve any breach of planning control unless restricted by an appropriate condition. Section 73 of the Act, on which the Council relied in granting the 2010 and 2014 permissions, is headed Determination of applications to develop land without compliance with conditions previously attached. It provides: (1) This section applies to applications for planning permission for the development of land without complying with conditions subject to which a previous planning permission was granted. (2) On such an application the local planning authority shall consider only the question of the conditions subject to which planning permission should be granted, and (a) if they decide that planning permission should be granted subject to conditions differing from those subject to which the previous permission was granted, or that it should be granted unconditionally, they shall grant planning permission accordingly, and (b) if they decide that planning permission should be granted subject to the same conditions as those subject to which the previous permission was granted, they shall refuse the application. The background to this section (formerly section 31A of the Town and Country Planning Act 1971) was described by Sullivan J in Pye v Secretary of State for the Environment, Transport and the Regions [1998] 3 PLR 72: Prior to the enactment of (what is now) section 73, an applicant aggrieved by the imposition of the conditions had the right to appeal against the original planning permission, but such a course enabled the Local Planning Authority in making representations to the Secretary of State, and the Secretary of State when determining the appeal as though the application had been made to him in the first instance, to go back on the original decision to grant planning permission. So the applicant might find that he had lost his planning permission altogether, even though his appeal had been confined to a complaint about a condition or conditions. It was this problem which section 31A, now section 73, was intended to address . While section 73 applications are commonly referred to as applications to amend the conditions attached to a planning permission, a decision under section 73(2) leaves the original planning permission intact and un amended. That is so whether the decision is to grant planning permission unconditionally or subject to different conditions under paragraph (a), or to refuse the application under paragraph (b), because planning permission should be granted subject to the same conditions. In the former case, the applicant may choose whether to implement the original planning permission or the new planning permission; in the latter case, he is still free to implement the original planning permission. Thus, it is not possible to go back on the original planning permission under section 73. It remains as a base line, whether the application under section 73 is approved or refused, in contrast to the position that previously obtained. The original planning permission comprises not merely the description of the development in the operative part of the planning permission . but also the conditions subject to which the development was permitted to be carried out . This passage was approved by the Court of Appeal in Powergen United Kingdom plc v Leicester City Council [2000] JPL 1037, para 28, per Schiemann LJ. Sullivan Js comment that such applications are commonly referred to as applications to amend the conditions was echoed by Schiemann LJ, who noted, at para 1, that such an application is commonly referred to as an application to modify conditions imposed on a planning permission. This usage is also consistent with the wording used in the statute under which section 31A was originally introduced. It was one of various minor and consequential amendments introduced by section 49 and Schedule 11 of the Housing and Planning Act 1986, described as (d) applications to vary or revoke conditions attached to planning permission. It is clear, however, that this usage, even if sanctioned by statute, is legally inaccurate. A permission under section 73 can only take effect as an independent permission to carry out the same development as previously permitted, but subject to the new or amended conditions. This was explained in the contemporary circular 19/86, para 13, to which Sullivan J referred. It described the new section as enabling an applicant, in respect of an extant planning permission granted subject to conditions, to apply for relief from all or any of those conditions. It added: If the authority do decide that some variation of conditions is acceptable, a new alternative permission will be created. It is then open to the applicant to choose whether to implement the new permission or the one originally granted. Although the section refers to development in the future, it is not in issue that a section 73 application can be made and permission granted retrospectively, that is in relation to development already carried out. This question arose indirectly in the courts below, in the context of a dispute about the validity of the time limit condition (condition 1), which required the development to which this permission relates to be begun within three years. The Court of Appeal upheld the inspectors decision that this condition was invalid, in circumstances where the relevant development had been carried out many years before. Lewison LJ said: I cannot see that the decision notice granted planning permission for any prospective development. The mere widening of the classes of goods that were permitted to be sold by retail does not amount to development at all. Conformably with the definition of development in section 55 the only development to which the application could have related was the original erection of the store and the commencement of its use as a DIY store. It was that development that was permitted subject to the conditions that the application was designed to modify; and it was the planning permission permitting that development to which the decision notice referred. (para 79) I agree with that analysis, which is not I understand in dispute before this court. However, it leaves open the question as to the effect of the new permission on conditions which have already taken effect following implementation of the earlier permission. The section does not assist directly. It envisages two situations: either (a) the grant of a new permission unconditionally or subject to revised conditions, or (b) refusal of permission, leaving the existing permission in place with its conditions unchanged. It does not say what is to happen if the authority wishes to change some conditions but leave others in place. As will be seen (para 20 below), the Court of Appeal cited government guidance indicating that to assist with clarity planning decisions under section 73 should also repeat the relevant conditions from the original planning permission. However, as I read this, it was given as advice, rather than as a statement about the legal position. Although the current status of the 2010 conditions is not directly in issue in the appeal, it is of some background relevance and has attracted conflicting submissions. I shall return to this aspect later in the judgment. For completeness, before leaving this discussion of section 73, I should note that circular 19/86 (referred to above) described its predecessor as complementing section 32 of the Town and Country Planning Act 1971 (later, section 63 of the 1990 Act), which at the time made specific provision for retrospective permissions (Permission to retain buildings or works or continue use of land). That section has since been repealed and partially replaced by section 73A of the 1990 Act (see Planning and Compensation Act 1991, Schedule 7). Whatever the precise significance of this change, it is not suggested that it has any relevance to the issues in this appeal and neither side has sought to rely on section 73A. Principles of interpretation We have received extensive submissions and citations from recent judgments of this court on the correct approach to interpretation. Most relevant in that context is Trump International Golf Club Ltd v Scottish Ministers [2015] UKSC 74; [2016] 1 WLR 85. An issue in that case related to the interpretation of a condition in a statutory authorisation for an offshore wind farm, requiring the developer to submit a detailed design statement for approval by Ministers. One question was whether the condition should be read as subject to an implied term that the development would be constructed in accordance with the design so approved. In the leading judgment Lord Hodge (at paras 33 37) spoke of the modern tendency in the law to break down divisions in the interpretation of different kinds of document, private or public, and to look for more general rules. He summarised the correct approach to the interpretation of such a condition: 34. When the court is concerned with the interpretation of words in a condition in a public document such as a section 36 consent, it asks itself what a reasonable reader would understand the words to mean when reading the condition in the context of the other conditions and of the consent as a whole. This is an objective exercise in which the court will have regard to the natural and ordinary meaning of the relevant words, the overall purpose of the consent, any other conditions which cast light on the purpose of the relevant words, and common sense. He rejected a submission that implication had no place in this context: 32. [Counsel] submits that the court should follow the approach which Sullivan J adopted to planning conditions in Sevenoaks District Council v First Secretary of State [2005] 1 P & CR 186 and hold that there is no room for implying into condition 14 a further obligation that the developer must construct the development in accordance with the design statement. In agreement with Lord Carnwath JSC, I am not persuaded that there is a complete bar on implying terms into the conditions in planning permissions 35. While the court will, understandably, exercise great restraint in implying terms into public documents which have criminal sanctions, I see no principled reason for excluding implication altogether. In the instant case, had it been necessary to do so, he would, at para 37, have readily drawn the inference that the conditions of the consent read as a whole required the developer to conform to the design statement in the construction of the windfarm. In my own concurring judgment, having reviewed certain judgments in the lower courts which had sought to lay down lists of principles for the interpretation of planning conditions, I commented: I see dangers in an approach which may lead to the impression that there is a special set of rules applying to planning conditions, as compared to other legal documents, or that the process is one of great complexity. (para 53) Later in the same judgment, I added: Any such document of course must be interpreted in its particular legal and factual context. One aspect of that context is that a planning permission is a public document which may be relied on by parties unrelated to those originally involved It must also be borne in mind that planning conditions may be used to support criminal proceedings. Those are good reasons for a relatively cautious approach, for example in the well established rules limiting the categories of documents which may be used in interpreting a planning permission But such considerations arise from the legal framework within which planning permissions are granted. They do not require the adoption of a completely different approach to their interpretation. (para 66) In summary, whatever the legal character of the document in question, the starting point and usually the end point is to find the natural and ordinary meaning of the words there used, viewed in their particular context (statutory or otherwise) and in the light of common sense. The Court of Appeals reasoning It is unnecessary to review in any detail the reasoning of the inspector or the High Court, since the issues, and the competing arguments, are fully discussed in the judgment of the Court of Appeal. Having set out the planning history and the terms of section 73, Lewison LJ (paras 19 22) identified what he saw as the problem. While he acknowledged that it was clear what Lambeth meant to do in a very broad sense, he said: But that is not the question. The question is: what did Lambeth in fact do? The application was an application for the variation of a condition attached to the 2010 permission the technical trap, into which it is said that Lambeth fell, is that approval of an application under section 73 requires the grant of a fresh planning permission, rather than merely a variation of an existing one It follows from this that the decision notice must be read as a free standing grant of planning permission. However, it failed to repeat any of the conditions imposed on the previous planning permissions and, more importantly, failed to express the new description of the use as a condition, rather than as a limited description of the permitted use He noted the advice given in the relevant Planning Policy Guidance note (PPG): It should be noted that the original planning permission will continue to exist whatever the outcome of the application under section 73. To assist with clarity, decision notices for the grant of planning permission under section 73 should also repeat the relevant conditions from the original planning permission, unless they have already been discharged. This advice, he thought, was reflective of the words of section 73(2)(a) which requires a local planning authority, if it decides that different conditions should be imposed, to grant planning permission accordingly: that is to say in accordance with the conditions upon which it has decided that planning permission should be granted. Later in the judgment he addressed the submissions before the court. He noted that Mr Reed QC for the Council put his argument in two ways: first by implication of a condition and second as a matter of interpretation. He thought it more logical to reverse the order, while accepting that the exercise was an iterative process, and observing that the objective was not to determine what the parties meant to do in the broad sense, but what a reasonable reader would understand by the language they in fact used. (para 38) Having referred to the findings of the judge in the court below, he summarised Mr Reeds submission on the interpretation of the decision notice: 45. In the light of those findings Mr Reed argues that the decision notice described itself as doing no more than approving a variation of condition in two previous planning permissions. For technical reasons, however, a variation of a condition under section 73 takes effect as the grant of a fresh planning permission. In order to give effect to Lambeths intention and also to that of the applicant for the variation of the condition, the limited description of the use must therefore be read as if it were itself a condition. In the critical paragraphs of the judgment, he gave his view of how the reasonable reader would have approached the matter: 52. The reasonable reader of the decision notice must be notionally equipped with some knowledge of planning law and practice. The distinction between a limited description of a permitted use and a condition is a well known distinction. The reasonable reader would also know that the Governments own guidance stated that any conditions applicable to planning permission granted under section 73 must be explicitly stated. He would know the general structure of a planning permission which will set out a summary of the application, describe the development permitted by the permission and, in a separate part of the permission, will set out any conditions imposed on the grant of planning permission with reasons for those conditions. He would notice that there were some conditions attached to the grant which were explicitly stated in the decision notice, and that the decision notice stated that Lambeth had decided that planning permission should be granted subject to the conditions listed below. If he had looked back over the planning history he would also have seen the 2010 approval of a variation to the condition, which did specify the permitted range of goods in the form of a condition. That had not been repeated in the decision notice. He would also have noticed that the decision notice in 2010 had imposed two conditions (relating to refuse and recycling on the one hand, and management of deliveries on the other) which had also not been repeated in the decision notice. If he had considered the 2013 refusal he would have seen that Lambeth was not satisfied at that time that the applicant had demonstrated that increased traffic would not lead to adverse impacts. But he would have seen that the decision notice of 2014 referred to a traffic assessment which Lambeth had considered. He would also have noticed that condition 3 required a traffic survey and the implementation of mitigation measures if junction capacity was worse than predicted. He might reasonably have concluded that Lambeth had been sufficiently satisfied on this second application to grant conditional permission, with the safety net of condition 3. 53. Accordingly, sympathetic though I am to Lambeths position, this submission seems to me to go well beyond interpretation. It is not a question of rearranging words that appear on the face of the instrument (as in Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101). It is a question of adding a whole condition, which has a completely different legal effect to the words that Lambeth in fact used. As a further point he noted the statutory requirement for the notice to state the reasons for any condition imposed. He said: To impose a condition without giving reasons for it would be a breach of statutory duty. It is one of the principles of contractual interpretation that one should prefer a lawful interpretation to an unlawful one. There is nothing in the decision notice which could amount to a clear, precise and full reason for treating the description of the use as a condition. Although Mr Reed suggested that the first reason given for the 2013 refusal could stand as the reason, I consider that to be untenable. The requirement to give reasons is applicable to the notice. It may be that the notice might extend to another document incorporated by reference; but that is not this case. Although the decision notice does cross refer both to the original planning permission and also to previous approved variations, it does not mention the refusal at all. There would be no reason for a reasonable reader of the decision notice to suppose that a reason for an unexpressed condition was contained in a document which was simply part of the background. (para 59) Lewison LJ went on to deal with the alternative formulation, based on implication of a condition in the same form as the proposed wording, holding that it failed to meet the stringent tests laid down by the authorities (paras 63 75). In particular he accepted a submission by Mr Lockhart Mummery that the judgments in Trump (like the decision on which they relied: Crisp from the Fens Ltd v Rutland County Council (1949 1951) 1 P & CR 48) decided no more than that implication might be made into an extant condition that was incomplete; they did not contemplate the implication of a wholly new condition (para 72). In this court Mr Reed QC for the Council repeated and developed his arguments in the Court of Appeal. In line with the decision of the High Court in Im Your Man Ltd v Secretary of State for the Environment [1998] 4 PLR 107, he did not seek to argue that the proposed wording could be treated as an enforceable limitation. He accepted the need to establish that the permission was subject to a legally effective condition in that form. In summary he put his case in three ways: (a) as a matter of the correct interpretation of the permission; (b) by correction of an obvious error (by analogy with the contractual principles applied in Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38; [2009] 1 AC 1101); (c) by the implication of a condition in the terms of the proposed wording (applying the principles in Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10; [2009] 1 WLR 1988). The respondents generally adopted the reasoning of the Court of Appeal. Mr Kolinsky QC for the Secretary of State emphasised the need for clarity and certainty in a public document. For the third respondent (as freehold owner of the site), Mr Lockhart Mummery reminded us that planning is a creature of statute, in which common law principles have a limited role; and also of the need for clear and specific words to exclude rights granted by provisions such as the Use Classes Order. Commentary With respect to the careful reasoning of the courts below, I consider that an ordinary reading of the decision notice compels a different view. I find it unnecessary to examine in detail the more ambitious alternatives proposed by Mr Reed. However, I observe in passing (in agreement with Mr Lockhart Mummerys submission as to the limited scope of the judgments in Trump) that it is difficult to envisage circumstances in which it would be appropriate to use implication for the purpose of supplying a wholly new condition, as opposed to interpretation of an existing condition. On the issue of interpretation, Lewison LJ was of course right to say that the 2014 permission needs to be seen through the eyes of the reasonable reader. However, such a reader should be assumed to start by taking the document at face value, before being driven to the somewhat elaborate process of legal and contextual analysis hypothesised in Lewison LJs para 52. In essence Mr Reeds submission, in the simple form recorded by Lewison LJ at para 45 (para 22 above) was in my view correct. It is not necessarily assisted by the varying formulations and citations discussed in his submissions to this court. There is a risk of over complication. Taken at face value the wording of the operative part of the grant seems to me clear and unambiguous. The Council hereby approves an application for the variation of condition as set out below . There then follow precise and accurate descriptions of the relevant development, of the condition to be varied, and of the permission under which it was imposed. They are followed by statements first of the Original wording, and then of the Proposed wording; the latter stating in terms that the store is to be used for the sale of non food goods only and for no other goods. Proposed wording in this context must be read as a description of the form of condition proposed in the application and hereby approved. In other words, the obvious, and indeed to my mind the only natural, interpretation of those parts of the document is that the Council was approving what was applied for: that is, the variation of one condition from the original wording to the proposed wording, in effect substituting one for the other. There is certainly nothing to indicate an intention to discharge the condition altogether, or in particular to remove the restriction on sale of other than non food goods. The suggested difficulties of interpretation do not arise from any ambiguity in the terms of the grant itself. Nor do they raise any question about the extent to which it is permissible to take account of extraneous material. It is unnecessary to look beyond the terms of the document. In these respects the case differs from many of the authorities to which reference has been made in submissions. The arguments against this simple view turn, not on any lack of clarity in the grant itself, but on supposed inconsistencies, firstly with its statutory context, and secondly with the treatment of other conditions in the remainder of the document. In respect of the statutory context, the objection is that this reading is inconsistent with the scope of the power under which the grant was made. Section 73, referred to in terms in the permission, does not give the authority power simply to vary a condition in the previous permission. That purpose could only be achieved by the grant of a new permission, subject in terms to a condition in the revised form. Accordingly, it is said, it was not enough simply to approve the proposed wording, without its terms being incorporated into the form of condition as required by section 73(2)(a). One problem with this argument is that it goes too far for the respondents case. If section 73 gave no power to grant a permission in the form described, the logical consequence would be that there was no valid grant at all, not that there was a valid grant free from the proposed condition. The validity of the grant might perhaps have been subject to a timely challenge by an interested third party or even the Council itself. That not having been done, there is no issue now as to the validity of the grant as such. All parties are agreed that there was a valid permission for something. That being the common position before the court, the document must be taken as it is. It may be that insufficient attention was paid in the submissions below to the background of section 73, as discussed earlier in this judgment. Once it is understood that it has been normal and accepted usage to describe section 73 as conferring power to vary or amend a condition, the reasonable reader would in my view be unlikely to see any difficulty in giving effect to that usage in the manner authorised by the section that is, as the grant of a new permission subject to the condition as varied. If the document had stopped at that point, I do not think such a reader could have been left in any real doubt about its intended meaning and effect. The lack of a specific reason for the condition, to which Lewison LJ attached weight, is of little practical significance, given that this was the relaxation of a previous condition for which the reason was well known, rather than the imposition of a new restriction. In any event the absence of a reason would not affect the validity of the condition (see Brayhead (Ascot) Ltd v Berkshire County Council [1964] 2 QB 303). Turning to the second part of the notice, it is true that there are some internal inconsistencies. Its heading suggests that it is simply stating the reasons for the permission granted in the first part, rather than imposing a separate set of conditions. Further, the wording of the conditions themselves betrays some ambivalence about what has been approved. In some places it is referred to as the development to which this permission relates, or the proposed development, in others as the variation hereby approved or the approved variation. (As I have already noted, the time limit condition was held by the courts below to be wholly invalid.) However, reading the document as a whole, and taking the first part in the sense suggested above, the second part can be given a sensible meaning without undue distortion. It is explanatory of and supplementary to the first part. The permitted development incorporating the amended condition is regarded as acceptable, in accordance with the development plan, but only subject to the conditions set out. They are in other words additional conditions. They are designed to regulate the expanded use as permitted by the revised condition, dealing in particular with staff parking, and monitoring of the additional traffic impact. The other 2010 conditions As I have said, we are not directly concerned in this appeal with the status of the other conditions in the 2010 permission, so far as still potentially relevant, notably conditions 2 and 3 relating respectively to treatment of waste and management of deliveries. However, some comment may be desirable, since the issue was subject to conflicting submissions before the Court of Appeal and in this court. At first sight it would seem surprising if the council, when relaxing the restrictions on sales, had not intended to maintain such requirements. No reason was given for releasing them, and it does not appear to have been requested in the application. For the Council, Mr Reeds position seems to have shifted during the course of the appeal below. Lewison LJ (paras 46 47) recorded his initial submission that conditions 2 and 3 should be treated as incorporated into the new permission; the reasonable reader of the decision notice could not be taken to understand that Lambeth was abandoning them. However, this argument was not pursued in his oral submissions (judgment paras 48, 51), and he seems implicitly to have accepted that they would cease to be effective. In this court this issue was not dealt with in any detail in the written submissions. Questioned in argument, Mr Lockhart Mummery QC for the third respondent submitted that conditions 2 and 3, not having been repeated in the new permission, must be taken as having lapsed altogether. In reply Mr Reed for the Council took a rather different position to that initially taken in the Court of Appeal. His submission as I understood it was that the 2010 conditions, so far as still relevant, were not as such incorporated into the new permission; but they continued to have effect under the 2010 permission, so far as not inconsistent with anything in the new grant. Although we have not heard full argument, my provisional view is that Mr Reeds current submission is correct. It will always be a matter of construction whether a later permission on the same piece of land is compatible with the continued effect of the earlier permissions (see the principles discussed in Pioneer Aggregates (UK) Ltd v Secretary of State for the Environment [1985] AC 132, 144). In this case, following implementation of the 2010 permission, the conditions would in principle remain binding unless and until discharged by performance or further grant. Conditions 2 and 3 were expressed to remain operative during continuation of the use so permitted. The 2014 permission did not in terms authorise non compliance with those conditions, nor, it seems, did it contain anything inconsistent with their continued operation. Accordingly, they would remain valid and binding not because they were incorporated by implication in the new permission, but because there was nothing in the new permission to affect their continued operation. This approach to the interpretation of the decision notice seems to me consistent with the decision of Sullivan J in a case relied on by Mr Reed before the Court of Appeal: Reid v Secretary of State for Transport [2002] EWHC 2174 (Admin). Permission for a transport depot had been granted subject to 12 conditions. The landowner applied for development described as retention of the use of the land without compliance with condition 2 (improvements to public highway) . The local authority responded with a notice referring to the terms of the application, and expressed in these terms notice of its decision to APPROVE Planning Permission for the application set out above subject to the following conditions: Conditions None. Sullivan J held that the grant did not mean that the other conditions were no longer effective. He said: 58. There is an apparent conflict between the description of the proposed development, which refers not to an existing use but to the retention of a permitted use without compliance with one condition in the 1992 planning permission, and the words Conditions: None. One is left wondering what is to happen to the remaining conditions on the 1992 planning permission. Once it is accepted that both the application and the 1992 planning permission referred to in the application for permission may properly be considered for the purpose of construing the meaning of the 2002 permission, then the words Conditions: None mean, in that context, no additional conditions beyond those which had been imposed upon the 1992 permission. Lewison LJ saw this as a case turning on the particular wording of permission, which was held to have the effect that the conditions attached to the previous planning permission continued to apply to the new one. He saw it as of no assistance in the present case, particularly given Mr Reeds abandonment before the Court of Appeal of the argument that the conditions attached to the 2010 permission could be carried forward into the new permission (para 51). As I read the judgment, however, Sullivan J did not intend to say that the other 11 conditions were by implication to be treated as included in the new permission, or that the old permission was superseded. Rather the new permission, confined as it was to the retention of the use without complying with condition 2, and involving no inconsistency with the old permission and the remaining conditions, had no effect on their continuing effect as conditions subject to which the development had been carried out. The words Conditions: None was indicating that there were to be no additional conditions beyond those already having effect under the earlier permission. By contrast, in the present case, the specific conditions in the 2014 permission were intended to be additional both to the varied condition, and to the others remaining in effect under the 2010 permission. Sullivan J added the following comment: 59. I accept unreservedly that the drafting of the 2002 planning permission could have been much clearer. The inspectors observations as to good practice should be heeded by all local planning authorities. When issuing a fresh planning permission under section 73, it is highly desirable that all the conditions to which the new planning permission will be subject should be restated in the new permission and not left to a process of cross referencing. Good practice was not followed in the present case. The present case illustrates the wisdom of that advice, which is also reflected in the PPG. Nothing in the present judgment is intended to detract from that advice, nor from the importance of ensuring that applications and grants under section 73 are couched in terms which properly reflect the nature of the statutory power. Conclusions For these reasons I would allow the appeal. The precise wording of the order should be agreed between the parties, or subject to further submissions.
+The Home Secretary determines to exercise his power to remove a foreign national from the UK. The foreign national contends that the determination is unlawful on the ground that her removal would violate her right to respect for her private life under article 8 of the European Convention on Human Rights and section 6(1) of the Human Rights Act 1998 (the 1998 Act). Section 117B(5) of the Nationality, Immigration and Asylum Act 2002 (the 2002 Act) provides that little weight should be given to a private life which she established at a time when her immigration status was precarious. What does the word precarious mean in this context? This is the primary question posed by the present appeal. Introduction The foreign national is Ms Rhuppiah. On 22 August 2014, in the First tier Tribunal, First tier Tribunal Judge Blundell (to whom I will refer as Judge Blundell) reluctantly dismissed her challenge under article 8 to the Home Secretarys determination, dated 6 June 2013, to remove her from the UK. Judge Blundell concluded that her private life in the UK had been established at a time when her immigration status had been precarious within the meaning of section 117B(5), which had come into force less than a month earlier; and he considered himself in effect bound by the subsection to dismiss her appeal against the determination. Her further appeals to the Upper Tribunal and then to the Court of Appeal both failed. By its decision dated 2 August 2016, [2016] EWCA Civ 803, [2016] 1 WLR 4203, the Court of Appeal (Sales LJ, who gave the substantive judgment, and Moore Bick LJ and Sir Stephen Richards, who agreed with it) upheld Judge Blundells conclusion that the establishment of Ms Rhuppiahs private life in the UK had occurred at a time when her immigration status had been precarious. Now she appeals against the decision of the Court of Appeal. Within the well known structure of article 8, the primary question arises as part of the inquiry into whether the proposed interference with Ms Rhuppiahs private life in the UK is proportionate. Therefore, in determining this appeal, this court, like the Upper Tribunal and the Court of Appeal, must ask itself whether Judge Blundell was wrong to hold that at the relevant time her immigration status had been precarious: see the judgment of Lord Carnwath in R (R) v Chief Constable of Greater Manchester Police [2018] UKSC 47, [2018] 1 WLR 4079, paras 53 to 64. As it happens, Ms Rhuppiahs appeal has recently become academic. This occurred on 9 February 2018; and explanation of it requires reference to the Immigration Rules HC 395 (the rules). The Home Secretary has set out in the rules, indorsed by Parliament, the provisions which, in his opinion reflective of his policy, should in principle govern his determination of claims to resist removal from the UK on the part of those in breach of immigration laws by reference to their right to respect for their private or family life under article 8. He recognises, however, that his obligation under section 6 of the 1998 Act, like that of a court hearing an appeal against his determination when based on article 8, is to act compatibly with rights under article 8 and that such compatibility may not always coincide with compatibility with his rules. So, like the courts, the Home Secretary has to allow for the possibility that a person may be entitled to resist removal under article 8 even when he or she cannot do so under the rules. But article 8 itself, as interpreted by the European Court of Human Rights (the ECtHR), confers upon the relevant policy maker, who in the UK is the Home Secretary, a limited discretion in relation to the determination of claims made under it. So, when a person claims to resist removal by reference to article 8 outside the rules, the Home Secretary is entitled, and a court hearing an appeal against his determination is required, to weigh in the balance against the claim the fact that it could not have succeeded under the rules: see the judgment of Lord Reed in R (Agyarko) v Secretary of State for the Home Department [2017] UKSC 11, [2017] 1 WLR 823, at paras 46 and 47. In these proceedings Ms Rhuppiah has been resisting removal by reference to article 8 outside the rules. What happened on 9 February 2018 was that the Home Secretary decided that she had recently become able to resist removal by reference to article 8 under the rules. As I will explain, Ms Rhuppiah entered the UK on 16 September 1997 and has lived here continuously ever since. Paragraph 276ADE(1) of the rules specifies the requirements to be met by an applicant for leave to remain in the UK on the ground of private life in the UK; and they include, at (iii), that he or she has lived continuously in the UK for at least 20 years. It follows that on 16 September 2017 Ms Rhuppiah began to satisfy the requirement at (iii); she also satisfied the other requirements. Paragraph 276BE(1) provides that, if the requirements of para 276ADE(1) are satisfied, the Home Secretary may grant leave to remain in the UK for up to 30 months; and para 276DE provides that, if an applicant has remained in the UK with continuous leave on the ground of private life for at least ten years, he or she may be granted indefinite leave to remain. Thus it was that by letter dated 9 February 2018, the heading of which referred to Private Life Rules, the Home Secretary (to whom, for convenience, I will throughout refer as male) informed Ms Rhuppiah that he had granted her leave to remain in the UK for 30 months; that she could apply for further limited leave prior to the end of that period; and that, in the event that she were to complete at least ten years of continuous residence pursuant to leave to remain on the ground of her private life, she might then be eligible for a grant of indefinite leave to remain in the UK. The result is that the Home Secretary then granted to Ms Rhuppiah all that she could have hoped to achieve in the present proceedings. Thought then turned to the utility of any further prosecution of the present appeal. In the event the court agreed with the parties that the appeal should proceed. The court agreed that it was of general importance for it to offer a definitive interpretation of the word precarious in section 117B(5) of the 2002 Act. It is also now clear, as both parties agree, that in any event the First tier Tribunal (and indeed the Court of Appeal) fell into error in a different respect and that, irrespective of whether it was material, the error requires to be rectified: see paras 51 to 57 below. So the appeal has proceeded. Were this court to conclude that the First tier Tribunal had been wrong in a material respect to dismiss Ms Rhuppiahs appeal against the Home Secretarys determination dated 6 June 2013, it would allow her appeal in the normal way and set aside the tribunals order. That would render Ms Rhuppiahs appeal against it undecided. But there is now no need for it to be decided. So the court would not remit it to the tribunal for fresh determination. The Facts The relevant facts can be taken from a determination of conspicuous clarity and sensitivity made by Judge Blundell following a substantial oral hearing. Ms Rhuppiah is a Tanzanian national, now aged 45. She lived in Tanzania until 1997, when she entered the UK with leave to reside here as a student for three months. Her mother and one of her brothers still reside in Tanzania. Her father works for the UN in Sudan and regularly sends money to the UK for her support. Her other brother lives in Basingstoke; and he has a daughter, aged nine, with whom she is on close terms. There would, however, be no significant obstacle to the re integration of Ms Rhuppiah into society in Tanzania. The Home Secretary granted further leave to Ms Rhuppiah to reside in the UK as a student on no less than 12 occasions. The final grant expired on 30 November 2009. But six of these further grants were made pursuant to applications made after the previous leave had expired. Responsibility for the delay usually lay with the college to which Ms Rhuppiah had entrusted the task of making the applications on her behalf. In making her applications for further leave to reside in the UK as a student, Ms Rhuppiah was required to demonstrate an intention to leave the UK at the end of her studies. On each occasion she did so to the satisfaction of the Home Secretary. In cross examination before the tribunal she accepted that she always expected to be required to leave the UK at some point. As a result of her extensive studies in the UK, Ms Rhuppiah, who speaks English fluently, gained a variety of qualifications in business studies and associated fields. In November 2009, at the time of the expiry of the final grant of leave, Ms Rhuppiah applied for indefinite leave to remain in the UK on the ground of continuous lawful residence in the UK for at least ten years pursuant to what was then para 276B(i)(a) of the rules. The trouble was that her continuous residence had not always been lawful. The Home Secretary refused her application and the First tier Tribunal dismissed her appeal against the refusal. When, on 11 October 2010, the Upper Tribunal refused to grant her leave to appeal against the dismissal, Ms Rhuppiah became an unlawful overstayer in the UK. Judge Blundell observed that, had it not been for the ineptitude of her college in failing to make timely applications for further leave on her behalf, her application for indefinite leave to remain would probably have succeeded. Ms Rhuppiahs next attempt to apply for indefinite leave to remain in the UK met further ill fortune. On 1 July 2012 she applied on the ground of continuous residence in the UK (whether or not lawful) for at least 14 years pursuant to what was then para 276B(i)(b) of the rules. But she applied on the wrong form and enclosed an insufficient fee. So on 12 July her application was returned to her. On 24 July she re applied. But by then, namely on 9 July, the rules had been amended so as to delete para 276B(i)(b) (Statement of Changes in Immigration Rules HC 194). Judge Blundell observed that Ms Rhuppiah was justified in feeling cheated but he correctly held that a near miss was irrelevant. He cited Patel v Secretary of State for the Home Department [2013] UKSC 72, [2014] AC 651, in which, at para 53, Lord Carnwath cited with approval an observation that a miss was as good as a mile. When, belatedly, the Home Secretary addressed Ms Rhuppiahs re application dated 24 July 2012, he inevitably determined that it could not succeed under the rules. He proceeded to consider whether it should succeed on a basis outside the rules, by reference to her right to respect for her private life under article 8. His determination on that basis was also negative; and such has been the basis on which in these proceedings she has challenged the lawfulness of his determination to remove her from the UK. There is a striking feature of the private life established by Ms Rhuppiah in the UK. It concerns her friendship with Ms Charles. She lives in the home of Ms Charles, which is, or was at the time of their oral evidence to Judge Blundell, in London. Ms Charles is highly qualified in the field of IT and works as a systems engineer for Ministry of Defence projects and often in Bristol. Ms Rhuppiah met Ms Charles when they were studying at the same college and they have resided together since 2001. But it is not suggested and there is no need to consider whether it might have been suggested that Ms Rhuppiah pursues family life with Ms Charles within the meaning of article 8. Ms Charles suffers from ulcerative colitis, a gravely debilitating condition. She suffers frequent symptoms of diarrhoea, nausea, inability to eat, anaemia, fatigue, joint pain and reduced mobility. She has had multiple admissions to hospital. She is heavily dependent on Ms Rhuppiah both physically and emotionally. Ms Rhuppiah cooks such food as Ms Charles can eat and accompanies her to Bristol, to hospital and in effect everywhere. Ms Charles has ceded control of her financial affairs to her. Instead of paying her for looking after her in these respects, Ms Charles provides her with largely free board and lodging. Judge Blundell found that Ms Rhuppiah, who is a Seventh Day Adventist, cares for Ms Charles out of friendship, faith and habit. He found that, were Ms Rhuppiah to leave the UK, Ms Charles would have to turn to the state to meet her need for care; that her physical health and her ability to continue to work in Bristol would be compromised, at least in the short term; and that her life would be turned upside down. Sections 117A and 117B Section 117B(5) falls within Part 5A of the 2002 Act, which was inserted into it, with effect from 28 July 2014, by section 19 of the Immigration Act 2014. Part 5A is headed Article 8 of the ECHR: Public Interest Considerations. Unfortunately it is necessary to set out a substantial amount of Part 5A, as follows: 117A Application of this Part (1) This Part applies where a court or tribunal is required to determine whether a decision made under the Immigration Acts (a) breaches a persons right to respect for private and family life under article 8, and as a result would be unlawful under (b) section 6 of the Human Rights Act 1998. In considering the public interest question, the (2) court or tribunal must (in particular) have regard in all cases, to the considerations listed in (a) section 117B In subsection (2), the public interest question (3) means the question of whether an interference with a persons right to respect for private and family life is justified under article 8(2). 117B Article 8: public interest considerations applicable in all cases (1) The maintenance of effective immigration controls is in the public interest. It is in the public interest, and in particular in the (2) interests of the economic well being of the United Kingdom, that persons who seek to enter or remain in the United Kingdom are able to speak English, because persons who can speak English are less of a burden on taxpayers, and (a) (b) are better able to integrate into society. (3) It is in the public interest, and in particular in the interests of the economic well being of the United Kingdom, that persons who seek to enter or remain in the United Kingdom are financially independent, because such persons (a) are not a burden on taxpayers, and (b) are better able to integrate into society. (4) Little weight should be given to a private life, or a relationship formed with a qualifying (a) (b) partner, that is established by a person at a time when the person is in the United Kingdom unlawfully. (5) Little weight should be given to a private life established by a person at a time when the persons immigration status is precarious. (6) It will be seen that the considerations in each of the first five subsections of section 117B are all entitled public interest considerations. On any view the considerations in the first three subsections relate to the public interest in the removal of a person present in the UK contrary to immigration law. At first sight, however, one might consider that the considerations in the fourth and fifth subsections relate to the strength of the case which might weigh against that public interest. The explanation for their inclusion as public interest considerations lies in the wide definition of the public interest question set out in section 117A(3) above. See Deelah (section 117B ambit) [2015] UKUT 00515 (IAC), paras 18 and 21. Section 117B(4) is not engaged in the present case: it is agreed that Ms Rhuppiah established her relevant private life in the UK, in particular her role in caring for Ms Charles, long before 2010 and at a time when her presence here was predominantly lawful. Nevertheless it may be helpful to note the reference to a qualifying partner in section 117B(4)(b) and to glance at the definition of that phrase in section 117D(1). It means a partner who is a British citizen or who is settled in the United Kingdom (within the meaning of the Immigration Act 1971 see section 33(2A) of that Act). Section 33(2A) defines a person as settled in the UK if he is ordinarily resident there without being subject under the immigration laws to any restriction on the period for which he may remain. Insofar as the courts inquiry into the meaning of a precarious status in section 117B(5) may be seen in what follows to require contrast with the meaning of a settled status, it may be helpful to bear in mind the definition of the word settled brought by section 117D(1) into the 2002 Act itself. At last this judgment can proceed to address the primary question, namely the meaning of the word precarious in section 117B(5). Section 117B(5) Ms Rhuppiah accepts that a persons immigration status in the UK can be precarious when he or she is lawfully present in the UK; otherwise subsection (5) of section 117B would add nothing to subsection (4). She suggests that, for example, asylum seekers pending determination of their applications and lawful visitors to the UK probably have a precarious immigration status. But she contrasts their situation with that of persons who, albeit with a right to remain which is time limited, have a reasonable hope of permanent settlement in the UK or who (as is suggested by Richard Warren, Private life in the balance: constructing the precarious migrant, Journal of Immigration, Asylum and Nationality Law (2016) 124, 130) are on a potential path to settlement. She contends that, with the grant to her of long periods of leave to reside as a student, she fell into the latter category. Hope that circumstances might change to enable her to continue to live in the UK did not, says Ms Rhuppiah, invalidate her intention, when seeking extensions of her visa, to depart from the UK at the end of her studies. That a potential path to settlement was open to her is, she contends, made clear by the fact that she came close to securing it both in 2010 and in 2012. The Court of Appeal rejected Ms Rhuppiahs argument, along the lines of the above, that her immigration status prior to 2010 was not precarious. But, when it turned to the Home Secretarys contrary argument, which was and is that all leave short of indefinite leave to remain in the UK gives rise to a precarious status, the court expressed provisional doubt. Sales LJ said at para 44: There is a very wide range of cases in which some form of leave to remain short of ILR may have been granted, and the word precarious seems to me to convey a more evaluative concept, the opposite of the idea that a person could be regarded as a settled migrant for article 8 purposes, which is to be applied having regard to the overall circumstances in which an immigrant finds himself in the host country. Some immigrants with leave to remain falling short of ILR could be regarded as being very settled indeed and as having an immigration status which is not properly to be described as precarious. Such being the parameters of the issue surrounding the primary question, we must seek guidance in authority, first that of the ECtHR. It was in its admissibility decision in Mitchell v United Kingdom, (Application No 40447/98) 24 November 1998, that the ECtHR appears first to have used the word precarious in the context of an application under article 8. It rejected, as manifestly ill founded, a British citizens application that her husbands deportation to Jamaica had violated her right to respect for her family life. Her husband had been admitted to the UK as a visitor for six months; and for the following five years, in the course of which the applicant had married him, he had remained in the UK unlawfully. The court said, at p 4: An important though not decisive consideration will also be whether the marriage 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 a relevant consideration it is likely only to be in the most exceptional circumstances that the removal of the non national spouse will constitute a violation of article 8 In its numerous subsequent reiterations of the consideration identified in the Mitchell case the ECtHR has adapted it so as to extend to cases in which the context of the alleged family life was not a marriage. So the question became whether family life was created at a time when the parties were aware that the immigration status of one of them was such that the persistence of family life within the host state would from the outset be precarious: see, for example, Rodrigues da Silva, Hoogkamer v Netherlands (2007) 44 EHRR 34, para 39. In that case a mother and her young daughter relied on their family life together. At all times the mothers stay in the Netherlands had been unlawful and she had given birth to the daughter there. It is implicit in the courts judgment that the persistence of their family life in the Netherlands was therefore known to be precarious and that it was only by virtue of exceptional circumstances that the court held article 8 to have been violated. In what circumstances beyond those in which a participant in the family life was known to be present in the state unlawfully, would its persistence there be precarious? 61292/00) 11 April 2006, the ECtHR said, at p 9: In its admissibility decision in Useinov v Netherlands (Application No it is the applicants submission that he was allowed to live in the Netherlands pending the proceedings on his asylum application and his subsequent application for a residence permit for compelling reasons of a humanitarian nature, ie a total period of just over five years. However, the court is of the view that this cannot be equated with lawful stay where the authorities explicitly grant an alien permission to settle in their country. Therefore, the applicants stay in the Netherlands was precarious for most of it, and illegal for the remainder. The court proceeded to hold, in apparent reference to the discussion in the Mitchell case, that there were no exceptional circumstances giving rise to a violation. The final sentence of the above passage in the Useinov case presents a slight complication in that it pitches the word precarious into a slightly different context from that in which it had been placed in the Mitchell case, from which the court had just quoted. For in the final sentence the court analysed whether the applicants stay had been precarious, not whether the persistence of family life there had been known to be precarious. In that slightly different context it distinguished between a precarious stay, permitted by the state but only pending its determination of outstanding applications, and an illegal stay. Had the court instead asked whether the persistence of family life had been known to be precarious, it would surely have answered affirmatively in relation both to the precarious and to the illegal periods of the applicants stay. The more useful part of the above passage is in the distinction drawn between permission to stay pending determination of applications, which makes persistence of family life during that period precarious, and permission to settle, which (by implication) does not do so. The distinction was reaffirmed in Nnyanzi v United Kingdom (2008) 47 EHRR 18, para 76. The case of Butt v Norway (Application No 47017/09) 4 December 2012, sheds further light on the circumstances in which the persistence of family life would be precarious. The family life of the applicant siblings in Norway had been created at a time when, with their mother, they had been granted a settlement permit which was later withdrawn because the mother had obtained it by the provision of false information. The court held at para 79 that, to the mothers knowledge, the persistence of their family life was precarious but at para 90 that there were exceptional circumstances which gave rise to a violation. But the most helpful decision of the ECtHR on this topic is that of the Grand Chamber in Jeunesse v Netherlands (2015) 60 EHRR 17. The applicants husband and their three children were Dutch nationals. But her family life with them in Holland was created at a time when, as a national of Suriname, her right to reside in Holland was no more than tolerated by the state pending its protracted determination of her various applications for residence permits and of her consequential appeals. The court held that, to her knowledge, the persistence of their family life there was precarious. In para 102 it echoed the contrast drawn in the Useinov and Nnyanzi cases with a grant of permission to settle. In para 104 it proceeded as follows: The instant case may be distinguished from cases concerning settled migrants as this notion has been used in the courts case law, namely, persons who have already been granted formally a right of residence in a host country. A subsequent withdrawal of that right, for instance because the person concerned has been convicted of a criminal offence, will constitute an interference with his or her right to respect for private and/or family life The significance of the passage mainly lies in the word withdrawal, which sheds light on the nature of the right of residence which the Grand Chamber had in mind. For, as Sales LJ himself suggested in para 39 of his judgment, a right of residence which can be withdrawn, for instance because of a criminal conviction, is, in particular, a right of residence pursuant to indefinite leave to remain. In relation to applications under article 8 arising prior to the introduction of section 117B(5), both the Home Secretary, in his Instructions to case workers, and the courts of England and Wales duly sought to take into account the consideration identified by the ECtHR in the Mitchell case and later adapted. For example in R (Nagre) v Secretary of State for the Home Department [2013] EWHC 720 (Admin) Sales J rejected the applicants challenge to the lawfulness of a determination to remove him to India on the basis that persistence of his family life in the UK with his cohabitant had from the outset been precarious. In fact at all material times the applicant had been in the UK unlawfully; so the basis for the judges decision was obvious and he was not required precisely to discern the boundary between when persistence of family life was and was not precarious. In the Agyarko case, cited in para 4 above, the appellants had also formed the relevant relationships while they had been unlawfully in the UK. But it is worthwhile to note the way in which Lord Reed expressed himself in a judgment with which the other members of the court agreed. Having in para 49 addressed the Jeunesse case, he suggested in para 51 (and in effect repeated in para 54) that persistence of family life would be precarious if created when an applicant was in the UK unlawfully or was entitled to remain in the UK only temporarily. In para 45 of his judgment in the present case Sales LJ recorded that it was common ground that the starting point for consideration of the proper construction of Part 5A of the 2002 Act is that sections 117A 117D are intended to provide for a structured approach to the application of article 8 which produces in all cases a final result which is compatible with, and not in violation of, article 8. This remains common ground; and it is clearly correct. But, insofar as the legislation is intended in all cases to produce a result compatible with the article, we will need to find somewhere within it provision for a degree, no doubt limited, of flexibility. It is obvious that Parliament has imported the word precarious in section 117B(5) from the jurisprudence of the ECtHR to which I have referred. But in the subsection it has applied the word to circumstances different from those to which the ECtHR has applied it. In particular Parliament has deliberately applied the subsection to consideration only of an applicants private life, rather than also of his family life which has been the predominant focus in the ECtHR of the consideration identified in the Mitchell case. The different focus of the subsection has required Parliament to adjust the formulation adopted in the ECtHR. Instead of inquiry into whether the persistence of family life was precarious, the inquiry mandated by the subsection is whether the applicants immigration status was precarious. And, because the focus is upon the applicant personally and because, perhaps unlike other family members, he or she should on any view be aware of the effect of his or her own immigration status, the subsection does not repeat the explicit need for awareness of its effect. Apart from the judgment of Sales LJ in the present case, the leading authority on the meaning of the word precarious in section 117B(5) is the decision of the Upper Tribunal given by Deputy Upper Tribunal Judge Holmes on behalf of himself and Mr CMG Ockelton, the Vice President, in AM (S117B) Malawi [2015] UKUT 260 (IAC), [2015] Imm AR 5. The appellant, a citizen of Malawi, entered the UK in 2006 on a student visa. In 2007 his wife and daughter joined him from Malawi. In 2011 a second daughter was born. The immigration status of his wife and daughters was dependent upon his status. In 2012 the final extension of his student visa expired. The Home Secretary determined to remove all four members of the family to Malawi. The appellant challenged the determination by reference to the private life of each of the four of them. He could not rely on their right to respect for their family life because the proposed removal of all of them together would not interfere with it. The Upper Tribunal upheld the conclusion of the First tier Tribunal that their private lives in the UK had been established when their immigration status had been precarious within the meaning of section 117B(5) and that his appeal against the determination to remove them should be dismissed. In explaining its decision the Upper Tribunal (a) noted at para 20 that, prior to the introduction of section 117B(5), the word precarious had been applied both in the ECtHR and in domestic courts not only to the status of a person lawfully present for a limited period but also to the situation of a person unlawfully present; (b) considered however at para 23 that Parliament had in section 117B(4) and (5) drawn a sharp distinction between a person in the UK unlawfully and one whose immigration status was precarious, with the result that, under the statute, a precarious immigration status did not include the situation of a person unlawfully present; (c) held at para 27 that all those granted a defined period of leave to remain in the UK, including discretionary leave to remain as well as leave of limited duration, had a precarious immigration status, even if they had a legitimate expectation that their leave would ultimately be extended indefinitely; (d) therefore at para 32 formulated its central decision as being that a persons immigration status was precarious for the purpose of section 117B(5) if his continued presence in the UK would be dependent upon a further grant of leave; and suggested at para 33 that even a grant of indefinite leave to remain (e) might render the persons status precarious if the grant had been obtained by deception or if he or she had embarked on a course of criminal conduct which would justify its withdrawal. In the Deelah case, cited in para 21 above, McCloskey J, sitting in the Upper Tribunal as its President, stressed at paras 17 and 29 that in the case before him no issue arose as to whether the immigration status of the appellants had been precarious. As an aside, however, at para 30, he described as clear and concise the central decision which in the AM case the same tribunal had recently reached (see para 39(d) above) and advised judges and practitioners constantly to be alert to it. The court understands that, contrary to the law report of the decision of the Court of Appeal in the present case, the AM case was cited to it. At all events, for whatever reason, Sales LJ does not appear to have had in mind the strong indorsement in that case of the Home Secretarys contention that, for the purposes of section 117B(5), a person has a precarious immigration status if he or she has leave to remain in the UK which is other than indefinite. The provisional view of Sales LJ, set out in para 25 above, was that leave to remain short of indefinite leave might sometimes confer on a person a status not properly to be described as precarious; and that the concept of precariousness might fall to be applied having regard to the persons overall circumstances. The view of Sales LJ is entitled to great respect. In para 36 above I have recognised the need for a degree, no doubt limited, of flexibility in the application of Part 5A of the 2002 Act. But I will shortly explain how, elsewhere, the statute does permit a limited degree of it. I do not consider that the ordinary meaning of the word precarious requires, or that in its context Parliament must have intended the word to require, that its application to the facts of a case should depend upon a subtle evaluation of the overall circumstances such as Sales LJ had in mind. The bright line interpretation of the word precarious in section 117B(5), commended by the specialist tribunal with the maximum weight of its authority, is linguistically and teleologically legitimate; and, for that matter, it is consistent with the way in which the ECtHR expressed itself in the Jeunesse case (see para 34 above) and in which this court expressed itself in the Agyarko case (see para 35 above). The answer to the primary question posed by the present appeal is therefore that everyone who, not being a UK citizen, is present in the UK and who has leave to reside here other than to do so indefinitely has a precarious immigration status for the purposes of section 117B(5). It follows that Judge Blundell, upheld on this point in both the successive appeals, was correct to determine that Ms Rhuppiahs private life in the UK, having been established when, at any rate predominantly, she had leave to reside here as a student, was established at a time when her immigration status was precarious. Irrelevant though it is, it may be worthwhile to note that even since 9 February 2018 her immigration status has been precarious. Although she no doubt reasonably entertains a hope that in 2028 she may secure indefinite leave to remain, her present leave is to do so for 30 months: see para 6 above. Another helpful feature of the Upper Tribunals decision in the AM case was its conclusion that the concept of a precarious immigration status under section 117B(5) did not include the situation of a person present in the UK unlawfully: see para 39(b) above. It is well arguable in principle that a person unlawfully present has an immigration status to that effect and that, of course, it is precarious. But in subsections (4) and (5) of section 117B Parliament has drawn a clear distinction between unlawful presence and a precarious immigration status. In relation to a person unlawfully present, subsection (4) covers all the ground (indeed, at (4)(b), more than all the ground) which subsection (5) would cover; and there is nothing to indicate that, notwithstanding the clear distinction, Parliament intended subsection (5) to overlap with subsection (4). The facts of the present case do not enable this court to appraise the further suggestion in the AM case that even a grant of indefinite leave to remain might yield a precarious immigration status in the circumstances identified at para 39(e) above. The reader will however have noted that the suggestion derives partial support from the decision of the ECtHR in the Butt case, summarised at para 33 above. It would be reasonable for this court to expect that its indorsement today of the conclusions in the AM case at paras 43 and 44 above will make it easier for decision makers to decide whether an immigration status was precarious at the relevant time. In Ahmed v Secretary of State for the Home Department [2014] EWHC 300 (Admin) Green J observed, at para 44, that there was an element of precariousness but not a very strong one. In Secretary of State for the Home Department v Thierno Barry [2018] EWCA Civ 790 Singh LJ observed at para 62 that the respondents position was not entirely precarious. Neither case required consideration of section 117B(5); both courts were seeking outside the statute to weigh the consideration identified by the ECtHR in the Mitchell case in their appraisal of rights under article 8. It is, however, to be hoped that decision makers will no longer need to wrestle with degrees of precariousness. Section 117A(2)(a) It was in section 117A(2)(a) of the 2002 Act that Parliament introduced the considerations listed in section 117B. So, in respect of the consideration in section 117B(5), Parliaments instruction is to have regard to the consideration [that] [l]ittle weight should be given to a private life established by a person at a time when the persons immigration status is precarious. McCloskey J suggested in para 23 of the Deelah case, cited in para 21 above, that the drafting wins no literary prizes. But, as both parties agree, the effect of section 117A(2)(a) is clear. It recognises that the provisions of section 117B cannot put decision makers in a strait jacket which constrains them to determine claims under article 8 inconsistently with the article itself. Inbuilt into the concept of little weight itself is a small degree of flexibility; but it is in particular section 117A(2)(a) which provides the limited degree of flexibility recognised to be necessary in para 36 above. Although this court today defines a precarious immigration status for the purpose of section 117B(5) with a width from which most applicants who rely on their private life under article 8 will be unable to escape, section 117A(2)(a) necessarily enables their applications occasionally to succeed. It is impossible to improve on how, in inevitably general terms, Sales LJ in his judgment described the effect of section 117A(2)(a) as follows: 53. Although a court or tribunal should have regard to the consideration that little weight should be given to private life established in [the specified] circumstances, it is possible without violence to the language to say that such generalised normative guidance may be overridden in an exceptional case by particularly strong features of the private life in question There was lively argument before the Court of Appeal about whether Judge Blundell understood the effect upon section 117B(5) of section 117A(2)(a), then recently enacted, and, if not, whether the advocates (none of whom appeared in this court) had failed to give him the necessary assistance in that regard. For he concluded that he was required by statute to attach little weight to the aspects of her private life upon which Ms Rhuppiah relied and that he was bound to conclude that the harsh consequences which will flow from [her] removal are justified. In the light of the now academic nature of the present appeal there is no need for this court either to explore this issue or to appraise the firm conclusion of Sales LJ at para 57, at first sight slightly surprising, that there were no such particularly strong features of Ms Rhuppiahs private life as would justify departure from the result indicated by section 117B(5). Section 117B(3) Section 117B(3) of the 2002 Act, set out in para 20 above, provides that it is in the public interest, and in particular in the interests of the economic well being of the UK, that persons who remain here are financially independent. Then the subsection proceeds to give two reasons why their financial independence is in the public interest. Judge Blundell held that, in that she was dependent on support from her father and from Ms Charles, Ms Rhuppiah was not financially independent and that this was a further consideration, negative to her claim under article 8, to which he was required to have regard. The Court of Appeal, at paras 63 64, upheld his analysis and in doing so rejected the submission on behalf of Ms Rhuppiah that persons were financially independent for the purposes of section 117B(3) if they were not financially dependent upon the state. The Home Secretary now agrees with the submission which was made, and which continues to be made, on behalf of Ms Rhuppiah about the meaning of financial independence in section 117B(3); but he adds uncontroversially that the evidence of support from third parties has to be credible and the support reliable. This is the agreed area of error into which Judge Blundell and the Court of Appeal fell, to which reference was made in para 7 above. The Home Secretary has changed his mind about the meaning of financial independence following the decision of this court in R (MM (Lebanon)) v Secretary of State for the Home Department [2017] UKSC 10, [2017] 1 WLR 771, which post dated the decision of the Court of Appeal in the present case. In the MM and linked cases this court considered the financial requirements imposed by the rules upon non EEA family members wishing to join their relatives in the UK. The court held that adherence to the rules, which had sought to exclude reliance on promises of third party support even if credible, might precipitate a violation of article 8. The rules were changed accordingly. The parties are correct to join in submitting to this court that financial independence in section 117B(3) means an absence of financial dependence upon the state. Why would it be in the public interest that they should not be financially dependent on other persons? Why would it in particular be in the interests of the economic well being of the United Kingdom that they should not be dependent on them? Sales LJ suggested, at para 64, that the financial support provided to Ms Rhuppiah by her father and Ms Charles might cease, whereupon the obligation to maintain her would probably fall upon the state; but a cessation of a persons employment would probably have the same result. Indeed the present case is a good example of the sometimes flimsy distinction between employment and third party support. Anyone other than Ms Rhuppiah who provided extensive caring services to Ms Charles would need to be paid; and it is but an incident of their close friendship and of Ms Rhuppiahs legal inability to have taken employment prior to 9 February 2018 that instead the provision to her has taken the form of largely free board and lodging. Regard must moreover be had to the first of the two reasons given in section 117B(3) for its statement as to where the public interest lay: because such persons are not a burden on taxpayers. It was the view of Sales LJ at para 65 that, if the phrase financially independent referred to independence of the state, the quoted words were close to tautological. Had those words been part of the statement as to where the public interest lay, one might more readily have agreed with his view. But they are not part of the statement. They are part of the explanation for it and in my view they unequivocally support the construction of section 117B(3) now agreed between the parties. So Judge Blundell erred in concluding that Ms Rhuppiah was not financially independent within the meaning of section 117B(3). The further submission on her behalf is and has been that the effect of section 117B(2) and (3) is to cast her ability to speak English and her financial independence as factors which positively weigh in her favour in the inquiry under article 8. But the further submission is based on a misreading of the two subsections and was rightly rejected by Judge Blundell, upheld by the Court of Appeal, just as an analogous submission was rejected in para 18 of the decision in the AM case, cited at para 38 above. The subsections do not say that it is in the public interest that those who are able to speak English and are financially independent should remain in the UK. They say only that it is in the public interest that those who seek to remain in the UK should speak English and be financially independent; and the effect of the subsections is that, if claimants under article 8 do not speak English and/or are not financially independent, there is, for the two reasons given in almost identical terms in the subsections, a public interest which may help to justify the interference with their right to respect for their private or family life in the UK. In seeking to portray the strength of their private or family life by reference to all their circumstances, claimants may wish to highlight their ability to speak English and/or their financial independence; but the legitimate deployment of such factors in that context is to be contrasted with the erroneous further submission that the subsections propel a conclusion that, where those factors exist, there is a public interest in favour of the claims. Conclusion It nevertheless follows that Judge Blundell erred in law in holding that section 117B(3) of the 2002 Act applied to Ms Rhuppiahs appeal and therefore that it identified an aspect of the public interest negative to her claim. Was his error material? In any event section 117B(5) required him to give little weight to her private life. But that requirement was subject to section 117A(2)(a), which conferred on him a limited degree of flexibility. In the absence of his error in relation to section 117B(3), section 117A(2)(a) might properly have led him to uphold her claim, for which he had obvious sympathy. I propose that we should allow Ms Rhuppiahs appeal to this court and should set aside his order upon her initial appeal; but that, for the reason given in para 8 above, we should not remit her initial appeal for fresh determination.
+This appeal offers an opportunity for this court to consider, for the first time, the extent to which the right to the free use of sporting and recreational facilities provided in a country club environment may be conferred upon the owners and occupiers of an adjacent timeshare complex by the use of freehold easements. In the well known leading case of In re Ellenborough Park [1956] Ch 131 the Court of Appeal decided that the shared recreational use of a communal private garden could be conferred upon the owners of townhouses built around and near it by means of easements. The use of the same conveyancing technique in the present case in relation to a much wider range of activities was, if not misguided, at least a more ambitious undertaking. The essential question, if that case was rightly decided, is whether the same underlying principles work in the present context (as the trial judge and the Court of Appeal both held) or whether the attempt to do so falls foul of the necessary limitations upon the scope of easements in English law, most of which, as recently as 2011, the Law Commission has advised should not lightly be put aside. The essence of an easement is that it is a species of property right, appurtenant to land, which confers rights over neighbouring land. The two parcels of land are traditionally, and helpfully, called the dominant tenement and the servient tenement. The effect of the rights being proprietary in nature is that they run with the land both for the benefit of the successive owners of the dominant tenement, and by way of burden upon the successive owners of the servient tenement. By contrast merely personal rights do not generally have those characteristics. Although owing much to the Roman law doctrine of servitudes, easements have in English law acquired an independent jurisprudence of their own, the essentials of which have been settled for many years, even if the uses of land during the same period have not stood still. Since the question whether a particular grant of, or claim to, rights is capable of having the enduring proprietary quality of an easement is usually (as here) fact intensive, it is convenient to begin with a summary of them. The Facts Broome Park, formerly the home of Field Marshal Lord Kitchener of Khartoum, is a substantial country estate near Canterbury, with a large 17th century Grade I listed house (the Mansion House) at its heart, and a much smaller house, Elham House, nearby. Prior to 1967 Broome Park had been in common ownership. In early 1967 Elham House together with land around it lying entirely within the Park was conveyed off and its separate title was first registered on 30 March 1967. I shall call the house and its surrounding land Elham House. It is the alleged dominant tenement in relation to the disputed easement. I will refer to the rest of Broome Park, retained by the vendor in 1967, including the Mansion House, as the Park. It is the alleged servient tenement in relation to the disputed easement. In or before 1979 the Park was acquired by Gulf Investments Ltd (Gulf Investments), a subsidiary of Gulf Shipping Lines Ltd (Gulf Shipping), for the purposes of developing a timeshare and leisure complex. The essential features of the development scheme included, first, the creation of 18 timeshare apartments on the upper two floors of the Mansion House; secondly, the creation of a communal club house for the timeshare owners and other paying members of the public on the ground floor and basement of the Mansion House including restaurant, TV, billiards and gymnasium facilities; and thirdly, the construction and laying out within the surrounding grounds of the Park of sporting and recreational facilities including an 18 hole golf course, an outdoor heated swimming pool, tennis and squash courts, and formal gardens. Individual purchasers of timeshare units within the apartments on the upper floors of the Mansion House formed themselves into the Broome Park Owners Club (the BPOC). On 13 August 1980, Gulf Investments granted a 35 year lease of the first and second floors of the Mansion House to Gulf Leisure Developments Ltd, which was to hold the residential accommodation within the Mansion House on behalf of the BPOC. I will call it the BPOC Lease. It was drafted so as to confer upon owners of the timeshare units within the Mansion House the free use of the communal and leisure facilities within the lower part of the Mansion House and its surrounding grounds, including the golf course and other sporting and recreational facilities, for the full 35 year of the term, and Gulf Investments covenanted as landlord to keep properly maintained repaired constructed and reconstructed the ground floor and basement of the Mansion House and the sporting and recreational facilities provided within the Park, including the swimming pool, golf course, squash courts, tennis courts and formal gardens. The solicitor responsible for the conveyancing in connection with the development gave evidence at trial that a leasehold structure was chosen for this purpose because of the need to make appropriate provision for what might prove to be the large repairing and maintenance obligations arising from the status of the Mansion House as a Grade I listed building of some antiquity. The early success of this development, centred on the Mansion House timeshare apartments, led Gulf Investments to plan a second timeshare development, this time centred upon Elham House. For that purpose, Elham House was re acquired so as to be integrated within Broome Park in November 1980, and planning permission was obtained for the conversion of the house into two timeshare apartments, and for the building of 24 further timeshare apartments in its grounds, the whole to be re named Regency Villas. It is evident from contemporary marketing materials that a main attraction held out to prospective buyers of timeshare units within the Regency Villas development was the same free use of the sporting and recreational facilities within the ground floor and basement of the Mansion House and within the Park, as had been afforded to the owners of timeshare units on the upper two floors of the Mansion House. On this occasion however, it was decided to use a freehold rather than leasehold structure for Regency Villas, apparently because it was not anticipated that Elham House or the newly built apartments in its grounds would give rise to the potentially onerous repairing obligations associated with the Mansion House. Thus, by a transfer dated 11 November 1981 (the 1981 Transfer) Gulf Investments transferred Elham House to Elham House Developments Ltd, another member of the Gulf Group headed by Gulf Shipping. On the following day, and as part of a pre planned series of transactions, Elham House Developments Ltd transferred Elham House to Barclays Bank Trust Co Ltd, to be held for the benefit in due course of the members of the Regency Villas Owners Club (RVOC) to be constituted by the purchasers of timeshare units within the Regency Villas development. The 1981 Transfer included the grant of rights which is the subject of the present dispute. I shall refer to that grant of rights as the Facilities Grant. The transfer itself has been lost, but the relevant terms of the Facilities Grant were duly recorded at HM Land Registry, on the Property Register in respect of the title to Elham House, and on the Charges Register against each of the two registered titles together constituting the Park. The words of the Facilities Grant appear in the last of three paragraphs, all of which it is appropriate to set out in full, so that the last paragraph appears in its context: TOGETHER WITH firstly the right of way for the Transferee its successors in title its lessees and the occupiers from time to time of the property at all times with or without vehicles for all purposes in connection with the use and enjoyment of the property over and along the drive ways and roadways (hereafter called the roadways) shown coloured blue on the plan attached hereto. AND Secondly all the right to the full and free passage of gas water soil electricity and any other services from and to the property in and through any pipes drains wires cables or other conducting media now in under or over the Transferees adjoining land or constructed within 80 years of the date hereof. AND thirdly the right for the Transferee its successors in title its lessees and the occupiers from time to time of the property to use the swimming pool, golf course, squash courts, tennis courts, the ground and basement floor of the Broome Park Mansion House, gardens and any other sporting or recreational facilities (hereafter called the facilities) on the Transferors adjoining estate. The 1981 Transfer also contained a covenant by Gulf Investments to maintain the sporting and recreational facilities within the Park, but it is common ground that the burden of this covenant, being positive in nature and unsupported by a leasehold structure, did not bind successors in title to the Park, including the appellants. By the time of the 1981 Transfer, there had already been constructed within the Park most of the relevant sporting and recreational facilities, including the golf course, the outdoor heated swimming pool, three squash courts, two tennis courts, a restaurant, billiard/snooker room and TV room on the ground floor of the Mansion House and a gymnasium, including sauna and solarium, in the basement. There were also Italianate gardens, a putting green, a croquet lawn, an outdoor jacuzzi/spa pool, an ice/roller skating rink, platform tennis courts, a soft ball court and riding stables. These facilities did not cover the whole of the Park, as defined. There remained about 90 acres of undeveloped farmland, which remain undeveloped to this day. An officious bystander in 1981 might well have been prompted to ask how it was envisaged by the promoters of these two timeshare schemes that the extensive sporting and recreational facilities of which the timeshare owners were to be afforded the free use were to be managed, maintained and when necessary renewed by the owners of the Park, to the high standards promised in the contemporary promotional materials, without any contribution from them. Although nowhere clearly stated in the evidence, the answer appears to be that the promoters envisaged that the operation of the leisure complex within the Park as a golf course and county club would attract sufficient paying members of the public (other than timeshare owners in either of the two timeshare developments) to fund its ongoing operating costs. If that was the expectation, it does not appear to have been fulfilled. Correspondence in and after 1998 between the RVOC and Broome Park Golf & Country Club, then owning or at least managing the Park, describes a reduction in the number of available facilities, a lack of investment in the Park, and a perception that, without some significant contribution to running costs by the RVOC members, whether or not under legal obligation, the facilities offered at the Park would be likely to deteriorate further. The outdoor swimming pool became disused and was filled in by 2000. The failure to maintain a swimming pool within the Park was a breach of the landlords covenants in the BPOC lease and, pursuant to an order of HHJ Pelling QC in proceedings brought by the BPOC, a new pool was constructed in part of the basement of the Mansion House, where the gymnasium had previously been situated. Some other facilities, such as the putting green, croquet lawn, jacuzzi/spa pool and roller skating rink had been closed and the riding stables were demolished. Apart from the major change constituted by the erection of the indoor swimming pool, other minor changes occurred to the facilities within the ground floor and basement of the Mansion House. Meanwhile, a third timeshare development was constructed within the Park in about 2003, bringing the total number of timeshare apartments within the Park (including the Regency Villas development) to some 58. Finally, the BPOC lease expired by effluxion of time, shortly after the trial, in 2015. The Mansion House was then temporarily closed for refurbishment and reopened as an hotel. From time to time, beginning in about 1983, RVOC made voluntary payments on behalf of timeshare owners within the Regency Villas development to the owners and operators of the Park towards the cost, including upkeep, of the facilities. While made under a reservation of rights, these payments were usually in agreed amounts, at least until the end of 2011. Thereafter, and in the absence of any agreement to amounts, individual timeshare owners were charged fees from time to time for the use of specific facilities, which they paid notwithstanding their case that they were entitled to the use of those facilities free of charge. The Litigation The first claimant (and first respondent in this court) is the freehold owner of Elham House. The remaining claimants are individual timeshare members of the RVOC. They sue upon their own behalf and on behalf of all other members. They claimed a declaration that they were entitled, by way of easement, to the free use of all the sporting or recreational facilities from time to time provided within the Park, and an injunction restraining interference with them by the defendants (and appellants in this court) who are the current freehold and leasehold owners of the Park and parts thereof. In addition the claimants sought the return of sums paid by them or on their behalf by the RVOC for the use of those facilities since 2008, as damages for interference with their easement, or by way of restitution. The defendants denied that the claimants had the benefit of any easement in relation to the facilities, and counterclaimed for a quantum meruit in respect of the provision of those facilities in and after 2012, to the extent not paid for, or not paid for in full. At the trial before the late Judge Purle QC sitting as a High Court judge in 2015 the claimants succeeded in all their claims, save only for the recovery of payments made for the use of facilities before 2012, which the judge found had been made by agreement rather than under protest, in circumstances giving rise to no restitutionary claim: [2016] 4 WLR 61. That monetary claim has not been further pursued by the claimants. In the Court of Appeal (Sir Geoffrey Vos C, Kitchin and Floyd LJJ) [2017] Ch 516 the claimants were again successful on the main issue about whether the rights over the facilities granted by the 1981 Transfer constituted an easement or easements, but the judges decision was reversed on matters of detail. In particular, the claimants were held to have no rights in relation to the new swimming pool constructed in the basement of the Mansion House. The Court of Appeals declaration confirmed their rights to specific existing facilities, namely the golf course, squash courts, tennis courts, croquet lawn, putting green and Italianate gardens, but excluded rights in relation to anything provided on the ground floor and basement of the Mansion House. The claimants monetary entitlement in relation to payments in and after 2012 was correspondingly reduced, and the defendants obtained judgment for a quantum meruit in respect of those facilities provided in and after 2012 to which the claimants rights did not extend, of which the most important was the swimming pool. In this court the appellant defendants pursue their contention that the 1981 Transfer granted no enduring rights in the nature of easements in relation to any of the facilities within the Park, while the claimants by respondents cross appeal seek to restore the judges conclusion as to the full extent of their rights in relation to the facilities, including the new swimming pool, and accordingly seek to have dismissed the Court of Appeals order for a quantum meruit in favour of the defendants. The Issues Much the most important group of issues (which have given rise to almost all the oral argument on this appeal) are those which govern the question whether the Facilities Grant is capable in law of amounting to one or more easements. Those are the issues which justified the grant of permission to appeal. The subordinate issues, relating to the claimants rights if any in relation to the ground floor and basement of the Mansion House, and in particular to use of the new swimming pool, give rise to no general issues of law of public importance, but all the issues turn to a greater or lesser extent upon the true construction of the Facilities Grant, to which I now turn. Construction of the Facilities Grant The main features of the matrix of fact against which the 1981 Transfer has to be construed are, in my view, as follows. First, the 1981 Transfer was part and parcel of a collaborative exercise undertaken by two associated companies within the same Gulf Group for a common purpose, namely the development of timeshare apartments and the profitable sale of timeshare units on land immediately adjacent to an already up and running leisure complex, containing sporting and recreational facilities in a clubhouse and associated parkland adjacent to and entirely surrounding the subject matter of the 1981 Transfer. Secondly, not least because they shared a common conveyancing solicitor, both parties to the 1981 Transfer may be taken to have known about the leasehold structure underpinning the development of the timeshare units within Mansion House itself, including the obligation, binding on Gulf Investments as landlord, and upon its successors in title as owners of the Park, to maintain, repair, construct and (where necessary) reconstruct all the sporting or recreational facilities provided within the Park (including within the Mansion House), for the full period of 35 years provided for in the BPOC Lease, which expressly contemplated that the rights of the BPOC timeshare owners would extend to all those facilities provided within the Park at any time during that term (see Schedule 3, paragraph 8). Gulf Investments had therefore committed both itself and its successors in title to the provision, operation and maintenance of those facilities by binding obligations which, if necessary, could be enforced against them by a large number of timeshare owners, constituting the BPOC. Thirdly both parties also knew, by their common conveyancing solicitor, of the planned structure under which, only one day after the 1981 Transfer, the interest of the grantee was to be transferred on to a successor in title, for the benefit of the future timeshare owners within the Regency Villas scheme whom both parties wished to attract as purchasers. Construed against that contextual background, the following points emerge as aspects of the true construction of the Facilities Grant in the 1981 Transfer. First, it is abundantly plain that, whether successfully or not, the parties intended to confer upon the Facilities Grant the status of a property right in the nature of an easement, rather than a purely personal right. It was expressed to be conferred not merely upon the Transferee, but upon its successors in title, lessees and occupiers of what was to become a timeshare development in multiple occupation. That being the manifest common intention, the court should apply the validation principle (ut res magis valeat quam pereat) to give effect to it, if it properly can. Secondly, and although reference is made to a number of different specific facilities within the Park, the Facilities Grant is in my view in substance the grant of a single comprehensive right to use a complex of facilities, and comprehends not only those constructed and in use at the time of the 1981 Transfer, but all those additional or replacement facilities thereafter constructed and put into operation within the Park as part of the leisure complex during the expected useful life of the Regency Villas timeshare development for which the 1981 Transfer was intended to pave the way. It is, in short, a right to use such recreational and sporting facilities as exist within the leisure complex in the Park from time to time. In that respect I agree with the judges analysis of this point (at para 44 of his judgment) and disagree with the approach of the Court of Appeal, which treats each facility as the subject of a separate grant of rights, referable only to the separate locus in quo of each relevant facility at the time of the grant. I shall explain my full reasoning for this conclusion when dealing with the cross appeal, below, but the main point is this. The Court of Appeal regarded the absence of words of futurity in the language of the Facilities Grant (in contrast with the grant relating to the passage of services in the immediately preceding paragraph) as a strong pointer to a construction which limited the rights granted only to those facilities already in existence. This was also a main plank in the written submissions of the appellants on this point. In my view the absence of express words of futurity is amply compensated by the inherent nature of the subject matter of the third paragraph, namely the combination of sporting and recreational facilities in a leisure complex which would be bound to be subjected to significant alterations and changes during its business life. It may be that in this respect the Court of Appeal was encouraged to depart from the judges more coherent analysis because of a fear on the part of those advising the claimants that to construe the Facilities Grant as extending to the provision of additional or different facilities in the future might give rise to a risk of the grant being held to be void for perpetuity. In written submissions delivered at the courts invitation following the hearing, the appellants submit that this would indeed be the consequence of the judges construction. Although by 1981 the Perpetuities and Accumulations Act 1964 had intervened to provide a period of wait and see, the new swimming pool was in fact erected more than 21 years after the 1981 Transfer. In my judgment that concern of the claimants and submission of the appellants is misplaced, in relation to what appears to me to be a single grant of rights over a leisure complex comprising sporting and recreational facilities, which may be changed and adjusted from time to time to suit customer demand without giving rise to separate and distinct grants of rights taking effect only in the future. The main authorities relied upon by the appellants in support of their submission on perpetuity are Dunn v Blackdown Properties Ltd [1961] Ch 433 and Adam v Shrewsbury [2006] 1 P & CR 27. They show that where (in the case of a pre 2010 instrument) there is a grant of a future easement, or (which is in substance the same thing) a present easement which can only be enjoyed if and when, in the future, something is done on the servient land to make the easement useable, then the rule against perpetuities applies. In the Dunn case the grant was of sewerage rights, but no sewers existed at all at the time of the grant. In the Adam case the grant was the use of a garage yet to be constructed, on ground to be excavated by the grantor, accessible only from a roadway which was only partly constructed, at the time of the grant. In both cases the grants failed for perpetuity. In the present case, by contrast, the grant consisted of an immediately effective grant to use the sporting and leisure facilities in a leisure complex which existed as a complex at the time of the grant. The fact that the precise nature and precise location of those facilities within the Park might change thereafter, but the grant still apply to the complex as a whole, does not bring the grant within the rule. If by analogy there had already been a sewerage system on the servient land at the time of the grant in the Dunn case, the drainage easement would not have been defeated or rendered subject to perpetuity merely because, thereafter, the dominant owner made a change to the routeing of the pipework. Thirdly, there is no express provision requiring the grantee or its successors or timeshare owners to contribute to the cost of operating, maintaining, renewing and replacing facilities, and there has been no challenge to the judges conclusion that an attempt to discover them by way of implied term would fall foul of the necessity test. Nor is there, in the Facilities Grant itself, any such obligation imposed upon the grantor, although there is a separate, purely personal, covenant to that effect elsewhere in the 1981 Transfer. Much has been made of this personal covenant by the appellants in their written submissions on the judges construction. They say that it shows that the Facilities Grant was really intended only to be a grant of personal rights to the free use of a serviced sporting and leisure complex, and that the drafter wrongly assumed that the grantor could impose the servicing obligation on its successors in title as owners of the Park. This meant that the Facilities Grant would in law be of utility for as long (only) as the grantor should remain the owner of the Park, and dependent upon the purely personal covenant of the grantor, the benefit of which could be assigned to successors in title of the grantee as owners of Elham House. If this meant that the Facilities Grant was vulnerable to an early demise (for example on an early sale of the Park or its transfer to an associated company of the grantor) that was just the result of a conveyancing mistake which the court should do nothing to correct, and certainly not by the use of the validating principle of construction. I do not accept that submission. The personal covenant commits the Transferor to the maintenance, repair and cleansing of the roadways and the facilities. The roadways were plainly the subject of a conventional easement in the first of the three paragraphs (quoted above) the last of which contains the Facilities Grant. It cannot therefore be said that the existence of the personal covenant somehow reduces the Facilities Grant to a purely personal obligation, if it does not (and cannot) do so in relation to the right of way over the roadways. Although it is not clear, it may be that the conveyancer thought that the burden of a positive maintenance covenant ran with the land, but this does not impact upon the clear intention, manifest in relation to both the roadways and the facilities, that proprietary rights were being granted over them. I have sought to explain above how, in commercial terms, the parties to the 1981 Transfer may have anticipated that the leisure complex would be self financing (from the contributions of paying members of the public) without need to have recourse to contributions from the two groups of timeshare owners. In my judgment the common intention to be inferred from the absence of any provision in the Facilities Grant itself for such maintenance or funding obligations is that the parties to the 1981 Transfer (both of which were timeshare experts) were content to leave that as a matter of commercial risk, while seeking to maximise the capital receipts expected to be derived from the sale of timeshare units in connection with the Regency Villas apartments shortly thereafter to be constructed. Plainly, the imposition of a payment obligation on the timeshare owners would have had a dampening effect on the purchase prices likely to be obtained. The Appeal Mr Tim Morshead QC for the appellants described the Facilities Grant as one which conferred the right of free access for the Regency Villas timeshare owners to a high class leisure complex providing recreational and sporting attractions otherwise being provided by the appellants within the Park for paying members of the public. He submitted that such a grant of rights was incapable of amounting to an easement or easements for three main reasons: The rights did not accommodate Elham House, the dominant i) tenement; ii) Their exercise by the RVOC timeshare owners would amount to an ouster of the appellants as owners of the Park; iii) The enjoyment of the rights by the RVOC timeshare owners depended upon substantial expenditure by the appellants in managing and maintaining the facilities. Recognising that the decision in In re Ellenborough Park would be likely to constitute the sheet anchor in any case for treating the Facilities Grant as an easement (as it had been in both the courts below), the appellants in their printed case submitted that the decision was contrary to principle, in so far as it suggested that rights conferred for the pure (or mere) enjoyment of their exercise, rather than the better enjoyment of the dominant tenement as such, could satisfy the requirement that they accommodate the dominant tenement. In his oral submissions in this court, Mr Morshead preferred to focus on the private nature of the use of the communal garden in that case as that which, in sharp contrast with the Facilities Grant in this case, made it (just) legitimate to describe the rights conferred as accommodating the townhouses surrounding the garden. Before addressing the Ellenborough Park case directly, it is convenient first to summarise what, by the 1950s, were the well established conditions for the recognition of a right as an easement. Writing in 1954, Dr Cheshire described the four essential characteristics as follows: There must be a dominant and a servient tenement; i) ii) The easement must accommodate the dominant tenement; iii) The dominant and servient owners must be different persons; iv) A right over land cannot amount to an easement, unless it is capable of forming the subject matter of a grant. Aspects of these requirements are better understood when it is appreciated that easements may be created, not only by express grant, but also by implied grant, upon the transfer of part of land formerly in single ownership under the rule in Wheeldon v Burrows (1879) 12 Ch D 31, under section 62 of the Law of Property Act 1925 and by prescription. In the present case, as in In re Ellenborough Park, it is the second and fourth of those requirements with which the court is concerned. The Second Requirement The requirement that the right, if it is to be an easement, should accommodate the dominant tenement has been explained by judges, textbook writers and others in various ways. In his Modern Law of Real Property, 7th ed (1954) at p 457, Dr Cheshire expressed it in this way: One of the fundamental principles concerning easements is that they must be not only appurtenant to a dominant tenement but also connected with the normal enjoyment of the dominant tenement. Citing from Bailey v Stephens (1862) 12 CB(NS) 91, at 115, he continued: It must have some natural connection with the estate as being for its benefit . In its report Making Land Work: Easements, Covenants and Profits Prendre (2011) Law Com No 327 (HC 1067) at para 2.25 the Law Commission advised: The easement must accommodate, or accommodate and serve, the dominant land. The requirement is that the right must be of some practical importance to the benefited land, rather than just to the right holder as an individual: it must be reasonably necessary for the better enjoyment of that land. In the present case, the Court of Appeal described this requirement, at para 56, as follows: In our view, the requirement that an easement must be a right of utility and benefit is the crucial requirement. The essence of an easement is to give the dominant tenement a benefit or utility as such. Thus, an easement properly so called will improve the general utility of the dominant tenement. It may benefit the trade carried on upon the dominant tenement or the utility of living there. Save only for easements of support (which may be said to benefit the land itself), easements generally serve or accommodate the use and enjoyment of the dominant tenement by human beings. Thus, a right of way makes the dominant tenement more accessible. Service easements enable the occupiers of the dominant tenement to receive water, gas and electricity. A drainage easement enables rainwater and sewage to be removed from land, in circumstances where its use would otherwise be inhibited by flooding. The following general points may be noted. First, it is not enough that the right is merely appurtenant or annexed to the dominant tenement, if the enjoyment of it has nothing to do with the normal use of it. Nor is it sufficient that the right in question adds to the value of the dominant tenement. Thus for example, a right granted to the owners and occupiers of a house in Kennington to have free access to the Oval cricket ground on test match days might be annexed to the ownership of that house, and add significantly to its value. But it would have nothing to do with the normal use of the property as a home. Secondly, the normal use of the dominant tenement may be a residential use or a business use. Further, since easements are often granted to facilitate a development of the dominant tenement, the relevant use may be not merely an actual use, but a contemplated use: see for example Moncrieff v Jamieson [2007] 1 WLR 2620, per Lord Neuberger of Abbotsbury, at paras 132 133. Thirdly, it is not an objection to qualification as an easement that the right consists of or involves the use of some chattel on the servient tenement. Examples include a pump (Pomfret v Ricroft (1668) 1 Saund 321), a lock and a sluice gate (Simpson v Godmanchester Corpn [1897] AC 696), and even a lavatory (Miller v Emcer Products Ltd [1956] Ch 304). Fourthly, although accommodation is in one sense a legal concept, the question whether a particular grant of rights accommodates a dominant tenement is primarily a question of fact: see per Evershed MR in In re Ellenborough Park at p 173. Recreational rights The main controversy in the present case arises because the Facilities Grant conferred recreational and sporting rights, the enjoyment of which may fairly be described as an end in itself, rather than a means to an end (ie to the more enjoyable or full use of the dominant tenement). The origin of the controversy lies in the Roman law doctrine that a ius spatiandi cannot constitute a servitude: see per Evershed MR giving the judgment of the Court of Appeal in In re Ellenborough Park, at p 163. For present purposes that Latin phrase may simply be translated as meaning a recreational right to wander over someone elses land. The difficulty arises as an aspect of the requirement that the right must accommodate the dominant tenement precisely because, generally speaking, the sporting or recreational right will be enjoyed for its own sake, on the servient tenement where it is undertaken, rather than as a means to some end consisting directly of the beneficial use of the dominant tenement. Prior to Ellenborough Park, there were inconclusive dicta for and against the recognition of recreational rights as easements. Duncan v Louch (1845) 6 QB 904 was about the alleged obstruction of a right of way granted in 1675 over a close called the Terrace Walk. Lord Denman CJ said this, at p 913: I think there is no doubt in this case. Taking the right, as Mr Peacock suggests, to be like the right of the inhabitants of a square to walk in the square for their pleasure, they paying the necessary rates for keeping it in order, I cannot doubt that, if a stranger were to put a padlock on the gate and exclude one of the inhabitants, he might complain of the obstruction, and a stranger would not be permitted to say that the plaintiffs right was only conditional. By contrast, in Mounsey v Ismay (1865) 3 H & C 486, it was decided that a customary public right to hold horse races was not an easement within the meaning of section 2 of the Prescription Act 1832 (2 & 3 Will 4, c 71). Baron Martin, delivering the judgment of the court, said, at p 498: we are of opinion that to bring the right within the term easement in the second section it must be one analogous to that of a right of way which precedes it and a right of watercourse which follows it, and must be a right of utility and benefit, and not one of mere recreation and amusement. On opposite sides of the same debate may be found Keith v 20th Century Club Ltd (1904) 73 LJ Ch 545 (in favour); International Tea Stores Co v Hobbs [1903] 2 Ch 165 at 172, and Attorney General v Antrobus [1905] 2 Ch 188 at 198 (Farwell J in both cases, against). I consider that In re Ellenborough Park should be taken to have been dipositive of this issue for the purposes of English common law, to this extent, namely that it is not fatal to the recognition of a right as an easement that it is granted for recreational (including sporting) use, to be enjoyed for its own sake on the servient tenement. The question in every such case is whether the particular recreational or sporting rights granted accommodate the dominant tenement. In In re Ellenborough Park the right was to the full use of a garden square (surrounded on three sides by houses and on the fourth by the sea), and the dominant tenements were all the houses surrounding the garden together with a small number of additional houses nearby which did not front onto the square. The rights granted did not accommodate those additional houses on the basis that the garden could be seen by persons from the dominant tenement. It was only by the permitted use of the garden that the requisite accommodation could be established. Evershed MR described the enjoyment contemplated by the full enjoyment of the pleasure ground as follows, at p 168: The enjoyment contemplated was the enjoyment of the vendors ornamental garden in its physical state as such the right, that is to say, of walking on or over those parts provided for such purpose, that is, pathways and (subject to restrictions in the ordinary course in the interest of the grass) the lawns; to rest in or upon seats or other places provided; and, if certain parts were set apart for particular recreations such as tennis or bowls, to use those parts for those purposes, subject again, in the ordinary course, to the provisions made for their regulation: but not to trample at will all over the park, to cut or pluck the flowers or shrubs, or to interfere in the laying out or upkeep of the park. He continued: Such use or enjoyment is, we think, a common and clearly understood conception, analogous to the use and enjoyment conferred upon members of the public, when they are open to the public, of parks or gardens such as St Jamess Park, Kew Gardens or the Gardens of Lincolns Inn Fields. Turning to the question of accommodation, he continued, at p 174, by contrasting the right granted to the purchaser of a house to use the Zoological Gardens free of charge or to attend Lords cricket ground without payment, with a sale of part of the freehold of a house and garden with a right to the purchaser to use the garden in common with the vendor. He said, at pp 174 175: In such a case, the test of connection, or accommodation, would be amply satisfied; for just as the use of a garden undoubtedly enhances, and is connected with, the normal enjoyment of the house to which it belongs, so also would the right granted, in the case supposed, be closely connected with the use and enjoyment of the part of the premises sold. Such, we think, is in substance the position in the present case. The park became a communal garden for the benefit and enjoyment of those whose houses adjoined it or were in its close proximity. It is the collective garden of the neighbouring houses, to whose use it was dedicated by the owners of the estate and as such amply satisfied in our judgment, the requirement of connection with the dominant tenements to which it is appurtenant. The result is not affected by the circumstance that the right to the park is in this case enjoyed by some few houses which are not immediately fronting on the park. The test for present purposes, no doubt, is that the park should constitute in a real and intelligible sense the garden (albeit the communal garden) of the houses to which its enjoyment is annexed. This careful and compelling judgment of the court repays reading in full. I have cited the above passages because they demonstrate the following points. First, and contrary to the main submission for the appellants in the present case, the Court of Appeals conclusion did not depend upon the rights granted being essentially private in nature. On the contrary, they were described as broadly similar to those enjoyed by the public over well known parks and gardens in London. Secondly, the rights granted were essentially recreational, although they included limited sporting elements. Thirdly, the reason why the accommodation requirement was satisfied was not because the rights were recreational in nature, but because the package of rights afforded the use of communal gardens to each of the townhouses to which the rights were annexed. They provided those houses with gardens, albeit on a communal basis, and gardens were a typical feature serving and benefiting townhouses as dominant tenements. In the present case the dominant tenement was to be used for the development, not of homes, still less townhouses, but of timeshare apartments. Although in terms of legal memory timeshare is a relatively recent concept, timeshare units of this kind are typically occupied for holidays, by persons seeking recreation, including sporting activities, and it is to my mind plain beyond a doubt (as it was to the judge) that the grant of rights to use an immediately adjacent leisure development with all its recreational and sporting facilities is of service, utility and benefit to the timeshare apartments as such, just as (although for different reasons) the grant of rights over a communal garden is of service, utility and benefit to a townhouse. The appellants submitted that the grant of such extensive recreational and sporting rights (including the use of a fully serviced and maintained 18 hole championship golf course) could not be regarded as accessory to the timeshare apartment, in the same way that a garden is accessory to a house. Rather, Mr Morshead submitted, use of the timeshare apartment was an accessory to the enjoyment of the recreational and sporting rights, so that to treat the rights as an easement for the benefit of the timeshare unit was to allow the tail to wag the dog. Reliance for that purpose was placed on Hill v Tupper (1863) 2 H & C 121, in which the owner of the Basingstoke Canal granted the exclusive right to operate a pleasure boating business on the whole canal, annexed to a small strip of land on the canal side near Aldershot, upon which the grantee intended to erect a boathouse. Giving the leading judgment Pollock CB said: I do not think it necessary to assign any other reason for our decision, than that the case of Ackroyd v Smith (1850) 10 CB 164 expressly decided that it is not competent to create rights unconnected with the use and enjoyment of land, and annex them to it so as to constitute a property in the grantee. The case had been argued on the basis that the exclusive right to operate a pleasure boat business on the canal was in the nature of a profit rather than an easement, by way of analogy with a several fishery or a right of turbary. Unlike easements, there is no invariable requirement that a profit accommodate neighbouring land: see Gale on Easements, 20th ed (2017), at para 1 149. It appears from the full report of the submissions of counsel, and the judicial interventions therein, that it was not argued that the right granted accommodated the plaintiffs land on the canal side. The members of the court appear to have assumed that it did not, although, following In re Ellenborough Park, at least one commentator has suggested that the same facts might now give rise to an easement on that basis: see R N Gooderson, writing in the Cambridge Law Journal [1956] CLJ 24, 25. In my view Hill v Tupper was decided on the basis that the grant of a monopoly to carry on a pleasure boat business on the whole length of a canal (which ran from Chertsey to Basingstoke) was by its very nature incapable of constituting a proprietary right, merely by being annexed to the lease of a tiny section of the canal bank, regardless whether it did or did not accommodate the supposed dominant tenement. It was held to have been a perfectly valid grant of a personal right, as between the canal owner and the plaintiff lessee. But to sue for an infringement of it by another pleasure boat operator would have required the plaintiff to sue in his landlords name as the owner of the canal. Hill v Tupper is not therefore authority for the proposition that the grant of rights which accommodate land cannot be an easement unless their enjoyment is capable of being described (in proportionate terms) as subordinate or ancillary to the enjoyment of the dominant tenement. Providing that the rights are for the benefit or utility of the dominant tenement as such, it matters not that their enjoyment may be a primary reason why persons are attracted to acquire rights (such as timeshare units) in the dominant tenement. The Fourth Condition At first sight, the condition that the rights must be capable of forming the subject matter of a grant appears more apposite for testing the validity, as easements, of rights said to have been acquired otherwise than by grant, for example by prescription. In In re Ellenborough Park the exact significance of this fourth condition was described, at p 164, as at first sight perhaps, not entirely clear. But it has come to be a repository for a series of miscellaneous requirements which have been held to be essential characteristics of an easement. They include the requirements that the right is defined in sufficiently clear terms, that it is not purely precarious, so as liable to be taken away at the whim of the servient owner, that the right is not so extensive or invasive as to oust the servient owner from the enjoyment or control of the servient tenement, and that the right should not impose upon the servient owner obligations to expend money or do anything beyond mere passivity. It used to be said that this fourth condition included the proposition that a mere right of recreation and amusement which conferred no quality of utility or benefit, could not be an easement. I have dealt with this supposed condition by reference to the question whether the grant accommodates the dominant tenement. If, as here, the accommodation test is satisfied, then the fact that it may be a right to use recreational or sporting facilities does not, as the Ellenborough Park case makes clear, disable it from being an easement. Furthermore, the advantages to be gained from recreational and sporting activities are now so universally regarded as being of real utility and benefit to human beings that the pejorative expression mere right of recreation and amusement, possessing no quality of utility or benefit has become a contradiction in terms, viewed separately from the issues as to accommodation of the dominant tenement. Recreation, including sport, and the amusement which comes with it, does confer utility and benefit on those who undertake it. Returning to the other aspects of this fourth condition, there is no doubt in this case that the Facilities Grant was in sufficiently clear and precise terms, and it is not said to have been merely precarious. The appellants objections have been formulated under the headings of ouster and mere passivity. These requirements serve a common public policy purpose, namely to prevent freehold land being permanently encumbered by proprietary restrictions and obligations which inhibit its utility to an unacceptable degree. The precise extent of the ouster principle is a matter of some controversy, which it is unnecessary to resolve on this occasion. The view of the Law Commission, in its 2011 paper Making Land Work: Easements, Covenants and Profits Prendre at paras 3.207 3.211, is that the scope for litigation created by its uncertainties sufficiently outweighs its utility that it should be abolished. The controversy usually causes difficulty in the context of parking rights, and its extent is sufficiently summarised (for present purposes) in the speech of Lord Scott in Moncrieff v Jamieson (supra) at paras 54 to 61 (in which he treated the Scottish law of servitudes as for all relevant purposes the same as the English law of easements). Leaving aside cases where the grant confers exclusive possession, which cannot by definition be an easement, the ouster principle rejects as an easement the grant of rights which, on one view, deprive the servient owner of reasonable beneficial use of the servient tenement or, on the other view, deprive the servient owner of lawful possession and control of it. In the present case the appellants ouster argument focused upon possession and control rather than reasonable beneficial use. It may be summarised as follows. The grant of the facilities rights, particularly in relation to the golf course, must be assumed to carry with it a step in right of the dominant owner to manage and maintain the relevant recreational and sporting facilities in the event that, being under no obligation to the dominant owner to do so, the appellants as servient owners ceased to do so themselves. A championship golf course requires not merely occasional maintenance but day to day management and supervision, to an extent that would require the dominant owners to take control of the golf course, and other facilities such as tennis and squash courts, if only to regulate their use in accordance with a booking system. Thus, the exercise of those step in rights would deprive the appellants of possession or control of the Park, or substantial parts of it, thereby amounting to ouster. The judge and the Court of Appeal rejected these submissions, on the basis of a concurrent factual analysis. Even the golf course could have been kept in a playable condition (although not as an immaculate championship course) by the exercise of those step in rights, without the dominant owners taking possession or control: see in particular paras 77 and 78 of the judgment of the Court of Appeal, and the analogy drawn with Dowty Boulton Paul Ltd v Wolverhampton Corpn (No 2) [1976] Ch 13, where the right to take off and land airplanes on an airfield enabled the dominant owners to step in and mow the field sufficient to create and maintain runways when the servient owners discontinued its use as an airfield. This was held not to amount to an ouster. No basis was shown in the appellants submissions to justify this court taking a different view of that essentially factual question. But I would go further. In my view it is wrong in principle to test the issue whether a grant of rights amounts to an ouster of the servient owner by reference to what the dominant owner may do by way of step in rights if the servient owner ceases to carry out the necessary management and maintenance of the servient tenement. This is for two reasons. The first is that the ouster question should be addressed by reference to what may be supposed to have been the ordinary expectations of the parties, at the time of the grant, as to who, as between dominant and servient owners, was expected to undertake the management, control and maintenance of the servient tenement. In the present case, as the judge held, the plain expectation was that the relevant part of the Park would be managed, controlled and maintained as a leisure complex by its owners, rather than by the owners of Elham House or by the timeshare owners as members of the RVOC. The exercise of step in rights by the dominant owners would arise only in the event that the owners of the Park gave up the management, control and maintenance of the recreational and sporting facilities. Nothing in the terms of the Facilities Grant impinged upon those rights of management and control in any way. The second reason is that step in rights are, by definition, rights to reasonable access for maintenance of the servient tenement, sufficient, but no more than sufficient, to enable the rights granted to be used: see Gale on Easements, 20th ed, at para 1 93 and Carter v Cole [2006] EWCA Civ 398; [2006] NPC 46 per Longmore LJ at para 8(6). The dominant owners right is to enter the servient owners land for the purpose, but only to do necessary work in a reasonable manner . Provided that, as the courts below have held, the recreational and sporting facilities in the Park could be used by the RVOC timeshare owners without taking control of the Park, then no question of ouster arises. Mere Passivity It is well settled that (subject to irrelevant exceptions) an easement does not require anything more than mere passivity on the part of the servient owner: see Gale (op cit) at para 1 96 and Jones v Price [1965] 2 QB 618 at 631, per Willmer LJ: properly speaking, an easement requires no more than sufferance on the part of the occupier of the servient tenement, In Moncrieff v Jamieson (supra) at para 47, Lord Scott of Foscote said: the grant of a right that required some positive action to be undertaken by the owner of the servient land in order to enable the right to be enjoyed by the grantee could not, in my opinion, be a servitude. He then referred to a right to use a neighbours swimming pool as an example of such a right. This does not mean that easements cannot be granted if they involve the use of structures, fixtures or chattels on the servient tenement, which, in the ordinary course, the parties to the grant expect that the servient owner will manage and maintain. All it means is that the grant of the easement does not impose upon the servient owner an obligation to the dominant owner to carry out any such management or maintenance. The servient owner may do so because he wishes to use the structures, fixtures or chattels for the same purpose as the dominant owner, and has both the possession and control of the servient tenement and more resources than the dominant owner with which to do so. The grantor may or may not choose to make enjoyment of the easement conditional upon the dominant owner making a contribution towards the cost of management and maintenance, but no such contribution obligation will lightly be implied. There may, as in the present case, be a commercial expectation that the servient owner will undertake the cost and other burdens of management and maintenance, but the fact that the shared commercial expectation may have been (as in the present case) built upon sand rather than rock, so that those burdens prove uneconomic for the servient owner, will not affect the question whether the grant of the relevant rights constitutes an easement. I have already mentioned examples of easements calling for the use of fixtures or chattels, such as the lock gates and sluices in Simpson v Godmanchester Corpn, the pump in Pomfret v Ricroft and the humble lavatory in Miller v Emcer. Perhaps the most telling example is the grant of a right of way over a route which includes a substantial bridge: see Jones v Pritchard [1908] 1 Ch 630 at 637. This may require significant regular maintenance, and (in connection with a freehold easement) the large expense of occasional reconstruction. If granted by the owners of a substantial landed estate in favour of the owners of a cottage to which the right of way is the only means of access, it may be inconceivable in the real world that the maintenance, repair and replacement of the bridge will in fact be undertaken by anyone other than the servient owners. Nonetheless the grant of the easement carries with it no obligation on the part of the servient owners to carry out maintenance, repair or replacement, even if the bridge were, in the absence of it, to become unusable. There is therefore nothing inherently incompatible with the recognition of a grant of rights over land as an easement that the parties share an expectation that the servient owner will in fact undertake the requisite management, maintenance and repair of the servient tenement, and of any structures, fittings or even chattels located thereon. The only essential requirement (imposed to prevent land being burdened to an extent contrary to the public interest) is that the servient owner has undertaken no legal obligation of that kind to the dominant owner. There plainly was in the present case a common understanding between the respective grantor and grantee of the rights over the recreational and sporting facilities in the Park that the significant cost of the management, maintenance, repair and replacement of the structures, fixtures and, if necessary, chattels, requisite for the enjoyment of those rights would be undertaken by the successive owners of the Park. That was the express basis upon which the Regency Villas timeshare units were offered for sale to the public in the promotional materials put in evidence at the trial. But the concurrent analysis of the judge and of the Court of Appeal that the Facilities Grant did not of itself impose such obligations on the servient owners of the Park cannot in my view be faulted. True it is that, in the same document, the original grantor undertook a personal maintenance obligation to the original grantee, but this was (or should have been) known at the time of the conveyancing to have a one day limited life, because of the intention that there should be an immediate further transfer of Elham House. This personal covenant did not form part of the Facilities Grant. The appellants submitted nonetheless that the Facilities Grant was no more than illusory as a grant of rights of practical utility for an unlimited period unless the owners for the time being of the Park undertook responsibility to the dominant owners for the substantial cost of management, maintenance, repair and renewal. They relied on Lord Scotts example of the swimming pool, although it was only an obiter observation in a case about parking rights. The courts below rejected this on the facts, concluding that some meaningful use, even of the golf course and the swimming pool, could be enjoyed by the RVOC timeshare owners, even if the appellants or their successors as owners of the Park were altogether to discontinue the business of operating the relevant part of the Park as a leisure complex. Greens and even fairways on the golf course could be mown. The swimming pool could be kept full of water. Timeshare owners could provide their own nets for the tennis courts, hoops for the croquet lawn and (if necessary with the use of a generator) lighting for the squash courts. The appellants submitted with force that this would be nothing like the proffered use of a high quality leisure complex held out to prospective timeshare owners in and shortly after 1981, but nothing in their submissions provided a basis upon which this court could properly depart from the factual findings of the courts below that some less attractive but still worthwhile use could be made of the facilities in those circumstances. This conclusion, that meaningful use of the rights granted did not depend upon the continued provision of management, maintenance, repair and renewal by the servient owners, is also sufficient to confirm that use of the facilities was granted by way of right, rather than merely by way of temporary offering, revocable by the servient owners at any time, by discontinuing management and maintenance. It is not difficult to imagine recreational facilities which do depend upon the active and continuous management and operation by the servient owner, which no exercise of step in rights by the dominant owners would make useable, even for a short period. Free rides on a miniature steam railway, a covered ski slope with artificial snow, or adventure rides in a theme park are examples which would probably lie on the wrong side of the line, so as to be incapable of forming the subject matter of an easement. But the precise dividing line in any particular case will be a question of fact. It is in this context to be borne in mind, as already explained, that the Facilities Grant extended only to such sporting or recreational facilities as existed within the Park from time to time. It did not oblige the servient owner to maintain or operate any particular facilities, or any facilities. It is perfectly possible that, in relation to some of them, the exercise by the dominant owners of step in rights, after discontinuation of operation and maintenance by the servient owners, would not make them useable by the dominant owners indefinitely. That was an inherent limitation in the value of the Facilities Grant, but it does not deprive it of the character of an easement. Overview My analysis thus far demonstrates, as it did to the courts below, that the Facilities Grant exhibited all the well settled essential characteristics of an easement or easements, viewing each of the four characteristics (and the sub characteristics of the fourth) separately. But it still leaves open the wider question whether the grant for timeshare owners of comprehensive rights to the use and enjoyment of recreational and sporting facilities in an adjacent leisure complex is something which the law of easements ought to comprehend, looking at the matter in the round rather than in a series of compartments. The facilities granted in the present case undoubtedly broke new ground within the context of easements, beyond that established in In re Ellenborough Park, and this court is in any event not bound to follow that decision, if it considers it to have been wrong, either on its facts, or in the application of settled principles undertaken by Court of Appeal. The Facilities Grant in the present case may be treated as breaking new ground by comparison with In re Ellenborough Park, in three main respects. First, as Lord Carnwath points out, the nature and extent of the recreational and sporting facilities granted at Broome Park was much greater, and their full enjoyment called for much more intensive management, than that afforded in Ellenborough Park. An 18 hole golf course and a heated swimming pool by their nature require more management and maintenance than an ornamental garden, even if Ellenborough Park may also have included tennis courts and a bowling green. Secondly, Ellenborough Park was made available to a limited number of dominant owners, whereas the facilities at Broome Park were available to two, later three, different groups of timeshare owners and to paying members of the public. Thirdly, the cost of managing and maintaining Ellenborough Park was shared among the dominant owners, whereas in Broome Park it was at least expected to be undertaken by the servient owners. Additionally, the grant in this case can only be described as a right of recreation and amusement. It is a recreational right pure and simple (treating sport as part of recreation) whereas in In re Ellenborough Park the Court of Appeal fought shy of describing it in those terms, preferring to identify its essential feature as the provision of a communal garden for townhouses. Before expressing a conclusion, I must briefly identify factors pointing in favour of, and against, this extension of the law to recognise this new species of easement. In favour of doing so is the principle that the common law should, as far as possible, accommodate itself to new types of property ownership and new ways of enjoying the use of land. The timeshare development, which is quintessentially for holiday and recreational use, is just such a new type, and the common law should accommodate it as far as it can. Secondly, recreational easements have become widely recognised in the common law world. Thus in Riley v Penttila [1974] VR 547, the Supreme Court of Victoria recognised as an easement the grant of land within a residential development for the purposes of recreation over a garden or a park, in favour of residential lots, enthusiastically following the lead given in In re Ellenborough Park. In Dukart v Corpn of the District of Surrey [1978] 2 SCR 1039 the Supreme Court of Canada recognised as easements the grant in favour of residential lots on a development plan of rights to use foreshore reserves separating the lots from a bay, treating the analysis in In re Ellenborough Park as applying all the more emphatically in the case of a beach pertinent to a resort development (p 1052), and treating it as well settled that a ius spatiandi could be the subject matter of an easement. The Supreme Court stated in its declaratory order that the right so granted includes the right to promenade freely across the whole of the Foreshore Reserves and not merely to cross directly from the edge or front of Lot 38 to the waters of Boundary Bay: pp 1070 1071. Furthermore, the rights were not exclusive to the lot owners but were to be shared with certain more limited rights of public access from roads terminating short of the bay, and therefore across the foreshore reserves. In Blankstein v Walsh [1989] 1 WWR 277 the High Court of Manitoba recognised as an easement, acquired by prescription, recreational rights to use a communal playground, in favour of the owners of adjoining holiday cottages. In City Developments Pty Ltd v Registrar General of the Northern Territory [2000] NTSC 33, 135 NTR 1 the Supreme Court of the Northern Territory (affirmed by the Court of Appeal of the Northern Territory) recognised as an easement the grant of rights over a lakeside resort near Darwin for private recreational purposes, treating it as clearly established that a right of recreation may be the subject of a valid easement by reference to Halsburys Laws of Australia: [2001] NTCA 7, para 18. Against the broad recognition of recreational rights over a leisure complex as easements are two main factors. First, if annexed to a freehold, they are indeterminate in length, whereas a timeshare structure is frequently set up for a limited number of years. Furthermore the rights conferred are likely to burden the servient land long after the leisure complex in question has outlived its natural life. There is at present no statutory basis for the modification or discharge of easements, such as exists in relation to restrictive covenants, although the Law Commissions 2011 report proposes that there should be. Secondly, the use of easements as the conveyancing vehicle for the conferring of recreational rights for timeshare owners upon an adjacent leisure complex is hardly ideal, by comparison for example with a leasehold structure of the type used in this case for the BPOC timeshare owners. Although obligations to share the cost of management, maintenance, repair and renewal may be attached as conditions for the enjoyment of an easement (as they were in In re Ellenborough Park) there is no way in which enforceable obligations of that kind may be imposed upon the servient owners so that the burden of them runs with the servient tenement, in the same way that the burden of positive covenants may be made to run with a leasehold reversion. I have described how effective the leasehold scheme was for the BPOC timeshare owners, in enabling them to take proceedings to require the owners of Broome Park to construct a swimming pool, after the original open air pool had been filled in. In my view this court should affirm the lead given by the principled analysis of the Court of Appeal in In re Ellenborough Park, by a clear statement that the grant of purely recreational (including sporting) rights over land which genuinely accommodate adjacent land may be the subject matter of an easement, provided always that they satisfy the four well settled conditions which I have described. Where the actual or intended use of the dominant tenement is itself recreational, as will generally be the case for holiday timeshare developments, the accommodation condition will generally be satisfied. Whether the other conditions, and in particular the components of the fourth condition, will be satisfied will be a question of fact in each case. Whatever may have been the attitude in the past to mere recreation or amusement, recreational and sporting activity of the type exemplified by the facilities at Broome Park is so clearly a beneficial part of modern life that the common law should support structures which promote and encourage it, rather than treat it as devoid of practical utility or benefit. I would therefore dismiss the appeal. The Cross appeal The essence of the disagreement between the judge and the Court of Appeal which has led to the cross appeal may be summarised as follows. The judge regarded the Facilities Grant as, in substance, the grant of a single easement to use all such recreational and sporting facilities as might be provided from time to time within the leisure complex (including the Mansion House). At para 44 of his reserved judgment he explained this conclusion in the following way: There is nothing vague or of excessive width in the present rights. They clearly extend to all recreational and sporting facilities on the estate, and to the gardens, and must in my judgment include facilities that were not there or planned in 1981, or which may have been significantly improved since then. To construe the rights as limited to the actual facilities which were on site or planned in 1981 is unrealistic and might inhibit the servient owner from introducing improvements or replacements or adding facilities which would be for everyones benefit. I say that because any alteration to the facilities, if the rights did not extend to the new or replacement facilities, might amount to a substantial interference with the claimants existing rights. That cannot have been intended on any sensible construction of the rights. Moreover, such a construction would allow the defendants to advantage from their own default or that of their predecessors, who filled the outdoor pool in before the defendants constructed a new one in the basement of the Mansion House. The point is perhaps academic as the rights under the 1981 Transfer expressly extend to the basement, where the pool now happens to be. The Court of Appeal said that this was the wrong approach. It was held, at para 40 of the judgment of the court, that the most natural meaning of the words of the grant was a grant of rights in the nature of separate easements only over those sporting and recreational facilities already in existence on the Park at the time of the grant. This would therefore exclude new or substitute facilities constructed or laid out in a different part of the complex from the location of the original facilities, and also exclude rights over the ground floor and basement of the Mansion House which were not, viewed separately, recreational or sporting facilities, so as, for example, to exclude the use of the restaurant. The court then went on to look at each facility in turn, treating it as the subject of a separate grant of rights relating to a separate part of the Park. Thus the rights granted over the Italianate gardens, the tennis courts, the squash courts, the putting green and croquet lawn, the outdoor pool and the golf course all qualified as easements. By contrast the rights claimed over the reception area, billiard room and TV room on the ground floor of the Mansion House, and over the restaurant, bar, gymnasium, sun bed and sauna area in the basement, all failed to qualify. This was, because, viewed individually, none of them amounted to a sporting or recreational facility, the court observing in passing that a restaurant is not like a toilet and that the modern approach to taking physical exercise is not really applicable to recreational indoor games such as snooker or to watching television: para 80. Furthermore, the Court of Appeal concluded that, if the leisure business was closed, and the Park owners chattels removed, it would be stretching language to describe the bare room occupied in 1981, but no longer occupied, by a billiard table, as a billiard room. The same analysis was applied in relation to the gymnasium. The result was that the court concluded that there had not in 1981 been any valid grant of an easement over the ground floor or basement of the Mansion House. Since the new basement swimming pool replaced the original pool but on a different part of the leisure complex, the dominant owners acquired no rights over it. I have already indicated my clear preference for the judges simple and common sense analysis. There is in my view no answer to the judges pithy observation that to construe the rights as limited to the actual facilities on site or planned in 1981 is unrealistic, and that it would be likely to inhibit the servient owner from introducing improvements or replacements, or adding facilities, for the benefit of all users of the leisure complex in the Park. In my view the Court of Appeals approach, looking at the facilities grant as if it were a grant of separate rights to each facility, affecting separate and distinct parts of the complex, failed to see the wood for the trees. It is fair comment that counsel for the respondents provided less than full blooded support during oral argument for the judges simple analysis, although they did in subsequent written submissions. This reluctance was apparently because of a concern about the effect of the law relating to perpetuities upon what, on one view, might be regarded as the grant of future easements. But this concern was, in my view, misplaced for the reason which I have already given. I have also explained why, in my view, the absence of express words of futurity in the Facilities Grant is more than compensated for by the nature of the subject matter, namely rights to use sporting and recreational facilities in a leisure park on an indefinite basis. The timeshare owners in the Mansion House were plainly granted rights to use all such facilities as might be there from time to time, and it makes no sense at all to think that the parties to the grant of rights to the Regency Villas timeshare owners over the same leisure complex actually intended that they should have a steadily reducing set of rights, as alterations, replacements and improvements were made to the leisure complex over time. In written submissions after the hearing the appellants advanced additional reasons why the judges construction could not be correct. First, it was said that the Regency Villas timeshare owners would then benefit from a later decision by the servient owner to construct leisure or sporting facilities within that large part of the Park (as defined) to which the leisure complex did not extend in 1981. Part of it remained farmland, and still does. Secondly it was submitted that if the Transferor (or a successor) sold off parts of the Park for residential development and houses were built with private gardens or swimming pools, then the Regency Villas timeshare owners would have the free use of them as well. It may be that developments of that kind (none of which appear to have occurred) might throw up issues of construction with which the court might have to grapple. A possible answer might have been that the ambit of the locus in quo to which the Facilities Grant extended was confined to the Mansion House and the curtilage of the rest of the leisure complex as it then stood, but still leaving the servient owner free to substitute and re locate particular facilities within that curtilage, without either depriving the Regency Villas timeshare owners of their use, or enabling them to veto any such changes. Another answer (to the private gardens and pool point) may be that the facilities grant applied only to facilities constructed for multiple use, as part of the leisure complex. But these considerations do not in my view stand in the way of recognising the good sense and practicality of the judges interpretation, in preference to that of the Court of Appeal. It also makes no sense to conclude that the Regency Villas timeshare owners were to have no enduring rights to the facilities in the ground floor and basement of the Mansion House, which constituted the heart of what was plainly intended to be a country club. While it may be that a restaurant, viewed on its own, is not a recreational or a sporting facility, it is perfectly capable of being viewed as part of a sporting or recreational complex. There were no doubt communal lavatory facilities in the Mansion House to which the same analysis would apply. The parties to the 1981 Transfer cannot sensibly have intended to exclude the RVOC owners from access to the restaurant, the lavatories, or to any other communal parts of the ground floor and basement of the Mansion House. There is also in my view no real basis for the sharp distinction which the Court of Appeal drew between outdoor and indoor recreational and sporting facilities. A gym, a sauna, a billiard room and a TV room are no less recreational than a formal garden or a golf course. An enclosed squash court is no less sporting than an open air tennis court. Furthermore, the focus of the Court of Appeal on the importance of the servient owners chattels to the use of the billiard room, gymnasium and sauna within the Mansion House, while correct as a matter of fact, does not justify their exclusion from the appropriate subject matter of a recreational easement. For the reasons already given, it is no objection to the recognition of a right as an easement that it may be exercised over, or with the use of, chattels or fixtures on land, rather than merely over the land itself. My preference for the judges construction of the Facilities Grant over that adopted by the Court of Appeal is decisive of the outcome of the cross appeal. The new indoor swimming pool was, from the moment of its completion, a recreational or sporting facility constructed and made available within the leisure complex in the Park. The dominant owners already enjoyed rights over the communal parts of the ground floor and basement of the Mansion House which, viewed as part of the grant of a recreational easement over the leisure complex as a whole, were perfectly capable of having the enduring quality of an easement, or part of an easement. The result is, that for both of those reasons, but primarily the first of them, the respondents recreational easement extended to the new indoor swimming pool from the moment of its completion, as the judge held. I would therefore allow the cross appeal, and restore the judges consequential orders, including his order for monetary compensation, to be assessed, for the payment under protest by the respondents for the use of the facilities, in particular the swimming pool, in and after 2012. LORD CARNWATH: (dissenting) Since I am in a minority, I will explain my thinking relatively briefly. I gratefully adopt Lord Briggs comprehensive account of the factual and legal background. With one important qualification I agree with, or am prepared to accept, his analysis. I would be very happy to go further, since the merits seem all one way. There is no doubt that the respondents were intended to have free access to the recreational facilities on the estate. But for an elementary conveyancing error by the original vendors solicitors, they should also have had the benefit of a covenant by the owner of the estate to maintain those facilities. Instead they have been faced with years of uncertainty and dispute. However our view of the merits should not allow us to distort the correct understanding of a well established legal concept. Nor is there any need to do so. Whatever our conclusion on this appeal, no one suggests that the conveyancing technique used in this case is a suitable model for future time share arrangements of this kind. The important qualification relates to the nature of the right asserted. An easement is a right to do something, or to prevent something, on anothers land; not to have something done (see Gale on Easements, 20th ed (2017), para 1 80). The intended enjoyment of the rights granted in this case, most obviously in the case of the golf course and swimming pool, cannot be achieved without the active participation of the owner of those facilities in their provision, maintenance and management. The same may apply to a greater or lesser degree to other recreational facilities which have been or might be created, such as the skating rink or the riding stables (who provides and keeps the horses?). Thus the doing of something by the servient owner is an intrinsic part of the right claimed. Neither principle, nor any of the 70 or so authorities which have been cited to us, ranging over 350 years, and from several common law jurisdictions, come near to supporting the submission that a right of that kind can take effect as an easement. This point is if anything underlined by Lord Briggs use of such expressions as country club and leisure complex (paras 1, 83) to describe the enterprise. In effect what is claimed is not a simple property right, but permanent membership of a country club. He recognises that it would be a new species of easement, but sees it as justified by the need to accommodate new ways of enjoying the use of land and as a natural development of the recreational easements widely recognised in the common law world (paras 76 77). However, none of the cases which he cites (paras 77 78) involves more than access to land for the purposes of walking and enjoyment as a garden or park in much the same way as in In re Ellenborough Park [1956] Ch 131. I agree that those cases lend support to the affirmation at this level of the Court of Appeals reasoning in that case, but not for extending it to create a wholly new form of property right. Furthermore, as Lord Briggs accepts, there are other and better legal procedures for dealing with this new way of enjoying land, if that is what it is. This limitation was clearly recognised (albeit obiter, and in the context of the Scottish law of servitudes) by Lord Scott of Foscote in Moncrieff v Jamieson [2007] 1 WLR 2620, at para 47. Subject to a few qualifications he saw no reason why any right of limited use of the land of a neighbour that is of its nature of benefit to the dominant land and its owners from time to time should not be capable of being created as a servitudal right in rem appurtenant to the dominant land His second qualification is directly relevant and merits quotation in full: A second necessary qualification to the proposition afore stated would be that the grant of a right that required some positive action to be undertaken by the owner of the servient land in order to enable the right to be enjoyed by the grantee could not, in my opinion, be a servitude. Thus the grant of a right of way over a driveway cannot place on the servient owner the obligation to keep the driveway in repair: see Jones v Pritchard [1908] 1 Ch 630, 637. The dominant owner would be entitled, although not obliged, as a right ancillary to his right of way to do such repairs to the driveway as were necessary or desirable. On the other hand I doubt whether the grant of a right to use a neighbours swimming pool could ever qualify as a servitude. The grantor, the swimming pool owner, would be under no obligation to keep the pool full of water and the grantee would be in no position to fill it if the grantor chose not to do so. The right to use the pool would be no more than an in personam contractual right at best. That passage draws a significant distinction between two situations. The first is where the position of the servient owner is essentially passive, but the dominant owner is able, as a right ancillary to his right of way, to make good any failure to keep the way in repair. The availability of such a limited, and clearly defined, ancillary right does not detract from the validity of the servitude or easement. The second, by contrast, is where active participation by the servient owner is an intrinsic part of the intended right. Lord Scott referred simply to filling the pool, but he might have added a reference to the active maintenance which is needed to keep a modern pool in safe and useable condition. Sir Geoffrey Vos C [2017] Ch 516 acknowledged the problem but did not see it as insuperable: Similarly in respect of the golf course, he recognised that: We accept that modern swimming pools will often have sophisticated filtration, heating, chlorination, and water circulation systems. But such systems are not essential to the benefit and utility of using the pool. Water is obviously essential, but that can, as the judge indicated, be provided by the owner of the dominant tenement if the servient owner closes his business or allows the pool to fall into disrepair. The same applies to any desirable filtration or other plant. Simply providing the necessary water or even ones own filtration plant cannot be regarded as sharing possession of the land on which the pool is constructed . (para 72) contemporary golf courses have sophisticated networks of landscaped, manicured and irrigated tees, bunkers and greens, punctuated by sheds and shelters, tarmacked paths, sand boxes, pro shops and club houses. 76. The difficulty posed by an easement of this modern kind of golf course, which we assume for this purpose was closer to the one that was opened at Broome Park Estate in mid 1981, is the large amount of maintenance required to keep it in what many would regard as a playable condition. We are all familiar with the teams of groundsmen and greenkeepers that such courses need to employ to maintain them to the high standard that players frequently desire. However again he thought the problem not insuperable: 77. As regards the validity of an easement to use a fully maintained golf course, we take the view that it is necessary to consider what would occur if, as was common ground could happen, the servient owner closed or ceased to maintain it. As with providing the water for the swimming pool, the dominant owners could mow the grass and take any other necessary steps to make the course playable. Such mowing was accepted by the Court of Appeal to be appropriate in relation to a grass airfield in Dowty Boulton Paul Ltd v Wolverhampton Corpn (No 2) [1976] Ch 13. (para 77) He did however (unlike the judge) accept some limits to this approach, in respect of facilities on the ground floor of the Mansion House (such as the billiard and TV rooms), when rejecting the respondents submission that this was no more than a right to use the common parts: We think this submission proves too much. It shows that the right granted is really not in the nature of an easement at all. It is not about the use of any land, but the use of facilities or services that may for the time being exist on the land. As with the case of the restaurant which was in the basement in 1981, we cannot see how there can properly be an easement over such a service area. A restaurant is not like a toilet (over which an easement may exist as we have mentioned). It can only be useful and a benefit if someone cooks the food and sells it to the user. Likewise, a TV room is of no benefit without a TV. The tennis court and golf course are both proper uses of the servient land. The grant of the right to use recreational facilities on the ground floor of the Mansion House was really no more than a personal right to use chattels and services provided by the defendants (para 80) This is a false distinction in my view. The essence of the grant, in respect of the golf course and swimming pool, no less than the others, was to use recreational facilities provided by the servient owners. Lord Briggs deals with this issue first in the context of arguments about ouster (paras 62 65). I am inclined to agree with him, contrary to the appellants submissions, that the ouster question should be judged by reference to the ordinary expectations at the time of grant, rather than to possible exercise of step in rights. However it is with the following passage, under the heading Mere passivity, that I feel bound to take issue. Having accepted that an easement requires no more than sufferance on the part of the servient owner, he dismisses the appellants reliance on Lord Scotts observations in Moncrieff, by reference to what he deems the factual findings of the courts below that some less attractive but still worthwhile use could be made of the facilities in those circumstances. (para 71) I find this difficult to accept. It is not clear to me that the courts below made any true factual findings on this question, nor indeed that there was any evidence on which they could properly to do so. There was plenty of evidence about the nature and cost of the maintenance actually carried out by the estate. (See for example the evidence of Mr Robson, Head of Maintenance, para 10, as to the contracts for the maintenance of the pool.) There appears to have been no evidence as to what might realistically have been done by the residents, collectively or individually, in the absence of such central management. What is involved is not simply maintenance or repair, as in the case of a right of way, or even the mowing of a disused airstrip as in Dowty Boulton (see below); but taking over the organisation and management of a leisure complex (in Lord Briggs words). The judge dealt with this point very briefly, but by reference to legal theory rather than practical evidence: Mr Latimer also says, as is not disputed, that the rights cannot take effect as easements if the existence of the easements requires expenditure of money by the defendants, or the carrying on of a business by them. Yet the existence of the rights claimed produces no such requirement. The defendants could (as happened in the past) neglect the maintenance and upkeep of the estate allowing it to fall into disrepair. They could cease carrying on business at the estate for that reason, or on purely economic grounds, whether or not disrepair required the closure. In that case, if the rights take effect as easements, the claimants could intervene and, at their own expense, maintain and repair the facilities themselves, and tend the gardens: see generally Carter v Cole [2006] EWCA Civ 398 at para 8 . (para 52) Carter v Cole does indeed contain an authoritative summary by Longmore LJ of the ancillary rights of the dominant owner, but that was in the context of rights of way. The case tells one nothing about the practicalities of running and maintaining a modern golf course or swimming pool. The judge did, it is true, say that he saw no reason why the claimants could not provide their own water supply if necessary from a tanker (para 64); but this appears to have been his own suggestion rather than one based on any evidence of what would be required in practice to maintain the pool in safe condition. The only case relied on by Sir Geoffrey Vos C in this context, Dowty Boulton Paul Ltd v Wolverhampton Corpn (No 2) [1976] Ch 13, is of no assistance. The actual decision turned on other issues, so that anything said about the claimed easement was obiter. It seems to have been assumed that the disused airfield could be made suitable for the limited use to be made of it by the appellants by no more than mowing. On that basis Russell LJ was prepared to proceed on the assumption (p 24C D) that the right to use the airfield was capable of existing as an easement with the ancillary right to mow to make it useable. The case tells one nothing about the view that would have been reached if the right had been claimed over an operational, commercial airfield. The appellants raise a related problem concerning the element of choice. In respect of a right of way over a strip of land, or even over a bridge, there is no doubt about what is required by way of step in rights. Here there is no such clarity. As submitted in their case: A right to enjoy facilities being run by the servient owner is defined by the active choice and implementation of the servient owner. It chooses the location of the bunkers, the layout of the gardens from time to time, the temperature and depth of the water in the pool no less than it chooses the menu in the restaurant, the range of equipment in the gym and the loudness of the music within it. There is no right in the dominant owner to exercise its right in any different, or any particular way. The scope of the right is defined by the active choices and implementation of the servient owner from time to time. This perhaps is a less strong point in respect of the swimming pool, the physical characteristics of which are clearly defined, and unlikely to change. However, in respect of the golf course it seems to me unanswerable. It is true that in Ellenborough Park the use was to some extent subject to decisions made by the servient owner as to the layout of the garden, and included the possibility of some sporting activity. The use was described by Evershed MR: The enjoyment contemplated was the enjoyment of the vendors ornamental garden in its physical state as such the right, that is to say, of walking on or over those parts provided for such purpose, that is, pathways and (subject to restrictions in the ordinary course in the interest of the grass) the lawns; to rest in or upon the seats or other places provided; and, if certain parts were set apart for particular recreations such as tennis or bowls, to use those parts for those purposes, subject again, in the ordinary course, to the provisions made for their regulation; but not to trample at will all over the park, to cut or pluck the flowers or shrubs, or to interfere in the laying out or upkeep of the park (p 168) However, these matters seem to have been treated as no more than incidental to the enjoyment of the garden as a place for walking, rather than as here essential to the purpose of the grant. Further, the enjoyment was subject to the dominant owners obligation to contribute to the cost of maintenance, and there was no discussion of what might happen in the event of failure to maintain. The court was not faced, as in this case, with the commercially incoherent position that the dominant owner is under no obligation to operate and maintain the recreational facilities which are essential to the grant, but has no right to recover the costs if he does so. I also find it difficult to see the limits of the majoritys approach. One could imagine, for example, similar time share apartments built on a theme park, and offering free access to the various rides on the park. It would I think be quite clear that the rides and other attractions could not be sensibly and safely enjoyed without active management and supervision of their owner. In theory, no doubt, if the owner defaulted, the dominant tenants could form their own management company and take over the running of the park. But it would in my view be unarguable that such a right could take effect as an easement or property interest. I accept that are some elements of the recreational facilities, notably the Italianate gardens, which lend themselves much more readily to a traditional understanding of an easement. However, like the majority, and in disagreement with the Court of Appeal, I would be inclined to regard this as a composite package of rights which stands or falls as a whole. Since I am in a minority it is unnecessary to pursue that issue further. It is also unnecessary to consider further the issues relating to the claimed quantum meruit. Finally, I comment briefly on the issues raised by the post hearing exchanges in connection with the rule against perpetuities (Lord Briggs paras 27ff). These arose from the interest shown by some members of this court in the question of future facilities. The background as I understand it is as follows. The judge held that the rights extended not only to recreational facilities existing at the date of grant, but to future replacements or additions. He said: There is nothing vague or of excessive width in the present rights. They clearly extend to all recreational and sporting facilities on the estate, and to the gardens, and must in my judgment include facilities that were not there or planned in 1981, or which may have been significantly improved since then. To construe the rights as limited to the actual facilities which were on site or planned in 1981 is unrealistic and might inhibit the servient owner from introducing improvements or replacements or adding facilities which would be for everyones benefit (para 44) In this passage he seems to have gone beyond the case as advanced at trial by the present respondents. Although their pleadings had asserted rights over any sporting or recreational facilities which may from time to time be provided on the Broome Park Estate, their case at trial was more limited. The right was said to extend to facilities existing at the date of grant, and to later facilities constructed either in direct substitution for existing facilities, or as extensions of them. In the Court of Appeal the present respondents supported the judges view, but there seems to have been some doubt as to how far it went. In their submission, as understood by the court, the grant would not extend to wholly new facilities on a part of the estate where none had previously existed, but would include, for example, an extension onto new land of the golf course (para 36). The court took a more limited view: The question of whether a minor or de minimis extension to the land used by the existing or replacement facilities does not arise on the facts of this case. But we would be inclined to accept that such an incremental increase in the land used by the golf course or, say, a small extension to the existing land used by the swimming pool or to the run back used by the tennis courts, would be covered on the proper construction of the grant. A completely new facility on new ground would not be covered, but a replacement facility, even one that had been slightly extended beyond the ground used by the original facility, would be. (para 44) The appellants submissions support this limited view. I note three points in particular. Firstly, they rely on the ordinary construction of the words of the grant which are expressed in the present tense, and say nothing about future facilities. They contrast para 2 which refers in terms to pipes and drains now in the land or constructed within 80 years of the date hereof. Secondly, they point out that the Transferors adjoining estate (the expression used in the grant) extends to a large area (some 90 acres) of mainly agricultural land. It cannot sensibly have been intended that this large area would be burdened for ever with rights to future recreational facilities created anywhere at any time in the future. Thirdly, such a construction would come into direct conflict with the rule against perpetuities. As they point out, there is authority for the proposition that the rule is not offended by a right which may allow for future substitutions (see eg Dunn v Blackdown Properties Ltd [1961] Ch 433, 440 per Cross J), but none for a right over wholly new facilities which may be created anywhere over an area of this size. I see considerable force in all these points. Although it is not necessary for the purposes of this appeal to reach a definitive view on the future extent of the grant, the Court of Appeal were right in my view to construe it narrowly. Lord Briggs seeks to avoid the problem by treating the grant as limited to the leisure complex. However, that is not what the document says, nor indeed is it clear precisely what physical area would be so defined. For these reasons, in respectful disagreement with the majority, I would have allowed the appeal.
+The common subject matter of these appeals is the treatment for rating purposes of ATMs (or automated teller machines) situated in supermarkets or shops. That turns on two main issues: first, were the sites of the ATMs properly identified as separate hereditaments from the stores or shops? Secondly, if so, who was in rateable occupation? The present appeals have been designated as lead appeals. Appeals relating to some 10,000 other sites (amounting to some 34,000 appeals in all) have been stayed pending the final decision in these cases. For convenience I shall refer to the respondents collectively as the retailers, to include (where different) the companies operating the ATMs. Different conclusions were reached at each level below. The Valuation Tribunal for England decided that in each case the sites of the ATMs were in separate rateable occupation. The Upper Tribunal (Lands Chamber) upheld that decision in respect of all the external machines, but not the internal machines. The Court of Appeal held that none of the machines, external or internal, were separately rateable. These questions have attracted a wealth of learning below, and in this court. I would pay tribute to the comprehensive and insightful treatment of the complex legal and factual issues at all three levels: the Valuation Tribunal for England (92 paragraphs: Alf Clark, Vice President); the Upper Tribunal (Lands Chamber) (195 paragraphs: Martin Rodger QC, Deputy Chamber President and A J Trott FRICS), and Court of Appeal (100 paragraphs: Lindblom LJ, with whom Gloster and King LJJ agreed). It is important however to be clear where lies the primary responsibility for reviewing the Valuation Officers decisions. Although the first appeal is to the Valuation Tribunal, and the Upper Tribunal acts as an appellate body, it does so by way of a full rehearing, not simply review, if necessary hearing evidence for that purpose (Johnson v H & B Foods Ltd [2013] UKUT 539 (LC); [2014] RA 490 per Sir Keith Lindblom CP). By contrast, onward appeal to the Court of Appeal lies only on points of law. Accordingly, it is to the Upper Tribunals judgment that we must look first for the relevant findings of fact and their evaluation. To justify intervention at a higher level it is necessary to identify something more than a difference of evaluative assessment. Further in this highly specialised area of the law the higher courts should give particular weight to the expertise which has been developed by the senior judges and members of the Upper Tribunal (Lands Chamber). That weight is not necessarily diminished by the fact that in this particular appeal, none of the parties before the court has seen it as in their own interests to defend the Upper Tribunals decision in its own terms. This of course is not to overlook the expertise in this field of Lindblom LJ, himself a former President of the Lands Chamber. External and internal ATMs The great majority of the ATMs in issue are external: typical hole in the wall machines fitted in the external walls of superstores or supermarkets belonging to the major national retailers, and as such available for use by the general public whether or not they are shopping there. In each case the ATM itself was installed and operated, not directly by the retail company but under contractual arrangements with a related banking company. This separation, we were told, was necessary for regulatory reasons. Although the contractual arrangements vary between the different groups, as discussed in detail in the judgments below, I do not understand these differences to have played a significant part in the ultimate decisions. That seems to me correct. It would be surprising if the rating treatment of such standard items were to vary according to the particular organisational arrangements of the companies concerned. As I understood his submissions, Mr Morshead QC for the appellant Valuation Officers did not attach particular weight to those differences, but was rightly concerned to establish principles of general application. Of the external ATMs, I can take as typical the ATM in Sainsburys supermarket in Worcester, as described by Lindblom LJ (para 6). The store was first shown in 2010 as Superstore and Premises with a rateable value of 875,000. That was replaced, as a result of the decision now under appeal, by separate entries of 875,000 for the store alone and 8,300 for the ATM site. (These figures can be taken as broadly illustrative for all the cases. The figures are not agreed and subject to future determination. But it is not in dispute that separate treatment of the ATMs is liable to have a significant impact in financial terms both in individual cases, and particularly when multiplied by the number of cases awaiting decision.) The Worcester ATM is in an external wall, next to the main entrance door, and can be used 24 hours a day. It sits on a metal plinth, is chained to the floor of the cash room in the store, and is connected to the supermarkets electricity supply. Sainsbury is the leasehold owner of the store, including the site of the ATM. An associated company, Sainsburys Bank plc, has a contractual licence to install and operate the ATM, and for that purpose to enter the ATM site. The cash dispensed by the ATMs is owned by the bank, but is kept in the security room of the store, under the control of Sainsburys staff. Maintenance is carried out daily by Sainsburys staff during the opening hours of the store. Some of Tescos ATMs are described as internal, in that they are available for use only from within the store, and accessible only during store opening hours. Apart from that, and with one exception, the physical and organisational arrangements are for practical purposes the same as for the external machines. The exception is the so called moveable ATM on the first floor of the Tescos store in Nottingham. It will be described later in this judgment. This difference led the Upper Tribunal to conclude that the site of this ATM, unlike all the others, did not qualify as a separate hereditament, so that the issue of rateable occupation did not arise. The last category can be described as a convenience store ATM, represented by the Cardtronics ATM in a Londis convenience store in Harefield. It is similar to the other external ATMs, but the main difference is the much smaller floorspace of the store, so that maintenance and loading leads to greater interference with the ordinary working of the store. I take the description from Lindblom LJ (para 9): Cardtronics operates an ATM in a Londis convenience store in Harefield, with about 60 square metres of floor space. The ATM is in an external wall, next to the entrance door. The ATM was placed in the store under a licence agreement with Londis, dated 26 March 2007, which makes provision for Cardtronics to gain access to it. It is owned, operated, maintained and loaded by Cardtronics. Maintenance and loading are undertaken within the store. Loading blocks an aisle, and the store is sometimes closed while it is being carried out. The Upper Tribunal gave further detail of the physical arrangement within the store (para 149): Within the store the machine is partially concealed from view by a pillar on one side but otherwise its metal cabinet is in plain sight, not being housed in any separate structure created for the purpose. The top of the cabinet is used to display magazines and other goods. The only adaptation to the store which has been undertaken to accommodate the ATM is the creation of a separate panel on the front of the building through which the display and keypad can be accessed and where we assume there would previously have been a window. The legal principles I turn to the relevant statutory provisions, and the leading authorities. Section 64(1) of the Local Government Finance Act 1988 defines a hereditament as anything which would before the passing of the Act have been a hereditament for the purposes of section 115(1) of the General Rate Act 1967. That section in turn provides that hereditament means: property which is or may become liable to a rate, being a unit of such property which is, or would fall to be, shown as a separate item in the valuation list. Authoritative guidance as to the application of that definition has recently been given by this court in Woolway (Valuation Officer) v Mazars LLP [2015] UKSC 53; [2015] AC 1862. As to rateable occupation, section 65(2) provides that whether a hereditament is occupied, and who is the occupier are to be determined by reference to the rules which would have applied under the 1967 Act. They were well established long before the 1967 Act. The classic statement of the ingredients of rateable occupation is that of Tucker LJ in John Laing & Son Ltd v Assessment Committee for Kingswood Assessment Area [1949] 1 KB 344, 350: . there are four necessary ingredients in rateable occupation . First, there must be actual occupation; secondly, that it must be exclusive for the particular purposes of the possessor; thirdly, that the possession must be of some value or benefit to the possessor; and, fourthly, the possession must not be for too transient a period. Two authorities at the highest level provide guidance as to the application of the second ingredient (exclusive) in cases of concurrent occupation. The first is Holywell Union Assessment Committee v Halkyn District Mines Drainage Co [1895] AC 117, 126, in which Lord Herschell LC said: There are many cases where two persons may, without impropriety, be said to occupy the same land, and the question has sometimes arisen which of them is rateable. Where a person already in possession has given to another possession of a part of his premises, if that possession be not exclusive he does not cease to be liable to the rate, nor does the other become so. A familiar illustration of this occurs in the case of a landlord and his lodger. Both are, in a sense, in occupation, but the occupation of the landlord is paramount, that of the lodger subordinate. The concepts of paramount and subordinate occupation were taken a stage further in the second case: Westminster Council v Southern Railway Co [1936] AC 511. This has been at the centre of much of the arguments in the present appeal. It was held that certain retail units at Victoria Station, including bookstalls, kiosks, a chemist's shop and various showcases, occupied by independent retailers under agreements with the railway company, should be treated as separate hereditaments in the rateable occupation of the retailers. As Lord Wright MR explained (p 551): The question is whether the premises in question have been so carved out of the railway hereditament, to which they or their sites belonged, as to be capable of a separate assessment, or whether they have, though let out, been so let out as still to leave them in the occupation of the Railway Company. As that passage shows, although it may be convenient for the purpose of analysis to separate the issues of hereditament and occupation, they are in truth linked. Lord Russell of Killowen (at pp 529 530) made some general observations on rateable occupation, including the treatment of concurrent occupation, which have been regarded as authoritative in later cases: The occupier, not the land, is rateable; but, the occupier is rateable in respect of the land which he occupies. Occupation, however, is not synonymous with legal possession: the owner of an empty house has the legal possession, but he is not in rateable occupation. Rateable occupation, however, must include actual possession, and it must have some degree of permanence: a mere temporary holding of land will not constitute rateable occupation. Where there is no rival claimant to the occupancy, no difficulty can arise; but in certain cases there may be a rival occupancy in some person who, to some extent, may have occupancy rights over the premises. The question in every such case must be one of fact namely, whose position in relation to occupation is paramount, and whose position in relation to occupation is subordinate; but, in my opinion, the question must be considered and answered in regard to the position and rights of the parties in respect of the premises in question, and in regard to the purpose of the occupation of those premises. In other words, in the present case, the question must be, not who is in paramount occupation of the station, within whose confines the premises in question are situate, but who is in paramount occupation of the particular premises in question. He also commented on the example of lodgers in a lodging house, mentioned by Lord Herschell, which he regarded as exceptional and largely the product of practical considerations, adding: But it can I think be justified and explained when we remember that the landlord, who is the person held to be rateable, is occupying the whole premises for the purpose of his business of letting lodgings, that for the purpose of that business he has a continual right of access to the lodgers rooms, and that he, in fact, retains the control of ingress and egress to and from the lodging house, notwithstanding that the power of ingress and egress at all hours, is essential to the lodger. The general principle applicable to the cases where persons occupy parts of a larger hereditament seems to be that if the owner of the hereditament (being also in occupation by himself or his servants) retains to himself general control over the occupied parts, the owner will be treated as being in rateable occupation; if he retains to himself no control, the occupiers of the various parts will be treated as in rateable occupation of those parts. (p 530) He referred to this as the landlord control principle, and having discussed its application to other cases, such as docks, he summarised the position: In truth the effect of the alleged control upon the question of rateable occupation must depend upon the facts in every case; and in my opinion in each case the degree of the control must be examined, and the examination must be directed to the extent to which its exercise would interfere with the enjoyment by the occupant of the premises in his possession for the purposes for which he occupies them, or would be inconsistent with his enjoyment of them to the substantial exclusion of all other persons. (p 532) Lord Wright MR, in his concurring judgment, also distinguished the lodging house cases: the position of the lodger is authoritatively explained by Lord Hatherley in Cory v Bristow ([(1877)] 2 App Cas 262, 276). Although, he says, a lodger may have the exclusive use of the chambers he occupies, still there is a concurrent right reserved by the person who lets the lodgings, of using the lodging house for whatever purposes he may think fit for managing the establishment and all purposes connected with it. In other words the landlord occupies his premises and uses them for his business of keeping lodgers. Such a case is far removed from the case of the tenants here, who occupy their shops in order to carry on their business . (p 556) As illustrations of the application of these principles in wholly different factual situations, reference has been made to two Court of Appeal decisions: i) In Wimborne District Council v Brayne Construction Co Ltd [1985] RA 234, contractors were engaged by the owner of a fish farm to excavate lakes and ponds on an area underlain by deposits of gravel. They engaged subcontractors who paid a royalty to the contractors for any gravel taken. It was held that the subcontractors were in rateable occupation because their occupation was exclusive for the particular purpose of winning the gravel, and not interfered with by the contractual control exercised by the contractors. Mr Morshead for the Valuation Officers relies on Lloyd LJs suggestion (at p 243) to reconcile the concepts of exclusive and concurrent occupation: Another way of explaining the difficulty might be that an occupier, in order to qualify for rateable occupation, has only to be in exclusive occupation for his own particular purposes. This does not exclude others from occupying the same hereditament for their particular purposes. Paramountcy is a way of choosing between exclusive occupiers in that sense. The degree of control exercised by one occupier over the other, or by a third party, seems to be relevant to both questions Sir George Waller added (p 247): In my opinion, in the phrase the particular purposes of the possessor, the word particular is to emphasise the work that the possessor is doing selling newspapers and not running a railway in the Southern Railway case; the carrying out of the contract in Laings case. In this case also, the particular purpose of the subcontractors was the carrying out of the contract, ie excavating the gravel. So far as the subcontractors were concerned, while no doubt the ultimate objective was to enable the contractors to complete the construction of the ponds, the particular purposes of the subcontractors were the excavation of gravel. ii) Vtesse Networks Ltd v Bradford (Valuation Officer) [2006] EWCA Civ 1339; [2006] RA 427 concerned a fibre optic telecommunications network consisting of pairs of fibres, encased within the cables and ducts owned by third parties, and leased to the ratepayer, Vtesse, for use in the transmission of its own signals. The network was held to be a hereditament of which Vtesse was in rateable occupation. The Court of Appeal upheld the Lands Tribunals conclusion that Vtesse was in paramount occupation of the network, notwithstanding that the owner of the ducts controlled access to the fibres and was responsible for maintenance. Suggested analogies with the landlord lodger relationship were rejected. One other House of Lords case, London County Council v Wilkins (Valuation Officer) [1957] AC 362, is of assistance in showing how chattels may be relevant to the identification of a rateable hereditament. It was held that wooden or corrugated iron huts, used as offices, stores and a canteen on a building site, could be included in the rating list (the building site itself not being rated). The House rejected the argument that the structures were chattels and should not be rated for that reason. Lord Radcliffe said (p 378): No one supposes, of course, that a man is rateable in respect of the enjoyment of chattels as he is in respect of the occupation of land. But, on the other hand, I think that that is a long way from saying that the presence of chattels on land can never be a relevant factor either in determining the assessment of the rateable value of a hereditament or in determining whether there is a rateable occupation or not. In the present case it is not in dispute, as I understand it, that in appropriate cases chattels may be taken into account in defining the land to be included in the hereditament. In the case of the ATMs, however there is however an issue as to whether that is compatible with their status as non rateable plant for valuation purposes under the special legislation relating to plant and machinery. The Bank of Ireland case To show how those principles have hitherto been applied to ATMs at tribunal or appellate court level, it is helpful to refer to a decision which is uncontentious, at least in its result. That is the decision of the Scottish Lands Valuation Appeal Court in Assessor for Central Scotland Joint Valuation Board v Bank of Ireland [2010] CSIH 91; [2011] RA 195. It related to a hole in the wall ATM in an outside wall of a sub post office. The court distinguished an earlier case, in which it had been decided by the same court that free standing ATMs inside various supermarkets and shops, to which the public had access only from within the premises, were not separately rateable (Clydesdale Bank plc v Lanarkshire Valuation Joint Board Assessor for Lanarkshire 2005 SLT 167). To illustrate the factors which have hitherto been regarded as relevant, it is worth setting out in full the reasoning of Lord Gill, as that of one of the most experienced judges in this field: [15] In my opinion, the crucial difference in this case is that there is no direct link between the ATM site and the operation of the sub post office. The ATM cannot reasonably be said to be one of the retail attractions provided in the sub post office for its customers. Where an ATM is sited within a retail store, it is reasonable to infer that its primary purpose is to provide a facility for shoppers enabling them to access cash in store in the course of shopping there. It is reasonable also to infer that few users will go to the store solely to obtain cash from the ATM. [16] In this case, however, although the ATM rests on the floor of the sub post office, the operative part of it from the users point of view is accessible only from outside. The ATM is therefore not an in store facility. Within the sub post office the site of it is in effect dead space. The ATM is intentionally provided for the use of the general public. For that purpose the building has been altered and adapted by the opening of an aperture in the glass frontage of the building in virtue of a planning permission and a building warrant. Furthermore, the usage of the ATM is entirely unrelated to the opening hours of the sub post office. [17] The sub postmaster has no access to the ATM site save for re filling and for simple first line maintenance, for all of which he receives a commission. Beyond that, he has no rights or duties in relation to the machine. Although Mr Morshead QC for the Valuation Officers criticised some of that reasoning as departing from the Southern Railway principles as he identified them, he did not question the actual decision. The Principle of Equality Mr Morshead urged that the approach of the Court of Appeal risked undermining a fundamental rating principle, the principle of equality. It meant that identical ATMs of adjacent High Street buildings would be treated differently depending on the use of the building. With respect, however, he seems to me to overstate the significance of the principle in these cases. It is already the position that identical ATMs in adjacent buildings may be treated differently. Lindblom LJ (para 1) recorded that in 2015 there were some 70,000 ATMs in the United Kingdom, most of them in bank premises. It seems clear that a typical hole in the wall ATM in the external wall of a high street bank is part of the same hereditament as the rest of the bank, and is no different in that respect from a similar machine within the bank. It is equally clear that an ATM in a building adjacent to the bank, for example a post office (as in the Bank of Ireland case) whose occupation has no direct link with the function of the ATM, may be treated as a separate hereditament. The present appeals are not about such fundamental issues of principle, but simply about where to draw the line, in cases where the functions of the ATM and of the host building are not wholly disconnected. General comment on the authorities I should add that, even in respect of authorities at the highest level such as those summarised above, there is a danger of over analysis. As Lord Sumption noted in Woolway v Mazars (supra at paras 1 to 4), the rating system has a very long history. As a fair and effective method of taxing property of all kinds, it has proved remarkably resilient and adaptable to technological developments and new forms of property. However, although the core concepts are well understood, they have not always proved susceptible to precise formulation, as indeed he observed of the term hereditament in that case. The same may be said of the concepts of paramount and subordinate occupation, which are at the heart of the second issue in these appeals. The underlying principles were authoritatively laid down in the Halkyn case. The notable length of the leading speeches in Southern Railway can be attributed to the attempts of their Lordships to develop those principles by drawing together the threads of a wide range of decided cases relating to disparate factual circumstances, not all readily reconcilable with each other. Inevitably in such an exercise, as anyone who has attempted the task will know, some tensions and inconsistencies are likely to arise. It may be misleading to extract particular statements, and to treat them as definitive propositions of law, without regard to their overall context. Further, as Lord Russell was at pains to emphasise, the principles as stated by him provide no more than a framework for the evaluation of the facts of any particular case. Identifying the hereditament The first issue is whether the sites of the ATMs are capable of identification as separate hereditaments. As the Upper Tribunal explained (para 115) there were two aspects to the arguments under this head: [The retailers] submitted first that the boundaries of a hereditament could not be defined by reference only to the presence of a piece of machinery which was not itself liable to be rated. If the ATM was ignored there was nothing to identify the area said to constitute the hereditament, as it was otherwise indistinguishable from any other part of the floor area of the host store. Secondly, it followed from the inability to define the area of the purported hereditament that the geographical test in Woolway v Mazars could not be satisfied. On both issues the Upper Tribunals reasoning and conclusions were approved by the Court of Appeal. I take the two aspects in turn. Non rateable plant The first argument, which was developed in this court by Mr Kolinsky QC for the first respondent, arises from the Valuation for Rating (Plant and Machinery) (England) Regulations 2000 (SI 2000/540), under which the ATM is left out of account for valuation purposes. Regulation 2 provides that in assessing the hypothetical rent for rating purposes, other than in respect of plant or machinery within the classes set out in the Schedule to these Regulations: (b) the prescribed assumption is that the value of any plant and machinery has no effect on the rent to be so estimated. An ATM does not fall within any of the classes set out in the Schedule, and it must therefore be assumed to have no effect on the rateable value of the hereditament on which it is sited. Items within paragraph (b) are sometimes described as non rateable plant, but that is no more than a term of convenience. On its face the Regulations are concerned solely with issues of valuation, not issues of rateability such as those raised by the appeal. However, it was argued that the ATM, being non rateable plant, must be disregarded for all purposes, including for the identification of the hereditament. This argument was supported by reference to a number of authorities, but most particularly to the decision of the House of Lords in Kennet District Council v British Telecommunications [1983] RA 43. The issue there was whether BT was in rateable occupation of two telephone exchanges while they were being fitted out with machinery and were not yet ready to be used as exchanges. The machinery was non rateable plant under the then current legislation (the predecessor of the 2000 Regulations). The House of Lords upheld the finding that BTs business purpose was the housing of telephone equipment, and the exchanges were used for that purpose once the first equipment was moved in. There had been an argument that the equipment was an essential part of the telephone exchange, which was thus incapable of beneficial occupation until the equipment was fully installed. It was in rejecting that argument that Lord Keith of Kinkel had used the words on which Mr Kolinsky relies. Having observed that the hereditament was the land with the building on it, and did not include any part of the plant and machinery in it, Lord Keith said (at p 46): The subsection provides that it is for the purposes of valuation that plant and machinery within para (b) is to be left out of account, but it must, I think, follow that it is impossible to treat such plant and machinery as part of the hereditament for any rating purpose, even though it be so fixed or attached that it would have fallen to be valued as part of the hereditament under the law prevailing before the statutory ancestor of section 21 was enacted in the form of section 24 of the Rating and Valuation Act 1925. Nothing can be rated which is not capable of being valued for the purposes of rating, and nothing which is not so capable can be the subject of rateable occupation. So it was rightly conceded by counsel for the respondents that the hereditament in issue here was land with the bare shell of the building on it, excluding all of the equipment therein. (Emphasis added) Mr Kolinskys argument, as the Upper Tribunal noted (para 122), was that, if the ATM could not be treated as part of a hereditament for any rating purpose, it must also be ignored in deciding whether the site on which it is placed is a separate hereditament. Against that Mr Morshead had argued that such a wide interpretation of Lord Keiths words was not consistent with statutory provision, and was contradicted by the decision itself, which did in fact treat the equipment as relevant to the issue of rateable occupation. The Upper Tribunal also referred (para 123) to Edmondson v Teesside Textiles Ltd (1984) 83 LGR 317, in which Oliver LJ had explained the specific nature of the argument which Lord Keith had been addressing. The finding that the hereditament was the building alone did not require it to be assumed that the equipment had been magically removed leaving an empty building. The Upper Tribunal agreed that neither Kennet nor any of the other authorities relied on was of assistance, since: each concerned a building whose boundaries clearly defined the extent of the relevant hereditament, the existence of which was not in doubt. They concluded: In principle, therefore, we consider that the presence of an item of non rateable machinery, such as an ATM, should not be ignored when determining whether a separate hereditament exists. The statutory assumption applies only for the purpose of valuation and may not legitimately be applied in answering the logically prior question of whether there is or is not a hereditament which needs to be valued. (paras 124 126) In the Court of Appeal, Lindblom LJ agreed in substantially similar terms (paras 45 50). Since I agree with both, and without disrespect to Mr Kolinskys attractive restatement of the arguments in this court, I am content to adopt their reasoning without further explanation. Defining the hereditament On the second aspect the principal argument for the retailers, as the Upper Tribunal noted (paras 127ff), relied on the observation by Lord Neuberger of Abbotsbury in Woolway v Mazars (para 47) referring to a hereditament as: a self contained piece of property (ie property all parts of which are physically accessible from all other parts, without having to go onto other property) It was argued (on behalf of Tesco and Cardtronics) that the site of an ATM did not satisfy this description because it was not self contained, and it was unusable without extensive use of the adjoining parts of the host store for servicing and for access by the public. Against that it was argued for the Valuation Officers that in this respect the ATM sites were no different in principle from separate shop units in a shopping centre which would undoubtedly qualify as separate hereditaments even though dependent for some purposes including access on other parts of the shopping centre. The Upper Tribunal agreed; as they said: Once a machine has been installed there should, in our view, be no difficulty in defining the boundaries of a fixed ATM site with sufficient precision to satisfy the geographic test of self containment. (para 130) They distinguished these cases from Clydesdale, in which the bank had been given a right of access to a more or less free standing moveable machine placed in a location chosen by the store from which it could be readily moved. They added: The deliberate creation of a specific space in a fixed and apparently permanent location, visibly different from the generality of the host store and clearly intended for a particular use, is sufficient to differentiate most of these cases from the arrangements considered in Clydesdale. In such cases enhanced security, visibility and permanence all contribute to the separation and identification of the unit. (paras 135 136) As already noted, they took a different view of the moveable ATM at Tescos Nottingham store. They described it as follows: On the first floor of the Nottingham store is a third ATM, which stands in a corner adjacent to a caf and customer toilets. The store itself has not been adapted to receive this machine, which could be unbolted from the floor and moved without difficulty to the ground floor lobby or to a different part of the retail area. The ATM is housed in a large metal cupboard, about 2 metres tall and 1.5 metres deep, which can be rolled forward to create a secure working area at the front of the ATM from which it can be serviced and replenished. Although this arrangement is slightly more substantial than some entirely free standing ATMs, its essential qualities are impermanence and mobility. We do not regard the space occupied by the machine from time to time as a unit of property separate from the remainder of the store. (para 143) They concluded as follows on this aspect: We are therefore satisfied that each of the appeal sites, with the exception of the first floor site at Tescos Nottingham store (where the machine is free standing), is capable of being the subject of a separate entry in the rating list. With that single exception, each site is more than just an indistinguishable space on the shop floor which happens to be occupied by an ATM; in each case the site has either been designed or adapted to accommodate such a machine. We are satisfied that the physical characteristics of a site, rather than incidental details of access or servicing arrangements, justify treating it as a potential hereditament. There are inevitably borderline cases (Cardtronics machine at Harefield, and Tescos at Walsall being closest to the boundary), but a clear distinction can be drawn between the space occupied by free standing machines on the one hand and specific sites which have been designed or adapted for the purpose on the other. That distinction is practical and appropriate to a tax on property, it is consistent with the Scottish jurisprudence and it provides a clear answer to the first issue for each of the appeal sites. (para 151) The Court of Appeal reviewed the Upper Tribunals reasoning and the opposing arguments at some length (paras 51 57) but in the end endorsed the Upper Tribunals approach, including the exception made for the moveable ATM, as faithful to the tests in Woolway v Mazars, and unimpeachable in its findings of fact (para 58). Again, although the main arguments were rehearsed in similar form in this court, I am content on this issue also to adopt the reasoning of the judgments below. I should note Mr Morsheads attempt to persuade us that the Upper Tribunal had been wrong to distinguish the Nottingham ATM, which though described as moveable was not regularly moved in practice. The tribunal had failed to consider the only relevant question, which was whether the occupation was so transient as to lack the necessary quality of permanence required by the Laing tests. However, that point seems to me sufficiently answered by the Upper Tribunals finding that the essential qualities of this ATM were impermanence and mobility. That was a finding of fact open to them. Like the Court of Appeal, I see no error of law in their approach. Rateable occupation I turn to the second issue, whether the retailer or the bank was in rateable occupation. This proved to be the most contentious issue below, and the only one on which there was a significant difference between the tribunal and the Court of Appeal. Both judgments deal with this issue at considerable length, in the course of which the relevant authorities and respective arguments are fully discussed. To avoid overburdening this judgment, I have consigned my (selective) account of their findings to an Appendix. I am grateful for this valuable groundwork which makes it possible to narrow down the scope of the investigation, and to concentrate on what seem to me the critical points of contention. At the heart of the submissions for the retailers, as I understand them, is the relationship between the service provided by the ATMs and the general retail business of the store. From their point of view, the ATM service is not a distinct business activity, but an integral part of the business activity of the store. It is, they say, one of the typical services provided at a modern retail store, and so regarded by their users. It is no different from other common facilities in such stores, such as photo booths, or coin change machines. It would be difficult to suggest that the sites of such individual services, at least if operated by the retailer, would be separately rateable. That relationship, they submit, is not altered by fact that for regulatory reasons the ATM is operated by a separate banking company. Such a situation they say is clearly distinguishable from cases such as Southern Railway or Wimborne. Selling newspapers was no part of the railway companys business; nor was commercial digging for gravel part of the business of the fish farm. Issues such as general control and interference as highlighted by Lord Russell may of course be important in the context of what he called rival occupations. By that I think he meant, not rivals in any commercial sense, but simply distinct business activities (selling newspapers or running railways in Southern Railway), and as such competing candidates for identification as paramount occupiers. Here by contrast there is of course no rivalry, and no question of any control exercised by the retailer interfering with the operations of its banking arm in respect of the ATM machines, since they share a common interest in their success. Their purpose is rather to facilitate that operation. However, the underlying principle remains that stated by Lord Herschell in Halkyn: Where a person already in possession has given to another possession of a part of his premises, if that possession be not exclusive he does not cease to be liable to the rate, nor does the other become so Thus in a case such as the present one starts from the position, as recognised by the unamended rating list, that the retailers were in exclusive occupation of their stores. One then asks how that has been affected by the transfer of operation to an associated company, and the limited possession given of the ATM sites, and whether nonetheless the occupation of the store owner remains paramount a concept which Lord Herschell chose to illustrate by reference to the familiar case of a landlord and his lodger. The retailers argue that, like the landlord, the retailer retains control of the whole premises and the ATM remains part of the overall business. Mr Morshead criticises the retailers approach for departing from what he calls the core principle derived from Lord Russells speech in the Southern Railway case as to the identification of the person who has paramount control of the area in question. That question is to be approached, he says, as in the Southern Railway case itself, by focussing on the particular sites in question (the bookstalls or showcases in that case, or the ATM sites in this), and asking whether the degree of control exercised by the host interferes with the enjoyment by the ATM operator of the site of the ATM for the purpose for which it is occupied, to the substantial exclusion of all other persons. Thus in that case, although the railway company retained a degree of control over each individual area, that control did not interfere with the enjoyment by each operator of that space for its own purpose. In the present cases, similarly, none of the factors identified by the Court of Appeal constitutes any interference by the host with the occupation by the bank for the purpose for which the bank occupies the ATM site, which is for the provision of ATM services. Rather the presence of the bank through its ATM excludes the host from any occupation of the ATM site for the same purpose, and excludes the host from any beneficial occupation of the ATM site for any other purpose, including the retail purpose which it conducts elsewhere in the store. I am with respect unpersuaded by Mr Morsheads analysis. While his analysis can perhaps be supported by a strict application of Lord Russells words, it sits uneasily with Lord Herschells approach, and in particular his comparison with the landlord lodger example. The lodging house has always been treated as a single hereditament in the occupation of the landlord, even though his control of the premises does not interfere with, but rather supports, the enjoyment by the lodgers of their own rooms for their own purposes. Mr Morshead appears implicitly to acknowledge this tension. His answer to that is in Lord Russells reference to the principle as exceptional and based on practical considerations. In the light of that, Mr Morshead submits that the landlord lodger example is anomalous and should not be extended: the lodger principle has no independent contribution to make to this area of the law. Whatever contribution it once had to make in this field has been fully absorbed, and fully expressed, in Southern Railway. I find that difficult to accept. The principle was long established by the time of Lord Herschells reference. He would hardly have described it as familiar, or have used it as his example of paramount and subordinate occupation, if he thought it in any way anomalous. It is true that Lord Russell appears to have had reservations about the principle, but he felt able to justify it by reference to the fact that the landlord would be occupying the whole premises for the purpose of his business of letting lodgings. Lord Wright also referred to the landlord lodger example, without suggesting that it was exceptional or anomalous; as he said the landlord occupies his premises and uses them for his business of keeping lodgers. occupation of the ATM sites: In the present case the Upper Tribunal has found that the retailers retained The Store has not, in any of these cases, parted with possession of the site of the ATM, but it has agreed to confer rights on the Bank which substantially restrict the Stores use of that small part of its premises which comprises the ATM site. The Store has agreed to that restriction because the presence of the ATM furthers its own general business purposes and because the operation of the ATM by the Bank provides the Store with an income. (para 169) I agree with the Court of Appeal that this was a finding which they were entitled to make on the evidence. Further at para 176, although they may perhaps have read more into the concept of rivalry than Lord Russell had intended, they were clearly right to reject it as of any relevance in these cases, and entitled to find in respect of the retailers and the banking companies that: Both parties derive a direct benefit from the use of the site for the same purpose and share the economic fruits of the specific activity for which the space is used. This in my view was sufficient to support their conclusion, affirmed by the Court of Appeal, that the sites of the internal ATMs remained in the occupation of the retailers. It is necessary however to consider the Upper Tribunals reason for treating the external machines differently. This appears most clearly from the following passage: Although obviously the Bank and the Store have a mutual interest in providing ATM services, and both derive a benefit from the presence of the machines, where the parties have chosen to make the service available to all, and at all times, and have physically separated the ATM from the facilities offered within the Store, we consider it is right to treat the primary purpose of the occupation of the site of the machine as being a purpose of the Bank. The Banks occupation for that purpose is exclusive: only one machine can be accommodated on the site and in each case the arrangements between the Store and the Bank provide that only the Bank is to have the right to locate such a machine in the Store. (para 185) With respect, I find that distinction difficult to understand. Like Lindblom LJ (para 96), I do not see that the factors identified by the tribunal support the conclusion that: where the retailers and the banks purposes in providing an ATM in a store are either the same or closely aligned, the retailer remains in occupation and possession of the ATM site, and the contractual, physical and functional arrangements are as they were here, an internal ATM site is in the paramount occupation of the retailer, but an external site is in the paramount occupation of the bank. I agree with the Court of Appeal that the Upper Tribunal erred in law by taking an unduly narrow approach. The only differences identified by them were the fact that the external ATMs were available to a wider market and at all times, and physically separated from the other facilities in the store. However these factors did not detract from their finding that the retailer remained in occupation of the ATM site, nor did they suggest that it was any less part of the retailers overall business. As Lindblom LJ said (para 93), this was in stark contrast with the independent uncontrolled occupation by the bank for the purposes of the banks business and the absence of a direct link with the Post Office use, as found in the Bank of Ireland case (see para 24 above). The difference is no greater in principle than that between internal and external ATMs in a bank building. No one, I think, would suggest that in that case the external ATM should be treated as a separate hereditament. On this issue also I consider that the retailers analysis is correct in law and should be supported. Conclusion In this appendix I set out what seem to me the principal points from the 1. treatment of this issue by the Upper Tribunal and the Court of Appeal. The Upper Tribunal 2. In their discussion of this issue, the Upper Tribunal began (paras 161 168) by referring to the Scottish cases, in particular Clydesdale and Bank of Ireland, which, contrary to the view of the Valuation Tribunal, it regarded as faithful to the principles in Southern Railway. In the Upper Tribunals view, the sole modification made by the Scottish court to the approach taken in Southern Railway concerned the value of control as a means of resolving the issue of paramount occupation. As the Upper Tribunal explained: In this very different factual context, where occupiers are not truly rivals but are both deriving a direct benefit from the same use of the subjects it regarded the question of control . as essentially subordinate to the broad question of purpose. That seems to us to be an unobjectionable refinement of the approach to paramount occupation where the circumstances do not justify treating concurrent occupiers as deriving different benefits from the use of the same unit of occupation. 3. They also accepted the retailers argument that, in respect of both internal and external machines, the floor space on which an ATM stands may be regarded as occupied both by the Store and by the Bank: The Store has not, in any of these cases, parted with possession of the site of the ATM, but it has agreed to confer rights on the Bank which substantially restrict the Stores use of that small part of its premises which comprises the ATM site. The Store has agreed to that restriction because the presence of the ATM furthers its own general business purposes and because the operation of the ATM by the Bank provides the Store with an income. (para 169) They cited Lord Russells statement that what matters is the position and rights of the parties in respect of the premises in question, and the purpose of the occupation of those premises, not of the larger premises of which they form part; and to the extent that there is concurrent occupation to consider which partys possession is paramount and which subordinate (para 170). However, they found less assistance in his references to rival claimants to the occupancy or to the issues of control and interference. They said: 176. We do not consider that it is generally helpful to characterise the Store and the Bank as rivals in their occupation of the site of an ATM. Both parties derive a direct benefit from the use of the site for the same purpose and share the economic fruits of the specific activity for which the space is used. In smaller stores it may be easier to detect an element of rivalry or competition associated with the presence of an ATM, despite the shared interest in providing the machine, because relative to the area of the store as a whole the potential sales space taken by the ATM is much greater than in a larger store. But even in the case of a small store we regard the concept of rivalry in occupation as artificial and unhelpful when considering which partys occupation of an ATM site is rateable. 177. When considering rateable occupation in the context of a complementary activity like the provision of an ATM, we do not regard control or interference as particularly relevant considerations either. Clearly where a segregated secure room has been created to accommodate the handling of cash, a high degree of security is to be expected. It suits the purposes of both the Bank and the Store for there to be very limited access to such a room, but there is no suggestion that the mutually beneficial security arrangements in place deprive the Bank of access which it would otherwise wish to have to enable it to operate its ATM facilities. The restrictions in place should therefore be seen as facilitating the Banks enjoyment of the site, rather than as interfering with it. Instead they preferred to consider the purpose of the occupation in question, 4. in respect first of the external ATMs: 179. We find it more helpful to consider the purpose of the occupation of the site in the light of the decisions the parties make about the manner in which the space dedicated to ATMs will be used. We regard it as significant that, by design, the target market of an external ATM is much broader than the retail customers of the store. An external ATM is not only physically remote from the generality of the retail offer of the store, as it was described, but its purpose is also distinctively different. It is to reach as wide a market for ATM services as possible, rather than to restrict usage to those who have entered the Store to make use of facilities only available to customers of the Store. They accordingly agreed with the approach exemplified by the decision in Bank of Ireland, that external ATMs available to the public at large should not be regarded as an in store facility (para 181). They then considered whether a different approach was required in respect of ATMs in small convenience stores but reached the same conclusion (paras 182 184). 5. Their overall conclusions in respect of external ATMs were stated thus: 185. Having regard to the broad customer base at which the service of an external ATM is targeted, the distinct character and branding of the space and the security arrangements associated with its use, the practical impossibility of the Store making any different use of the same space while it is occupied by the Banks ATM, and the inconvenience and impracticality of the machine being removed to a different location, we consider it to be realistic and workable to regard the Bank as being in paramount occupation. Although obviously the Bank and the Store have a mutual interest in providing ATM services, and both derive a benefit from the presence of the machines, where the parties have chosen to make the service available to all, and at all times, and have physically separated the ATM from the facilities offered within the Store, we consider it is right to treat the primary purpose of the occupation of the site of the machine as being a purpose of the Bank. The Banks occupation for that purpose is exclusive: only one machine can be accommodated on the site and in each case the arrangements between the Store and the Bank provide that only the Bank is to have the right to locate such a machine in the Store. 6. However, they reached a different view in respect of the internal ATMs: 190. We consider that the sites of these internal ATMs are in the paramount occupation of the Store, and not the Bank. The service is primarily offered to shoppers in the store, and is not aimed at attracting passing trade (although no doubt there will be occasions when someone who wishes to use an ATM and is aware of its presence inside a store may make an incidental purchase). The purpose of the Banks occupation of the site is to provide a service to the Stores customers, which is also the purpose of the Stores occupation of the whole of the premises including the site. By its control of the opening hours of the premises the Store limits the use which may be made of the ATM by the Bank. We do not think it is appropriate to make any distinction between the normal arrangement where access for all purposes is from within the store and the arrangement at Tescos store in Rugby where, for servicing, access to the room which houses the machine itself is from outside the store. 191. An internal site, even one which has been designed or adapted to house an ATM, is likely to be more easily relocated elsewhere in the store than an external hole in the wall site. The space vacated by an internal ATM is also likely to be more readily usable for an alternative purpose (the recess in which the machines at Walsall are housed could equally accommodate the vending machines, display cabinets or recycling bins seen in other photographs of Tesco stores). 192. These considerations are sufficient, in our judgment, to justify treating the Store as the party in paramount occupation of the site of an internal ATM. The Court of Appeal 7. Having summarised the relevant principles of law, which he described as well established, familiar and complete (para 83), Lindblom LJ pointed to the Upper Tribunals finding (at para 169) that: in each instance here the retailer had not parted with possession of the ATM site and had remained in occupation of it, sharing actual occupation with the bank, that retailer and bank were not rivals in their occupation of the site, and that they were using it for the same purpose Having regard to that finding he saw no justification for the Upper Tribunals conclusion that the bank rather than the retailer was in paramount occupation of an external ATM as the paramount occupier (para 85). He continued: 87. I think there is force in the submission [for the retailers] that where the owner has given up neither possession nor actual occupation of the site in question, where the purpose for which that site is occupied in this instance, the operation of an ATM is a common purpose with that of the other party in occupation and is of direct benefit to the owner, and where the owner retains physical or contractual control over the site to realize that benefit and this can be demonstrated by objective evidence, the principle of general control applies, in the normal way. Rateable occupation is not resolved in such a case by weighing one partys purpose against anothers. General control remains the decisive factor in establishing who is in rateable occupation of the site. There is no need for a further test to be imposed to gauge which of two purposes is the dominant or primary purpose, or for the general control principle to be subordinated or made subject to such an enquiry. Such a test is not prescribed in the jurisprudence. And in my view it is neither necessary nor appropriate to resort to it as a means of resolving the question of rateable occupation 88. On a straightforward application of the general control principle, in the light of the facts the Tribunal accepted, the correct answer seems to me to have been that the retailer, as owner, had in all these cases both internal and external ATM sites retained sufficient control of the site, in contractual, physical and functional terms, to be regarded as being in rateable occupation of it. 8. Lindblom LJ referred to the undisputed evidence that: the ATMs the retailers had chosen to have sited in their stores, whether inside the store or in an external wall, enhanced their stores retail offer by adding to the range of services available at the store; that some at least of the stores had been either designed to accommodate an ATM or physically adapted to accommodate it; that access to the ATM for regular servicing, maintenance and loading could only be achieved from within the store, and with the retailers co operation or consent (para 92) He noted also the Upper Tribunals acceptance that: [both] parties bank and retailer derive a direct benefit from the use of the [ATM] site for the same purpose, and share the economic fruits of the specific activity for which the space is used. (para 176) He contrasted the position in the Bank of Ireland case: The banks shared occupation of the ATM site with the retailer, the retailers continued possession of that site, and the fact that the retailer had, as the Tribunal also found (in para 169), agreed to restrict its own use of the site because the presence of the ATM furthers its own general business purposes , are in stark contrast with the independent uncontrolled occupation by the bank for the purposes of the banks business and the absence of a direct link, as was found to be so on different facts in Bank of Ireland . There, on the evidence, the synergy one sees in this case was lacking. Here the retailers remained in occupation and possession of the ATM sites in their stores, the banks had not been given exclusive possession for their own purposes, the relevant purpose of the banks and the retailers was the same, and the retailers had retained general control over those sites in the relevant sense (para 93). He concluded accordingly that the Upper Tribunal had been wrong to hold that the sites of external ATMs should be entered as in separate rateable occupation (para 94). The same criticism did not apply to its treatment of the internal sites, in respect of which its conclusions were consistent with previous decisions, but did not validate its approach to the external sites: They do not justify the conclusion that, where the retailers and the banks purposes in providing an ATM in a store are either the same or closely aligned, the retailer remains in occupation and possession of the ATM site, and the contractual, physical and functional arrangements are as they were here, an internal ATM site is in the paramount occupation of the retailer, but an external site is in the paramount occupation of the bank. In short, it is not clear from the Tribunals decision how the application of the principles established in the authorities, including the principle of general control in Westminster Council v Southern Railway Co, could properly lead to that result. (para 96) 9. The Court of Appeal accordingly allowed the retailers appeals in respect of the external ATMs and dismissed the Valuation Officers appeal in respect of the internal sites. For all these reasons I would dismiss these appeals by the Valuation Officers and uphold the order of the Court of Appeal. Appendix Rateable Occupation
+This case raises difficult issues about the scope for justifying direct discrimination on the ground of age and in particular a mandatory contractual retirement age. It arises under the Employment Equality (Age) Regulations 2006 (SI 2006/1031) (the Age Regulations), the measure by which the United Kingdom transposed Council Directive 2000/78/EC, establishing a general framework for equal treatment in employment and occupation (the Directive), into UK law in respect of age discrimination. But the same issues arise under the Equality Act 2010, which has now replaced those Regulations. Age is a relative newcomer to the list of characteristics protected against discrimination. Laws against discrimination are designed to secure equal treatment for people who are seen by society to be in essentially the same situation. The Aristotelian injunction that like cases be treated alike depends upon which characteristics are seen as relevant for the particular purpose. For most of history it was assumed that the differences between men and women were relevant for a whole host of purposes. Now the general rule is that they are not. But as Advocate General Sharpston commented in her Opinion in Bartsch v Bosch und Siemens Hausgerte (BSH) Altersfrsorge GmbH Case C 427/06 [2008] ECR I 7245, at [47], until comparatively recently differentiating on the basis of age was considered obviously relevant for the purpose of termination of employment. And it is still considered that age may be a relevant consideration for many more purposes than is so with the other protected characteristics. Hence recital 25 to the Directive, after recognising that the prohibition of age discrimination is an essential part of meeting the aims set out in the Employment Guidelines and encouraging diversity in the workforce, continued: However, differences in treatment in connection with age may be justified under certain circumstances and therefore require specific provisions which may vary in accordance with the situation in Member States. It is therefore essential to distinguish between differences in treatment which are justified, in particular by legitimate employment policy, labour market and vocational training objectives, and discrimination which must be prohibited. The reasons why age may be relevant in more circumstances than the other characteristics may seem obvious, at least where this has to do with the comparative capabilities of people of different ages. A younger person may not have the same training and experience as an older person. An older person may have lost the mental or physical strength which once she had. But it will be seen from recital 25 above that the European legislators considered that age discrimination might be justified by factors which had nothing to do with the characteristics of the individual but had to do with broader social and economic policy. These factors would not justify direct discrimination on the ground of any of the other protected characteristics, so why should age be different? The answer must be that age is different. As Ms Rose put it on behalf of the Secretary of State, age is not binary in nature (man or woman, black or white, gay or straight) but a continuum which changes over time. As Lord Walker pointed out in R (Carson and Reynolds) v Secretary of State for Work and Pensions [2006] 1 AC 173, at [60], Every human being starts life as a tiny infant, and none of us can do anything to stop the passage of the years. This means that younger people will eventually benefit from a provision which favours older employees, such as an incremental pay scale; but older employees will already have benefitted from a provision which favours younger people, such as a mandatory retirement age. The critical issues in this case are what sort of policy considerations can justify such discrimination, who decides upon them, and how they are to be applied to any individual person. I turn, therefore, to the facts of this case. The facts Mr Seldon was born on 15 January 1941, qualified as a solicitor in 1969, joined Clarkson Wright and Jakes, the respondent firm, in 1971 and became an equity partner in 1972. He became the senior partner in 1989. He was also managing partner from 1989 to 1993. He reached the age of 65 on 15 January 2006. There had been a succession of partnership deeds over that period but all had provided for the mandatory retirement of partners at the end of the year in which they reached the age of 65. Clause 22 of the deed adopted in 2005 provided: Any partner who attains the age of 65 years shall retire from the Partnership on 31st day of December next following his attainment of such age (or on such later date as the Partners shall from time to time and for the time being determine.) The deed did not make any provision for the removal of underperforming partners or for the reduction of their profit share to reflect underperformance. The partners preferred to address these matters through discussion and agreement. As he approached his 65th birthday, Mr Seldon realised that for financial reasons he would need to go on working in some capacity for another three years. Early in 2006 he made a series of proposals to his partners with a view to continuing to work as a consultant or salaried employee for another three years. These proposals were rejected by the other partners in May 2006 on the basis that there was no sufficient business case, but an ex gratia payment of 30,000 was offered as a goodwill gesture to reflect his long service with the firm. The Age Regulations came into force on 1 October 2006. Mr Seldon told the firm that he was seeking legal advice on the Regulations and the offer of an ex gratia payment was withdrawn. Mr Seldon automatically ceased to be a partner in accordance with the partnership deed on 31 December 2006. He began these proceedings in March 2007, alleging that his expulsion from the firm was an act of direct age discrimination and the withdrawal of the offer of the ex gratia payment was an act of victimisation. The firm claimed that his treatment was justified. They put forward six legitimate aims: 29.1 ensuring that associates are given the opportunity of partnership after a reasonable period as an associate, thereby ensuring that associates do not leave the firm; 29.2 ensuring that there is a turnover of partners such that any partner can expect to become Senior Partner in due course; 29.3 facilitating the planning of the partnership and workforce across individual departments by having a realistic long term expectation as to when vacancies will arise; 29.4 limiting the need to expel partners by way of performance management, thus contributing to a congenial and supportive culture in the Respondent firm; 29.5 enabling and encouraging employees and partners to make adequate financial provision for retirement; 29.6 protecting the partnership model of the Respondent. If equity partners could not be forced to retire at 65, but employees (including salaried partners) could be, it would be preferable to keep lawyers at the Respondent as employees or salaried partners rather than equity partners. It was made clear that the firm was not relying on the personal characteristics or any poor performance of Mr Seldon, nor were they relying on the structure of the wider market for legal services, but simply upon their own circumstances. The Employment Tribunal (ET) accepted that the firm did have the first, third and fourth of the claimed aims and that they were legitimate. Retention of associates was a legitimate aim for a firm with a strategy for growth and the preservation of a reputation for the quality of its legal services (ET [51.5]). The short and long term planning of the requirement for professional staff was facilitated by solicitors having, among other things, an expectation of when vacancies within the partnership would arise (ET [53.4]). The lack of a power to expel partners for under performance was capable of contributing to the creation of a congenial and supportive culture among the partners (ET [54.8]. The tribunal were not persuaded that the firm actually had the second, fifth and sixth of the claimed aims: enabling all partners who stayed the course to become senior partner (ET [52.4]); encouraging partners to make financial provision for their retirement (ET [55.5]); or protecting the partnership model (ET [56.3]). The ET also accepted that compulsory retirement was an appropriate means of achieving the firms legitimate aims of staff retention, workforce planning and allowing an older and less capable partner to leave without the need to justify his departure and damage his dignity. The first two could not be achieved in any other way and introducing performance management would be difficult, uncertain and demeaning, so there was no non discriminatory alternative to the third. Having balanced the needs of the firm against the impact of the rule upon the partners, the ET concluded that it was a proportionate means of achieving a congenial and supportive culture and encouraging professional staff to remain with the firm (ET [67]). The discrimination claim therefore failed but the victimisation claim succeeded. The ET was not asked to consider whether any of those aims could be achieved by a different retirement age. The Employment Appeal Tribunal [2009] IRLR 267 appears to have accepted that the aims of staff retention and workforce planning could be met by any fixed retirement age. But there was no evidential basis for the assumption that performance would drop off at around the age of 65, and thus for choosing that age in order to avoid performance management and promote collegiality (EAT [77, 78]). As the EAT could not be sure what decision the Tribunal would have reached had it assessed the justification by reference only to the other two objectives, the case was remitted to the Tribunal to consider the question afresh (EAT [81]). Mr Seldon appealed to the Court of Appeal, where the principal issues were the same as those before this Court. The appeal was dismissed: [2010] EWCA Civ 899, [2011] ICR 60. The issues The issues before this Court, as agreed by the parties, are three: (1) whether any or all of the three aims of the retirement clause identified by the ET were capable of being legitimate aims for the purpose of justifying direct age discrimination; (2) whether the firm has not only to justify the retirement clause generally but also their application of it in the individual case; and (3) whether the ET was right to conclude that relying on the clause in this case was a proportionate means of achieving any or all of the identified aims. Both Mr Seldon and Age UK invite the Court to consider these issues having it firmly in mind that the purpose of all anti discrimination legislation is to address the mismatch between reality and past assumptions or stereotypes. In the context of age discrimination these assumptions have usually concerned age as a proxy for continuing competence or capability or financial security or intentions about work. These assumptions no longer hold good (if they ever did) in times of increasing longevity, where there are benefits both to individuals and to the wider society if people continue to work for as long as they can. Put simply, the younger generations need the older ones to continue to be self supporting for as long as possible. So we should put such stereotypical assumptions out of our minds. The legislation Article 1 of the Directive proclaims that its purpose is to: lay down a general framework for combating discrimination on the grounds of religion or belief, disability, age or sexual orientation as regards employment and occupation, with a view to putting into effect in the Member States the principle of equal treatment. Article 2 defines the concept of discrimination thus: 1. For the purposes of this Directive, the 'principle of equal treatment' shall mean that there shall be no direct or indirect discrimination whatsoever on any of the grounds referred to in article 1. 2. For the purposes of paragraph 1: (a) direct discrimination shall be taken to occur where one person is treated less favourably than another is, has been or would be treated in a comparable situation, on any of the grounds referred to in article 1; (b) indirect discrimination shall be taken to occur where an apparently neutral provision, criterion or practice would put persons having . a particular age . at a particular disadvantage compared with other persons unless: (i) that provision, criterion or practice is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary, . Thus it can be seen that the possibility of justification is built into the very concept of indirect discrimination in a way which is familiar from the prohibition of discrimination on other grounds. The possibility of justification of direct discrimination is not built into the concept itself, but has to be found elsewhere. Article 2(5) provides the familiar general exception that: This Directive shall be without prejudice to measures laid down by national law which, in a democratic society, are necessary for public security, for the maintenance of public order and the prevention of criminal offences, for the protection of health and for the protection of the rights and freedoms of others. Article 4(1) makes the familiar general exception for genuine occupational requirements: . Member States may provide that a difference of treatment which is based on a characteristic related to any of the grounds referred to in article 1 shall not constitute discrimination where, by reason of the nature of the particular occupational activities concerned or of the context in which they are carried out, such a characteristic constitutes a genuine and determining occupational requirement, provided that the objective is legitimate and the requirement is proportionate. Both of these exceptions feature in some of the case law of the European Court of Justice but they have not featured in this case. We are concerned with article 6, which makes special provision for the justification of differences of treatment on grounds of age. Only article 6(1) is relevant to this case: 1. Notwithstanding article 2(2), Member States may provide that differences of treatment on grounds of age shall not constitute discrimination, if, within the context of national law, they are objectively and reasonably justified by a legitimate aim, including legitimate employment policy, labour market and vocational training objectives, and if the means of achieving that aim are appropriate and necessary. Such differences of treatment may include, among others: (a) the setting of special conditions on access to employment and vocational training, employment and occupation, including dismissal and remuneration conditions, for young people, older workers and persons with caring responsibilities in order to promote their vocational integration or ensure their protection; (b) the fixing of minimum conditions of age, professional experience or seniority in service for access to employment or to certain advantages linked to employment; (c) the fixing of a maximum age for recruitment which is based on the training requirements of the post in question or the need for a reasonable period of employment before retirement. Article 6 contemplates provision being made by the Member States, within the context of national law, but article 18 contemplates that alternatively they may entrust the social partners, at their joint request, with the implementation of this Directive as regards provisions concerning collective agreements. This has no direct relevance in the United Kingdom where collective agreements are not legally enforceable, but it serves to explain why all the cases before the European Court of Justice have concerned the provisions either of national law or of collective agreements. The United Kingdom has implemented the Directive through the 2006 Age Regulations. Principally relevant is regulation 3, which defines age discrimination: (1) For the purposes of these Regulations, a person (A) discriminates against another person (B) if (a) on grounds of B's age, A treats B less favourably than he treats or would treat other persons, or (b) A applies to B a provision, criterion or practice which he applies or would apply equally to persons not of the same age group as B, but (i) which puts or would put persons of the same age group as B at a particular disadvantage when compared with other persons, and (ii) which puts B at that disadvantage, and A cannot show the treatment or, as the case may be, provision, criterion or practice to be a proportionate means of achieving a legitimate aim. (2) A comparison of Bs case with that of another person under paragraph (1) must be such that the relevant circumstances in the one case are the same, or not materially different, in the other. (3) In this regulation (a) age group means a group of persons defined by reference to age, whether by reference to a particular age or a range of ages; and . Also relevant is regulation 17, which makes unlawful certain acts of discrimination by partnerships: (1) It is unlawful for a firm, in relation to a position as partner in the firm, to discriminate against a person . (d) in a case where the person already holds that position (i) in the way they afford him access to any benefits or by refusing to afford, or deliberately not affording, him access to them; or (ii) by expelling him from that position, or subjecting him to any other detriment." It is not in dispute that enforcing a retirement age would be unlawful within regulation 17 if it amounts to unjustified discrimination within regulation 3. Although it did not apply to partners, it is also relevant to note that at the material time, regulation 30 provided for a designated retirement age for employees: (1) This regulation applies in relation to an employee within the meaning of section 230(1) of the [Employment Rights Act 1996], a person in Crown employment, a relevant member of the House of Commons staff, and a relevant member of the House of Lords staff. (2) Nothing in Part 2 or 3 shall render unlawful the dismissal of a person to whom this regulation applies at or over the age of 65 where the reason for the dismissal is retirement. Regulation 30 did not preclude an employer from having an earlier retirement age, but it would have to be justified under regulation 3. Nor did it require an employer to retire an employee at that age. It simply meant that an employer could do so without having to justify it under regulation 3. By regulation 47 and Schedule 6 to the Regulations, an employer who intended to retire an employee on a particular date had to give the employee between six and 12 months notice of that intention; the employee had a statutory right to request not to retire on that date and to continue working either indefinitely or for a stated period; the employer had then to take the request seriously, meet with the employee to discuss it, and give the employee a right of appeal if it was turned down. The Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 (SI 2011/1069) phase out the designated retirement age in regulation 30, so that (at the latest from October 2012) there is no longer any self justifying retirement age for employees. Employees will therefore be in the same position as partners, to whom regulation 30 has never applied. The principles governing the approach to the justification of compulsory retirement ages are therefore relevant to a much larger section of the working population than they were when these proceedings were begun. This particular retirement has of course to be considered as at the date when it took place, on 31 December 2006. Legitimate aims The principal case advanced on behalf of Mr Seldon is that regulation 3 is inconsistent with the Directive, for two inter linked reasons. The first is that it combines the justification of direct and indirect discrimination in a single familiar phrase: and A cannot show the treatment or, as the case may be, the provision, criterion or practice to be a proportionate means of achieving a legitimate aim. The Directive, on the other hand, draws a careful distinction. Article 2 prohibits all direct discrimination and all indirect discrimination where the provision etc cannot be justified. Article 6 contains a special rule for age discrimination, which although literally applying to both direct and indirect discrimination, is most likely to apply to direct discrimination. Regulation 3 has impermissibly elided the two types of justification. The second reason is that article 6 contemplates that the justifications for direct age discrimination should be the broad social and economic policy objectives of the state (or, elsewhere in Europe, the social partners) and not the individual business needs of particular employers or partnerships. This point was most clearly articulated in reply. The problem is that the social policy aims may conflict: there is the need to get young people into the workforce and there is the need to enable older people to continue working for as long as they are able and wish to do so. Only the state (or the social partners) can make the choice between these conflicting aims and that is clearly what is contemplated by article 6. The respondent firm points out that regulation 3 was held by Blake J to be a proper implementation of the Directive in R (Age UK) v Secretary of State for Business, Innovation and Skills (Equality and Human Rights Commission and another intervening) [2009] EWHC 2336 (Admin), [2010] ICR 260 (Age UK) after a reference to the Luxembourg Court. And the jurisprudence has made plain that aims analogous to those found in fact to be the aims of the firm are capable of being legitimate aims in this context. The Secretary of State accepts that only certain kinds of aim are capable of justifying direct age discrimination and that the apparently broad terms of regulation 3 must be read down accordingly. The distinction drawn in the evolving case law of the European Court of Justice/Court of Justice of the European Union (Luxembourg) is between aims relating to employment policy, the labour market or vocational training, which are legitimate, and purely individual reasons particular to the employers situation, such as cost reduction or improving competitiveness, which in general are not. It is necessary, therefore, to turn to the developing Luxembourg jurisprudence, coupled with its application to these Regulations in the Age UK case. It is helpful to do so chronologically. The jurisprudence Age Concern England (which later became Age UK) brought its challenge to the Regulations in July 2006, just after they had been made. Their principal target was the designated retirement age in regulation 30, but they also attacked regulation 3 on the ground that it was necessary for the state to spell out the circumstances in which age discrimination might be justified. At that stage it was not clear whether the Directive covered retirement ages at all. Recital 14 states that the Directive shall be without prejudice to national provisions laying down retirement ages. In July 2007, therefore, the administrative court referred five questions to Luxembourg, the first three of which concerned whether the Directive did cover retirement ages, the fourth asked whether article 6 required the state to specify the kinds of differences in treatment on grounds of age which might be justified, and the last asked whether there was any significant difference between the test in article 2(2) and the test in article 6(1). In October 2007, the Grand Chamber in Luxembourg gave judgment in Flix Palacios de la Villa v Cortefiel Servicios SA, Case C 411/05, [2009] ICR 1111. Spain had legislated for compulsory retirement when it wanted to encourage recruitment; then abolished it when economic circumstances improved and it wanted to encourage people to stay in work; and then reintroduced it by allowing collective agreements to prescribe retirement ages, provided that the worker had qualified for a retirement pension. The Court held that, despite recital 14, requiring retirement at a particular age is direct age discrimination within the meaning of article 2(1) and 2(2)(a) and has therefore to be justified. But this did not preclude national legislation allowing for this, even if the social policy aims were not spelled out in the legislation, as long as it could be decided from the context and other sources what those aims were. The encouragement of recruitment was a legitimate aim. The means employed had still to be both appropriate and necessary, although member states (and where appropriate social partners) enjoyed a broad discretion in the choice both of the aims and of the means to pursue them. The measure in question did not unduly prejudice the legitimate claims of the workers because it was based, not only on a specific age, but also on having qualified for a pension. Not surprisingly, therefore, when the Third Chamber (with Judge Lindh as juge rapporteur) came to decide the Age Concern reference, in R (Age Concern England) v Secretary of State for Business, Enterprise and Regulatory Reform, Case C 388/07 [2009] ICR 1080 (Age Concern), it held that member states were not required to draw up a list of differences in treatment which might be justified by a legitimate aim [43]. Lack of precision as to the aims which might be considered legitimate did not automatically preclude justification, although it was necessary to be able to identify the aim in order to review whether it was legitimate and the means of achieving it were appropriate and necessary [44, 45]. However, at [46], much relied upon on behalf of Mr Seldon: It is apparent from article 6(1) of Directive 2000/78 that the aims which may be considered legitimate within the meaning of that provision are social policy objectives, such as those related to employment policy, the labour market or vocational training. By their public interest nature, those legitimate aims are distinguishable from purely individual reasons particular to the employers situation, such as cost reduction or improving competitiveness, although it cannot be ruled out that a national rule may recognise, in the pursuit of those legitimate aims, a certain degree of flexibility for employers. As to the fifth question, as the dispute was about the retirement age provisions, it was not necessary to interpret article 2(2)(b) which was concerned with indirect discrimination [63, 64]. But the Court did observe that the scope of article 2(2)(b) and article 6(1) is not identical [58]. In another passage at [65], also much relied upon on behalf of Mr Seldon, it pointed out that: . it is important to note that [article 6(1)] is addressed to the member states and imposes on them, notwithstanding their broad discretion in matters of social policy, the burden of establishing to a high standard of proof the legitimacy of the aim pursued. Before Age UK came back before the administrative court, the Third Chamber (again with Judge Lindh as juge rapporteur) decided the case of David Htter v Technische Universitt Graz, Case C 88/08 [2009] All ER (EC) 1129. The law governing public service stipulated that service before the age of 18 was not to be taken into account in determining the pay grade. This discriminated against those who had undertaken apprenticeships in the public sector compared with those who had stayed in general education. The aims of not discouraging people to stay in secondary education, of not making apprenticeship costly for the public sector, and of promoting the integration of young apprentices into the labour market (see [16]) were social policy aims of the kind which could be justification under article 6(1) [43]. But those aims were contradictory [46] and the law was not appropriate to achieve them [50]. This case therefore illustrates that it is not enough for the aims of a measure to be legitimate: the measure must still be carefully scrutinised to ensure that it is both appropriate to meeting those aims and a proportionate means of doing so. The Grand Chamber (again with Judge Lindh as juge rapporteur) decided three cases in January 2010, after Advocate General Bot had given his opinions in July and September 2009. Petersen v Berufungsausschuss fr Zahnrzte fr den Bezirk Westfalen Lippe, Case C 341/08, [2010] 2 CMLR 830 concerned a law which prohibited practice as a panel dentist after reaching the age of 68. Both protecting the health of patients and controlling public health expenditure were legitimate objectives under the exception in article 2(5) for measures necessary . for the protection of health. Prohibiting practice as a panel dentist but not private practice over the age of 68 was inconsistent with the former aim but not inconsistent with the latter [63, 64]. The other possible aim, of sharing out employment opportunities between the generations, could be regarded as an employment policy measure under article 6(1) [68]. It might be necessary to impose such an age limit where there were too many panel dentists or a latent risk of such [73, 77]. Having given that guidance, the court repeated that it was for the national court to identify the aim which was actually being pursued by the measure [78]. Wolf v Stadt Frankfurt am Main, Case C 229/08 [2010] 2 CMLR 849 concerned a regulation of the Land Hessen setting an age limit of 30 for recruitment as a firefighter. Although the referring court had asked about justification under article 6(1), the Luxembourg court considered that it could be justified under article 4(1), because the physical capabilities required for the job were related to age. Kckdeveci v Swedex GmbH & Co KG, Case C 555/07, [2011] 2 CMLR 703 was about a law which calculated the length of notice to which employees were entitled by reference to their length of service but disregarding any period of service below the age of 25. The aim of facilitating the recruitment of young people, who could react more easily to the loss of their jobs, by increasing the flexibility of personnel management did belong to employment and labour market policy within the meaning of article 6(1) [35, 36]; but the law was not appropriate to that aim because it applied to all employees who joined before 25 irrespective of their age at dismissal [40]. Nor was it appropriate to the aim of strengthening the protection of workers according to their length of service [41]. It is worth noting that Advocate General Bot had found it difficult to accept that the flexibility granted to employers could be an aim in itself, because the Court in Age Concern had made it clear that legitimate objectives are of a public interest nature [AG44 49]. The Court did not expressly endorse this, but the aim it was considering was more than mere flexibility it was flexibility designed to encourage the recruitment of young people. When Blake J came to decide Age UK in September 2009, he had the decisions in Palacios de la Villa, Age Concern, and Htter, coupled with the Advocate Generals opinion in Kckdeveci, to guide him in deciding whether regulations 3 and 30 were compatible with the Directive. Clearly, a regulation in such general terms as regulation 3 was not precluded, provided that it could be justified. He concluded that the Governments aim in promoting the regulations was to preserve the confidence and integrity of the labour market and that this was a legitimate aim for the purpose of article 6(1). In the context of regulation 3 he pointed out that the private employer is not allowed the wider margin of discretion in the application of the regulation that the state is [92] and that there was a clear distinction between the government as a public body being concerned about the social cost to competitiveness of UK employment in the early phase of implementing the new principles and policies of the Directive, and individual business saying it is cheaper to discriminate than to address the issues that the Directive requires to be addressed [93]. In the context of regulation 30, he concluded that while a designated retirement age could be justified, it was harder to justify adopting the age of 65. Had this been done for the first time in 2009 or there was no indication of an early review, he would have concluded that it was not proportionate [128]. As things were in 2006, however, it was not beyond the competence of government [129]. But he correctly predicted that the age would not survive the review [130]. As we have seen, of course, the whole concept of a designated retirement age has not survived. In October 2010 the Grand Chamber (again with Judge Lindh as juge rapporteur) decided two more age discrimination cases. Rosenbladt v Oellerking GmbH, Case C 45/09, [2011] CMLR 1011, is much relied upon by the respondent firm and the Secretary of State. The dispute was about a clause in the collective agreement for employees in the commercial cleaning sector (RTV) which provided for automatic termination when an employee became entitled to a retirement pension and at the latest at the end of the month when she reached 65. Para 10.5 of the General Law on Equal Treatment (AGG) listed agreements providing for automatic termination on reaching the age when an employee might claim an old age pension among the examples of differences in treatment which might be justified if necessary and appropriate for a legitimate aim. The Court held that the aims of sharing employment between the generations, making it easier for younger workers to find work, particularly in a time of chronic unemployment, while protecting the rights of older workers whose pensions serve as replacement income, and not requiring employers to dismiss them on grounds of incapacity, which may be humiliating [43] were in principle capable of objectively and reasonably justifying a difference in treatment on grounds of age [45]. Authorising clauses like this could not generally be regarded as prejudicing the legitimate interests of the workers concerned [47]. It is based not only on age but also on entitlement to a replacement income [48]. Also, unlike dismissal or resignation, it has its basis in an agreement. That allows not only employees and employers, by means of individual agreements, but also the social partners, by means of collective agreements and therefore with considerable flexibility to opt for application of that mechanism so that due account may be taken not only of the overall situation in the labour market concerned, but also of the specific features of the jobs in question (Palacios de la Villa, [74]). [49] So article 6(1) did not preclude a measure such as paragraph 10.5 of the national law; but the collective agreement implementing it must itself pursue a legitimate aim in an appropriate and necessary manner [53]. The clause offered stability of employment and the promise of foreseeable retirement while offering employers a certain flexibility in the management of their staff, thus reflecting a balance between diverging but legitimate interests, against a complex background of employment relationships closely linked to political choices in the area of retirement and employment [68]. So it was not unreasonable for social partners to regard the clause as appropriate [69]. But was it necessary, given the significant financial hardship caused to workers in the commercial cleaning sector, where poorly paid part time employment is typical [71]? Were there less onerous measures? People who had reached retirement age could continue to work, and must not be discriminated against on grounds of age in finding work [74], so they were not forced to withdraw from the labour market [75]. So the measure was not precluded. There is no suggestion that its actual application to Frau Rosenbladt, who needed to carry on working because her pension was so small, had also to be justified. In contrast, in Ingenirforeningen i Danmark v Region Syddanmark, Case C 499/08 [2011] 1 CMLR 1140, the Grand Chamber (again with Judge Lindh as juge rapporteur) held that a Danish law on severance allowances, which did not apply to people dismissed when they had qualified for a retirement pension, was not justified. The general (and legitimate) aim of the severance allowances was to facilitate the move to new employment of people who might find it difficult to find new employment because of the length of time they had been with their old employer. Excluding people who had qualified for a pension and who actually intended to retire was not inappropriate [34, 35]. But it was not necessary to exclude those who wished to waive their pension claims in order to try to continue working [4447]. In Georgiev v Technicheski Universitet Sofia, Filial Plovdiv, Joined Cases C 250/09 & C 268/09 [2011] 2 CMLR 179, the Second Chamber (again with Judge Lindh as juge rapporteur) held that article 6(1) did not preclude national legislation under which university professors are compulsorily retired when they reach 68 and may only work beyond 65 on one year fixed term contracts renewable at most twice, provided that it pursued a legitimate aim linked to employment and labour market policy, such as the delivery of quality teaching and the best possible allocation of posts for professors between the generations and that it makes it possible to achieve that aim by appropriate and necessary means [68]. Given that the average age of Bulgarian professors was 58 and younger people were not interested in entering the career, it was for the national court to decide whether these actually were the aims of the Bulgarian legislature. The second chamber (again with Judge Lindh as juge rapporteur) had to consider a very similar law of the Land Hessen, providing for the compulsory retirement of civil servants, including state prosecutors, in Fuchs and another v Land Hessen, Joined Cases C 159/10 and C 160/10, [2011] 3 CMLR 1299. The claimed aims were to achieve a balance between the generations, plus the efficient planning of the departure and recruitment of staff, encouraging the recruitment or promotion of young people, and avoiding disputes about older employees ability to perform their duties [47]; and also to promote interchange between the experience of older colleagues and the recently acquired knowledge of younger ones [48]. All of these could constitute legitimate aims [49], [50]. The court repeated the general propositions about the nature of legitimate aims in Age Concern [46] at [52]. But it went on to issue some words of warning. Member states may not frustrate the prohibition of discrimination on grounds of age, read in the light of the fundamental right to engage in work [62]. Particular attention must be paid to the participation of older workers in the labour force and thus in economic, cultural and social life. Keeping older workers in the labour force promotes diversity, and contributes to realising their potential and to their quality of life [63]. This interest must be taken into account in respecting the other, potentially divergent, interests [64]. Therefore, in defining their social policy on the basis of political, economic, social, demographic and/or budgetary considerations, the national authorities concerned may be led to choose to prolong peoples working life or, conversely, to provide for early retirement (see Palacios de la Villa, [68] and [69]). The Court has held that it is for those authorities to find the right balance between the different interests involved, while ensuring that they did not go beyond what is appropriate and necessary to achieve the legitimate aim pursued (Palacios de la Villa [69], [71] Rosenbladt [44]). [65] Budgetary considerations might underpin the chosen social policy, but they could not in themselves constitute a legitimate aim within article 6(1) [74]. This measure might be appropriate to the aim of facilitating access to employment by younger people, in a profession where the number of posts is limited (citing Petersen and Georgiev) [58, 59, 60]. Nor did it go beyond what was necessary to achieve its aims, given that the prosecutors could retire at 65 on generous pensions, continue working until 68, and practise as lawyers if they left [68]. Hennigs v Eisenbahn Bundesamt; Land Berlin v Mai, Joined Cases C 297/10 and C 298/10, [2011] ECR, decided by the Second Chamber (again with Judge Lindh as juge rapporteur) in September 2011, is another example of a finding that determining pay grades by reference to age at first appointment could not be justified. Rewarding experience was a legitimate aim (see Htter), but while length of service was appropriate to achieve that aim, age did not always correlate with experience [74, 75, 76]. Finally, in Prigge and others v Deutsche Lufthansa AG, Case C 447/09 [2011] IRLR 1052, the Grand Chamber (again with Judge Lindh as juge rapporteur) found that a collective agreement providing for the employment of Lufthansa pilots to terminate automatically at the age of 65 could not be justified. This was not an article 6(1) case, as the suggested aims had to do with the safety and security of air travel, which fell within article 2(5), or the physical capabilities required for flying a plane, which fell within article 4(1). But as neither international nor national legislation considered that an absolute ban at the age of 65 was necessary to achieve these aims, it could not be justified. What messages, then, can we take from the European case law? (1) All the references to the European Court discussed above have concerned national laws or provisions in collective agreements authorised by national laws. They have not concerned provisions in individual contracts of employment or partnership, as this case does. However, the Bartsch case, mentioned at [2] above, did concern the rules of a particular employers pension fund; and the Prigge case, [49] above, concerned a collective agreement governing the employees of a single employer, Deutsche Lufthansa. (2) If it is sought to justify direct age discrimination under article 6(1), the aims of the measure must be social policy objectives, such as those related to employment policy, the labour market or vocational training. These are of a public interest nature, which is distinguishable from purely individual reasons particular to the employers situation, such as cost reduction or improving competitiveness (Age Concern, Fuchs). (3) It would appear from that, as Advocate General Bot pointed out in Kckdeveci, that flexibility for employers is not in itself a legitimate aim; but a certain degree of flexibility may be permitted to employers in the pursuit of legitimate social policy objectives. (4) A number of legitimate aims, some of which overlap, have been recognised in the context of direct age discrimination claims: (i) promoting access to employment for younger people (Palacios de la Villa, Htter, Kckdeveci); (ii) the efficient planning of the departure and recruitment of staff (Fuchs); (iii) sharing out employment opportunities fairly between the generations (Petersen, Rosenbladt, Fuchs); (iv) ensuring a mix of generations of staff so as to promote the exchange of experience and new ideas (Georgiev, Fuchs); (v) rewarding experience (Htter, Hennigs); (vi) cushioning the blow for long serving employees who may find it hard to find new employment if dismissed (Ingenirforeningen i Danmark); (vii) facilitating the participation of older workers in the workforce (Fuchs, see also Mangold v Helm, Case C 144/04 [2006] 1 CMLR 1132); (viii) avoiding the need to dismiss employees on the ground that they are no longer capable of doing the job which may be humiliating for the employee concerned (Rosenbladt); or (ix) avoiding disputes about the employees fitness for work over a certain age (Fuchs). (5) However, the measure in question must be both appropriate to achieve its legitimate aim or aims and necessary in order to do so. Measures based on age may not be appropriate to the aims of rewarding experience or protecting long service (Htter, Kckdeveci, Ingenirforeningen i Danmark). (6) The gravity of the effect upon the employees discriminated against has to be weighed against the importance of the legitimate aims in assessing the necessity of the particular measure chosen (Fuchs). (7) The scope of the tests for justifying indirect discrimination under article 2(2)(b) and for justifying any age discrimination under article 6(1) is not identical. It is for the member states, rather than the individual employer, to establish the legitimacy of the aim pursued (Age Concern). Issues 1 and 3 Not surprisingly, in view of the way in which regulation 3 is constructed, the ET in this case approached the task of justifying direct age discrimination in the way that was familiar to them in the context of indirect discrimination on other grounds (as to which see Homer v Chief Constable of West Yorkshire Police [2012] UKSC 15). They did not, of course, have the benefit of any of the subsequent jurisprudence either in Luxembourg or the UK. It now seems clear that the approach to justifying direct age discrimination cannot be identical to the approach to justifying indirect discrimination and that regulation 3 (and its equivalent in section 13(2) of the Equality Act 2010) must be read accordingly. In Age Concern, the Court recorded the submission of the EU Commission that in article 6, the focus is on the legitimate aim pursued by the member state, whereas in article 2(2)(b) the focus is on whether the employer can justify his employment practices [57]. The Court did not expressly approve that, but it did say that the scope of the two is not identical [58] and that article 6 is addressed to member states [67]. (It is also worth noting that in Ingenirforeningen i Danmark, Advocate General Kokott pointed out that the objectives which might be relied upon to justify direct discrimination, whether under article 6(1), 4(1) or 2(5), were fewer than those capable of justifying an indirect difference in treatment, even though the proportionality test requirements are essentially the same [AG31].) But what exactly does this mean in practical terms? On the one hand, Luxembourg tells us that the choice of social policy aims is for the member states to make. It is easy to see why this should be so, given that the possible aims may be contradictory, in particular between promoting youth employment and prolonging the working life of older people. On the other hand, however, Luxembourg has sanctioned a generally worded provision such as regulation 3, which spells out neither the aims nor the means which may be justified. It is also easy to see why this should be so, given that the priority which might be attached to particular aims is likely to change with the economic, social and demographic conditions in the country concerned. In Age UK, Blake J identified the states aim, in relation both to regulation 3 and to the designated retirement age in regulation 30, as being to preserve the confidence and integrity of the labour market. This is not an easy concept to understand, and there is a risk that it might be taken as allowing employers to continue to do whatever suits them best. But it is, as Advocate General Bot observed in Kckdeveci, difficult to see how granting flexibility to employers can be a legitimate aim in itself, as opposed to a means of achieving other legitimate aims. Furthermore, the Secretary of State accepts that there is a distinction between aims such as cost reduction and improving competitiveness, which would not be legitimate, and aims relating to employment policy, the labour market and vocational training, which would. It seems, therefore, that the United Kingdom has chosen to give employers and partnerships the flexibility to choose which objectives to pursue, provided always that (i) these objectives can count as legitimate objectives of a public interest nature within the meaning of the Directive and (ii) are consistent with the social policy aims of the state and (iii) the means used are proportionate, that is both appropriate to the aim and (reasonably) necessary to achieve it. Two different kinds of legitimate objective have been identified by the Luxembourg court. The first kind may be summed up as inter generational fairness. This is comparatively uncontroversial. It can mean a variety of things, depending upon the particular circumstances of the employment concerned: for example, it can mean facilitating access to employment by young people; it can mean enabling older people to remain in the workforce; it can mean sharing limited opportunities to work in a particular profession fairly between the generations; it can mean promoting diversity and the interchange of ideas between younger and older workers. The second kind may be summed up as dignity. This has been variously put as avoiding the need to dismiss older workers on the grounds of incapacity or underperformance, thus preserving their dignity and avoiding humiliation, and as avoiding the need for costly and divisive disputes about capacity or underperformance. Either way, it is much more controversial. As Age UK argue, the philosophy underlying all the anti discrimination laws is the dignity of each individual, the right to be treated equally irrespective of either irrational prejudice or stereotypical assumptions which may be true of some but not of others. The assumptions underlying these objectives look suspiciously like stereotyping. Concerns about capacity, it is argued, are better dealt with, as they were in Wolf and Prigge under article 4(1), which enables them to be related to the particular requirements of the job in question. I confess to some sympathy with the position taken by Age UK. The fact that most women are less physically strong than most men does not justify refusing a job requiring strength to a woman candidate just because she is a woman. The fact that this particular woman is not strong enough for the job would justify refusing it to her. It would be consistent with this principle to hold that the fact that most people over a certain age have slower reactions than most people under that age does not justify sacking everyone who reaches that age irrespective of whether or not they still do have the necessary speed of reaction. But we know that the Luxembourg court has held that the avoidance of unseemly debates about capacity is capable of being a legitimate aim. The focus must therefore turn to whether this is a legitimate aim in the particular circumstances of the case. The fact that a particular aim is capable of being a legitimate aim under the Directive (and therefore the domestic legislation) is only the beginning of the story. It is still necessary to inquire whether it is in fact the aim being pursued. The ET, EAT and Court of Appeal considered, on the basis of the case law concerning indirect discrimination (Schnheit v Stadt Frankfurt am Main, Joined Cases C 4/02 and C 5/02, [2004] IRLR 983; see also R (Elias) v Secretary of State for Defence [2006] 1 WLR 3213), that the aim need not have been articulated or even realised at the time when the measure was first adopted. It can be an ex post facto rationalisation. The EAT also said this [50]: A tribunal is entitled to look with particular care at alleged aims which in fact were not, or may not have been, in the rule makers mind at all. But to treat as discriminatory, what might be a clearly justified rule on this basis would be unjust, would be perceived to be unjust, and would bring discrimination law into disrepute. There is in fact no hint in the Luxembourg cases that the objective pursued has to be that which was in the minds of those who adopted the measure in the first place. Indeed, the national court asked that very question in Petersen. The answer given was that it was for the national court to seek out the reason for maintaining the measure in question and thus to identify the objective which it pursues [42] (emphasis supplied). So it would seem that, while it has to be the actual objective, this may be an ex post facto rationalisation. Once an aim has been identified, it has still to be asked whether it is legitimate in the particular circumstances of the employment concerned. For example, improving the recruitment of young people, in order to achieve a balanced and diverse workforce, is in principle a legitimate aim. But if there is in fact no problem in recruiting the young and the problem is in retaining the older and more experienced workers then it may not be a legitimate aim for the business concerned. Avoiding the need for performance management may be a legitimate aim, but if in fact the business already has sophisticated performance management measures in place, it may not be legitimate to avoid them for only one section of the workforce. Finally, of course, the means chosen have to be both appropriate and necessary. It is one thing to say that the aim is to achieve a balanced and diverse workforce. It is another thing to say that a mandatory retirement age of 65 is both appropriate and necessary to achieving this end. It is one thing to say that the aim is to avoid the need for performance management procedures. It is another to say that a mandatory retirement age of 65 is appropriate and necessary to achieving this end. The means have to be carefully scrutinised in the context of the particular business concerned in order to see whether they do meet the objective and there are not other, less discriminatory, measures which would do so. Issue 2 This leads to the final issue, which is whether the measure has to be justified, not only in general but also in its application to the particular individual. After all, the regulation applies to a particular act of direct discrimination, where on grounds of Bs age, A treats B less favourably than he treats or would treat other persons and A cannot show the treatment . to be a proportionate means of achieving a legitimate aim. The argument on behalf of Mr Seldon, therefore, is that the partnership, A, had to show that its particular less favourable treatment of him, B, was justified. This could be another distinction between direct and indirect discrimination, because for indirect discrimination the regulation only requires A to show that the provision, criterion or practice is a proportionate means of achieving a legitimate aim. Hence, it is argued, the partnership should have to show, not only that the mandatory retirement rule was a proportionate means of achieving a legitimate aim, but also that applying it to Mr Seldon could be justified at the time. The answer given in the EAT, at [58], with which the Court of Appeal agreed, at [36], was that: Typically, legitimate aims can only be achieved by the application of general rules or policies. The adoption of a general rule, as opposed to a series of responses to particular individual circumstances, is itself an important element in the justification. It is what gives predictability and consistency, itself an important virtue. Thus the EAT would not rule out the possibility that there may be cases where the particular application of the rule has to be justified, but they suspected that these would be extremely rare. I would accept that where it is justified to have a general rule, then the existence of that rule will usually justify the treatment which results from it. In the particular context of inter generational fairness, it must be relevant that at an earlier stage in his life, a partner or employee may well have benefited from a rule which obliged his seniors to retire at a particular age. Nor can it be entirely irrelevant that the rule in question was re negotiated comparatively recently between the partners. It is true that they did not then appreciate that the forthcoming Age Regulations would apply to them. But it is some indication that at the time they thought that it was fair to have such a rule. Luxembourg has drawn a distinction between laws and regulations which are unilaterally imposed and collective agreements which are the product of bargaining between the social partners on a presumably more equal basis (Rosenbladt, Hennigs). There is therefore a distinction between justifying the application of the rule to a particular individual, which in many cases would negate the purpose of having a rule, and justifying the rule in the particular circumstances of the business. All businesses will now have to give careful consideration to what, if any, mandatory retirement rules can be justified. Application to this case In common with both the EAT and the Court of Appeal, I would pay tribute to the careful judgment of the ET. Their conclusions are particularly impressive given that they were deciding the case in November 2007, before any of the European jurisprudence discussed earlier had emerged. They did approach the justification of direct discrimination in the same way as they would have approached the justification of indirect discrimination, whereas we now know that there is a difference between the two. However, they identified three aims for the compulsory retirement age, which the Court of Appeal summed up as dead mens shoes and collegiality. Mr Seldon, with the support of Age UK, has argued that these were individual aims of the business rather than the sort of social policy aims contemplated by the Directive. I do not think that that is fair. The first two identified aims were staff retention and workforce planning, both of which are directly related to the legitimate social policy aim of sharing out professional employment opportunities fairly between the generations (and were recognised as legitimate in Fuchs). The third was limiting the need to expel partners by way of performance management, which is directly related to the dignity aims accepted in Rosenbladt and Fuchs. It is also clear that the aims can be related to the particular circumstances of the type of business concerned (such as university teaching, as in Georgiev). I would therefore accept that the identified aims were legitimate. As to whether the means chosen were proportionate, in the article 6(1) sense of being both appropriate and (reasonably) necessary to achieving those aims, the case is already to go back to the ET on the basis that it had not been shown that the choice of 65 was an appropriate means of achieving the third aim. The question, therefore, was whether the ET would have regarded the first two aims as sufficient by themselves. In answering that question, I would not rule out their considering whether the choice of a mandatory age of 65 was a proportionate means of achieving the first two aims. There is a difference between justifying a retirement age and justifying this retirement age. Taken to extremes, their first two aims might be thought to justify almost any retirement age. The ET did not unpick the question of the age chosen and discuss it in relation to each of the objectives. It would be unduly constraining to deny them the opportunity of doing so now. I would emphasise, however, that they are considering the circumstances as they were in 2006, when there was a designated retirement age of 65 for employees, and not as they are now. Subject to that observation, I would dismiss this appeal. LORD HOPE I am in full agreement with Lady Hales comprehensive judgment. For the reasons she gives, I too would dismiss this appeal. I wish to add only a few words of my own. Article 6(1) of Council Directive 2000/78/EC declares that Member States may provide that differences of treatment on grounds of age shall not constitute discrimination if, within the context of national law, they are objectively and reasonably justified by a legitimate aim including legitimate employment policy, labour market and vocational training objectives, and if the means of achieving that aim are appropriate and necessary. The provision in national law which defines age discrimination is regulation 3 of the Employment Equality (Age) Regulations 2006. This case seemed at one stage to be being argued on the basis that it concerns the application to Mr Seldon of a measure of the kind referred to in regulation 3(1)(b), under which a person (A) discriminates against another person (B) if A applies to B a provision, criterion or practice which he applies or would apply equally to persons not of the same age group as B, but (i) which puts or would put persons of the same age group as B at a particular disadvantage when compared with other persons, and (ii) which puts B at that disadvantage, and A cannot show the treatment or, as the case may be, provision, criterion or practice to be a proportionate means of achieving a legitimate aim. But I think that it is truly a case of direct discrimination of the kind referred to in regulation 3(1)(a). The proportionality test quoted above also applies to it, although the layout of the regulation in the statutory instrument might be taken as suggesting otherwise. Regulation 3(1)(a) provides that a person discriminates against another person for the purposes of the Regulations if, on grounds of Bs age, A treats B less favourably than he treats or would treat other persons. Regulation 3 was held by the ECJ in R (Age Concern England) v Secretary of State for Business, Enterprise and Regulatory Reform, Case C 388/07 [2009] ICR 1080 to be a proper implementation of the Directive, and the general words which appear at the end of the passage which I have quoted survived scrutiny by Blake J in R (Age UK) v Secretary of State for Business, Innovation and Skills (Equality and Human Rights Commission and another intervening) [2010] ICR 260: see paras 84 90. They must however be read together with article 6 of the Directive which indicates that aims of a certain character only can be regarded as legitimate in this context. The characteristic which distinguishes aims which are legitimate from those which are not is indicated by the words including legitimate employment policy, labour market and vocational training objectives. As Lady Hale has demonstrated, the evolving case law of the ECJ and the CJEU has shown that a distinction must be drawn between legitimate employment policy, labour market and vocational training objectives and purely individual reasons which are particular to the situation of the employer. There is a public interest in facilitating and promoting employment for young people, planning the recruitment and departure of staff and the sharing out of opportunities for advancement in a balanced manner according to age. These social policy objectives have private aspects to them, as they will tend to work to the employers advantage. But the point is that there is a public interest in the achievement of these aims too. They are likely to be intimately connected with what employers do to advance the interests of their own businesses, because that it how the real world operates. It is the fact that their aims can be seen to reflect the balance between the differing but legitimate interests of the various interest groups within society that makes them legitimate. It was submitted that the aims which were identified by the firm to justify the compulsory retirement age in this case were not social policy aims at all, when viewed objectively. Mr Allen QC for Mr Seldon said that the state had no interest in whether it was run in this way. It would make it all too easy for a prejudiced employer to avoid being held to be in breach of the regulation if it could rely on aims such as those that had been identified in this case. Like Lady Hale, I would reject these arguments. It is true that the aims which the Employment Tribunal accepted as legitimate the retention of associates, facilitating the planning of the partnership and workforce and limiting the need to expel partners by way of performance management were directed to what could be regarded as being in the firms best interests. That in itself is not surprising, because firms such as Clarkson Wright and Jakes are in business and must organise their affairs accordingly. They are exposed to all the forces of competition in their chosen market. They are not a social service. This affects the way they choose to manage the partnership and other aspects of their workforce, just as much as it affects the way in which their business as a whole is conducted. But this does not mean that their aims cannot be seen, when viewed objectively, as being directly related to what is regarded as a legitimate social policy. I agree that the Employment Tribunal reached a sound decision on this point and that the aims which it identified were of a kind that, in terms of article 6 of the Directive, were legitimate. The question then is whether, as Mr Allen contended, the partners of the firm had to show that they had the legitimate public interests in mind at the time when the partnership deed was entered into in 2005, or at least that these were their only or main aims or objectives. I would answer this question in the negative. What article 6 requires is that the measure must be objectively justified. Just as it will not be sufficient for the partners simply to assert that their aims were designed to promote the social policy aims that the article has identified, it does not matter if they said nothing about this at the time or if they did not apply their minds to the issue at all. As it happens, no minute was taken of the reasons why clause 22 was framed as it was. But I regard this fact as immaterial, as the matter was one for the Employment Tribunal and not for the partners themselves to determine. Furthermore, the time at which the justification for the treatment which is said to be discriminatory must be examined is when the difference of treatment is applied to the person who brings the complaint. The case must go back to the Employment Tribunal on the issue as to whether it was proportionate for clause 22 to provide for the mandatory retirement of the partners at the end of the calendar year when they reached the age of 65. I agree with Lady Hale that it would be right for account to be taken of the fact that at the time both when the clause was agreed to and when it was applied to Mr Seldon, regulation 30 which provided for a designated retirement age for employees, was still in force. This fact is not, of course, conclusive. But it is a factor that can properly be taken into account, as the question is whether the treatment which Mr Seldon received was discriminatory at the time when he was subjected to it. The fact that it was lawful for others to be subjected to a designated retirement age may help to show that what was agreed to in this case was, at the relevant time, an acceptable way of achieving the legitimate aim.
+Under the Equal Pay Act 1970, women (or men) whose work is of equal value to that of men (or women) in the same employment are entitled to the benefit of a deemed equality clause in their contracts of employment. This means that if any of their terms and conditions is less favourable than the equivalent term or condition of the men with whom they are compared, they are entitled to have the benefit of that more favourable term, as if it had been included in their original contract of employment. It is therefore necessary to identify the precise terms and conditions with which comparison is to be made. This entails finding an individual or group of the opposite sex who constitute a valid comparator. There are several elements in that task. One involves looking at the kind of work the men and the women do: is it like, or has it been rated as equivalent, or is it of equal value? Another involves looking to see whether there are material factors other than the difference in sex which explain the difference in treatment. But a threshold question is whether the men and women are in the same employment. The issue in this case is what that means. The answer would be easy if all it meant was that they were employed by the same employer, the person with whom they all have contracts of employment and who therefore has it within his power to correct the inequality. Unfortunately, it is not that simple. There are occasions when women may be able to compare themselves with men who are not employed by the same employer. However, in United Kingdom law, there are also occasions when women may not be able to compare themselves with men, even though they are employed by the same employer, because they are not employed at the same establishment. But if that provision erects a barrier to a claim which would otherwise be available under European Union law, it would be our duty to disapply it. Section 1(6) of the Equal Pay Act 1970 provides: . men shall be treated as in the same employment with a woman if they are men employed by her employer or any associated employer at the same establishment or at establishments in Great Britain which include that one and at which common terms and conditions of employment are observed either generally or for employees of the relevant classes. (emphasis supplied) The Equal Pay Act 1970 has now been repealed and replaced by provisions in the Equality Act 2010 which are intended to be of equivalent effect, but the 1970 Act continues to govern claims, such as those in the present case, which were brought before the 2010 Act came into force. The case law so far Section 1(6) falls into two separate propositions, one contained in the words before and the other contained in the words after or where it appears for the second time in the subsection. The first proposition is straightforward: if the woman and her comparator are employed by the same or an associated employer in the same establishment, then they are in the same employment and there is no need to consider the question of common terms of employment: see Lawson v Britfish Ltd [1987] ICR 726; North Cumbria Acute Hospitals NHS Trust v Potter [2009] IRLR 176. The difficulty comes with the second proposition, where they are employed at establishments in Great Britain which include that one and at which common terms and conditions of employment are observed either generally or for employees of the relevant classes. The interpretation of this proposition has come before the House of Lords on two previous occasions and we have not been invited to depart from the conclusions they reached. In Leverton v Clwyd County Council [1989] AC 709, the applicant was a nursery nurse who wished to compare herself with male clerical workers employed by the same local authority under terms and conditions derived from the same collective agreement, known as the Purple Book. None of the male workers worked at the same establishment as she did and their hours of work were longer and their holidays shorter than those of the applicant. The employment tribunal, the Employment Appeal Tribunal, and the Court of Appeal (by a majority) held that they were not in the same employment for the purpose of section 1(6). They took the view that the subsection called for a comparison between the terms and conditions of the applicant and of her comparators and that only if those were broadly similar to one another was the test satisfied. The House of Lords disagreed. Lord Bridge of Harwich gave the leading opinion, with which the other members of the appellate committee agreed. He thought that the language of the subsection was clear and unambiguous: The concept of common terms and conditions of employment observed generally at different establishments necessarily contemplates terms and conditions applicable to a wide range of employees whose individual terms will vary greatly inter se (p 745F). Terms and conditions governed by the same collective agreement seemed to him the paradigm, though not necessarily the only example, of common terms and conditions contemplated by the subsection. But if there was any ambiguity, he would reject a construction which required a broad similarity between the terms and conditions of the woman and of her claimed comparators. Such a construction: frustrates rather than serves the manifest purpose of the legislation. That purpose is to enable a woman to eliminate discriminatory differences between the terms of her contract and those of any male fellow employee doing like work, work rated as equivalent or work of equal value, whether he works in the same establishment as her or in another establishment where terms and conditions of employment common to both establishments are observed (pp 745H 746A). It could not have been the intention of Parliament to require a woman to prove an undefined substratum of similarity between her terms of employment and his as the basis of a claim to eliminate any discriminatory difference between them. In his view, the reason why Parliament had not simply required that the woman and her comparators be employed by the same employer but had also required that common terms and conditions of employment be observed between two different establishments was that a single employer might operate essentially different employment regimes at different establishments (p 746C). He gave the examples of one employer having establishments in London and in Newcastle, where the regimes were quite different, or of a company operating one factory taking over a company operating another factory, where there were quite different collective agreements resulting in quite different structures. Leverton was an easy case, because everyone was employed under the same Purple Book agreement. But once it is clear that Parliament cannot have been referring to common, or even broadly similar, terms and conditions between the woman and her comparators, it is equally clear that it cannot be a requirement that they are covered by the same collective agreement. In British Coal Corporation v Smith [1996] ICR 515, the applicants were canteen workers, canteen manageresses and cleaners, employed at 47 different British Coal Corporation establishments. Their named comparators were mainly surface mineworkers working at 14 different establishments, some of them the same as the places where the women worked and some of them not. Their terms and conditions were governed by a variety of agreements. It was not disputed that the women could take a comparator from their own colliery or other workplace. The question was whether they could take comparators from other collieries or workplaces. Lord Slynn of Hadley, with whose opinion all the other members of the appellate committee agreed, pointed out that it was obvious why a woman was not limited to comparing herself with men employed in the same workplace as she was: . otherwise an employer could so arrange things as to ensure that only women worked at a particular establishment or that no man who could reasonably be considered as a possible comparator should work there (p 525H). The inclusion in section 1(6) of the words which include that one (that is, the establishment at which the woman works) was at first sight puzzling, but read with the words and at which common terms . are observed which follow it simply meant that common terms must be observed, not only at the other place but also at the womans place of work if employees of the relevant class were employed there. It was agreed that the woman did not have to show that she shared common terms and conditions with her comparator, either in relation to those terms which were alleged to constitute the discrimination or in relation to the other terms. What had to be shown was that the different classes of employee shared common terms. It was agreed that the women did so. Hence: What therefore has to be shown is that the male comparators at other establishments and at her establishment share common terms and conditions. If there are no such men at the claimants place of work then it has to be shown that like terms and conditions would apply if men were employed there in the particular jobs concerned (p 526F). The Corporation claimed that this meant that the terms and conditions of the comparators had to be the same in substantially all respects. Lord Slynn rejected this and adopted a test of broad similarity: The purpose of requiring common terms and conditions was to avoid it being said simply a gardener does work of equal value to mine and my comparator at another establishment is a gardener. It was necessary for the applicant to go further and to show that gardeners at other establishments and at her establishment were or would be employed on broadly similar terms. It was necessary but it was also sufficient (p 527D). The principles to be derived from these two cases are therefore plain. First, the common terms and conditions referred to in section 1(6) are not those of, on the one hand, the women applicants and, on the other hand, their claimed comparators. They are, on the one hand, the terms and conditions under which the male comparators are employed at different establishments from the women and, on the other hand, the terms and conditions under which those male comparators are or would be employed if they were employed at the same establishment as the women. Second, by common terms and conditions the subsection is not looking for complete correspondence between what those terms are, or would be, in the womans place of work. It is enough that they are, or would be, broadly similar. It is also plain from the reasoning of both Lord Bridge in Leverton and Lord Slynn in British Coal Corporation that it is no answer to say that no such male comparators ever would be employed, on those or any other terms, at the same establishment as the women. Otherwise, it would be far too easy for an employer so to arrange things that only men worked in one place and only women in another. This point is of particular importance, now that women are entitled to claim equality with men who are doing completely different jobs, provided that the women are doing jobs of equal value. Those completely different jobs may well be done in completely different places from the jobs which the women are doing. However, it is fair to say that it is not clear from the facts as we have them that this was the actual situation in the British Coal Corporation case. Some of the male surface mine workers were working in the same colliery as some of the claimants. It could just be, as suggested by Mr Truscott QC on behalf of the employers in this case, that all the 47 places where the women worked were collieries at which it was possible that surface mineworkers might also work, even though those chosen do not in fact do so. The issue, therefore, is whether the women can compare themselves with men employed by the same employer in other places of work when in practice those men would never be employed to do their current jobs in the same place as the women. The facts These claims are brought by 251 classroom assistants, support for learning assistants and nursery nurses employed in a local authoritys schools. The classroom and support for learning assistants are employed in the local authoritys education service under the terms contained in a national collective agreement, the Administrative, Professional, Technical and Clerical agreement, known as the Blue Book. The nursery nurses are employed under a supplement to the Blue Book. They are based at a variety of schools in the local authoritys area. Their individual contracts specify the particular school at which they are based and also state that they may be required to work at other locations. They are employed during the school terms only and work less than 35 hours per week. The convenience of these hours for people with child care or other domestic responsibilities is no doubt one of the reasons why these posts are predominantly held by women. The claimants wish to compare themselves with a variety of manual workers employed by the same local authority, as groundsmen, refuse collectors, refuse drivers and a leisure attendant. They are employed in the authoritys combined services, under a different collective agreement, the Scottish Council for Local Authorities Services (Manual Workers) Scheme of Pay and Conditions of Service, known as the Green Book. The leisure attendant is based at a swimming pool, but the others are based at various depots in the local authoritys area, from which they go out to do their work in a variety of locations. Although some of their work is done at schools, they are not based there. Their individual contracts of employment specify the depot at which they are based and that they may be required to work at other locations. They work full time with a fixed annual leave entitlement. They are entitled to substantial bonus payments or supplements on top of their basic pay, whereas the claimants are not. The authority does employ a small number of manual workers as school janitors. They are based in schools and, like the claimants, work only during the school terms. But the claimants do not wish to compare themselves with the janitors, who are not entitled to the bonuses or supplements which the other manual workers enjoy. It may be worth noting that the employers and trade unions have negotiated a single status collective agreement, known as the Red Book, which would cover both the claimants and the comparators. But the existing pay and grading arrangements were to remain in force until the employers had completed a job evaluation exercise. This had not been done at the time of the employment tribunals decision in this case, so the essential terms remained governed by the original Blue and Green Books. The proceedings Most of the claims were lodged between February and December 2006, with the last claim lodged in February 2007. As none of the claimants was employed at the same establishment as their chosen comparators, the local authority applied for a pre hearing review to have the employment tribunal determine whether or not they were in the same employment as defined in section 1(6) of the 1970 Act. The claims were conjoined by order at the outset of the pre hearing review in December 2007. This is but the first hurdle which the claimants face. If they succeed in jumping it, they will still have to prove that their work is comparable to that of the men. In its original form, the 1970 Act only imposed an equality clause where they were employed in like work (now covered by section 1(2)(a)) or work rated as equivalent in a formal job evaluation exercise (now covered by section 1(2)(b)). Although both are mentioned in the sample claim form which we have seen, these claims are primarily based on the allegation that the work done by the claimants is of equal value to that done by the comparators. Section 1(2)(c) of the 1970 Act (added by SI 1983/1794) applies where a woman is employed on work which, not being work in relation to which paragraph (a) or (b) above applies, is, in terms of the demands made on her (for instance under such headings as effort, skill and decision), of equal value to that of a man in the same employment. That issue has yet to be addressed. Furthermore, if the claimants succeed in establishing that their work is of equal value, the employer could still seek to establish that there was a good reason for the difference between their terms and conditions. Section 1(3) of the 1970 Act (as substituted by SI 1983/1794) provides: An equality clause . shall not operate in relation to a variation between the womans contract and the mans contract if the employer proves that the variation is genuinely due to a material factor which is not the difference of sex and that factor (a) in the case of an equality clause falling within subsection (2)(a) or (b) above, must be a material difference between the womans case and the mans; and (b) in the case of an equality clause falling within subsection (2)(c) above, may be such a material difference. This issue, too, has yet to be addressed. Nevertheless, it is important to bear in mind that the question of whether there are other explanations for the difference in treatment is analytically quite distinct from the question whether the claimants and their comparators are in the same employment within the meaning of section 1(6). So too is the question of what modifications to the womens terms and conditions would be necessary to eliminate the less favourable treatment. At times during the argument at all levels in this case, it appears that those distinctions have not been observed. In May 2008, the employment tribunal determined the same employment issue in the claimants favour. The employment judge defined the question in this way, at para 61: In the present case, the claimants and comparators are neither employed under the same terms and conditions nor in the same establishment. It is therefore necessary for the claimants to satisfy the Tribunal that if their comparators were employed at their establishment, they would be employed under broadly similar terms to those that they are employed under at present. That, as the Court of Session later acknowledged, was exactly the right question. The judge answered that question in the affirmative. It was not enough for the respondents to say that the comparators would never be employed at the same establishment. They did some of their work at schools, there was no suggestion that this work was of less significance than the work they did elsewhere, and when they did work at schools there was no change to their terms and conditions of employment. There was no persuasive evidence before the Tribunal that in the event they were based at the same establishment as the claimants, the comparators would be employed under terms and conditions other than the Green Book (para 61 bis). The judge did not at that stage specifically refer to the evidence which had been given for the local authority on which that statement was based (excerpted at para 27 below), although she had earlier referred to some of it when reciting the submissions of the parties. The local authority appealed to the Employment Appeal Tribunal, which handed down judgment allowing the appeal in May 2009: UKEATS/47/08, [2009] ICR 1363. Lady Smith accepted the respondents argument that a woman who seeks to compare her terms and conditions with those of a man who does not work at the same establishment as she does must first show that there is a real possibility that he could be employed there to do the same or a broadly similar job to the one which he does at the other establishment. Such a finding was not open to the Tribunal on the evidence. The claimants then appealed to the Court of Session. Before their appeal was heard, the EAT decided the case of City of Edinburgh Council v Wilkinson [2010] IRLR 756. The women claimants were employed by the council on Blue Book terms in a variety of posts in schools, hostels, libraries or social work. They wished to compare themselves with manual workers, including road workers, refuse collectors, gardeners and grave diggers, employed on Green Book terms. Lady Smith (having revisited the House of Lords authorities discussed above) accepted that the intention of section 1(6) could be undermined if claimants were required to establish, as fact, that there was a real possibility of their comparators being employed at the same establishments as them. It was enough to show that it is likely that those comparators would, wherever they worked, always be employed on the same terms and conditions. If they were always employed on the same terms and conditions, it was legitimate to assume that they would be employed on those terms and conditions at the claimants establishment and men and women would thus be shown to be in the same employment (para 77). The paradigm example of the required hypothetical exercise would be where the comparators were always employed under the same collective agreement, as in that case. When the present case came before the Court of Session, in January 2011, that court agreed with Lady Smiths rejection of the real possibility test in Wilkinson: [2011] CSIH 2, 2011 SLT 203. Nevertheless, Lady Paton (delivering the opinion of the court) held that the evidence did not support the employment tribunals factual conclusion. She quoted several paragraphs from the evidence of Mr Archibald, for the local authority, at para 35 of her judgment, which included the following: If a manual worker comparator were for any reason to transfer to do their job solely and only in a school context, which would seem an impossible suggestion, then I cannot envisage other than that they would retain core Green Book conditions, but because of the nature of the work undertaken across all educational establishments, their terms and conditions would require to be very significantly varied to make working in such locations possible (para 32). In her view, that passage was concerned with a worker who was transferred to do most of his work at a school but remained based at his depot. Later passages in Mr Archibalds evidence hypothesised a manual worker based at a school: Conceivably some new, hybrid, handyperson type job incorporating all the tasks of the comparators could be created but as to what the terms of such a job would be would be difficult to assess if it was to remain on Manual Worker terms, because of the job content then the Green Book terms any such postholder would be on (whether doing a hybrid job or his/her current job) would not be similar to those s/he currently enjoys because so many of the provisions of the Green Book which s/he now enjoys would no longer be apt. I cannot imagine even in the hypothetical context the job or jobs being able to remain similar to what they would be now they simply would not fit into any JES manual worker profile and that would have an effect on their terms and conditions (para 36). Hence the claimants had not established that, if the comparators were based at the same establishment as the claimants, the comparators would still have been employed on Green Book terms and conditions. The appeal was therefore refused, not because the employment tribunal had applied the wrong legal test, but because the evidence did not support the conclusion on the facts. To complete the chronology, the Wilkinson case then came before the Court of Session: [2011] CSIH 70, 2012 SC 423. The Court upheld the decision of the EAT. Lord Eassie held, at para 35, that: What has to be considered is whether if a manual worker, in casu a gardener, refuse collector, or grave digger, whether hypothetically likely or not, were to be located in the claimants establishment for the performance of his current job he would continue to be employed on terms and conditions applicable to manual workers. Lady Paton distinguished the case from the present one, because the tribunal had analysed the evidence relating to the terms and conditions of work for the hypothetical transposed worker, and found it not inconceivable that he could be assigned to work at one of the claimants establishments and that, if so, he would still be employed on Green Book terms. But both she, at para 49, and Lord Hardie, at para 54, disagreed with Lord Eassies further observation, in para 35, that it was: erroneous (perhaps particularly in an equal value claim) to consider whether, on the transfer of the male comparator hypothetically to the womans establishment, adjustment might be made to his terms and conditions to dovetail more closely with those of the female claimant. Thus, it would appear that, while the Court of Session has rejected the real possibility test, it remains unclear to what extent the Tribunal is obliged to hypothesise about possible adjustments to the terms and conditions which would apply in the unlikely event of the comparator being transferred to work at the same establishment as the claimant. Discussion Not surprisingly, Ms Dinah Rose QC, on behalf of the appellant claimants, argues that the tribunal should not speculate about the adjustments to the comparators present terms and conditions which might be made in the unlikely event that they were transferred to the claimants workplace. The hypothesis is that the comparators are transferred to do their present jobs in a different location. The question is whether in that event, however unlikely, they would remain employed on the same or broadly similar terms and conditions to those applicable in their current place of work. As Lord Slynn had recognised in the British Coal Corporation case, the object of the legislation was to allow comparisons to be made between workers who did not and never would work in the same work place. An example might be a manufacturing company, where the (female) clerical workers worked in an office block, whereas the (male) manufacturers worked in a factory. She also argues that, the employment tribunal having adopted the correct test, the Court of Session should not have interfered with its findings in fact. The tribunal had founded its conclusion on the first of the two passages of Mr Archibalds evidence quoted in paragraph 27 above. This was contemplating that the manual workers would become based in the claimants schools in order to do their present jobs, although he could not envisage that ever happening. In the second passage, he was hypothesising the creation of a completely new all purpose handyman who might plausibly be based in schools. That was an unnecessary and illegitimate hypothesis and the tribunal was clearly entitled to conclude that there was no compelling evidence that the comparators would not be employed on the same or broadly similar terms and conditions in the unlikely event that they became based in schools. Mr Truscott, for the local authority, agrees that there is no need to show a real possibility that the comparators could be transferred to do their current jobs in the claimants workplace. But, he argues, how does the British Coal Corporation test work in a factual situation such as this, which goes well beyond what was envisaged in that case? That case was premised on the fact that the comparators could be based at the same place as the claimants, even though some of them were not. So, while he agrees that there is no need to show a real possibility that the workers could be co located, he argues that it should at least be feasible that they might be. The evidence of Mr Archibald was clear that it was not. I have no hesitation in preferring the arguments presented by Ms Rose. In the first place, it is by no means clear from the facts reported in the British Coal Corporation case that all the women claimants were based in collieries where there might also be surface mine workers employed. In the second place, there is no hint of a real possibility or feasibility test in that case and I find it difficult to discern a genuine difference in principle between them. Both add an unwarranted gloss to the wording of the subsection as interpreted in the British Coal Corporation case. In the third place, to adopt such a test would be to defeat the object of the exercise. This is not just a matter of preventing employers from so organising their workplaces that the women work in one place and the men in another. There may be perfectly good reasons for organising the work into different places. But the object of the legislation is to secure equality of treatment, not only for the same work, but also for work rated as equivalent or assessed by the experts to be of equal value. It stands to reason, therefore, that some very different jobs which are not or cannot be carried out in the same workplaces may nevertheless be rated as equivalent or assessed as having equal value. One example is the (female) office worker who needs office equipment in a clean environment and the (male) factory worker who needs machines which create dirt and dust. But another is the (female) factory worker who puts microscopic circuits on silicon chips in one factory and the (male) factory worker who assembles computer parts in another. The fact that of necessity their work has to be carried on in different places is no barrier to equalising the terms on which it is done. It is well known that those jobs which require physical strength have traditionally been better rewarded than those jobs which require dexterity. It is one of the objects of the equality legislation to iron out those traditional inequalities of reward where the work involved is of genuinely equal value. In the fourth place, it is not the function of the same employment test to establish comparability between the jobs done. That comparability is established by the like work, work rated as equivalent and work of equal value tests. Furthermore, the effect of the deemed equality clause is to modify the relevant term of the womans contract so as not to be less favourable than a term of a similar kind in the contract under which the man is employed or to include a beneficial term in her contract if she has none (section 1(2)(a), (b) or (c) as the case may be). That modification is clearly capable of taking account of differences in the working hours or holiday entitlement in calculating what would be equally favourable treatment for them both. Moreover, the equality clause does not operate if a difference in treatment is genuinely due to a material factor other than sex (section 1(3)). The same employment test should not be used as a proxy for those tests or as a way of avoiding the often difficult and complex issues which they raise (tempting though this may be for large employers faced with multiple claims such as these). Its function is to establish the terms and conditions with which the comparison is to be made. The object is simply to weed out those cases in which geography plays a significant part in determining what those terms and conditions are. In the fifth place, the construction of section 1(6) favoured by the appellants is more consistent with the requirements of European Union law than is the construction favoured by the respondents. The 1970 Act was the United Kingdoms way of giving effect in United Kingdom law to the principle of equal treatment of men and women, first enshrined in article 119 EEC, then translated into article 141 EC, and now translated into article 157 of the Treaty on the Functioning of the European Union. The Court of Justice held as long ago as 1976, in the case of Defrenne v Sabena (Case 43/75) [1976] ICR 547, 566, para 12 that the principle of equal pay for men and women forms part of the foundations of the community and has direct effect in the member states in relation to direct discrimination which may be identified solely with the aid of the criteria based on equal work and equal pay. As Advocate General Geelhoed explained in Lawrence v Regent Office Care Ltd (Case C 320/00) [2003] ICR 1092: It is not evident from the wording of Article 141 EC that the comparison must be confined to one and the same employer. Its case law demonstrates that the Court has consistently stood by its requirement that for a finding of direct discrimination there must be a clear difference in pay vis vis male co workers working in the same establishment or service (see, inter alia, Defrenne v Sabena (Case 43/75) [1976] ICR 547, 567, para 22) or that the difference in pay must have its origin in legislative provisions or provisions of collective labour agreements (Defrenne, para 21). (para 46) There were three categories of case where it was possible to go outside the individual undertaking or service in order to make the comparison: first, where statutory rules applied to the working and pay conditions in more than one undertaking, establishment or service, such as the pay of nurses in the National Health Service; second, where several undertakings or establishments were covered by the same collective works agreement or regulations; and third where terms and conditions were laid down centrally for more than one organisation or business within a holding company or conglomerate (paras 50, 49). This was because: The feature common to the three categories is that regulation of the terms and conditions of employment actually applied is traceable to one source, whether it be the legislature, the parties to a collective works agreement, or the management of a corporate group (para 51). This was an essential criterion because article 141 was addressed to those who may be held responsible for the unauthorised differences in terms and conditions of employment (para 52). Hence: It is clear from the foregoing that the direct effect of article 141 EC extends to employees working for the same legal person or group of legal persons, or for public authorities operating under joint control, as well as cases in which for purposes of job classification and remuneration, a binding collective agreement or statutory regulation applies. In all these cases the terms and conditions of employment can be traced back to a common source (para 54). In Lawrence itself, the Court of Justice agreed that the principle was not limited to situations in which men and women worked for the same employer (Judgment, para 17). But in the case in question, the differences cannot be attributed to a single source, there is no body which is responsible for the inequality and which could restore equal treatment (Judgment, para 18). This was because the claimants, women cleaners and catering workers who had previously been employed by North Yorkshire County Council and whose work had then been rated as equivalent to that of men doing jobs such as gardening, refuse collection and sewage treatment, were now working for the private company to whom the cleaning and catering service had been contracted out. They could no longer, therefore, compare their pay and conditions with the men who now worked for a different employer. (It is worth noting that no question had been referred to the court about the effect of the regulations governing the transfer of undertakings.) The position is thus that, for the principle of equal pay to have direct effect, the difference in treatment must be attributable to a single source which is capable of putting it right. As it happens, the researches of counsel have discovered no case in the Court of Justice in which the principle of equal pay has not been applied between men and women who work for the same employer. However, in Department for Environment, Food and Rural Affairs v Robertson [2005] EWCA Civ 138, [2005] ICR 750, the Court of Appeal held that the terms and conditions of civil servants working in different Government departments were not attributable to a single source for the purpose of article 141 EC. Although they were all the servants of the Crown, responsibility for negotiating and agreeing their pay and conditions had been devolved by delegated legislation to the individual departments concerned. It was common ground that the claimants and their would be comparators in the Department for Transport, Environment and the Regions were not in the same employment within the meaning of section 1(6) of the 1970 Act, because they did not work at the same establishment and common terms and conditions had not been observed in the two departments since the delegation. Mr Robin Allen QC, for the Equality and Human Rights Commission, tells us that it is the view of the Commission that Robertson was wrongly decided, because it did lie within the power of the Crown to put matters right. It is not necessary for us to determine that question now. In this case it is quite clear that the difference in treatment between the claimants and their comparators is attributable to a single source, namely the local authority which employs them and which is in a position to put right the discrepancy if required to do so. If section 1(6) were to operate as a barrier to a comparison which was required by EU law in order to give effect to the fundamental principle of equal treatment, it would be our duty to disapply it. However, for the reasons given earlier, it sets a low threshold which does not operate as a barrier to the comparison proposed in this case. I would therefore allow this appeal and restore the decision of the employment tribunal. The employment judge asked herself the right question and was entitled on the evidence to answer it in the way that she did.
+This appeal concerns the permissibility and in particular compatibility with European Union law and Human Rights Convention rights, of a procedure (conveniently described as a closed material procedure) whereby an applicant and his representatives may be excluded from certain aspects of employment tribunal proceedings on grounds of national security, and a special advocate may represent his interests so far as possible in relation to the aspects closed to him and his representatives. In the relevant employment tribunal proceedings, the appellant, Mr Kashif Tariq, complains that his security clearance as an immigration officer was withdrawn in circumstances involving direct or indirect discrimination on grounds of race and/or religion, and that this was contrary to the Race Relations Act 1976 and the Employment Equality (Religion or Belief) Regulations 2003 (SI 2003/1660). The Home Offices case is that there was no such discrimination, that the decisions taken in relation to Mr Tariq were taken for the purposes of safeguarding national security, and that the order for a closed material procedure made by the Employment Tribunal (on the Home Offices application) on 15 February 2008 was made justifiably and for the same protective purposes. Mr Tariqs challenge to the Employment Tribunals order for a closed material procedure was dismissed by the Employment Appeal Tribunal on 16 October 2009, UKEAT 168/09, [2010] ICR 223 and the Court of Appeal on 4 May 2010 [2010] EWCA Civ 462, [2010] ICR 1034, but it was declared (by the Employment Appeal Tribunals order dated 24 November 2009, upheld in the Court of Appeal) that article 6 of the European Convention on Human Rights requires [Mr Tariq] to be provided with the allegations being made against him in sufficient detail to enable him to give instructions to his legal team so that those allegations can be challenged effectively (a requirement which can conveniently be described as gisting), even if this put the Home Office in the invidious position of having to make difficult decisions about disclosure and whether or how a claim is to be defended: [2010] ICR 1034, para 50, per Maurice Kay LJ. The Home Office appeals to the Supreme Court against the latter conclusion, while Mr Tariq cross appeals against the conclusion that a closed material procedure was permissible. The factual background in more detail Mr Tariq started employment with the Home Office as an immigration officer on 21 April 2003, having received the necessary security clearance on 18 February 2003. On 19 August 2006 he was suspended from duty on basic pay, while consideration was given to the withdrawal of his security clearance, and on 20 December 2006 his clearance was withdrawn. His internal appeal against this decision was dismissed on 9 August 2007, and his further appeal to the Security Vetting Appeals Panel (SVAP) was unsuccessful in January 2011. The background to the Home Offices decisions to suspend and withdraw Mr Tariqs security clearance consists in the arrest of his brother and cousin on 10 August 2006 during a major counter terrorism investigation into a suspected plot to mount a terrorist attack on transatlantic flights. Mr Tariq's brother was subsequently released without charge. Mr Tariq's cousin, Tanvir Hussain, was convicted on 8 September 2008 of conspiracy to murder, having previously also pleaded guilty to two counts of conspiracy to cause explosions and to commit a public nuisance. He is now serving a sentence of life imprisonment. Inquiries were made at the time of the arrests to establish whether or not Mr Tariq was involved in any way with the plot or could be affected by it. No information suggested that Mr Tariq had himself been involved in any terrorism plot, but the Home Office (in grounds of resistance served in the Employment Tribunal proceedings on 6 August 2007 and amplified on 20 December 2007) states that it was concerned in August 2006 that [Mr Tariq] could be vulnerable to an approach to determine if terrorist suspects had been flagged to the authorities or to smuggle prohibited items airside and that its decision to withdraw security clearance in December 2006 was based on [his] close association with individuals suspected of involvement in plans to mount terrorist attacks and on its view that association with such individuals might make him vulnerable to attempts to exert undue influence on [him] to abuse his position. Mr Tariq commenced the employment tribunal proceedings claiming direct or indirect discrimination on grounds of race and/or religion on 15 March 2007. He stated at the outset that he had been advised that his suspension and the withdrawal of his security clearance were because of his perceived association with certain relatives or associates of relatives suspected of association with terrorist activities and the risk of their attempting to exert influence on him to abuse his position. He denied any such association or risk. On 10 July 2007 he provided what he said were (considering, he said, the extremely limited information as to the grounds for his treatment to that date given) the best further particulars possible to give pending disclosure by the Home Office. These particulars alleged, inter alia, that the Home Office had relied upon stereotypical assumptions about him and/or Muslims and/or individuals of Pakistani origin such as susceptibility to undue influence, coercion or brainwashing and had indirectly discriminatory security policies, procedures and methods of investigation. The Home Office in its grounds of resistance denied this and maintains, as stated, that it acted throughout to protect national security. The legislation The Race Relations Act 1976 provides: 1 Racial discrimination (1) A person discriminates against another in any circumstances relevant for the purposes of any provision of this Act if (a) on racial grounds he treats that other less favourably than he treats or would treat other persons; . (lA) A person also discriminates against another if, in any circumstances relevant for the purposes of any provision referred to in subsection (lB), he applies to that other a provision, criterion or practice which he applies or would apply equally to persons not of the same race or ethnic or national origins as that other, but (a) which puts or would put persons of the same race or ethnic or national origins as that other at a particular disadvantage when compared with other persons, (b) which puts or would put that other at that disadvantage, and (c) which he cannot show to be a proportionate means of achieving a legitimate aim. 42 Acts safeguarding national security Nothing in Parts II to IV shall render unlawful an act done for the purpose of safeguarding national security if the doing of the act was justified by that purpose. The Race Relations Act 1976 is the means by which the United Kingdom gives effect to its obligations under Council Directive 2000/43/EC of 29 June 2000 (the Race Directive) implementing the principle of equal treatment between persons irrespective of racial or ethnic origin. On 27 November 2000 Council Directive 2000/78/EC (the Employment Equality Directive) established a general framework for equal treatment in employment and occupation. This led to the making, under section 2 of the European Communities Act 1972, of the Employment Equality (Religion or Belief) Regulations 2003 (the Employment Equality Regulations), prohibiting discrimination on grounds of religion or belief and providing: 3.(1) For the purposes of these Regulations, a person (A) discriminates against another person (B) if (a) on grounds of religion or belief, A treats B less favourably than he treats or would treat other persons; or (b) A applies to B a provision, criterion or practice which he applies or would apply equally to persons not of the same religion or belief as B, but (i) which puts or would put persons of the same religion or belief as B at a particular disadvantage when compared with other persons, (ii) which puts B at that disadvantage, and (iii) which A cannot show to be a proportionate means of achieving a legitimate aim. Exception for national security 24. Nothing in Part II or III shall render unlawful an act done for the purpose of safeguarding national security, if the doing of the act was justified by that purpose. The issues regarding closed material procedure in more detail Employment Tribunals are established under the Employment Tribunals Act 1996. Section 7 entitles the Secretary of State to make by regulations (employment tribunal procedure regulations) . such provision as appears to him to be necessary or expedient with respect to proceedings before employment tribunals. Section 10, which I set out in the annex to this judgment, specifically authorises the making in the interests of national security of regulations providing for a closed material procedure, either by direction of a minister or by order of the employment tribunal or judge, and for the appointment by the Attorney General in that context of a special advocate. The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 (SI 2004/1861) contain in Schedules 1 and 2 provisions made under sections 7 and 10 of the Act. Schedule 1, headed the Employment Tribunals Rules of Procedure (the ET Procedure Rules), contains rule 54, set out in the annex, providing specifically for a closed material procedure where a minister so directs (rule 54(1)) or where the tribunal or employment judge concludes that such a procedure is appropriate and so orders (rule 54(2)). Schedule 2, headed the Employment Tribunals (National Security) Rules of Procedure (the ET National Security Rules), contains rules 8 and 10, also set out in the annex, providing for special advocates and reasons in national security proceedings. Regulation 16 provides that the rules in Schedule 1 apply to employment tribunal proceedings generally, but that such rules shall be modified in accordance with Schedule 2 wherever any power conferred on the minister, the tribunal or an employment judge by rule 54 of Schedule 1 is exercised. Regulation 2 of the 2004 Regulations contains definitions, again set out in the annex. Mr Tariqs cross appeal (a) general The power to give directions conferred on the minister by rule 54(1) has not been exercised in this case. The Supreme Court was told that it has never been exercised in any case. The probable reasons are not difficult to discern, bearing in mind the scope for challenge both by judicial review and, more fundamentally, under the Human Rights Act 1998 or, Mr Robin Allen QC also submits for Mr Tariq, European Union law. While the conferral of the power is expressly authorised by the 1996 Act, it is hard to see how it could be compatible with article 6 of the European Convention on Human Rights for a minister to have power to make such a direction to a judicial tribunal. Instead of giving any direction, the minister made an application to the tribunal, asking it to order a closed material procedure with a special advocate under the discretionary power conferred by rule 54(2). On 15 February 2008, the tribunal held that it was expedient in the interest of national security to make orders under rule 54 that the whole of the proceedings be in private, and directed that Mr Tariq and his representative should be excluded from part of the proceedings when closed evidence and/or documents were being considered, that the Tribunal would consider both open and closed documents and that the Home Office would make available the appropriate closed material to any special advocate appointed. It further stated that the terms so ordered would be reviewed at a later case management discussion. At a case management discussion held on 30 May 2008, in the presence of representatives of the parties and of Ms J Farbey of counsel nominated by the Attorney General to act as special advocate, the judge ordered that her role as special advocate should take effect and that she should proceed in discussions with Mr Tariq. Meanwhile, reasons for the tribunals decision on 15 February 2008 were outstanding. The minister, to whom the tribunal was required by rule 10 of the ET National Security Rules to submit such reasons in the first instance, directed that one paragraph be abridged and another omitted. As a result, an edited version, identifying the positions of the amendment and abridgement, was initially issued to Mr Tariq and his representatives on 15 October 2008. However, on 9 December 2008 the full reasons were released. One may speculate that this resulted from submissions made by the special advocate. The paragraphs amended and omitted do not, on their face, seem likely to impact on national security. This course of events offers therefore a cautionary message, but, quite possibly also, an indication of at least one purpose which a special advocate may serve. In the upshot, there is not now any ministerial order in effect under rule 10. Whatever objections may be made to a rule giving the executive power to direct the judiciary with regard to reasons do not therefore arise for consideration on this appeal. This appeal concerns an exercise by the Tribunal of its power under rule 54(2) of the ET Procedure Rules, read with rule 8 of the ET National Security Rules. (b) The European Union Directives On behalf of Mr Tariq, Mr Allen submits that rule 54(2) and rule 8 are contrary to European Union law and/or the European Human Rights Convention. These rules were made pursuant to the express statutory authority to make such rules conferred by section 10 of the Employment Tribunals Act 1996. Mr Allens first submission is that they are, none the less, in conflict with European legal principles governing discrimination, contained in the European Treaties and in the Race and Employment Equality Directives, to which the 1996 Act, the Race Relations Act 1976 and the Employment Equality Regulations must all be read, at least as far as possible, as being subject. Mr Allen notes in this connection a contrast between the two Directives. The Employment Equality Directive makes express reference to national security, providing in article 2(5): 5. This Directive shall be without prejudice to measures laid down by national law which, in a democratic society, are necessary for public security, for the maintenance of public order and the prevention of criminal offences, for the protection of health and for the protection of the rights and freedoms of others. There is no equivalent provision in the Race Directive. Mr Allen suggests that this may be because the Race Directive does not preclude discrimination on grounds of nationality: article 3(2). Mr Allen further notes that neither Directive makes express provision for closed hearings, and that the Court of Justice has on more than one occasion made clear that the European Treaties contain no general power for states to derogate from European law and the rights it confers on grounds of public safety or national defence, outside specific situations identified in Treaty articles, none of which applies here: Case 222/84 Johnston v Chief Constable of the Royal Ulster Constabulary [1987] QB 129; Case C 337/05 Commission of the European Communities v Italian Republic [2008] ECR I 2173. None of these points is, in my view, relevant in the present context. I agree with the reasoning and conclusions of Maurice Kay LJ in paras 12 to 22 of his judgment in the Court of Appeal: [2010] ICR 1034. The authorities cited by Mr Allen deal with derogation from principles of substantive law, here the rights not to be discriminated against conferred by the Directives. The legitimacy of closed hearings and of the use of a special advocate are matters of procedural law. Procedure is primarily a matter for national law. It is, however, a basic principle of European Union law that national law should provide effective legal protection, by establishing a system of legal remedies and procedures which ensure respect for the relevant right: Case C 312/93 Peterbroeck v Belgian State [1995] ECR I 4599; Case C 432/05 Unibet (London) Ltd v Justitie Kanslern [2007] ECR I 2271. In that respect, European Union law directs attention primarily to principles established under articles 5 and 6 of the European Convention on Human Rights as a guide to what constitutes effective legal protection. Mr Allen points out that the Directives both contain provisions (article 7(1) of the Race Directive and article 9 of the Employment Equality Directive), whereby: Member states shall ensure that judicial and/or administrative procedures, including where they deem it appropriate conciliation procedures, for the enforcement of obligations under this Directive are available to all persons who consider themselves wronged by failure to apply the principle of equal treatment to them, even after the relationship in which the discrimination is alleged to have occurred has ended. Further, by articles 8 and 10 respectively of these Directives: Member states shall take such measures as are necessary, in accordance with their national judicial systems, to ensure that, when persons who consider themselves wronged because the principle of equal treatment has not been applied to them establish, before a court or other competent authority, facts from which it may be presumed that there has been direct or indirect discrimination, it shall be for the respondent to prove that there has been no breach of the principle of equal treatment. Again, and as this wording contemplates, it is for each national judicial system to ensure an effective system of legal procedures enabling a claimant to establish facts from which it may be presumed that there has been direct or indirect discrimination. In the present case, Mr Allen has not suggested that Mr Tariq has not been able to do this. Mr Allen also submits that Mr Tariq could lose his claim by reason of section 42 of the Race Relations Act 1976 and/or regulation 24 of the Employment Equality Regulations on a basis which, by reason of the closed material procedure, would not be disclosed. Section 42 and regulation 24 are dealing with substantive law. If they were read and applied as excusing what would otherwise be unlawful discrimination, they might therefore be open to challenge under the principle of European Union law identified in para 14 above. But the present case is far from involving any such issue. First, the issue could only arise from a substantive decision, and the Tribunal is a long way from reaching such a decision. Second, it is far from clear that section 42 and regulation 24 are to be read as entitling a tribunal or court to excuse what would otherwise be unjustified discrimination on grounds of national security. The question would arise: if it would involve unjustified discrimination, how could the doing of the act be justified for the purpose of safeguarding national security? Third, the Home Offices dominant aim in the present proceedings is to show that there was no discrimination at all on any prohibited ground, but a rational and proportionate decision taken in the public interest. If the Employment Tribunal were at some future stage to find that there was discrimination on a prohibited ground, but that the effect of section 42 and/or regulation 24 was that such discrimination could none the less be regarded as justified as being for the purpose of safeguarding national security, the Tribunal would be obliged to identify this basis of decision, however generally, in open reasons, to enable its legitimacy under European Union law to be challenged. There is no reason to assume that the Tribunal, assisted as it would also be by a special advocate, would fail to do this. (c) Effective legal protection The question is therefore whether the closed material procedure authorised by United Kingdom law provides effective legal protection, by establishing a system of legal remedies and procedures to ensure respect for the relevant rights conferred by the Race Relations Act and the Employment Equality Regulations in implementation of the United Kingdoms obligations under the two Directives. Mr Allen relies upon the decisions of the Court of Justice in Joined Cases C 402/05 P and C 415/05 P Kadi v Council of the European Union and the General Court in Case T 85/09 Kadi v Commission of the European Union (Council of the European Union intervening). These two cases concerned the validity of the European Unions own measures, and the two European Courts were charged not merely with ascertaining and interpreting the relevant European legal principles applicable under the Treaties, but also with applying these to the particular measures and circumstances before them. In the former case [2009] AC 1225, the Court of Justice addressed Council Regulation 881/2002 which aimed to mirror within Europe a similar asset freezing regime to that mandated by Security Council Resolutions for all member states of the United Nations. The Regulation, in its Annex I, simply listed as persons whose assets were to be frozen persons whose names appeared on a list drawn up by the Security Councils Sanctions Committee, and no opportunity was given before or after its passing to such persons to mount any legal challenge to such listing at either the Security Council or the European level. The Court of Justice accepted that: 342 . with regard to a Community measure intended to give effect to a resolution adopted by the Security Council in connection with the fight against terrorism, overriding considerations to do with safety or the conduct of the international relations of the Community and of its Member States may militate against the communication of certain matters to the persons concerned and, therefore, against their being heard on those matters. It went on: 343 However, that does not mean, with regard to the principle of effective judicial protection, that restrictive measures such as those imposed by the contested regulation escape all review by the Community judicature once it has been claimed that the act laying them down concerns national security and terrorism. 344 In such a case, it is none the less the task of the Community judicature to apply, in the course of the judicial review it carries out, techniques which accommodate, on the one hand, legitimate security concerns about the nature and sources of information taken into account in the adoption of the act concerned and, on the other, the need to accord the individual a sufficient measure of procedural justice (see, to that effect, the judgment of the European Court of Human Rights in Chahal v United Kingdom (1996) 23 EHRR 413, para 131). The Regulation was annulled in respect of Mr Kadi and Al Barakaat (a Swedish foundation) because there had been no procedure for communicating any evidence or for any hearing of persons listed, so that such persons rights of defence and to an effective legal remedy were infringed. But the Court postponed the annulment for up to three months from 3 September 2008. The second Kadi case [2011] 1 CMLR 697 was a sequel. After the first case, the Commission sought and obtained from the Sanctions Committee a summary of its reasons for listing Mr Kadi, communicated that to him and received his comments on it on 10 November 2008. On 28 November 2008 the Commission by Commission Regulation (EC) No 1190/2008, made pursuant to a power in Regulation 881/2002 to amend Annex I to that Regulation, recited this course of events and purported on that basis to amend Annex I to reinsert Mr Kadi and Al Barakaat. Mr Kadi again successfully challenged this. The General Court held that his rights of defence had been observed only in the most formal and superficial sense, as the Commission in actual fact considered itself strictly bound by the Sanctions Committees findings and therefore at no time envisaged calling those findings into question in the light of the applicants observations (para 171). The General Court went on to say that the Commission, notwithstanding recitals in its Regulation, failed to take due account of the applicants comments (para 172) and that the procedure followed by the Commission, in response to the applicant's request, did not grant him even the most minimal access to the evidence against him. In actual fact, the applicant was refused such access despite his express request, whilst no balance was struck between his interests, on the one hand, and the need to protect the confidential nature of the information in question, on the other (see, in that regard, the judgment of the Court of Justice in Kadi, paras 342 to 344) (para 173). The General Court noted that this conclusion was consistent with the reasoning on the European Court of Human Rights in A v United Kingdom [2009] 49 EHRR 625 (para 176). Earlier in its judgment, at paras 146 147, the General Court said this about national security issues, with reference to its previous judgment in Case T 228/02 Organisation des Modjahedines du Peuple d'Iran v Council of the European Union [2006] ECR II 4665 (OMPI): 146 The General Court also noted in that regard, at para 156 of OMPI, that, although the European Court of Human Rights recognises that the use of confidential information may be necessary when national security is at stake, that does not mean, in that court's view, that national authorities are free from any review by the national courts simply because they state that the case concerns national security and terrorism (see the judgment of the European Court of Human Rights in Chahal v United Kingdom, para 131, and case law cited, and its judgment in calan v Turkey (2003) 37 EHRR 238, para 106 and case law cited). 147 The General Court added, at para 158 of OMPI, that it was not necessary for it to rule, in the action before it, on the separate question as to whether the applicant and/or its lawyers could be provided with the evidence and information alleged to be confidential, or whether they had to be provided only to the Court, in accordance with a procedure which remained to be defined so as to safeguard the public interests at issue whilst affording the party concerned a sufficient degree of judicial protection. The question identified by the General Court in para 147 did not arise for decision in either of the two Kadi cases. It is, however, clear from both Kadi cases that the Court of Justice will look for guidance in the jurisprudence of the European Court of Human Rights when deciding whether effective legal protection exists, and how any balance should be struck when a question arises whether civil procedures should be varied to reflect concerns relating to national security. A national court, faced with an issue of effective legal protection or, putting the same point in different terms, access to effective procedural justice, can be confident that both European courts, Luxembourg and Strasbourg, will have the same values and will expect and accept similar procedures. Article 6(2) of the Treaty on the European Union (The Union shall respect fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms signed in Rome on 4 November 1950 and as they result from the constitutional traditions common to the Member States, as general principles of Community law) and the Charter of Fundamental Rights already point strongly in this direction. Assuming that the European Union will in due course formally subscribe to the European Convention on Human Rights, as contemplated by the Treaty amendments introduced under the Treaty of Lisbon, the expectation will receive still further reinforcement. In the present case, the Home Office applied for and obtained the Tribunals order for a closed material procedure in order to be able to defend itself against Mr Tariqs claim that the removal of his security clearance involved unlawful discrimination on grounds of race or religion. The case concerns a different subject matter from that of both Kadi cases, where freezing orders were in issue. The effect of freezing orders (made under United Kingdom legislation directly implementing the Security Councils Resolutions) was examined by the Supreme Court in A v HM Treasury (JUSTICE intervening) [2010] UKSC 2; [2010] 2 AC 534. Persons subject to such orders became effectively prisoners of the state and there was a devastating effect on them and their families: para 60. A v United Kingdom, to which the General Court in Kadi referred, also involved a different subject matter to the present, concerning, as it did, the detention of foreign nationals suspected of terrorist involvement. Rights said that: In A v United Kingdom 49 EHRR 695 the European Court of Human 216 The Court takes as its starting point that, as the national courts found and it has accepted, during the period of the applicants detention the activities and aims of the AlQaeda network had given rise to a public emergency threatening the life of the nation. It must therefore be borne in mind that at the relevant time there was considered to be an urgent need to protect the population of the United Kingdom from terrorist attack and, although the United Kingdom did not derogate from article 5(4), a strong public interest in obtaining information about AlQaeda and its associates and in maintaining the secrecy of the sources of such information (see also, right under article 5(4) in this connection, Fox, Campbell and Hartley (1991) 13 EHRR 157, para 39). 217 Balanced against these important public interests, however, was the applicants' to procedural fairness. Although the Court has found that, with the exception of the second and fourth applicants, the applicants detention did not fall within any of the categories listed in sub paragraphs (a) to (f) of article 5(1), it considers that the case law relating to judicial control over detention on remand is relevant, since in such cases also the reasonableness of the suspicion against the detained person is a sine qua non (see para 197 above). Moreover, in the circumstances of the present case, and in view of the dramatic impact of the lengthy and what appeared at that time to be indefinite deprivation of liberty on the applicants' fundamental rights, article 5(4) must import substantially the same fair trial guarantees as article 6(1) in its criminal aspect (Garcia Alva v Germany (2003) 37 EHRR 335, para 39, and see also see Chahal, cited above, paras 130 131). 218 Against this background, it was essential that as much information about the allegations and evidence against each applicant was disclosed as was possible without compromising national security or the safety of others. Where full disclosure was not possible, article 5(4) required that the difficulties this caused were counterbalanced in such a way that each applicant still had the possibility effectively to challenge the allegations against him. 219 The Court considers that SIAC, which was a fully independent court (see para 84 above) and which could examine all the relevant evidence, both closed and open, was best placed to ensure that no material was unnecessarily withheld from the detainee. In this connection, the special advocate could provide an important, additional safeguard through questioning the states witnesses on the need for secrecy and through making submissions to the judge regarding the case for additional disclosure. On the material before it, the Court has no basis to find that excessive and unjustified secrecy was employed in respect of any of the applicants' appeals or that there were not compelling reasons for the lack of disclosure in each case. 220 The Court further considers that the special advocate could perform an important role in counterbalancing the lack of full disclosure and the lack of a full, open, adversarial hearing by testing the evidence and putting arguments on behalf of the detainee during the closed hearings. However, the special advocate could not perform this function in any useful way unless the detainee was provided with sufficient information about the allegations against him to enable him to give effective instructions to the special advocate. While this question must be decided on a case by case basis, the Court observes generally that, where the evidence was to a large extent disclosed and the open material played the predominant role in the determination, it could not be said that the applicant was denied an opportunity effectively to challenge the reasonableness of the Secretary of State's belief and suspicions about him. In other cases, even where all or most of the underlying evidence remained undisclosed, if the allegations contained in the open material were sufficiently specific, it should have been possible for the applicant to provide his representatives and the special advocate with information with which to refute them, if such information existed, without his having to know the detail or sources of the evidence which formed the basis of the allegations. An example would be the allegation made against several of the applicants that they had attended a terrorist training camp at a stated location between stated dates; given the precise nature of the allegation, it would have been possible for the applicant to provide the special advocate with exonerating evidence, for example of an alibi or of an alternative explanation for his presence there, sufficient to permit the advocate effectively to challenge the allegation. Where, however, the open material consisted purely of general assertions and SIAC's decision to uphold the certification and maintain the detention was based solely or to a decisive degree on closed material, the procedural requirements of article 5(4) would not be satisfied. In Secretary of State for the Home Department v AF (No 3) [2009] UKHL 28; [2010] 2 AC 269, the House of Lords applied the reasoning in para 220 of A v United Kingdom when concluding that a closed material procedure involving a special advocate could be legitimate in the context of the imposition of a control order on a suspected terrorist, so long as the case was not based solely or to a decisive extent on closed material. Mr Allen submits that the fundamental nature of equality rights makes it just as critical that Mr Tariq should receive the fullest procedural rights in this case as it was for Mr Kadi or A or AF to have such rights. However, the reasoning in para 217 of the European Court of Human Rights judgment in A v United Kingdom emphasises the context of that decision, the liberty of the individual. Detention, control orders and freezing orders impinge directly on personal freedom and liberty in a way to which Mr Tariq cannot be said to be exposed. In R(AHK) v Secretary of State for the Home Department (Practice Note) [2009] EWCA Civ 287; [2009] 1 WLR 2049, a claim for judicial review of the refusal of an application for British citizenship, the Court of Appeal distinguished A v United Kingdom on the ground that it was focusing on detention. In my opinion, it was justified in making this distinction. An applicant for British citizenship has, of course, an important interest in the appropriate outcome of his or her application. Mr Tariq also has an important interest in not being discriminated against which is entitled to appropriate protection; and this is so although success in establishing discrimination would be measured in damages, rather than by way of restoration of his security clearance (now definitively withdrawn) or of his position as an immigration officer. But the balancing exercise called for in para 217 of the European Courts judgment in A v United Kingdom depends on the nature and weight of the circumstances on each side, and cases where the state is seeking to impose on the individual actual or virtual imprisonment are in a different category to the present, where an individual is seeking to pursue a civil claim for discrimination against the state which is seeking to defend itself. That the outcome of the balancing exercise may differ with the circumstances is confirmed by three decisions of the European Commission and Court of Human Rights: Leander v Sweden (1987) 9 EHRR 433, Esbester v United Kingdom (1993) 18 EHRR CD72 and Kennedy v United Kingdom (Application No 26839/05) (unreported) 18 May 2010. In Leander, the applicant had been refused permanent employment as museum technician with the Naval Museum, which was adjacent to the Karlskrona Naval Base in which the Museum had storage rooms and other objects to which he would need access. The refusal was on account of secret information, contained in an annex compiled by the police, which was alleged to make him a security risk and to which he was refused access. He claimed that there had been breaches of, inter alia, articles 8 and 13 of the Convention. The Court did not accept this. Article 8 provides that everyone has the right to respect for his private life, and that 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 other specified interests. As to article 8, the Court held that, although there was adverse interference with Mr Leanders private life through the consequences for his access to certain sensitive posts (para 59) and although he was refused any possibility of challenging the correctness of the information concerning him (para 61), the system for collecting and using the secret information contained a number of internal safeguards (para 62) and it could not be concluded that the interference involved in the non communication of the information to Mr Leander was not necessary in a democratic society in the interests of national security, as it is the very absence of such communication which, at least partly, ensures the efficacy of the personnel control procedure (para 66). Article 13 provides that everyone whose rights and freedoms as set forth in this Convention are violated shall have an effective remedy before a national authority. As to article 13, the Court in Leander held by a majority (4 to 3) that an effective remedy under article 13 must mean a remedy that is as effective as can be, having regard to the restricted scope for recourse inherent in any system of secret surveillance for the protection of national security (para 84), and that, even if the procedure of complaint to the Government (which Mr Leander had followed and which had led to the Cabinet rejecting his complaint) were not considered sufficient, the aggregate of that and the other remedies of complaint to the Swedish Parliamentary Ombudsman and Chancellor of Justice (which he could also have pursued, although their views would only have been advisory) satisfied the conditions of article 13 (para 84). In Esbester 18 EHRR CD72 the Commission was again concerned with a refusal to employ, in this case as an administrative officer with the Central Office of Information (COI). The COI having offered to employ Mr Esbester subject to the satisfactory completion of our inquiries ., gave as its reasons for refusal simply that having completed our inquiries . we are unable to offer you an appointment. Mr Esbester claimed infringement of articles 8 and 13, maintaining that it was likely that the intelligence services had in the course of negative vetting procedures obtained and relied upon information about his private life, which he had had no opportunity to refute. He also alleged that there was inadequate legal regulation regarding the gathering of such information, and that the Security Service Tribunal responsible for investigating complaints gave inadequate protection and was prevented from giving reasons for its decisions. The Commission accepted, following Leander, that security vetting based on information about a persons private life constitutes interference within article 8, and it accepted, following Klass v Federal Republic of Germany (1978) 2 EHRR 214 and Malone v United Kingdom (1985) 7 EHRR 14 that the existence in the United Kingdom of a system for secret surveillance for vetting and the circumstances giving rise to the refusal to employ Mr Esbester gave rise to an inference that such interference had taken place. But it rejected Mr Esbesters complaints as manifestly unfounded. In finding the United Kingdoms system to be in accordance with the law, the Commission noted that the Court had held in Leander that the requirement of foreseeability in the special context of employment vetting in sectors affecting national security cannot be the same as in many other fields. In finding that the system was necessary in a democratic society, the Commission said, again with reference to Leander, that regard must also be had in this context to the margin of appreciation of the respondent state which in the area of assessing the requirements of and means of pursuing interests of national security has been held by the Court to be wide. In considering whether there existed adequate and effective guarantees against abuse, as required by the Courts decision in Klass, the Commission noted that the term national security was not amenable to exhaustive definition, and that, as regards the lack of reasons for the decisions of the Tribunal, the Court in Klass, when considering a similar problem, had found that the state could legitimately fear that the efficacy of surveillance systems might be jeopardised if information is divulged to the person concerned. The Commission concluded its discussion of article 8 by saying that In the absence of any evidence or indication that the system is not functioning as required by domestic law, the Commission finds that the framework of safeguards achieves a compromise between the requirements of defending democratic society and the rights of the individual which is compatible with the provisions of the Convention. Consequently it concludes that the interference in the present case was necessary in a democratic society in the interests of national security. As to article 13, the Commission held that the complaint of lack of an effective remedy failed in the absence of any arguable claim for breach of article 8. In Kennedy v United Kingdom decided by its Fourth Section on 18 May 2010, the Court was concerned with a claim that there had been breaches of articles 6 (the right to a fair trial in the determination of civil rights and obligations), 8 and 13 in circumstances where the claimants requests to MI5 and GCHQ under the Data Protection Act 1998 to discover whether information about him was being processed had been refused on the grounds of national security. Complaints about such refusals to the Investigatory Powers Tribunal (IPT) chaired by Lord Justice Mummery were examined in private. They concluded with the IPT simply notifying Mr Kennedy that no determination had been made in his favour in respect of his complaints. This meant either that there had been no interception or that any interception which took place was lawful (para 20). As to article 8, the Court held that the domestic law, practice and safeguards relating to surveillance satisfied the conditions of that article. It referred to, inter alia, Leander v Sweden as establishing that the requirement that the consequences of the domestic law must be foreseeable, before any interference could be said to be in accordance with the law under article 8(2), cannot be the same in the context of interception of communications as in many other fields (paras 151 152). As to article 6, the Court in Kennedy found it unnecessary to decide whether this article applies to proceedings concerning a decision to put someone under surveillance, because it concluded that, assuming it does, the IPTs rules of procedure complied with the requirements of article 6(1) (para 179). The parties respective cases appear from the following paragraphs of the Courts judgment: 181. The applicant submitted that even where national security was at stake, a domestic court could not infringe the fair hearing principle in a blanket and uncritical manner. He argued that less restrictive measures were available to achieve the aim pursued, including arrangements to protect witnesses' identities, disclosure of documents with redactions approved by the IPT, provision of a summary of particularly sensitive material under the supervision of the IPT and appointment of special advocates to whom disclosure of sensitive material could be made. He referred to a recent report on secret evidence published in June 2009 by the non governmental organisation, JUSTICE, which called for the strengthening of disclosure procedures and increased transparency in court proceedings. 182. The Government emphasised that even where article 6(1) applied to a field falling within the traditional sphere of public law, this did not in itself determine how the various guarantees of article 6 should be applied to such disputes (citing Vilho Eskelinen v Finland (2007) 45 EHRR 993, para 64). The obligation to read the Convention as a whole meant that the scope of the article 6 guarantees in such a case should be in harmony with the Court's approach to judicial control under article 8. The Government argued that the overarching consideration was that an individual could not be notified of interception measures while interception was ongoing or where notification would jeopardise the capabilities or operations of intercepting agencies. They therefore disputed that the less restrictive measures proposed by the applicant were appropriate. They noted that protection of witnesses' identities would not assist in keeping secret whether interception had occurred. Nor would disclosure of redacted documents or summaries of sensitive material. Further, unless they were appointed in every case, the appointment of special advocates would also allow a complainant to draw inferences about whether his communications had been intercepted. 183. The Government argued that the procedure before the IPT offered as fair a procedure as could be achieved in the context of secret surveillance powers. In particular, a complainant did not have to overcome any evidential burden to apply to the IPT and any legal issues could be determined in a public judgment after an inter partes hearing. Further, the IPT had full powers to obtain any material it considered necessary from relevant bodies and could call upon the assistance of the Commissioner. It could appoint an advocate to assist it at closed hearings. Finally, in the event that the complainant was successful, a reasoned decision would be provided. The Court, in holding that there had been no violation of article 6 or 13 in Kennedy, substantially aligned itself with the United Kingdom Governments position particularly in so far as it endorsed in relation to the concept of a fair trial under article 6 the relevance of similar considerations to those taken into account, previously and in Kennedy itself, when applying articles 8 and 13. It held: 184. The Court reiterates that according to the principle of equality of arms, as one of the features of the wider concept of a fair trial, each party must be afforded a reasonable opportunity to present his case under conditions that do not place him at a substantial disadvantage vis a vis his opponent . The Court has held none the less that, even in proceedings under article 6 for the determination of guilt on criminal charges, there may be restrictions on the right to a fully adversarial procedure where strictly necessary in the light of a strong countervailing public interest, such as national security, the need to keep secret certain police methods of investigation or the protection of the fundamental rights of another person. There will not be a fair trial, however, unless any difficulties caused to the defendant by a limitation on his rights are sufficiently counterbalanced by the procedures followed by the judicial authorities (see, for example, Doorson v The Netherlands (1996) 22 EHRR 330, para 70; Jasper v United Kingdom (2000) 30 EHRR 441, paras 51 to 53; and A v United Kingdom (2009) 49 EHRR 625, para 205). A similar approach applies in the context of civil proceedings. 185. The Court notes that the IPT, in its preliminary ruling of 23 January 2003, considered the applicant's complaints regarding the compliance of the Rules with article 6(1). It found that, with the exception of rule 9(6) which required all oral hearings to be held in private, the Rules challenged by the applicant were proportionate and necessary, with special regard to the need to preserve the Government's neither confirm nor deny policy 186. At the outset, the Court emphasises that the proceedings related to secret surveillance measures and that there was therefore a need to keep secret sensitive and confidential information. In the Court's view, this consideration justifies restrictions in the IPT proceedings. The question is whether the restrictions, taken as a whole, were disproportionate or impaired the very essence of the applicant's right to a fair trial. 187. In respect of the rules limiting disclosure, the Court recalls that the entitlement to disclosure of relevant evidence is not an absolute right. The interests of national security or the need to keep secret methods of investigation of crime must be weighed against the general right to adversarial proceedings (see, mutatis mutandis, Edwards and Lewis v United Kingdom (2005) 40 EHRR 593, para 46). The Court notes that the prohibition on disclosure set out in rule 6(2) admits of exceptions, set out in rules 6(3) and (4). Accordingly, the prohibition is not an absolute one. The Court further observes that documents submitted to the IPT in respect of a specific complaint, as well as details of any witnesses who have provided evidence, are likely to be highly sensitive, particularly when viewed in light of the Government's neither confirm nor deny policy. The Court agrees with the Government that, in the circumstances, it was not possible to disclose redacted documents or to appoint special advocates as these measures would not have achieved the aim of preserving the secrecy of whether any interception had taken place. It is also relevant that where the IPT finds in the applicant's favour, it can exercise its discretion to disclose such documents and information under rule 6(4) . 188. As regards limitations on oral and public hearings, the Court recalls, first, that the obligation to hold a hearing is not absolute. There may be proceedings in which an oral hearing is not required and where the courts may fairly and reasonably decide the case on the basis of the parties' submissions and other written materials. The character of the circumstances that may justify dispensing with an oral hearing essentially comes down to the nature of the issues to be decided by the competent national court (see Jussila v Finland (2006) 45 EHRR 900, paras 41 to 42). The Court notes that rule 9(2) provides that oral hearings are within the IPT's discretion and it is clear that there is nothing to prevent the IPT from holding an oral hearing where it considers that such a hearing would assist its examination of the case. 189. Concerning the provision of reasons, the Court emphasises that the extent to which the duty to give reasons applies may vary according to the nature of the decision and must be determined in the light of the circumstances of the case (see Ruiz Torija v Spain (1994) 19 EHRR 553, para 29). In the context of the IPT's proceedings, the Court considers that the "neither confirm nor deny" policy of the Government could be circumvented if an application to the IPT resulted in a complainant being advised whether interception had taken place. In the circumstances, it is sufficient that an applicant be advised that no determination has been in his favour. The Court further notes in this regard that, in the event that a complaint is successful, the complainant is entitled to have information regarding the findings of fact in his case . 190. In light of the above considerations, the Court considers that the restrictions on the procedure before the IPT did not violate the applicant's right to a fair trial. In reaching this conclusion, the Court emphasises the breadth of access to the IPT enjoyed by those complaining about interception within the United Kingdom and the absence of any evidential burden to be overcome in order to lodge an application with the IPT. In order to ensure the efficacy of the secret surveillance regime, and bearing in mind the importance of such measures to the fight against terrorism and serious crime, the Court considers that the restrictions on the applicant's rights in the context of the proceedings before the IPT were both necessary and proportionate and did not impair the very essence of the applicant's article 6 rights. As regards article 13, the Court held that the IPT offered to the applicant an effective remedy insofar as his complaint was directed towards the alleged interception of his communications and, in respect of the applicants general complaint under article 8, it reiterated its case law to the effect that article 13 does not require the law to provide an effective remedy where the alleged violation arises from primary legislation, citing in this respect also Leander v United Kingdom 9 EHRR 433. These three cases Leander, Esbester and Kennedy establish that the demands of national security may necessitate and under European Convention law justify a system for handling and determining complaints under which an applicant is, for reasons of national security, unable to know the secret material by reference to which his or her complaint is determined. The critical questions under the Convention are whether the system is necessary and whether it contains sufficient safeguards. But, subject to satisfactory answers on these questions, national security considerations may justify a closed material procedure, closed evidence (even without use of a special advocate) and, furthermore, (as in Kennedy itself) a blanket decision leaving the precise basis of determination unclear. There is however a further decision, even more recent than Kennedy, on which Mr Allen relies in an opposite sense. That is Uukauskas v Lithuania (Application No 16965/04) decided by the Second Section of the Court on 6 July 2010. The applicant had a licence to keep a pistol and hunting rifle. His request for a licence for another kind of firearm was refused and his existing licence was withdrawn, after his listing by the police in an operational records file maintained by the police to hold data for law enforcement bodies obtained during operational activities. He instituted proceedings challenging his listing, and the court, after examining classified material submitted by the police without disclosure to the applicant, upheld the listing. He complained to the European Court of Human Rights on the basis that there had been a breach of article 6(1). The Court said (para 48): The Court is not insensitive to the goals which the Lithuanian law enforcement authorities pursued through their operational activities. Likewise, the Court shares the Government's view that documents which constitute state secrets may only be disclosed to persons who possess the appropriate authorisation. And yet the Court notes that Lithuanian law and judicial practice provide that such information may not be used as evidence in court against a person unless it has been declassified, and that it may not be the only evidence on which a court bases its decision (see paras 20 22 above). It went on to indicate that the file was the only evidence of the applicants alleged danger to society, that he had repeatedly asked for its disclosure to him, even in part, and that, without it, he had no possibility of being apprised of the evidence against him or of being able to respond to it (paras 50 51). The Court concluded (para 51): In conclusion, therefore, the Court finds that the decision making procedure did not comply with the requirements of adversarial proceedings or equality of arms, and did not incorporate adequate safeguards to protect the interests of the applicant. It follows that there has been a violation of article 6(1) in the present case. The case has the special feature that the procedure adopted was contrary to Lithuanian law. Quite probably for this reason, no reference was made to any of the decisions considered in paras 28 to 36 of this judgment. There was evidently also no procedure under Lithuanian law for the use of a special advocate to consider closed material: the choice lay between declassification and no use of the material at all. The decision is therefore very far from the present, and does not offer assistance on the issues which arise on this appeal. (d) Necessity for a closed material procedure in this case In the present case, Mr Allen submits that no necessity is shown for a closed material procedure. He submits that the rule of law and the maintenance of the modern democratic state [will] not [be] imperilled if the Home Office loses this case for want of advancing a secret case. In other words, the worst that may happen is that the Home Office has to pay an unmeritorious claim. On this basis, Mr Allen distinguishes control order cases such as AF (No 3), in which it could be said that national security would be directly imperilled if secret evidence could not be used to justify imposing a control order. This distinction would positively encourage unmeritorious claims; and it would on any view mean that the government could only operate a security vetting system on pain of having to accept or pay all claims for discrimination which appeared sufficiently arguable to avoid being dismissed as abusive. The only other possibility is that a court might, following the Court of Appeal decision in Carnduff v Rock [2001] EWCA Civ 680, [2001] 1 WLR 1786, determine that, if the national security material could not be deployed in defence, the claim might not be fairly justiciable at all. Laws LJ said of this situation in Carnduff (para 36) that . a case which can only be justly tried if one side holds up its hands cannot, in truth, be justly tried at all. Under that possibility, it would be Mr Tariqs case which would fail in limine. Neither of these possibilities is one which the law should readily contemplate. In the penal context, an accused is presumed innocent until proved guilty; there is a public interest in the trial of suspects before a court, but it is better that the state should forego prosecution than that there should be any risk of an innocent person being found guilty through inability to respond to the full case against them. These imperatives do not operate in quite the same way in a civil context like the present, where the state may not be directly involved as a party at all. The rule of law must, so far as possible, stand for the objective resolution of civil disputes on their merits by a tribunal or court which has before it material enabling it to do this. In considering how this may be achieved, if a defendant can only defend itself by relying on material the disclosure of which would damage national security, a balance may have to be struck between the interests of claimant and defendant in a civil context. Mr Allens submission also involves anomalies. The Leander, Esbester and Kennedy cases demonstrate that, had Mr Tariq been claiming that the decision to suspend or remove security clearance was unjustified on its merits, he could not have complained about the use of a closed material procedure. Yet, on Mr Allens submission, all such a claimant would (presumably) have to do would be to claim damages, rather than any other relief. The Home Office could still only defend the claim by disclosing material contrary to the national interest; but, on Mr Allens case, no problem arises: the Home Office would not have to damage the national interest by making disclosure; instead, it could simply admit liability or defend fruitlessly and lose for want of being able to deploy the material. I cannot think that that is the law, in Strasbourg or domestically. (e) The acceptability of a special advocate procedure I do not therefore consider that a closed material procedure is in principle inconsistent with the right to an effective remedy in respect of alleged discrimination or with the Human Rights Convention. But there are further strings to Mr Allens case, which call for closer examination of the actual procedure, in particular the use of a special advocate. A special advocate procedure has been accepted as potentially useful in both United Kingdom and Strasbourg case law. Thus, in A v United Kingdom, addressing the issue of detention of terrorist suspects without trial, the Court of Human Rights said (para 220): The Court further considers that the special advocate could perform an important role in counterbalancing the lack of full disclosure and the lack of a full, open, adversarial hearing by testing the evidence and putting arguments on behalf of the detainee during the closed hearings. However, the special advocate could not perform this function in any useful way unless the detainee was provided with sufficient information about the allegations against him to enable him to give effective instructions to the special advocate. The Court went on: While this question must be decided on a case by case basis, the Court observes generally that, where the evidence was to a large extent disclosed and the open material played the predominant role in the determination, it could not be said that the applicant was denied an opportunity effectively to challenge the reasonableness of the Secretary of State's belief and suspicions about him. In other cases, even where all or most of the underlying evidence remained undisclosed, if the allegations contained in the open material were sufficiently specific, it should have been possible for the applicant to provide his representatives and the special advocate with information with which to refute them, if such information existed, without his having to know the detail or sources of the evidence which formed the basis of the allegations. It concluded by saying that where the open material consisted of general assertions and the decision to maintain the detention was based solely or to a decisive degree on closed material, the procedural requirements of article 5(4) would not be satisfied. Domestically, the House of Lords in both Secretary of State for the Home Department v MB [2007] UKHL 46; [2008] AC 440 and Secretary of State for the Home Department v AF (No 3) [2010] 2 AC 269 accepted a special advocate procedure, while endorsing in AF (No 3) the applicability, in the context of control orders, of the approach taken in A v United Kingdom. Mr Allen draws attention to a report of the Joint Committee on Human Rights of the Houses of Lords and Commons on Counter Terrorism Policy and Human Rights (Session 2006 2007) (HL Paper 157, HC 394), published 30 July 2007, which precedes the cases mentioned in the previous paragraph. The Committee was addressing the use of special advocates in, in particular, control order proceedings, but it also heard evidence from four special advocates (including Ms Farbey who acts in this case), which ranged more widely. It identified a number of concerns. These included, first, the overriding duty to which it saw both SIAC and a court as being subject, to ensure that material was not disclosed contrary to the public interest, in other words its inability to balance the interests of justice to the individual against the public interest in non disclosure (paras 196 and 199). It was also concerned by, secondly, the difficulties presented if closed material was not gisted (paras 195 and 199) and, thirdly, the inflexibility of the prohibition on communication between special advocates and the person concerned or his or her legal representatives, once the special advocate had seen the closed material (paras 203 and 205). The first of these concerns is covered and resolved by case law subsequent to the Joint Committees Report. Under rule 54(2) the employment tribunal or judge has a discretion. This is subject to rule 54(4), according to which a tribunal or judge, when exercising its or his functions, shall ensure that information is not disclosed contrary to the interests of national security. But the tribunal or judge is subject to the overriding objective to deal with cases justly under regulation 3 of the Employment Procedure Regulations, and, most importantly also, obliged under section 3 of the Human Rights Act 1996 to interpret primary and secondary legislation in a way which is compatible with Convention rights. In Secretary of State for the Home Department v MB [2008] AC 440 (decided 31 October 2007), the House of Lords held that paragraph 4(3)(d) of the Prevention of Terrorism Act 2005 (the terms of which parallel those of rule 54(2)) should be read and given effect except where to do so would be incompatible with the right . to a fair trial (para 72, per Lady Hale; and see paras 84 and 92 per Lord Carswell and Lord Brown). The result was that, when and if the court did not consider that material could safely remain closed, the Secretary of State had a choice: either to disclose to the person concerned, or to withdraw reliance on the material. The House followed and applied this reasoning in Secretary of State for the Home Department v AF (No 3) [2010] 2 AC 269, when deciding that persons subject to control orders must be told the gist of the case against them. Applying it in the context of the present secondary legislation in rule 54(2), it means that, even if disclosure of material to the person concerned might involve some potential damage to national security, an employment tribunal or court might, weighing the interests of justice, conclude that either the state should make such disclosure, not merely to the special advocate but also to the person concerned, or it should withdraw any reliance on the material. Likewise, in relation to the third concern, it is a matter of discretion how far such contact is permitted, and the tribunal or judge can and should exercise such discretion flexibly and after balancing the competing interests. The second concern involves consideration of the case law and issue discussed in paras 28 to 37 above and 63 to 68 below. Mr Allen submits, first, that, despite the general endorsement of its potential appropriateness in these cases, the special advocate procedure involves flaws undermining its acceptability; and, secondly, that, even if the special advocate procedure is otherwise acceptable, this can only be on the basis of disclosure of the substance of the Home Offices case (gisting) in respect of Mr Tariq. Since the Court of Appeal accepted this second submission, it arises for consideration as a result of the Home Offices cross appeal. The flaws which Mr Allen identifies relate to the special advocates role and powers and the lack of guidance as to their exercise or supervision. These are matters of detail which he submits have gone largely and unjustifiably without scrutiny in previous cases. As to role, Mr Allen takes issue at the outset with the appointment of special advocates by the Attorney General who is the governments principal legal adviser. This is a point which was addressed and is the subject of previous authority in the form of the House of Lords decision in R v H [2004] UKHL 3; [2004] 2 AC 134, where the suitability of the Attorney General to act in this respect had been questioned in the courts below. Lord Bingham giving the unanimous opinion of the House said (para 46): In our opinion such doubt is misplaced. It is very well established that when exercising a range of functions the Attorney General acts not as a minister of the Crown (although he is of course such) and not as the public officer with overall responsibility for the conduct of prosecutions, but as an independent, unpartisan guardian of the public interest in the administration of justice: see Halsbury's Laws of England, 4th ed, vol 44(1) (1995), para 1344; Edwards, The Law Officers of the Crown (1964), pp ix, 286, 301 302. It is in that capacity alone that he approves the list of counsel judged suitable to act as special advocates or, now, special counsel, as when, at the invitation of a court, he appoints an amicus curiae. Counsel roundly acknowledged the complete integrity shown by successive holders of the office in exercising this role, and no plausible alternative procedure was suggested. It would perhaps allay any conceivable ground of doubt, however ill founded, if the Attorney General were to seek external approval of his list of eligible advocates by an appropriate professional body or bodies, but such approval is not in current circumstances essential to the acceptability of the procedure. Special advocates are appointed from the independent bar or solicitor advocates on the basis of open competition, and are selected for inclusion on the panel on the basis of their abilities. Mr Tariq was able to make representations as to the choice of his special advocate, in accordance with para 98 of the Treasury Solicitors Special Advocates Guide, Special Advocates A Guide to the Role of Special Advocates and the Special Advocates Support Office (SASO). His suggested choice was appointed. Para 88 of the Special Advocates Guide further makes clear that: The role of the Attorney General (or Solicitor General, acting in his place by virtue of section 1 Law Officers Act 1997) in appointing a special advocate is purely formal. No 'instructions' (other than in the purely formal sense) will come from the Law Officers to special advocates indicating any particular way that the case in which the special advocate is instructed is to be argued. That is a matter for special advocates and the appellant, to the extent that the appellant engages with the special advocates. Mr Allens first point on role is therefore one I reject. Mr Allen next submits that special advocates are subject to a conflict of interest which would be prohibited in private litigation. This is said to arise from the fact that they are supported by a unit (SASO) which is located within the Treasury Solicitors Department. It is not disputed (or disputable) that legal and administrative support is necessary for a special advocate procedure to work; and it is unclear as to where else such support might or should be located. The submission is simply that there is an impermissible conflict of interest. Reliance is placed on the Solicitors Code of Conduct 2007. Rule 3 precludes a solicitor from acting (without informed consent) where there is a conflict of interests defined as existing where, inter alia, the solicitor or his firm owes separate duties to act in the best interests of two or more clients in relation to the same or related matters, and those duties conflict, or there is a significant risk that those duties may conflict. Mr Allen further submits that there is no sufficient Chinese wall between SASO and the remainder of the Treasury Solicitors Office to enable reliance on that possibility, which was discussed in the House of Lords in Prince Jefri Bolkiah v KPMG [1999] 2 AC 222. In my opinion, these objections also fail. As to the former, the Treasury Solicitor does not have two clients and is not in breach of the professional code. The special advocate is an independent (security cleared) member of the bar or solicitor advocate, who is not professionally engaged by or on behalf of Mr Tariq, though he or she is charged to represent Mr Tariqs interests. As the Special Advocates Guide states (para 113): Actual conflicts of interest in the usual sense do not arise, since a special advocate owes no duty to the person whose interests he represents. However, a special advocate should be careful to ensure that no situation arises in which there could be any perception of anything other than absolute independence on his part. The Guide then reminds special advocates of the need for care to avoid any perceived conflict of interest when undertaking the role as well as in the future. SASO, which supports special advocates, operates for all practical purposes as a separate unit, with an established Chinese wall arrangement dividing it from the rest of the Treasury Solicitors Office. Maurice Kay LJ set out the position (para 30): SASO was set up in 2006 in response to the recommendation of the Constitutional Affairs Select Committee in its report on the operation of the Special Immigration Appeals Commission and use of SAs [special advocates] (7th report, session 2004 2005, 3 April 2005). The functions of SASO are described in Special Advocates A Guide to the Role of Special Advocates and the Special Advocates' Support Office, which is published on the Treasury Solicitor's Department's website. It is SASO that provides an SA with formal instructions. It also provides legal and administrative support to SAs and acts as the librarian of closed case law for them. Although formal instructions originate with SASO, it has no input into decisions such as whether to appeal a closed adverse judgment or to open part of a closed judgment. Such matters are for the independent judgment of the SA alone. Although SASO is physically located within the premises of the Treasury Solicitor at One Kemble Street, it has an established Chinese wall arrangement and is for all practical purposes a separate entity. It comprises five lawyers and three administrators. Four lawyers and two administrators form the SASO (closed) team, the remaining lawyer and administrator forming the SASO (open) team. The open team does not have security clearance. It alone communicates with the litigant's open representatives. Although other relevant litigation teams within the office of the Treasury Solicitor are able to share their facilities, this is not so in relation to SASO's resources and facilities. It has completely separate document handling, communication, storage and technology facilities. The four lawyers who carry out casework on cases in which the SAs are instructed do not carry out any work for any other part of the Treasury Solicitor's office. The fifth lawyer is at Grade 6 level. He does not have his own casework in relation to cases involving SAs. His role is more supervisory and he has a wider line management role which extends to the general private law litigation team. He may report to the Attorney General but only in relation to open issues in matters where SAs are instructed. In addition, in order to protect the independence of the SASO team, there are conflict checks to ensure that other members of the private law team do not act in cases which are in any way relevant to SASO. Mr Allen challenges the adequacy of this system. The information about its operation based on the Special Advocates Guide was amplified by a Home Office note produced during the Court of Appeal hearing. Mr Tariq invites scepticism about information provided in the context of litigation in which, he suggests, the Treasury Solicitor has an interest in the status quo. The information that SASO operates on a Chinese wall basis with the Treasury Solicitor teams who represent the Government in cases in which special advocates appear is however contained in the Special Advocates Guide (para 87). The arrangements described in both documents evidence a serious intention to achieve such a separation, and there is no reason to doubt their genuineness or efficacy. Significantly, as Maurice Kay LJ indicated in the passage quoted above, the position is that, although formal instructions originate with SASO, SASO has no input into special advocates decisions, which are taken only by the relevant independent special advocate. One can also be confident that, if any special advocate or court at any point suspected that the separation between SASO and other government legal teams was in any way incomplete, this would at once be brought to light. Maurice Kay LJ, based on his own experience, commented (para 32): If I may be permitted a subjective observation: if such problems were evident they would be expected to provoke adverse judicial comment but, in my experience, the system, although inherently imperfect, enjoys a high degree of confidence among the judges who deal with cases of this kind on a regular basis. In these circumstances, Mr Allen focuses on the fifth of the five SASO lawyers, a grade 6 lawyer who has no case work responsibility at all, but who does have a line management role in relation to both the SASO team and the Treasury Solicitors general private law team. He also chairs the monthly special advocates meetings at which cases and tactics are discussed, the minutes of which are sent to the Attorney Generals office, and he may occasionally brief the Attorney Generals office on open issues only. After pointing out that a person in Mr Tariqs position will instruct the special advocate before any closed material procedure begins, Mr Allen suggests that the description given of the grade 6 lawyers activity means that the content of such instructions could be shared with parts of the Treasury Solicitors office outside the SASO team or even with the Attorney General. I do not regard this as realistic. Substantive legal decisions are, as stated, taken by the special advocate. The grade 6 lawyer has no case work responsibility, and would not on the face of it be likely even to know of any instructions given by Mr Tariq. Even if he did know, disclosure to anyone outside the SASO team would involve a serious breach of his duty. There is no reason to think that minutes of the monthly meeting circulated to the Attorney Generals office would disclose such instructions, and the special advocate would presumably receive them and ensure that they did not. There is also no reason to think any briefing of the Attorney Generals office could or would go into detail about individual cases, still less about instructions given by Mr Tariq. It is clear that the Attorney General has no role and no detailed knowledge in relation to individual cases. In Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 the House was concerned with accountants (KPMG) who were in possession of information confidential to a former client (Prince Jefri) which might be relevant to instructions which they then accepted from the Brunei Investment Agency, of which Prince Jefri had been chairman, to investigate the whereabouts of certain assets suggested to have been used by Prince Jefri for his own benefit. The House granted an injunction restraining KPMG from acting for the Agency. It held that the burden was on KPMG to show that there was no risk of the information coming into the possession of those within KPMG acting for the Agency. KPMG had attempted to erect a Chinese wall, but this was ad hoc and within a single department; further the two teams involved one which had acted for Prince Jefri and the one which was acting for the Agency contained large and rotating memberships of persons accustomed to working with each other. In these circumstances, the House held that, although there was no rule of law that Chinese walls or other similar arrangements were insufficient, nevertheless, to eliminate the risk, an effective Chinese wall needs to be an established part of the organisational structure of the firm, not created ad hoc and dependent on the acceptance of evidence sworn for the purpose by members of staff engaged on the relevant work (per Lord Millett, at p 239D E). The present case falls into an opposite category. SASO has a small team which works separately under arrangements which are not ad hoc, but well established, and it uses the services of independent outside special advocates, who can be relied upon to reinforce the culture and reality of such separation. There is no reason to doubt the genuineness and efficacy of the Chinese wall which has been set up in this way to service special advocates needs, in particular by providing assistance described in para 90 of the Special Advocates Guide. Mr Allen makes other further criticisms of the arrangements for special advocates: he submits that special advocates lack supervision, that there is insufficient guidance as to their role and that they lack any or sufficiently defined powers in respect of matters such as disclosure, the calling and cross examination of witnesses and appeal. I do not regard these criticisms as well founded or as rendering the whole closed material procedure unfair. Special advocates are experienced independent practitioners, accustomed to act of their own initiative and to take difficult decisions, and able to raise points of doubt or difficulty with the tribunal or court before which they appear. The special advocates role is familiar in a variety of contexts. It has been extensively described in the Special Advocates Guide. It divides into two parts, the open and closed. The Guide notes that throughout the open part, where the parties are exchanging open material, the special advocate will have the opportunity to meet the person in whose interests he or she is to act and to obtain as good an understanding as possible of his or her case (paras 99 100). Once the open stages have been completed the Secretary of State will serve his or her closed material upon the special advocate only (paras 101 102). The Guide goes on (para 102): The receipt of closed material marks the end of the period in which the special advocate may communicate directly with the appellant. It should be noted that communication with the appellant is still possible at this point but any communication from the special advocate to the appellant after this time requires the permission of the Court and the proposed format of it must be notified to the Secretary of State who can make objections if he so wishes (see SIAC Rule 36(4) and CPR 76.25(4)). During the closed phase, the special advocates role was summarised by Sedley LJ in Murungaru v Secretary of State for the Home Department [2008] EWCA Civ 1015, [2009] INLR 180 in this way at para 17: The ways in which a special advocate will seek to represent the interests of an appellant are, first, to test by cross examination, evidence and argument the strength of the case for non disclosure. Secondly, to the extent that non disclosure is maintained, the special advocate is to do what he or she can to protect the interests of the appellant, a task which has to be carried out without taking instructions on any aspect of the closed material. In relation to the protection of the interests of the person in Mr Tariqs position in relation to disclosure after the closed phase has begun, the Guide amplifies the special advocates role (in the largely parallel context of his or her role in proceedings before SIAC) as follows (para 103): It is now for the special advocate to take a view himself on the material and to decide whether any of what is contained within the closed material should in fact be made open (and therefore be disclosed to the appellant) because its disclosure would not harm the public interest e.g. the material is already in the public domain or could not be regarded as damaging to national security or other public interests. Sometimes, the special advocate will submit that a summary or gist of the material could be safely disclosed to the appellant. The special advocate has a period after service of the closed material in which to consider and prepare written submissions on what, if any, of the 'closed' material should become open. These are known as rule 38 submissions in SIAC and rule 29 submissions in Control Order proceedings (although they are in fact governed by CPR 76.29). These submissions may also include requests to the Secretary of State for further information or documents to be provided to the special advocate. This period has usually in SIAC been a period of two to three weeks (although no period is specified see SIAC Rules rule 38(3)). In the CPR, similar provisions specify a period of two weeks for the special advocate to indicate whether he challenges the Secretary of state's assessment of what is open and what is closed (see rule 76.29(3)), though the Court may modify it in appropriate circumstances. With regard to the hearing on the merits, the special advocate will be present during the open part, when he or she will have the opportunity to observe how the case is put by counsel both for and against the person whose interests the special advocate will be protecting during the closed phase. The closed hearing will take place, and all but the special advocate and the Secretary of State will withdraw. I see no reason why a special advocate may not, where appropriate, take steps to call factual or expert evidence during the closed phase, if necessary applying for any necessary witness summons. The Guide is in my view correct in contemplating this (para 108): There is also a possibility that the special advocate may call his own witnesses. This latter has never, to date, been undertaken, certainly not in a SIAC context. There appears no reason in principle, however, why this should not be possible, and special advocates in proceedings in the High Court will have the considerable advantage of being able to call on both the remainder of the CPR (insofar as not disapplied) and on the inherent jurisdiction of the Court to achieve such an end. In its June 2005 Response to the Constitutional Affairs Select Committee's Report into the Operation of SIAC and the Use of Special Advocates, the Government acknowledged that it is, in principle, open to special advocates in SIAC appeals to call expert evidence. On any appeal, it is well established that the special advocate is able both to appear and represent an appellants interests in any closed phase of the appeal. Mr Allen suggests that the special advocates role in positively instituting an appeal in relation to events or decisions occurring during the closed phase is insufficiently clear. Again (and consistently with Maurice Kay LJs description in para 30, cited in para 50 above) I see no reason why the special advocates role should not embrace this. The special advocate may, with the courts permission, communicate with Mr Tariq, even after the closed phase has begun (para 50 above); the court would no doubt permit a special advocate to inform a person in Mr Tariqs position that there were closed matters which merited consideration on appeal, even though such matters could not in any way be disclosed. In this way, an appeal could be lodged to enable the special advocate to pursue such matters, although the subject matter and basis of the appeal would remain unknown to the person in Mr Tariqs position. Reference to the Court of Justice Mr Allen submits that the Supreme Court should refer to the Court of Justice points arising in this case on which European Union law is relevant. Article 267 of the Treaty on the European Union provides: The Court of Justice of the European Union shall have jurisdiction to give preliminary rulings concerning: (a) the interpretation of the Treaties; (b) the validity and interpretation of acts of the institutions, bodies, offices or agencies of the Union; Where such a question is raised before any court or tribunal of a Member State, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court to give a ruling thereon. Where any such question is raised in a case pending before a court or tribunal of a Member State against whose decisions there is no judicial remedy under national law, that court or tribunal shall bring the matter before the Court The principles of European Union law which arise for consideration in this case are clear. There must in particular be effective legal protection in respect of the rights not to be discriminated against which Mr Tariq invokes, and, so far as guidance is necessary, it is to be found for the relevant purposes in the European Convention on Human Rights and the case law of the European Court of Human Rights. The principles which the European Court of Human Rights would apply in the area of national security have been confirmed recently by the decision in Kennedy. The questions before the Supreme Court involve the application of such principles to the circumstances of this case, and in particular to the closed material procedure involving a special advocate which the Employment Tribunal has ordered. There is on this basis no question of interpretation of the European Treaties which calls for a reference under article 267 as explained by the Court of Justice in Case 283/81 Srl CILFIT v Ministry of Health [1982] ECR 3415. It is not the role of the Court of Justice to rule on the application of established general criteria to a particular provision or arrangement, which must be considered in the light of the particular circumstances of the case in question: compare Case C 237/02 Freiburger Kommunalbauten GmbH Baugesellschaft & Co KG v Hofstetter [2004] 2 CMLR 291, paras 21 23, explaining and distinguishing Joined Cases C 240/98 to 244/98 Ocano Grupo Editorial SA v Murciano Quintero [2002] 1 CMLR 1226. I add that, if Mr Tariq were to have cause for complaint about the application of the relevant legal principles as established by the European Convention on Human Rights, there will always exist the potential to seek redress in Strasbourg. The European Court of Human Rights is not limited to the examination of questions of interpretation or law arising under the Convention, but will re examine the fairness of their application as a whole in the light of the circumstances of the particular case. It follows that I would hold that the use of a closed material procedure before the Employment Tribunal was and is lawful in the present case, and dismiss Mr Tariqs appeal accordingly. The Home Offices appeal It is as well to bear in mind at the outset that the general nature of the Home Offices case has been communicated to Mr Tariq. It is that the Home Office was concerned in August 2006 that [Mr Tariq] could be vulnerable to an approach to determine if terrorist suspects had been flagged to the authorities or to smuggle prohibited items airside and that its decision to withdraw security clearance in December 2006 was based on [his] close association with individuals suspected of involvement in plans to mount terrorist attacks and on its view that association with such individuals might make him vulnerable to attempts to exert undue influence on [him] to abuse his position: para 5 above; Mr Tariq must be able to meet this case on a general basis, in particular, by disclosing and describing his relationship and the nature and extent of his association with those of his relatives suspected and his cousin who was ultimately convicted of terrorist activity; and he has, further, on the basis of, in particular, his questioning in interview also been able to mount a sufficiently arguable case of discrimination to avoid any application to strike out his claim: para 6 above. What is in issue is the declaration made by the Employment Appeal Tribunal and upheld by the Court of Appeal to the effect that article 6 of the European Convention on Human Rights requires [Mr Tariq] to be provided with the allegations being made against him in sufficient detail to enable him to give instructions to his legal team so that those allegations can be challenged effectively: para 3 above. This is worth repeating, because some language used in the Court of Appeal might suggest that Mr Tariq knew nothing at all of the nature of the case against him, as opposed to particular allegations supporting it. Thus, for example, Maurice Kay LJ said that, although a closed material procedure was in principle justified, it was none the less the right of a litigant to know the essence of the case against him, if necessary by gisting ([2010] ICR 1034, para 43). He went on to acknowledge that, in a particular case, this may put the public authority in the invidious position of having to make difficult decisions about disclosure and whether or how a claim is to be defended, but said that all that is for the future in this litigation. It is the consequence of the requirements of justice. The Home Office by its appeal challenges this conclusion, pointing out that it raises directly the dilemma addressed by the Court of Appeal in the case of Carnduff v Rock [2001] EWCA Civ 680, [2001] 1 WLR 1786. If the disclosure of material would harm national security, but without disclosure the public authority could not defend and would have to capitulate, the claim itself may not be justiciable. The appeal raises the question whether there is an absolute requirement that a claimant should him or herself see and know the allegations forming the basis of the states defence in sufficient detail to give instructions to the defence legal team to enable the allegations to be challenged effectively. One problem about the declaration made by the Employment Appeal Tribunal and upheld by the Court of Appeal is that it is questionable whether or how far it differs in any significant way from the ordinary duty of any party in any litigation to disclose the nature of its factual allegations, where no issue of national security arises at all. A second point is that the declaration made does not correspond with any requirement expressed in section 7 of the Employment Tribunals Act 1996 or in the language of the statutory instruments made under that Act. But the submission is no doubt that, if the Convention requires gisting of the nature declared in every case, even though this could damage national security, then the court should under section 3 of the Human Rights Act 1998 find it possible to read into the Employment Tribunals Act 1996 and the ET Procedure Rules and ET National Security Rules introduced under it, some qualification to enable such gisting to occur. The question is therefore whether there is in the European Convention on Human Rights, as explained by the European Court of Human Rights, any such absolute requirement, where this would involve the disclosure to Mr Tariq of the detail of allegations which would in normal litigation require to be disclosed, but which the interests of national security require to be kept secret. Clearly, it is a very significant inroad into conventional judicial procedure to hold a closed material procedure admissible, if it will lead to a claimant not knowing of such allegations in such detail. As the Home Office acknowledges, it is an inroad which should only ever be contemplated or permitted by a court, if satisfied after inspection and full consideration of the relevant material as well as after hearing the submissions of the special advocate, that it is essential in the particular case; and this should be kept under review throughout the proceedings. However, to say that it is not possible under the Convention as interpreted by the Court in Strasbourg is in my view impossible, in the light of the clear line of jurisprudence culminating in the Courts decision in Kennedy which I have already discussed in paras 27 to 37 above. It is significant that, when the Court of Appeal reached its decision, it did not have the benefit of Kennedy. I would therefore allow the Home Offices appeal, and set aside the declaration made below to the effect that there exists an absolute requirement that Mr Tariq personally or his legal representatives be provided with sufficient detail of the allegations made against him to enable him to give instructions to his legal representatives on them. As I have indicated, both Mr Tariq and his legal representatives already know of the general nature of the Home Offices case. The Employment Tribunal will, with the assistance of the special advocate, keep under review and will be able to determine whether any and what further degree of gisting of the Home Offices case, or of disclosure regarding the detail of allegations made in support of it, is required, having regard to (a) the nature of the relevant allegations and of the national security interest in their non disclosure and in the light of its best judgment as to (b) the significance of such allegations for the Home Offices defence and (c) the significance for Mr Tariqs claim of the disclosure or non disclosure of such allegations to him. Employment Tribunals Act 1996, section 10 ANNEX (judgment, para 9) (5) Employment tribunal procedure regulations may make provision enabling a Minister of the Crown, if he considers it expedient in the interests of national security (a) to direct a tribunal to sit in private for all or part of particular Crown employment proceedings; (b) to direct a tribunal to exclude the applicant from all or part of particular Crown employment proceedings; (c) to direct a tribunal to exclude the applicant's representatives from all or part of particular Crown employment proceedings; (d) to direct a tribunal to take steps to conceal the identity of a particular witness in particular Crown employment proceedings; (e) to direct a tribunal to take steps to keep secret all or part of the reasons for its decision in particular Crown employment proceedings. (6) Employment tribunal procedure regulations may enable a tribunal, if it considers it expedient in the interests of national security, to do in relation to particular proceedings before it anything of a kind which, by virtue of subsection (5), employment tribunal procedure regulations may enable a Minister of the Crown to direct a tribunal to do in relation to particular Crown employment proceedings. (7) In relation to cases where a person has been excluded by virtue of subsection (5)(b) or (c) or (6), employment tribunal procedure regulations may make provision (a) for the appointment by the Attorney General . of a person to represent the interests of the applicant; . The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 (SI 2004/1861) Schedule 1 The Employment Tribunals Rules of Procedure 54(1) A Minister of the Crown (whether or not he is a party to the proceedings) may, if he considers it expedient in the interests of national security, direct a tribunal or Employment Judge by notice to the Secretary to: (a) conduct proceedings in private for all or part of particular Crown employment proceedings; (b) exclude the claimant from all or part of particular Crown employment proceedings; (c) exclude the claimant's representative from all or part of particular Crown employment proceedings; (d) take steps to conceal the identity of a particular witness in particular Crown employment proceedings. (2) A tribunal or Employment Judge may, if it or he considers it expedient in the interests of national security, by order (a) do in relation to particular proceedings before it anything which can be required by direction to be done in relation to particular Crown employment proceedings under paragraph (1); (b) order any person to whom any document (including any judgment or record of the proceedings) has been provided for the purposes of the proceedings not to disclose any such document or the content thereof: (i) to any excluded person; (ii) in any case in which a direction has been given under [sub ]paragraph (l)(a) or an order has been made under [sub ]paragraph (2)(a) read with sub paragraph (1)(a), to any person excluded from all or part of the proceedings by virtue of such direction or order; or (iii) in any case in which a Minister of the Crown has informed the Secretary in accordance with paragraph (3) that he wishes to address the tribunal or Employment Judge with a view to an order being made under sub paragraph (2)(a) read with sub paragraph (l)(b) or (c), to any person who may be excluded from all or part of the proceedings by virtue of such an order, if an order is made, at any time before the tribunal or Employment Judge decides whether or not to make such an order; (c) take steps to keep secret all or part of the reasons for its judgment. The tribunal or Employment Judge (as the case may be) shall keep under review any order it or he has made under this paragraph. (3) In any proceedings in which a Minister of the Crown considers that it would be appropriate for a tribunal or Employment Judge to make an order as referred to in paragraph (2), he shall (whether or not he is a party to the proceedings) be entitled to appear before and to address the tribunal or Employment Judge thereon. The Minister shall inform the Secretary by notice that he wishes to address the tribunal or Employment Judge and the Secretary shall copy the notice to the parties. (4) When exercising its or his functions, a tribunal or Employment Judge shall ensure that information is not disclosed contrary to the interests of national security. The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 Schedule 2 The Employment Tribunals (National Security) Rules of Procedure 8 Special advocate (1) In any proceedings in which there is an excluded person the tribunal or Employment Judge shall inform the Attorney General of the proceedings before it with a view to the Attorney General , if he thinks it fit to do so, appointing a special advocate to represent the interests of the claimant in respect of those parts of the proceedings from which (a) any representative of his is excluded; (b) both he and his representative are excluded; or (c) he is excluded, where he does not have a representative. (2) A special advocate shall have a general qualification for the purposes of section 71 of the Courts and Legal Services Act 1990 or shall be an advocate or a solicitor admitted in Scotland. (3) Where the excluded person is the claimant, he shall be permitted to make a statement to the tribunal or Employment Judge before the commencement of the proceedings, or the part of the proceedings, from which he is excluded. (4) Except in accordance with paragraphs (5) to (7), the special advocate may not communicate directly or indirectly with any person (including an excluded person) (a) (except in the case of the tribunal, Employment Judge and the respondent) on any matter contained in the grounds for the response referred to in rule 3(3); (b) (except in the case of a person who was present) on any matter discussed or referred to during any part of the proceedings in which the tribunal or Employment Judge sat in private in accordance with a direction or an order given or made under rule 54. (5) The special advocate may apply for orders from the tribunal or Employment Judge authorising him to seek instructions from, or otherwise to communicate with, an excluded person (a) on any matter contained in the grounds for the response referred to in rule 3(3); or (b) on any matter discussed or referred to during any part of the proceedings in which the tribunal or Employment Judge sat in private in accordance with a direction or an order given or made under rule 54. (6) An application under paragraph (5) shall be made in writing to the Employment Tribunal Office and shall include the title of the proceedings and the grounds for the application. (7) The Secretary shall notify the Minister of an application under paragraph (5) and the Minister shall be entitled to address the tribunal or Employment Judge on the application. (8) In these rules and those in Schedule I, in any case in which a special advocate has been appointed to represent the interests of the claimant in accordance with paragraph (I), any reference to a party shall (save in those references specified in paragraph (9)) include the special advocate. 10 Reasons in national security proceedings (1) This rule applies to written reasons given under rule 30 of Schedule 1 for a judgment or order made by the tribunal or Employment Judge in national security proceedings. (2) Before the Secretary sends a copy of the written reasons ('the full written reasons') to any party, or enters them in the Register under rule 32 of Schedule I, he shall send a copy of the full written reasons to the Minister. (3) If the Minister considers it expedient in the interests of national security and he has given a direction or the tribunal or an Employment Judge has made an order under rule 54 in those proceedings, the Minister may (a) direct the tribunal or Employment Judge that the full written reasons shall not be disclosed to persons specified in the direction, and to prepare a further document ('the edited reasons') setting out the reasons for the judgment or order, but with the omission of such of the information as is specified in the direction; (b) direct the tribunal or Employment Judge that the full written reasons shall not be disclosed to persons specified in the direction, but that no further document setting out the tribunal or Employment Judge's reasons should be prepared. (4) Where the Minister has directed the tribunal or Employment Judge in accordance with sub paragraph 3(a), the edited reasons shall be signed by the Employment Judge and initialled in each place where an omission has been made. (5) Where a direction has been made under sub paragraph (3)(a), the Secretary shall (a) send a copy of the edited reasons referred to in subparagraph (3)(a) to any person specified in the direction and to the persons listed in paragraph (7); (b) enter the edited reasons in the Register, but omit from the Register the full written reasons; and (c) send a copy of the full written reasons to the persons listed in paragraph (7). (6) Where a direction has been made under sub paragraph (3)(b), the Secretary shall send a copy of the full written reasons to the persons listed in paragraph (7), but he shall not enter the full written reasons in the Register. (7) The persons to whom full written reasons should be sent in accordance with paragraph (5) or (6) are (a) the respondent; (b) the claimant or the claimant's representative if they were not specified in the direction made under paragraph (3); (c) if applicable, the special advocate; (d) where the proceedings were referred to the tribunal by a court, to that court; and (e) where there are proceedings before a superior court (or in Scotland, an appellate court) relating to the decision in question, to that court. The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 Regulation 2 Definitions excluded person means, in relation to any proceedings, a person who has been excluded from all or part of the proceedings by virtue of: (a) a direction of a Minister of the Crown under rule 54(1)(b) or (c) of Schedule 1, or (b) an order of the tribunal under rule 54(2)(a) read with 54(1)(b) or (c) of Schedule 1; national security proceedings means proceedings in relation to which a direction is given under rule 54(1) of Schedule 1, or an order is made under rule 54(2) of that Schedule; special advocate means a person appointed in accordance with rule 8 of Schedule 2 . LORD HOPE I agree that, for the reasons so fully set out by Lord Mance in his judgment and the further reasons given by Lord Brown and Lord Dyson, the appeal by the Home Office should be allowed and that the cross appeal by Mr Tariq should be dismissed. At the heart of both the appeal and the cross appeal are two principles of great importance. They pull in different directions. On the one hand there is the principle of fair and open justice. As OConnor J declared in Hamdi v Rumsfeld 542 US 507 (2004), 533, parties whose rights are to be affected are entitled to be heard and in order that they may enjoy that right they must first be notified. In European Convention terms, this is the principle of equality of arms which is part of the wider concept of a fair trial: Kennedy v United Kingdom (Application No 26839/05) (unreported) 18 May 2010, para 184. On the other there is the principle that gives weight to the interests of national security. This is one of the legitimate aims referred to in articles 8(2), 10(2) and 11(2) of the Convention. The extent of the discretion that must be accorded to the national authorities in this field was recognised in Leander v Sweden (1987) 9 EHHR 433, para 59. National security was described as a strong countervailing public interest in Kennedy, para 184. But it must be weighed against the fundamental right to a fair trial. The context will always be crucial to a resolution of questions as to where and how this balance is to be struck. Mr Tariq was employed by the Home Office in a capacity for which security clearance was required in the interests of national security. To be effective security vetting will usually, if not invariably, require to be carried out in secret. Its methods and the sources of information on which it depends cannot be revealed to the person who is being vetted. Those who supply the information must be able to do so in absolute confidence. In some cases, their personal safety may depend on this. The methods, if revealed to public scrutiny, may become unusable. These are the unusual circumstances in which the claim Mr Tariq seeks to make in this case must be determined. Mr Tariqs complaint against the Home Offices decision to suspend his security clearance is that it was based on grounds that amounted to direct or indirect discrimination against him on grounds of his race and religion. There is no doubt that he is entitled to a fair and public hearing in the relevant tribunal of his claim that the rights conferred on him by the Race Relations Act 1976 and the Employment Equality (Religion or Belief) Regulations 2003 (SI 2003/1660) have been breached. The principle of equal treatment is part of European Union law, but it is for national law to ensure that the right to a fair hearing is respected according to the principles established under the European Convention. By section 10(6) of the Employment Tribunals Act 1996 it is provided that the employment tribunal procedure regulations may enable a tribunal, if it considers it expedient in the interests of national security, to adopt a closed procedure. Section 10(7) of the 1996 Act provides that the procedure regulations may make provision in that event for the appointment by the Attorney General of a special advocate to represent the interests of the applicant. The provisions that were made in the exercise of that power are to be found in the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 (SI 2004/1861). Rule 54 of Schedule 1 to the Regulations provides for the use of closed procedure, and rule 8 of Schedule 2 provides for the appointment of special advocates. No one doubts Mr Tariqs right not to be discriminated against on grounds of his race or his religion. But it was his own choice to seek employment in a post for which, in the interests of national security, security clearance was required. He was a volunteer, not a conscript. This is not a case where he is the victim of action taken against him by the state which deprived him of his fundamental rights. Furthermore, as I have already indicated, security vetting is a highly sensitive area. Its intensity will no doubt vary from case to case, but common to them all is the need to preserve the integrity of sources of information and the methods of obtaining it. That must always be the paramount consideration, whatever the nature of the proceedings in which the issue arises. It ensures that the national interest is protected when people are appointed to posts where security clearance is required. Issues of employment and discrimination law raised by people appointed to those posts may require access to the way this process has been carried out. It was no doubt for that reason that the use of the closed procedure and the appointment of special advocates was expressly authorised by the statute. The question then is whether the difficulties that Mr Tariq faces in making good his discrimination claim are sufficiently counterbalanced by the procedures that the Home Office wishes the employment tribunal to adopt. First, there is the use of the closed procedure for the consideration of the material on which the Home Office wishes to rely in its defence. Is the procedure that the Regulations have prescribed for use in national security cases compatible with European Union law? This is the point raised by Mr Tariqs cross appeal. Second, if the use of the closed procedure is lawful, how is it to be applied in this case? Is the Home Office obliged to give sufficient detail of the material on which it relies to enable Mr Tariq to give detailed instructions to his special advocate to enable that material to be challenged effectively? This is the point raised by its appeal. The Court of Appeal held that the principle illustrated by Secretary of State for the Home Department v AF (No 3) [2009] UKHL 28, [2010] 2 AC 269 must apply. This was despite the fact that this would put the Home Office in the invidious position of having to make decisions as to whether, and if so how, the claim was to be defended: [2010] EWCA Civ 462, [2010] ICR 1034, para 50. I have found the second issue more troublesome than the first. As to the first, which is the issue raised in Mr Tariqs cross appeal, the question is whether the use of the closed procedure in cases of this type impairs the very essence of his right to a fair trial. The right to a fair trial itself is an absolute right, but rights that are to be implied from article 6 of the European Convention are not: Brown v Stott [2003] 1 AC 681, 719. Their purpose is to give effect, in a practical way, to the fundamental right. The right to a fair hearing must ordinarily carry with it the right to have proceedings conducted in open court, with full disclosure by both sides. But, for the reasons already mentioned, the use of an open procedure where details of the security vetting process are in issue cannot be resorted to without risk to the integrity of the system which in the national interest must be preserved. The observations of the Court of Justice in Joined Cases C 402/05P and C 415/05P Kadi v Council of the European Union [2009] AC 1225, para 344 indicate that European law is willing to accept a closed material procedure in the interests of national security so long as the individual is accorded a sufficient measure of procedural justice. That this is the position that the Strasbourg court too has adopted is amply demonstrated by its decisions in Kennedy v United Kingdom, paras 184 190. Parliament has expressed a clear democratic judgment that the tribunal may in its discretion make use of the closed procedure with the assistance of a special advocate. As for the procedure that the 2004 Regulations provide for, several features indicate that the balance has been struck in the right place. First, there is the fact that, under the procedure provided for by rule 54(2) of Schedule 1 to the Regulations, the decision as to whether closed procedure should be resorted to rests with the tribunal or the employment judge. The fact that the decision is taken by a judicial officer is important. It ensures that it is taken by someone who is both impartial and independent of the executive. Second, there is the fact that, as this is a judicial decision, it will not be taken without hearing argument in open court from both sides. It will be an informed decision, not one taken without proper regard to the interests of the individual. Third, it opens the door to the use of the special advocate. Fourth, it is a decision that can and should be kept under review as the case proceeds: see the last sentence of rule 54(2). Fifth, the special advocate can and should be heard as the process of keeping it under review proceeds. As against all that, account must be taken of the consequences for national security if this procedure were not to be available to the tribunal. Without it, there would be a stark choice: to conduct the entire defence in open proceedings however damaging that might be to the system of security vetting, and in particular to those who contributed to it in this case; or to concede the case and accept the consequences. They would not only be financial. They would lead to the government being seen as an easy target for unjustified claims. That would be a field day for the unscrupulous. They could lead to tensions if those who were in a position to make discrimination claims were thought to be enjoying an unfair advantage because their claims were not likely to be contested if they were to be pressed to the point of a public hearing. I think that the balance lies firmly in favour of allowing the tribunal, in its discretion, to make use of the closed procedure. I would dismiss the cross appeal. As for the second issue, there is a very real problem. Procedural justice indicates that Mr Tariq should be given sufficient information to enable him to give detailed instructions to his special advocate so that she can challenge the withheld material on his behalf. But Mr Eadie QC for the Home Office insists that the process of gisting as envisaged in Secretary of State for the Home Department v AF (No 3) [2010] 2 AC 269 cannot be resorted to in this case without risk to those who were involved in the security vetting process. In the AF (No 3) case I said that what would be needed would vary from case to case, and that the judge would be in the best position to strike the balance between what was needed to enable the special advocate to challenge the case against the individual and what could properly be kept closed: para 86. But I also said that if the concept of an effective challenge was to be applied, where detail matters it must be met by detail: para 87. That is what Mr Eadie objects to in this case. Here again the context for the argument is what matters. This is an entirely different case from Secretary of State for the Home Department v AF (No 3). There the fundamental rights of the individual were being severely restricted by the actions of the executive. Where issues such as that are at stake, the rule of law requires that the individual be given sufficient material to enable him to answer the case that is made against him by the state. In this case the individual is not faced with criminal proceedings against him or with severe restrictions on personal liberty. This is a civil claim and the question is whether Mr Tariq is entitled to damages. He is entitled to a fair hearing of his claim before an independent and impartial tribunal. But the Home Office says that it cannot defend the claim in open proceedings as, for understandable reasons, it cannot reveal how the security vetting was done in his case. That conclusion is unavoidable, given the nature of the work Mr Tariq was employed to do. How then is the balance to be struck here? Mr Tariq will be at a disadvantage if the closed procedure is adopted. But the disadvantage to the Home Office is greater, as unless the closed procedure is adopted it will have to concede the claim. There is no way that the disadvantage to the Home Office can be minimised. It will simply be unable to defend itself. It will be unable to obtain a judicial ruling on the point at all. That would plainly be a denial of justice. The disadvantage to Mr Tariq, on the other hand, is less clear cut. He is not entirely without information, as the general nature of the Home Offices case has been disclosed to him. He will have the services of the special advocate, with all that that involves second best by far, no doubt, but at least the special advocate will be there. His claim will be judicially determined by an independent and impartial tribunal, which can be expected to take full account of the fact that the details of the case for the Home Office have had to be kept closed. If inferences have to be drawn because of the quality or nature of the evidence for the Home Office, they will have to be drawn in Mr Tariqs favour and not against him. And throughout the process the need for the evidence to be kept closed will be kept under review as rule 54 of Schedule 1 to the Regulations requires, with the assistance of the special advocate. There cannot, after all, be an absolute rule that gisting must always be resorted to whatever the circumstances. There are no hard edged rules in this area of the law. As I said at the beginning, the principles that lie at the heart of the case pull in different directions. It must be a question of degree, balancing the considerations on one side against those on the other, as to how much weight is to be given to each of them. I would hold that, given the nature of the case, the fact that the disadvantage to Mr Tariq that the closed procedure will give rise to can to some extent be minimised and the paramount need to protect the integrity of the security vetting process, the balance is in favour of the Home Office. I would allow the appeal. LORD BROWN I have read Lord Mances comprehensive judgment and, like him, would allow the Home Offices appeal and dismiss Mr Tariqs cross appeal. As to the cross appeal the question whether a closed material procedure in the employment tribunal can ever be compatible with the Race Directive and the Equal Treatment Framework Directive there is almost nothing I wish to add to Lord Mances judgment. To my mind plainly it can. The submission that it is never necessary for reasons of national security to deploy secret evidence in employment tribunal discrimination proceedings because instead the government can simply pay up I find not merely unpersuasive but wholly preposterous. Is it seriously to be suggested that, however unmeritorious such claims may be, the complainant should simply be paid off? Taxpayers money aside, consider the appalling consequences for the governments reputation were there to be a succession of findings of unlawful racial or religious discrimination and the insidious effect of all this upon relations between different racial groups. As for the appeal in effect the question whether a complainant in Mr Tariqs position has to be provided with sufficient details of the allegations being made against him (however sensitive the information on which they are based) to enable him to give instructions to his special advocate in order effectively to challenge them I conclude no less clearly that this is not required. On this question, however, I wish to add a few further thoughts of my own. It is, as I understand it, Mr Tariqs case on the appeal apparently supported by Mr John Howell QC for JUSTICE and Liberty that, assuming (contrary to his primary case) that a closed material procedure is available at all in employment tribunal proceedings, the complainant has exactly the same rights to be provided with sufficient information about the allegations against him to enable him to give effective instructions to the special advocate as the Grand Chamber in A v United Kingdom (2009) 49 EHRR 625 (at para 220) decided had to be given to those deprived of their liberty at Belmarsh Prison pursuant to the Anti terrorism, Crime and Security Act 2001. For simplicitys sake I shall call this degree of disclosure A type disclosure. As is well known, the nine Members of the House of Lords sitting in Secretary of State for the Home Department v AF (No 3) [2009] UKHL 28, [2010] 2 AC 269 unanimously held that A type disclosure was similarly required in control order cases under the regime established by the Prevention of Terrorism Act 2005 in place of the detention regime. Substantially relying on A and on AF (No 3), Mr Allen QC submits that in any special advocate context to which article 6 applies, there is required an irreducible minimum standard of fairness which in every case demands A type disclosure. Prominent amongst the passages prayed in aid from the AF (No 3) judgments are, to my considerable surprise, these from my own judgment: . the suspect must always be told sufficient of the case against him to enable him to give effective instructions to the special advocate, notwithstanding that sometimes this will be impossible and national security will thereby be put at risk (para 116). Plainly there now is a rigid principle. Strasbourg has chosen in para 220 of A to stipulate the need in all cases to disclose to the suspect enough about the allegations forming the sole or decisive grounds of suspicion against him to enable him to give effective instructions to the special advocate (para 119). The argument, notwithstanding its apparent acceptance by the Court of Appeal, is to my mind unsustainable. As all the judgments in AF (No 3), my own not least, made plain, the Grand Chambers judgment in A was to be regarded as indistinguishable simply because of the striking similarities between the two situations then under consideration: Belmarsh detention and the control order regime. To suggest that the identical rigid principle will be imported into every situation where article 6 applies notwithstanding that sometimes this [A type disclosure] will be impossible and national security will thereby be put at risk is absurd. It is, indeed, to re assert here the very argument already rejected in relation to the cross appeal: the argument that, if giving effect to A type disclosure will compromise national security, then it is always open to government instead to pay up. True it is that in the control order context, government has on a number of occasions since AF (No 3) chosen to abandon the control order rather than make the necessary degree of disclosure. That, however, is a far cry from recognising that governments should face the same dilemma in the context of a monetary claim for discrimination. Although the Court of Appeal did not regard these cases as being in a different category (para 50 of Maurice Kay LJs judgment below), for my part I strongly disagree. Not merely, moreover, is there no support for Mr Allens argument to be found in our domestic jurisprudence but, as Lord Mance convincingly demonstrates, it is now clearly belied by a series of Strasbourg decisions culminating most recently and most decisively in Kennedy v United Kingdom (Application No 26839/05) (unreported) 18 May 2010. Kennedy concerned a complaint, largely on article 6 grounds, against the ruling of the Investigatory Powers Tribunal (IPT) made on 23 January 2003 as to the legality of various of their rules. A sufficient description of the highly restrictive nature of these rules is to be found at paras 7 and 25 of my judgment in this Court in R (A) v Director of Establishments of the Security Service [2009] UKSC 12, [2010] 2 AC 1 (at paras 8 and 30 of which I noted that the IPTs own decision on these rules was shortly to be considered by the European Court of Human Rights, as now it has been in Kennedy). The Court in Kennedy assumed (at para 179 of its judgment) that article 6 applies to proceedings before the IPT and then, at paras 181 190 of its judgment (cited by Lord Mance at paras 34 and 35 above) comprehensively rejected the claim that it had been violated. There could hardly be a clearer example of a procedure being held compliant with article 6 notwithstanding the conspicuous absence of anything approaching A type disclosure. The final comments I wish to make in the appeal are these. Security vetting by its very nature often involves highly sensitive material. As an immigration officer, Mr Tariq required security clearance to a comparatively high level (above that of a counter terrorist check albeit below that of developed vetting). Immigration officers require long term, frequent and controlled access to secret information and assets. It is surely, therefore, not altogether surprising that, upon his brothers and his cousins arrest and more particularly since his cousins conviction and life sentence for conspiracy to murder arising out of a terrorist plot to attack transatlantic flights from Heathrow he has been suspended from duty (albeit continuing to be paid) and his security clearance withdrawn. No one suggests that Mr Tariq himself was involved in the plot. What is suggested, however, is that he could be vulnerable to pressures from someone in his community to abuse his position as an immigration officer. Mr Tariq submitted an internal appeal against the Departmental Security Officers decision to withdraw his security clearance but this was dismissed by the Permanent Secretary of the Home Office (following his consideration of a full report from the Director of Human Resource Services). Mr Tariq then made a further appeal to the Security Vetting Appeals Panel (SVAP) (presided over by a retired High Court judge) which held both open and closed hearings, with a special advocate appointed for the closed hearings, and which as recently as January 2011 dismissed the appeal. (No objection is taken to the SVAPs use of a closed procedure and special advocate, apparently on the basis that it was bound to use such a procedure and that in any event its decision on the appeal is solely advisory, the department being free to ignore it.) We know nothing of the underlying facts of this case. Assume, however, in a case like the present that someone in the employees community (perhaps a relative or associate) has given information in confidence to those responsible for reviewing the employees security clearance which is detrimental to his case. Perhaps it belies assurances he has given as to the limited nature and extent of his contacts with those suspected of terrorist activity. It surely goes without saying that nothing of this could properly be disclosed to the employee beyond perhaps telling him that the department was not satisfied with the assurances he has given. To give chapter and verse of any inconsistencies between those assurances and the information given to the department would be to betray the information provided and quite likely put its provider at risk. Similar considerations could well apply even in respect of an initial vetting procedure. Is it really sensible, one cannot help wondering, to attempt to force disputes in such cases as these into the comparative straitjacket of employment tribunal proceedings. Even if it is, is it sensible to operate in parallel two sets of proceedings, both with closed procedures and special advocates, one before the SVAP, the other before the Employment Tribunal. Of course I recognise that the issues they are determining are not identical. But there must inevitably be some substantial overlap between them and the effort, time and expense involved in all this hardly bears thinking about. In my judgment in R (A) v Director of Establishments of Security Service (at paras 34 and 35) I expressly contemplated that in certain circumstances the IPTs exclusive jurisdiction might with advantage be widened. True, I was not considering a case like the present. I seriously wonder, however, whether it might not be wise to channel all disputes arising in security vetting cases to a single tribunal if not the IPT itself, then a body sharing some at least of its characteristics. That, however, is a thought for the future perhaps for consideration in relation to a Green Paper we are told will be published later this year with regard to possible ways of resolving, or at least mitigating, the undoubted problems faced by Government in litigation raising sensitive security issues. LORD KERR Introduction On 14 February 2008 the Employment Tribunal dealing with Mr Tariqs case sent to the minister a copy of the reasons it proposed to give for making its order under rule 54 of the First Schedule to the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 (SI 2004/1861). It was required to do so by rule 10 of the Employment Tribunals (National Security) Rules 2004 which are contained in Schedule 2 to the 2004 Regulations. The reasons were amended by the minister (or, more probably, by someone acting on his behalf) and were eventually issued to the claimant and his advisers in their amended form on 15 October 2008. The reasons that the tribunal proposed to give Mr Tariq related to the way in which his case would be dealt with. They purported to explain why he and his representatives would be excluded from those parts of the proceedings at which closed evidence was to be given or closed documents were to be considered; why a special advocate was to be appointed to represent his interests in any part of the proceedings from which he and his representatives were to be excluded; and why the proceedings should be held entirely in private. As a means of explaining these matters to Mr Tariq, the reasons given were, to say the least, not informative. Para 10 encapsulated them. It stated: Having read the relevant documents and having heard submissions, I was satisfied that it was expedient in the interest of national security to make an order under rule 54 as set out in the separate document marked as Orders. I was further satisfied that it would be in the interest of the claimant if a special advocate were to be appointed for the matter to be further reviewed, as I am required to do, at the next case management discussion on 1 May 2008 when not only can the issues as to what documents should be in the closed and open bundles and what should be included in the closed and open witness statements be addressed but also any submissions from the special advocate in that regard at that case management discussion in the anticipation that there would have been such an appointment before then. Beyond saying that the decisions as to the way in which his case was to be heard had been taken for reasons of national security, this paragraph conveyed precisely nothing to the claimant. The paragraphs that had preceded it did little more. Apart from rehearsing the submissions that had been made by either party, they said virtually nothing. But that did not make them immune from the ministers blue pen. In para 5 of the reasons the tribunal had set out (in 5.1, 5.2 and 5.3) the Home Office submissions that the entire proceedings should be held in private; that Mr Tariq and his representative should be excluded while closed evidence or documents were being considered; and that the tribunal should consider both the closed evidence and closed documents and that these would be provided to a special advocate, if one was appointed. In its original form, the statement of reasons continued at para 6: The respondents made this application on the basis that given the circumstances and the relationship of the claimant to other parties involved in what was believed to be unlawful activities and the fact that he might have contact with them that there could be inadvertent disclosure by him of information that was either sensitive or classified. Now it should be noted that on 30 August 2006, the departmental security officer, Jacqueline Sharland, had met Mr Tariq and his union representative and she had then explained that the review of Mr Tariq's security clearance had been prompted by national security concerns and that these related to Mr Tariq's vulnerability. At that meeting Mr Tariq indicated that he understood that the withdrawal of his security clearance had occurred because his brother had been arrested. There was no demur from Ms Sharland to this suggestion. Despite this, in October 2008, more than two years later, the minister (or a civil servant acting on his behalf) felt that para 6 of the tribunals reasons required amendment. He directed that it should be changed so as to read as follows: The respondents made the applications at paras 5.1 5.3 above, on the basis that the material in the closed bundle provided to the tribunal was sensitive on grounds of national security and accordingly should not be disclosed to the claimant or his representative. So, although Mr Tariq had been informed by the departmental security officer that his security clearance had been reviewed because he was considered to be vulnerable, and although he had responded that he believed that that had happened because his brother had been arrested, the Home Office view was that it was necessary on national security grounds that he should not be told in October 2008 that others who were believed to be involved in unlawful activities might receive sensitive or classified information that he might inadvertently impart to them. It has never been explained why the view was taken that this information could not be disclosed. Mystifying though this is, the second change to the statement of reasons directed by the minister is even more inexplicable. This required the complete deletion of para 8 of the reasons. This paragraph had done no more than summarise an argument made on the respondents behalf in the presence of Mr Tariqs representative, an argument of which, therefore, it must be assumed, he was fully aware. It had stated: The respondents further maintained that due to the nature of the contact and the place of contact (the claimant's parents home at which he partially resided with his family during most week ends), it was inappropriate for all these matters to be disclosed on a public basis and that there were matters properly to be dealt with on a closed basis and for the hearing generally to be in private. Again no explanation for the decision to withhold this information has been given. It seems likely that its subsequent disclosure and the full revelation of what para 6 contained was brought about by representations made by the special advocate appointed to act on Mr Tariqs behalf. Lord Mance has said that this is an indication of one of the purposes that a special advocate may serve. It may very well amount to such an indication but the fact that the intervention of the special advocate was required to secure the release of material which ought never to have been withheld is, in my opinion, profoundly troubling. Lord Mance has suggested that the course of events about the disclosure of this information offers a cautionary message. It does more than that. It illustrates all too clearly the dangers inherent in a closed material procedure where the party which asks for it is also the repository of information on the impact that an open system will avowedly have on national security. The common law right to know and effectively challenge the opposing case The right to know and effectively challenge the opposing case has long been recognised by the common law as a fundamental feature of the judicial process. In Kanda v Government of Malaya [1962] AC 322, 337 Lord Denning said: If the right to be heard is to be a real right which is worth anything, it must carry with it a right in the accused man to know the case which is made against him. He must know what evidence has been given and what statements have been made affecting him: and then he must be given a fair opportunity to correct or contradict them. This appears in all the cases from the celebrated judgment of Lord Loreburn LC in Board of Education v Rice down to the decision of their Lordships Board in Ceylon University v Fernando. It follows, of course, that the judge or whoever has to adjudicate must not hear evidence or receive representations from one side made behind the back of the other. The centrality of this right to the fairness of the trial process has been repeatedly emphasised. Thus, in In re K (Infants) [1963] Ch 381 Upjohn LJ at pp 405 406 said: It seems to be fundamental to any judicial inquiry that a person or other properly interested party must have the right to see all the information put before the judge, to comment on it, to challenge it and if needs be to combat it, and to try to establish by contrary evidence that it is wrong. It cannot be withheld from him in whole or in part. If it is so withheld and yet the judge takes such information into account in reaching his conclusion without disclosure to those parties who are properly and naturally vitally concerned, the proceedings cannot be described as judicial. And in Brinkley v Brinkley [1965] P 75, 78 Scarman J said that for a court to take into consideration evidence which a party to the proceedings has had no opportunity during trial to see or hear, and thus to challenge, explain or comment upon, seems to us to strike at the very root of the judicial process. In Pamplin v Express Newspapers Ltd [1985] 1 WLR 689 at 691 Hobhouse J expressed the principle in similarly forthright terms: The first principle is the principle of natural justice which applies wherever legal proceedings involve more than one person and one party is asking the tribunal for an order which will affect and bind another. Natural justice requires that each party should have an equivalent right to be heard. This means that if one party wishes to place evidence or persuasive material before the tribunal, the other party or parties must have an opportunity to see that material and, if they wish, to submit counter material and, in any event, to address the tribunal about the material. One party may not make secret communications to the court. Exceptions to the rule that a party to the proceedings must be informed of every detail of his opponents case have, of course, been recognised. But it is essential to be aware of the starting point from which one must embark on the inquiry whether the principle of equality of arms (which is such a vital hallmark of our adversarial system of the trial of contentious issues) may be compromised. As a general indeed, basic rule, those who are parties to litigation need to know what it is that their opponent alleges against them. They need to have the chance to counter those allegations. If that vital entitlement is to be denied them, weighty factors must be present to displace it. And it is self evident that he who wishes to have it displaced must show that there are sufficiently substantial reasons that this should happen. Put shortly, he who thus avers must establish that nothing less will do. The case made on behalf of the appellant in this appeal has been stigmatised by the suggestion that it amounts to a claim that the state must accept that it should pay compensation even in those instances where the claimant is known to be wholly undeserving but it is impossible to adduce evidence that would establish this because of national security considerations. The respondent claimed and the majority have accepted that the law will not contemplate such a situation. In my view, however, this approach carries the danger of allowing the possible consequences of the implementation of the proper principle to effect a modification of the principle itself. So, because, it is said, the state, faced with the dilemma of having to choose between revealing the information on which it relies to defeat the claim and compromising national security by doing so, would be forced to settle the case, a better solution must be found. That better solution is that the state should be allowed to deploy the information on which the claim can be defeated but be absolved from the need to disclose it to the claimant. This solution, it is clear, is founded not on principle but on pragmatism. Pragmatic considerations, of course, have their part to play in the resolution of difficult legal conundrums but, I suggest, they have no place here. Where, as in this case, the challenged decision is the subject of factual inquiry or dispute and the investigation of the disputed facts centres on an individuals actions or, to bring the matter directly to the circumstances of this case, his supposed vulnerability, that individual is the critical source of information needed to discover the truth; in many cases he may be the only source. If he is denied information as to the nature of the case made either directly against him or, as seems more likely here, against others whose presumed relationship with the claimant renders it unsuitable for him to retain security clearance and if he is thereby forced to speculate on the content of the defendants case, no truly adversarial proceedings are possible. As Upjohn LJ put it in In re K, the proceedings are not judicial. The withholding of information from a claimant which is then deployed to defeat his claim is, in my opinion, a breach of his fundamental common law right to a fair trial. Even if the closed material procedure was compatible with article 6 of the European Convention on Human Rights (and for reasons that I will discuss presently, I do not believe that it is) this has no bearing on the appellants right at common law to be provided with details of the case against him sufficient to enable him to present a reasoned challenge to it. This courts endorsement of a principle of non disclosure whereby a party in civil proceedings may have withheld from him the allegations forming the basis of the opposing case is a landmark decision, marking a departure from the common laws long established commitment to this basic procedural right. In my view, the removal of that right may only be achieved by legislation and only then by unambiguous language that clearly has that effect. In R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115, dealing with Parliaments power to legislate contrary to fundamental human rights, Lord Hoffmann at p 131 said: Parliamentary sovereignty means that Parliament can, if it chooses, legislate contrary to fundamental principles of human rights. The Human Rights Act 1998 will not detract from this power. The constraints upon its exercise by Parliament are ultimately political, not legal. But the principle of legality means that Parliament must squarely confront what it is doing and accept the political cost. Fundamental rights cannot be overridden by general or ambiguous words. This is because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process. In the absence of express language or necessary implication to the contrary, the courts therefore presume that even the most general words were intended to be subject to the basic rights of the individual. In this way the courts of the United Kingdom, though acknowledging the sovereignty of Parliament, apply principles of constitutionality little different from those which exist in countries where the power of the legislature is expressly limited by a constitutional document. Although that statement of principle was made in the context of legislation overriding human rights, it applies with equal force to legislation affecting other constitutional rights such as arise in this case. In R (Anufrijeva) v Secretary of State for the Home Department [2003] UKHL 36, [2004] 1 AC 604, at para 27 Lord Steyn said of Lord Hoffmanns dictum, this principle may find its primary application in respect of cases under the European Convention on Human Rights. But the Convention is not an exhaustive statement of fundamental rights under our system of law. Lord Hoffmann's dictum applies to fundamental rights beyond the four corners of the Convention. In my view it is engaged in the present case. And it therefore seems to me remarkable that a modification of such a fundamental right can be achieved without the unambiguous legislative provision that would be required to alter a right arising under the Convention. To recognise that this right continues to exist at common law does not mean that every time the state wishes to withhold information from a claimant which, although vital to the defence of the claim, cannot be revealed for reasons of national security, it must submit to settlement of the claim. As the experience in Carnduff v Rock [2001] EWCA Civ 680, [2001] 1 WLR 1786 illustrates, it is perfectly proper and, more importantly, principled to find in such cases that they cannot be regarded as justiciable because no just trial is possible. Where insistence upon a fully fair hearing for a claimant will deny the defendant (or where it is not a party, the state) the protection of its vital interests that the law should recognise, then a truly fair proceeding is not possible and the trial should be halted in limine. Lord Mance has said that this is not an option that the law should readily contemplate. I agree but it seems to me to be a plainly more palatable course than to permit a proceeding in which one party knows nothing of the case made against him and which, by definition, cannot be subject to properly informed challenge. At least in the Carnduff situation both parties are excluded from the judgment seat. In the state of affairs that will result from the decision of the majority in this case, one party has exclusive access to that seat and the system of justice cannot fail to be tainted in consequence. Article 6 Article 6(1) of the European Convention on Human Rights and Fundamental Freedoms provides: In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. Judgment shall be pronounced publicly but the press and public may be excluded from all or part of the trial in the interest of morals, public order or national security in a democratic society, where the interests of juveniles or the protection of the private life of the parties so require, or to the extent strictly necessary in the opinion of the court in special circumstances where publicity would prejudice the interests of justice. It is well established that the overriding right guaranteed by article 6(1), the right to a fair trial, is absolute see Montgomery v HM Advocate [2003] 1 AC 641, 673, Brown v Stott [2003] 1 AC 681, 719 and Dyer v Watson [2002] UKPC D1, [2004] 1 AC 379 at para 73. But the constituent rights comprised, whether expressly or implicitly, within article 6 are not themselves absolute: Brown v Stott at 704 per Lord Steyn. One of the implicit constituent rights of article 6 is that there should be equality of arms between the parties to proceedings. Of this constituent right, Lord Bingham said in Brown v Stott at 695 that it lay at the heart of the right to a fair trial. Equality of arms is the means by which a fair adversarial contest may take place. It requires that there must be an opportunity for all parties to be aware of and to comment on all the evidence adduced or observations submitted, with a view to influencing the courts decision Vanjak v Croatia (Application No 29889/04) (unreported) 14 January 2010, at para 52. Although, as a constituent element of article 6, equality of arms is not an absolute right, restrictions may only be placed upon it where it is strictly necessary and proportionate do so. A strong countervailing public interest is required to satisfy this requirement. Moreover, the restriction must be sufficiently counterbalanced by appropriate procedures allowed by the judicial authorities. And the restrictions must not be such as effectively to extinguish the very essence of the right. These propositions derive from a series of decisions of the European Court of Human Rights (ECtHR) which constitute a clear and constant line of authority emanating from Strasbourg. One may begin with Tinnelly & Sons Ltd v United Kingdom (1998) 27 EHRR 249. At para 72 the court said: 72. The Court recalls that article 6(1) embodies the right to a court, of which the right of access, that is the right to institute proceedings before a court in civil matters, constitutes one aspect. In this respect, the contracting states enjoy a certain margin of appreciation, although the final decision as to the observance of the Convention's requirements rests with the Court. It must be satisfied that the limitations applied do not restrict or reduce the access left to the individual in such a way or to such an extent that the very essence of the right is impaired. Furthermore, a limitation will not be compatible with article 6(1) if it does not pursue a legitimate aim and if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be achieved. So the very essence of the right must not be impaired and the restriction on the constituent right must be proportionate. In Rowe and Davis v United Kingdom (2000) 30 EHRR 1 at para 61 the court said: . as the applicants recognised, the entitlement to disclosure of relevant evidence is not an absolute right. In any criminal proceedings there may be competing interests, such as national security or the need to protect witnesses at risk of reprisals or keep secret police methods of investigation of crime, which must be weighed against the rights of the accused. In some cases it may be necessary to withhold certain evidence from the defence so as to preserve the fundamental rights of another individual or to safeguard an important public interest. However, only such measures restricting the rights of the defence which are strictly necessary are permissible under article 6(1). Moreover, in order to ensure that the accused receives a fair trial, any difficulties caused to the defence by a limitation on its rights must be sufficiently counterbalanced by the procedures followed by the judicial authorities. A precisely similar formula was employed by the court in para 52 of its judgment in Jasper v United Kingdom (2000) 30 EHRR 441 and in para 52 of Pocius v Lithuania (Application No 35601/04) (unreported) 6 July 2010. Significantly, it was also used by the court at para 184 of its judgment in Kennedy v United Kingdom (Application No 26839/05) (unreported) 18 May 2010 where it was confirmed that these principles apply with equal force to civil proceedings. From these statements it is clear that the balancing exercise between, on the one hand, full access to all the elements of the equality of arms principle and, on the other, the withholding of evidence on the grounds of national security, must be conducted on the basis that only such restriction on full access to relevant material as is absolutely required can be countenanced. And even if that hurdle is surmounted, it must be shown that the limitation on the rights of the party who is denied such access is adequately offset by sufficient counterbalancing measures. It seems to me that measures can only be regarded as sufficient if they either wholly eliminate the disadvantage that would otherwise have accrued or if they diminish the difficulties deriving from the non disclosure of the relevant material to a condition of insignificance. Thus as the interveners, Justice and Liberty, have put it, restrictions on untrammelled access to relevant material can only be justified in a justiciable case where sufficient information about the substantive case which a party has to meet is disclosed so that he may effectively challenge it. Otherwise, the limitation on the right to equality of arms can in no sense be regarded as having been sufficiently counterbalanced. A function of the counterbalancing measures is to ensure that the very essence of the right is not impaired. It is, I believe, important to have a clear understanding of what is meant by the essence of the right. If equality of arms lies at the heart of a fair trial, the essence of the right must surely include the requirement that sufficient information about the case which is to be made against him be given to a party so that he can give meaningful instructions to answer that case. In Secretary of State for the Home Department v MB [2007] UKHL 46, [2008] AC 440, a case involving a challenge to a non derogating control order, Lord Bingham referred to the general acceptance by the House of Lords in R (Roberts) v Parole Board [2005] UKHL 45, [2005] 2 AC 738 that there was a core, irreducible, minimum entitlement for the appellant, as a life sentence prisoner, to be able effectively to test and challenge any evidence which decisively bore on the legality of his detention. That irreducible minimum entitlement also applied in the case of a control order: see para 43 of MB. The opportunity to know and effectively test the case against him (the core irreducible minimum entitlement) surely captures the essence of the right. And it seems to me that the essence of the right cannot change according to the context in which it arises. Whether a hearing should be conducted in private or in open session; whether information about the case against an individual should be provided by way of full disclosure or by redacted statements or in the form of a summary or gist; whether witnesses should be anonymised all of these are variables to which recourse may be had in order to reflect the context in which the requirements of article 6 must be examined. But if the essence of the right is to be regarded (as I believe it must be) as the indispensable and necessary attributes of the right as opposed to those which it may or may not have, its essence cannot alter according to the circumstances in which it falls to be considered. Para 217 of the European Court of Human Rights judgment in A v United Kingdom (2009) 49 EHRR 625 has been cited by Lord Mance as an example of the emphasis given by the court to the context in which the requirements of the right were being considered. That case involved a challenge to the decision of the Home Secretary to certify that each of the applicants should be detained because he reasonably believed that their presence in the United Kingdom posed a threat to national security. As it seems to me the only relevant part of para 217 is contained in the following passage: In view of the dramatic impact of the lengthy and what appeared at that time to be indefinite deprivation of liberty on the applicants fundamental rights, article 5(4) must import substantially the same fair trial guarantees as article 6(1) in its criminal aspect This says nothing about the essence of the right to equality of arms. It merely (but unsurprisingly) confirms that if ones liberty is to be deprived on foot of the order of the Secretary of State, the same guarantees as are available to defendants in a criminal trial should be extended to those who were the subject of detention orders. Lord Mance also expressed agreement with the decision of the Court of Appeal in R(AHK) v Secretary of State for the Home Department (Practice Note) [2009] EWCA Civ 287; [2009] 1 WLR 2049 where, according to Lord Mances analysis, it was held that a claim for judicial review of the refusal of an application for British citizenship could be distinguished from the requirements prescribed by A v United Kingdom on the ground that the latter cases focus was on detention. I do not agree that the AHK case distinguished A v United Kingdom or, at least, that it suggested (contra the decision in A v UK), that abrogation of the right of a claimant to know the essential elements of the case to be made against him was permissible. The AHK case was principally concerned with the question whether a special advocate should be appointed. In the list of principles to be applied in cases where the Secretary of State has decided that the reasons for refusing British citizenship could not be fully disclosed Sir Anthony Clarke MR at para 37 (iv) (d) said: All depends upon the circumstances of the particular case, but it is important to have in mind the importance of the decision from the claimant's point of view, the difficulties facing the claimant in effectively challenging the case against him in open court and whether the assistance of a special advocate will or might assist the claimant in meeting the Secretary of State's case and the court in arriving at a fair conclusion. Underlying this statement is the acknowledgment that the claimant must be assisted in meeting the Secretary of States case. There is no reason to suppose that the Court of Appeal would have endorsed a procedure where the claimant was effectively prevented from knowing and meeting the essential case made against him. At a theoretical level it is possible that advocates retained to consider material that cannot be disclosed to a claimant can supply the vital ingredient of ensuring that the case made against the claimant is effectively met. In such circumstances the essence of the article 6 right is not lost. But AHK is not authority for the proposition that where that indispensable requirement cannot be fulfilled and the claimant is prevented from presenting a fully informed opposition to the case made against him, no violation of article 6 arises because the consequences for the claimant are less serious than the deprivation of his liberty. It is, I believe, crucial to a proper understanding of ECtHR jurisprudence in this area that the essence of the right under article 6 is that a party is entitled to know and effectively challenge the case made against him. Equality of arms, or a properly set adversarial contest, requires that both parties have equal, or at least a sufficient, access to the material that will be deployed against them. The adversarial contest sets the context and the adversarial contest arises in relation to article 6 rights as opposed to other Convention rights. Thus cases such as Leander v Sweden (1987) 9 EHRR 433 (which was concerned with alleged violations of articles 8, 10 and 13) and Esbester v United Kingdom (1998) 18 EHRR CD72 (which dealt with claims under article 8 and 13) are of little assistance in determining the requirements of the equality of arms principle under article 6. Equality of arms did not arise in these cases. No adversarial contest was engaged. Whether it is legitimate to withhold information in an article 8 or an article 10 context has nothing to do with the propriety of its non disclosure where parties are seeking a resolution of competing cases from a properly informed and impartial tribunal. Articles 8 and 10 are qualified rights. Interference with those rights may be justified on grounds specified in the articles. By contrast, article 6 is not subject to exemption from the effect of interference. Kennedy v United Kingdom involved complaints made by the applicant to the Investigatory Powers Tribunal (IPT) that his communications were being intercepted. The applicant had sought specific directions regarding the conduct of the proceedings in order to ensure the protection of his Convention rights under article 6 (1). In particular, he asked that his arguments and evidence be presented at an oral hearing; that all hearings be conducted in public; that there be mutual disclosure and inspection between the parties of all witness statements and evidence upon which parties sought to rely and exchange of skeleton arguments in relation to planned legal submissions; that evidence of each party be heard in the presence of the other party or their legal representatives, with oral evidence being open to cross examination by the other party; that any opinion received from a commissioner be disclosed to the parties; and that, following its final determination, the IPT state its findings and give reasons for its conclusions on each relevant issue. IPT had held that the applicants proceedings before that tribunal engaged article 6. That finding was somewhat diffidently contested before ECtHR, the government contending that there was no civil right involved. It was not contended, as it might well have been, that article 6, according to the courts constant jurisprudence, did not apply to cases of surveillance. ECtHR proceeded on the assumption that article 6 did apply. It is significant that the courts judgment is largely preoccupied with a consideration of the various specific claims made by the applicant about how the proceedings should be conducted. The question of providing him with sufficient information in the form of a gist or summary to meet the case against him did not feature in the list of those claims. The question of supplying redacted documents is discussed, however, and the courts decision seems largely to have been influenced by the argument advanced on behalf of the government that it was simply not possible to produce the information that the applicant sought because national security would inevitably be compromised. That stance is entirely consistent with the view that surveillance cases do not engage article 6. It is surprising that more was not made of this by the government and that the court did not address the issue directly. If it had done and if it had followed its own constant jurisprudence, the anomaly, which I believe the decision in Kennedy represents, would have been avoided. In Klass v Federal Republic of Germany (1978) 2 EHRR 214 at para 75 ECtHR said this about secret surveillance: As long as it remains validly secret, the decision placing someone under surveillance is thereby incapable of judicial control on the initiative of the person concerned, within the meaning of article 6; as a consequence, it of necessity escapes the requirements of that article. The logic of this position is inescapable. The entire point of surveillance is that the person who is subject to it should not be aware of that fact. It is therefore impossible to apply article 6 to any challenge to the decision to place someone under surveillance, at least until notice of termination of the surveillance has been given. This approach has been consistently applied by the court. So for instance in Rotaru v Romania (2000) 8 BHRC 449 at para 69 the court said where secret surveillance is concerned, objective supervisory machinery may be sufficient as long as the measures remain secret. It is only once the measures have been divulged that legal remedies must become available to the individual. It is precisely because the fact of surveillance must remain secret in order to be efficacious that article 6 cannot be engaged. It appears to me, therefore, that the decision in Kennedy ought to have been made on the basis that article 6 was not engaged because the issues that the case raised were simply not justiciable. That the decision is out of line with the established jurisprudence of the court is perhaps best exemplified by contrasting it with the approach of the Grand Chamber in A v United Kingdom as applied by the House of Lords in Secretary of State for the Home Department v AF (No 3) [2010] 2 AC 269. At para 59 Lord Phillips said this about the ratio in A v United Kingdom: I am satisfied that the essence of the Grand Chamber's decision lies in para 220 and, in particular, in the last sentence of that paragraph. This establishes that the controlee must be given sufficient information about the allegations against him to enable him to give effective instructions in relation to those allegations. Provided that this requirement is satisfied there can be a fair trial notwithstanding that the controlee is not provided with the detail or the sources of the evidence forming the basis of the allegations. Where, however, the open material consists purely of general assertions and the case against the controlee is based solely or to a decisive degree on closed materials the requirements of a fair trial will not be satisfied, however cogent the case based on the closed materials may be. Whilst Lord Phillips at para 65 implied that the Grand Chambers decision (that non disclosure cannot deny a party knowledge of the essence of the case against him) might apply only where the consequences for an individual were as severe as those normally imposed under a control order, there are indications in his and other speeches that the principle is of general application. In particular, Lord Phillips rejected the suggestion that there should be a different standard where the control order did not amount to detention para 63 and at para 64 he said this: The best way of producing a fair trial is to ensure that a party to it has the fullest information of both the allegations that are made against him and the evidence relied upon in support of those allegations. Where the evidence is documentary, he should have access to the documents. Where the evidence consists of oral testimony, then he should be entitled to cross examine the witnesses who give that testimony, whose identities should be disclosed. Both our criminal and our civil procedures set out to achieve these aims. In some circumstances, however, they run into conflict with other aspects of the public interest, and this is particularly the case where national security is involved. How that conflict is to be resolved is a matter for Parliament and for government, subject to the law laid down by Parliament. That law now includes the Convention, as applied by the HRA. That Act requires the courts to act compatibly with Convention rights, in so far as Parliament permits, and to take into account the Strasbourg jurisprudence. That is why the clear terms of the judgment in A v United Kingdom resolve the issue raised in these appeals. The views of Lord Hope were equally clear and comprehensive. At para 83 he said: The approach which the Grand Chamber has adopted is not, as it seems to me, at all surprising. The principle that the accused has a right to know what is being alleged against him has a long pedigree. As Lord Scott of Foscote observed in A v Secretary of State for the Home Department [2005] 2 AC 68, para 155, a denunciation on grounds that are not disclosed is the stuff of nightmares. The rule of law in a democratic society does not tolerate such behaviour. The fundamental principle is that everyone is entitled to the disclosure of sufficient material to enable him to answer effectively the case that is made against him. Lady Hale in para 103 said that Strasbourg had now made it entirely clear what the test of a fair hearing is. The test was whether the controlled person had had the possibility to challenge effectively the allegations made against him. He had to have sufficient information about those allegations to be able to give effective instructions to his special advocate. If the majority in this appeal are right, however, the test of a fair hearing in Mr Tariqs case is different. He need not be given sufficient information about the allegations against him to challenge them effectively or to give effective instructions to his special advocate. For my part I cannot understand why this should be so. The result of the decision of the majority is to create a different class of case from that where what Lord Brown has helpfully described as A type disclosure must be given. The eligibility criteria for inclusion in this privileged group are not clear. Certainly, the class is not confined to those whose liberty is at stake, as the speeches in AF (No 3) make clear. And, presumably, it must also include freezing order cases Kadi v Council of the European Union Joined Cases C 402/05 P and C 415/05 P [2009] AC 1225, as applied by the European General Court in Kadi II Case T 85/09 [2011] 1 CMLR 697. If A type disclosure is required in challenges to freezing orders, does it extend to property rights more generally? If it does, why should property rights be distinguished from loss of employment cases? After all, loss of livelihood may be just as devastating as having ones assets frozen. It seems to me that there is no principled basis on which to draw a distinction between the essence of the right to a fair trial based on the nature of the claim that is made. A fair trial in any context demands that certain indispensable features are present to enable a true adversarial contest to take place. That conclusion is reflected in the later decision of ECtHR of Uukauskas v Lithuania (Application No 16965/04) (unreported) 6 July 2010. Lord Mance has sought to distinguish this case on the basis that the procedure adopted was contrary to national law. But that consideration was in no sense central to the courts reasoning. On the contrary, the observation (at para 48) that Lithuanian law and judicial practice provide that such information may not be used as evidence in court against a person unless it has been declassified, and that it may not be the only evidence on which a court bases its decision was made in order to draw a contrast with the view that documents which constitute state secrets may only be disclosed to persons who possess the appropriate authorisation. It is quite clear that the violation of article 6 which the court held to have occurred was based on conventional ECtHR principles. This much is evident from para 51 where the court said; In conclusion, therefore, the Court finds that the decision making procedure did not comply with the requirements of adversarial proceedings or equality of arms, and did not incorporate adequate safeguards to protect the interests of the applicant. It follows that there has been a violation of article 6(1) in the present case. The unavoidable result from this case is that Strasbourg has again made it entirely clear what the test for a fair hearing is where someone seeks to challenge a decision that he should be removed from a firearms register. He is entitled to know the reasons that this has happened in order to be able to effectively challenge them. If that is so, why should someone who has been dismissed from his employment be in a less advantageous position? Conclusions I have concluded that the Court of Appeal was correct in finding that where article 6 is engaged, it is necessary for a party to proceedings to be provided with sufficient information about the allegations against him to allow him to give effective instructions to his legal representatives and, if one has been appointed, the special advocate so that those allegations can be effectively challenged. I would therefore dismiss the appeal by the Home Office. For the reasons given by Lord Mance, with which I agree, I would hold that the closed material procedure provided for in the Employment Tribunal legislative scheme is not in principle incompatible with article 6 and EU law. I would therefore also dismiss the cross appeal. LORD DYSON I agree that for the reasons given by Lord Mance the Court of Appeal was correct to hold that the closed material procedure provided for in the Employment Tribunal legislative scheme, including its provision for the appointment of special advocates is in principle compatible with article 6 of the European Convention on Human Rights (ECHR) and EU law. I also agree that the Court of Appeal was wrong to find that, in all cases in which article 6 (civil) is engaged, it is necessary for an individual to be provided with sufficient information about the allegations against him (the gist) to enable him to give effective instructions to his legal representatives and the special advocate (where one has been appointed) in relation to those allegations. It is on this second question that I wish to add some words of my own. General observations about closed procedures The article 6 right to a fair trial is absolute: see, for example, per Lord Hope in Dyer v Watson [2002] UKPC D1 [2004] 1 AC 379 at para 73. In principle, a fair trial presupposes adversarial proceedings and equality of arms. Thus, for example, in Vanjak v Croatia (Application No 29889/04) (unreported) 14 January 2010, at para 52, the European Court of Human Rights said: . . independently of whether the case is a civil, criminal or disciplinary one, the right to adversarial proceedings has to be complied with. That right means in principle the opportunity for the parties to court proceedings falling within the scope of article 6 to have knowledge of and comment on all evidence adduced or observations submitted, with a view to influencing the courts decision. But the constituent elements of a fair process are not absolute or fixed: see Brown v Stott [2003] 1 AC 681 at 693D E per Lord Bingham; 719G H per Lord Hope; and 727H per Lord Clyde. This was re affirmed by the ECtHR in relation to article 5(4) in A v United Kingdom (2009) 49 EHRR 625 at para 203: The requirement of procedural fairness under article 5(4) does not impose a uniform, unvarying standard to be applied irrespective of the context, facts and circumstances. Moreover, it has been recognised by the ECtHR that there are circumstances where a limitation on what would otherwise be a general rule of fairness is permissible. Thus in Rowe and Davis v United Kingdom (2000) 30 EHRR 1, at para 61, the European Court of Human Rights said: the entitlement to disclosure of relevant evidence is not an absolute right. In any criminal proceedings there may be competing interests, such as national security or the need to protect witnesses at risk of reprisals or keep secret police methods of investigation of crime, which must be weighed against the rights of the accused. In some cases it may be necessary to withhold certain evidence from the defence so as to preserve the fundamental rights of another individual or to safeguard an important public interest. However, only such measures restricting the rights of the defence which are strictly necessary are permissible under article 6(1). Moreover, in order to ensure that the accused receives a fair trial, any difficulties caused to the defence by a limitation on its rights may be sufficiently counterbalanced by the procedures followed by the judicial authorities. Prima facie, a closed material procedure denies the party who is refused access to the closed material the right to full and informed participation in adversarial proceedings and to that extent is inconsistent with the principle of equality of arms. There are two factors which the Secretary of State says are sufficient to counterbalance the effects of the closed material procedure in the present case. The first is that there is scrutiny by an independent court (the Employment Tribunal) fully appraised of all relevant material and experienced in dealing with discrimination cases. The second is the testing by a special advocate of the Home Offices case in closed session. But are these factors sufficient in circumstances where the gist of the Home Office case is not disclosed to the claimant? How can the special advocate represent the claimants interests if the claimant is unable to give full instructions to him? The answer to these questions in the context of proceedings involving the liberty of the subject is clear. If the special advocate is unable to perform his function in any useful way unless the detainee is provided with sufficient information about the allegations to enable him to give effective instructions to the special advocate, then there must be disclosure to the detainee of the gist of that information: see A v United Kingdom at para 220 and, in the context of control orders, Secretary of State for the Home Department v AF (No 3) [2009] UKHL 28, [2010] 2 AC 269. In such a case, there must be disclosure, regardless of how important the competing national interest may be in favour of withholding the information. The consequence of this will inevitably be that in some cases the prosecuting or detaining authorities will be faced with the invidious choice of disclosing sensitive information or risking losing the case. But what is the position in cases which do not involve the liberty of the subject? For the reasons given by Lord Mance and Lord Brown, I agree that neither A v United Kingdom nor AF (No3) decides this question. Mr Allen QC and Mr Howell QC submit that the reasoning in A v United Kingdom is not limited to cases involving the liberty of the subject and should be applied to civil claims too. They submit that, properly understood, the Strasbourg jurisprudence does not support the proposition that a different approach may be adopted to the problem in civil claims. They also say that to distinguish between the requirements of article 6 on the basis of a classification of the type of case involved is unprincipled and will give rise to uncertainty and confusion. But it is clear from para 203 of A v United Kingdom itself that article 6 does not require a uniform approach to be adopted in all classes of case. In Kennedy v United Kingdom (Application No 26839) (unreported) 18 May 2010, the European Court of Human Rights said that the entitlement to disclosure of relevant evidence is not an absolute right (para 187); the character of the proceedings may justify dispensing with an oral hearing (para 188); and the extent to which the duty to give reasons applies may vary according to the nature of the decision and must be determined in the light of the circumstances of the case (para 189). I therefore agree with what Sir Anthony Clarke MR said when giving the judgment of the court in R(AHK) v Secretary of State for the Home Department (Practice Note) [2009] EWCA Civ 287, [2009] 1 WLR 2049 at para 45: The above analysis shows that the European Court of Human Rights considers each class of case separately. The issues in this class of case are a far cry from the issues that arise in the criminal cases discussed by the court in A v United Kingdom 19 February 2009. Moreover, without in any way minimising the effect of being refused British citizenship, the consequences of a deprivation of (or even interference with) liberty are plainly very much more serious. In these circumstances we do not think that the approach of the court in criminal cases or in cases of deprivation or interference with liberty can or should be applied directly to this class of case. That is not to say that, as explained earlier, each individual is not entitled to a fair hearing of his application for judicial review. Nevertheless, I would accept that the general rule is that an applicant should enjoy the full panoply of article 6 rights, including full disclosure of all relevant material and that any limitation on the ordinary incidents of article 6 requires careful justification. In deciding how to strike the balance between the rights of the individual and other competing interests, the court must consider whether scrutiny by an independent court and the use of special advocates are sufficient to counterbalance the limitations on the individuals article 6 rights. In many cases, an individuals case can be effectively prosecuted without his knowing the sensitive information which public interest considerations make it impossible to disclose to him. For example, in a discrimination claim such as that of Mr Tariq, the central issue may well not be whether the underlying security concerns are well founded, but rather whether the decision making process was infected by discrimination. As Mr Eadie QC points out, Mr Tariqs appeal is not against the assessments or conclusions of the Home Office as to the withdrawal of his security clearance. SVAP provides the expert forum for considering such issues. It was not for the Employment Tribunal to determine whether, for example, it believed or did not believe Mr Tariqs assertions about the nature of his relationships with persons involved in or associated with terrorist activities. Thus in the conduct of a discrimination claim, the special advocate and indeed the judge can to a considerable extent test the case of the alleged discriminator without the input of the claimant. The surveillance/security vetting cases Lord Mance has referred at para 68 to what he describes as the clear line of jurisprudence culminating in the Courts decision in Kennedy which demonstrates that, in civil cases, it is not necessary to provide the gist of information which the interests of national security require to be kept secret. I think that it is necessary to examine the authorities with some care to see precisely what these cases do establish. In the absence of special circumstances, our courts should follow any clear and constant jurisprudence of the European Court of Human Rights: see R (Alconbury Developments Ltd) v Secretary of State for the Environment, Transport and the Regions [2001] UKHL 23, [2003] 2 AC 295 at para 26. The first case to note is Klass v Federal Republic of Germany (1978) 2 EHRR 214. This involved a challenge to legislation which permitted the authorities to open and inspect mail and listen to telephone conversations in order to protect, inter alia, against imminent dangers threatening the existence or the security of the state. The challenge was based on an alleged breach of articles 6, 8 and 13 of the European Convention on Human Rights. At para 75, the European Court of Human Rights said : As long as it remains validly secret, the decision placing someone under surveillance is thereby incapable of judicial control on the initiative of the person concerned, within the meaning of article 6; as a consequence, it of necessity escapes the requirements of that article. The cases of Leander v Sweden (1987) 9 EHRR 433 and Esbester v United Kingdom (1993) 18 EHRR CD72 are discussed by Lord Mance at paras 28 to 32 above. They can be considered together, although at first sight it may seem odd to refer to them at all since they are not article 6 cases. The claim in Leander was brought under articles 8, 10 and 13 and in Esbester under articles 8 and 13. I accept that what may be a proportionate and justified interference with a persons rights under article 8 may not correspond precisely with what may be a strictly necessary and sufficiently counterbalanced invasion of his right to a fair trial under article 6. Moreover, it is right to point out that Leander and Esbester were referred to by the European Court of Human Rights in Kennedy, but only in its discussion of the claims under articles 8 and 13: see paras 122, 152, 195 and 197. The section in Kennedy which deals with article 6 does not refer to either of these authorities. Mr Eadie accepts that Leander and Esbester did not concern article 6. He relies on them as being directly analogous to the present case, relating to security vetting in an employment context. Issues of fairness were central to the issues arising under articles 8 and 10 and the right to an effective remedy under article 13. The European Court of Human Rights found that the vetting systems in those cases were compatible with article 8 and upheld the right of the state not to disclose the reasons for the rejection of the applicants application for employment as a result of a security vetting process. Whereas Klass is a case where it seems to have been held that article 6 did not apply at all and Leander and Esbester are not article 6 cases, there can be no doubt that Kennedy is an article 6 case. In Kennedy (which was decided after the decision of the Court of Appeal in the present case), the applicant complained about an alleged interception of his communications, claiming that it was a violation of his article 8 rights. He also complained that the hearing before the Investigatory Powers Tribunal (IPT) was not attended by adequate safeguards as required under article 6 and that, as a result, he had been denied an effective remedy under article 13. Lord Mance has set out the relevant passages of the judgment at paras 34 and 35 above. The submissions of the parties summarised at paras 180 to 183 of the judgment were directed to the question of what article 6 required. It is of note that the Government submitted that the scope of the article 6 guarantees in that case should be in harmony with the Courts approach to judicial control under article 8. The courts assessment at paras 184 to 191 was explicitly on the basis of the application of article 6. In contrast with para 75 of Klass, the court did not say that the case escapes the requirements of [article 6]. Thus at para 186, the court emphasised that the proceedings related to secret surveillance measures and that there was therefore a need to keep secret sensitive and confidential information. The court continued: this consideration justifies restrictions in the IPT proceedings. The question is whether the restrictions, taken as a whole, were disproportionate or impaired the very essence of the applicants right to a fair trial. This is the classic approach to article 6. The courts conclusion at para 190 was that the restrictions on the procedure before the IPT did not violate the applicants right to a fair trial. In reaching this conclusion, the court took into account the breadth of access to the IPT (an independent court) enjoyed by those complaining about interception and the absence of any evidential burden to be overcome in order to lodge an application with the IPT. It concluded: In order to ensure the efficacy of the secret surveillance regime, and bearing in mind the importance of such measures to the fight against terrorism and serious crime, the Court considers that the restrictions on the applicants rights in the context of the proceedings before the IPT were both necessary and proportionate and did not impair the very essence of the applicants article 6 rights. Mr Allen and Mr Howell submit that Kennedy should be understood as a decision that, so long as the very subject matter of the dispute must justifiably remain secret, is effectively non justiciable and the substantive protections that article 6 contains cannot be applied in substance to its resolution. In other words, they submit that the decision in Kennedy should be analysed as an application of para 75 of Klass. If, however, the court had intended to adopt this approach, it would have said so. Instead, it clearly purported to apply article 6. Kennedy is a striking decision. But for the security issues raised in the case, it is surely inconceivable that the court would have concluded that the restrictions on the applicants rights before the IPT (a completely closed procedure without even the protection of a special advocate) were necessary and proportionate and did not impair the very essence of the applicants article 6 rights. The crucial reason for this conclusion was that the restrictions on the applicants rights were necessary in order to ensure the efficacy of the secret surveillance regime. Kennedy was a case about a secret surveillance regime by interception of his communications. This same language was used by the court in Klass at para 58 to justify the interference with the applicants article 8 rights in that case (another interception of communications case): the fact of not informing the individual once surveillance has ceased cannot itself be incompatible with this provision, since it is this very fact which ensures the efficacy of the interference. The same reasoning appears in the security vetting cases of Leander and Esbester. Thus, for example, at para 66 of Leander, the court said that the very fact that the information released to the military authorities was not communicated to Mr Leander cannot by itself warrant the conclusion that the interference was not necessary in a democratic society in the interests of national security, as it is the very absence of such communication which, at least partly, ensures the efficacy of the personnel control procedure. In support of this proposition, the court referred to para 58 of Klass. There is similar reasoning in the Commissions decision in Esbester. In my view, the significance of Kennedy is that it is a decision explicitly based on an application of article 6 which adopted the same approach as that which was taken by the court in applying articles 8 and 13 in Leander and by the Commission in Esbester. This provides clear support for the submission of Mr Eadie that, for the purposes of the issues that arise in the present case, there is no material difference between articles 8 and 13 on the one hand and article 6 on the other. I do not consider that, if the complaints in Leander and Esbester had been based on article 6, the outcome in these cases would have been different. The other point to emphasise is that these cases show that there is no material difference between surveillance cases (such as Klass and Kennedy) and security vetting cases (such as Leander and Esbester). In the former, restrictions on an individuals right to disclosure and participation in a hearing will be considered necessary and proportionate if they are required in order to ensure the efficacy of the secret surveillance regime. In the latter, the restrictions will be considered necessary and proportionate if they are required in order to ensure the efficacy of the personnel control procedure. Mr Allen and Mr Howell submit that the limited significance of Leander, Esbester and Kennedy is demonstrated by the decision of the ECtHR in Uukauskas v Lithuania (Application No 16965/04) (unreported) 6 July 2010. Lord Mance has set out the facts at para 37 above. I find this a difficult decision to interpret. On the one hand, the court approached the matter in conventional article 6 terms: see para 46 where it noted that (i) the entitlement to disclosure of relevant evidence is not an absolute right; (ii) it may be necessary to withhold certain evidence to safeguard an important public interest; but (iii) only such measures restricting the rights of the defence which are strictly necessary are permissible and there must be sufficient counterbalancing. At para 48 the court referred to the fact that, according to Lithuanian law and judicial practice, secret information may not be used as evidence in court unless it has been declassified and it may not be the only evidence on which a court bases its decision. It is not clear to me to what extent the court based its conclusion that there had been a breach of article 6 on the fact that use of the secret material against the applicant (which was of decisive importance to his case) was contrary to Lithuanian law. But I accept that on the face of it, this is an article 6 decision which does not sit easily with the surveillance/vetting procedure cases to which I have referred. There is no reference to them. There is no weighing of the national interest in the protection of the community against crime against the general right to adversarial proceedings. For these reasons and because it is unclear to what extent the position under Lithuanian law influenced the decision, I agree with Lord Mance that this decision does not cast doubt on the approach adopted in the surveillance/security vetting cases. Unlike Lord Mance, however, I doubt whether the fact that there is no procedure under Lithuanian law for the use of a special advocate to consider closed material is of significance, since, as was pointed out by the European Court of Human Rights in Kennedy at para 187, the procedure before the IPT did not permit the use of special advocates either. In my judgment, these decisions show that there is a clear line of authority to support the proposition that, in surveillance and security vetting cases, an individual is not entitled to full article 6 rights if to accord him such rights would jeopardise the efficacy of the surveillance or security vetting regime itself. On the material shown to us, the line of authority may not be very long, but in my view it is sufficiently clear that it should be followed by our courts. The cases show, in particular, that there is no right to be given the gist of relevant information if and to the extent that this would jeopardise the efficacy of the surveillance or security vetting regime. The present case I have no doubt that article 6 does not require that Mr Tariq should be given the gist of information which would damage or jeopardise national security. First, and above all, this is a security vetting case and in such a case article 6 does not require gisting if and in so far as it would jeopardise the efficacy of the personnel control procedure. That is a sufficient reason for allowing the Home Office appeal. There is no sensible basis for distinguishing the present case from Leander and Esbester. In those cases (which concerned a complaint about the manner in which security vetting was conducted where the applicant was applying for a sensitive post), article 8 did not require disclosure of the security material. In the present case, the complaint is about the decision not to allow a person to remain in a post where security vetting was employed. There can be no distinction in principle between the two cases. A related point is that in all cases where security clearance is sought, it is because the individual has volunteered to undergo the clearance process for the purpose of doing (or continuing to do) the job that he is employed to do. He must be taken to know that checks will be made that may produce material that cannot be shown to him. As Lord Hope points out, he is a volunteer. I would add the following points which reinforce the Home Office case. First, the subject matter of the claim is a claim for damages for alleged discrimination. I do not wish to underestimate the importance of the right not to be subjected to discrimination. But on any view, discrimination is a less grave invasion of a persons rights than the deprivation of the right to liberty. Secondly, the issues in the present case are such that the presence of an independent court and a special advocate are likely to go a long way to making up for the fact that Mr Tariq will be unable fully to participate in the proceedings. As I have explained at para 147 above, there is likely to be only limited (if any) scope for Mr Tariq to be able to give instructions to the special advocate which are necessary to enable her to test the Home Office case effectively. Conclusion I would, therefore, allow the Home Offices appeal primarily on the ground that this case concerns a decision taken in the context of security vetting. In other classes of civil case which are outside the surveillance/security vetting context, the balance between the individuals article 6 rights and other competing interests may be struck differently. It is said that this gives rise to undesirable uncertainty. But much of the content of the European Convention on Human Rights is about striking balances. This is sometimes very difficult and different opinions can reasonably be held. As a consequence, outcomes are sometimes difficult to predict. This is inevitable. But it is not a reason for striving to devise hard and fast rules and rigid classifications. It is, however, at least possible to say that, in principle, article 6 requires as much disclosure as possible. It is very easy for the state to play the security card. The court should always be astute to examine critically any claim to withhold information on public interest grounds. For the reasons that I have given, I would allow the Home Office appeal. I would also dismiss the appeal of Mr Tariq for the reasons given by Lord Mance. LORD PHILLIPS, LADY HALE AND LORD CLARKE I agree that, for the reasons given by Lord Hope, Lord Brown, Lord Mance and Lord Dyson, the appeal of the Home Office should be allowed and that the cross appeal of Mr Tariq should be dismissed. LORD RODGER Lord Rodger, who died before judgment was given in this case, had indicated that he agreed with the judgments of Lord Mance and Lord Brown.
+The appellant was questioned at an airport under Schedule 7 to the Terrorism Act 2000 (TA 2000), which requires a person in her position to answer questions asked by police officers, immigration officers and customs officers for the purpose there set out. She refused to answer the questions and was subsequently convicted of the offence of wilfully failing to do so, contrary to paragraph 18 of that Schedule. Her appeal against her conviction raises the issue whether Schedule 7 is compatible with the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR), and in particular with articles 8 (right to respect for private and family life), 5 (right to liberty) and 6 (privilege against self incrimination). The statutory power Schedule 7 of TA 2000 has been somewhat amended, by the Anti Social Behaviour, Crime and Policing Act 2014 (the 2014 Act), since the date when the appellant was questioned, but the issues of compatibility remain substantially the same. Since the argument before this court has in effect been concerned with its future application as well as with the appellants particular case, it is convenient to set out the statute in its present form, unless necessary to draw attention to any change which has been made. material, it provides: Paragraph 2 of Schedule 7 creates the power which was exercised. So far as 2(1) An examining officer may question a person to whom this paragraph applies for the purpose of determining whether he appears to be a person falling within section 40(1)(b). (2) This paragraph applies to a person if (a) he is at a port or in the border area, and (b) the examining officer believes that the person's presence at the port or in the area is connected with his entering or leaving Great Britain or Northern Ireland or his travelling by air within Great Britain or within Northern Ireland. (3) This paragraph also applies to a person on a ship or aircraft which has arrived at any place in Great Britain or Northern Ireland (whether from within or outside Great Britain or Northern Ireland). (4) An examining officer may exercise his powers under this paragraph whether or not he has grounds for suspecting that a person falls within section 40(1)(b). The statutory purpose for which the questions may be asked is thus for determining whether the person questioned appears to fall within section 40(1)(b). That in turn defines terrorist for the purposes of the Act, and does so in these terms: (1) In this Part terrorist means a person who (a) has committed an offence under any of sections 11, 12, 15 to 18, 54 and 56 to 63, or (b) is or has been concerned in the commission, preparation or instigation of acts of terrorism. So the statutory purpose for which the questions may be asked is for determining whether the person appears either to be, or to have been, concerned in the commission, preparation or instigation of acts of terrorism. Terrorism is defined for the purposes of the Act in section 1. Shorn of inessential detail it means the use or threat of action which meets all of three conditions: (1) it must be done for the purpose of advancing a political, religious, racial or ideological cause, (2) it must be designed to influence the government or an international governmental organisation or to intimidate the public and (3) it must involve serious violence to a person or to property, danger to life or serious risk to public health or the risk of serious interference with an electronic system. Acts of terrorism are therefore to be construed as acts or omissions having these characteristics. Whilst the statute creates some new offences, most acts of terrorism once committed will in any event constitute long established criminal offences such as murder, infliction of grievous bodily harm, criminal damage, explosives offences or the like. The TA 2000 is largely concerned with the essential process of counter terrorism, much of which is preventative in character. Part II deals with the proscription of terrorist organisations. Part III prohibits fund raising for terrorist purposes and makes provision for the disclosure of terrorist property. Part IV contains provisions for terrorist investigations, which are not confined to inquiry into known criminal acts which have already occurred but, clearly necessarily, extend to planned or prospective acts, including the commission, preparation or instigation of acts of terrorism. It is within Part IV that Schedule 7, containing the power now under consideration, is given effect. Schedule 7 is headed Port and Border Controls. It follows that what Schedule 7 paragraph 2 does is to create a power to stop and to question people passing through ports or borders in order to see whether they appear to be terrorists in the sense defined by section 40(1)(b), that is to say whether they are or have been concerned in the commission, preparation or instigation of acts of terrorism. This core power to question is supplemented by subsequent provisions of Schedule 7 which give the officer additional powers in relation to a person questioned under paragraph 2. These are as follows: (i) (ii) (iii) (iv) to stop; under paragraph 6 the officer may stop the person in order to question him; to require production of documents carried; under paragraph 5 the person questioned must give the officer any information in his possession which the officer requests, provide his passport or other document verifying his identity, and hand over any document requested if he has it with him; to search; under paragraph 8 the person may be searched, an intimate search is not permitted and a strip search is allowed only when there are reasonable grounds for suspecting concealment of something which may be evidence that the individual falls within section 40(1)(b), and then only on the authority of a second and senior officer; to copy and retain material; paragraph 11 (and now paragraph 11A (inserted by the 2014 Act)) contain provisions for the retention of material handed over or found; this includes power to copy and retain electronic data contained on any device carried, the detail of which it will be necessary to consider later; (v) to detain; under paragraph 6 (and now paragraph 6A (inserted by the 2014 Act)) the officer may detain the person, for the purpose of exercising the questioning power under paragraph 2; by paragraph 6A he may not continue the questioning beyond one hour without invoking the more formal rules which attend detention; these are found in separate provisions in both Schedule 7 and Schedule 8 and include regular reviews by a different officer senior to the examining officer; it is necessary to note that at the time of the appellants questioning this power to detain was limited to nine hours, but now it is limited to six hours (the latter including the first hour). The sanction in the event that the person stopped wilfully fails to comply with the obligations of Schedule 7 is conviction of a specific offence created by paragraph 18. That paragraph provides: (1) A person commits an offence if he (a) wilfully fails to comply with a duty imposed under or by virtue of this Schedule; (b) wilfully contravenes a prohibition imposed under or by virtue of this Schedule; or (c) wilfully obstructs, or seeks to frustrate, a search or examination under or by virtue of this Schedule. The penalty available is a fine and/or imprisonment with a maximum of three months, together of course with the generally available lesser penalties of discharge or community orders; an amendment passed in 2003 to increase the maximum imprisonment to 51 weeks has never been brought into force. These statutory powers are supplemented by a Code of Practice for officers exercising them, issued by the Home Secretary under Schedule 14 paragraph 6, laid before Parliament, published generally and available wherever the powers may be exercised. This power of questioning, and its associated provisions, is separate from the general power to arrest, detain and question persons who are reasonably suspected of having committed an offence, and, in the context of terrorism, from the specific power to arrest on reasonable suspicion of having been concerned in the commission, preparation or instigation of an act of terrorism. That latter separate power is provided for by section 41 and different consequential provisions are made by Schedule 8 for the conduct of detention which is consequent upon such an arrest. The power in issue in the present case is a preliminary power of inquiry in aid of the prevention of terrorism. It is not dependent on the existence of any reasonable suspicion of either a past offence or act of terrorism or a plan to commit such in future. It is expressly provided in order to assist officers stationed at ports and borders to make counter terrorism inquiries of any person entering or leaving the country. If such inquiries lead to a reasonable suspicion of terrorism or offence then the different provisions appropriate to such a case become operative. The appellants case The appellant Mrs Beghal passed through East Midlands Airport on 4 January 2011. She was returning from Paris where she had visited her husband, who is a French national in custody, so the courts have been told in this litigation, in relation to terrorist offences. (The court was given no further information about him.) She was accompanied by her three children. She was not arrested and was told that whilst the police did not presently suspect her of being a terrorist they needed to speak to her in order to establish whether or not she was a person concerned in the commission, preparation or instigation of acts of terrorism. Someone was meeting her, so her two older children continued through to the land side of the airport to join that person. She elected to keep the youngest with her. She asked to consult with a lawyer. She requested an opportunity to pray, which was granted, and whilst she did so one of the officers contacted her lawyer. She was permitted to speak to him on the telephone. In the meantime she was searched. The police officers made it clear that the questions would not await the arrival of the lawyer, and proceeded to ask them. The questions concerned, inter alia, (i) her reasons for travel, (ii) where she had stayed, (iii) whether she had travelled on beyond France, (iv) the identity of the person meeting her, (v) whether she had been arrested in the past, (vi) her relationship with her husband given his imprisonment for terrorism, (vii) whether she was employed or supported by benefits, (viii) how she had paid for the flight, (ix) whether she had a motor car, (x) the details of her parents and siblings, (xi) her nationality status, (xii) how long she had lived in England and (xiii) whether she was carrying a mobile telephone. She was not formally detained. She remained at the airport. Including arrangements for the children, time for prayer (approximately 20 minutes) and time to find and speak to her solicitor, the process appears to have lasted about an hour and three quarters from her being stopped to her being told that she was free to go. The questions, plus reporting her for the failure to answer them, lasted a little under half an hour. She refused to answer most of the questions. She was charged with the offence of wilful failure to comply with the requirement to answer questions. In due course, after an unsuccessful application to the District Judge to stay the proceedings as an abuse of process, she pleaded guilty to the offence of wilfully failing to answer questions asked under Schedule 7 paragraph 2. She was sentenced to be conditionally discharged. History of the power Although now contained in the TA 2000, the power to question at ports and borders in relation to possible terrorism has been in existence in the UK for 40 years. It was amongst powers introduced, initially as temporary measures, by the Prevention of Terrorism (Temporary Provisions) Act 1974, which was passed in response to the then threat of IRA terrorism and the bombing campaigns associated with it. Terrorism legislation has been subject to almost continuous scrutiny ever since. Other powers introduced by the 1974 Act have not survived, notably a power for the Secretary of State, of his own motion, to remove from Great Britain, and thereafter to exclude, any person he was satisfied was a terrorist, even UK citizens unless they were long term residents. But the power to question at ports and borders has been re enacted at regular intervals since 1974. It was re enacted annually until 1984, and then replaced by the Prevention of Terrorism (Temporary Provisions) Act of that year. That in turn was replaced by the Prevention of Terrorism (Temporary Provisions) Act 1989, which itself was renewed annually until replaced by the TA 2000. Quite apart from the examination involved in repeated Parliamentary re enactment, there have been both specific inquiries and continuous review. A review of the then new 1974 Act was undertaken shortly afterwards by Lord Shackleton (Review of the operation of the Prevention of Terrorism (Temporary Provisions) Acts 1974 and 1976 (Cmnd 7324), August 1978). A further wholesale independent inquiry into terrorism legislation was undertaken in 1995 1996 by Lord Lloyd of Berwick, then, as a Law Lord, one of the UKs most senior judges (Inquiry into Legislation Against Terrorism (Cm 3420), October 1996). The occasion for his review was the then current hope for a peaceful accord in Northern Ireland, and he reported on the situation as it might be if that occurred; the prospect was subsequently confirmed by the Good Friday Agreement of 1998. The government then conducted a public consultation on terrorist legislation in 1998. More recently, in 2012 2013, the government undertook a further public consultation specifically in relation to the Schedule 7 powers and, independently of any tabled legislative proposal, the joint committee on human rights of the Houses of Parliament then examined the powers in 2013 and produced a public report. In addition to those specific inquiries, there has been in existence since 1984 the office of Independent Reviewer of terrorism legislation, currently pursuant to section 36 of the Terrorism Act 2006. The reviewers have been distinguished independent lawyers, charged with reporting at least annually on the structure and working of the legislation. Their reports must be laid before Parliament and thus the public. Lord Lloyd, successive Independent Reviewers, and the joint committee have all advised that the port questioning power should remain, in some cases with suggested modifications, some of which have been made. The power to detain was originally limited to 12 hours. It was reduced to nine hours in 1998 after Lord Lloyd had suggested a six hour limit. It was further reduced to the present six hours by the 2014 Act, following the 2012 2013 consultation. At the same time other alterations were made to the Schedule 7 powers by Schedule 9 to the 2014 Act: (i) searches were confined to non intimate searches, with the restrictions on strip searches described above introduced (para 8(3) to (7)); the power to take blood and urine samples was removed; (ii) (iii) a person detained was ensured the right to have a third person informed, when detained at the port as well as if taken to a police station (Schedule 8 paragraph 6(1)) (iv) similarly all persons detained were ensured the right to consult a solicitor, and the questioning is now to be postponed until his arrival unless that would prejudice the inquiry being made (Schedule 8 paragraph 7A); (v) A new requirement for periodic review of detention by a senior officer (vi) was introduced (Schedule 8, Part 1A); and the power to retain documents or data was supplemented by a specific power to copy them, with the same limit to seven days or during a criminal or deportation inquiry. The Code of Practice The current Code of Practice was issued in 2014. Amongst its provisions are the following: (i) examining officers must be specially trained and authorised for the purpose and must normally be police officers; an immigration or customs officer is in effect to be used only exceptionally and when specifically designated by the Secretary of State after consultation with the chief officer of police on both his training and the proposal for his designation (paras 8 to 13); (ii) officers are advised that it will often be helpful to ask initial screening questions without compulsion and that this may avoid the need for the exercise of Schedule 7 powers (para 20); (iii) emphasis is placed upon the need to avoid discrimination and/or arbitrary action, by selecting persons only for the statutory purpose; selection must not be based solely upon the ethnic background or religion of the individual but rather must be informed by considerations relating to the threat of terrorism (paras 18 19); (v) (iv) persons questioned must be informed clearly of the statutory basis for what is being done and of the procedure for feedback or complaint (para 22); if a person questioned but not detained asks to notify a third party and/or to consult a solicitor, these requests should be granted (paras 41 42); records must be kept of the fact and duration of each examination and detention and, from April 2015 when the equipment will be in place, examinations of those in detention must be audio recorded (paras 43 and 66 68); (vi) (vii) guidance is given as to when it may be appropriate to exercise the power of detention; essentially this will be when detention is made necessary by lack of co operation; officers are instructed that if questioning is to last longer than an hour, formal detention must take place before the hour elapses (paras 45 46). Use of the power The Independent Reviewers have set out the use of, inter alia, the Schedule 7 powers. In 2013 there were approximately 245m passenger movements through the ports of the UK. In 2012 2013, 61,145 were examined under Schedule 7, and in 2013 2014 47,350 were. Others were asked screening questions, but these entailed the use of no compulsory powers. It follows that the proportion of passengers examined under compulsion was between 0.02% and 0.025%, or between 1 in 4,000 and 1 in 5,000. Of the 47,350 examined in 2013 2014, before a decision on detention was required to be made within the first hour, all but 1,889 were dealt with within that time and only 517 were detained (a fraction over 1% of those examined or very roughly 1 in 500,000 passengers). The Reviewers reports show that the numbers examined have been falling steadily over the past five years. The Reviewers themselves, whilst concluding that the Schedule 7 questioning power should be retained, have consistently counselled against its over use, and have not detected such. They have also reported favourably on the manner in which they have observed the power being exercised. The independent reviewer: recent reports There has been broad consensus over recent years in the conclusions of successive Independent Reviewers as to the Schedule 7 powers. It will suffice to refer to the most recent reports of David Anderson QC. These reports make clear the conclusion that the presence of a port questioning and search power which does not require prior objectively established suspicion on reasonable grounds has undoubted utility in the struggle against terrorism. The June 2012 report sets out these conclusions at para 9.43ff, and subsequent reports make clear that they still hold good. The questioning and search powers are found to have three principal values and one ancillary one: (a) (b) (c) (d) in providing evidence which assists in the conviction of terrorists; in furnishing intelligence about the terrorist threat; in disrupting and deterring terrorist activity; and, as an ancillary benefit; in enabling the recruitment of informants. The principal source of evidence subsequently used either in evidence or in investigations leading to conviction is material found on persons questioned, especially the contents of mobile telephones, laptops or data storage devices such as pen drives. The Reviewer catalogued five different examples, over a four year period, of convictions deriving from evidence produced from the exercise of Schedule 7 powers. Even more potent, the Reviewer concluded, has been the gathering of valuable intelligence. Sometimes this may trigger a train of inquiry which leads directly to a prosecution; on far more occasions it is the accumulation of individually small pieces of intelligence which, combined, may inform both particular and general responses to the terrorist threats confronting this country. It is a commonplace of detective or security work that a jigsaw approach can yield vital results beyond the significance initially apparent from any single piece of information. The Reviewer has satisfied himself that port checks can help to dissuade young, nervous or peripheral members of terrorist networks from their plans. Stops not based on intelligence can help to inhibit the use of clean skins or persons selected for their absence of any prior known connection with terrorism. The knowledge of port stops can help to disrupt plans which involve international travel. The Reviewer has attended training sessions for examining officers and has watched them at work. His conclusion is that the examinations he saw were non confrontational, considerate and no longer than necessary (June 2012 report, para 9.61). He comments specifically on being struck by the light touch and professionalism displayed by nearly all the ports officers observed. (ibid para 9.58). In his June 2014 report Mr Anderson expressly considered the potential for ethnically discriminatory use of these powers. The Strasbourg court had adverted in Gillan v United Kingdom (2010) 50 EHRR 1105 to this potential in the context of the different powers there studied (see below), and the Equality and Human Rights Commission had addressed the same issue, as it helpfully has before this court. The Reviewer found that there was a significantly higher incidence of the use of Schedule 7 powers in relation to persons of Asian origin than there was for those of white, black or other origin. He made adjustments for the lower proportion of Asian persons travelling through ports than in the population generally, but there remained a clearly greater use of the powers in the case of such persons. He concluded that if Schedule 7 were intended to be operated on a random basis, this would be worrying, but that since the powers were, as required by the Code, to be operated having regard to the nature of the terrorist threat confronted by this country, this was, in conditions of the present threat, inevitable and indeed an indication that the Schedule was being properly used. His conclusion was expressed at paras 7.11 and 7.14 as follows: If Schedule 7 is being skilfully used, therefore, one would expect its exercise to be ethnically proportionate not to the UK population, nor even to the airport using population, but rather to the terrorist population that travels through UK ports. I have no reason to believe that Schedule 7 powers are exercised in a racially discriminatory manner. The so called disproportionality identified by the EHRC is not evidence (and not suggested to be evidence) of this. What matters is that Schedule 7 should be operated responsively to the terrorist threat. The ethnicity figures are not indicative of a failure to do this. The Reviewer made several recommendations for changes in Schedule 7. To the extent that these have been adopted either by statute or the Code (see paras 16 and 17 above) they need not be further rehearsed. He also made recommendations which have not been adopted, the principal of which were as follows (July 2014 report, paras 19ff): (a) (b) (c) that detention should be permitted only when a senior officer is satisfied that there are (subjectively judged) grounds for suspicion that the person falls within section 40(1)(b); that a similar condition should govern the copying and retention of data downloaded from electronic devices; and that a statutory bar be introduced on the admission of anything said in a Schedule 7 interview in any subsequent criminal trial. The different powers In analysing the lawfulness of Schedule 7 it is convenient to break them down into (a) the power of port questioning and search, (b) the power of detention and (c) the power to inspect data on any electronic device carried and to copy and retain that data. Port questioning and search: article 8 There was, rightly, no dispute before us that Schedule 7 questioning and search under compulsion constitutes an interference with the private life of a person questioned. It does not follow that screening questions without compulsion do so, and they would appear not to pass the threshold of interference, but that issue does not arise on the facts of this case. The issue here, accordingly, is whether the interference by questioning and search under compulsion is justified under article 8(2). In order for it to be justified, it must be (1) in accordance with the law and (2) a proportionate means to a legitimate end. In accordance with the law It is well established that the primary constituent of the requirement that interference with an ECHR right must be in accordance with the law (legality) is that there must be a lawful domestic basis for it, that this law must be adequately accessible to the public and that its operation must be sufficiently foreseeable, so that people who are subject to it can regulate their conduct. An example of a case which failed these primary tests is Malone v United Kingdom (1985) 7 EHRR 14, where it was found to be impossible to say with any reasonable certainty what elements of the powers to intercept communications were incorporated in legal rules and what elements remained within the discretion of the executive. The requirement of legality, however, is now established to go further than this. It calls for the law to contain sufficient safeguards to avoid the risk that power will be arbitrarily exercised and thus that unjustified interference with a fundamental right will occur. This proposition has often been re stated by the European Court of Human Rights (ECtHR). An example is S & Marper v United Kingdom (2008) 48 EHRR 1169, para 95: The court recalls its well established case law that the wording in accordance with the law requires the impugned measure both to have some basis in domestic law and to be compatible with the rule of law, which is expressly mentioned in the preamble to the Convention and inherent in the object and purpose of article 8. The law must thus be adequately accessible and foreseeable, that is, formulated with sufficient precision to enable the individual if need be with appropriate advice to regulate his conduct. For domestic law to meet these requirements, it must afford adequate legal protection against arbitrariness and accordingly indicate with sufficient clarity the scope of discretion conferred on the competent authorities and the manner of its exercise (see Malone v United Kingdom 1984 7 EHRR 14, paras 66 68; Rotaru v Romania (2000) 8 BHRR 449, para 55; and Amann v Switzerland (2000) 30 EHRR 843, para 56). Legality in this latter sense may be failed, for example, where there is an over rigid regime which does not contain the flexibility which is needed to avoid an unjustified interference with a fundamental right. This was the situation in both MM v United Kingdom [2012] ECHR 1906 and R (T) v Chief Constable of Greater Manchester Police (Liberty intervening) [2014] UKSC 35, [2015] AC 49. In those cases the statutory rules under which recordable convictions and cautions were automatically retained and compulsorily disclosed upon applications for particular forms of employment were held to fail the test of legality. This was in large part because they were without any flexibility or discretion to allow for the case where the recorded matter was irrelevant to the proposed employment and thus disclosure would constitute an unjustified (disproportionate) interference with article 8 rights. The safeguards (there of discretion or flexibility) were required in order to guard against automatic operation of the rule resulting in disproportionate interference with article 8 rights. It was in this context that Lord Reed observed in R(T), at para 114, that to satisfy the test of legality there must be sufficient safeguards in place to demonstrate that the State has properly addressed the issue of the proportionality of any interference and enabled it to be examined in a particular instance. In other situations, however, legality is relevant to the reverse case of discretionary power. Here what legality may require is that the safeguards should be present in order to guard against overbroad discretion resulting in arbitrary, and thus disproportionate, interference with Convention rights. The present is a case where the complaint of lack of legality is of this latter kind. In both kinds of case, the issue of legality is thus, whilst distinct from proportionality, closely linked to it. In both kinds of case, legality is a prior test which is designed to ensure that interference with Convention rights can be proportionate. It does not, however, subsume the issue of proportionality, whether the issue is the proportionality of the measure as a whole or the proportionality of its application in a particular case. As recorded above, there has been unanimity amongst all the independent reviews of the port questioning power as to its utility. This is clearly relevant to the question of the proportionality of the power, but it does not contribute significantly to the question of its legality. It is obvious that an arbitrary power can be useful, but it is not legitimate. In Gillan v United Kingdom (2010) 50 EHRR 1105 the Strasbourg court applied these principles to a different set of counter terrorist provisions of the TA 2000 and, differing from the House of Lords (R (Gillan) v Comr of Police of the Metropolis [2006] 2 AC 307), found that those failed the test of legality. There, the provisions in question were sections 44 46 TA 2000, which enabled a senior police officer to designate an area for a period of 28 days as one in which police officers could stop and search any person for articles of a kind which could be used in connection with terrorism. The power to stop and search did not depend on the existence of any objectively judged grounds for suspicion relating to the person intercepted. That characteristic is shared by the Schedule 7 power of port questioning here under consideration. The appellant in the present case relies heavily on that decision and contends that the port questioning power similarly fails the test of legality. The fact that the power was exercisable without depending on any prior suspicion, subjective or objective, was one of the reasons for the Strasbourg courts conclusion in Gillan. At para 83 the court said this: Of still further concern is the breadth of the discretion conferred on the individual police officer. The officer is obliged, in carrying out the search, to comply with the terms of the Code. However, the Code governs essentially the mode in which the stop and search is carried out, rather than providing any restriction on the officers decision to stop and search. That decision is, as the House of Lords made clear, one based exclusively on the hunch or professional intuition of the officer concerned. Not only is it unnecessary for him to demonstrate the existence of any reasonable suspicion; he is not required even subjectively to suspect anything about the person stopped and searched. The sole proviso is that the search must be for the purpose of looking for articles which could be used in connection with terrorism, a very wide category which could cover many articles commonly carried by people in the streets. Provided the person concerned is stopped for the purpose of searching for such articles, the police officer does not even have to have grounds for suspecting the presence of such articles. As noted by Lord Brown of Eaton under Heywood in the House of Lords [at para 74], the stop and search power provided for by section 44, radically . departs from our traditional understanding of the limits of police power. Whilst that factor is common to the provisions considered in Gillan and the present ones, there are otherwise very significant differences between that case and this. First, the section 44 power was exercisable in relation to any person anywhere in the street, whereas the Schedule 7 power is confined to those who are passing through ports of entry/exit. The public in this country has historically enjoyed the right to free movement about the streets and the power to stop and search is, as Lord Brown observed, a substantial intrusion upon it. In this country, there is no general requirement for identity documents to be carried and produced on demand when a citizen is out and about. By contrast, those who pass through our ports have always been adjusted to border controls, including the requirement to identify oneself and to submit to searches and answer questions in aid of general security. The potential importance of intercepting, detecting and deterring terrorists at border points is generally recognised. The current public concern about those leaving this country with a view to joining terrorist groups abroad is simply an example. The intrusion inherent in stopping for questioning and/or search is accordingly less at border points. As long ago as 1981 the European Commission on Human Rights referred in McVeigh, ONeill and Evans v United Kingdom (1981) 5 EHRR 71, para 192 to this factor, and to the widely recognised importance of controlling the international movement of terrorists. In his 1996 report Lord Lloyd identified it in the following passage: 10.27 As an island nation it has long been the British way to concentrate controls at its national frontiers, and to maintain a correspondingly greater freedom from random checks inland. This is not always the practice adopted in continental countries which have long land frontiers. But our geography gives us a unique opportunity to target checks where they are likely to be most effective; namely at the choke points provided by our ports and airports. That, of course, is where immigration and customs controls are also to be found. But it is only by virtue of the PTA [ie the then Prevention of Terrorism (Temporary Provisions) Act 1989] that the police have any power to stop and question people passing through ports. Immigration checks on EU nationals having in most eases been reduced to a simple passport check, only a separate police check is likely to identify a terrorist suspect if he is a national of an EU country. Lord Lloyd added at para 10.47 that the port powers were among the less controversial of the provisions in the statute and that very few of those who submitted evidence to him took exception to them. Those who did were comprised chiefly of those who were regular travellers to and from Ireland, who might at that time experience frequent questioning, together with pilots who wished to use airfields which were not authorised and port operators who wished to speed up the movement of travellers through their domains. This distinction between port controls and street searches is by no means confined to the UK. In the USA, for example, border searches of persons or packages are a long recognised exception to the Fourth Amendments prohibition on searches without probable cause and a warrant: see for example the decision of the Supreme Court in United States v Ramsey 431 US 606 (1977). Similarly, the Canadian Supreme Court referred in R v Simmons [1988] 2 RCS 495, 528 (in the context of holding that a contraband search based on reasonable suspicion of the presence of smuggled material is an exception to the usual requirements for searches imposed by section 8 of the Charter) to the fact that the degree of personal privacy reasonably expected at customs is lower than in most other situations. Delivering the majority opinion, Dickson CJ observed: People do not expect to be able to cross international borders free from scrutiny. Consequently, travellers seeking to cross national boundaries fully expect to be subject to a screening process. This process will typically require the production of proper identification and travel documentation and involve a search process Of course, the powers there under consideration differed from the present, as did the grounds for their exercise. The relevance of the cases is the recognition that public expectations are different at borders and that the intrusion represented by checks, questioning and searches is less than it is elsewhere. Second, the Strasbourg court in Gillan had great regard to the manner in which the section 44 power was actually being used, and in which controls over it provided by the statute were in fact not working. It identified several different failings. (a) Although there was an authorisation procedure for designation of a particular area, it depended only upon the senior police officer determining that such designation was expedient, which, unlike a test of necessity, betokened no assessment of proportionality (para 80). (b) Although authorisation required the approval of the Secretary of State, he had no power to alter the geographical scope of it, nor was there any evidence that he ever altered the time limit (para 80). (c) Much more significantly, for some years there had been, in the Metropolitan Police district, continuous rolling authorisations for the whole of the area, with each 28 day period being succeeded immediately by another (para 81). The result was that in the whole of Greater London any person might be subject to stop and search anywhere in the streets at any time. The same did not apply in other cities even when there might be specific reason for heightened terrorist alert (para 40). There was thus every sign that the authorisations were not responsive to particular calls for them, as they were clearly intended to be. This misuse of authorisations had been identified by the then Independent Reviewer, Lord Carlile, in 2002. It contrasted with the position at the time of Lord Lloyds inquiry six years earlier, when he had reported (at para 10.22) that the power was used with great discretion. (d) The evidence recorded by the Independent Reviewer showed a rapidly mushrooming use of the power of stop and search, from about 33,000 in 2004/2005 to triple that (117,000) in 2007/2008 (para 83). (e) The Independent Reviewer was an additional safeguard but although he had been calling for some years for the power to be used less, this had not been heeded (para 82). (f) The Independent Reviewer had, moreover, found that poor and unnecessary use of section 44 abounded, and he reported evidence of cases where the person stopped was so obviously far from any known terrorist profile that there was, realistically, not the slightest possibility that he or she was a terrorist, and there was no other reason for the stop (para 84). He had concluded that the evidence showed that section 44 was in some cases being used unacceptably as an instrument to aid non terrorism policing (para 43). (g) There was evidence of the section 44 power being used in a discriminatory fashion against black and Asian persons and indeed of a practice developing of stopping white people for no other reason than to produce greater racial balance in the statistics (para 85). (h) There was a real risk of the section 44 power being misused against demonstrators and protestors in breach of articles 10 or 11 (para 85). These factors demonstrated in Gillan that the apparent safeguards against disproportionate interference with Convention rights which were provided in the case of section 44 were ineffective. None of these factors, however, applies to port questioning and search powers. By contrast, in relation to them, the frequency of use has diminished, the Independent Reviewer endorses their continuation without expressing anxiety of misuse, his suggestions for improvements have been heard, and additional safeguards for the individual have been introduced as set out at paras 16 and 17 above. Although it is obvious that questioning is in one sense a different power from search, there are in the case of port questioning and search powers sufficient effective safeguards in the manner of operation to meet the requirement of legality. They include: (i) (ii) (iii) (iv) (v) (vi) the restriction to those passing into and out of the country; the restriction to the statutory purpose; the restriction to specially trained and accredited police officers; the restrictions on the duration of questioning; the restrictions on the type of search; the requirement to give explanatory notice to those questioned, including procedure for complaint; (vii) the requirement to permit consultation with a solicitor and the notification of a third party; (viii) the requirement for records to be kept; (ix) the availability of judicial review; the contention of the appellant and of Liberty that judicial review would be ineffective is overstated; judicial review is available if bad faith or collateral purpose is alleged, and also via the principle of legitimate expectation where a breach of the Code of Practice or of the several restrictions listed above is in issue; courts are well used to requiring police officers to justify their actions and to drawing the correct inference if there is material to do so; use of the power for a collateral purpose, such as to investigate a non terrorism suspected offence, would be likely to become apparent, as it did in the case of section 44 see para 41(f), (g) and (h) above. the continuous supervision of the Independent Reviewer is of the first importance; it very clearly amounts to an informed, realistic and effective monitoring of the exercise of the powers and it results in highly influential recommendations for both practice and rule change where needed. (x) The fact that questioning is not dependent on the existence of objectively established grounds for suspicion does not by itself mean that there are not adequate safeguards or that the power is not in accordance with the law. If that had been enough, the long discussion in Gillan of the failures of the safeguards would have been unnecessary. That is also to an extent illustrated by Colon v Netherlands (2012) 55 EHRR SE45 where a power of universal or random search in aid of public order in a particular area was held to meet the requirement of legality, although not grounded on any basis of suspicion. Certainly the power was granted for a short period, but that does not affect the principle. In the particular instance of the exercise of the power which had there occurred the searching had been universal, which meant that there was no potentially arbitrary selection by police officers, but the power did not have to be exercised in that way; random selection for search was equally permitted. The applicants contention in that case appears to have been limited to the absence of prior judicial approval, but the court reviewed Gillan and it seems clear that if it had concluded that the power failed for want of a suspicion based grounding, it would have said so, particularly since its practice is to consider issues of its own motion under the principle jura novit curia: see for example MM v United Kingdom (supra) at para 150. For these reasons the principle of legality is satisfied in relation to the Schedule 7 port questioning power. The suggested analogy with Gillan requires examination but fails. The need for safeguards is measured by the quality of intrusion into individual liberty and the risk of arbitrary misuse of the power. The intrusion into individual liberty is of a significantly lesser order at ports than in the streets generally. There are sufficient safeguards against arbitrary use of this power which either were not present or were not working in Gillan. There are effective controls via judicial review and the Independent Reviewer which prevent arbitrary use of the power or provide a correction if it should occur. Proportionality In Bank Mellat v HM Treasury (No 2) [2013] UKSC 39; [2014] AC 700, 770 771, para 20 Lord Sumption conveniently formulated the concept of proportionality into four questions. There has been no dispute in the present appeal about this formulation: (i) is the objective sufficiently important to justify limitation upon a fundamental right? (ii) is the measure rationally connected to the objective? (iii) could a less intrusive measure have been adopted? (iv) has a fair balance been struck between individual rights and the interests of the community? So far as concerns the power of port questioning and search the live dispute is as to the combination of the last two questions, which are inevitably linked. As to the first, the objective of Schedule 7 is clearly not border control per se but rather the prevention and detection of terrorism. That is clearly sufficiently important to justify some intrusion upon article 8 rights. The power of questioning and search is rationally connected to that objective; it is designed to serve it and the unanimous findings of the Independent Reviewers demonstrate its utility in aid of it. The appellant contended that it was not rationally connected to ports and borders, but that is not the question. Rather that contention is another way of confronting questions (iii) and (iv); moreover there is a plain rational reason for connecting questioning and search aimed at the prevention and detection of terrorism with border control. Of course acts of terrorism may be entirely confined to these shores, but it is obvious that those concerned in acts of terrorism, at whatever level, are very likely to be travellers and, certainly given the sources of present terrorist threats, to have international connections leading to travel. The current concern for outgoing travellers, some very young, seeking to join terrorist organisations abroad is merely an example. The gravamen of the appellants case is that all questioning and searching is plainly disproportionate unless it is based upon an objectively established reasonable ground for suspecting the person concerned of being within section 40(1)(b). Thus her case is that a less intrusive measure, namely a power based on such objective grounds for suspicion, could and should have been adopted, and that failure to do so does not strike a fair balance. The answer to these two linked questions depends in the end on the balance between the level of intrusion for the individual and the value of the power in community purpose served. It is common ground that the State is entitled to a generous margin of judgment in striking this balance. The importance for the public of the prevention and detection of acts of terrorism can scarcely be overstated and the level of risk of such acts is at least as high now as it has been at any time in the 40 years since these powers were introduced, though of course the sources of the threats have changed from time to time. Lord Lloyds 1996 report referred in the passage quoted at para 39 above to the unique opportunity to target checks where they are likely to be most effective, namely at the choke points provided by our ports and airports. He went on to record that the port checks were designed to deter terrorists from entering the UK to catch those who try: and to collect intelligence on the movement of persons of interest. He concluded that the intelligence which they yielded is a valuable by product of the work of the port examiners, and that he had heard that it makes a real contribution to the counter terrorism effort (para 10.41). The unanimous view of all independent observers who have considered the matter has consistently been that questioning and search powers which are not grounded on objectively demonstrable reasonable suspicion of involvement in terrorism are of undoubted value in the struggle against the threat of terrorism, and that to restrict the powers to those in respect of whom a reasonable suspicion can be demonstrated to the satisfaction of a court would not achieve anything like the same utility. The present Independent Reviewer gave specific consideration to this in his July 2013 report at paras 10.58ff. He gave examples of the detection and prevention of terrorist activity in cases where the threshold of objectively demonstrated grounds for reasonable suspicion would not have been passed. He adverted to the way in which, if such a threshold had to be passed, the use of clean skins (or previously innocent unknowns) could thwart investigation, travelling companions of known suspects could not be questioned and those actively involved in terrorism would be likely to be alerted (and, he might have added, likely to be given an insight into intelligence gathering). There is no reason to doubt these conclusions. In particular, it is clear that the vital intelligence gathering element of Schedule 7 would not be achieved if prior suspicion on reasonable grounds were a condition for questioning. A distinct issue relating to proportionality arises in connection with any potential for discriminatory application of the powers. There is in this case no separate claim that the appellant suffered discrimination, nor could there be given her husbands apparent connection with some form of terrorism. But if there were a real potential for misuse of the power on a racially discriminatory basis, that would be a reason pointing towards a lack of proportionality, and thus of justification. For the reasons explained by the Independent Reviewer, however, (see para 25 above) this risk is not a substantial one. Moreover the Code of Practice (para 43) requires that the records kept of examinations should detail the self declared ethnicity of the subject, which is a guard against discriminatory misuse. Nor is there any sign of compensatory selection of white subjects simply in order to balance the statistics, as there was found to be in relation to section 44 see para 41(g) above. Some degree of profiling of potential subjects for questioning is inevitable given the sources, from time to time, of terrorist threat. The present Code of Practice (at para 4) does little more than rehearse the public sector duty under the Equality Act 2010. Its later provisions in paras 18 and 19 do confront the issue more directly and they make clear that selection for questioning must be informed by the known sources of terrorist threat. However the statement that ethnic background or religion must not be used alone or in combination with each other as the sole reason for selecting the person for examination (para 19) is potentially confusing. The two propositions could usefully be drawn together. What needs to be made clear is that neither ethnic background nor religion can (separately or together) be the sole criterion for selection, unless present in association with known terrorist profiles or with other relevant characteristics, such as age, mode of travel, destination or origin. Overall, the level of intrusion into the privacy of the individual is, for the reasons which have been explained above, comparatively light and not beyond the reasonable expectations of those who travel across the UKs international borders. Given the safeguards set out above, it is not an unreasonable burden to expect citizens to bear in the interests of improving the prospects of preventing or detecting terrorist outrages. In those circumstances, the port questioning and associated search powers represent a fair balance between the rights of the individual and the interests of the community at large and are thus not an unlawful breach of article 8. Detention: article 5 The power of detention here under consideration exists only as an ancillary to the Schedule 7 powers of port questioning and search, that is to say to reinforce them and to make them effective. Such detention falls within article 5(1)(b) in that it is made in order to secure the fulfilment of an obligation prescribed by law. It follows that what has already been said about the port questioning and search powers applies also to detention, and that the safeguards which exist in relation to them stand also in relation to detention. It does not, however, follow, although the Divisional Court [2014] QB 607 thought otherwise, that the power of detention is automatically justified. The level of intrusion occasioned by detention for up to six hours is of a different order to the intrusion occasioned by compulsory questioning and search, and it does not follow either that the safeguards which are adequate for the one are sufficient for the other, or that the fair balance between the rights of the individual and the interests of the public falls in the same place. Detention under Schedules 7 and 8 may involve the removal of the individual to a police station, and even if it is conducted entirely at the port it represents a substantial interference with the freedom to travel on either in or out of the country and to go about ones ordinary business. The question of the compatibility of the power of detention with article 5 only barely arises in the present case. The appellant was prevented from moving on from the airport for about an hour and three quarters, some of which time she chose to use for prayer and thus to an extent delayed the questioning process. Whether that period was sufficient to constitute a deprivation of liberty for the purposes of article 5 is a question to which the answer is not clear. Deprivation of liberty, contrary to article 5, is to be contrasted with a simple restriction of freedom of movement, which is the subject of article 2 of Protocol 4, to which the UK is not a ratifying party: see Austin v United Kingdom (2012) 55 EHRR 359, where public order containment for several hours was held not to infringe article 5. We were referred also to the admissibility decision of the ECtHR in Gahramanov v Azerbaijan (Application No 26291/06) (unreported) given 15 October 2013, in which the applicant was prevented for (on his own case) some four hours from leaving, after being stopped at an airport. The court held the complaint inadmissible on the ground that it had not been shown that he had been obliged to remain any longer than was necessary to ascertain his status. In the present case the Secretary of State, as intervener, disputed that the appellant had suffered a deprivation of liberty. However, in the court below the Crown conceded that she had. It is helpful to address the question of detention more generally. To the extent that it is necessary to prevent a person being questioned from leaving whilst the process is underway, some degree of restriction of movement is a proper corollary of the port questioning and search power. It will usually not constitute a deprivation of liberty, as in Gahramanov. Even if it does, it will if it is for no more than is necessary to complete the process, be justified. The separate sanction of prosecution for the offence of failing to comply with the requirements of Schedule 7 may not be sufficient to ensure that questioning and search are effective and may not always bite on those who are leaving the country. What is not easy to see is why detention for as long as six hours can be necessary for this purpose. If a subject is bent on refusal, the additional period in a police station is unlikely to make a difference, and in any event the interference with personal liberty is sufficiently serious to call for greater justification than this. To be proportionate detention for this length of time calls for objectively demonstrated grounds, such as a suspicion on reasonable grounds that the subject falls within section 40(1)(b) or, of course, other grounds for arrest. The Independent Reviewer also had doubts about the power of detention, although he contemplated a test of subjective, rather than objectively justified, suspicion. The better view is that if detention beyond what is necessary to complete the process is to be undertaken it ought to be justified by objectively demonstrated suspicion. A refusal to co operate after explanation that the purpose of inquiry is to establish whether the subject is within that section might, depending on the circumstances, itself provide or contribute to grounds for such reasonable suspicion that he is, especially, for example, if he fails to identify himself. But it will not always do so; everything will depend on the facts. The Independent Reviewer doubted whether this would be so at the outset of questioning, and he is no doubt right that often it would not, but for the reasons given it is at that stage perfectly proportionate to prevent the subject moving on for a reasonable time whilst questions are asked, possessions inspected and any search undertaken. To the extent that there was any deprivation of liberty in the present case, it seems clear that it was for no longer than was necessary for the completion of the process. There was no requirement to attend a police station. Accordingly, there was in this case no breach of article 5. Inspection, copying and retention of electronic data The use of this power does not arise in the present appeal and it was not separately argued. The inspection of electronic data is no doubt akin to the inspection of written documents, or for that matter the inspection of baggage or possessions, and it may, as in those analogous cases, yield valuable intelligence, especially of contacts between persons who have separately come to attention. The Independent Reviewer has emphasised the value of material extracted from such sources (see para 21 above). But the retention of such data is a considerable intrusion into the private life of the subject, particularly given the volume and content of personal material which is kept nowadays on mobile telephones or portable computers. Paragraph 11A(3) of Schedule 7 permits retention under three heads. Under para 11A(3)(b) it may be retained while the examining officer believes it may be needed as evidence in criminal proceedings. Under para 11A(3)(c) it may be retained while he believes it may be needed in connection with an immigration decision. There appears no arguable disproportion in these provisions. But under para 11A(3)(a) it may be retained for so long as is necessary for the purpose of determining whether a person falls within section 40(1)(b). To the extent that this justifies retention for the duration of the stop, and for a short period afterwards to compare records, this would appear not to be disproportionate. Retention for long enough to compare with other records necessarily goes with the power to inspect, which would otherwise be of very limited value. But if para 11A(3)(a) were to be used to justify retention indefinitely so as to provide a bank of data, that would seem to be a different matter. Other objects seized cannot be retained beyond seven days in the absence of potential use as evidence on criminal or immigration issues (para 11(2)(a)). The Code (para 40) offers no further guidance on the retention of electronic data. In a case such as that postulated there appears to be a good deal of force in the Independent Reviewers conclusion that greater safeguards are called for (see para 26(b) above). His proposal was for a requirement that subjective suspicion should be enough, that it should be required for both copying and retention, and that if it exists both copying and retention should follow. It may be that the better view is that copying and initial inspection for a reasonable period should be governed by the same criteria as port questioning and the other search and retention powers, but that if longer retention is to be justified objectively established grounds for suspicion should be required. Whether the right period for initial inspection is the seven days prescribed for other material obtained by search would need evidence which this court has not needed to be given. Moreover, there ought to be verifiable means of destruction if retention is not justified. A definitive ruling on such matters must, however, if suitable adjustments are not made to the legislation or Code, await a case in which they are directly raised. It may also be necessary then to give detailed consideration to the inter relation between such data retention and other surveillance and data interception powers. Self incrimination and article 6 Two related questions arise at this stage: (a) could the appellant avail herself of the common law privilege against self incrimination when questioned under Schedule 7 or is that privilege inapplicable either because it is by necessary inference abrogated by the statute or because in the case of a person questioned under its powers no sufficient risk existed of the answers being used in criminal proceedings against either that person or her spouse? and (b) was the appellant in any event provided with a privilege against self incrimination by article 6 of the ECHR? In the Divisional Court the appellants case seems to have been argued almost entirely upon the second of these questions, but the first was fully raised in this court and should be addressed first. The privilege against self incrimination is firmly established judge made law dating from the 17th century abolition of the Star Chamber: see Holdsworths History of English Law (3rd ed) (1944) and Bishopsgate Investment Management Ltd v Maxwell [1993] Ch 1, 17. It entitles any person to refuse to answer questions or to yield up documents or objects if to do so would carry a real or appreciable risk of its use in the prosecution of that person or his spouse: In re Westinghouse Electric Corpn Uranium Contract Litigation MDL Docket No 235 (Nos 1 and 2) [1978] AC 547 and Rank Film Distributors Ltd v Video Information Centre [1982] AC 380. If such level of risk exists, the individual should be allowed great latitude in judging for himself the effect of any particular question: R v Boyes (1861) 1 B & S 311, 330, cited with approval in Westinghouse. A statute may, however, exclude this privilege in a particular situation, and may do so either expressly or by necessary implication: Bishopsgate (supra). Because the privilege is firmly embedded in the common law, such necessary implication must be established with clarity and is not to be assumed; the approach classically enunciated by Lord Hoffmann in relation to fundamental human rights in R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115, 131 is clearly appropriate: Parliamentary sovereignty means that Parliament can, if it chooses, legislate contrary to fundamental principles of human rights. The Human Rights Act 1998 will not detract from this power. The constraints upon its exercise by Parliament are ultimately political, not legal. But the principle of legality means that Parliament must squarely confront what it is doing and accept the political cost. Fundamental rights cannot be overridden by general or ambiguous words. This is because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process. In the absence of express language or necessary implication to the contrary, the courts therefore presume that even the most general words were intended to be subject to the basic rights of the individual. For the appellant Mr Matthew Ryder QC correctly submitted that such a parliamentary intention will often be gathered from an ancillary provision preventing the use in criminal prosecutions of answers or material disclosed, or sometimes limiting such use to specific kinds of prosecution, such as for giving false information on the occasion of the questioning. As he says, no such ancillary provision is present here. That, however, is to overstate the position. There is no parliamentary consistency of practice. Sometimes, a statute which provides for an obligation to provide information or to answer questions will indeed say that no privilege against self incrimination may be claimed. Sometimes there will be added a provision that any answer given may not be relied upon in a subsequent criminal prosecution, or only in prosecutions for making a false statement in answer. A familiar example of both provisions occurring is section 31 of the Theft Act 1968. But other provisions which are clearly intended to impose an unqualified obligation to answer do not contain one, or either, of such stipulations. An example is afforded by the provisions considered in Bishopsgate, sections 235 and 236 of the Insolvency Act 1986. In that case, the Court of Appeal concluded that the transparent purpose of those provisions to enable a liquidator or similar office holder to obtain information in the public interest, would be stultified if a person required to give that information could refuse to answer by claiming privilege. Another illustration is R v Hertfordshire County Council, Ex p Green Environmental Industries Ltd [2000] 2 AC 412 where the House of Lords, in a speech delivered by Lord Hoffmann, held that the same applied to section 71(2) of the Environmental Protection Act 1990. The same applies to the present provisions. The Schedule 7 powers are patently not aimed at the obtaining of information for the purpose of prosecuting either the person questioned or his spouse. Whilst that does not by itself mean that there is no real risk that such information could be so used subsequently, it is an indicator that the process of information gathering is not to be limited by the operation of privilege. The reality is that Schedule 7 powers would be rendered very largely nugatory if privilege applied. The necessary implication is that it does not. Moreover, there is a powerful reason why the risk of prosecution based upon answers to Schedule 7 questioning is not a real and appreciable one. Whilst the mere fact that prosecution is not the purpose of such questioning does not sufficiently reduce the risk, the provisions of section 78 of the Police and Criminal Evidence Act 1984 in practice do. That section provides that evidence relied upon by the prosecution in a criminal trial may be excluded if it appears to the court that, having regard to all the circumstances, including those in which the evidence was obtained, its admission would have such an adverse effect upon the fairness of the proceedings that it should not be admitted. Before the Divisional Court, and likewise in this court, the Crown has been unable to postulate any scenario in which answers obtained under the compulsory powers afforded by Schedule 7 would not fall to be excluded under this section, and there is no known case in which such answers have been adduced in a prosecution, although on one occasion they were adduced at the request of the defendant. It is to be accepted as a general proposition that reliance on a judicial discretion is not to be equated, for a prospective defendant, with the exercise of his privilege against self incrimination: see observations to this effect in Rank Films (para 442) and Bishopsgate (para 19). But the section 78 controlling power, vested in the trial judge in criminal proceedings, is not sufficiently described as a matter of discretion. It is a matter of judgment. If in practice the outcome of the exercise of that judgment is inevitably that the evidence will be excluded, then the real and appreciable risk which the privilege against self incrimination exists to guard against is not present. The circumstances in which the evidence was obtained are a central consideration in the exercise of the section 78 judgment. Evidence obtained from the defendant himself (or his spouse) by means of legal compulsion is a classic case of evidence which it will be unfair to admit. Even without the direct application of article 6 ECHR the outcome of the section 78 judgment is effectively inevitable. Once article 6, directly binding on a court under section 6(3) of the Human Rights Act 1998, is brought into the equation, there is simply no room for any contrary conclusion, for, as is shown by Saunders v United Kingdom (1997) 23 EHRR 313 (below), article 6 has the effect that any use in a criminal prosecution of answers obtained under compulsion of law will be a breach of the right to a fair trial. The presence or absence of other evidence implicating the defendant is irrelevant to this proposition. For this reason, it is simply nothing to the point that the Director of Public Prosecutions declined in the Divisional Court to volunteer an undertaking never to seek to adduce Schedule 7 material if later there were a criminal prosecution; she would never be allowed to do so. For the same reason, the suggested possibility of use does not contribute to the assessment of proportionality. So clearly is this the inevitable outcome of the application of section 78 that it is difficult to understand why effect has not been given to the Independent Reviewers recommendation that the position be put beyond argument (such as has been made here) by the enactment of a provision making answers or information obtained inadmissible except in proceedings under para 18 of Schedule 7 or for an offence of which the gist is deliberately giving false information when questioned. It may be that the view has been taken that the effect of section 78 was so clear that specific provision is not necessary. The present argument demonstrates that it is desirable. Moreover, it is necessary to make the position plain in relation to the (largely theoretical) possibility that if A was indeed prosecuted, his co accused B, if hostile to him, might seek to adduce material deriving from Schedule 7 questioning; section 78 would have no application since it would not be the Crown which was adducing the evidence, and fairness might have to be achieved by the unsatisfactory method of severance. It is to be hoped that following the observations of the Divisional Court and (now) this court, such enactment will follow. Article 6 ECHR does not contain an explicit privilege against self incrimination, but it is well established that such is implicit in it. The trigger for the privilege is, however, that a person is charged with a criminal offence, in the special sense in which that word is used in the jurisprudence of the Strasbourg court, that is to say that his position has been substantially affected by an allegation against him and he has become, in effect, a suspect: see Lord Hopes summary of the rule in Ambrose v Harris [2011] UKSC 43; [2011] 1 WLR 2435, paras 62 63. If a person is charged in this sense, then the effect of article 6 will be to confer the privilege against self incrimination and any abrogation by statute of the common law privilege will accordingly be ineffective; moreover the use in a subsequent criminal trial of answers obtained under compulsion before the defendant was charged will be an infringement of the right to a fair trial. See for example Saunders v United Kingdom where section 434(5) of the Companies Act 1985 had abrogated the privilege. In that case the answers given under compulsion to DTI inspectors were adduced in a criminal prosecution of the subject and it was that which constituted the breach of article 6. The court made it clear at para 67 that the asking of the questions, at a stage when the defendant (as he later became) had not been charged and the purpose of the questioning was an administrative investigation quite different from a criminal one, did not amount to a breach of article 6. Port questioning and search under Schedule 7 TA 2000 is not part of a criminal investigation. Its purpose is not the accumulation of an evidential case against the subject. If that follows, it is a separate matter. The subject is not a person charged for the purposes of article 6, which has no application to him. The appellant was at no stage a defendant to a criminal charge and no question of a breach of a right to a fair trial arises. For those reasons, there was in the present case neither a wrongful denial of the common law privilege against self incrimination nor a breach of article 6 ECHR. Conclusion It follows that the appeal should be dismissed. LORD NEUBERGER AND LORD DYSON: The relevant factual and legal background is set out in the judgment of Lord Hughes at paras 1 27 above, and we agree with most of his subsequent reasoning. There is nothing we wish to add to what Lord Hughes says in paras 57 70 in relation to electronic data, self incrimination and article 6 of the Convention. However, because we consider that there is force in the opposite view, we will briefly express our reasoning on the two main points which have caused Lord Kerr to reach the opposite conclusion in relation to article 8 (albeit in a different order from that on which they are discussed in his judgment), namely proportionality (his paras 119 128) and legality ie in accordance with the law (his paras 93 111). Exercise of the Schedule 7 powers, and in particular exercise of the initial powers of stopping and questioning under para 2, which are the focus of this appeal, is said to involve a potential interference with the rights of the person concerned under articles 5 and 8 of the Convention. We agree with Lord Hughes that article 5 is not engaged for the reasons which he gives at paras 52 56 above. However, as he says, it is common ground that article 8 is engaged. Accordingly, the four requirements set out in R (Aguilar Quila) v Secretary of State for the Home Department (AIRE Centre intervening) [2011] UKSC 45, [2012] 1 AC 621, para 45 (Lord Wilson) and Bank Mellat v HM Treasury (No 2) [2013] UKSC 39; [2014] AC 700, 770 771, 790 791, paras 20 and 74 (Lord Sumption and Lord Reed respectively) must be satisfied. We agree that the first two requirements, namely importance of objective and rationality of connection, are satisfied as Lord Hughes and Kerr say; however, unlike Lord Kerr, we also consider that the third and fourth requirements, namely necessity and fair balance (or proportionality), are satisfied. The two most fundamental and well established functions of any government are the defence of the realm from external attack and the maintenance of the rule of law internally. The powers granted to the executive by the legislature under Schedule 7 are for the purpose of ensuring national security, which includes aspects of both those vital functions as well as having the important role of curbing terrorism internationally. A court should be circumspect before upholding any challenge to such legislative powers, when that challenge is based on necessity or disproportionality. The executive is, or at any rate should be, particularly well informed and experienced in assessing any risks to national security and how to deal with them, whereas the courts are not. However, this does not mean that the court should simply wave through any such legislation: the rule of law crucially requires the court to be vigilant when assessing the necessity or proportionality of both the contents and the implementation of any statute which interferes with human rights. The importance of, and tension between, the need for circumspection and the need for vigilance is apparent from the discussion in the judgments in this court in R (Lord Carlile of Berriew) v Secretary of State for the Home Department [2014] UKSC 60, [2015] AC 945, paras 31 44, 67 74, 104 109, 112 117 and 147 174. Further, as Lord Reed also said in Bank Mellat (No 2), para 71, the degree of restraint practised by courts in applying the principle of proportionality, and the extent to which they will respect the judgment of the primary decision maker, will depend on the context, and will in part reflect national traditions and institutional culture. In our view, it is not correct to say that in every case where the issue of necessity or proportionality arises the executive must produce positive evidence to show that the means which it has adopted to meet the objective in question is no more than is required. In some cases, it would be tantamount to proving a negative, which is often hard and sometimes impossible. It is important to be realistic as well as principled when assessing the proportionality of any means adopted: the need for a degree of reality in relation to proportionality was acknowledged by Lord Reed in Bank Mellat (No 2) at para 75. In any case where an issue of necessity or proportionality arises, it is appropriate to consider the third and fourth questions raised by Aquila and Bank Mellat (No 2) by reference to the practical realities of the case in question, as well as general principles. Turning to this case, it is of course not in dispute that properly trained police officers should have the power to exercise border controls to curb terrorism by stopping and questioning individuals entering or leaving the United Kingdom, ie at ports and borders. Once that is accepted, we find it hard to see how there could be any objection to giving officers the right to stop and question people at ports or borders on a random, or unpredictable, basis ie on a basis which cannot be predicted by those passing through the ports and borders provided that that right is properly regulated and supervised, and as predictable and controlled as reasonably possible. The legislature does not consider it necessary that officers should stop and question everyone passing through ports and borders, a course which would be self evidently generally much more intrusive on individual rights. In those circumstances, it is easy to understand why Schedule 7 does not limit the right to stop and question to those people who give rise to objectively explicable suspicion. The fact that officers have the right to stop and question unpredictably is very likely to assist in both detecting and preventing terrorism, and in deterring some who might otherwise seek to travel to or from this country for reasons connected with terrorism. Further, many experienced officers may have a feeling of suspicion, which is justified but objectively inexplicable, of a particular individual passing through a port or border. Of course, in many cases, it may be inappropriate to allow even the likelihood of an increase in the prospects of successfully achieving a legitimate aim to justify an interference with human rights. However, in this case, the interference is slight (see paras 51 and 54 56 above), the independent justification is convincing (see paras 39 and 49 above), the supervision is impressive (see paras 19 26 above), there are substantial safeguards (para 43 above), the benefits are potentially substantial (see paras 20 23 above), and no equally effective but less intrusive proposal has been forthcoming. In those circumstances, we conclude that the appeal, in so far as it is based on proportionality, should fail. We turn to legality. The requirement that legislation is in accordance with the law means (i) that the legislation must have some basis in domestic law and (ii) that it must be compatible with the rule of law, as the Grand Chamber of the Strasbourg court put it in S & Marper v United Kingdom (2008) 48 EHRR 1169, para 95. Unsurprisingly, it is not suggested that Schedule 7 fails to satisfy the first requirement, and the argument on legality therefore focusses on the second requirement. The argument that the Schedule 7 powers are incompatible with Convention rights in this connection is that they are unlawful in the light of the unpredictability of, and lack of control over, their application. Thus, it is said, contrary to what the Fourth Section of the Strasbourg court held was required in Gillan v United Kingdom (2010) 50 EHRR 1105, paras 76 77, the powers in question are not sufficiently precise or constrained. In other words, it is said that the power under paragraph 2 of Schedule 7 has not been formulated with sufficient precision to enable the individual to regulate his conduct, and it involves a legal discretion granted to the executive expressed in terms of an unfettered power. In Gillan, the court had to consider the lawfulness of the power conferred by section 44 of the 2000 Act on a senior police officer to designate an area anywhere in the United Kingdom as one in which the police could stop and search any person for articles in connection with terrorism. The designated areas were often substantial (eg the whole of the Greater London area) and the periods, although limited, were almost automatically renewed. Both the successful applicants and the court made the point that the power under consideration was to be distinguished from a power of search exercised at airports (paras 59 and 64). To use the words of the court, [a]n air traveller may be seen as consenting to such a search by choosing to travel and has a freedom of choice, whereas, under section 44, [t]he individual [could] be stopped anywhere and at any time, without notice and without any choice as to whether or not to submit to a search. Furthermore, the court in Gillan was also plainly influenced by a number of other factors which it mentioned in paras 83 85 of its judgment. Those factors were (i) the fact that the domestic court, the House of Lords, considered that the section 44 power radically . departs from our traditional understanding of the limits of police power, (ii) the very large and fast increasing number of stop and searches which were being conducted annually under section 44, (iii) the startling fact that every one of them had been fruitless, (iv) the fact that the independent reviewer had criticised the way in which stop and search under section 44 had been conducted in a number of highly significant respects, (v) the fact that black and Asian persons [had been] disproportionately affected by the section 44 stop and search system, and (vi) the fact that section 44 could be used against demonstrators and protesters in breach of articles 10 and/or 11. We do not read the decision in Gillan as ruling that any random stop and search system, let alone any system which permits officers randomly to stop and question preliminarily, cannot be in accordance with the law. This view is supported by the Third Sections decision in Colon v Netherlands (2012) 55 EHRR SE45, which upheld a universal right of stop and search in a particular area, albeit for a limited, but not inconsiderable, period. While the court in Colon relied in paras 73 and 76 78 on certain factors which distinguished it from Gillan, its decision emphasises how the determination of lawfulness is very sensitive to the facts of the particular case. (However, it is only fair to acknowledge that the court in Colon relied on some features of the Dutch stop and search system which are not present here.) The point that the lawfulness of any scheme is highly fact sensitive was made by the court in Gillan at para 77, where it said that [t]he level of precision required of domestic legislation which cannot in any case provide for every eventuality depends to a considerable degree on the content of the instrument in question, the field it is designed to cover and the number and status of those to whom it is addressed (a passage repeated in Colon in para 72). And, as the Grand Chamber observed in Rekvnyi v Hungary (Application No 25390/94) (2000) 30 EHRR 519, para 34: [w]hilst certainty is highly desirable, it may bring in its train excessive rigidity and the law must be able to keep pace with changing circumstances. Accordingly, many laws are inevitably couched in terms which, to a greater or lesser extent, are vague and whose interpretation and application are questions of practice. In the same case, the Grand Chamber said at para 59 that lawfulness implies qualitative requirements in the domestic law such as foreseeability and, generally, an absence of arbitrariness. When considering whether the legality principle is satisfied in relation to a particular system, it appears clear from the reasoning in the judgment in Gillan that one must look not only at the provisions of the statute or other relevant instrument which gives rise to the system in question but also at how that system actually works in practice. There are, in our view, important differences between the statutory provisions and modus operandi of the system in this case and those of the system in Gillan, and those differences establish that the powers in this case are more foreseeable and less arbitrary than those in Gillan and, in our view, justify the lawfulness of the Schedule 7 powers. First, the areas in which Schedule 7 powers can be exercised are targeted by statute to specific and relatively limited and confined places, namely ports and airports. As Lord Lloyd put it in his report, these locations constitute the first line of defence against the entry of terrorists and, it may be added, the exit of terrorists. Secondly, the individuals against whom the powers in question can be exercised are limited by statute to a relatively limited, identifiable and specific group, namely, only against those passing across the UKs borders. Thirdly, the Schedule 7 powers may only be exercised for a limited purpose, namely to determine whether the person concerned appears to be a person who is or has been concerned in the commission, preparation or instigation of acts of terrorism. Furthermore, none of the more specific concerns which the court raised in paras 83 85 of Gillan, summarised in para 83 above, appear to us to arise here. (i) The Schedule 7 powers, particularly as they are only exercisable at a port or airport, cannot be said to be extraordinary. Questioning, even challenging, people who are seeking to enter or leave a country is relatively commonplace. Physical searches at security points in airports are not infrequently conducted on a random basis. (ii) As the evidence summarised in para 18 above establishes, a relatively limited number of people are interviewed under Schedule 7, and the number has decreased each year between 2009/2010 and 2013/2014, whereas the court in Gillan (see para 84) was struck by the dramatic increase in numbers of people stopped and searched, year on year. (iii) Quite unlike the powers in Gillan, the exercise of the powers under review in the present case has produced some successful outcomes see paras 20 23 above. (iv) The independent reviewer is very positive about the way in which the Schedule 7 system is working and is being operated, as is apparent from what is said in para 24 above; indeed, he describes the system as an essential ingredient in the fight against terrorism. Again, this is quite different from the independent reviewers assessment in Gillan. By contrast with point (v) in para 83, there is no evidence that the Schedule 7 powers have been used in a racially discriminatory fashion. Indeed, discriminatory use is specifically prohibited by the code. In this connection, the independent reviewers reports quoted in para 25 above are significant. Finally, (vi) unlike the powers in Gillan, the Schedule 7 powers could not be used against demonstrators and protesters in breach of articles 10 and/or 11. It is right to add that we are not convinced that there is much force in the respondents arguments that (i) the code governing the Schedule 7 powers is more restrictive than that governing the powers considered in Gillan, or (ii) the nature of the powers exercised under Schedule 7 is less intrusive than those exercisable under the powers considered in Gillan. So far as point (i) is concerned, little if any argument was directed to it, and consideration of the two codes does not suggest a very significant difference between them. As to point (ii), we do not consider that it has much, if any, bearing on the issue of legality, although we accept that it could be of real relevance to the issue of proportionality. Nonetheless, these reservations do not in any way undermine the significance of the points made in paras 87 and 88 above. The significant differences between the Schedule 7 powers and the powers considered in Gillan, which are set out in paras 88 and 89 above do not, of course, automatically mean that the powers granted by Schedule 7 to the 2000 Act satisfy the requirement of legality. Legality is said to give rise to a problem for the powers granted under paragraph 2 of Schedule 7 because those powers can be exercised randomly. However, it is important to the effectiveness of these powers that they can be exercised in this way. Furthermore, if the power to stop and question under Schedule 7 infringes the Convention because it is exercisable randomly, the logical conclusion must be either that the valuable power must be abandoned or the power must be exercised in a far more invasive and extensive way, namely by stopping and questioning everyone passing through ports and borders. The former alternative would be unfortunate in terms of deterring and hindering terrorism, whereas the latter alternative would seem to put proportionality and legality in irreconcilable tension. Further, the Schedule 7 powers are subject to the specific controls set out by Lord Hughes in paras 16, 17 and 43 of his judgment. There are, of course, cases in which legality requires practical systems that are otherwise in the public interest to be abandoned. However, given the various factors summarised in paras 88 89 above, as more fully considered by Lord Hughes in his judgment, we have reached the conclusion the powers granted by paragraph 2 of Schedule 7 to the 2000 Act do not offend against the requirement of legality, and accordingly we conclude that this appeal should be dismissed. LORD KERR: (dissenting) Legality The opportunity to exercise a coercive power in an arbitrary or discriminatory fashion is antithetical to its legality. The primary question in this case is whether the powers under Schedule 7 to the Terrorism Act 2000 can be used in this way or whether there are in place sufficient safeguards to prevent them from being exercised in such a manner. It is not enough that they have not in fact been used arbitrarily or in a discriminatory way. If they can be used in such a way, they will not be legal. Moreover, powers which can be used in an arbitrary or discriminatory way are not transformed to a condition of legality simply because they are of proven utility. The most important authority in this area is the Strasbourg decision in Gillan v United Kingdom (2010) 50 EHRR 1105 and probably the most important passage from the judgment (in relation to the issues in the present case) is that contained in para 83, quoted by Lord Hughes in para 36 above. There are important earlier passages, however. In paras 76 and 77, the court said this: 76. the words, in accordance with the law require the impugned measure both to have some basis in domestic law and to be compatible with the rule of law, which is expressly mentioned in the preamble to the Convention and inherent in the object and purpose of article 8. The law must thus be adequately accessible and foreseeable, that is, formulated with sufficient precision to enable the individual if need be with appropriate advice to regulate his conduct. 77. For domestic law to meet these requirements it must afford a measure of legal protection against arbitrary interferences by public authorities with the rights safeguarded by the Convention. In matters affecting fundamental rights it would be contrary to the rule of law, one of the basic principles of a democratic society enshrined in the Convention, for a legal discretion granted to the executive to be expressed in terms of an unfettered power. Consequently, the law must indicate with sufficient clarity the scope of any such discretion conferred on the competent authorities and the manner of its exercise. The level of precision required of domestic legislation which cannot in any case provide for every eventuality depends to a considerable degree on the content of the instrument in question, the field it is designed to cover and the number and status of those to whom it is addressed (emphasis supplied) As ECtHR acknowledged, eleven constraints on the exercise of the powers at issue in the Gillan case had been identified by Lord Bingham when the case had been before the House of Lords (R (on the application of Gillan) v Comr of Police of the Metropolis [2006] UKHL 12; [2006] 2 AC 307). These were set out in para 14 of Lord Binghams speech: . First, an authorisation under section 44(1) or (2) may be given only if the person giving it considers (and, it goes without saying, reasonably considers) it expedient for the prevention of acts of terrorism. The authorisation must be directed to that overriding objective. Secondly, the authorisation may be given only by a very senior police officer. Thirdly, the authorisation cannot extend beyond the boundary of a police force area, and need not extend so far. Fourthly, the authorisation is limited to a period of 28 days, and need not be for so long. Fifthly, the authorisation must be reported to the Secretary of State forthwith. Sixthly, the authorisation lapses after 48 hours if not confirmed by the Secretary of State. Seventhly, the Secretary of State may abbreviate the term of an authorisation, or cancel it with effect from a specified time. Eighthly, a renewed authorisation is subject to the same confirmation procedure. Ninthly, the powers conferred on a constable by an authorisation under sections 44(1) or (2) may only be exercised to search for articles of a kind which could be used in connection with terrorism. Tenthly, Parliament made provision in section 126 for reports on the working of the Act to be made to it at least once a year, which have in the event been made with commendable thoroughness, fairness and expertise by Lord Carlile of Berriew QC. Lastly, it is clear that any misuse of the power to authorise or confirm or search will expose the authorising officer, the Secretary of State or the constable, as the case may be, to corrective legal action. Notwithstanding the existence of these constraints, ECtHR considered that the safeguards provided for in domestic law did not constitute a real curb on the wide powers afforded to the executive so as to offer the individual adequate protection against arbitrary interference para 79. The reasons for this conclusion were given in para 83 of the courts judgment (op cit) and in the following passages from paras 80 82: 80. The court notes at the outset that the senior police officer referred to in section 44(4) of the Act is empowered to authorise any constable in uniform to stop and search a pedestrian in any area specified by him within his jurisdiction if he, considers it expedient for the prevention of acts of terrorism. However, expedient means no more than advantageous or helpful. There is no requirement at the authorisation stage that the stop and search power be considered necessary and therefore no requirement of any assessment of the proportionality of the measure. The authorisation is subject to confirmation by the Secretary of State within 48 hours. The Secretary of State may not alter the geographical coverage of an authorisation and although he or she can refuse confirmation or substitute an earlier time of expiry, it appears that in practice this has never been done. Although the exercise of the powers of authorisation and confirmation is subject to judicial review, the width of the statutory powers is such that applicants face formidable obstacles in showing that any authorisation and confirmation are ultra vires or an abuse of power. 81. The authorisation must be limited in time to 28 days, but it is renewable. It cannot extend beyond the boundary of the police force area and may be limited geographically within that boundary. However, many police force areas in the United Kingdom cover extensive regions with concentrated populations. The Metropolitan Police Force Area, where the applicants were stopped and searched, extends to all of Greater London. The failure of the temporal and geographical restrictions provided by Parliament to act as any real check on the issuing of authorisations by the executive are demonstrated by the fact that an authorisation for the Metropolitan Police District has been continuously renewed in a rolling programme since the powers were first granted. 82. An additional safeguard is provided by the independent reviewer. However, his powers are confined to reporting on the general operation of the statutory provisions and he has no right to cancel or alter authorisations, despite the fact that in every report from May 2006 onwards he has expressed the clear view that, section 44 could be used less and I expect it to be used less. Drawing on the description of the section 44 powers in this passage, it is possible to contrast them with the powers contained in Schedule 7 in a variety of different ways. These illustrate the greater ambit of the Schedule 7 powers. No authorisation, whether from a senior police officer or otherwise, is required for the examining officer to have resort to the Schedule 7 powers. The exercise of those powers is not dependent on the examining officer (or anyone else) considering that it is expedient to do so for the prevention of acts of terrorism. Since no authorisation is required, there is no question of it being subject to review by the Secretary of State. There is no geographical or temporal limitation on the exercise of the powers (other than, of course, that they are to be used at a port of entry into or exit from the United Kingdom). There is no provision for automatic lapse of the powers nor is there any question of their renewed authorisation being subject to confirmation. Certain features are common to both sets of powers. The width of the powers is similar in both instances and challenges to their use on conventional judicial review grounds both face the same difficulty as was identified by ECtHR in Gillan. Both are subject to review by the independent reviewer but, as in Gillan, so in this case, this is a post hoc review. The independent reviewer cannot restrict the exercise of the powers. He may merely make recommendations as to their future use and, as we have seen in this case, his recommendations are not always followed. Resort to the powers may be based on no more than a hunch or the professional intuition of the officer concerned. Indeed, the absence of any requirement of either reasonable or even subjective suspicion in both instances clearly contemplates that this is the basis on which the powers will in fact be exercised. The sole proviso as in Gillan is that the Schedule 7 powers should be exercised for the purpose of determining whether the person who is subject to them appears to be or have been concerned in the commission, preparation or instigation of acts of terrorism. The same considerations affect the viability of a judicial review challenge and this in turn brings sharply into question the claim that judicial superintendence of the exercise of the powers is an effective safeguard against their being resorted to in an arbitrary, discriminatory or disproportionate fashion. If an examining officer does not have to form a suspicion, how is his exercise of the powers to be reviewed? At present, the only averment required of an officer whose use of the powers is challenged is that they were exercised for the statutory purpose. On the current state of the law that unvarnished statement will be sufficient to insulate the exercise of the powers from further investigation or challenge. It is said that a distinguishing feature of the Schedule 7 powers is that, whereas the section 44 power was exercisable in relation to any person in the designated geographical area, the Schedule 7 powers may only be used in relation to those passing through ports of entry or exit. It is suggested that, while people in this country expect to be allowed to pass through the streets freely, they have traditionally accepted that they will be subject to border controls such as the requirement to identify themselves. Two points should be made about this. Firstly, being subject to border controls such as the requirement to provide proof of identity and entitlement to enter is an entirely different matter from being required to answer questions about ones movements and activities. As this case shows, these questions can be quite detailed and, more importantly, if they are not answered, the person of whom they are asked faces criminal sanction. Secondly, and more importantly, whether people in this country are accustomed to intrusion when they move through ports of entry or exit does not bear on the question of whether the circumstances in which the Schedule 7 powers may be exercised are too widely drawn to satisfy the test of in accordance with law. Put shortly, an unfettered power which may be arbitrarily or capriciously used does not become legal just because people generally do not take exception to its use. The significance of the restriction on the use of Schedule 7 powers to ports of entry should not be misunderstood. As the respondent has acknowledged, there are 245m passenger movements through United Kingdom ports every year. All are potentially subject to this power. The fact that it is exercised sparingly has no direct bearing on its legality. A power on which there are insufficient legal constraints does not become legal simply because those who may have resort to it, exercise self restraint. It is the potential reach of the power rather than its actual use by which its legality must be judged. Moreover, although the percentage of travellers who are subjected to the use of the power is small, in absolute terms the number is not inconsequential. On average 5 to 7 people each day are examined for more than an hour. That there is the potential for arbitrary or discriminatory exercise of the power is apparent from, among other things, the provisions of the Code of Practice. It stipulates that selection should not be based solely upon the ethnic background or religion of the individual. This provision is objectionable for two reasons. In the first place there is no clearly obvious means of policing the requirement that persons should not be stopped and questioned just because of their ethnic background or religion. As ECtHR held in Gillan at para 86 in the absence of any obligation on the part of the officer [exercising powers of stop and search under TA section 44] to show a reasonable suspicion, it is likely to be difficult if not impossible to prove that the power was improperly exercised. Keeping records of the self declared ethnicity of those subject to the Schedule 7 powers does not, of itself, provide a guarantee that the powers are not being exercised in a discriminatory way. Secondly, the provision in the Code of Practice contemplates that ethnic origin or religious adherence can be at least one of the reasons for exercising the power. In so far as the perceived religious belief or ethnic origin of an individual (as opposed to his or her capacity to provide information about their possible involvement in terrorism) is the basis on which he or she is made subject to Schedule 7 powers, this constitutes direct discrimination. As Lord Nicholls of Birkenhead held in Nagarajan v London Regional Transport [2000] 1 AC 501, 512H: Decisions are frequently reached for more than one reason. Discrimination may be on racial grounds even though it is not the sole ground for the decision. Provided that race exerted a more than trivial influence on the decision to treat a person less favourably, the decision will constitute race discrimination (Igen Ltd (formerly Leeds Careers Guidance) v Wong [2005] ICR 931, paras 36 37). As Mr Squires, for the intervener, the Equality and Human Rights Commission, submitted, if examining officers exercise Schedule 7 powers not because they have any particular suspicion or intelligence about an individual but on the basis of an intuition that a person looks like a terrorist, it is predictable that those of Asian or Muslim appearance will be disproportionately targeted. The startling reality that this legislation authorises the use of a coercive power, at least partly, on the grounds of race and religion should be starkly confronted. That not only permits direct discrimination, it is entirely at odds with the notion of an enlightened, pluralistic society all of whose members are treated equally. The legality of a measure which interferes with a Convention right must also be vouched against its demonstrable proportionality. Limits to police powers must be prescribed in order to enable the necessary examination of whether the specific exercise of those powers is proportionate to take place and in order to demonstrate that a proper balance between individual rights and wider public interests has been struck. The majority in R (T) v Chief Constable of Greater Manchester Police (Liberty intervening) [2015] AC 49, held that ensuring that a particular provision was proportionate was an aspect of the prescribed by law requirement. This is, of course, distinct from the question whether an interference in a particular case was necessary (see per Lord Reed paras 114 115). In order to be prescribed by law, the legal regime governing the exercise of police powers must include limitations capable of securing the proportionate exercise of those powers and of ensuring that the proportionality of any interference can be adequately examined (ibid para 114). Where the stop, question and search powers can be exercised without any suspicion whatever, there is simply no material on which a judgment as to whether they are being used proportionately can be made. The examining officer does not have to explain why he or she chose a particular individual for the exercise of the Schedule 7 powers. Indeed, he or she does not have to have a reason (in the sense of a rationalised conclusion) for the exercise of the power, since it is unnecessary to have any form of suspicion. A purely instinctive impulse based on nothing more than a feeling that something relating to terrorism might be disclosed by the exercise of the powers is enough to permit recourse to them. In those circumstances, an examination of whether the powers have been used proportionately is simply unfeasible. This crucial dimension of the prescribed by law requirement is missing from the Schedule 7 regime. On that account use of the Schedule 7 powers cannot be said to be in accordance with law. Utility The utility of a provision in this case, its effectiveness as a counter terrorism measure is, at least potentially, relevant to a claimed justification of interference with a qualified Convention right. So, for instance, if it could be shown that the exercise of Schedule 7 powers provided a tangible result in terms of reducing the risk of terrorist attack, this would sound on the question of pursuit of a legitimate aim for the interference and whether a proper balance had been struck between the rights of the individual and the interests of the community. But it is misconceived to assume that, because the possible utility of Schedule 7 powers is relevant to justification of an interference with a Convention right, it meets the requirement that the measure be in accordance with law. The distinction between the manner in which a power is exercised and the result that its exercise may achieve should be clearly recognised. It does not follow that, because a measure is an effective counter terrorist tool, the way in which that tool is deployed is automatically proportionate and in accordance with law. In Colon v The Netherlands (2012) 55 EHRR SE45 a power of search in aid of public order, on foot of a designation by the Burgomaster, in the old centre of Amsterdam was held to meet the requirement of legality, although not grounded on any basis of suspicion. It is to be noted, however, that the applicants complaint that the interference with his right to respect for his private life was not in accordance with the law was confined to what he claimed was the ineffectiveness of the judicial remedies available. In particular, he argued that an essential guarantee in the form of prior judicial control was missing. The European Court dealt with that claim in paras 75 78 as follows: 75. The court has accepted in past cases that prior judicial control, although desirable in principle where there is to be interference with a right guaranteed by article 8, may not always be feasible in practice; in such cases, it may be dispensed with provided that sufficient other safeguards are in place (see, mutatis mutandis, Klass v Germany (1979 80) 2 EHRR 214, para 56; and Rotaru v Romania, (2000) 8 BHRC 449 para 59). In certain cases, an aggregate of non judicial remedies may replace judicial control (see, mutatis mutandis, Leander v Sweden (1987) 9 EHRR 433, paras 64 65). 76. In the Netherlands, all pertinent legal texts are in the public domain (compare and contrast para 30 of Gillan). Before the public prosecutor can order police to carry out a search operation, a prior order designating the area concerned must be given by an administrative authority of the municipality, the Burgomaster. That order must in turn be based on a byelaw adopted by an elected representative body, the local council, which has powers to investigate the use made by the Burgomaster of his or her authority (see paras 34 36 above). 77. Review of a designation order, once it has been given, is available in the form of an objection to the Burgomaster, followed if necessary by an appeal to the Regional Court and a further appeal to the Administrative Jurisdiction Division of the Council of State (see para 40 above). 78. The criminal courts have a responsibility of their own to examine the lawfulness of the order and the scope of the authority of the official who gave it. It is a defence for anyone charged with failing to comply with a search order issued by or on behalf of the public prosecutor to state that the order was not lawfully given; the criminal court must answer it in its judgment (see para 41 above). The emphasis of the legality debate was on the reviewability of the authorising agents (the Burgomasters) decision, rather than on any opportunity to examine the proportionality of the individual decision of officers as to who should be stopped and searched. The use which the Burgomaster made of his or her powers remained subject to review and control by the local council, an elected representative body. It is important to understand, therefore, that the courts reference to the effectiveness of the measure (in paras 94 and 95 of its judgment) was made in the context of the justification of the interference with the article 8 right, rather than as an assessment of the accordance with law requirement. The fact that a measure may be effective in pursuit of the aim of counteracting terrorism does not mean that its use in accordance with law is to be assumed. If the measure is not effective to achieve its avowed aim, this is, of course, a reason to find it disproportionate. But the converse does not hold true. The proportionality of a measure is not to be determined by its efficacy in fulfilling its objective. The privilege against self incrimination and article 6 The venerable history of the privilege against self incrimination and its place at the centre of our system of criminal justice have been described by Lord Hughes in para 60 of his judgment. The importance attached to this right is such that it is not to be lightly set aside. As Lord Griffiths said in AT & T Istel Ltd v Tully [1993] AC 45, 57 the privilege is deeply embedded in English law and can only be removed or moderated by Parliament and in Gray v News Group Newspapers Ltd [2013] 1 AC 1, para 18 Lord Neuberger of Abbotsbury MR said that it was for the legislature and not the judiciary to remove or cut down the privilege against self incrimination. Two particular features of the right should be noted. It is engaged when compliance with a legal obligation to answer questions would create a real and appreciable risk of criminal proceedings being brought In re Westinghouse Electric Corpn Uranium Contract Litigation MDL Docket No 235 (Nos 1 and 2) [1978] AC 547, 574 per Lord Denning MR. Secondly, the relevant risk is of prosecution, not conviction: Sociedade Nacional de Combustiveis de Angola UEE v Lundqvist [1991] 2 QB 310; JSC BTA Bank v Ablyazov (No 13) [2014] EWHC 2788. So, if answering the questions put to her by examining officers would expose Mrs Beghal (or, for that matter, her husband) to an appreciable risk of prosecution, the privilege against self incrimination is in play. It is not necessary to show that criminal proceedings are likely. The privilege arises unless the risk is so far beyond the bounds of reason as to be no more than a fanciful possibility: Westinghouse [1978] AC 547, 579 per Roskill LJ. It is suggested that the powers under Schedule 7 would be ineffective if the privilege against self incrimination was held to apply to them. The premise on which this is based appears to be that those stopped and questioned under Schedule 7 would be unlikely to answer without there being in place the prospect of prosecution if they refused to respond. It must therefore be assumed that Parliament intended that the privilege should be abrogated in relation to the use of these powers. For my part, I would be reluctant to make the assumption that those who were questioned under Schedule 7 would indeed refuse to answer unless faced with the possibility that they would be prosecuted in consequence. But I have a more fundamental reason for disagreeing with the conclusion that the privilege against self incrimination does not arise in relation to the exercise of Schedule 7 powers. I am therefore prepared to proceed on the hypothetical basis that Parliament did indeed intend that the privilege should be abrogated. It is suggested that Schedule 7 powers are not aimed at obtaining information for the purpose of prosecuting the person questioned or her spouse. I do not understand why this should be so. The purpose of questioning under the schedule is to determine whether the person questioned appears to be a terrorist within the wide definition contained in section 40(1)(b) of the 2000 Act. If answers to the questions posed suggest that the person questioned is indeed someone who has committed an offence under one of the sections specified in section 40 or who is or has been concerned in the commission, preparation or instigation of acts of terrorism, why should those answers not form the basis of a prosecution? It seems to me inescapable that there is a real and appreciable risk of prosecution if the answers to the questions posed prove to be self incriminating. The fact that, in this case, it was not suspected that the appellant was a terrorist is nothing to the point. If, as she should have been, she was asked questions designed to establish whether she appeared to be a terrorist, the potential of her answers to incriminate her if they were of an inculpatory character, is indisputable. In the Divisional Court [2014] QB 607 there was some discussion as to whether the Director of Public Prosecutions might be prepared to give an undertaking that answers to questions asked in the exercise of Schedule 7 powers would never form part of a subsequent prosecution case. Unsurprisingly, to me at least, the Director declined to give that undertaking. It would be a startling policy decision to give an assurance that evidence of terrorism elicited by Schedule 7 questioning would not be used to prosecute someone implicated by such evidence. The independent reviewer and, incidentally, the Divisional Court and Lord Hughes in his judgment in this case, have recommended that Parliament should enact a provision making answers or information obtained inadmissible in proceedings, except where there has been a breach of paragraph 18 of the Schedule (wilful failure to comply with a duty under Schedule 7) or for an offence of deliberately giving false information when questioned. The plain fact is, however, that self incriminating answers given in response to questions posed under Schedule 7 can form the basis of a prosecution. It is suggested, however, that such a prosecution would not be viable by reason of section 78 of the Police and Criminal Evidence Act 1984. True it is that the exercise of the power to exclude evidence under this provision must be exercised in accordance with article 6 of ECHR and that this has the effect that any use in a criminal prosecution of answers obtained under compulsion of law will generally be a breach of the right to a fair trial. But two caveats to that must be entered. In the first place, answers to questions posed under Schedule 7 can prompt inquiry which might lead to the obtaining of evidence independent of the material which the responses have supplied. Secondly, it is by no means clear that evidence of those answers will automatically be excluded if there is other evidence which directly implicates the person responding. So, for instance, if there is significant other evidence which, alone, might be sufficient to establish the guilt of the accused, is it inevitable that evidence of responses given during a Schedule 7 investigation which corroborates or reinforces that evidence, would be excluded? I do not believe that it is. Of greater importance, however, is the consideration that the protection afforded by the privilege against self incrimination is against the risk of prosecution rather than conviction. In this context the significance of the DPPs understandable refusal to confirm that there will never be any circumstances in which responses to a Schedule 7 questioning will not be used in a prosecution comes fully into play. There is, currently, no guarantee that someone who gives a self incriminating answer in the course of a Schedule 7 inquiry will not be confronted by those answers in a subsequent criminal trial. He may succeed in having evidence of those answers excluded but he cannot ensure that he will not be prosecuted on foot of them. I consider therefore that the requirement in Schedule 7 that a person questioned under its provisions must answer on pain of prosecution for failing to do so is in breach of that persons common law privilege against self incrimination. On that account it is incompatible with article 6 of ECHR. Articles 5 and 8 It is accepted that the exercise of Schedule 7 powers constitutes an interference with article 5 and article 8 rights. This throws the focus of the discussion about those rights on the question of justification. To establish justification, it is necessary to satisfy a trilogy of tests: the interference must pursue a legitimate aim; it must be in accordance with law; and it must be necessary in a democratic society. An aspect of the last of these is proportionality. As Lord Wilson in R (Aguilar Quila) v The Secretary of State for the Home Department (AIRE Centre intervening) [2012] 1 AC 621, para 45 and Lord Sumption and Lord Reed in Bank Mellat v HM Treasury (No 2) [2014] AC 700, 770 771, 789, paras 20 and 70ff explained, this normally requires that four questions be addressed: (a) (b) is the legislative objective sufficiently important to justify limiting a fundamental right?; are the measures which have been designed to meet it rationally connected to it?; are they no more than are necessary to accomplish it?; and (c) (d) do they strike a fair balance between the rights of the individual and the interests of the community? The objective of the Schedule 7 powers (counteracting terrorism) can be readily acknowledged as a legitimate aim. And obtaining information about whether a person appears to be a terrorist is rationally connected to that aim. As is usually the case, the real debate centres on the third and fourth issues: is the breadth of the powers no more than is necessary to achieve the aim; and has a fair balance been struck between the rights of the individual and the interests of the community. The fact that a power has been successful in promoting the aim of the interference with a Convention right does not supply the complete answer to the question whether it is no more than is necessary to achieve the aim. Nor does the endorsement of the usefulness of the power by the independent reviewer. Valuable though the independent reviewers opinions are, the question whether this undoubted interference with an individuals Convention rights is no more than is necessary is one for the courts. And the courts should be mindful that the proven success of the use of the power does not establish that no lesser form of interference would be just as efficacious. Nor does it, indeed, address the question whether, even if somewhat less effective, a more unobtrusive interference would be sufficient to fulfil the aim of the measure. While the state enjoys an area of discretionary judgment as to what measures are needed to pursue a particular aim, this does not relieve it of the obligation to produce some evidence that the specific means chosen to bring that about are no more than is required. There is no evidence that a suspicion less power to stop, detain, search and question is the only way to achieve the goal of combatting terrorism. The fact that the measure has been successful does not establish that proposition. Indeed, to take the example of detention, it is clear that the measure goes beyond what is necessary. As Lord Hughes has pointed out in paras 54 and 55, detention beyond what is necessary to complete the process should be justified by objectively demonstrated suspicion. The fact that the appellant was not detained for more than was necessary does not establish that the breadth of the power available to examining officers is proportionate. Plainly, it is not. Likewise, the failure or refusal of Parliament to enact a provision making answers or information obtained by use of Schedule 7 powers inadmissible in proceedings disposes of any possible argument that this measure goes no further than is required to meet its aim. The opinion of the independent reviewer and the Divisional Court that this enactment should be made has not been challenged. While the provision remains in force, that aspect of the Schedule 7 powers is not only not in accordance with law (for the reasons earlier given) but also, ipso facto, more than is necessary to fulfil the objective of the interference. Of course it is true that the threat of terrorism is substantial and should not be downplayed. But that undoubted truth should not mask or distort the obligation to dispassionately examine the aptness of measures taken to deal with it. If they are to be seen as no more than necessary, the powers under Schedule 7 must be capable of withstanding scrutiny of their rationale. In my view, no reasoned justification has been proffered for investing examining officers with a power to stop, search, question and detain anyone passing through a port and for making those who refuse to answer questions amenable to the criminal law. On the issue of whether a proper balance has been struck between the rights of the individual and the interests of the community, the degree of interference with rights is self evidently relevant. And it is unquestionably true that in many cases, the interference with the Convention rights may be relatively unobtrusive. It is also undoubtedly relevant that members of the public expect to be questioned at ports of entry to and exit from the United Kingdom and that many raise no objection to the use of Schedule 7 powers. Again, the scourge of terrorism and the need to take effective measures against it loom large in this context. But the potential reach of the Schedule 7 powers must also be clearly recognised. A person stopped under this provision is required to answer questions even though they may not have had the benefit of legal advice. Individuals may have many reasons why they do not want to answer questions as to their movements and activities. These reasons are not necessarily or invariably discreditable. Some may be apprehensive about answering questions without a lawyer being present or may lack a full understanding of the significance of refusing to answer. The fact that they are open to criminal sanction, which could include imprisonment, for failing to answer questions, renders the exercise of these powers a significant interference with article 8 rights, in my opinion. Again, the absence of any articulated reason for the need for a suspicion less power to stop, detain, etc makes its justification on the basis that it strikes the right balance problematic. The safeguards outlined by Lord Hughes in para 43 of his judgment do not bear on this anterior question, and, in fairness, he does not suggest that they do. Whatever may be said about the efficacy of those safeguards (and there is, at least, ample scope for debate about, for instance, the effectiveness of judicial review) they do not supply the necessary justification for allowing examining officers to exercise the powers under Schedule 7 without any suspicion whatever. For that fundamental reason, I cannot accept that the particular form of interference which Schedule 7 represents has been shown to be justified. Conclusion I would allow the appeal and declare that Schedule 7 of the Terrorism Act 2000 is incompatible with articles 5, 6 and 8 of ECHR.
+This appeal concerns the scope of the duty of confidentiality owed by Her Majestys Revenue and Customs (HMRC) in respect of the affairs of tax payers. The duty is now in statutory form. Commissioners for Revenue and Customs Act 2005 added by me to highlight the important words): Section 18 of the Act is headed Confidentiality. It provides (with emphasis (1) Revenue and Customs officials may not disclose information which is held by the Revenue and Customs in connection with a function of the Revenue and Customs. (2) But subsection (1) does not apply to a disclosure is made for the purposes of a function of (a) which (i) the Revenue and Customs, and (ii) does not contravene any restriction imposed by the Commissioners, (b) which is made in accordance with section 20 or 21, (c) which is made for the purposes of civil proceedings (whether or not within the United Kingdom) relating to a matter in respect of which the Revenue and Customs have functions, (d) which is made for the purposes of a criminal investigation or criminal proceedings (whether or not within the United Kingdom) relating to a matter in respect of which the Revenue and Customs have functions, (e) which is made in pursuance of an order of a court, (f) which is made to Her Majestys Inspectors of Constabulary, the Scottish inspectors or the Northern Ireland inspectors for the purpose of an inspection by virtue of section 27, (g) which is made to the Independent Police Complaints Commission, or a person acting on its behalf, for the purpose of the exercise of a function by virtue of section 28, (h) which is made with the consent of each person to whom the information relates, (3) Subsection (1) is subject to any other enactment permitting disclosure. In this section (4) (a) a reference to any person who is or was a reference to Revenue and Customs officials is a Commissioner, (i) (ii) an officer of Revenue and Customs, (iii) a person acting on behalf of the Commissioners or an officer of Revenue and Customs, or (iv) a member of a committee established by the Commissioners, a reference to the Revenue and Customs has the (b) same meaning as in section 17, (c) a reference to a function of the Revenue and Customs is a reference to a function of the Commissioners, or (i) (ii) an officer of Revenue and Customs, Sections 20 and 21, which are referred to in section 18(2)(b), cover various situations where disclosure is authorised on public interest grounds, such as disclosure to another public body for the purposes of the prevention, detection or prosecution of crime. Section 5 is headed Commissioners initial functions. It provides: (1) The Commissioners shall be responsible for (a) the collection and management of revenue for which the Commissioners of Inland Revenue were responsible before the commencement of this section, [and] (b) the collection and management of revenue for which the Commissioners of Customs and Excise were responsible before the commencement of this section, Section 9 is headed Ancillary powers. It provides: (1) The Commissioners may do anything which they think (a) necessary or expedient in connection with the exercise of their functions, or (b) functions. incidental or conducive to the exercise of their Section 51 (headed Interpretation) defines function as meaning any power or duty (including a power or duty that is ancillary to another power or duty). Section 19 makes it a criminal offence for a person to contravene section 18(1) by disclosing revenue and customs information relating to a person whose identity is specified in or can be deduced from the disclosure, subject to a statutory defence if the defendant shows that he reasonably believed that the disclosure was lawful or that the information had already been lawfully made available to the public. Mr Patrick McKenna is a former senior partner of a global firm of chartered accountants. He is the founder and chief executive officer of Ingenious Media Holdings plc. The company and its subsidiaries (collectively Ingenious Media) are an investment and advisory group specialising in the media and entertainment industries. Among other things they have promoted film investment schemes involving film production partnerships. The schemes were devised by Mr McKenna and utilised certain tax relief which was then available. The marketing of the schemes stopped when the tax relief ceased to be available. On 14 June 2012 the Permanent Secretary for Tax in HMRC, Mr David Hartnett, gave an interview to two financial journalists from The Times. They had requested the meeting to discuss tax avoidance. The meeting was recorded and was agreed to be off the record. On 21 June 2012 The Times published two articles on the subject of film schemes and tax avoidance. They informed readers that: Patrick McKenna and [X] are the two main providers of film investments schemes in the UK. To the Revenue the two men represent a threat. HM Revenue and Customs believes that film schemes have enabled investors to avoid at least 5 billion in tax. Much of that sum, the Revenue says, is attached to schemes created by [X] or Mr McKenna. Mr McKenna, 56, founder of Ingenious Media, is also involved in a long running Revenue inquiry into three of his partnerships. Hes never left my radar, a senior Revenue official said of Mr McKenna. Hes an urbane man, , hes a clever guy, hes made a fortune, hes a banker, but actually hes a big risk for us so we would like to recover lots of the tax relief hes generated for himself and other people. Are we winning? I would say, beginning to. I think well clean up on film schemes over the next few years. The senior Revenue official was Mr Hartnett. The words attributed to him are a direct quotation from the transcript of the interview, and Mr Hartnett was the source of the reference to 5 billion (although in the interview Mr Hartnett gave the figure utterly off the record). Mr Hartnett said other things which were not for quotation (and were not quoted), including a description of the film schemes as scams for scumbags. At the time of the interview, HMRC had not reached a formal decision whether to challenge their validity. There is no dispute that Mr Hartnett imparted information to The Times regarding the tax activities of Mr McKenna and Ingenious Media, and HMRCs attitude towards them, derived from information held by HMRC about them. Mr Hartnetts reasons for disclosure The reasons given by Mr Hartnett for what he said to the journalists about Mr McKenna and Ingenious were that it was generally in HMRCs interests to try to establish good relations with the financial press; that they provided a way of emphasising to the general public HMRCs views on elaborate tax avoidance schemes; and that Mr Hartnett thought that the journalists might have information of significant value to HMRC, which they might reveal as the dialogue continued, such as details of tax avoidance arrangements which the journalists had uncovered but were unknown to HMRC. Mr Hartnett emphasised that the interview was agreed to be off the record, and that he did not anticipate that his comments about Mr McKenna and Ingenious Media would be published. The claim The claim by Ingenious Media and Mr McKenna was brought by way of an application for judicial review, although in substance it was a straightforward claim for breach of a duty of confidentiality. The form in which the claim was brought appears to have influenced its perception by the courts below. At first instance, Sales J held that it was not appropriate for the court to approach Mr Hartnetts decision to say what he said as if the court were the primary decision maker: [2013] EWHC 3258 (Admin), para 40. The court, he held, could only intervene if satisfied that Mr Hartnett could not rationally take the view that speaking to the journalists as he did would assist HMRC in the exercise of its tax collection functions. Sales J emphasised, at para 50, that the rationality standard is a flexible one, which varies in the width of discretion allowed to a decision maker according to the strength of the public interest and the strength of the interests of any individual affected by the decision to be taken. He laid stress on the fact that the disclosures made were limited and that the interview was agreed to be off the record. The disclosures made were, in his judgment, not irrational, were made for a legitimate purpose and were proportionate. In short, he approached the matter as a review on public law principles of an administrative act, and he dismissed the claim. Sales Js judgment was upheld by the Court of Appeal in a judgment given by Sir Robin Jacob, with which Moore Bick and Tomlinson LJJ agreed: [2015] 1 WLR 3183. Sir Robin rejected the claimants arguments that the disclosures made were not in connection with a function of HMRC, properly construed, and that the judge had adopted the wrong standard of review. As to the first argument, he held that a wide meaning should be given to section 18(2)(a)(i) ( subsection (1) does not apply to a disclosure which is made for the purposes of a function of the Revenue and Customs). As to the second argument, Sir Robin echoed Sales Js holding that it was not for the court to review all the facts de novo as though it were the primary decision maker (para 46). Analysis From the judgments below and the arguments in this court, three main issues emerge: what is the proper construction of the section 18(2)(a)(i) read with the other provisions of the Act; what is the proper approach of the court in judging the conduct of Mr Hartnett; and what is the significance of his understanding that his interview with the journalists was to be off the record? The interpretation of section 18 Unfortunately the courts below were not referred (or were only scarcely referred) to the common law of confidentiality. The duty of confidentiality owed by HMRC to individual taxpayers is not something which sprang fresh from the mind of the legislative drafter. It is a well established principle of the law of confidentiality that where information of a personal or confidential nature is obtained or received in the exercise of a legal power or in furtherance of a public duty, the recipient will in general owe a duty to the person from whom it was received or to whom it relates not to use it for other purposes. The principle is sometimes referred to as the Marcel principle, after Marcel v Commissioner of Police of the Metropolis [1992] Ch 225. In relation to taxpayers, HMRCs entitlement to receive and hold confidential information about a person or a companys financial affairs is for the purpose of enabling it to assess and collect (or pay) what is properly due from (or to) the tax payer. In R v Inland Revenue Comrs, Ex p National Federation of Self Employed and Small Businesses Ltd [1982] AC 617, 633, Lord Wilberforce said that the whole system involves that matters relating to income tax are between the commissioners and the taxpayer concerned, and that the total confidentiality of assessments and of negotiations between individuals and the revenue is a vital element in the working of the system. See also Conway v Rimmer [1968] AC 910, 946 (Lord Reid); and R v Inland Revenue Comrs, Ex p Preston [1985] AC 835, 864F (Lord Templeman). The Marcel principle may be overridden by explicit statutory provisions. In In re Arrows Ltd (No 4) [1995] 2 AC 75, 102, Lord Browne Wilkinson said: In my view, where information has been obtained under statutory powers the duty of confidence owed on the Marcel principle cannot operate so as to prevent the person obtaining the information from disclosing it to those persons to whom the statutory provisions either require or authorise him to make disclosure. Subsections (2)(b) et seq of section 18 contain specific provisions permitting the disclosure of taxpayer information for various purposes other than HMRCs primary function of revenue collection and management. What then is the proper interpretation of the far broader words of subsection (2)(a)(i) disclosure made for the purposes of a function of HMRC? On HMRCs interpretation, it would be hard to conceive a wider expression. By taking sections 5, 9 and 51(2) in combination, it is said to include anything which in the view of HMRC is necessary or expedient or incidental or conducive to or in connection with the exercise of the functions of the collection and management of revenue. If that is the right interpretation of subsection (2)(a)(i), it means that a number of the subsequently listed specific exceptions are otiose, including (c) and (d), which deal with disclosure for the purposes of civil or criminal proceedings relating to matters connected with customs and excise. Secondly, and more fundamentally, it means that the protection which would otherwise have been provided to the taxpayer by HMRCs duty of confidentiality will have been very significantly eroded by words of the utmost vagueness. So to construe the words would run counter to the principle of construction known as the principle of legality, after Lord Hoffmanns use of the term in R v Secretary of State for the Home Office, Ex p Simms [2000] 2 AC 115, 131. He explained the principle as follows: Fundamental rights cannot be overridden by general or ambiguous words. This is because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process. In the absence of express language or necessary implication to the contrary, the courts therefore presume that even the most general words were intended to be subject to the basic rights of the individual. Lord Hoffmann said that this presumption will apply even to the most general words, but I would say further that the more general the words, the harder it is likely to be to rebut the presumption. A similar principle can be seen in the courts approach to the interpretation of powers delegated under a so called Henry VIII clause. In R (Public Law Project) v Lord Chancellor [2016] 3 WLR 387, para 26, Lord Neuberger of Abbotsbury PSC, with the agreement of the other members of the court, cited with approval the following passage in Craies on Legislation, 10th ed (2012), edited by Daniel Greenberg, at para 1.3.11: as with all delegated powers the only rule for construction is to test each proposed exercise by reference to whether or not it is within the class of action that Parliament must have contemplated when delegating. Although Henry VIII powers are often cast in very wide terms, the more general the words used by Parliament to delegate a power, the more likely it is that an exercise within the literal meaning of the words will nevertheless be outside the legislatures contemplation. (Emphasis added) To take the present case, the general principle of HMRCs duty of confidentiality regarding individual tax payers affairs is long established. (In 2011 Mr Hartnett articulated it when refusing to give any information to the House of Commons Public Accounts Committee about tax payers with whom HMRC had reached settlements.) In passing the 2005 Act, Parliament cannot be supposed to have envisaged that by section 18(2)(a)(i) it was authorising HMRC officials to discuss its views of individual taxpayers in off the record discussions, whenever officials thought that this would be expedient for some collateral purpose connected with its functions, such as developing HMRCs relations with the press. If Parliament really intended to delegate to officials such a wide discretion, limited only by a rationality test, in place of the ordinary principles of confidentiality applicable to public bodies in respect of confidential or private information obtained under statutory powers or for a statutory purpose, it would have significantly emasculated the primary duty of confidentiality recognised in section 18(1). For those reasons section 18(2)(a)(i) requires to be interpreted more narrowly. I take section 18(1) to be intended to reflect the ordinary principle of taxpayer confidentiality referred to in para 17, to which section 18(2)(a)(i) creates an exception by permitting disclosure to the extent reasonably necessary for HMRC to fulfil its primary function. It was argued by HMRC that despite being headed Confidentiality, section 18 is not confined to information which is in any real sense confidential, but is far wider in its scope. Therefore, it was argued, the exception contained in subsection (2)(a)(i) must be given a similarly expansive interpretation in order to avoid absurdity. In support of this argument HMRC relied on the wording of section 19, which makes it a criminal offence for an official to disclose revenue or customs information relating to an identifiable person, but provides a defence if the person charged proves that he reasonably believed that the information had already and lawfully been made available to the public. The creation of this defence showed, in HMRCs submission, that section 18 was not essentially or only about protecting confidentiality, because it self evidently extended to the disclosure of information which was already in the public domain. This argument found favour with the Court of Appeal, but I do not consider that it bears the weight which HMRC seeks to put on it. The argument is too subtle, and it is open to other objections. It is well settled that information may be available to the public and yet not sufficiently widely known for all confidentiality in it to be destroyed. As Eady J put it in McKennitt v Ash [2006] EMLR 10, para 81, where information has been obtained in circumstances giving rise to a duty of confidentiality, the protection of the law will not be withdrawn unless and until it is clear that a stage has been reached where there is no longer anything left to be protected. Whether that stage has been reached may be a hard question on which reasonable people may disagree. It is a fallacy to suppose that because a defence to a criminal charge under section 19 is available to a person who reasonably believed the information to be available to the public, it must follow that Parliament intended section 18 to prohibit the disclosure of information of the most ordinary kind about which there could be no possible confidentiality. Moreover, even if section 18(1) has the wide scope suggested by HMRC (which it is not necessary to decide in this case), it does not follow that Parliament must be taken to have intended by subsection (2)(a)(i) to confer on officials a wide ranging discretion to disclose confidential information about the affairs of individual taxpayers. The courts approach to review of HMRCs conduct Ordinarily it is a matter for the court to decide the question whether there has been a breach of a duty of confidentiality, applying established principles of law to its own judgment of the facts. Among other authorities, the point is well illustrated by the decision of the Court of Appeal in W v Egdell [1990] 1 Ch 359. The plaintiff was detained in a secure mental hospital, under a hospital order coupled with a restriction order, after pleading guilty to manslaughter on the grounds of diminished responsibility. The defendant, a consultant psychiatrist, was engaged on his behalf to prepare a report in connection with an intended application to a mental health review tribunal for his discharge. The defendants report presented a disturbing picture and it led to the withdrawal of the application. The defendant was nevertheless so concerned that matters in his report ought to be known to those responsible for the plaintiffs care and discharge that he sent a copy of it to the medical director at the hospital, with a view to its onward transmission to the Home Office. The plaintiff sued the defendant for breach of his contractual duty of confidence. Dismissing the action, the trial judge held that the doctors duty of confidentiality did not bar him from disclosing the report to the hospital if the doctor judged the report to be relevant to his care, nor from disclosing it to the Home Secretary if the doctor judged the report to be relevant to the exercise of the Home Secretarys discretionary powers. The Court of Appeal upheld the judges decision but not his approach. Bingham LJ said, at p 422, that the answer to the question whether the doctors disclosure was justified must turn not on what the doctor thinks but on what the court rules. He added that it did not follow that the doctors conclusion was irrelevant; in making its ruling the court would give such weight to the doctors considered judgment as seemed in all the circumstances to be appropriate. The same principle applies whether or not the duty of confidentiality is contractual. It applies equally where the person or body owing a duty of confidentiality holds a public office or is a public body or is performing a public function, subject to any contrary statutory provision. It is a cardinal error to suppose that the public law remedies and principles associated with judicial review of the exercise of administrative power, developed by the common law from the ancient prerogative writs, occupy the entire field whenever the party whose conduct is under challenge holds a public position. It is important to emphasise that public bodies are not immune from the ordinary application of the common law, including in this case the law of confidentiality. The common law is multi faceted and remains the bedrock of the English legal system. Having rejected the view that section 18(2)(a)(i) should be interpreted as making the disclosure of information about individual taxpayers a matter for the discretion of HMRC officials, subject only to a rationality control, I disagree with the view of the lower courts that it was not for them to approach the disclosures made by Mr Hartnett as if they were primary decision makers. In accordance with ordinary principles, the question of breach of confidentiality is one for the courts judgment. Off the record Off the record is an idiom and like many idioms can bear different shades of meaning. It may, for example, be intended to mean strictly confidential or it may be intended to mean not to be directly quoted or attributed. The judge found that Mr Hartnett understood it to mean that the interview was to be a background briefing, intended to influence the journalists views and what they wrote about matters affecting HMRC but not to be published. There has been no appeal against that finding, but nothing in my view turns on what precisely Mr Hartnett intended. As a matter of principle, a disclosure of confidential information may sometimes be permissible on a restricted basis. (In the case of W v Egdell, previously cited, the doctor was lawfully justified in passing on his report to those who had responsibility for the plaintiffs care, whereas it would not have been lawful to pass it to someone who had no such responsibility.) But an impermissible disclosure of confidential information is no less impermissible just because the information is passed on in confidence; every schoolchild knows that this is how secrets get passed on. The references by the courts below to the nature of the interview leave me in some doubt whether they had a clear regard for the distinction. Conclusion The information supplied by Mr Hartnett to the journalists about Mr McKenna and Ingenious Media was information of a confidential nature, in respect of which HMRC owed a duty of confidentiality to them under section 18(1). It was limited in scope, but it was not insignificant, as is evident from the use made of it in the articles which followed the interview. At the time of the interview the tax consequences of the film schemes discussed in it were under consideration by HMRC. The schemes themselves were things of the past. It is not suggested that the disclosures made by Mr Hartnett were reasonably necessary for the purpose of HMRCs investigations into the schemes. As to the justifications put forward by HMRC, a general desire to foster good relations with the media or to publicise HMRCs views about elaborate tax avoidance schemes cannot possibly justify a senior or any other official of HMRC discussing the affairs of individual tax payers with journalists. The further suggestion that the conversation might have led to the journalists telling Mr Hartnett about other tax avoidance schemes, of which HMRC knew nothing, appears to have been no more than speculation, and is far too tenuous to justify giving confidential information to them. The fact that Mr Hartnett did not anticipate his comments being reported is in itself no justification for making them. The whole idea of HMRC officials supplying confidential information about individuals to the media on a non attributable basis is, or should be, a matter of serious concern. I would not seek to lay down a rule that it can never be justified, because never say never is a generally sound maxim. It is possible, for example, to imagine a case where HMRC officials might be engaged in an anti smuggling operation which might be in danger of being wrecked by journalistic investigations and where for operational reasons HMRC might judge it necessary to take the press into its confidence, but such cases should be exceptional. I would reject the argument that the disclosure was justified under section 18(2)(a), allow the appeal and invite the parties written submissions as to the appropriate form of order.
+As a child, the claimant was abused physically and sexually by foster parents with whom she was placed while in the care of the defendant local authority. The local authority were not negligent in the selection or supervision of the foster parents. The question the court has to decide is whether the local authority are nevertheless liable to the claimant for the abuse which she suffered, either on the basis that they were in breach of a non delegable duty of care, or on the basis that they are vicariously liable for the wrongdoing of the foster parents. The facts The claimant was taken into the care of the local authority in February 1985, when she was aged seven. Statutory care orders followed. Between March 1985 and March 1986 she was fostered by a Mr and Mrs Allison. The judge found that during that period, she was physically and emotionally abused by Mrs Allison. Between October 1987 and February 1988 she was fostered by a Mr and Mrs Blakely. The judge found that during that period, she was sexually abused by Mr Blakely. In each case, the abuse took place in the foster home in the course of day to day care and control of the claimant. Mrs Allison employed grossly excessive violence to discipline her. Mr Blakely molested her when bathing her and when she was alone in her bedroom. The fostering arrangements involved in the two placements were different, and demonstrate that analogies with ordinary family life need to be treated with care. Mr and Mrs Allison generally had a large number of children living with them at any given time, and their home had been categorised as a family group foster home. The appellant was one of nine or ten children fostered there at the relevant time. Mr and Mrs Allison also had four children of their own. The fostering arrangements gave rise to a fairly rapid turnover of foster children, mostly under the age of ten. Mr and Mrs Blakely, on the other hand, fostered children in a more conventional family setting. They had two foster children living with them at the material time the claimant and a younger girl besides two older children of their own. The statutory framework The statutory framework during the relevant period was contained in the Children and Young Persons Act 1969 (the 1969 Act), the Child Care Act 1980 (the 1980 Act), and the Boarding Out of Children Regulations 1955 (SI 1955/1377) (the Regulations). The claimant was committed to the care of the local authority by virtue of a care order made under section 1 of the 1969 Act. Section 10 of the 1980 Act set out the powers and duties of a local authority when a care order was made: (1) It shall be the duty of a local authority to whose care a child is committed by a care order . to receive the child into their care and . to keep him in their care while the order . is in force. (2) A local authority shall, subject to the following provisions of this section, have the same powers and duties with respect to a person in their care by virtue of a care order . as his parent or guardian would have apart from the order . In terms of section 12(2) of the 1980 Act, those functions were in addition to the functions conferred on the authority by Part III of that Act. Part III included section 18(1), which imposed a general duty on the local authority, in reaching any decision as to a child in their care, to give first consideration to the need to safeguard and promote the welfare of the child throughout his childhood, and so far as practicable to ascertain the wishes and feelings of the child regarding the decision and give due consideration to them, having regard to his age and understanding. Section 21 of the 1980 Act provided: (1) A local authority shall discharge their duty to provide accommodation and maintenance for a child in their care in such one of the following ways as they think fit, namely, (a) by boarding him out on such terms as to payment by the authority and otherwise as the authority may, subject to the provisions of this Act and regulations thereunder, determine; or (b) by maintaining him in a community home or in any such home as is referred to in section 80 of this Act; or (c) by maintaining him in a voluntary home (other than a community home) the managers of which are willing to receive him; or by making such other arrangements as seem appropriate to the local authority. (2) Without prejudice to the generality of subsection (1) above, a local authority may allow a child in their care, either for a fixed period or until the local authority otherwise determine, to be under the charge and control of a parent, guardian, relative or friend. It follows from section 10(1) of the 1980 Act that the local authority were required to keep the claimant in their care, and to comply with the duties imposed by section 10(2), so long as the order remained in force, even if the claimant was boarded out in accordance with section 21(1)(a): that is to say, was placed with foster parents. It is implicit in the opening words of section 21(1) that the local authoritys duties included a duty to provide accommodation and maintenance for a child in their care, and it follows from section 21(1)(a) and (2) that a foster placement, and a placement with the childs family, were among the means by which that duty could be discharged. Section 22 of the 1980 Act enabled the Secretary of State to make regulations making provision for the welfare of children boarded out by local authorities under section 21(1)(a), including provision for securing that children shall not be boarded out in any household unless that household is for the time being approved by such local authority as may be prescribed by the regulations (section 22(2)(b)), and provision for securing that children boarded out under section 21(1)(a) of this Act, and the premises in which they are boarded out, will be supervised and inspected by a local authority and that the children will be removed from those premises if their welfare appears to require it (section 22(2)(d)). Turning to the Regulations, regulation 1 provided that the Regulations applied to the boarding of a child to live with foster parents in their dwelling as a member of their family. Regulation 4 required the local authority not to allow a child to remain boarded out with any foster parents if it appeared that the boarding out was no longer in his best interests. Regulation 5 provided for the child to be removed from the foster parents forthwith if the visitor appointed under the Regulations to supervise his welfare considered that his health, safety or morals were endangered. Regulation 6 required the child to undergo a medical examination before being placed with foster parents, except in a case of emergency. Regulation 7 required the local authority to arrange medical examinations of boarded out children every six to 12 months, depending on the age of the child. Regulation 8 required adequate arrangements to be made for the child to receive medical and dental attention. Regulation 9 required visitors to make written reports about the children and houses they visited. Regulation 10 required the local authority to maintain case records in respect of every child boarded out by them. Regulation 11 required the local authority to maintain a register of foster parents and boarded out children. In relation to boarding out arrangements expected to last for more than eight weeks, regulation 17 required that the foster home should be visited in advance, and a report obtained from the visitor as to its suitability. Regulation 19 required that, where possible, a child should be boarded out with foster parents who were of the same religious persuasion, or who gave an undertaking to bring the child up in that religious persuasion. Regulation 20 required the local authority to obtain an undertaking from the foster parents, stating (amongst other things) that they had received the child into their home as a member of their family, that they would allow the child to be medically examined at such times and places as the local authority might require, that they would inform the local authority immediately of any serious occurrence affecting the child, that they would at all times permit any person authorised by the local authority to see the child and to visit their home, and that they would allow the child to be removed from their home when so requested by any person authorised by the local authority. Regulation 21 required the local authority to ensure that a visitor saw the child and visited the foster parents house within one month after the commencement of the placement, and thereafter as often as the welfare of the child required, but not less often than every one to three months, depending on the age of the child, the length of the placement, and any change of address. Regulation 22 required the local authority to ensure that reviews of the childs welfare, health, conduct and progress were carried out, by persons who did not usually act as visitors, within three months after the child was placed with any foster parents, and thereafter as often as was expedient in the particular case, but not less often than once in every six months. It is apparent from the Regulations that, although the local authority did not exercise day to day control over the manner in which the foster parents cared for the claimant, they nevertheless had powers and duties of approval, inspection, supervision and removal without any parallel in ordinary family life. Relevant practice The evidence of social care experts was that children in care are placed in foster care wherever it is considered safe and appropriate to do so, since it is a fundamental principle of social work practice that children are best placed in a family environment. That principle had been established by the time the claimant was in care. The process of becoming a foster carer involves extensive safeguarding and reference checks, assessment of potential to foster by a supervisory social worker, and attendance at pre approval training. The process was broadly similar, although less highly developed, at the time when the claimant was in care. Foster carers were described in evidence led on behalf of the local authority as home based professionals . acting as a public parent in a private household. According to the evidence, the local authority recruited individuals as prospective foster parents. A social worker employed as a substitute family care worker assessed and prepared them for placements, and supported them in their role as carers. Arrangements for specific placements reflected the legal status of the child (in particular, whether she was received into care voluntarily or was the subject of a care order), the purpose of the placement, the skills and experience of the foster parents in dealing with children who belonged to a particular age group or presented particular problems, and the circumstances of the child and her family. The substitute family care worker dealt with the foster parents on a long term basis. She reviewed their training needs and provided or co ordinated the necessary training. This might include specialised training: for example, the records relating to Mr and Mrs Allison indicate that they were to receive training prior to their designation as family foster group parents, while, somewhat ironically, Mr and Mrs Blakely received training in dealing with abused children. The substitute family care worker also monitored placements, assessing how the foster parents were coping with the child or children in the placement, the impact the foster child was having on their own children, the difficulties they might be experiencing, and the support or information they might require. This involved visits to the foster family, which took place at least monthly, but might be more frequent if the need arose. There were also less frequent case reviews, which were typically chaired by a senior member of the local authoritys social work department, and attended by the substitute family care worker, the childs social worker (whose focus was on the child, and whose involvement with the foster parents would last only as long as the childs placement with them), the foster parents, and members of the childs family. The foster parents also attended planning meetings at the social work department, when the care arrangements for fostered children were discussed. A minute of such a meeting, involving Mr and Mrs Blakely, indicates that they were provided with diaries in which to record the behaviour, development and statements of children whom they were fostering. In the case of family group foster parents, such as Mr and Mrs Allison, there were also annual reviews attended by social work staff and the foster parents themselves. The documents relating to Mr and Mrs Allison, and Mr and Mrs Blakely, for the period in question also indicate that it was the practice for a foster carer agreement between the foster family, the substitute family care worker and the childs social worker to be recorded in writing at the beginning of the placement, covering such matters as contact between the child and her family, visits by the childs social worker and activities during those visits, visits by the substitute family care worker, and case reviews. This was additional to the undertaking given in accordance with regulation 20 of the Regulations. In the case of Mr and Mrs Allison, a written agreement was also entered into between themselves and the local authority when they were given the status of family group foster parents, recording the number and age of the children to be placed with them, and their use as an emergency foster home for out of hours placements. Foster care does not involve a complete break from the childs family. That is reflected in the fact that the fostering agreements contemplated contact between the child and her family. In the present case, it was envisaged that the claimant would return to the care of her mother. Consequently, she had contact with her mother during the foster placements, and spent a significant period of time between the foster placements living with her mother. It appears from the evidence that, besides the matters specifically mentioned in the Regulations, there were other aspects of the life of a child in foster care which were decided by the local authority, reflecting the fact that it was the local authority, not the foster parents, which possessed parental powers in relation to the child. It was the local authority which agreed to medical treatment of the child, and which decided the level of contact between the child and her family. The local authority also decided whether or not the child could go on holiday, whether the child could have a passport, and whether the child could go on school trips or on overnight stays with friends. According to the evidence, if the foster parents needed child care because they were working, generally the social worker would make the arrangements because of the need to ensure that any substitute carer was suitable. Sometimes extended members of the foster family were approved to care for the child in the foster carers absence. A few matters, including the religion in which the child was brought up, remained under the control of the childs parents. Areas where either the foster parent or the social worker could become involved included attending parents evenings at the childs school, making arrangements for contact with members of the childs family, and buying clothes and equipment for the child. The foster parents were expected to undertake the daily care of the child and to take the child to the dentist and the optician. Foster parents received boarding out allowances from the local authority. In the case of family group foster homes, such as Mr and Mrs Allison provided, the allowances were paid at a scale which was higher than normal. Foster parents also received additional allowances or grants for such matters as taxi fares, holidays and childminding costs incurred in respect of the children. For example, Mr and Mrs Allison received payments to cover the cost of childminding when they took children on various visits and outings, and when they attended reviews. They also received equipment, such as beds and mattresses, when necessary. The proceedings below The trial judge, Males J, dealt with the issues of liability and limitation, leaving issues concerning causation and quantum of damages to be dealt with later if necessary: [2014] EWHC 4005 (QB); [2015] PTSR 653. In relation to limitation, the judge decided that the limitation period should be disapplied pursuant to section 33 of the Limitation Act 1980. In relation to liability, there was no case that the local authority had failed to exercise reasonable care in the selection of the foster parents or in the supervision and monitoring of the placements. The claimants case was that the local authority was responsible in law for the tortious conduct of the foster parents, either on the basis of vicarious liability, or on the basis of a non delegable duty of care. In a carefully reasoned judgment, the judge rejected both arguments. In relation to vicarious liability, the judge considered the law as stated in Lord Phillips of Worth Matravers judgment in Various Claimants v Catholic Child Welfare Society [2012] UKSC 56; [2013] 2 AC 1 (the Christian Brothers case), and focused on the question whether the relationship between the local authority and the foster parents was akin to that between an employer and an employee. He concluded that it was not. Considering the five features listed by Lord Phillips in para 35 of the Christian Brothers judgment, he accepted that the first and fourth features were present: the local authority were more likely to have the means to compensate a claimant and would have insurance, and by placing the child with the foster parents the local authority would have created the risk of abuse being committed by the foster parents. On the other hand, he considered that the remaining features were not satisfied. Treating the activity of the foster parents as the provision of family life, they did not in his view provide family life on behalf of the local authority, and their provision of family life was not part of the activity of the local authority. The foster parents were not, in his view, under the control of the local authority to any material degree. In agreement with the majority of the Supreme Court of Canada in KLB v British Columbia [2003] 2 SCR 403, he considered the lack of control to be decisive. In his view, the local authority not only did not have control over the foster parents, whether to direct what they did or how they did it, but it was essential to the whole concept of foster parenting that the local authority should not have that control. The foster parents role was to provide family life, bringing up the child as a member of their own family. That was only possible if a foster parent enjoyed independence from direction by the local authority and autonomy to determine how the child should be parented. In relation to the case based on a non delegable duty, the judge found that the five features identified by Lord Sumption in Woodland v Essex County Council [2013] UKSC 66; [2014] AC 537, para 23 were all present. First, the claimant was a child who was in care. Secondly, the relationship between the parties existed before the acts of abuse: it was created by a care order, and gave rise to statutory responsibilities. Thirdly, the claimant had no control over how the local authority chose to perform its obligations. Fourthly, the local authoritys duty to care for the child was delegated to the foster parents: it was they who exercised the day to day care of the child. Fifthly, the foster parents tortious conduct had been committed in the performance of the very function delegated to them. In that regard, the judge rejected a contention that a non delegable duty could be breached only by negligence, and not by the commission of an intentional tort. The judge, however, interpreted Woodland as imposing a separate Caparo like criterion, to be considered as a second stage of the analysis, and which must also be satisfied (Caparo Industries plc v Dickman [1990] 2 AC 605). Applying that approach, he concluded that the imposition of a non delegable duty on the local authority would not be fair, just and reasonable. He gave a number of reasons for reaching that conclusion, including the following. First, it would impose an unreasonable financial burden on local authorities providing a critical public service. Funds used to compensate the victims of historical abuse would not be available to meet current needs. There would also be a significant financial impact on local authorities in terms of recruitment practices, training requirements and supervision, all of which might become more intensive. Those factors could affect the capacity of local authorities to maintain the provision of foster care resources. Financial compensation was in any event an unsatisfactory form of recompense for abuse. Secondly, there was a real danger that the imposition of a non delegable duty would discourage local authorities from placing children with foster parents, even where reasonable steps had been taken to ensure their suitability. Thirdly, it was inherent in foster care placements that the local authority did not have the same control over the day to day lives of the children as they had over children in residential homes. That was a benefit to the children in foster care and was necessary in order to give them the experience of family life which was the purpose of fostering. Fourthly, it would be difficult to draw a principled distinction between liability for abuse committed by foster parents and liability for abuse committed by others with whom a local authority decided to place a child, including her own parents. An appeal against the judges decision was dismissed by the Court of Appeal: [2015] EWCA Civ 1139; [2016] QB 739. In relation to vicarious liability, Tomlinson LJ considered that the local authority did not exercise sufficient control over the foster parents for vicarious liability to arise. The provision of family life could not be part of the activity of the local authority or of the enterprise upon which they were engaged, because inherent in it was a complete absence of external control over day to day family routine. The control retained by the local authority was at the higher or macro level, as opposed to micro management of the day to day family environment (para 15). It was therefore irrelevant to the risk of abuse occurring during the unregulated course of life in the foster home (ibid). Black LJ also rejected the imposition of vicarious liability, for similar reasons, and Burnett LJ agreed with both judgments on this issue. The argument for a non delegable duty was also rejected, although each of the members of the Court of Appeal gave different reasons for their conclusion. Tomlinson LJ noted that a non delegable duty must relate to a function which the local authority had assumed a duty to perform. Fostering was not a function which the local authority could perform: it must be entrusted to others. By placing the child with foster parents, the local authority discharged rather than delegated their duty under section 21 of the 1980 Act to provide accommodation and maintenance for a child in their care (paras 23 24). Burnett LJ, on the other hand, considered that the relevant duty was the duty of the local authority to care for the child: to promote her welfare and to protect her from harm, so far as reasonably practicable (para 30). If, applying the principles summarised in the Christian Brothers case, there was no vicarious liability for an assault upon a child in care, then in his view the common law should not impose liability via the route of a non delegable duty (para 34). He also doubted whether a claim for breach of a non delegable duty could arise in consequence of an intentional wrong (paras 36 37). In relation to these matters, he cited the decision of the High Court of Australia in State of New South Wales v Lepore [2003] HCA 4; 212 CLR 511. Furthermore, he considered that section 10 of the 1980 Act, in tying the powers and duties of the local authority to those of a parent or guardian, was incompatible with the imposition of a non delegable duty of the kind contended for: parents who let their children stay away from home could not sensibly be fixed with liability for an assault on the basis of a non delegable duty (para 41). In addition, he agreed with the judges reasoning in relation to the Caparo rubric, treated as a separate issue. Black LJ was in broad agreement with the judge. She considered that the local authority delegated to the foster parents the obligation to care for the claimant as a parent or guardian would, which was an integral part of the positive duty which they had assumed towards her (para 55). Like the judge, however, she also considered that it would not be fair, just or reasonable to impose a non delegable duty on the local authority. In that regard, in addition to the resource implications of the imposition of strict liability for torts committed by foster parents, she also emphasised the risk that local authorities would be reluctant to place children in their care with foster parents, or with their own parents, if a non delegable duty were imposed (paras 62 63). Like Burnett LJ, she noted that the duties of local authorities were assimilated by section 10(2) of the 1980 Act to those of parents, and observed that parents were not subject to a non delegable duty (para 64). Unlike Burnett LJ, she did not treat the absence of vicarious liability as bearing on the question whether there was a non delegable duty, and she questioned the idea that a non delegable duty could not be breached by deliberate wrongdoing (para 59). The priority of the issues Liability in tort normally depends on the breach of a duty owed by the defendant to the claimant. The only true exception to that principle under the common law is vicarious liability, where for reasons of policy the defendant is held liable for the breach of a duty owed to the claimant by a third party. There cannot, however, be any rationale for imposing vicarious liability on a defendant where he is directly liable for the harm caused by the third party. It therefore makes sense to consider the scope of the defendants own duties before considering whether vicarious liability may exist. Non delegable duties of care The expression non delegable duties of care is commonly used to refer to duties not merely to take personal care in performing a given function but to ensure that care is taken. The expression thus refers to a higher standard of care than the ordinary duty of care. Duties involving this higher standard of care are described as non delegable because they cannot be discharged merely by the exercise of reasonable care in the selection of a third party to whom the function in question is delegated. Tortious liabilities based not on personal fault but on a duty to ensure that care is taken are exceptional, and have to be kept within reasonable limits. Yet there are some well known examples: it is well established that employers have a duty to ensure that care is taken to provide their employees with a safe system of work, that hospitals have a duty to ensure that care is taken, in the treatment of their patients, to protect their health, and that schools have a duty to ensure, in the education of their pupils, that care is taken to protect their safety. The question which arises in the present case is whether local authorities have an analogous duty to ensure that care is taken, in the upbringing of children in their care, to protect their safety. In the Woodland case, Lord Sumption identified two broad categories of case in which a non delegable duty of care has been held to arise. The first was a large, varied and anomalous class of cases in which the defendant employs an independent contractor to perform some function which is either inherently hazardous or liable to become so in the course of his work (para 6). The present case does not fall within that category. The second broad category was said to comprise cases where the common law imposed a duty which had three critical characteristics. First, the duty arises because of an antecedent relationship between the defendant and the claimant. Secondly, the duty is a positive or affirmative duty to protect a particular class of persons against a particular class of risks, and not simply a duty to refrain from acting in a way that foreseeably causes injury. Thirdly, the duty is by virtue of that relationship personal to the defendant (para 7). Lord Sumption went on to identify a number of characteristic features of cases in the second category. These included the assumption by the defendant of a positive duty to protect the claimant from harm, and the delegation by the defendant to a third party of some function which is an integral part of the positive duty which he has assumed towards the claimant (para 23). In such a situation, the defendant may delegate the performance of the function, but he remains under a duty to ensure that the function is performed and that, in doing so, care is taken to protect the claimant from harm. It follows, as Lord Sumption explained, that in the absence of negligence of their own, for example in the selection of contractors, [the defendants] will not be liable for the negligence of independent contractors where on analysis their own duty is not to perform the relevant function but only to arrange for its performance (para 25). Lord Sumption described the five features he had identified as criteria (ibid). He stated that a non delegable duty of care should be imputed to schools [with which the case was concerned] only so far as it would be fair, just and reasonable to do so, but added that he did not accept that any unreasonable burden would be cast on them by recognising the existence of a non delegable duty on the criteria which I have summarised above (ibid). Lady Hale agreed that the principle [of personal liability for the breach of a non delegable duty] will apply in the circumstances set out by Lord Sumption . subject of course to the usual provisos that such judicial statements are not to be treated as if they were statutes and can never be set in stone (para 38). She also agreed with Lord Sumption that recognising the existence of a non delegable duty in the circumstances described above would not cast an unreasonable burden on the service providers (para 40). The five criteria set out by Lord Sumption were thus intended to identify circumstances in which the imposition of a non delegable duty was fair, just and reasonable. It is important to bear in mind Lady Hales cautionary observation that such judicial statements are not to be treated as if they were statutes, and can never be set in stone. Like other judicial statements, the criteria articulated by Lord Sumption may need to be re considered, and possibly refined, in particular contexts. That does not, however, mean that it is routinely necessary for the judge to determine what would be fair and just as a second stage of the analysis. As was made clear by this court in Cox v Ministry of Justice [2016] UKSC 10; [2016] AC 660, para 41, in relation to vicarious liability, having recourse to a separate inquiry into what is fair, just and reasonable is not only unnecessarily duplicative, but is also apt to give rise to uncertainty and inconsistency. The critical question, in deciding whether the local authority were in breach of a non delegable duty in the present case, is whether the function of providing the child with day to day care, in the course of which the abuse occurred, was one which the local authority were themselves under a duty to perform with care for the safety of the child, or was one which they were merely bound to arrange to have performed, subject to a duty to take care in making and supervising those arrangements. Although Lord Sumption focused upon situations in which a non delegable duty of care was deemed to have been assumed voluntarily, it is of course possible for the necessary relationship to be created by statute. It is a familiar aspect of the legislation governing safety at work, for example, that duties are laid on employers which they cannot escape by employing competent contractors. But everything turns on the particular statute. The point is illustrated by the decision of the Court of Appeal in Myton v Woods (1980) 79 LGR 28, where a claim was made against a local education authority for the negligence of a taxi firm employed by the authority to drive children to and from school. The authority had no statutory duty to transport children, but only to arrange and pay for it. The claim was therefore dismissed. Lord Denning MR said at p 33 that the authority was not liable for an independent contractor except he delegates to the contractor the very duty which he himself has to fulfil. That decision was approved in the Woodland case. One could similarly ask in the present case whether the local authority had a statutory duty to provide the children with day to day care, or only to arrange, supervise and pay for it. Discussion An appropriate starting point is section 10 of the 1980 Act. As was explained earlier, section 10(1) requires a local authority to whose care a child is committed by a care order to receive the child into their care and . to keep him in their care while the order . is in force. Section 10(2) provides that a local authority shall, subject to the following provisions of this section, have the same powers and duties with respect to a person in their care by virtue of a care order . as his parent or guardian would have apart from the order . None of the subsequent provisions of section 10 bears on the present issue. Section 10 thus confers or imposes upon a local authority, in relation to a child who is in their care by virtue of a care order, the powers and duties which a parent or guardian would have by virtue of their relationship to a child of which they were the parent or guardian: that is to say, the powers and duties which they have by reason of their status. Those powers and duties are many and various. They include, for example, the power to consent to medical treatment on behalf of a child below the age of capacity. Perhaps most relevantly in the present context, they include the general duty to safeguard and promote the childs health, development and welfare, and the right to direct, control or guide the childs upbringing. Should these parental powers and duties be construed as imposing a tortious duty not merely to take care for the safety of the child, but to ensure that care is taken? There is ample authority that the duty of a parent, or of a person exercising temporary care of a child in loco parentis, is a duty to take reasonable care. For example, in Carmarthenshire County Council v Lewis [1955] AC 549, concerned with a nursery teacher, Lord Reid stated at p 566: There is no absolute duty; there is only a duty not to be negligent, and a mother is not negligent unless she fails to do something which a prudent or reasonable mother in her position would have been able to do and would have done. More recently, in Harris v Perry [2008] EWCA Civ 907; [2009] 1 WLR 19, concerned with parents holding a birthday party attended by other peoples children, the Court of Appeal held at para 19 that the relevant standard of care was that which a reasonably careful parent would show for her own children (see also Surtees v Royal Borough of Kingston upon Thames [1991] 2 FLR 559, concerned with a foster parent). On the other hand, there are no authorities suggesting that parents, or persons with analogous responsibilities, must not merely take personal care for their childrens safety, but must ensure that reasonable care is taken by anyone else to whom the safety of the children may be entrusted. There are good reasons for adopting that approach in a domestic setting. If parents both wish to work, they may have to place their child in a nursery, or employ a nanny. If they wish to maintain a social life, they may have to entrust their children to babysitters. Their children may stay with friends overnight, or with their grandparents in the holidays. If, notwithstanding the exercise of reasonable care by the parents, the law of tort were to hold them liable if their child were injured because of a lack of care on the part of the nanny or the babysitter, or if the child were abused by a friend or a grandparent, that would be liable to interfere with ordinary aspects of family life which are often in the best interests of children themselves. Local authorities are in a different position from parents, or other individuals having temporary care and control of children, in a variety of ways. For example, as Lord Hutton observed in Barrett v Enfield London Borough Council [2001] 2 AC 550, 587 588, a local authority employs trained staff to make decisions and to advise it (see also Surtees at pp 123 124 per Sir Nicolas Browne Wilkinson V C). That fact, however, forms part of the context in which the question whether reasonable care was taken must be answered: it does not entail that a different duty altogether should be imposed. Although there are differences between the position of local authorities and that of parents, children in care have the same needs as other children. In particular, it may be in their best interests to spend time staying with their parents or grandparents, or with other relatives or friends. That is specifically permitted by section 21(2) of the 1980 Act, as explained earlier. Furthermore, in deciding whether to exercise their power under section 21(2), the local authority are required by section 18(1) to give first consideration to the need to safeguard and promote the welfare of the child throughout his childhood, and, so far as practicable, to ascertain the wishes and feelings of the child regarding the decision and give due consideration to them. If, however, local authorities which reasonably decided that it was in the best interests of children in care to allow them to stay with their families or friends were to be held strictly liable for any want of due care on the part of those persons, the law of tort would risk creating a conflict between the local authoritys duty towards the children under section 18(1) and their interests in avoiding exposure to such liability. Furthermore, since a non delegable duty would render the local authority strictly liable for the tortious acts of the childs own parents or relatives, if the child was living with them following a decision reasonably taken under section 21(2), the effect of a care order, followed by the placement of the child with his or her family, would be a form of state insurance for the actions of the childs family members (and, indeed, their friends, relatives and babysitters, if the child were left with them). Section 21 is also relevant in another respect. As explained earlier, section 21(1) requires the local authority to discharge their duty to provide accommodation and maintenance for a child in their care in whichever of the specified ways they think fit, or by making such other arrangements as seem appropriate to the local authority. The specified ways include boarding him out on such terms as to payment by the authority and otherwise as the authority may . determine. The implication of the word discharge is that the placement of the child constitutes the performance of the local authoritys duty to provide accommodation and maintenance. It follows that the local authority do not delegate performance of that duty to the persons with whom the child is placed. This is difficult to reconcile with the idea that, when the foster parents provide daily care to the child placed with them, they are performing a function which remains incumbent on the local authority. That is not to say that the local authority are absolved of all responsibility: on the contrary, they remain subject to numerous duties towards the child in their care, some of which will be considered shortly. Nevertheless, in the language used by Lord Sumption in Woodland (para 25), this suggests that the duty of the local authority is not to perform the function in the course of which the claimant was abused (namely, the provision of daily care), but rather to arrange for, and then monitor, its performance. Section 22 is also relevant. As explained earlier, it enables the Secretary of State to make regulations imposing duties on local authorities in relation to the approval of households where children are boarded out, the inspection and supervision of the premises where they are boarded out, and the removal of the children from the premises if their welfare appears to require it. As McLachlin CJ observed in a similar context in the Canadian case of KLB v British Columbia at para 36, it might be thought that there would be no need to set out in regulations a catalogue of duties with respect to placement and supervision which are incumbent on the local authority, if they were in any event responsible for all the wrongs that might befall children in foster care. The implication of section 22 is rather that the continuing responsibility of the local authority for the care of the child, in accordance with section 10, is discharged in relation to the boarding out of children by means of prior approval of the households in which they are placed, and subsequent inspection, supervision and removal if appropriate, in accordance with the relevant regulations. The objective of section 22, and of the regulations made under it, is to ensure that potential problems arising during a foster placement are avoided if possible by means of prior approval of the households involved, and that any problems subsequently arising are identified and addressed once they have become capable of observation by means of inspection and supervision. The statutory regime does not impose on the local authority any other responsibility for the day to day care of the child or for ensuring that no harm comes to the child in the course of that care. For all these reasons, I conclude that the proposition that a local authority is under a duty to ensure that reasonable care is taken for the safety of children in care, while they are in the care and control of foster parents, is too broad, and that the responsibility with which it fixes local authorities is too demanding. I therefore reach the same conclusion as the Court of Appeal on this aspect of the case, although for somewhat different reasons. In particular, I am unable to agree with Burnett LJs view that if, applying the principles in the Christian Brothers case, there is no vicarious liability for an assault upon a child in care, then the common law should not impose liability via the route of a non delegable duty. That, with respect, is to conflate two distinct legal doctrines with different incidents and different rationales, and to misunderstand the relationship between them. As explained earlier, it is the imposition of vicarious liability which is implicitly premised on the absence of direct liability. Nor am I able to agree that a non delegable duty cannot be breached by a deliberate wrong: see, for example, Morris v C W Martin & Sons Ltd [1966] 1 QB 716, a bailment case which was treated as a case of non delegable duty in Woodland, para 7. On Burnett LJs approach, the local authority would seemingly be liable if the foster parents negligently enabled a third party to abuse the child, but not if they abused her themselves. That can hardly be right. The judgment of the Privy Council in another bailment case, Port Swettenham Authority v T W Wu and Co [1979] AC 580, 591, is instructive: When, a bailee puts goods which have been bailed to him in the care of his servants for safe custody, there can be no doubt that the bailee is responsible if the goods are lost through any failure of those servants to take proper care of the goods . Cheshire v Bailey [1905] 1 KB 237 laid down the startling proposition of law that a master who was under a duty to guard anothers goods was liable if the servant he sent to perform the duty for him performed it so negligently as to enable thieves to steal the goods, but was not liable if that servant joined with the thieves in the very theft. This proposition is clearly contrary to principle and common sense, and to the law: Morris v C W Martin and Sons Ltd [1966] 1 QB 716,740. Their Lordships agree with the decision in Morris v C W Martin and Sons Ltd and consider that Cheshire v Bailey mis stated the common law. Vicarious liability The question whether local authorities are vicariously liable for torts committed by foster parents against children placed with them while in care was previously considered by the Court of Appeal in S v Walsall Metropolitan Borough Council [1985] 1 WLR 1150. Oliver LJ, giving an ex tempore judgment with which Balcombe LJ agreed, treated the critical question as being whether the foster parents were acting as the agents of the local authority. He concluded that they were not: the statutory scheme was entirely inconsistent with the notion that the foster parents are in any way the agents of the local authority in carrying out their duties (p 1155). On that basis, the claim was rejected. The approach adopted by the court treated vicarious liability as confined to particular legal relationships, such as employment and agency. A more fine grained approach has been adopted in more recent authorities, as will shortly be explained. The decision does not, therefore, provide a satisfactory guide to the resolution of the issue. Cox v Ministry of Justice The general principles governing the imposition of vicarious liability were recently reviewed by this court in Cox v Ministry of Justice. As was said there, the scope of vicarious liability depends upon the answers to two questions. First, what sort of relationship has to exist between an individual and a defendant before the defendant can be made vicariously liable in tort for the conduct of that individual? Secondly, in what manner does the conduct of that individual have to be related to that relationship in order for vicarious liability to be imposed? The present appeal, like the case of Cox, is concerned only with the first of those questions. It is conceded that, if the relationship between the local authority and the foster parent is one which can give rise to vicarious liability, then the abuse of the child is a tort for which vicarious liability is imposed. Under the doctrine of vicarious liability, the law holds a defendant liable for a tort committed by another person. Plainly, the doctrine can only apply where the relationship between the defendant and the tortfeasor has particular characteristics justifying the imposition of such liability. The classic example of such a relationship is that between employer and employee. As was explained in Cox and in the earlier case of the Christian Brothers, however, the doctrine can also apply where the relationship has certain characteristics similar to those found in employment, subject to there being a sufficient connection between that relationship and the commission of the tort in question. In Cox, reference was made to five incidents of the relationship between employer and employee which had been identified by Lord Phillips in the Christian Brothers case as usually making it fair, just and reasonable to impose vicarious liability, and which could properly give rise to vicarious liability where other relationships had the same incidents and could therefore be treated as akin to employment. They were: (i) the employer is more likely to have the means to compensate the victim than the employee and can be expected to have insured against that liability; (ii) the tort will have been committed as a result of activity being taken by the employee on behalf of the employer; (iii) the employees activity is likely to be part of the business activity of the employer; (iv) the employer, by employing the employee to carry on the activity will have created the risk of the tort committed by the employee; and (v) the employee will, to a greater or lesser degree, have been under the control of the employer. As was indicated in Cox, the weight to be attached to these various factors will vary according to the context. It was said that the first was unlikely to be of independent significance in most cases, although there might be circumstances in which the absence or unavailability of insurance, or some other means of meeting a potential liability, might be a relevant consideration. As explained below, that is an aspect of the present case. In relation to the fifth factor, it was said at para 21: The fifth of the factors that the tortfeasor will, to a greater or lesser degree, have been under the control of the defendant no longer has the significance that it was sometimes considered to have in the past, as Lord Phillips PSC immediately made clear. As he explained at para 36, the ability to direct how an individual did his work was sometimes regarded as an important test of the existence of a relationship of master and servant, and came to be treated at times as the test for the imposition of vicarious liability. But it is not realistic in modern life to look for a right to direct how an employee should perform his duties as a necessary element in the relationship between employer and employee; nor indeed was it in times gone by, if one thinks for example of the degree of control which the owner of a ship could have exercised over the master while the ship was at sea. Accordingly, as Lord Phillips PSC stated, the significance of control is that the defendant can direct what the tortfeasor does, not how he does it. The three remaining factors were that (1) the tort will have been committed as a result of activity being taken by the tortfeasor on behalf of the defendant, (2) the tortfeasors activity is likely to be part of the business activity of the defendant, and (3) the defendant, by employing the tortfeasor to carry on the activity, will have created the risk of the tort committed by the tortfeasor. It was explained in Cox that those factors are inter related, and reflect the principal justifications which have been put forward in our law for the imposition of vicarious liability: The first has been reflected historically in explanations of the vicarious liability of employers based on deemed authorisation or delegation, as for example in Turberville v Stampe (1697) 1 Ld Raym 264, 265, per Holt CJ and Bartonshill Coal Co v McGuire (1858) 3 Macq 300, 306, per Lord Chelmsford LC. The second, that the tortfeasors activity is likely to be an integral part of the business activity of the defendant, has long been regarded as a justification for the imposition of vicarious liability on employers, on the basis that, since the employees activities are undertaken as part of the activities of the employer and for its benefit, it is appropriate that the employer should bear the cost of harm wrongfully done by the employee within the field of activities assigned to him: see, for example, Duncan v Findlater (1839) 6 Cl & Fin 894, 909 910; MacL & Rob 911, 940, per Lord Brougham and Broom v Morgan [1953] 1 QB 597, 607 608, per Denning LJ . The essential idea [of the third factor] is that the defendant should be liable for torts that may fairly be regarded as risks of his business activities, whether they are committed for the purpose of furthering those activities or not. (para 23) As the references to authority in that passage demonstrate, the approach adopted in Christian Brothers and Cox does not depart from the normative roots of the doctrine of vicarious liability, but provides guidance to assist in discerning circumstances in which the doctrine applies. The resultant position was summarised in Cox as follows: The result of this approach is that a relationship other than one of employment is in principle capable of giving rise to vicarious liability where harm is wrongfully done by an individual who carries on activities as an integral part of the business activities carried on by a defendant and for its benefit (rather than his activities being entirely attributable to the conduct of a recognisably independent business of his own or of a third party), and where the commission of the wrongful act is a risk created by the defendant by assigning those activities to the individual in question. (para 24) As was explained, words such as business do not confine vicarious liability to activities of a commercial nature (para 30). That is apparent from Cox itself, which concerned a prison operated by the prison service, and from the Christian Brothers case, which concerned a religious organisation, as well as from many other cases concerned with hospitals and public authorities. The five factors in the present case Applying the approach adopted in Cox to the circumstances of the present case, and considering first the relationship between the activity of the foster parents and that of the local authority, the relevant activity of the local authority was the care of children who had been committed to their care. They were under a statutory duty to care for such children. In order to discharge that duty, insofar as it involved the provision of accommodation, maintenance and daily care, they recruited, selected and trained persons who were willing to accommodate, maintain and look after the children in their homes as foster parents, and inspected their homes before any placement was made. They paid allowances to the foster parents in order to defray their expenses, and provided the foster parents with such equipment as might be necessary. They also provided in service training. The foster parents were expected to carry out their fostering in cooperation with local authority social workers, with whom they had at least monthly meetings. The local authority involved the foster parents in their decision making concerning the children, and required them to co operate with arrangements for contact with the childrens families. In the light of these circumstances, the foster parents with which the present case is concerned cannot be regarded as carrying on an independent business of their own: such a characterisation would fail to reflect many important aspects of the arrangements. Although the picture presented is not without complexity, nevertheless when considered as a whole it points towards the conclusion that the foster parents provided care to the child as an integral part of the local authoritys organisation of its child care services. If one stands back from the minutiae of daily life and considers the local authoritys statutory responsibilities and the manner in which they were discharged, it is impossible to draw a sharp line between the activity of the local authority, who were responsible for the care of the child and the promotion of her welfare, and that of the foster parents, whom they recruited and trained, and with whom they placed the child, in order for her to receive care in the setting which they considered would best promote her welfare. In these circumstances, it can properly be said that the torts committed against the claimant were committed by the foster parents in the course of an activity carried on for the benefit of the local authority. Considering next the issue of risk creation, the local authoritys placement of children in their care with foster parents creates a relationship of authority and trust between the foster parents and the children, in circumstances where close control cannot be exercised by the local authority, and so renders the children particularly vulnerable to abuse. Although it is generally considered to be in the best interests of children in care that they should be placed in foster care, since most children benefit greatly from the experience of family life, it is relevant to the imposition of vicarious liability that a particular risk of abuse is inherent in that choice. That is because, if the public bodies responsible for decision making in relation to children in care consider it advantageous to place them in foster care, notwithstanding the inherent risk that some children may be abused, it may be considered fair that they should compensate the unfortunate children for whom that risk materialises, particularly bearing in mind that the children are under the protection of the local authority and have no control over the decision regarding their placement. In that way, the burden of a risk borne in the general interest is shared, rather than being borne solely by the victims. So far as the issue of control is concerned, it was explained earlier that the local authority selected foster parents and inspected their homes prior to the placement of children with them. The local authority were required under the Regulations to arrange regular medical examinations of fostered children, to ensure that the children were regularly visited, to carry out regular reviews of their welfare, health, conduct and progress, and to remove them from the foster parents forthwith if the visitor considered that their health, safety or morals were endangered. It was also explained that foster parents had to agree that they would allow the children to be medically examined at such times and places as the local authority might require, that they would inform the local authority immediately of any serious occurrence affecting the children, that they would at all times permit any person authorised by the local authority to see the children and to visit their home, and that they would allow the children to be removed from their home when so requested by any person authorised by the local authority. It was explained that a number of aspects of the lives of children in foster care were decided by the local authority, reflecting the fact that it was the local authority, not the foster parents, which possessed parental powers in relation to the children. The arrangements made in practice for the monitoring of placements were described earlier. Accordingly, although the foster parents controlled the organisation and management of their household to the extent permitted by the relevant law and practice, and dealt with most aspects of the daily care of the children without immediate supervision, it would be mistaken to regard them as being in much the same position as ordinary parents. The local authority exercised powers of approval, inspection, supervision and removal without any parallel in ordinary family life. By virtue of those powers, the local authority exercised a significant degree of control over both what the foster parents did and how they did it, in order to ensure that the childrens needs were met. In relation to the remaining issue, that of the ability to satisfy an award of damages, vicarious liability is only of practical relevance in situations where (1) the principal tortfeasor cannot be found or is not worth suing, and (2) the person sought to be made vicariously liable is able to compensate the victim of the tort. Those conditions are satisfied in the present context. Most foster parents have insufficient means to be able to meet a substantial award of damages, and are unlikely to have (or to be able to obtain) insurance against their own propensity to criminal behaviour. The local authorities which engage them can more easily compensate the victims of injuries which are often serious and long lasting. Consideration of the factors discussed in Cox therefore points towards the imposition of vicarious liability. What, then, of the reasons given by the Court of Appeal for reaching the opposite conclusion (prior, it should be said, to the decision in Cox)? As was explained earlier, Tomlinson LJ rejected vicarious liability principally on the basis that the local authority did not exercise sufficient control over the foster carers. The provision of family life by definition could not be an activity of a local authority or part of the enterprise on which it was engaged, since inherent in it was a complete absence of external control over day to day routine. The local authoritys control was at the higher or macro level, rather than micro management. Control at that level was irrelevant to the risk of abuse occurring. Black LJ similarly considered that the provision of the experience of family life through fostering precluded the degree of control required for the imposition of vicarious liability. Burnett LJ agreed with both judgments. It is important not to overstate the extent to which external control was absent from the fostering with which this case is concerned, as explained earlier. The local authority controlled who the foster parents were, supervised their fostering, and controlled some aspects of day to day family life, such as holidays and medical treatment. More fundamentally, it is important not to exaggerate the extent to which control is necessary in order for the imposition of vicarious liability to be justified. The possibility that vicarious liability may arise in relation to the provision of elements of family life is consistent with such cases as Lister v Hesley Hall Ltd [2001] UKHL 22; [2002] 1 AC 215, where vicarious liability was imposed for the abuse of children by the warden of a school boarding house, and the Canadian case of Bazley v Curry [1999] 2 SCR 534, where it was imposed for abuse committed by a father figure employed to perform parental tasks at a childrens home. It is not necessary for there to be micro management, or any high degree of control, in order for vicarious liability to be imposed. There are countless cases where vicarious liability has been imposed for torts committed by professional persons who carry out their work without close supervision. The example was also given in Cox of a ship at sea in the age before modern communications, where the owner could exercise little control over the master employed by him. Recent examples of vicarious liability being imposed in the absence of micro management include E v English Province of Our Lady of Charity [2013] QB 722, where the relationship between a Roman Catholic priest and his diocesan bishop was sufficient, and the Christian Brothers case, where liability was imposed on a religious association for a tort committed by one of its members while working for a third party. The Court of Appeals analysis, like that of the judge, was influenced by the reasoning of the majority of the Supreme Court of Canada in the case of KLB v British Columbia. That reasoning emphasised that the degree of control which could be exercised over foster parents was insufficient to prevent abuse from taking place, and that the imposition of vicarious liability would not result in the deterrence of such abuse. On the other hand, it was said, it might discourage the use of foster care in favour of residential care: an alternative which would be less effective in promoting the welfare of children. It is unfortunate that the Court of Appeal does not appear to have been referred to the case of S v Attorney General [2003] NZCA 149; [2003] 3 NZLR 450, where the New Zealand Court of Appeal unanimously reached the opposite conclusion. Vicarious liability was imposed in circumstances similar to those of the present case, the view being taken that policy considerations supported its imposition. The decision of the Canadian court in KLB reflects the view taken in that jurisdiction that the deterrence of tortious behaviour is one of the principal justifications for the imposition of vicarious liability: see Bazley v Curry. Although the decision in that case was endorsed by the House of Lords in Lister v Hesley Hall, their Lordships did not adopt the reasoning of the Canadian court: see at pp 230 (Lord Steyn), 237 (Lord Clyde), 238 (Lord Hutton), 242 (Lord Hobhouse of Woodborough), and 250 (Lord Millett). As explained earlier, a number of justifications for the imposition of vicarious liability have been advanced in the British case law, but deterrence has not been prominent among them (although it was advanced as a partial explanation by Pollock, Essays in Jurisprudence and Ethics (1882), p 130). It was not mentioned in either Christian Brothers or Cox. The most influential idea in modern times has been that it is just that an enterprise which takes the benefit of activities carried on by a person integrated into its organisation should also bear the cost of harm wrongfully caused by that person in the course of those activities. The idea that the imposition of vicarious liability might discourage local authorities from placing children in care with foster parents, and encourage them instead to place them in residential homes, is difficult to accept, even if one grants the premise that local authorities might be deterred by financial considerations from performing their statutory duty to promote the welfare of the children in their care. Local authorities are vicariously liable for the abuse of children by those whom they employ in residential care homes. There could therefore be an economic advantage, from the perspective of local authorities or their insurers, in placing children in local authority residential care rather than in foster homes, only if, assuming all other costs were equal, the incidence of abuse was lower in the former than in the latter. No evidence has been produced as to whether that is the position. Furthermore, other financial considerations would have to be taken into account: for example, one would expect the cost of care in a residential home to be much higher than the relatively modest payments to foster parents which were mentioned in this case. That would also be the answer if it were suggested that the imposition of vicarious liability could incentivise local authorities to place children in residential homes provided by private operators. Not only is private residential care more expensive than foster care, but the operators of residential care homes might be expected to pass on to the local authorities the costs arising from their own vicarious liability. If, on the other hand, there is substance in the floodgates arguments advanced on behalf of the local authority if, in other words, there has been such a widespread problem of child abuse by foster parents that the imposition of vicarious liability would have major financial and other consequences then there is every reason why the law should expose how this has occurred. It may be although this again is empirically untested that such exposure, and the risk of liability, might encourage more adequate vetting and supervision. It is all very well to point to the cost of such precautions, and to the cost of compensating the victims, and to complain that this will divert the resources of local authorities from other channels. That is a point which might be made in relation to many claims against public bodies, including claims against local authorities arising from the abuse of children in residential homes. As the New Zealand Court of Appeal pointed out in S v Attorney General at paras 71 72, there is also a considerable cost to society if appropriate mechanisms are not put in place to protect vulnerable children. As they noted, the victims of abuse commonly experience a range of long term emotional and behavioural problems, are disproportionately represented both in the criminal justice system and in users of mental health services, often need to receive state benefits because they are unable to take up employment, and are often entitled to compensation from public funds under the criminal injuries compensation scheme. More fundamentally, the problem with the resources argument is that, if it is accepted, the greater the problem, the less likely there is to be a remedy. There remain the concerns raised by Lord Hughes. The first is that the imposition of vicarious liability for the torts committed by the foster parents in the present case would logically entail vicarious liability for torts committed at the present time by parents and other family members with whom a child is placed. It is important to emphasise that the decision that vicarious liability should be imposed in the present case is based on a close analysis of the legislation and practice which were in force at the relevant time, and a balancing of the relevant factors arising from that analysis, some of which point away from vicarious liability, but the preponderance of which support its imposition. Applying the same approach, vicarious liability would not have been imposed if the abuse had been perpetrated by the childs parents, if the child had been placed with them, since the parents would not have stood in a relationship with the local authority of the kind described in Cox: even if their care of the child might be described as having been approved by the local authority, and was subject to monitoring and might be terminated, nevertheless they would not have been recruited, selected or trained by the local authority so as to enable it to discharge its child care functions. They would have been carrying on an activity (raising their own child) which was much more clearly distinguishable from, and independent of, the child care services carried on by the local authority than the care of unrelated children by foster parents recruited for that purpose. It would not be appropriate in this appeal to address the situation under the law and practice of the present day, on which the court has not been addressed, and which would also require a detailed analysis. It is sufficient to say that, for the reasons explained by Lord Hughes, the court would not be likely to be readily persuaded that the imposition on a local authority of vicarious liability for torts committed by parents, or perhaps other family members, was justified. The other concern raised by Lord Hughes is that, in relation to claims of negligence, it is undesirable that the courts should impose unduly exacting standards in the context of family life. Lord Hughes refers in that regard to observations made by Sir Nicolas Browne Wilkinson V C in Surtees v Kingston on Thames Borough Council at p 583, cited with approval by Lord Hutton in Barrett v Enfield Borough Council. The case of Surtees itself concerned alleged negligence on the part of a foster parent. The Vice Chancellors observations in that case would be equally relevant in a case where a local authority was alleged to be vicariously liable for negligence on the part of a foster parent: the local authority can only be vicariously liable in such a case if, in the first place, the foster parent has herself been negligent. Nothing in the present judgment diminishes the force of the Vice Chancellors observations in Surtees (even if the decision in that case might not be considered equally persuasive). Conclusion For these reasons I would allow the appeal, and hold that the local authority are vicariously liable for the torts committed by the foster parents in this case. LORD HUGHES: (dissenting) I respectfully agree with the judgment of Lord Reed as to the possibility of the local authority being under a non delegable duty imposing liability in a case such as this. Liability under a non delegable duty is, in effect, a liability to guarantee that others provide all reasonable care and, it may well follow, abstain from deliberate tortious behaviour. A local authority, in relation to children whom it is looking after, is put by statute into a position analogous to that of a parent. A parent does not owe to his or her children an obligation to guarantee that others whom he may ask to help in the management or care of the children will not be careless or deliberately abusive. Nor does a local authority. I have found the debate about vicarious liability a good deal more difficult. It is plain from recent cases, from Various Claimants v Catholic Child Welfare Society [2012] UKSC 56 (the Christian Brothers case) to Cox v Ministry of Justice [2016] UKSC 10 that the principles which have long recognised vicarious liability in consequence of employment can apply equally to other relationships. Adopting the helpful analysis of Lord Reed in Cox, it follows that those principles can apply to relationships which not only are not employment but which it is difficult to describe as akin to employment. Although it is not the only factor, the essential minimum for vicarious liability is that the tortfeasor is acting as an integral part of the defendants enterprise, which need not only be a commercial enterprise: see para 24 of Cox. So the question whether vicarious liability should attach to the local authority in relation to the acts and omissions of foster parents is not wholly answered by the fact that they are clearly not employees and nor can they sensibly be described as akin to employees; they look, if the business model is to be used, a great deal more like independent contractors, carefully selected and supervised as many a panel of such contractors is. Lord Phillipss five policy factors or incidents (Christian Brothers paras 35 and 47) were derived by him from the primary model of vicarious liability, namely employment. As this court held in Cox (at paras 41 and 42), if these incidents exist, it will usually not be necessary to embark on a separate analysis of whether it is fair, just and reasonable to impose vicarious liability, but the five factors cannot be applied mechanically. An overall view of the justice, fairness and reasonableness of imposing vicarious liability may still be necessary. In the present case, the third factor (business activity) does not apply. The first (deep pockets or insurance), as Lord Reed explained in Cox at para 20, cannot by itself be a principled ground for vicarious liability and tends to be circular. The fourth (creation of risk) will in practice apply to virtually all situations in which A asks or authorises B to deal in some manner with C. The principally relevant factors here would seem to be factors 2 (integration), and 5 (control). If one focuses on those factors, it is certainly possible, and maybe initially tempting, to conclude that they point towards vicarious liability. There can be no doubt that foster parents undertake their care of children as part of a scheme administered by the local authority. Some important decisions remain ones which the local authority itself takes. There is careful pre authorisation and continuing monitoring. National standards have been promulgated by the Department for Education, dealing with matters as disparate as records to be kept of medical treatment, the desirability of separate bedrooms for each child over three years old unless that is not practicable, and the principle that children should be permitted to take part in leisure activities as a reasonable parent would allow and (nowadays) that they should be permitted school trips, holidays and overnight stays with friends at the discretion of the foster parents: Fostering Services; National Minimum Standards (DfE 2011) 6.11, 10.6, 7.5 and 7.7. The authority can remove the child at any time. As Lord Reed explained in Cox, the minutiae of micro managerial control have always been absent from the employment of specialists without removing vicarious liability. So the fact that the essence of fostering is that the foster parents bring up the children as integrated members of their own family, without managerial instructions as to how the family is to be organised, who has responsibility for what, or how relationships are to be allowed to develop is not by itself fatal to the imposition of vicarious liability, although it tends to point away from it. There is also considerable force at first sight in the proposition that if the authority would be vicariously liable for a tort committed against the child by its employee in a childrens home, it seems fair for the same to apply to a tort committed by a foster parent. However, when one looks in greater detail at the legal and practical shape of fostering, the position becomes a good deal less clear. Although the present case arises in the context of the regime under the Children and Young Persons Act 1969, the Child Care Act 1980 and the 1955 Boarding Out Regulations, it is instructive to consider also the present regime. The latter does not alter the fundamental nature of fostering, but it does make explicit some things which were matters of practice in earlier times, and it illustrates where vicarious liability would take the law. There is, and always has been in modern times, a spectrum of situations in which the childrens services of a local authority may concern themselves with the welfare of children and families in their area, and in particular with where the children should live. First, if a family is in difficulty, the authoritys childrens social workers will offer advice and assistance, and sometimes may give financial help. Such advice and assistance may well result in children living for long or short periods with other members of the extended family or with friends. The local authority is not formally accommodating them, but it may broker the arrangement and will typically monitor it carefully; sometimes it may be clear that if such an arrangement is not made, or does not work satisfactorily, the authority will consider invoking its formal powers. Next, in other situations, the local authority may accept responsibility for accommodating the child with the voluntary (if sometimes reluctant) agreement of the parent(s). Thirdly, the authority is under an obligation under section 20 of the Children Act 1989 to provide accommodation for any child in its area who is in need, as there defined, chiefly where the family is unable to provide suitable accommodation or care. Fourthly, if satisfied that it is the only way to safeguard the childs welfare and if the statutory test of risk of significant harm is met (section 31), the local authority may seek a care order from the court, which has the effect of vesting it with parental responsibility. There are other routes also by which children may be accommodated by the authority, for example where the police ask it to take children who have been removed from where they were found, or who have been arrested. Children in each of the second, third and fourth situations are known, now, in the legislation as looked after children: section 22 Children Act 1989. The statute does not distinguish between those who are in compulsory care and those who are voluntarily accommodated when it deals with how they are to be accommodated. Section 22C provides for all of them. It identifies a category of potential providers of accommodation who are relatives, friends, and so on; such people are now conveniently referred to as connected persons. In all cases, the combined effect of 22C(2) to (7) is that first priority is given to the child being placed, if it is consistent with his welfare and practicable, with a parent or person to whom residence had been given by a family court. Failing that, accommodation may be provided by way of (1) fostering by a connected person who is a local authority foster carer, (2) fostering by a local authority foster parent who is not a connected person, (3) a childrens home or (4) some other placement within Regulations made under the Act. The expression Local authority foster parent, as used in both the statute and Regulations made under it, means a foster parent authorised as such under regulations made under the Act: section 105. The approval of foster carers is governed by regulations, currently the Fostering Services (England) Regulations 2011 (SI 2011/581) (The Fostering Services Regulations). It may be accomplished either by local authorities or by registered Fostering Agencies. Approval is normally given for a stated number of children. Although at the time of the events giving rise to the present case, one of the foster homes was a family group home, where up to 13 or 14 children were living at a time, nowadays the ordinary limit on fostering is three children at a time, unless a larger group of siblings needs to stay together: Children Act 1989, Schedule 7. In selecting the placement, the local authority is required to give priority, if possible, to accommodation with connected persons. That framework reflects a well established tenet of child support work that where it is not contra indicated, a child is better cared for in his or her own family than by strangers. The way that this is in practice effected is for placements to be made within the family where possible. As the foregoing summary of the Act makes clear, such placements still require the approval as Local authority foster parents of connected persons unless they are either parents, or persons with parental responsibility, or beneficiaries of a court residence order. That is confirmed by the Regulations made under the Act, the Care Planning Placement and Care Review Regulations 2010 (SI 2010/959) (the Care Planning etc Regulations), which, however, provide by regulation 25 for temporary authorisation of connected persons for a limited period pending approval as local authority fosterers. Once such in family placements are with approved local authority connected foster parents, the same raft of regulations applies to them as to placements with the kind of foster parents who are willing to take any children whom the authority may wish to place with them. The supervision and monitoring which must be undertaken by the local authority is the same. The Authority must in all such cases, as in others, prepare a care plan under regulation 4 of the Care Planning etc Regulations. There must be the same Independent Reviewing Officer, specific to each placement, as required by section 25A Children Act. The Authority pays allowances to connected person foster parents, who are entitled to be paid at the same rates as other foster parents: see R (X) v London Borough of Tower Hamlets [2013] EWCA 504 and Fostering Services; National Minimum Standards (DfE 2011) sections 28.7 and 30.10. The practice of placing children with either parents, or with connected persons, is in no sense new. It has existed for many years. As long ago as 1955, the Boarding Out of Children Regulations of that year recognised the practice in regulation 2 which (then) provided that only a husband and wife, or a sole woman, could be foster parents, but excepted the case of a grandfather, uncle or older brother of the child being fostered. The same regime for supervision, medical examination, reports and termination of placement applied to such non parental family placements as to any other fostering. Later, at the time of the commencement of the Children Act 1989, complementary regulations were made for placements with parents or those with parental responsibility or residence orders on the one hand (the Placement of Children with Parents Regulations 1991 (SI 1991/893), and, on the other hand, for all other placements including with connected persons other than that group (the Foster Placement (Children) Regulations 1991 (SI 1991/910). The former required approval at a higher level within the local authority, but the supervision and termination regime was very similar. The latter applied an identical regime to placements with connected persons as to placements with strangers. In order to preserve the aim of enabling children to live where possible with connected persons, there has grown up an extensive practice of approval of what are known as Friends and Family carers: see Department for Education Guidance Family and Friends Care; Statutory Guidance for Local Authorities (2010). Such approval may be, and commonly is, on terms which are specific to the particular children in question. Family and Friends Care makes it clear at para 5.16 that approval can be limited to suitability to care for the particular connected children and that there need be no consideration of qualification to care for looked after children generally. Separate treatment for family placements is recognised by the Regulations, as well as by the DfE guidance. The Fostering Services Regulations by regulation 26(8) specifically relax the normal statutory qualifications for approval of foster carers in the case of relatives who are thus approved for particular children rather than generally; they may, at the discretion of the authority, be approved notwithstanding specified convictions or cautions, either of themselves or members of their households, which would otherwise be a bar under regulations 26(5) and (7). As mentioned above, the Care Planning Regulations by regulations 24 and 25 permit temporary placements with connected persons who are not yet approved foster parents. The Fostering Services; Minimum Standards provide at section 20.2 for a different standard of training and development for family and friends fosterers, and at section 30 for the special circumstances of such fosterers. Ofsteds report National Statistics Fostering in England 2015 2016 (February 2017) suggests that around 5,000 friends and family households were approved at that time, representing about 10 13% of the total. It seems to me to follow that if vicarious liability applies to ordinary foster parents, on the basis that they are doing the local authoritys business, then it must apply also to family and friends placements with connected persons. What of placements with parents? These too may be in the interests of the children, and even after a care order has been made. If they are, it is desirable that they are encouraged, as at present consideration of them is encouraged. It would, however, be artificial in the extreme to say of such placements that the parents care was given on behalf of the local authority, or that it was integrated into the caring systems of the authority. Nor would it be fair, just or reasonable, if there were to be behaviour by the parent which amounted to a tort, to impose vicarious liability for that behaviour on the local authority which exercised all due care in making the placement and did so in pursuit of what are recognised to be sound principles of child care. It might in theory be possible to distinguish parents on the basis that they do not have to be approved foster parents and are thus not part of the local authoritys enterprise, but it is not easy to see how they differ in practice from grandparents or from aunts and uncles or close friends who fulfil the same role but have to be approved as foster parents, on limited terms, in order to do so. The reality is that any member of the extended family, or close friend, who undertakes the care of children in need, is doing so in the interests of the family, not as part of a local authority enterprise. What the local authority does, in all cases, whether involving family and friends or strangers, is to take responsibility for making decisions about where the children shall live, and then monitoring the progress with a view to changing the arrangements if they do not benefit the children. It seems to me that this is much the more realistic way of looking at the functions of the local authority, and the relationship between it and foster parents, of whichever type. The detailed controls which the authority exercises, and which are apt at first sight to suggest analogy to employment, are in reality decisions about where the children shall live. These are onerous decisions about young lives, and are properly surrounded by detailed regulations. But once the decision to place has been made, the care of the children is in practice committed to the foster parents. The daily lives of the children are not thereafter managed by the authority, as they are if they are accommodated in a Childrens Home. Subject to specific rules (such as a bar on corporal punishment), the practice of the foster parents in relation to their own and the fostered children is for them. The foster carers do not do what the authority would otherwise do for itself; they do something different, by providing an upbringing as part of a family. The children live in a family; a family life is not consistent with the kind of organisation which the enterprise test of vicarious liability contemplates. The children are in reality committed to independent carers, as they also are, although in a different manner, if the authority places the children in a specialist home run by a different authority or by a charity, as may often happen where children have special needs. The authority retains the right, and the responsibility, in all cases including that of children placed in a specialist childrens home, to remove the child if the placement is no longer the best for his welfare. In order to exercise that power, the authority monitors progress by way of visits, it expects reports, and it provides a social worker for the child. Meanwhile, the authority retains the right, in the case of children in care at least, to make major medical decisions if the need arises. But none of that really means, in practice, that the authority is bringing the child up, as it is if the accommodation is one of its own childrens homes. This is essentially the reasoning which was adopted by the Supreme Court of Canada in KLB v British Columbia [2003] 2 SCR 403 when confronting the same issue as now faces this court and in concluding that vicarious liability does not attach to the Government for the acts or omissions of foster parents. It seems to me both principled and realistic. In the Court of Appeal, Black LJ, as she then was, dealt almost entirely with the possibility of non delegable duty applying to the local authority. In that context, she expressed the fear that such a duty, if recognised, would be apt to inhibit the generally laudable practice of family placements. I agree, but the same is also likely to be true of vicarious liability. It is not impossible that if such liability were to exist, insurers would insist on additional safeguards in relation to family placements, which would discourage their being made. With or without that factor, the liability is likely to make placement panels more cautious. Almost by definition, family placements are likely to carry a somewhat greater risk of failure and of tortious wrongdoing than safer placements with foster parents who have greater independence and greater experience of bringing up other peoples children. But the greater safety and lesser mutual involvement of unconnected placements is bought at the expense of sacrificing family trust and loyalties, and of not allowing the natural affection which comes with them to flourish. Family placements are by no means universally the best answer, but they are plainly recognised by those experienced in the care of children as desirable when not contra indicated. It is not in the interests of children or families generally, nor of the society to which the children when grown up will belong, that those children should be made any less likely to be permitted such placements. The present case arises in the context of deliberate wrongdoing or abuse. If, however, the placement of children with foster parents is to be attended by vicarious liability, it will not only or even chiefly be this kind of fortunately relatively rare behaviour which will generate liability on the part of the local authority. It is more likely to be generated by complaints of acts or omissions said to have been negligent. Since the limitation period does not run during a childs minority, such claims will be possible many years after the event on which they rely. Such claims are theoretically possible, of course, within any natural family, but they are not made, nor is it generally in the interests of family unity that they should be. This principle was recognised by Sir Nicolas Browne Wilkinson in Surtees v Kingston on Thames Borough Council [1991] 2 FLR 559, 583: I further agree with Stocker LJ that the court should be wary in its approach to holding parents in breach of a duty of care owed to their children. It is accepted that the duty owed by Mr and Mrs H, as foster parents, to the plaintiff was exactly the same as that owed by the ordinary parent to his or her own children. There are very real public policy considerations to be taken into account if the conflicts inherent in legal proceedings are to be brought into family relationships. That passage was approved by Lord Hutton in Barrett v Enfield Borough Council [2001] 2 AC 550, 587 in distinguishing the case of a local authority if it was negligent in the exercise of its statutory powers in relation to children. It is no doubt true that one consequence of this principle is that the law does not impose exacting standards in family situations, and that this caution will be reflected in cases where vicarious liability is relied upon. But it is an additional indication against the imposition of vicarious liability that it is likely to result the litigation of family activity which it is undesirable should be ventilated in the courts. Vicarious liability is strict liability, imposed on a party which has been in no sense at fault. It is necessary, and fair and just, when it applies to fix liability on someone who undertakes an activity, especially a commercial activity, by getting someone else integrated into his organisation to do it for him. Employment is the classic example, but other situations may be analogous. But the extension of strict liability needs careful justification. Once one examines the nature of fostering, its extension to that activity does not seem to me to be either called for or justified, but, rather, fraught with difficulty and contra indicated. Accordingly, I would uphold the decision of the Court of Appeal and dismiss this appeal.
+This case, in which a professional gambler sues a casino for winnings at Punto Banco Baccarat, raises questions about (1) the meaning of the concept of cheating at gambling, (2) the relevance to it of dishonesty, and (3) the proper test for dishonesty if such is an essential element of cheating. The facts Over two days in August 2012 Mr Ivey, the claimant in this case, deployed a highly specialist technique called edge sorting which had the effect of greatly improving his chances of winning. He had the help of another professional gambler, Cheung Yin Sun (Ms Sun). First they set up the conditions which enabled him to win. Then, later that evening and the following day, over the course of some hours, he won approximately 7.7m. The casino declined to pay, taking the view that what he had done amounted to cheating. His case is that it was not cheating, but deployment of a perfectly legitimate advantage. What happened is not in dispute. It was set out with admirable clarity by Mitting J and very little is necessary by way of addition or subtraction. What follows in this section is almost entirely in his words. Punto Banco is a variant of Baccarat. It is not normally, to any extent, a game of skill. Six or eight decks or, in English nomenclature, packs of 52 cards are dealt from a shoe, face down by a croupier. Because the cards are delivered one by one from the shoe, she has only to extract them; no deviation is permitted in their sequence. She places them face down in two positions on the table in front of her, marked player, the Punto in the name, and Banker, Banco. Those descriptions label the positions marked on the table; there need be no person as player and ordinarily there is not. She slides the cards from the shoe, face down, one card to player, one to banker; a second to player and a second to banker. In prescribed circumstances she must deal one further card, either to player or to banker or to both, but this possibility is irrelevant to what occurred. The basic object of the game is to achieve, on one of the two positions, a combination of two or three cards which, when added together, is nearer to 9 in total than the combination on the other position. Aces to 9 count at face value, 10 to King inclusive count as nothing. Any pair or trio of cards adding up to more than 10 requires 10 to be deducted before arriving at the counting total. Thus 4 plus 5 equals 9, but 6 plus 5 (which equals 11) counts as only 1. Punters (of whom there need only be one) play the house. They bet before any card is dealt and can bet on either the player or banker position. The cards are revealed by the croupier after a full hand (or coup), usually of four cards, two to each position, has been dealt. Winning bets are paid at evens on player, and at 19 to 20 on banker. It is possible to bet on a tie. In the event of a tie, all bets on player or banker are annulled; in other words, the punter keeps his stake and the only bet paid out on is the tie at odds set by the casino of either eight to one or, at Crockfords, nine to one. It is possible to place other types of bet, but this case does not concern them and they need not be described. The different odds mean that the casino, or house, enjoys a small advantage, taken over all the play. That is standard and well known to all; casinos publish the percentage house edge which they operate. In Punto Banco at Crockfords it was 1.24% if player wins and 1.06% if banker wins. A pack of 52 playing cards is manufactured so as to present a uniform appearance on the back and a unique appearance on the face. The backs of some cards are, however, not exactly uniform. The backs of many packs of cards for social use have an obvious top and bottom: for example the manufacturers name may be printed once only, or the pattern may have an obviously right way up and an upside down. In casino games in which the orientation of the back of the card may matter, cards are used which are in principle indistinguishable whichever way round they are when presented in a shoe. Cards with no pattern and no margin at the edge present no problem; they are indistinguishable. However, many cards used in casinos are patterned. If the pattern is precisely symmetrical the effect is the same as if the card is plain; the back of one card is indistinguishable from any other. But if the pattern is not precisely symmetrical it may be possible to distinguish between cards by examining the backs. Edge sorting becomes possible when the manufacturing process causes tiny differences to appear on the edges of the cards so that, for example, the edge of one long side is marginally different from the edge of the other. Some cards printed by Angel Co Ltd for the Genting Group (which owns Crockfords) have this characteristic, apparently within the narrow tolerances specified for manufacture. The pattern is not precisely symmetrical on the back of the cards. The machine which cuts the card leaves very slightly more of the pattern, a white circle broken by two curved lines, visible on one long edge than on the other. The difference is sub millimetric, but the pattern is, to that very limited extent, closer to one long edge of the card than it is to the other. Before a card is dealt from a shoe, it sits face down at the bottom of the shoe, displaying one of its two long edges. It is possible for a sharp eyed person sitting close to the shoe to see which long edge it is. Being able thus to see which long edge is displayed is by itself of no help to the gambler. All the cards have the same tiny difference between their right and left long edges, so knowing which edge is displayed tells the gambler nothing about the value of the next card in the shoe. The information becomes significant only if things can be so arranged that the cards which the gambler is most interested in are all presented with long edge type A facing the table, whilst all the less interesting cards present long edge type B. Then the gambler knows which kind of card is next out of the shoe. In Punto Banco cards with a face value of 7, 8 and 9 are high value cards. If one such card is dealt to player or to banker, it will give that position a better chance of winning than the other. Thus a punter who knows that when the first card dealt (always to the player position) is a 7, 8 or 9, he will know that it is more likely than not that player will win. If he knows that the card is not a 7, 8 or 9, he will know that it is more likely than not that banker will win. Such knowledge, it is agreed, will give the punter a long term edge of about 6.5% over the house if played perfectly accurately. What is therefore necessary for edge sorting to work is for the cards in the shoe to be sorted so that all the 7s, 8s and 9s display edge type A, whilst the rest display edge type B. That means rotating the high value cards so that they display edge type A. If the punter were to touch the cards, the invariable practice at most casinos, including at Crockfords, would be that those cards would not be used again. The only person who touches the cards is the croupier. So what had to happen was to get the cards sorted (ie differentially rotated) by type A and type B by the croupier and then to get them re used in the next shoe, now distinctively sorted. For edge sorting to work at Crockfords it is therefore essential that the croupier is persuaded to rotate the relevant cards without her realising why she is being asked to do so. Casinos routinely play on quirky and superstitious behaviour by punters. It is in the casinos interests that punters should believe, erroneously, that a lucky charm or practice will improve their chance of winning and so modify or defeat the house edge. Consequently a wide variety of requests by punters, particularly those willing to wager large sums on games which they must, if they play long enough, lose in the long run, are accommodated by casinos without demur or surprise. All of the games of Punto Banco played by the claimant and Ms Sun on 20 and 21 August 2012 were captured on CCTV, mostly with contemporaneous audio recording as well. The moment at which they persuaded the croupier, Kathy Yau, to rotate the cards was at 9 pm on 20 August. The video shows it and the words spoken have been transcribed. Before then, the claimant and Ms Sun had played part of four shoes, the first two plain backed, and the second two Angel cards but with no asymmetry on the back. The claimant is a high stakes gambler. He began, by his standards, modestly: bets placed on those four shoes ranged from 4,000 to 75,000 per coup. He was losing. At 8.56 pm he requested a new shoe of cards. A new shoe was produced. The cards were blue Angel cards with the rounded pattern described on the back. At 8.57 the claimant asked Jeremy Hillier, the senior croupier overseeing the game: If I win, can I say I want the same cards again? to which Mr Hillier replied he could, because [he was] not bending them. The claimant had in fact avoided touching the cards from either the first or second shoe onwards. The croupier, Kathy Yau, then put the cards face down in blocks on the table to make the cut, as is conventional. She cut the cards so as to exclude about one deck from play. The claimant asked about the cut: Why so big? Ms Sun said: They dont cut the seven cards, a reference to the traditional cut of 7 cards from the end. Ms Yau asked if he wanted her to cut 7 cards, to which he replied yes, he wanted to play 90 hands, slightly more than the maximum likely to be possible with an eight deck shoe with a seven card cut. She complied, after checking with the supervisor on duty in the room. That had the effect of maximising the number of coups which would be possible with those packs, and of exposing the maximum number of cards to the sorting (rotation) process. Ms Yau then dealt the first coup. After the bet was made, and all the cards then dealt, the next stage was for the croupier to turn the cards face up to reveal whether Player or Banker had won. Ms Sun then asked Ms Yau in Cantonese to do it, in other words to turn the cards over so that the face showed, slowly. Ms Yau said yes. Ms Sun then asked her again in Cantonese to turn the cards in a particular and differential way as they were being exposed and before they were put on the pile of used cards. If I say it is good, you turn it this way, good, yes? Um, no good. (A slightly different sounding um). Ms Yau did not immediately understand what was required. She asked, so you want me to leave it? To which Ms Sun replied, change, yeah, yeah, change luck. Ms Yau: what do you mean? Ms Sun gestured how to turn it. Turn it this way. Ms Yau: what, just open it? Yeah. Ms Sun: um, signifying good in Cantonese. The claimant then chipped in, yeah, change the luck, thats good. Anything to change the luck, it is okay with me. Ms Sun reiterated her request in Cantonese, If I say it is not good, you turn it this way. If it is good, turn it this way, okay? To which Ms Yau said okay. When she turned over the cards of the second coup, Ms Sun said of four of them, good, and of one, not good, in Cantonese. Ms Yau did as requested. What she was being asked to do, and did, was to turn the cards which Ms Sun called as good end to end, and the not good cards side to side. In consequence, the long edge of the not good card was oriented in a different way from the long edge of the good cards. The judge found that she had been wholly ignorant of the significance of what she was doing, card by card, at the call of Ms Sun. This procedure was followed for each of the next 79 coups dealt from this shoe. The maximum amount staked by the claimant on the coups towards the end of the shoe reached 100,000. Self evidently, at no time during the play of this shoe did he derive any advantage from the rotation of the cards requested by Ms Sun because that rotation occurred at the end, not at the beginning, of each coup. This was all preparation. At 10.03 pm, when the shoe was exhausted, the claimant said that he had won with that deck (ie shoe), and that he would keep it. The senior croupier, who had brought in a new collection of cards, was told by the claimant he did not want them, as he had won 40,000 with that deck; that was agreed to. The original cards were reused. The defendant has not been able to calculate retrospectively whether that assertion of winnings to that point was true. Before the shoe was reused it had to be reshuffled. The claimant had earlier asked Ms Yaus predecessor as croupier for a shuffling machine to shuffle the cards. The cards were reshuffled by a machine. For a punter using the edge sorting technique this ensured that the shuffle would be effected without rotating any of the cards unless the croupier did so before they were put into the machine. Ms Yau did not do so. Manual shuffling would have carried a much higher risk of re rotation as it was done. Play with the reshuffled shoe recommenced at 10.12 pm and continued until Ms Yau went for a half hour break at 10.31 pm. The claimant did not play during her break but resumed when she returned until 3.57 am on 21 August. Ms Yau was the croupier throughout. The claimants stake increased to 95,000 and then to 149,000 per coup. He won approximately 2m. The accuracy of his bets on player increased sharply. In the first two shoes in which Angel cards were used, those without an asymmetric pattern on the back, he placed respectively 11 bets and then 1 bet on player and a 7, 8 or 9 only occurred once in that 12 times. On the shoe in which the edge sorting was done in the manner described, he placed 23 bets on player of which eight were 7s, 8s or 9s. On the succeeding shoes, those at least that were completed on that night, shoes four to eight, the record was as follows. Shoe four, 23 accurate bets out of 27; shoe five, 22 accurate bets out of 25; shoe six, 20 accurate bets out of 26; shoe 7, 23 accurate bets out of 30; shoe 8, 17 accurate bets out of 19. A similar but slightly less pronounced pattern occurred on the following day. At the end of play on the early morning of the 21st the claimant asked if he could keep the same shoe, which he referred to as a deck, if he returned on the following day. He was told he could. Ms Yau returned to duty at 2 pm on 21 August. The claimant resumed play with the same cards at 3 pm and played until 6.41 pm. His average stake was never less than 149,000. For the last three shoes it was 150,000, the maximum that he was allowed to bet each time. In the middle of play of the last shoe, the senior croupier told the claimant that the shoe would be replaced when it was exhausted. When it was, the claimant and Ms Sun left. By then he had won just over 7.7m. Crockfords practice after a large win such as this is to conduct an ex post facto investigation to work out how it occurred. After quite lengthy review of the CCTV footage and examination of the cards, the investigators succeeded in spotting what had been done. Nobody at Crockfords had heard of edge sorting before. Nine days after the play, on 30 August, the claimant spoke to Mr Pearce, Managing Director of the London casinos of Genting UK, who told him that Crockfords would not be paying his winnings because the game had been compromised. The claimant said he had not touched the cards, but did not state that which at the trial he freely admitted, that he had used edge sorting. Arrangements were made to refund his deposited stake, 1m, on 31 August. The judge found that Mr Ivey gave factually frank and truthful evidence of what he had done. The finding was that he was a professional gambler who described himself as an advantage player, that is one who, by a variety of techniques, sets out to reverse the house edge and to play at odds which favour him. The judge found that he does so by means that are, in his opinion, lawful. He is jealous of his reputation and is adamant that what he does is not cheating. He described what he did, with Ms Sun, as legitimate gamesmanship. The judge accepted that he was genuinely convinced that what he did was not cheating. But the question which matters is not whether Mr Ivey thought of it as cheating but whether in fact and in law it was. The judge concluded that it was, and so did the majority of the Court of Appeal. Were they right or wrong? Gaming and the law Gaming has been the subject of statutory rules since at least the time of the Restoration. They have addressed, inter alia, both (1) unfair play and (2) the recoverability of winnings by civil action. Very recently, the Gambling Act 2005 has comprehensively revised the statutory framework for gaming. In outline, it makes it lawful but subject to detailed licensing. The Gaming Act of 1664 (16 Car 2 c7) addressed what it identified as the social ill of excessive gambling, when conducted not for innocent and moderate recreation but as a means of trade or making a living. Even in times of relative debauchery, the Act castigated the effect of such gaming on the youth of the day, whether of the nobility and gentry or otherwise. By section 3 it made irrecoverable at law any winnings over the then enormous sum of 100. And by section 2 it imposed a forfeit of three times the winnings on anyone who won by (in effect) wrongful means. The forfeit was recoverable by civil action at the suit either of the loser or, if he did not sue, by anyone else. Half the forfeit went to the loser, and half to the Crown. The misbehaviours which gave rise to such forfeit were defined as any fraud, shift, cousenage, circumvention, deceit or unlawful device, or ill practice whatsoever, and the activities covered included not only cards and dice, but also tennis and foot races, as well as horse racing, skittles, bowls and many other games. The forfeit was incurred not only by winnings by wagering, but also by prize winning, if the ill practice was demonstrated. By the time of Queen Anne, the attitude to gambling had hardened. The Gaming Act 1710 (9 Ann c 14) repeated in section 5 the list of misbehaviour attracting a forfeit (now five times the winnings), and such was now recognised as a criminal offence attracting corporal punishment. The same Act, by section 2, enabled anyone who lost more than 10 at games, however fair, to recover it by civil action, together with a forfeit of three times the loss, half for the loser and half for the poor of the parish. By section 1 it made void any security given for payment of gaming debts. The Gaming Act 1845 (8 & 9 Vict c 109) abolished the forfeits, but (by section 18) made general the rule that gaming or wagering contracts were unenforceable in law. Section 17 dealt with malpractice. It referred to fraud or unlawful device or ill practice and made winning by such means a criminal offence, by way of deeming it to be the recognised offence of obtaining by false pretences with intent to cheat or defraud (see section 53 Larceny Act 1827, 7 & 8 Geo 4 c 29). Section 17 was headed cheating at play to be punished as obtaining money by false pretences. This history is of limited importance, given the enactment of an entirely new regime by the Gambling Act 2005, but it does demonstrate that the law concerned itself from very early times with malpractice at gaming, and that by 1845 a general expression used for it was cheating. It is also of note that the malpractice thus dealt with was not confined to deception or fraud, but extended to ill practice. Given the origins of that expression in the 1664 Act, relating to foot races, tennis and the like, as well as to gambling, it is not possible to treat ill practice as having been limited by the principle of ejusdem generis to deception or fraud. The Gambling Act 2005 reversed, by sections 334 and 335, the rule that gaming contracts are unenforceable. The new Gambling Commission is, however, given by section 336 a new power to declare void a bet taken by a licensee if satisfied that the bet was substantially unfair. Amongst the factors (not exhaustively defined) which are to be considered when deciding whether a bet was substantially unfair is included the circumstance that either party to the bet either did believe or ought to have believed that an offence of cheating had been or was likely to have been committed in connection with it, although that is by no means the only consideration. Supply of insufficient information and the belief of either party that the underlying contest is conducted in contravention of industry rules are two of the other specified relevant circumstances. The offence contrary to section 17 of the 1845 Act is replaced by a new offence of cheating at gambling created by section 42. Section 42 is in the following terms: 42. Cheating (1) A person commits an offence if he cheats at gambling, or (a) (b) does anything for the purpose of enabling or assisting another person to cheat at gambling. (2) For the purposes of subsection (1) it is immaterial whether a person who cheats improves his chances of winning (a) anything, or (b) wins anything. (3) Without prejudice to the generality of subsection (1) cheating at gambling may, in particular, consist of actual or attempted deception or interference in connection with the process by which gambling is (a) conducted, or (b) or process to which gambling relates. a real or virtual game, race or other event By subsection (4) this offence carries a penalty of up to two years imprisonment on indictment, or 51 weeks on summary conviction. Cheating It has been common ground throughout this litigation that the (now in principle enforceable) contract for betting into which these parties entered is subject to an implied term that neither of them will cheat. It follows that, if what Mr Ivey did was cheating, he is in breach of this implied term and cannot as a result recover his winnings. As well as advancing this defence, the casino pleaded that what he did amounted to the offence under section 42, and that in consequence he could not recover the proceeds of his criminal offence. Mitting J held that the implied term had been broken, and that it was therefore unnecessary to decide whether or not the statutory offence had been committed. The majority of the Court of Appeal dismissed Mr Iveys appeal. The reasoning of Arden and Tomlinson LJJ was not identical, but both upheld the judges conclusion that what had been done amounted to cheating. Sharp LJ would have allowed the appeal, taking the view that there could not be cheating unless the statutory offence had been committed and that a necessary ingredient of it was dishonesty as defined in R v Ghosh [1982] QB 1053. The core submission of Mr Spearman QC for Mr Ivey runs as follows: the test of what is cheating must be the same for the implied term as (a) for section 42; (b) cheating necessarily involves dishonesty; (c) the judge found that Mr Ivey was truthful when he said that he did not consider what he did to be cheating; therefore dishonesty and in particular the second leg of the test established by R v Ghosh had not been demonstrated; (d) it follows that what was done was not cheating, and Mr Ivey ought to have recovered the 7.7m. The concept of cheating long pre dates section 42 of the Gambling Act 2005. It clearly embraces the kind of malpractice described in the statutes of 1664, 1710 and 1845. Section 42 thus adopted a longstanding concept. However, there is no reason to doubt that cheating carries the same meaning when considering an implied term not to cheat and when applying section 42 of the Act. There will be a difference in standard of proof as between civil and criminal proceedings, but that does not affect the meaning of cheating. Section 42 expressly does not exhaustively define cheating, and the elaboration in section 42(3) is explanatory rather than definitive. The section leaves open what is and what is not cheating, as is inevitable given the extraordinary range of activities to which the concept may apply. Plainly, what is cheating in one form of game may be legitimate competition in another. For his second and crucial proposition Mr Spearman relied, as a matter of authority, substantially on R v Scott [1975] AC 819. Viscount Dilhorne, with whom the other law lords agreed, referred in the course of his speech to the ancient common law offence of cheating. He cited, at p 840, Easts Pleas of the Crown (1803) vol II, pp 816ff for that authors opinion that that offence consisted in: the fraudulent obtaining [of] the property of another by any deceitful and illegal practice or token (short of felony) which affects or may affect the public. It is not, however, every species of fraud or dishonesty in transactions between individuals which is the subject matter of a criminal charge at common law; it must be such as affects the public calculated to defraud numbers, to deceive the people in general. Says Mr Spearman, this demonstrates that fraud, and thus dishonesty, was an essential element of the common law offence of cheating. The same, he contends, must follow for cheating at gambling. Mr Scott and his co defendants were in the business of film piracy. They bribed employees of commercial cinemas, such as projectionists, to abstract the reels of film overnight so that infringing copies could be made and in due course distributed commercially for profit. The charge was not cheating at common law but conspiracy to defraud. The substantial issue before the House of Lords was whether conspiracy to defraud required as an essential element that there had been deception, which had not been any part of the strategy employed by the defendants. The answer was that deception was one very common form of defrauding, but not the only one. Whilst no exhaustive definition of defrauding was attempted, the House held that defrauding also included depriving another, by dishonest means, of something which is his or to which he would or might be entitled but for the fraud. In so holding, the House followed its own decision in Welham v Director of Public Prosecutions [1961] AC 103, where it had emphasised that the essence of defrauding was the effect on the victim. To the extent that defrauding someone may take the form of depriving him of something which is his, or to which he might otherwise be entitled, it is plain, and wholly unsurprising, that a criminal offence of defrauding must contain in addition an element which demonstrates that the means adopted are illegitimate and wrong. Otherwise much perfectly proper business competition would be at risk of being labelled fraud, since such competition frequently involves strategies to divert business from A to B. Hence it is entirely unsurprising that conspiracy to defraud was held to require in addition the proof of dishonest means. Dishonesty, in this context, supplies the essential element of illegitimacy and wrongfulness. As the citation from East shows, the ancient common law offence of cheating consisted of a particular subset of fraudulently depriving another of property, where the fraud affected the public as a whole. This offence was abolished by section 32(1) of the Theft Act 1968, except insofar as it consisted of cheating the Revenue. There is no discussion of this abolition in the Eighth Report of the Criminal Law Revision Committee on Theft and Related Offences (1966) (Cmnd 2977), which preceded the Act and recommended most of the terms of the statute including section 32(1), but it is clear that the Committee took the view that whatever was previously covered by other forms of common law cheating would be caught by its newly recommended offences, particularly that of obtaining property by deception under what became section 15 of the Act. The Theft Act 1968 used the expression cheat only in one place, in relation to the offence of going equipped created by section 25. There, in section 25(1) and (5), it was used in a restrictive sense limited to the offences contrary to section 15. (The references to cheat have since been removed from that section.) The common law offence of cheating was referred to in Scott only because a supplementary argument for the defendants was that section 32(1) had impliedly abolished also the offence of conspiracy to defraud, which argument unsurprisingly failed. There is no occasion to investigate the accuracy of Easts opinion on the scope of the common law offence of cheating. It may well be that it necessarily involved dishonesty, although that expression was not in general use in criminal statutes until the Theft Act 1968 adopted it in preference to fraudulently. But to say that dishonesty was a necessary element in an offence of which the gist was obtaining the property of others who may well be strangers, and where the offence would otherwise be likely to be impossibly wide, is of no help in construing the meaning of cheating in the quite separate context of gambling. Still less is there any reason to suppose that the framers of the Gambling Act adopted in 2005 an analogy with a common law offence which had largely been abolished nearly 40 years earlier, and when cheat had been used in a different sense in the Theft Act 1968. Whilst it makes perfect sense to interpret the concept of cheating in section 42 of the Gambling Act in the light of the meaning given to cheating over many years, it makes none to interpret cheating, as used over those many years, by reference to an expression dishonesty introduced into the criminal law for different purposes long afterwards in 1968. In gambling, there is an existing close relationship between the parties, governed by rules and conventions applicable to whichever game is undertaken, and which are crucial to what is cheating and what is not. Cheating at gambling need not result in obtaining the property of the other party, as section 42(2) explicitly says. Most importantly, whilst the additional element of dishonesty was necessary to the common law offence of cheating, and no doubt still is to the surviving offences of cheating the Revenue and conspiracy to defraud, in order to mark out the illegitimate and wrongful from the legitimate, the expression cheating in the context of games and gambling carries its own inherent stamp of wrongfulness. Authority apart, Mr Spearman contended that as a matter of ordinary English, cheating necessarily imports dishonesty. This argument is most neatly encapsulated by inversion: honest cheating is indeed, as has been sensibly recognised by those who have addressed the phrase in this litigation, an improbable concept. But that is because to speak of honest cheating would be to suggest that some cheating is right, rather than wrong. That would indeed be contrary to the natural meaning of the word cheating. It does not, however, follow, either (1) that all cheating would ordinarily attract the description dishonest or (2) that anything is added to the legal concept of cheating by an additional legal element of dishonesty. Although the great majority of cheating will involve something which the ordinary person (or juror) would describe as dishonest, this is not invariably so. When, as it often will, the cheating involves deception of the other party, it will usually be easy to describe what was done as dishonest. It is, however, perfectly clear that in ordinary language cheating need not involve deception, and section 42(3) recognises this. Section 42(3) does not exhaustively define cheating, but it puts beyond doubt that both deception and interference with the game may amount to it. The runner who trips up one of his opponents is unquestionably cheating, but it is doubtful that such misbehaviour would ordinarily attract the epithet dishonest. The stable lad who starves the favourite of water for a day and then gives him two buckets of water to drink just before the race, so that he is much slower than normal, is also cheating, but there is no deception unless one manufactures an altogether artificial representation to the world at large that the horse has been prepared to run at his fastest, and by themselves it is by no means clear that these actions would be termed dishonesty. Similar questions could no doubt be asked about the taking of performance enhancing drugs, about the overt application of a magnet to a fruit machine, deliberate time wasting in many forms of game, or about upsetting the card table to force a re deal when loss seems unavoidable, never mind sneaking a look at ones opponents cards. Conversely, there may be situations in which there is deception of the other player but what is done does not amount to cheating. The so called three card trick, much practised upon travellers on Victorian and Edwardian trains especially to and from racecourses, commonly involved a deception of the target traveller by a group of associates pretending to be unconnected to one another. The idea was to lure the target into playing the game. But once he was ensnared, the game was often played genuinely; the target lost not because of any cheating but because the shuffler of the cards had sufficient speed of hand to deceive the eye: see for example R v Governor of Brixton Prison, Ex p Sjoland and Metzler [1912] 3 KB 568. No doubt other exponents of the three card trick had less genuine methods, such as a fourth (concealed) card, which would indeed be cheating. Sometimes the game admits of a level of legitimate deception. The unorthodox lead or discard at bridge is designed to give the opponent a misleading impression of ones hand, but it is part of the game and not cheating. Pretending to be stupid at the poker table, so that ones opponent does not take one seriously, and takes risks which he otherwise might not, may or may not be another example. These far from sophisticated examples demonstrate the inevitable truth that there will be room for debate at the fringes as to what does and does not constitute cheating. To label an activity advantage play, as Mr Ivey and others did, is of no help at all. It asks, rather than answers, the question whether it is legitimate or cheating. It would be very unwise to attempt a definition of cheating. No doubt its essentials normally involve a deliberate (and not an accidental) act designed to gain an advantage in the play which is objectively improper, given the nature, parameters and rules (formal or informal) of the game under examination. The question in the present case, however, does not depend on the near impossible task of formulating a definition of cheating, but on whether cheating necessarily requires dishonesty as one of its legal elements. Where it applies as an element of a criminal charge, dishonesty is by no means a defined concept. On the contrary, like the elephant, it is characterised more by recognition when encountered than by definition. Dishonesty is not a matter of law, but a jury question of fact and standards. Except to the limited extent that section 2 of the Theft Act 1968 requires otherwise, judges do not, and must not, attempt to define it: R v Feely [1973] QB 530. In this it differs strikingly from the expression fraudulently, which it largely replaced, for the judge did define whether a state of mind, once ascertained as a matter of fact, was or was not fraudulent: R v Williams [1953] 1 QB 660. Accordingly, dishonesty cannot be regarded as a concept which would bring to the assessment of behaviour a clarity or certainty which would be lacking if the jury were left to say whether the behaviour under examination amounted to cheating or did not. The issue whether what was done amounts to cheating, given the nature and rules of the game concerned, is likewise itself a jury question. The judge in the present case applied himself to the question whether there was cheating in exactly this jury manner. He directed himself that it is ultimately for the court to decide whether conduct amounted to cheating and that the standard is objective. In so directing himself he was right. There is no occasion to add to the value judgment whether conduct was cheating a similar, but perhaps not identical, value judgment whether it was dishonest. Some might say that all cheating is by definition dishonest. In that event, the addition of a legal element of dishonesty would add nothing. Others might say that some forms of cheating, such as deliberate interference with the game without deception, are wrong and cheating, but not dishonest. In that event, the addition of the legal element of dishonesty would subtract from the essentials of cheating, and legitimise the illegitimate. Either way, the addition would unnecessarily complicate the question whether what is proved amounts to cheating. The judges conclusion, that Mr Iveys actions amounted to cheating, is unassailable. It is an essential element of Punto Banco that the game is one of pure chance, with cards delivered entirely at random and unknowable by the punters or the house. What Mr Ivey did was to stage a carefully planned and executed sting. The key factor was the arranging of the several packs of cards in the shoe, differentially sorted so that this particular punter did know whether the next card was a high value or low value one. If he had surreptitiously gained access to the shoe and re arranged the cards physically himself, no one would begin to doubt that he was cheating. He accomplished exactly the same result through the unwitting but directed actions of the croupier, tricking her into thinking that what she did was irrelevant. As soon as the decision to change the cards was announced, thus restoring the game to the matter of chance which it is supposed to be, he first covered his tracks by asking for cards to be rotated at random, and then abandoned play. It may be that it would not be cheating if a player spotted that some cards had a detectably different back from others, and took advantage of that observation, but Mr Ivey did much more than observe; he took positive steps to fix the deck. That, in a game which depends on random delivery of unknown cards, is inevitably cheating. That it was clever and skilful, and must have involved remarkably sharp eyes, cannot alter that truth. Although the judge did not think it necessary to make a finding on the topic, and it is unnecessary to the resolution of this appeal, it would also seem that the facts which he found amounted in any event to a deception of the croupier. Certainly, the judge found (para 40) that pretending to be superstitious did not by itself cross the line from legitimate play to cheating, comparing it to the skilled poker player who pretends to be a fool. He also found, contrary to one of Crockfords submissions, that what occurred did not amount to such deception as altogether to negate the existence of any contract for the game. But that was not a finding that there was no deception at all, and on the facts found there clearly was deception of the croupier into doing something which appeared innocuous or irrelevant, but was in fact highly significant and enabled Mr Ivey to win when he should not have done. If, therefore, there were indeed (and contrary to the conclusion reached above) a necessary legal element of dishonesty in cheating, such a deception would be prima facie dishonest, unless it is prevented from being so by necessity to satisfy the second leg of the test in R v Ghosh. Dishonesty Dishonesty has been adopted since the Theft Act 1968 in the definition of some, but not all, acquisitive criminal offences. Forgery, for example, is defined without reference to dishonesty, but rather by the yardstick of the intention of the forger that his false document should be accepted as genuine and acted upon to the prejudice of someone else (Forgery and Counterfeiting Act 1981, section 1), whilst the Fraud Act 2006 retains dishonesty as an element of several forms of fraud (see sections 2, 3, 4 and 11). As recorded at para 48 above, dishonesty is itself primarily a jury concept, characterised by recognition rather than by definition. Most of the Theft Act 1968 offences required dishonesty without any elaboration of its meaning: section 15 (dishonestly obtaining property by deception) was a prime example and the Fraud Act 2006, which replaces this and other Theft Act offences, adopts the same form. There are in section 2 of the Theft Act 1968 limited rules relating to when appropriation is not to be regarded as dishonest (claim of right, belief in consent of owner, belief that owner cannot be found) and a specific provision that it may be dishonest despite a willingness to pay for the goods, but these were designed to reflect existing rules of law, they apply only to appropriation, and they do not alter the underlying principle that dishonesty is not defined. This reflects the view of the Criminal Law Revision Committee that dishonesty was a matter to be left to a jury; it said at para 39 that Dishonesty is something which laymen can easily recognise when they see it. That is not to suggest that there is not room for debate at the fringes whether particular conduct is dishonest or not, but the perils of advance definition would no doubt have been greater than those associated with leaving the matter to the jury. Over the succeeding half century, whilst there have undoubtedly (and inevitably) been examples of uncertainty or debate in identifying whether some conduct is dishonest or not, juries appear generally to have coped well with applying an uncomplicated lay objective standard of honesty to activities as disparate as sophisticated banking practices (for example R v Hayes [2015] EWCA Crim 1944) and the removal of golf balls at night from the bottom of a lake on a private golf course (R v Rostron [2003] EWCA Crim 2206). A significant refinement to the test for dishonesty was introduced by R v Ghosh [1982] QB 1053. Since then, in criminal cases, the judge has been required to direct the jury, if the point arises, to apply a two stage test. Firstly, it must ask whether in its judgment the conduct complained of was dishonest by the lay objective standards of ordinary reasonable and honest people. If the answer is no, that disposes of the case in favour of the defendant. But if the answer is yes, it must ask, secondly, whether the defendant must have realised that ordinary honest people would so regard his behaviour, and he is to be convicted only if the answer to that second question is yes. The occasion for this ruling owed nothing to the facts of Ghosh. The defendant locum surgeon had claimed payment for operations which either he had not performed, or which had been carried out under the National Health scheme so that no fees were due. The court summarily dismissed his appeal on the basis that no jury could have concluded, by any test, otherwise than that he was dishonest. The occasion for the analysis of dishonesty in Ghosh was a tangle of what were perceived to be inconsistent decisions, some of which were said to apply a subjective test, and others of which were said to apply an objective one. Those terms are not always as plain to jurors as they have become to lawyers, but it is convenient to adopt them here when examining the reasoning in Ghosh. That case arrived, as has been seen, at a compromise rule which is partly objective and partly subjective. Thirty years on, however, it can be seen that there are a number of serious problems about the second leg of the rule adopted in Ghosh. (1) It has the unintended effect that the more warped the defendants standards of honesty are, the less likely it is that he will be convicted of dishonest behaviour. (2) It was based on the premise that it was necessary in order to give proper effect to the principle that dishonesty, and especially criminal responsibility for it, must depend on the actual state of mind of the defendant, whereas the rule is not necessary to preserve this principle. It sets a test which jurors and others often find puzzling and difficult It represented a significant departure from the pre Theft Act 1968 law, (3) to apply. (4) It has led to an unprincipled divergence between the test for dishonesty in criminal proceedings and the test of the same concept when it arises in the context of a civil action. (5) when there is no indication that such a change had been intended. (6) Moreover, it was not compelled by authority. Although the pre Ghosh cases were in a state of some entanglement, the better view is that the preponderance of authority favoured the simpler rule that, once the defendants state of knowledge and belief has been established, whether that state of mind was dishonest or not is to be determined by the application of the standards of the ordinary honest person, represented in a criminal case by the collective judgment of jurors or magistrates. The principal objection to the second leg of the Ghosh test is that the less the defendants standards conform to what society in general expects, the less likely he is to be held criminally responsible for his behaviour. It is true that Ghosh attempted to reconcile what it regarded as the dichotomy between a subjective and an objective approach by a mixed test. The court addressed the present objection in this way, at p 1064: There remains the objection that to adopt a subjective test is to abandon all standards but that of the accused himself, and to bring about a state of affairs in which Robin Hood would be no robber: R v Greenstein [1975] 1 WLR 1353. This objection misunderstands the nature of the subjective test. It is no defence for a man to say I knew that what I was doing is generally regarded as dishonest; but I do not regard it as dishonest myself. Therefore I am not guilty. What he is however entitled to say is I did not know that anybody would regard what I was doing as dishonest. He may not be believed; just as he may not be believed if he sets up a claim of right under section 2(1) of the Theft Act 1968, or asserts that he believed in the truth of a misrepresentation under section 15 of the Act of 1968. But if he is believed, or raises a real doubt about the matter, the jury cannot be sure that he was dishonest. And a little later the court added that upon the test which it was setting: In most cases, where the actions are obviously dishonest by ordinary standards, there will be no doubt about it. It will be obvious that the defendant himself knew that he was acting dishonestly. It is dishonest for a defendant to act in a way which he knows ordinary people consider to be dishonest, even if he asserts or genuinely believes that he is morally justified in acting as he did. For example, Robin Hood or those ardent anti vivisectionists who remove animals from vivisection laboratories are acting dishonestly, even though they may consider themselves to be morally justified in doing what they do, because they know that ordinary people would consider these actions to be dishonest. Even if this were correct, it would still mean that the defendant who thinks that stealing from a bookmaker is not dishonest (as in R v Gilks [1972] 1 WLR 1341 see para 73 below) is entitled to be acquitted. It is no answer to say that he will be convicted if he realised that ordinary honest people would think that stealing from a bookmaker is dishonest, for by definition he does not realise this. Moreover, the courts proposition was not correct, because it is not in the least unusual for the accused not to share the standards which ordinary honest people set for society as a whole. The acquisitive offender may, it is true, be the cheerful character who frankly acknowledges that he is a crook, but very often he is not, but, rather, justifies his behaviour to himself. Just as convincing himself is frequently the stock in trade of the confidence trickster, so the capacity of all of us to persuade ourselves that what we do is excusable knows few bounds. It cannot by any means be assumed that the appropriators of animals from laboratories, to whom the court referred in Ghosh, know that ordinary people would consider their actions to be dishonest; it is just as likely that they are so convinced, however perversely, of the justification for what they do that they persuade themselves that no one could call it dishonest. There is no reason why the law should excuse those who make a mistake about what contemporary standards of honesty are, whether in the context of insurance claims, high finance, market manipulation or tax evasion. The law does not, in principle, excuse those whose standards are criminal by the benchmarks set by society, nor ought it to do so. On the contrary, it is an important, even crucial, function of the criminal law to determine what is criminal and what is not; its purpose is to set the standards of behaviour which are acceptable. As it was put in Smiths Law of Theft 9th ed (2007), para 2.296: the second limb allows the accused to escape liability where he has made a mistake of fact as to the contemporary standards of honesty. But why should that be an excuse? It is plain that in Ghosh the court concluded that its compromise second leg test was necessary in order to preserve the principle that criminal responsibility for dishonesty must depend on the actual state of mind of the defendant. It asked the question whether dishonestly, where that word appears in the Theft Act, was intended to characterise a course of conduct or to describe a state of mind. The court gave the following example, at p 1063, which was clearly central to its reasoning: Take for example a man who comes from a country where public transport is free. On his first day here he travels on a bus. He gets off without paying. He never had any intention of paying. His mind is clearly honest; but his conduct, judged objectively by what he has done, is dishonest. It seems to us that in using the word dishonestly in the Theft Act 1968, Parliament cannot have intended to catch dishonest conduct in that sense, that is to say conduct to which no moral obloquy could possibly attach. But the man in this example would inevitably escape conviction by the application of the (objective) first leg of the Ghosh test. That is because, in order to determine the honesty or otherwise of a persons conduct, one must ask what he knew or believed about the facts affecting the area of activity in which he was engaging. In order to decide whether this visitor was dishonest by the standards of ordinary people, it would be necessary to establish his own actual state of knowledge of how public transport works. Because he genuinely believes that public transport is free, there is nothing objectively dishonest about his not paying on the bus. The same would be true of a child who did not know the rules, or of a person who had innocently misread the bus pass sent to him and did not realise that it did not operate until after 10.00 in the morning. The answer to the courts question is that dishonestly, where it appears, is indeed intended to characterise what the defendant did, but in characterising it one must first ascertain his actual state of mind as to the facts in which he did it. It was not correct to postulate that the conventional objective test of dishonesty involves judging only the actions and not the state of knowledge or belief as to the facts in which they were performed. What is objectively judged is the standard of behaviour, given any known actual state of mind of the actor as to the facts. Although there have been relatively few appeals based upon Ghosh, that is because judges have dutifully given the two leg direction where there has been any occasion for it. But the existence of the second leg has frequently led to trials being conducted on the basis that even if the defendants actions, in his actual state of knowledge or belief about the relevant facts, would be characterised by most people as dishonest, the defendant himself thought that what he was doing was not wrong, and it was for that reason honest. Juries are then required first to ask the so called objective question, that is to say to apply their own standards of honesty, but then to depart from them in order to ask what the defendant himself thought. The idea that something which is dishonest by ordinary standards can become honest just because the defendant thinks it is may often not be an easy one for jurors to grasp. Dishonesty is by no means confined to the criminal law. Civil actions may also frequently raise the question whether an action was honest or dishonest. The liability of an accessory to a breach of trust is, for example, not strict, as the liability of the trustee is, but (absent an exoneration clause) is fault based. Negligence is not sufficient. Nothing less than dishonest assistance will suffice. Successive cases at the highest level have decided that the test of dishonesty is objective. After some hesitation in Twinsectra Ltd v Yardley [2002] UKHL 12; [2002] 2 AC 164, the law is settled on the objective test set out by Lord Nicholls in Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378: see Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37; [2006] 1 WLR 1476, Abou Rahmah v Abacha [2006] EWCA Civ 1492; [2007] Bus LR 220; [2007] 1 Lloyds Rep 115 and Starglade Properties Ltd v Nash [2010] EWCA Civ 1314; [2011] Lloyds Rep FC 102. The test now clearly established was explained thus in Barlow Clowes by Lord Hoffmann, at pp 1479 1480, who had been a party also to Twinsectra: Although a dishonest state of mind is a subjective mental state, the standard by which the law determines whether it is dishonest is objective. If by ordinary standards a defendants mental state would be characterised as dishonest, it is irrelevant that the defendant judges by different standards. The Court of Appeal held this to be a correct state of the law and their Lordships agree. Although the House of Lords and Privy Council were careful in these cases to confine their decisions to civil cases, there can be no logical or principled basis for the meaning of dishonesty (as distinct from the standards of proof by which it must be established) to differ according to whether it arises in a civil action or a criminal prosecution. Dishonesty is a simple, if occasionally imprecise, English word. It would be an affront to the law if its meaning differed according to the kind of proceedings in which it arose. It is easy enough to envisage cases where precisely the same behaviour, by the same person, falls to be examined in both kinds of proceeding. In Starglade Properties Leveson LJ drew attention to the difference of test as between civil cases and criminal cases, and rightly held that it demanded consideration when the opportunity arose. Such an opportunity is unlikely to occur in a criminal case whilst Ghosh remains binding on trial judges throughout the country. Although in R v Cornelius [2012] EWCA Crim 500 the opportunity might have arisen before the Court of Appeal, Criminal Division, it did not do so because there had been in that case no false representation of which the honesty needed to be examined; moreover, there is some doubt about the freedom of that court to depart from Ghosh in the absence of a decision from this court. Prior to the Theft Act 1968, the expression dishonestly had not appeared in the legal definition of acquisitive offences. The mental element was usually marked by the expression fraudulently. There is no doubt that that latter expression involved an objective evaluation of the defendants conduct, given his actual state of knowledge and belief as to the facts. The Criminal Law Revision Committee, in its eighth report, advised the substitution of the word dishonestly, on the grounds that fraudulently had become technical and its meaning had departed somewhat from the ordinary understanding of lay people. It recommended that dishonestly would be more easily understood by lay fact finders and the public generally. At para 39 the Committee advised that: Dishonestly seems to us a better word than fraudulently. The question Was this dishonest? is easier for a jury to answer than the question Was this fraudulent?. Dishonesty is something which laymen can easily recognize when they see it, whereas fraud may seem to involve technicalities which have to be explained by a lawyer. It was in accordance with this substitution that in Feely a five judge Court of Appeal, Criminal Division, held that the question whether a defendant had behaved dishonestly was to be left to the jury and should not, as had been the case with fraudulently, be the subject of judicial ruling. But there is no hint in the Committees report of any contemplation that whether a man was or was not dishonest should henceforth depend on his own view of his behaviour. On the contrary, the report clearly assumed that the prior objective approach would continue, save that the question would be a jury matter rather than one of law. Prior to Ghosh the post Theft Act authorities on the meaning of dishonesty were in something of a tangle. The court in that case seems to have thought, however, that there were more or less equal strands of authority supporting the subjective and the objective approach. It identified R v Feely [1973] QB 530 and R v Greenstein [1975] 1 WLR 1353 as tending to support an objective approach, and R v Landy [1981] 1 WLR 355, R v Waterfall [1970] 1 QB 148, R v Royle [1971] 1 WLR 1764 and R v Gilks [1972] 1 WLR 1341 as tending to favour a subjective one. It treated R v McIvor [1982] 1 WLR 409 as an unsustainable attempt to reconcile the two lines. This apparently binary dichotomy is not entirely borne out on analysis. Chronologically the first two cases, Waterfall and Royle, decided in July 1969 and November 1971, did not concern the characterisation of behaviour as dishonest. Rather, they held that where a false representation is alleged, it must be shown that the defendant knew that it was false, or at least was reckless in making it without caring whether or not it was true. Until there is a false representation, deliberately or recklessly made, the jury does not get to whether it was dishonest or not. Plainly, the defendants actual state of mind as to the truth of the representation is a matter for subjective determination. If he genuinely believes that what he said was true, he is entitled to be acquitted, unless of course there is some other behaviour independent of the false representation which can be said to be dishonest. It does not at all follow that, when once an absence of belief in the truth of his representation is established, dishonesty is likewise an entirely subjective matter, nor that it is so in cases which do not depend on allegations of false representation(s). This important distinction was subsequently identified in both Landy and in Ghosh itself, but the court in the latter case regarded it as unsatisfactory that the jury should have to apply successive tests, firstly of the defendants actual knowledge or belief, and, only if he deliberately made a false representation, secondly of the character of his conduct, given his actual state of mind. Waterfall and Royle were treated as examples of a subjective test of dishonesty, although they are not. There should in fact be no difficulty in the jury making this distinction, as cases such as Greenstein (below) show. It has to be done in every case where there was a false representation but there is a question whether there is any possible moral obloquy attaching to it. And it falls to be done, easily enough, in non representation cases such as that of the bus travelling foreign visitor. A not dissimilar two stage test is routinely applied by juries where self defence is in issue. The first stage is to ask what the facts were, as the defendant subjectively believed them to be. The second stage is, assuming such facts, to judge whether the response of the defendant was objectively reasonable. See R v Gladstone Williams [1987] 3 All ER 411 and section 76 of the Criminal Justice and Immigration Act 2008. In December 1972 a five judge Court of Appeal decided Feely. Like some others, the case concerned a defendant employee who had helped himself to money from the till knowing that such a thing was forbidden, but contended by way of defence that he had intended to repay it, and that his employers owed him money anyway. The decision of the court was that it is for the jury, not the judge, to say whether the conduct established was dishonest or not. The court said plainly that employees who take money from the till without permission are usually thieves, but that if the circumstances were such that no possible moral obloquy could attach to what was done, they might not be. It gave as an example the defendant who took the money only because he had no change in his pocket to pay a taxi which had just delivered his wife to the shop, and who meant to and did replace it within minutes. Because the question whether that kind of analysis applied in that case had not been left open by the direction to the jury, the appeal against conviction was allowed. It is therefore inherent in that case that what the jury has to do is to apply its own (objective) standards to whether the conduct was dishonest. Greenstein, decided in July 1975, concerned a large scale operation of a method of the discouraged but not illegal practice of stagging new issue shares by applying for vastly more than the defendants could pay for, in the hope that a smaller affordable number would be allocated, but more than would have been allotted if the application had been confined to what they could afford. The charges, of obtaining property by deception, depended on the representation made when a cheque is issued, that it is good for the money on due presentation. The defendants, who applied in multiple aliases, did not have the money to meet the cheques they signed for the full number of shares applied for, which were required by the issuers, but they hoped that the return cheques which could be expected to be sent after partial allocation would feed their accounts in time to enable their original cheques to be met. The court upheld the judges two part direction. First, he told the jury that when it came to asking whether the defendants genuinely believed that their cheques would be met on due presentation (as many were and several were not) the answer should depend on their actual state of belief. Secondly, he told them that when the question was whether the defendants had acted honestly overall (that is if there was a false representation), they must apply their own standards. It was, the judge had said, no good applying the standards of anyone accused of dishonesty, for in that event everyone would automatically be acquitted. That case accordingly supports the principle that the test of dishonesty (but not of belief in a representation) is objective. Feely was applied. Feely was also applied in Boggeln v Williams [1978] 1 WLR 873, decided in January 1978. The defendant had been acquitted of dishonestly abstracting electricity by re connecting his supply after the Board had cut him off for late payment. The acquittal was by the Crown Court on appeal and specific findings of fact were accordingly available. They were that he knew how to by pass the meter, but had not done so, that he gave notice to the Board of what he was doing, that he genuinely believed that he would be able to pay when the time came, that that belief was not shown to be unreasonable and that in the judgment of the Crown Court he had not acted dishonestly. The Divisional Court applied Feely in holding that the decision upon honesty was for the fact finding tribunal and that there was material entitling it to find as it did. That case did not address the nature of the test of dishonesty beyond saying that the defendants view of his conduct was, on those findings, crucial. The reality is that the Crown Court did not think the conduct dishonest, given what the defendant did and intended. In Ghosh, this case was rightly treated as inconclusive upon the perceived binary dichotomy. R v Landy, decided in January 1981, was a case of complex fraudulent trading via a bank, which re affirmed that dishonesty was a necessary element of conspiracy to defraud. It also, and more crucially, insisted on an indictment for conspiracy to defraud giving proper particulars of the conduct complained of, the absence of which had, in that case, led to a confused and diffuse summing up which did not properly identify the issues for the jury. The case was important for laying the early ground for modern case management of fraud trials. In the course of its judgment, given by Lawton LJ, the court said this, at p 365: There is always a danger that a jury may think that proof of an irregularity followed by loss is proof of dishonesty. The dishonesty to be proved must be in the minds and intentions of the defendants. It is to their states of mind that the jury must direct their attention. What the reasonable man or the jurors themselves would have believed or intended in the circumstances in which the defendants found themselves is not what the jury have to decide, but what a reasonable man or they themselves would have believed or intended in similar circumstances may help them to decide what in fact individual defendants believed or intended. An assertion by a defendant that throughout a transaction he acted honestly does not have to be accepted but has to be weighed like any other piece of evidence. If that was the defendants state of mind, or may have been, he is entitled to be acquitted. But if the jury, applying their own notions of what is honest and what is not, conclude that he could not have believed that he was acting honestly, then the element of dishonesty will have been established. What a jury must not do is to say to themselves: If we had been in his place we would have known we were acting dishonestly so he must have known he was. What they can say is: We are sure he was acting dishonestly because we can see no reason why a man of his intelligence and experience would not have appreciated, as right minded people would have done, that what he was doing was dishonest. This passage was treated in Ghosh as supportive of a subjective test of dishonesty. However, its context was an alleged banking fraud consisting of dealing with money of lenders and depositors in ways which were likely to, and did, lead them to lose their money. The ways included reckless and unsecured speculation, preferential payments to connected companies, the preparation of false accounts, the lodging of false Bank of England returns, and the creation of false discount bills when there was no underlying commercial transaction. The critical fact is that the defence was that the defendants did not know enough of what was going on to be responsible, and/or that they trusted others to manage the bank. Since that was the issue, it is plain that the actual state of mind of the defendants was indeed the critical question for the jury, and that the jury had to approach it in the way explained by Lawton LJ. The issue in the case was not principally whether a state of knowledge, if once established, meant that the defendants conduct fell to be characterised as dishonest. Indeed, a defendant who knew about the means allegedly adopted would be hard pressed to suggest that he thought them honest. The position became more complicated in McIvor, decided in November 1981. This was, like Feely, a case of unauthorised taking from the till by an employee. The defendant had asked to borrow money and, having been refused, helped himself nevertheless. He asserted by way of defence that he had always intended to put the money back, as indeed he had done ten days later. The judge had told the jury that it must apply the standards of ordinary honest people to whether what the defendant had done was dishonest, and that what he himself thought about that issue was neither here nor there. The appeal came before a Court of Appeal presided over by Lawton LJ, who had delivered the judgments in both Feely and Landy. The court held that the passage cited above in Landy applied only to the offence of conspiracy to defraud and not to the offence of theft (or, therefore, to the other Theft Act offences in which dishonesty was an essential element). For the latter, the objective lay standard of honesty was to be applied. In Ghosh the court treated this decision as suggesting a subjective test for conspiracy to defraud and an objective one for other offences, and understandably held that such a distinction could not be sustained in logic or fairness. It is, however, at least possible, if not likely, that all that Lawton LJ was saying in McIvor was that the passage in Landy referred to the issue of the defendants actual state of knowledge of what was happening, and to his actual belief in the truthfulness of any representation which he had made, rather than to the issue of whether an established state of mind is or is not dishonest. With hindsight it can be seen that the court perceived clearly that if a wholly subjective test of when an established actual state of knowledge or belief is and is not dishonest were to be applied, the consequences would be that any defendant whose subjective standards were sufficiently warped would be entitled to be acquitted. It might be noted that in McIvor the court held that the judges remarks about what the defendant himself thought being neither here nor there might have been taken by the jury as requiring them to disregard what he had said about his actual state of knowledge or belief. There had thus been a misdirection, but just as in Ghosh the court held that the only possible conclusion was that the defendant had been dishonest. There was in fact only one pre Ghosh case which frankly raised the relevance of the defendants own view as to the honesty of what he had done. R v Gilks had been decided as long ago as June 1972. The defendant had been handed, by mistake, as much as 100 too much by a bookmaker. He realised the mistake but kept the money anyway. Asked to account for doing so, he offered the view that whereas it would clearly be wrong to keep such an overpayment if made by the grocer, bookmakers were fair game. He was convicted notwithstanding the judges direction that the jury should put itself in his shoes and ask itself whether he had thought he was acting honestly or dishonestly. Amongst other grounds of appeal which the Court of Appeal rejected, he contended that the judge ought to have made it yet clearer that even if he did not believe he had any claim of right in law to keep the money, he would still not be guilty unless he did not have the belief he asserted that bookmakers were fair game. The Court of Appeal rejected that contention also, saying that the judges direction was a proper and sufficient one. Thus the case can be said to have endorsed the (subjective) direction as to dishonesty given by the judge. It did so, of course, only to the extent that it rejected the defendants argument that the judges direction was wrongly adverse to him. The question whether the direction was too favourable to him did not arise and was not addressed. Gilks preceded Feely, Greenstein, Landy, Boggeln v Williams and McIvor but was not cited to any of those later courts, which therefore did not analyse what if anything it had decided. It might, however, be thought that the facts of Gilks are a powerful demonstration of the perils of the second leg of the Ghosh test, for it means that if the likes of Mr Gilks are once truthful about their idiosyncratic view of bookmakers, they are bound to be acquitted. These several considerations provide convincing grounds for holding that the second leg of the test propounded in Ghosh does not correctly represent the law and that directions based upon it ought no longer to be given. The test of dishonesty is as set out by Lord Nicholls in Royal Brunei Airlines Sdn Bhd v Tan and by Lord Hoffmann in Barlow Clowes: see para 62 above. When dishonesty is in question the fact finding tribunal must first ascertain (subjectively) the actual state of the individuals knowledge or belief as to the facts. The reasonableness or otherwise of his belief is a matter of evidence (often in practice determinative) going to whether he held the belief, but it is not an additional requirement that his belief must be reasonable; the question is whether it is genuinely held. When once his actual state of mind as to knowledge or belief as to facts is established, the question whether his conduct was honest or dishonest is to be determined by the fact finder by applying the (objective) standards of ordinary decent people. There is no requirement that the defendant must appreciate that what he has done is, by those standards, dishonest. Therefore in the present case, if, contrary to the conclusions arrived at above, there were in cheating at gambling an additional legal element of dishonesty, it would be satisfied by the application of the test as set out above. The judge did not get to the question of dishonesty and did not need to do so. But it is a fallacy to suggest that his finding that Mr Ivey was truthful when he said that he did not regard what he did as cheating amounted to a finding that his behaviour was honest. It was not. It was a finding that he was, in that respect, truthful. Truthfulness is indeed one characteristic of honesty, and untruthfulness is often a powerful indicator of dishonesty, but a dishonest person may sometimes be truthful about his dishonest opinions, as indeed was the defendant in Gilks. For the same reasons which show that Mr Iveys conduct was, contrary to his own opinion, cheating, the better view would be, if the question arose, that his conduct was, contrary to his own opinion, also dishonest. For these several reasons, this appeal must be dismissed.
+Is it an answer to a refugee claim by an individual who has no political views and who therefore does not support the persecutory regime in his home country to say that he would lie and feign loyalty to that regime in order to avoid the persecutory ill treatment to which he would otherwise be subjected? This is the question of general importance that arises in these appeals which are a sequel to the decision of this court in HJ (Iran) v Secretary of State for the Home Department [2011] 1 AC 596. In that case, it was held that a gay man was entitled to live freely and openly in accordance with his sexual identity under the Refugee Convention (the Convention) and it was no answer to the claim for asylum that he would conceal his sexual identity in order to avoid the persecution that would follow if he did not do so. I shall refer to this as the HJ (Iran) principle. These cases fall to be decided in the light of the latest country guidance for Zimbabwe which is to be found in the decision of the Asylum and Immigration Tribunal (AIT) in RN (Returnees) Zimbabwe CG [2008] UKAIT 00083 to which I shall have to refer in more detail later. At this stage, it is sufficient to refer to para 216: This campaign [of persecution] has been rolled out across the country not by disciplined state forces but by the loose collection of undisciplined militias who have delivered a quite astonishingly brutal wave of violence to whole communities thought to bear responsibility for the wrong outcome of the March 2008 poll. It is precisely because of that that any attempt to target specifically those who have chosen to involve themselves with the [Movement for Democratic Change (MDC)] has been abandoned. In our view, there can be no doubt at all from the evidence now before the Tribunal that those at risk are not simply those who are seen to be supporters of the MDC but anyone who cannot demonstrate positive support for Zanu PF or alignment with the regime. We were referred to the new country guidance issued by the Upper Tribunal in EM and Others (Returnees) Zimbabwe CG [2011] UKUT 98 (IAC) which states that the situation in Zimbabwe has significantly changed. But this decision was quashed by the Court of Appeal on 13 June 2012. It is common ground that it is not material to the present appeals. The facts RT was born on 28 May 1981. She left Zimbabwe legally in February 2002 and arrived in the United Kingdom on 2 March 2002. She was given leave to enter for six months and began to work for a family as a nanny. She overstayed her leave. In 2005, she was refused leave to remain as a student. On 16 February 2009, she claimed asylum. The claim was refused by the Secretary of State and her appeal to the AIT was dismissed on 1 July 2009. IJ Hussain found that she would be able to take any positive steps necessary to show her loyalty to the regime and that there was no real risk of her being subject to ill treatment on return. Reconsideration was ordered on 8 December 2009. On the reconsideration, RTs appeal was dismissed by the Upper Tribunal on 2 March 2010. DIJ Manuell found that she was a credible witness and that she had never been politically active in Zimbabwe or in the United Kingdom. At para 25 he gave his reasons for concluding that she did not have a well founded fear of persecution on a Convention ground. Of particular relevance is the finding that she was in a position to explain that she has never been politically involved at home or abroad, should anyone see fit to enquire. SM was born on 26 September 1982. She left Zimbabwe in April 2008 using a passport issued in another name and claimed asylum in the United Kingdom on 1 May 2008. Following refusal of her claim in November 2008, she appealed to the AIT. Her appeal was dismissed on 29 January 2009. IJ Lawrence found that she was not a credible witness, had given inconsistent accounts of her involvement with the MDC and had lied in a number of other respects. On 17 June 2009, reconsideration was ordered on the single issue of whether SM would be at risk on return in view of the decision in RN. Her appeal was dismissed by IJ Charlton Brown on 3 November 2009. She too found that SM was not a credible witness. She said that SM had no connections with the MDC and that, although her mother had left Zimbabwe in 2002 and had been recognised as a refugee in 2003, she had not had difficulties living in Zimbabwe between 2002 and 2008. On the issue of loyalty to the regime, she said at para 23: Finally, in terms of whether or not this appellant can demonstrate positive support for/loyalty to ZANU PF, it seems clear that she herself has not been linked with the MDC as she has claimed, given her lack of credibility throughout. As previously stated, she appears to have been able to live in Zimbabwe without problems since her mother left the country in 2002 and quite frankly, given this individuals complete lack of credibility and indeed her inclination to lie as and when required, as the original immigration judge pointed out, no doubt she would be prepared to lie again in the future to the authorities on return to Zimbabwe about any political affiliation she might have. AM was born on 16 November 1966. He left Zimbabwe and arrived in the United Kingdom on 25 February 2001 with leave to enter as a visitor. He remained with leave as a student until 30 November 2007. He claimed asylum on 28 April 2009. This was refused. His appeal was dismissed by the AIT on 15 September 2009 and dismissed again (following reconsideration) on 23 March 2010. DIJ Shaerf did not find AM to be a credible witness. Although he was in favour of the MDC (para 46), AM had no political profile and was not politically engaged prior to his departure from Zimbabwe (para 47). He would be able to account for his absence from Zimbabwe by reference to his studies in the United Kingdom and the breakdown of his marriage whilst he was here. He had returned to Zimbabwe in 2003 without difficulty. RT, SM and AM all appealed to the Court of Appeal. The judgment of the court was given by Carnwath LJ: [2010] EWCA Civ 1285; [2011] Imm AR 259. Their appeals were allowed. The court said at para 36 that if individuals are forced to lie about their absence of political beliefs, solely in order to avoid persecution, that seems to us to be covered by the HJ (Iran) principle, and does not defeat their claims to asylum. In the case of RT, the court said (para 42) that the Upper Tribunal did not address the critical issue raised by RN since: It is not enough that she would be able to explain her lack of political activity abroad. The question is whether she would be forced to lie in order to profess loyalty to the regime, and whether she could prove it. Since she was found to be generally credible, there is no other reason to hold that she has failed to prove her case. The court allowed RTs appeal and upheld RTs asylum claim. As for SM, at para 46 the court said of para 23 of the decision of the AIT that: it was not enough to hold that she would be willing to lie as and when required, if the reason for doing so would be to avoid persecution. Nor is willingness to lie the same as ability to prove loyalty to the regime. On the other hand, in view of her lack of credibility overall, it remains open to question whether her case should fail for lack of proof as in [TM (Zimbabwe) v Secretary of State for the Home Department [2010] EWCA Civ 916]. We will therefore allow the appeal and remit the case to the Upper Tribunal for redetermination. In relation to AM, the court said at para 52: As in the first case, the issue was not simply whether the appellant could account for his absence in the UK. The judge failed to address the issue as to his ability to show his loyalty to the regime. Unlike RT, he has not been held to be a credible witness. Accordingly, as in the case of SM, we do not feel able to substitute our own conclusion on this issue. We will therefore allow the appeal and remit the case to the Upper Tribunal. The Secretary of State seeks an order that the decisions of the Tribunal should be restored in all three cases, alternatively that the claims should be remitted for further consideration of the sole issue of whether each claimant would be able to prove loyalty to the regime. KM was born on 5 March 1957. He left Zimbabwe legally and claimed to have arrived in the United Kingdom in January 2003 on a false South African passport. He was given six months leave to enter as a visitor. He claimed asylum on 20 August 2008 and his claim was refused by the Secretary of State. His appeal was dismissed by the AIT on 1 April 2009. A fact of central importance was that his son had been granted asylum in the United Kingdom because he had a well founded fear of persecution in Zimbabwe on the grounds that he was a sympathiser of the MDC. IJ Parkes concluded that KM and his son (on whose evidence he relied) were not reliable witnesses with regard to events in Zimbabwe and that KM could not demonstrate an inability to show loyalty to the regime. On 11 August 2009, Hickinbottom J ordered reconsideration. The appeal was dismissed on reconsideration on 23 October 2009. SIJ Latter said at para 18: In the light of the judges findings of fact I am not satisfied that the appellant established any adequate factual basis to support his claim that he would be at real risk of finding himself in a position where he would be unable to demonstrate loyalty to the regime. The judge found that the appellant had no profile in Zimbabwe and had not been involved in MDC activities. There was no reasonable degree of likelihood that the grant of status to his son would be known to those who might call upon him to show loyalty and he also failed to establish any serious possibility of finding himself in a position that such a call would now be made on him. Finally, he failed to show that his background, his profile or his beliefs were such that he would not be able to demonstrate loyalty. The Court of Appeal allowed his appeal and remitted the case to the Upper Tribunal. The leading judgment was given by Pill LJ: [2011] EWCA Civ 275. The Secretary of State accepted that the appeal should be allowed by the Court of Appeal because it was arguable that the Tribunal had failed to give adequate consideration to the assessment of risk in the light of the guidance in RN. The issue between the parties was whether there should be a remittal to the Tribunal (as the Secretary of State contended) or the appeal should be allowed outright (as the appellant contended). It was conceded by the Secretary of State that there was a real risk that the appellants son having obtained asylum because of his MDCs sympathies would come out on the appellants return (para 6 of Pill LJs judgment); and that the fact that KMs son had been granted asylum may place the appellant in an enhanced risk category by making it more difficult for him to demonstrate his loyalty to the regime (para 12). The primary submission of the Secretary of State to the Court of Appeal was that there should be a further opportunity to examine the circumstances of return, for example, the area to which KM would return and whether he was a person who would be returning to a milieu where loyalty to the regime would be assumed (para 13). At para 15, Pill LJ said that, in the light of the evidence and the guidance in RN, the appellants prospect of demonstrating loyalty to the regime appeared bleak. He concluded, however, that this was not a case which the court could decide on the basis that only one outcome was possible before the Tribunal, although he regarded the appellants case as strong and it was acknowledged by the Secretary of State that there was a risk of his sons status becoming known (para 29). At para 27, he gave two reasons for his conclusion by reference to the decision in RN: First, an applicant found not to have been a witness of truth will not be assumed to be truthful about his inability to demonstrate loyalty (paragraph 246). Secondly, there is recognition, in paragraphs 229 and 230, of categories of people, for example, those returning to more affluent areas and likely to be associated with the regime, who may be returning to a milieu where loyalty to the regime may be assumed and the risk of persecution does not arise. The country guidance in RN In RN the AIT summarised the position at para 258 as follows: The evidence establishes clearly that those at risk on return to Zimbabwe on account of imputed political opinion are no longer restricted to those who are perceived to be members or supporters of the MDC, but include anyone who is unable to demonstrate support for or loyalty to the regime or Zanu PF. To that extent the country guidance in HS (Returning asylum seekers) Zimbabwe CG [2007] UKAIT 00094 is no longer to be followed. The following points of detail are relevant. The risk of persecution resulted in particular from the activities at road blocks of ill disciplined militia gangs and War Veterans. It did not result from the risk of detection at the airport on return to Zimbabwe. The means used by those manning road blocks to establish whether a person was loyal to the ruling Zanu PF party included requiring them to produce a Zanu PF card or sing the latest Zanu PF campaign songs. An inability to do these things would be taken as evidence of disloyalty to the party and therefore of support for the opposition (para 81). In deploying these militia gangs, the regime unleashed against its own citizens a vicious campaign of violence, murder, destruction, rape and displacement designed to ensure that there remains of the MDC nothing capable of mounting a challenge to the continued authority of the ruling party (para 215). Any attempt by the regime to target those who have chosen to involve themselves with the MDC has been abandoned. The risk of not being able to demonstrate loyalty to the regime exists throughout the country, in both urban and rural areas (para 226). The means by which loyalty may be demonstrated will vary depending on who is demanding it. Production of a Zanu PF card is likely to suffice where an individual is confronted with such a demand, for example, at a road block. But even that may not protect the holder from serious harm in rural areas where the adverse interest is in the community as a whole, because the area is one in which the MDC made inroads in the Zanu PF vote at the March 2008 elections (para 227). People living in high density urban areas will face the same risk from militias or War Veterans as those living in rural areas, save that the latter are possibly at greater risk if their area has been designated as a no go area by the militias (para 228). Finally, at paras 229 and 230, points are made about milieu which Pill LJ noted at para 27 of his judgment, to which I have referred above. HJ (Iran) There has been no challenge in these appeals to the correctness of the decision in HJ (Iran) or its essential reasoning. In the light of the submissions that have been advanced in the present appeals, it is necessary to refer to parts of the judgments in HJ (Iran) in a little detail. The court recognised as a refugee a gay man who, if he returned to his country of nationality and lived openly as a homosexual, would face a real risk of persecution on the ground of his sexual orientation, and who, in order to avoid this risk, would carry on any homosexual relationships discreetly. I would accept the analysis of Mr Fordham QC that five principal reasons were given by the court for this conclusion. First, the treatment of those who lived openly as homosexuals in Iran and Cameroon constituted persecution (para 40 42). Secondly, sexual orientation was a protected characteristic within the category of membership of a particular social group (para 42). Thirdly, the underlying rationale of the Convention was that people should be able to live freely, without fearing that they may suffer harm of the requisite intensity or duration because they are, say, black, or the descendants of some former dictator, or gay (para 53): see also paras 52, 65, 67 and 78. Fourthly, the necessary modification in order to avoid persecution (carrying on any homosexual relationships discreetly) ran contrary to this underlying rationale. It involved surrendering the persons right to live freely and openly in society as who they are, in terms of the protected characteristic, which was the Conventions basic underlying rationale: see per Lord Rodger at paras 75 76, Lord Hope at para 11 and myself at para 110. Fifthly, the modification was a response to the feared persecution because of these dangers of living openly (para 40). There was a difference between a case where the individual would live discreetly because of social pressures (para 61) and the situation where he would behave discreetly in order to avoid persecution because he is gay (para 62). Only the latter would be entitled to refugee protection, assuming, of course, that he would suffer persecution if he were to live openly as a homosexual. In the course of its reasoning, the court rejected three arguments advanced on behalf of the Secretary of State. The first was that it was necessary for a refugee to be able to characterise living discreetly in order to avoid persecution as being itself persecution. The second was that it was appropriate to see living discreetly in such circumstances as analogous to internal relocation, so that the unduly harsh test applied in relation to internal relocation should be applied here too: see per Lord Hope at paras 20 and 21. The third was that the question was whether living discreetly was or was not reasonably tolerable to the asylum seeker. This was the test enunciated by the Court of Appeal in HJ (Iran). In reaching his conclusion, Lord Rodger (para 69) followed the reasoning of the majority in the High Court of Australia in Appellant S395/2002 v Minister of Immigration (2003) 216 CLR 473. At para 72, he also referred to the approach adopted in New Zealand, particularly in Refugee Appeal No 74665/03 [2005] INLR 68 where at para 124 the New Zealand Refugee Status Appeals Authority considered that its own approach and that expressed by the majority in Appellant S395/2002 converged on the same point, namely that refugee status cannot be denied by requiring of the claimant that he or she avoid being persecuted by forfeiting a fundamental human right. Lord Rodger continued: The difference between the High Court and the authoritywhich the authority considered could be important in certain caseswas that it preferred to use a human rights framework in order to determine the limits of what an individual is entitled to do and not to do. That approach might, for instance, be relevant if an applicant were claiming asylum on the ground that he feared persecution if he took part in a gay rights march. I respectfully see the attractions of that approach. But no such issue arises in the present appeals and I prefer to leave the point for consideration in a case where it might be of practical effect. For present purposes I take the decision of the authority, based on a particularly full and impressive analysis of the relevant materials, as clear support for the High Court of Australias approach that an applicant cannot be denied asylum on the basis that he would, in fact, take effective steps, by suppressing his sexual identity, to avoid the harm which would otherwise threaten him. I shall return to the New Zealand case later in this judgment. At para 113 of my judgment, I said that the emphasis in the New Zealand decision was on the fact that refugee status could not be denied to a person who on return would forfeit a fundamental human right in order to avoid persecution. Like Lord Rodger, I saw the attractions of this approach. At para 114, I said that a particular attraction of the New Zealand approach was that it facilitated a determination of whether the proposed action by the claimant was at the core of the right or at its margins. At para 115, I said: It is open to question how far the distinction between harmful action at the core of the right and harmful action at its margin is of relevance in cases of persecution on grounds of immutable characteristics such as race and sexual orientation. But it is a valuable distinction and there may be more scope for its application in relation to cases concerning persecution for reasons of religion or political opinion. The principal issues that arise in these appeals Two principal issues arise. The first is whether the HJ (Iran) principle can apply to an individual who has no political beliefs and who is obliged to pretend to support a political regime in order to avoid the persecution that he would suffer if his political neutrality were disclosed. Is the position of such a person analogous to that of a homosexual who is obliged to live a discreet life in order to avoid the persecution that he would suffer if he revealed his sexual orientation? The second is whether, in the light of the country guidance given in RN, there is a real risk that such a person would face persecution on the grounds that he would be perceived to be a supporter of MDC. In other words, would he face a risk of persecution on the grounds of imputed political belief? The first issue: can the HJ (Iran) principle apply to individuals who have no political beliefs? The case of the Secretary of State in outline The relevant factual premises for a consideration of these issues are that (i) the claimants do not hold any political beliefs and (ii) in practice, in order to avoid the imputation that they do not support the ruling regime (and consequently to avoid maltreatment), there is a real and substantial risk that they will be required to dissemble political loyalty to that regime. The Court of Appeal were wrong to say at para 36 of their judgment that, if the claimants are forced to lie about their political neutrality or indifference solely in order to avoid persecution, the concealment of their lack of political beliefs would not defeat their claims to asylum. HJ (Iran) does not establish any such rigid principle. Rather, what is required is a fact sensitive analysis and consideration of whether interference with the claimants freedom to hold or not hold political opinions is at the core or the margin of the protected right or requires them to forfeit a fundamental human right. There are two fundamental differences between HJ (Iran) and the present cases. First, the issue in these cases does not relate to a fundamental or immutable part of the individuals identity or a fundamental human right, since the claimants do not have any political views. The right in question is freedom of political thought and/or expression. Since the claimants do not have political views, having to express a particular view which they do not hold is at the margin of the right. They are not being required to forfeit a fundamental human right in order to avoid being persecuted. Secondly, the situation contemplated in HJ (Iran) was one in which a person had to conceal a fundamental and immutable part of his identity at all times (at least when not in private). In these cases, what is contemplated is a situation where a person may on isolated occasions be required to spend a very short amount of time professing a feigned opinion on a matter of politics. Discussion It is well established that there are no hierarchies of protection amongst the Convention reasons for persecution, and the well founded fear of persecution test set out in the Convention does not change according to which Convention reason is engaged: see, for example, per Lord Hope in HJ (Iran) at para 10, per Lord Hoffmann in R v Immigration Appeal Tribunal, Ex p Shah [1999] 2 AC 629, 651B and per Lord Bingham in Fornah v Secretary of State for the Home Department [2007] 1 AC 412, paras 20 22 (approving the reasoning of Laws J in R v Immigration Appeal Tribunal, Ex p De Melo [1997] Imm AR 43, 49 50). Thus the Convention affords no less protection to the right to express political opinion openly than it does to the right to live openly as a homosexual. The Convention reasons reflect characteristics or statuses which either the individual cannot change or cannot be expected to change because they are so closely linked to his identity or are an expression of fundamental rights. The HJ (Iran) principle applies to any person who has political beliefs and is obliged to conceal them in order to avoid the persecution that he would suffer if he were to reveal them. Mr Swift accepted that such a person would have a strong case for Convention protection, but he stopped short of an unqualified acceptance of the point. In my view, there is no basis for such reticence. The joint judgment of Gummow and Hayne JJ in Appellant S395/2002 contains a passage under the heading Discretion and being discreet which includes the following at para 80: If an applicant holds political or religious beliefs that are not favoured in the country of nationality, the chance of adverse consequences befalling that applicant on return to that country would ordinarily increase if, on return, the applicant were to draw attention to the holding of the relevant belief. But it is no answer to a claim for protection as a refugee to say to an applicant that those adverse consequences could be avoided if the applicant were to hide the fact that he or she holds the beliefs in question. And to say to an applicant that he or she should be discreet about such matters is simply to use gentler terms to convey the same meaning. The question to be considered in assessing whether the applicants fear of persecution is well founded is what may happen if the applicant returns to the country of nationality; it is not, could the applicant live in that country without attracting adverse consequences. I made much the same point in HJ (Iran) at para 110: If the price that a person must pay in order to avoid persecution is that he must conceal his race, religion, nationality, membership of a social group or political opinion, then he is being required to surrender the very protection that the Convention is intended to secure for him. The Convention would be failing in its purpose if it were to mean that a gay man does not have a well founded fear of persecution because he would conceal the fact that he is a gay man in order to avoid persecution on return to his home country. In the context of religious belief, the United Nations High Commissioner for Refugees has said (in my view, rightly): Applying the same standard as for other Convention grounds, religious belief, identity or way of life can be seen as so fundamental to human identity that one should not be compelled to hide, change or renounce this in order to avoid persecution: Guidelines on International Protection: Religion Based Refugee Claims (2004) para 13 (emphasis added). But what about the person who has no political beliefs and who, in order to avoid persecution, is forced to pretend that he does? Does the right to hold no political beliefs (and say so) attract Convention protection as much as the right to hold and express political beliefs? A useful starting point is the preamble to the Convention, which includes the following: CONSIDERING that the Charter of the United Nations and the Universal Declaration of Human Rights approved on 10 December 1948 by the General Assembly have affirmed the principle that human beings shall enjoy fundamental rights and freedoms without discrimination, CONSIDERING that the United Nations has, on various occasions, manifested its profound concern for refugees and endeavoured to assure refugees the widest possible exercise of these fundamental rights and freedoms. This emphasis on the importance of human rights in the present context is also reflected in Council Directive 2004/83/EC (the Qualification Directive) whose tenth recital states: This Directive respects the fundamental rights and observes the principles recognised in particular by the Charter of Fundamental Rights of the European Union. In particular this Directive seeks to ensure full respect for human dignity and the right to asylum of applicants for asylum and their accompanying family members. As Lord Bingham said in Fornah at para 10, the Convention must be interpreted: in accordance with its broad humanitarian objective and having regard to the principles, expressed in the preamble, that human beings should enjoy fundamental rights and freedoms without discrimination and that refugees should enjoy the widest possible exercise of these rights and freedoms. Lord Steyn made the same point in R v Immigration Appeal Tribunal, Ex p Shah [1999] 2 AC 629, 638H to 639E. Under both international and European human rights law, the right to freedom of thought, opinion and expression protects non believers as well as believers and extends to the freedom not to hold and not to have to express opinions. The rights to freedom of thought, opinion and expression are proclaimed by articles 18 and 19 of the Universal Declaration of Human Rights 1948. As Lord Hope said in HJ (Iran) at para 15: The guarantees in the Universal Declaration are fundamental to a proper understanding of the Convention. The relevance of that general statement is not diminished by the note of caution sounded by Lord Hope that the Convention has a more limited purpose than the Declaration, in that, for example, persecution is not the same as discrimination simpliciter. Articles 18 and 19 of the Declaration are given effect internationally by articles 18 and 19 of the International Covenant on Civil and Political Rights 1966 (ICCPR). Article 18 of the ICCPR deals with the right to freedom of thought, conscience and religion. Article 19 deals with the right to freedom of opinion and expression. The United Nations Human Rights Committee has commented on these rights. In its General Comment No 22 on article 18 (30 July 1993), it said that the right to freedom of thought, conscience and religion in article 18.1 is far reaching and profound (para 1); the terms belief and religion are to be broadly construed (para 2); and article 18 protects theistic, non theistic and atheistic beliefs, as well as the right not to profess any religion or belief (para 2). In its General Comment No 34 on article 19 (12 September 2011), it said that freedom of opinion and freedom of expression are indispensable conditions for the full development of the person. They are essential for any society. They constitute the foundation stone for every free and democratic society (para 2). All forms of opinion are protected (para 9). At para 10, it said: Any form of effort to coerce the holding or not holding of any opinion is prohibited. Freedom to express ones opinion necessarily includes freedom not to express ones opinion. There is case law in relation to the European Convention on Human Rights to the effect that the guarantee of freedom of thought, conscience and religion under article 9 protects the indifferent or unconcerned, and extends to the right not to hold thoughts or beliefs and not to give expression to them. In Kokkinakis v Greece (1993) 17 EHRR 397, para 31, the European Court of Human Rights said: As enshrined in Article 9, freedom of thought, conscience and religion is one of the foundations of a democratic society within the meaning of the Convention. It is, in its religious dimension, one of the most vital elements that go to make up the identity of believers and of their conception of life, but it is also a precious asset for atheists, agnostics, sceptics and the unconcerned. The pluralism indissociable from a democratic society, which has been dearly won over the centuries, depends on it. In Buscarini and others v San Marino (1999) 30 EHRR 208, at para 34 unanimous Grand Chamber of the ECtHR repeated this passage and added: That freedom entails, inter alia, freedom to hold or not to hold religious beliefs and to practise or not to practise a religion. In Buscarini, the applicants were required, contrary to their wishes, to swear an oath on the Holy Gospels in order to take their seats in the San Marino Parliament. It was held that this requirement was not compatible with article 9. No part of the Grand Chambers reasoning concerned the strength of the applicants convictions that they should not be required to swear the oath. The essential point is that the court held that article 9 protects the right of the non believer as well as that of the believer. I can see no basis in principle for treating the right to hold and not to hold political beliefs differently. Article 10 of the ECHR provides that everyone has the right to freedom of expression and that this right shall include freedom to hold opinions. That must include the freedom not to hold opinions. As Professor Barendt puts it in Freedom of Speech, OUP, 2005 (2nd ed), p 94: The right not to speak, or negative freedom of speech, is closely linked with freedom of belief and conscience and with underlying rights to human dignity, which would be seriously compromised by a legal requirement to enunciate opinions which are not in truth held by the individual. Mr Husain QC has also drawn attention to some comparative jurisprudence. In his celebrated judgment in West Virginia State Board of Education v Barnette (1943) 319 US 624, 642 Justice Jackson said: If there is any fixed star in our constitutional constellation, it is that no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or other matters of opinion or force citizens to confess by word or act their faith therein. If there are any circumstances which permit an exception, they do not now occur to us. The Supreme Court upheld the challenge by Jehovahs Witnesses to the constitutionality of a state requirement that children in public schools salute and pledge loyalty to the US flag. The court held that the freedom not to speak was an integral part of the right to speak. At pp 634 635, Justice Jackson said: Nor does the issue as we see it turn on ones possession of particular religious views or the sincerity with which they are held. While religion supplies the appellees motive for enduring the discomforts of making the issue in this case, many citizens who do not share these religious views hold such a compulsory rite to infringe constitutional liberty. Similarly, Sachs J in the Constitutional Court of South Africa stated in Christian Education South Africa v Minister of Education 2000 (10) BCLR 1051, para 36: There can be no doubt that the right to freedom of religion, belief and opinion in the open and democratic society contemplated by the Constitution is important. The right to believe or not to believe, and to act or not to act according to his or her beliefs or non beliefs, is one of the key ingredients of any persons dignity. It can therefore be seen that under both international and European human rights law, the right to freedom of thought, opinion and expression protects non believers as well as believers and extends to the freedom not to hold and not to express opinions. It is true that much of the case law and commentary is on freedom of belief in the context of religion, rather than other kinds of belief (whether political, philosophical or otherwise). But I see no basis for distinguishing between the freedom to hold and express different kinds of belief here. As Sachs J said, the right to believe or not to believe is a key ingredient of a persons dignity. The right to dignity is the foundation of all the freedoms protected by the Convention. I repeat what I said in HJ (Iran) at para 113: The right to dignity underpins the protections afforded by the Refugee Convention: see Canada (Attorney General) v Ward [1993] 2 SCR 689, approving Professor Hathaway, Law of Refugee Status (1991), p 108: The dominant view, however, is that refugee law ought to concern itself with actions which deny human dignity in any key way, and that the sustained or systemic denial of core human rights is the appropriate standard. Freedom to hold and express political beliefs is a core or fundamental right. As Mr Husain says, it would be anomalous, given that the purpose of the Convention inter alia is to ensure to refugees the widest possible exercise of their fundamental rights and freedoms, for the right of the unconcerned to be protected under human rights law, but not as a religious or political opinion under the Convention. Mr Swift accepts that political neutrality is an important human right protected by the Convention, but, he submits, only if the individual is a committed political neutral and not one to whom his neutrality is a matter of indifference. This is because there is no entitlement to protection under the Convention where the interference involves matters which are only at the margins of an individuals right to hold or not hold political opinions, and not at the core of that right. There is no entitlement to protection where what is required of the applicant does not oblige him to forfeit a fundamental human right. Mr Swift, therefore, draws a distinction between a person who is a conscientious or committed political neutral (A) and a person who has given no thought to political matters because the subject simply is of no interest to him (B). He accepts that the Convention protects A from persecution, because his political neutrality is a core or fundamental human right. The HJ (Iran) principle is capable of applying to A. Refugee status may not be denied to him simply because he would pretend to support a regime in order to avoid persecution. But Mr Swift says that the HJ (Iran) principle cannot apply to B because, in his case, false support for the regime would cause interference at the margin, rather than the core, of the protected right and would not cause him to forfeit a fundamental human right. Mr Swift seeks support for the distinction, in particular, from paras 72 and 115 of HJ (Iran) to which I have referred at paras 20 and 21 above. I would reject this distinction for a number of reasons. First, the right not to hold the protected beliefs is a fundamental right which is recognised in international and human rights law and, for the reasons that I have given, the Convention too. There is nothing marginal about it. Nobody should be forced to have or express a political opinion in which he does not believe. He should not be required to dissemble on pain of persecution. Refugee law does not require a person to express false support for an oppressive regime, any more than it requires an agnostic to pretend to be a religious believer in order to avoid persecution. A focus on how important the right not to hold a political or religious belief is to the applicant is wrong in principle. The argument advanced by Mr Swift bears a striking resemblance to the Secretary of States contention in HJ (Iran) that the individuals in that case would only have a well founded fear of persecution if the concealment of their sexual orientation would not be reasonably tolerable to them. This contention was rejected on the grounds that (i) it was unprincipled and unfair to determine refugee status by reference to the individuals strength of feeling about his protected characteristic (paras 29 and 121) and (ii) there was no yardstick by which the tolerability of the experience could be measured (paras 80 and 122). As regards the point of principle, it is the badge of a truly democratic society that individuals should be free not to hold opinions. They should not be required to hold any particular religious or political beliefs. This is as important as the freedom to hold and (within certain defined limits) to express such beliefs as they do hold. One of the hallmarks of totalitarian regimes is their insistence on controlling peoples thoughts as well as their behaviour. George Orwell captured the point brilliantly by his creation of the sinister Thought Police in his novel 1984. The idea if you are not with us, you are against us pervades the thinking of dictators. From their perspective, there is no real difference between neutrality and opposition. In Gomez v Secretary of State for the Home Department [2000] INLR 549, a starred decision of the Immigration Appeal Tribunal, Dr Storey put the point well at para 46: It will always be necessary to examine whether or not the normal lines of political and administrative responsibility have become distorted by history and events in that particular country. This perception also explains why refugee law has come to recognise that in certain circumstances neutrality can constitute a political opinion. In certain circumstances, for example where both sides operate simplistic ideas of political loyalty and political treachery, fence sitting can be considered a highly political act. There is no support in any of the human rights jurisprudence for a distinction between the conscientious non believer and the indifferent non believer, any more than there is support for a distinction between the zealous believer and the marginally committed believer. All are equally entitled to human rights protection and to protection against persecution under the Convention. None of them forfeits these rights because he will feel compelled to lie in order to avoid persecution. Secondly, the distinction suggested by Mr Swift is unworkable in practice. On his approach, the question arises: how important to the individual does the right not to hold political beliefs have to be in order to qualify for protection? On a spectrum of political non belief, at one end is the person who has carefully considered matters engaging the machinery of State, government, and policy (Goodwin Gill and McAdam, The Refugee in International Law, 3rd ed (2007) p 87) and conscientiously decided that he is not interested. He may, for example, have concluded that effective political governance is beyond the ability of man and that he cannot therefore support any political party or cause. At the other end is the person who has never given any thought to such matters and has no interest in the subject. There will also be those who lie somewhere between these two extremes. Where is the core/marginal line to be drawn? At what point on the spectrum of non belief does the non belief become a core or fundamental human right? The test suggested by Mr Swift would, to say the least, be difficult to apply. Unless compelled to do so, we should guard against introducing fine and difficult distinctions of this kind. In my view, there is no justification for calling on immigration judges to apply the distinction suggested by Mr Swift. It would be likely to be productive of much uncertainty and potentially inconsistent results. Thirdly, Mr Swifts suggested distinction between core and marginal rights is based on a misunderstanding of what we said in HJ (Iran). In order to understand what Lord Rodger and I said on the issue, it is necessary first to see what was said by the New Zealand Refugee Status Appeals Authority in Refugee Appeal No 74665/03. At para 82, the Authority said that if the right sought to be exercised by the applicant is not a core human right, the being persecuted standard of the Convention is not engaged. But if the right is a fundamental human right, the next stage is to determine the metes and bounds of that right. The Authority continued: If the proposed action in the country of origin falls squarely within the ambit of that right the failure of the state of origin to protect the exercise of that right coupled with the infliction of serious harm should lead to the conclusion that the refugee claimant has established a risk of being persecuted. The same point was made at para 90. For the purpose of refugee determination, the focus must be on the minimum core entitlement conferred by the relevant right. Thus, where the risk of harmful action is only that activity at the margin of a protected interest is prohibited, it is not logically encompassed by the notion of being persecuted. The point was repeated at para 120. At paras 99, 101 and 102, the Authority gave examples of the kind of activity which were at the margin of a protected right. Prohibition on a homosexual from adopting a child on the grounds of his sexual orientation would not be persecution, because adoption of a child was well on the margin of the right enjoyed by homosexuals to live their lives as homosexuals openly and free from persecution. The same point was made in relation to (i) the denial to post operative transsexuals of the right to marry, (ii) the denial to homosexuals of the right to marry and (iii) the prosecution of homosexuals for sado masochistic acts. It was suggested that, whether or not any of these involved breaches of human rights, they could not be said to amount to persecution since the prohibited activities in each case were at the margin of the protected right. In HJ (Iran), Lord Rodger gave as another possible example the applicant who claimed asylum on the ground that he feared persecution if he took part in a gay rights march. If a person would be able to live freely and openly as a gay man provided that he did not take part in gay rights marches, his claim for asylum might well fail. At paras 114 and 115 of my judgment too, I was saying no more than that a determination of whether the applicants proposed or intended action lay at the core of the right or at its margins was useful in deciding whether or not the prohibition of it amounted to persecution. I remain of that view. The distinction is valuable because it focuses attention on the important point that persecution is more than a breach of human rights. What matters for present purposes is that nothing that was said in the Authoritys decision or by us in HJ (Iran) supports the idea that it is relevant to determine how important the right is to the individual. There is no scope for the application of the core/marginal distinction (as explained above) in any of the appeals which are before this court. The situation in Zimbabwe as disclosed by RN is not that the right to hold political beliefs is generally accepted subject only to some arguably peripheral or minor restrictions. It is that anyone who is not thought to be a supporter of the regime is treated harshly. That is persecution. For the reasons that I have given, I would reject the restrictive approach suggested by Mr Swift to the application of the HJ (Iran) principle to these cases and hold that it applies to applicants who claim asylum on the grounds of a fear of persecution on the grounds of lack of political belief regardless of how important their lack of belief is to them. The second issue: imputed political belief The principle is not in doubt that an individual may be at risk of persecution on the grounds of imputed opinion and that it is nothing to the point that he does not in fact hold that opinion. Professor Hathaway, The Law of Refugee Status (1991), pp 155 156 states: The focus is always to be the existence of a de facto political attribution by the state of origin, notwithstanding the objective unimportance of the claimants political acts, her own inability to characterise her actions as flowing from a particular political ideology, or even an explicit disavowal of the views ascribed to her by the state. In Interpreting Article 1 of the 1951 Convention Relating to the Status of Refugees, April 2001, the UNHCR summarised the relevant law well at para 25: It is now generally agreed that imputed or perceived grounds, or mere political neutrality, can form the basis of a refugee claim. For example, a person may not in fact hold any political opinion, or adhere to any particular religion, but may be perceived by the persecutor as holding such an opinion or being a member of a certain religion. In such cases, the imputation or perception which is enough to make the person liable to a risk of persecution is likewise, for that reason, enough to fulfil the Convention ground requirement, because it is the perspective of the persecutor which is determinative in this respect. The application of this principle in any given case raises questions of fact. Persecution on the grounds of imputed opinion will occur if a declared political neutral is treated by the regime (or its agents) as a supporter of its opponents and persecuted on that account. But a claim may also succeed if it is shown that there is a real and substantial risk that, despite the fact that the asylum seeker would assert support for the regime, he would be disbelieved and his political neutrality (and therefore his actual lack of support for the regime) would be discovered. It is well established that the asylum seeker has to do no more than prove that he has a well founded fear that there is a real and substantial risk or a reasonable degree of likelihood of persecution for a Convention reason: R v Secretary of State for the Home Department, Ex p Sivakumaran [1988] AC 958. I do not believe that any of this is controversial. How does it apply to the facts of these cases? The issue that is common to all these cases as regards imputed belief is whether there is a real and substantial risk that the political neutrality of the claimants would be discovered by the militia gangs and War Veterans who man road blocks even if the claimants were to dissemble and say that they support the regime. This raises two questions namely (i) whether the claimants would be likely to be stopped or face serious interrogation at road blocks at all; and (ii) if yes, whether their pretended support for the regime would be disbelieved. As regards the first question, the best evidence as to the likelihood of being stopped and interrogated at a road block is provided by RN. The AITs decision states that the militia groups and War Veterans operate in rural areas and urban districts (para 213) and across the country (para 216). The risk of persecution arises throughout the country (para 225) and people living in high density urban areas face the same risk from militias and War Veterans as those living in rural areas (para 228). But those living in more affluent low density urban areas or suburbs are likely to avoid such difficulties (para 229). If a failed asylum seeker is associated with the regime or is otherwise a person who would be returning to a milieu where loyalty to the regime is assumed, he will not be at risk simply because he spent time in the United Kingdom and sought to extend his stay by making a false asylum claim (para 230). In other words, it is only if an applicant returns to a milieu where loyalty to the regime is assumed that his claim is likely to fail at the first hurdle. As for the second question, the immigration judge would have to consider the kind of questions that the applicant might be asked when interrogated at the road block; how effective a liar the applicant would be when asserting loyalty to the regime; how credulous the interrogators would be in the face of such lies; whether the interrogators might ask the applicant to produce a Zanu PF card or sing the latest Zanu PF campaign songs and whether the applicant would be able to produce a card and sing the songs. It is difficult to see how a judge could provide confident answers to these questions. He or she would almost certainly be unable to avoid concluding that there would be a real and substantial risk that, if a politically neutral claimant were untruthfully to assert loyalty to the regime, his political neutrality would be discovered. To summarise, in the light of RN, it is difficult to see how an asylum claim advanced on the basis of imputed political opinion could be rejected, unless the judge was able to find that the claimant would return to a milieu where political loyalty would be assumed and where, if he was interrogated at all, he would not face the difficulties faced by those who were not loyal to the regime in other parts of the country. If the claimant would return to any other parts of the country, the judge would be likely to conclude that there was a real and substantial risk that a politically neutral person who pretended that he was loyal to the regime would be disbelieved. Disposal I can now turn to the disposal of all four appeals in the light of my conclusion on the two principal issues. The facts relating to RTs case are set out at paras 4 and 5 above. The Secretary of State submits that there is no basis for concluding that, if RT were required to profess loyalty to the regime, she would be forced to lie. There was no record of any evidence as to her political views. The Tribunal merely found that she had never been politically active. Mr Swift submits that she may have been a fervent (albeit inactive) supporter of the regime. But DIJ Manuell found RT to be a credible witness and that she was in a position to explain that she has never been politically involved at home or abroad (para 25). Her evidence before IJ Hussain (which was accepted) was that on her return she would be required to demonstrate loyalty to the regime, which she could not do because she is not a political person and has not supported the party (para 34). Unless she would return to a milieu where loyalty to the regime was assumed, the only way that she could avoid the risk of persecution would be to feign support for the regime. In that event, having regard to my conclusions on the application of the HJ (Iran) principle, the Court of Appeal were right to uphold her claim to asylum. It is not suggested by Mr Swift that RT would return to a milieu where support for the regime would be assumed and where she would therefore not face the risk of hostile interrogation. In these circumstances, there was no case for remitting the case to the Tribunal. I would also reach the same conclusion on the basis of imputed opinion. The facts relating to SM are set out at para 6 above. In addition to taking issue with the way in which the Court of Appeal dealt with the HJ (Iran) principle, Mr Swift submits that they appear to have ignored or misunderstood RN where it was made clear (para 241) that a bare assertion that a person will be unable to prove loyalty is not enough for a successful claim, adding that this is especially so where the applicant has been found to be incredible. At paras 23 and 24 of the decision of IJ Charlton Brown, the judge concluded that, contrary to SMs claim, she had not been linked with the MDC, that she had been able to live in Zimbabwe without problems since 2002, and that she was unable to rely on any of the risk factors identified in RN. As to this, the Court of Appeal said at para 46: At first sight this is a much less meritorious case, and one can understand the judges reaction to her failure to give credible evidence. However, it was not enough to hold that she would be willing to lie as and when required, if the reason for doing so would be to avoid persecution. Nor is willingness to lie the same as ability to prove loyalty to the regime. On the other hand, in view of her lack of credibility overall, it remains open to question whether her case should fail for lack of proof as in TM. We will therefore allow the appeal and remit the case to the Upper Tribunal for redetermination. The Court of Appeal were correct. For all the reasons stated in RN, the fact that SMs claimed support for the MDC was rejected as being incredible was not decisive. The central question is whether there was a real and substantial risk that her loyalty to the regime could not be demonstrated. In view of her lack of credibility throughout, she might have difficulty in demonstrating that she did not have loyalty to the regime. But the case should be remitted to the Tribunal for that issue to be determined in the light of RN and in the light of what I have said about the HJ (Iran) principle and the issue of imputed opinion. There is no cross appeal on behalf of SM that her claim for asylum should be recognised by this court. I would dismiss this appeal. I have set out the findings by the AIT at para 7 above. The Court of Appeal allowed AMs appeal on the ground that the immigration judge had failed to address the issue as to his ability to show his loyalty to the regime (para 52). Like SM, he had not been held to be a credible witness. For that reason, the Court of Appeal did not feel able to substitute their own conclusion for that of the judge and remitted the case to the Tribunal. The Secretary of State advances no reasons particular to AMs case (as distinct from the HJ (Iran) principle) for overturning the decision of the Court of Appeal. There is no cross appeal by AM. I would, therefore, dismiss this appeal too. The facts relating to the case of KM are set out at paras 12 to 14 above. Mr Dove QC submits that the Court of Appeal should have allowed the appeal outright and not remitted the case to the Upper Tribunal for a third hearing. I have referred at para 14 above to the two reasons given by Pill LJ for his conclusion that, although KMs case was strong, it could not be said that it was bound to succeed before the Tribunal. The first was that an applicant who had been found to be an untruthful witness would not be assumed to be truthful about his inability to demonstrate loyalty to the regime. But, as I have already said, the circumstances in Zimbabwe as described in RN mean that the fact that an applicant is lacking in credibility may be a matter of little relevance on the key question of whether he will be able to demonstrate loyalty. As for the second reason, the milieu to which KM would be returned is likely to be of marginal relevance in this case. That is because, as was conceded before the Court of Appeal, there was a real risk that the fact that KMs son had been granted asylum in the United Kingdom on account of his MDC sympathies would come out on his return to Zimbabwe (para 6 Pill LJs judgment) and that this might place him in an enhanced risk category by making it more difficult for him to demonstrate his loyalty to the regime (para 12). I can well understand why the Court of Appeal decided to remit this case to the Tribunal. But it seems to me that, in the light of the concessions to which I have referred and the fact that KMs case was therefore very strong, it would not be just to subject him to a third Tribunal hearing. Overall conclusion For the reasons that I have given, I would dismiss the appeals of the Secretary of State in the cases of RT, SM and AM and allow the appeal of KM. LORD KERR For the reasons given by Lord Dyson, with which I entirely agree, I too would dismiss the appeals of the Secretary of State in the cases of RT, SM and AM and allow the appeal of KM. The starting point in consideration of these appeals must be that the purpose of the Refugee Convention is to protect people from persecution. In the extreme, repressive and anarchic conditions which obtain in Zimbabwe, the risk of being persecuted is all too real and predictable, albeit, on the evidence currently available, the incidence of that persecution is likely to be both random and arbitrary. As a general proposition, the denial of refugee protection on the basis that the person who is liable to be the victim of persecution can avoid it by engaging in mendacity is one that this court should find deeply unattractive, if not indeed totally offensive. Even more unattractive and offensive is the suggestion that a person who would otherwise suffer persecution should be required to take steps to evade it by fabricating a loyalty, which he or she did not hold, to a brutal and despotic regime. As a matter of fundamental principle, refusal of refugee status should not be countenanced where the basis on which that otherwise undeniable status is not accorded is a requirement that the person who claims it should engage in dissimulation. This is especially so in the case of a pernicious and openly oppressive regime such as exists in Zimbabwe. But it is also entirely objectionable on purely practical grounds. The intellectual exercise (if it can be so described) of assessing whether (i) a person would and could reasonably be expected to lie; and (ii) whether that dissembling could be expected to succeed, is not only artificial, it is entirely unreal. To attempt to predict whether an individual on any given day, could convince a group of undisciplined and unpredictable militia of the fervour of his or her support for Zanu PF is an impossible exercise. But all of the foregoing is by way of incidental preamble. The truly critical question in this appeal is whether there is a right in Refugee Convention terms not to have a political opinion. Ultimately, Mr Swift was driven to accept that there is such a right but he suggested that this right can be attenuated according to the disposition of the person who espouses a strictly apolitical stance. I consider that this central proposition is fundamentally flawed. The level of entitlement to protection cannot be calibrated according to the inclination of the individual who claims it. The essential character of the right is inherent to the nature of the right, not to the value that an individual places on it. And the need for a clear insight into that critical aspect of the right is well exemplified by the situation in Zimbabwe. If an apolitical individual fails to demonstrate plausibly that he or she is a sufficiently fervent supporter of Zanu PF, he or she will be deemed to be a political opponent, irrespective of how greatly he or she cherishes the right not to hold a political view. The status of deemed political opponent, whether it is the product of imputation of political opposition or merely the arbitrary decision of those testing the degree of conviction or fervour with which support for Zanu PF is expressed, is the gateway to persecution and that cannot be dependent on whether the lack of political opinion is due to a consciously held conviction or merely due to indifference. That is why the emphasis must be not on the disposition of the individual liable to be the victim of persecution but on the mind of the persecutor. In the present appeals it is clear that the question whether the treatment that the individuals might face if returned to Zimbabwe would amount to persecution is not in issue. Quite clearly it would be. Nor is there any reason to doubt that the motivation for simulating support for the regime on their parts would be because of their desire to avoid that persecution. The only basis, therefore, on which denial of their claim to refugee status can be sustained, is that their right not to hold a political opinion lies at the lower end of the core/marginal spectrum. As Mr Dove submitted, such an argument requires to be treated extremely circumspectly. Those instances where the right was found to lie at the marginal end of the continuum all involved a measure of voluntary control over the situation in which the individual who was claiming protection found himself. That is not the position here. But, in any event, if the core/marginal dichotomy has any relevance whatever, it is in making an assessment as to whether the species of infringement strikes at the essence of the right or merely at a less important aspect of it. For the reasons that Lord Dyson has given, it appears to me that the infringement is quintessentially a violation of the central core of the right not to hold a political opinion.
+The flags protest, as it has become known, took place throughout Northern Ireland in late 2012 and early 2013. The series of demonstrations and marches that the protest involved presented the Police Service with enormous, almost impossible, difficulties. They strove to deal with those difficulties by using different policing techniques and strategies; responding to intelligence reports; considering representations made by community leaders; continuously re evaluating their decisions; and consulting interested parties who might contribute to the resolution of the problems caused by the protests. They also recorded the deliberations that they undertook and the consultations that they held within the Police Service. A great many police officers were deployed to police the demonstrations and marches. A considerable number of them sustained injuries. Assiduous detection of offenders and their prosecution continued throughout this unhappy time. There can be no reasonable suggestion, therefore, that the police failed to treat the control of parades and demonstrations with sufficient seriousness. They were obviously exercised at an early stage, and throughout the period when the parades and the disorder took place, to seek to control the marches and to minimise the disorder to which they gave rise. It is also clear that police were constantly concerned about the risk of greater disorder occurring with the consequent risk to life which might accrue if they tried to prevent the parades from taking place altogether, rather than policing and controlling them as best they could. This case is not about the sincerity and authenticity of the efforts made by police to control the parades. It is about their conception and understanding of the powers available to them to do so. The various managerial and strategic steps undertaken by the police and the tactical decisions made on foot of them reflect the standards required of and the demands made on a modern police force. It is also, of course, necessary for a police force in our society to have a proper understanding of the extent of the legal powers available to them in order to discharge their duties effectively and fairly in service of the community. The question whether the Police Service for Northern Ireland (PSNI) was sufficiently aware of the full range and scope of those powers is now the principal issue in this appeal. This was not always the position. Application for leave to apply for judicial review was first made on 31 January 2013. Its primary focus was on obtaining relief in relation to a planned parade on 2 February and challenging the failure of PSNI to give assurances that they would take action to prevent that parade from taking place. The statement served in support of the application under Order 53 of the Rules of the Court of Judicature of Northern Ireland (1980) did, however, contain the claim that the failure of PSNI to prevent the parade had the effect of undermining the Public Processions (Northern Ireland) Act 1998 and that it constituted a breach of their obligations under section 32 of the Police (Northern Ireland) Act 2000. As the case progressed and the reasons that the police had not taken action to stop various parades became clear, the emphasis has shifted to an attack on PSNIs failure to recognise and make use of legal powers available to it to prevent the parades from taking place. It is still argued that that failure has undermined the efficacy and proper functioning of the 1998 Act. It is also claimed that the operational decisions of the police have not been proportionate. But these latter arguments have featured somewhat less prominently in the appellants presentation of his appeal before this court. The application for judicial review had also sought orders against the Secretary of State for Northern Ireland for failing to exercise her powers under section 11 of the 1998 Act to prohibit the holding of the procession. That particular application was dismissed. There is no appeal from that dismissal and nothing more need be said about it. The historical setting For a number of years before 1998, considerable public disorder and community conflict were regular features of many contentious parades in Northern Ireland. Until the enactment of the 1998 Act, the police were responsible for deciding whether parades should be permitted to proceed. This placed them in a wholly invidious position. Their impartiality was questioned and they were accused of taking sides both in permitting some parades to proceed and banning others. It was against this background that a report was commissioned by the government into what should be done about the management and control of public processions in Northern Ireland. The chairman of the body which produced the report was Dr Peter North and the report has become known as the North report. Some details about the recommendations which the report contained are given at paras 45 49 below. The 1998 Act created a new public body, the Parades Commission. The commission was charged under section 8 with the function of controlling parades by means of conditions regulating their conduct, imposed on those who organised them. The commission did not have power to prohibit a procession. The Secretary of State did have such a power under section 11, on specific grounds, but it has never been exercised. A key part of the scheme of the 1998 Act was that control of parades would be achieved by conditions imposed by the commission. In order for that vital element to work, a statutory duty (section 6(1)) was placed on those proposing to organise a public procession to give advance notice of that proposal to a member of the police force. By section 6(7) it was made a criminal offence to organise or to take part in a public procession which had not been notified. It was also an offence to fail to comply with any conditions imposed. None of the flags parades in Belfast was notified to the commission. Under the general law the police have a duty to prevent the commission of offences. That fundamental duty of the police, inherent at common law, is expressly confirmed by section 32 of the 2000 Act. There was power, therefore, to prevent a parade from taking place on the grounds that it was likely to result in public order offences. But under the 1998 Act there was also power to prevent the commission of the offence of processing in an un notified parade. The complaint which is made of the police in the present case is that they were conscious of the first of those powers, but they did not properly appreciate the existence and significance of the second. The factual background Until 3 December 2012 the Union flag flew over Belfast City Hall throughout the year. On that date the City Council decided that the flag should fly on certain designated days only. That decision sparked a wave of protests throughout Northern Ireland which continued for some months. The present appeal is concerned with those protests which took place in Belfast and the policing operations that were undertaken to deal with them. After 3 December 2012, the protests in Belfast quickly took on a pattern. Every week, protesters marched from a meeting point in East Belfast to Belfast City Hall which is located in the centre of the city. That route took them through part of the city known as Short Strand. Most residents in the Short Strand area are perceived to be nationalist. Those taking part in the processions were loyalists. When the protesters who had processed from East Belfast assembled at the City Hall, they were joined by others who had found their way to the city centre by other means. Some at least of these others joined the protesters from East Belfast on the march back after the protest. Considerable numbers were involved in the parade which passed through the Short Strand on its return to East Belfast, therefore. There was substantial violence and disorder as the parade went through that nationalist area. Sectarian abuse was directed at the residents of Short Strand; stones and other objects were thrown at them; and their homes were attacked. The appellant is a resident in Short Strand and his and his neighbours homes have come under attack during the parades that took place during December 2012 and January 2013. On 4 December 2012 an initial decision was made that protesters should not be permitted to enter Belfast city centre on Saturday 8 December when, as police knew, a protest at the City Hall was planned. That decision had nothing to do with stopping a parade or march. It was taken because it was considered necessary to prevent disorder. It was felt that the normal life of the city centre should be maintained because of the number of families and other members of the public who would be gathered there at a peak retail period. The reputation of the city at a time when inward investment was being encouraged was also a consideration. In the period between 6 and 8 December police reflected on this decision. That reflection led to a change of mind. In an entry of 7 December 2012 in an Event Policy Book maintained by PSNI, the change in decision was explained. It was considered that there was a need to try and facilitate some form of protest at Belfast City Hall to allow for some venting of anger and [relief of] community tension on this issue. The parades therefore began on 8 December 2012 and, as earlier noted, quickly developed into a weekly pattern. They continued until March 2013. Social media alerted those who wished to participate of their timing and organisation. Until March 2013, police took no action to stop them. The affidavit evidence of Assistant Chief Constable Kerr Soon after it had begun, a police strategy to deal with the flags protest was devised. This was called Operation Dulcet and its leader, designated Gold Commander, was Assistant Chief Constable Will Kerr of PSNI. Chief Superintendent Alan McCrum was appointed Silver Commander. In a series of affidavits filed in these proceedings, Mr Kerr has described how the police developed and implemented plans to deal with the protest. In the first of these he suggested that police have no specific power to ban a procession under the relevant legislation. He stated that PSNI seeks to enforce conditions imposed by the Parades Commission or a prohibition order by the Secretary of State for Northern Ireland. Such an order may be made by the Secretary of State under article 5(1) of the Public Order (Northern Ireland) Order 1987 (SI 1987/463 (NI 7)) in respect of open air public meetings. Significantly. Mr Kerr stated that in the absence of either a Parades Commission determination or prohibition from the Secretary of State, PSNI can only have recourse to general public order policing powers. Having referred to a statement issued by the Parades Commission on 22 February 2013 (in which, among other things, the commission said that the event in East Belfast had not been notified). Mr Kerr made the following statements in paras 21 and 22 of his affidavit: 21. This being the case and there having been no determinations upon any of protests which have taken place close to the Short Strand area, the PSNI have had to police the situation in line with their powers outside of the statutory scheme contained in the [Public Processions (Northern Ireland) Act 1998]. 22. PSNI also have regard to our general functions as contained in Section 32 of the Police (NI) Act 2000 (the P(NI)A) wherein the general duties of the police are set out ie to protect life and property, to preserve order, to prevent the commission of offences and, where an offence has been committed, to take measures to bring the offender to justice. Human Rights considerations are included in decisions made in respect of public order issues such as have arisen during the flag protests. This includes but is not necessarily limited to article 2 Rights (Life) wherein public order disturbances can put this right at risk along with the article 8 Rights (Private Life) of persons in the community and the article 11 Rights (Assembly) of the protesters. The interaction between these competing rights and the status of article 8 and 11 rights as being qualified are all taken into account when operational decisions are being made. Later in the same affidavit Mr Kerr said that where a public procession is not notified under the Public Processions (Northern Ireland) Act 1998, those organising the parade committed an offence under the Act. Tellingly, however, he continued, The role of PSNI in such situations is to collect evidence of such offences and refer them to the prosecuting authorities while also employing public order and common law powers to keep the peace para 39. In a second affidavit, Mr Kerr said that PSNI had consistently held the view that parades can be stopped but not solely because they are unnotified. In February 2013, a change in police policy in relation to the flag protests and in particular the marches coming from and returning to East Belfast occurred. Mr Kerr explained how this came about in para 17 of his second affidavit: the CNR On the 14th of February, as part of the ongoing strategy review, several changes were adopted, one was in respect of the protests processing into the city centre and the other regarded the charging policy The considerations resulting in the decision to stop the unnotified parade included the fact that protests were continuing although with lower numbers, the views of [Catholic/Nationalist/Republican] community that the protests should be stopped, the wider attitude in the PUL [Protestant/Unionist/Loyalist] community that the protests had run their course and the likely reaction from Loyalists would not be extreme as had been the case in or around the 6th of December. In addition, the wish to have a break in time between the protests and the main marching season, the lack of any proper structure in the protests groups whereby an agreed cessation could be settled, the resource considerations in terms of our ability to manage and contain any problems associated with stopping the protests and the impact upon the residents of the Short Strand of the ongoing protests. It should also be noted that what he described as the article 2 risks weighed heavily with ACC Kerr in deciding to permit protestors in the city centre. In an affidavit he said: Between the 6th of December and the 8th of December, the decision not to permit flag protestors to move into the city centre was changed. The rationale for this change was that risks associated with doing so were too great. The intelligence at the time informed us that had we stopped the protests from going into the city centre that the risk to life posed by the resultant disorder and violence posed too great an article 2 risk. The Service Procedure and the Event Policy Book PSNI maintains a service procedure which gives guidance for dealing with public processions and protest meeting applications. It is also intended to provide advice on the interaction between the Parades Commission and PSNI. The service procedure was issued on 31 March 2008 and amended and reissued on 9 June 2011. An event is defined in the procedure as including any event or incident ranging from routine operational policing through to major disorder requiring a degree of planning. When an event has been notified or the police become aware of an intended event, a strategy meeting is held. At the first such meeting an Event Policy Book is opened. Strategic decisions concerning the way in which an event is policed should be recorded in this book. These include major decisions which have an impact on an established strategy; major tactical decisions; any change in strategy; and any issue or decision which may have legal consequences not already addressed in the strategy plan. Between 4 December 2012 and 30 April 2013, no fewer than 67 decisions were taken as to how the parades and the associated disorder would be policed. A record of each of the decisions taken and the reasons for them was made in the Event Policy Book. We were referred to several of these. It is not necessary to advert to more than a few of them. On 6 December 2012 Mr Kerr, in an email to police colleagues about the movement of groups of protesters from various parts of the city towards Belfast City Hall, referred to the rights and presumptions (sic) to peaceful protest, outlined in articles 9 to 11 of ECHR. He pointed out that these were not absolute rights and that the degree of disorder experienced during protests on earlier evenings justified preventing known groups of protesters (from either community) from entering Belfast city centre. This was cited as an example of Mr Kerrs appreciation that the police were entitled to stop unnotified processions or parades. It is plainly not that. To the contrary, the entire tenor of the email is directed towards the public order powers of the police to prevent disorder even where that takes place under the guise of the right to protest. The record of decision appearing in the Event Policy Book of the same date to the effect that a Gold Direction was issued to prevent large numbers of protesters moving towards the city centre prompts the same conclusion. It does not address the question of parades at all, much less the legal powers of police to stop them. A change to the Gold Strategy was introduced in January 2013. This had two aspects: more proactive engagement with protest groups so as to convey to them that blocking the road was against the law; and avoiding the public impression that police were doing nothing. Again, no reference was made to the circumstance that participating in an unnotified parade was a criminal offence and that, where such an event was reasonably apprehended, the police had powers to prevent it. In January 2013, representations were received by PSNI from local representatives of the Short Strand area in which it was suggested that police were facilitating illegal parades. As is clear from the record of decision in the Event Policy Book of 22 January 2013, instead of prompting PSNI to examine its legal powers to stop an unnotified parade, this led to a discussion between ACC Kerr and the Chief Constable that the appropriate means and mechanism to determine how the Public Processions (Northern Ireland) Act should be complied with was for PSNI and the Parades Commission to seek legal advice. It had been agreed between the chairman of the commission and Mr Kerr on 15 January 2013 that both sides should take advice. A letter from Chief Superintendent McCrum to the chairman of the commission on 19 January 2013 stated that un notified processions that had been occurring every Saturday were likely to continue and that the commission might wish to take legal advice as to whether it should be considering these in line with the Public Processions (Northern Ireland) Act 1998. This was followed up by a letter in much the same terms on 23 January. On 12 February 2013 Mr Kerr and another senior police officer met a member of the Legislative Assembly of Northern Ireland who expressed concern about police decisions to facilitate the weekly parade past Short Strand. The Event Policy Books record of this meeting is to the effect that there were policing challenges in dealing with these events, Human Rights Act considerations and gaps in the Public Procession legislation. On 13 February 2013, a record was made that Mr Kerr was considering whether judicial review proceedings should be brought on behalf of PSNI in order to obtain clarity on powers under the Public Processions Act. It was suggested that a judicial review application might act as a catalyst to have weak legislation reviewed and possibly amended. On 14 February 2013 the Events Policy Book recorded for the first time discussion of stopping the parade. Even then, there was no reference to police powers to stop a parade which, because it had not been notified, was illegal. Indeed, it referred to the absence of a legislative (regulatory) fix under the Public Processions (Northern Ireland) Act. ACC Kerrs press interview On 16 February 2013, a local paper, the Irish News, published a report of an interview which one of its journalists had had with Mr Kerr on 14 February. An incomplete transcript of the interview and handwritten notes made by PSNI staff are available. In the course of the interview, Mr Kerr is recorded as saying that a difficulty with the Public Processions Act was that it was predicated at least in part that everybody will consent to being regulated by that means [and] if some people decide that they dont want to be regulated by those means it leaves a gap and that gap at the minute is defaulting to policing and we dont find that acceptable. Later in the interview Mr Kerr said that there was no such thing as an illegal parade under the Public Processions Act, it doesnt exist. He also said that the police had no power to stop an illegal parade under the Public Processions Act, the offence is taking part in an un notified parade. On the contact between the police and the Parades Commission the Assistant Chief Constable said that they had written to the commission in the hope that it would take responsibility for dealing with the parade. The situation was legally complex and that police would welcome some judicial clarity on what exactly the Public Processions Act allowed people to do. The principal concern of the police was not to be placed in the position of having to decide whether a parade should be permitted to take place because they could only make the decision based on a risk or threat to life. The proceedings The application for judicial review generated a substantial number of affidavits. Apart from those of Assistant Chief Constable Kerr, the most significant of these relate to exchanges between police and a local Sinn Fein councillor, Niall ODonnghaile. His council area includes Short Strand. He wrote to Chief Superintendent McCrum on 8 January 2013 asking for information about notification of the parades. He also inquired about the action PSNI intended to take in the event that no notification had been given. In his response of 19 January Mr McCrum confirmed that no notification of the parades had been received. In relation to the action to be taken by PSNI, he said this: As regards the responsibility of PSNI to ensure that parades and protests which have previously resulted in disorder do not occur again, it is important to remember that PSNI do not authorise parades or protests. I am sure you will agree with me that it would be inappropriate in a democratic society for the police to determine when people can protest. However, it is important that the police take all feasible steps to maintain order and PSNI are committed to continuing to do so. Again, as in the affidavits of ACC Kerr, no reference was made to the fact that, by reason of the illegality of the parades under the 1998 Act, the police could resort to common law powers and the statutory duty arising under section 32 of the Police (Northern Ireland) Act 2000 to stop them from taking place. The emphasis was, as before, on the maintenance of order. In a careful and comprehensive judgment, [2014] NIQB 55, Treacy J reviewed the relevant provisions of the 1998 Act; he referred to section 32 of the Police (Northern Ireland) Act 2000 which provides, among other things, that it is the general duty of police to prevent the commission of crime; and he considered the powers of arrest at common law referred to in article 26 of the Police and Criminal Evidence (Northern Ireland) Order 1989 (SI 1989/1341 (NI 12)) to prevent an imminent breach of the peace. The judge also painstakingly examined all the evidence in the case, and in much greater detail than I have considered necessary for the purposes of the appeal. He summarised the appellants submissions in a series of propositions. A simple paraphrase of those may be expressed thus: In failing to stop the weekly parades, PSNI had undermined the 1998 1. Act; 2. The police had been wrong to conclude that they did not have power to stop the parades; 3. ACC Kerr had misunderstood the qualified nature of article 11 of ECHR; 4. The attacks on the appellants home engaged his right under article 8 of ECHR. The state (in the form of its police force) had failed to discharge its positive obligation to protect him from unjustified interference with that right; 5. Operational decisions taken by PSNI were not immune from challenge on the basis that they were taken within an area of discretionary judgment since that had been wrongly informed by the belief that there was no power to stop the parades; and 6. Operational discretion does not, in any event, provide an automatic and blanket immunity H v Commissioner of Police for the Metropolis [2013] EWCA Civ 69; [2013] 1 WLR 3021. The circumstances of the present case were quite different from those of E v Chief Constable of the Royal Ulster Constabulary [2009] AC 536 where the appellant had to surmount the high hurdle of showing that there was a positive obligation to prevent article 3 ill treatment. Furthermore, unlike the position in the present case, there was a substantial body of evidence in E v Chief Constable of the Royal Ulster Constabulary that policing the operation in that case differently might have led to an extension of the protest to other locations and resulted in a risk to lives of other civilians. Treacy J concluded that, in the period between 8 December 2012 and January 2013, ACC Kerr did not consider the option of stopping the weekly parades. PSNI did not behave in a proactive manner to arrest and prosecute those who were organising and participating in the parades. When he did come to consider police action to stop them, Mr Kerr wrongly believed, the judge held, that he was inhibited from doing so by the 1998 Act. The police officer was labouring under a material misapprehension as to the proper scope of police powers and the legal context in which they were operating. para 127 of the judgment. The judge further found that no evidence had been presented to him as to why police had repeatedly permitted violent loyalist protesters to participate in illegal marches both to and from Belfast City Centre on every Saturday between 8 December and 14 February para 122 of his judgment. The judge found that a failure to notify the Parades Commission of an intended parade invests the police with powers to prevent it from taking place. These were equivalent to the powers available to police when parade organisers and participants arrange and take part in parades where conditions imposed by the Parades Commission had not been observed para 134 of his judgment. ACC Kerrs purported distinction between the two scenarios was unsustainable, the judge said. Whether a parade was unlawful by reason of breach of a Parades Commission determination or because of a decision to flout the notice requirement, should not have led to a different police response. In each case the expectation is that the police will seek to uphold the rule of law. para 135. The consequence of the polices failure to appreciate the extent of their powers to deal with the criminal offences of organising and participating in non notified parades had the effect, in the estimation of the judge, of undermining the 1998 Act; it had led to a failure on the part of the police to act in accordance with their obligations under section 32 of the Police (Northern Ireland) Act 2000 and it gave rise to a violation of the appellants article 8 rights para 137 of the judgment. The Court of Appeal (Sir Declan Morgan LCJ, Girvan LJ and Weir J [2014] NICA 56) allowed the Chief Constables appeal against the judgment of Treacy J. The Lord Chief Justice, delivering the judgment of the court, also carefully rehearsed the evidence about the various parades and the action taken by police in relation to them. He quoted from a letter of 31 January 2013 sent by PSNI to the appellants solicitors in response to their pre action protocol correspondence. In it the police had said: Professional policing decisions dealing with public order issues are extremely complicated and require the balancing of a wide range of competing interests. As recognised by the European Court of Human Rights in its decision on the admissibility in PF and EF v United Kingdom (23 November 2010) to require the police in Northern Ireland to forcibly end every violent protest would likely place a disproportionate burden on them, especially where such an approach could result in the escalation of violence across the province. In a highly charged community dispute, most courses of action will have inherent dangers and difficulties and it must be permissible for the police to take all of those dangers and difficulties into consideration before choosing the most appropriate response. At para 34 of the judgment the Lord Chief Justice said that the central issue in the case was whether the police response to the parades was based on the need to take account of the possibility of violence and disorder giving rise to article 2 risks both in the immediate vicinity and in the wider Northern Ireland community. For reasons that I will give presently, I do not consider that this was in fact the central issue in the appeal. Having taken this as the starting point, the judgment proceeded to examine the operational decisions taken by the police. This examination was conducted against the backdrop of the decision of the House of Lords in E v Chief Constable of the Royal Ulster Constabulary [2008] UKHL 66; [2009] AC 536 in which Lord Carswell, drawing on the judgment of the European Court of Human Rights in Osman v United Kingdom (1998) 29 EHRR 245, alluded to the many practical difficulties that confronted police in dealing with protests and making arrests in situations of riot or near riot. Having referred to Lord Carswells opinion on this question, the Lord Chief Justice stated that the same approach should be taken by the Court of Appeal in considering the police conduct in this case. It should also be borne in mind that section 32 of the 2000 Act did not impose a requirement to intervene on every occasion when a crime was being committed. The police had, he said, a wide area of discretionary judgment as to how they should respond para 41 of the judgment. In relation to Treacy Js conclusion that ACC Kerr had not addressed the question of whether to stop the weekly parade, the Lord Chief Justice said that strategy documents indicate that there was ongoing consideration of the manner in which this situation, which at that time extended throughout Northern Ireland, should be managed. para 46. Commenting on the judges view that ACC Kerr wrongly felt himself inhibited by the 1998 Act from taking action to stop the parades, the Lord Chief Justice suggested that this conclusion was based on two, essentially misconceived, considerations. The first was that Mr Kerr had said, when interviewed by the Irish News, that he had no power to stop an unnotified parade; the second was that the assistant chief constable had sought to encourage the Parades Commission to take action in relation to the parades para 49. Dealing with the first of these reasons, the Lord Chief Justice said (at para 47 of the judgment): The interview on which the article was based explored a number of aspects of the unnotified parades. ACC Kerr sought to promote the primacy of the Parades Commission in the regulation of all parades. He indicated that police did not want to find themselves in the situation they were in prior to the 1998 Act. It was against that background that he noted that police did not have power to stop an illegal parade under the 1998 Act. He was correct about that. Such power lay only with the Secretary of State. He noted that the offence under the Act was taking part in an unnotified parade. That again was correct. He went on to indicate that police were faced with having to make decisions about the appropriate response to such parades on the basis of a risk or threat to life. We do not consider that any criticism can be made of that. The difficulty with this passage is that it does not address the point that Treacy J had made. This was that, because ACC Kerr had not adverted to the provision in the 1998 Act which made it illegal to organise or participate in an unnotified parade (section 6(7)), and had failed to recognise that this provided police with the power (and, indeed, the duty under section 32 of the 2000 Act) to prevent this particular species of criminal activity, the option of stopping the parade for that reason was not considered. Contrary to what the Lord Chief Justice said, the police did have power to stop an unnotified parade precisely because participating in such a parade was a criminal offence. Police have common law powers to prevent crime, quite apart from their duty to do so under section 32. The Lord Chief Justice said, in para 48, that ACC Kerr had initially decided to prevent the parade coming into the centre of Belfast which itself was an indicator that he recognised his power to stop it. As pointed out in para 23 above, however, a proper understanding of what was said by Mr Kerr in his email of 6 December 2012 and the entry in the Event Policy Book of the same date, leads inevitably to the conclusion that the police were not exercised about the question of stopping a parade at all. Their concern was to prevent disorder in Belfast city centre and to stop protesters converging there. Discussions about the tactical approach did not take place in the context of an anticipated parade. On the second reason for the judges conclusion (the attempt by ACC Kerr to engage the Parades Commission to deal with the unnotified parades), the Lord Chief Justice said this at para 49: [Mr Kerr] hoped to persuade [the commission] that there was some mechanism by which they could become involved in the determination of the action to be taken in respect of such parades. That certainly was the intention of the North Committee. It is, however, agreed that there is no mechanism by which the Parades Commission can take decisions for unnotified parades. The management of such parades is the responsibility of the police on the basis of their general public order powers and their obligation to prevent crime including crimes under the 1998 Act. Again, this does not deal directly with the judges consideration of the issue. Treacy J had raised the question (in para 129 of his judgment) of Mr Kerr having suggested that the Parades Commission take responsibility when, given that the commission had no role because of the lack of notification about the parades, the only agency that had the legal authority to stop the parade was PSNI. The circumstance that it had been the intention of the North Committee that the Parades Commission should be involved in the regulation of non notified parades is not relevant to ACC Kerrs attempt to persuade the Parades Commission to do what legally it could not. Trying to get the commission to intervene betokened a failure on the part of Mr Kerr to understand that it was the police, not the commission, who had responsibility under the law to prevent the parades from taking place. In para 52 of the Court of Appeal judgment it is stated that that court had seen a transcript of the interview of ACC Kerr by the Irish News and that this was not available to Treacy J. In the same para it is also suggested that the Court of Appeal had been taken through the police strategy documents and the Events Policy Book in greater detail than had been opened to the trial judge. Ms Quinlivan QC, who appeared for the appellant, disputed both those statements. It is not possible to assess how detailed was the consideration before the judge of the various strategy documents etc. But it is abundantly clear (and not disputed by Mr McGleenan QC for the respondent) that the judge had seen the transcript of the interview. Indeed, he quoted from it in para 73 of his judgment. The Court of Appeal concluded that the 1998 Act had not been undermined by the decisions and actions of the police in relation to the parades. It also decided that the steps taken by the police to protect the article 8 rights of the appellant and other residents of Short Strand were proportionate. The North report In August 1996 the government commissioned an independent review of contentious parades and marches in Northern Ireland. As earlier noted, the body convened to conduct the review was chaired by Dr Peter North and its report, published in January 1997, has become known as the North report. The Public Processions (Northern Ireland) Act 1998 implemented the report, although not all of its recommendations found their way into the legislation. Before the 1998 Act police had responsibility for imposing conditions on public parades. Article 3(1) of the Public Order (Northern Ireland) Order 1987 required a person proposing to organise a public procession to give seven days written notice of that proposal to the police. Article 4 of the 1987 Order provided: (1) If a senior police officer, having regard to the time or place at which and the circumstances in which any public procession is being held or is intended to be held and to its route or proposed route, reasonably believes that it may result in serious public disorder, serious (a) damage to property or serious disruption to the life of the community; or (b) the purpose of the persons organising it is the intimidation of others with a view to compelling them not to do an act they have a right to do, or to do an act they have a right not to do, he may give directions imposing on the persons organising or taking part in the procession such conditions as appear to him necessary to prevent such disorder, damage, disruption or intimidation, including conditions as to the route of the procession or prohibiting it from entering any place specified in the directions. The North report concluded that a new independent body was required which would replace the police as the organisation to decide whether a parade would take place and, if so, under what conditions. The report was not solely concerned with the identity of the body that would take decisions about whether parades should be permitted to take place and under what conditions they ought to be allowed to proceed. Public order considerations, which were intrinsic to the operation of the police powers to control processions under the 1987 Order, were no longer to be the sole driver for determining whether and in what circumstances parades should be permitted to take place, although the report did recommend that the police should retain the power to intervene on public order grounds in the extreme circumstances of the determination of the Parades Commission being defied Chapter 12 para 12.124 of the report. Generally, however, the report considered that putting emphasis on the question whether a particular parade might cause disorder ran the risk of rewarding threats that such disorder would take place. New criteria were required which should include the need to have regard to the impact that a parade would have on relationships within the community. The North report envisaged that parades should come to the Parades Commissions attention in any one of three ways first on referral by the police; second on the initiative of the commission itself; and third as a result of public representation Chapter 12 paras 12.55 et seq. As it happened, however, the structure of the 1998 Act did not cater for the commission having power to make determinations in relation to processions unless the police had been notified of a parade and had sent a copy of the notice to the commission thereby triggering their powers. The Public Processions (Northern Ireland) Act 1998 The Parades Commission was established by section 1 of the 1998 Act. Its functioning in relation to controlling public processions depends on receipt of a notification of an intention to hold a parade. Section 6(1) of the Act provides that a person proposing to organise a public procession shall give notice of that proposal to a member of the police force; within a stipulated period (section 6(2)); in a prescribed form (section 6(3)); and providing certain specified information (section 6(4)). By virtue of section 6(6) the Chief Constable is to ensure that the Parades Commission is provided with a copy of the notice immediately. Section 6(7) makes it an offence to organise or take part in a procession that has not been notified. It provides: (7) A person who organises or takes part in a public procession (a) section as to notice have not been satisfied; or in respect of which the requirements of this (b) which is held on a date, at a time or along a route which differs from the date, time or route specified in relation to it in the notice given under this section, shall be guilty of an offence. Section 8 gives the commission powers to impose on persons organising or taking part in a proposed public procession such conditions as it considers necessary. These may include conditions as to the route of the procession and prohibiting it from entering any place. Section 9 gives the Secretary of State power to review a determination by revoking or amending it. Section 11 empowers the Secretary of State to ban processions in certain circumstances. This provision has not been invoked during the life of the commission. Although article 4(1) of the 1987 Order was repealed by the 1998 Act, the recommendation that had been made in the North report that police should retain the power to intervene on public order grounds if the determination of the Parades Commission was defied, was not implemented. This does not mean, of course, that the police could not have recourse to common law powers to stop a parade in order to prevent disorder and to the duty under section 32 of the 2000 Act in order to avert the criminal offence of participating in an unnotified parade contrary to section 6(7) of the 1998 Act. The Court of Appeal in para 19 of its judgment (perhaps in contrast to its later statement in para 47 see para 41 above) acknowledged that these powers were available to PSNI but considered that the incomplete enactment of the North report created a particular difficulty for the police: The North Report recognised that under its proposals there would still remain that cohort of parades that were last minute or unforeseen. It considered that in those circumstances the parades should be controlled by police using their public order powers. The problem for police, which the circumstances in this case demonstrate, is that the partial implementation of the North Report has left a larger cohort of parades outside the Parades Commissions jurisdiction. In particular, the PSNI have to deal with unnotified parades using their available public order powers including the right of arrest in respect of the organisation or participation in such parades and the prevention of such unlawful parades in accordance with the duty under section 32 of the 2000 Act to prevent crime. It is not clear why this should be regarded as a particular problem, at least in terms of police operational decisions. When the correct legal position is understood, namely that the police have power to stop parades to prevent disorder and to pre empt breach of section 6(7) of the 1998 Act, the police strategy and tactics in exercising those powers would have been similar, if not identical, to those which they would deploy to prevent a parade from proceeding in a manner which did not comply with a determination of the Parades Commission. Neither situation called on the police to form a judgment as to whether a parade should take place. What was required of them in both instances was a decision as to whether the parade was taking place legally. If it was not, either because it did not comply with a determination of the commission or because it had not been notified, their powers were, to all intents and purposes, the same. And the operational decisions should not have been any different, or, at least, certainly not on account of the fact that each parade contravened the law in different ways or that the source of the power of the police to stop the parade arose from different sections of the 1998 Act. Article 11 of the European Convention on Human Rights Article 11 of the European Convention on Human Rights and Fundamental Freedoms (ECHR) provides: 1. Everyone has the right to freedom of peaceful assembly and to freedom of association with others, including the right to form and to join trade unions for the protection of his interests. 2. No restrictions shall be placed on the exercise of these rights other than such as are prescribed by law and are necessary in a democratic society in the interests of national security or public safety, 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. This article shall not prevent the imposition of lawful restrictions on the exercise of these rights by members of the armed forces, of the police or of the administration of the State. ACC Kerr clearly regarded what he described as the interaction between articles 8 and 11 of ECHR as important see para 17 above. He also considered that it was significant that both were qualified rights. During his interview with the Irish News he had said: The European Convention makes it very clear that there is a right to peaceful assembly under article 11 of the European Convention and the reasons it gets slightly confusing sometimes is that the European Convention is explicitly clear the Police Service has a responsibility to facilitate peaceful protests even if it is technically unlawful and thats where it takes us in to the space of confusing rights. In Eva Molnar v Hungary (Application 10346/05) the European Court of Human Rights (ECtHR) considered a complaint that the applicants rights under article 11 had been infringed by police dispersing a peaceful demonstration in which she had participated merely because prior notification of the protest had not been given. At paras 34 38 ECtHR said this: 34. The Court observes that paragraph 2 of article 11 entitles States to impose lawful restrictions on the exercise of the right to freedom of assembly. The Court notes that restrictions on freedom of peaceful assembly in public places may serve the protection of the rights of others with a view to preventing disorder and maintaining the orderly circulation of traffic. 35. The Court reiterates that a prior notification requirement would not normally encroach upon the essence of that right. It is not contrary to the spirit of article 11 if, for reasons of public order and national security, a priori, a High Contracting Party requires that the holding of meetings be subject to authorisation (see Nurettin Aldemir v Turkey, nos 32124/02, 32126/02, 32129/02, 32132/02, 32133/02, 32137/02 and 32138/02 (joined), para 42, 18 December 2007). 36. However, in special circumstances when an immediate response might be justified, for example in relation to a political event, in the form of a spontaneous demonstration, to disperse the ensuing demonstration solely because of the absence of the requisite prior notice, without any illegal conduct by the participants, may amount to a disproportionate restriction on freedom of peaceful assembly (see Bukta, cited above, paras 35 and 36). It is important for the public authorities to show a certain degree of tolerance towards peaceful gatherings if the freedom of assembly guaranteed by article 11 of the Convention is not to be deprived of all substance (see Nurettin Aldemir, cited above, para 46). 37. Nevertheless, in the Courts view, the principle established in the case of Bukta cannot be extended to the point that the absence of prior notification can never be a legitimate basis for crowd dispersal. Prior notification serves not only the aim of reconciling, on the one hand, the right to assembly and, on the other hand, the rights and lawful interests (including the right of movement) of others, but also the prevention of disorder or crime. In order to balance these conflicting interests, the institution of preliminary administrative procedures is common practice in member states when a public demonstration is to be organised. In the Courts view, such requirements do not, as such, run counter to the principles embodied in article 11 of the Convention, as long as they do not represent a hidden obstacle to the freedom of peaceful assembly protected by the Convention (see Balcik v Turkey, no 25/02, para 49, 29 November 2007). 38. The Court therefore considers that the right to hold spontaneous demonstrations may override the obligation to give prior notification to public assemblies only in special circumstances, namely if an immediate response to a current event is warranted in the form of a demonstration. In particular, such derogation from the general rule may be justified if a delay would have rendered that response obsolete. ACC Kerrs belief that PSNI was obliged by article 11 of ECHR to facilitate peaceful protests even if they were technically illegal was therefore misplaced. ECtHR has made it clear that, in general, a requirement to notify an intention to hold a parade and a decision to disperse a parade or protest which has not been notified will not infringe article 11. There was no warrant for allowing article 11 considerations to determine how these parades should be policed. Ms Quinlivan submitted that the 1998 Act occupies the field for virtually all planned demonstrations in Northern Ireland. She also claimed that, in relation to protests such as involved in the parades here, the vital ingredient of spontaneity (which might absolve organisers of the need to notify) was missing. In both propositions she is clearly right. The 1998 Act is the considered response of Parliament to the intractable problem of parades in Northern Ireland. Fundamental to its successful operation is the requirement that there be notification of parades, especially those which are likely to be contentious or to provoke disorder. The parades in this case were far from peaceful. The police had no obligation to facilitate them. To the contrary, they had an inescapable duty to prevent, where possible, what were plainly illegal parades from taking place and to protect those whose rights under article 8 of ECHR were in peril of being infringed. Meeting those obligations had to be tempered by operational constraints, of course. Stopping the parades without taking account of what further violence that might provoke was not an option. But the operational difficulties required to be assessed in the correct legal context. PSNI had to have a clear sighted appreciation of their available powers and an equally percipient understanding of the fact that the Parades Commission had no power to intervene. I shall discuss this in more detail in the next section of this judgment. Undermining the 1998 Act Failure to notify a proposed parade strikes at the heart of the effective functioning of the Parades Commission and therefore at the successful implementation of the 1998 Act. This Act represented, as Ms Quinlivan put it, a paradigm shift away from the old system where police were drawn into the controversial role of deciding which parades should be permitted to take place and under what conditions they should be allowed to proceed. Enforcing the legal requirement of notifying an intention to hold a parade was not less than vital to the success of the new venture. A premium had to be placed on preserving the integrity of that requirement. Unfortunately, ACC Kerr and his colleagues failed to recognise this central truth. There is no reference to section 6(7) of the 1998 Act in the many entries in the Event Policy Book. Instead, the focus was on the need to recognise the competing claims under articles 8 and 11 of ECHR; the so called gaps in the 1998 legislation; the need to engage the Parades Commission in some role in controlling the parades; the lack of power on the part of the police to ban parades; the need to police the situation outside of the statutory scheme; that the role of the police was to collect evidence of such offences and refer them to the prosecuting authorities; that the parades could not be stopped solely because they were unnotified; that there was no such thing as an illegal parade under the Public Processions Act; and that the situation was legally complicated and judicial clarification was needed. The situation was not legally complicated, although, in fairness to ACC Kerr this is a judgment that can be made in confidence now, with the benefit of close attention to the text and effect of the 1998 Act. But, having had the opportunity to consider these and the powers of the police both at common law and under section 32 of the 2000 Act, it can be assuredly said that there is no reason to suppose that the avowed gaps in the 1998 Act were other than the product of deliberate legislative intention. Likewise it must now be clearly understood that the Parades Commission had no role where a proposed procession had not been notified. The attempt to persuade the commission to become involved was misconceived. The police did not have power to ban the parades but they had ample legal power to stop them. Contrary to ACC Kerrs stated position, they could indeed be stopped solely because they were unnotified. There certainly was such a thing as an illegal parade under the Public Processions Act. All of that is quite different from saying that police decisions undermined the 1998 Act, however. Clearly, there was no considered intention to weaken the effect of the Act. The view of ACC Kerr and his colleagues on what were perceived to be shortcomings of the Act and their lack of powers to stop the parades were the result of misapprehension of the true legal position rather than a wilful disregard for it. It is true, of course, that the Loyal Orange Order, in light of PSNIs response to the unnotified parades, considered adopting a policy of not notifying the commission of intended parades, contrary to their previous practice of doing so. But that does not signify in the debate as to whether the 1998 Act was in fact undermined. As it happens such a policy was not adopted by the Orange Order. The power of the police to stop a parade which has not been notified has been a consistent thread that runs through the judgments of Treacy J, of the Court of Appeal and of this court, although the emphasis on the importance of this may have varied. Whatever may have been the misapprehension of the police as to their powers to stop a parade which had not been notified, the legal position is now clear. The 1998 Act has not been undermined. The central issue The Lord Chief Justice considered that the central issue in the case was whether the police response to the parades was based on the need to take account of the possibility of violence and disorder giving rise to article 2 risks both in the immediate vicinity and in the wider Northern Ireland community. One can understand why this might have been considered to be the dominant question. But it is now clear that the crucial issue was whether there was a proper understanding on the part of the police as to the extent of their legal powers. Of course, there were many pressing concerns about the possibility of increased violence if the police attempted to stop the parades. But this must not distract from what was the true issue in the case. That was did the police approach the difficult decision of whether to stop the parades with a proper understanding of their legal powers. If they wrongly considered that there were limits on their powers to do so, this would inevitably cloud their judgment on that critical question. For the reasons that I have given, I consider that Treacy J was right in his conclusion that the police laboured under a misapprehension as to the extent of their powers and on that account alone the appeal must be allowed. Operational discretion It is universally agreed that PSNI must have operational discretion to make policing decisions. Treacy J accepted this in para 120, after citing the well known passage from para 116 of ECtHRs judgment in Osman v United Kingdom (1998) 29 EHRR 245. The Court of Appeal dealt with the same issue in paras 38 41 of its judgment. It is also generally accepted, however, that operational discretion does not equate to immunity from judicial scrutiny of policing decisions. As Lord Dyson MR said in H v Commissioner of Police of the Metropolis v ZH [2013] 1 WLR 3021 at para 90: operational discretion is important to the police. It has been recognised by the European court: see [(2012)] Austin v United Kingdom 55 EHRR 359, para 56. And I have kept it well in mind in writing this judgment. But operational discretion is not sacrosanct. It cannot be invoked by the police in order to give them immunity from liability for everything that they do. The debate in the present case has centred on how judicial scrutiny of the policing decisions taken about these parades should be conducted. The appellant suggested that the discretion was circumscribed by the imperative of ensuring the full effectiveness of the 1998 Act. The area of discretion available to the police was also constrained by the positive obligation to protect the appellants article 8 rights, Ms Quinlivan argued. She claimed that policing decisions in this context had to satisfy a requirement of proportionality. In advancing this claim she relied on what had been said by Lord Carswell in E v Chief Constable of the Royal Ulster Constabulary [2009] AC 536. That case was concerned with attempts by loyalist protesters in Belfast to prevent Catholic parents from taking their normal route on foot through a loyalist area to a Catholic girls primary school. The appellant had challenged what she claimed was the failure of police to discharge their positive obligation to protect her and her daughter against the infliction upon them of inhuman and degrading treatment within the meaning of article 3 of ECHR. Having considered R (Daly)v Secretary of State for the Home Department [2001] 2 AC 532, Huang v Secretary of State for the Home Department [2007] 2 AC 167 and R (SB)v Governors of Denbigh High School [2007] 1 AC 100, Lord Carswell said this at para 54: [these cases] all concerned the compatibility of decisions of an administrative character with the Convention rights of those affected by them. Nevertheless, the essential point established by them is that the Smith test [see R v Ministry of Defence, Ex p Smith [1996] QB 517, 554] is insufficiently intense and that the actions of the police in the present case have to pass the test of proportionality, which must be decided by the court. Ms Quinlivan criticised the judgment of the Court of Appeal in the present case on the basis that it had failed to consider whether the actions of the police passed the test of proportionality. It is true that the court did not refer to the question whether the police actions were proportionate but it appears to have accepted that the appellants article 8 rights were engaged and the Lord Chief Justice referred on more than one occasion to Lord Carswells judgment in E so it is difficult to conclude that he did not have the question of proportionality in mind. Whatever of that, it seems to me that there is something of an air of unreality about discussing the question of proportionality given that PSNI had wrongly construed their powers under the 1998 Act and the Court of Appeal failed to so find. Like so much else involved in judicial review of police actions, proportionality depends on context and PSNI had set themselves the wrong context in which to make decisions. Ms Quinlivan was therefore inclined to accept that a finding that the police had failed to recognise the true breadth and nature of their powers under the legislation would render discussion of the discretionary area of judgment less than central to the case. She was right to do so. What might be considered proportionate if the police view of the limits on their powers was correct might be considered not to be so if they had recognised the full panoply of controls that were in fact available. Discussion of what might have been proportionate in those circumstances is unlikely to be helpful. So too is speculation about what the police ought to have done if they had a proper understanding of the powers available to them. One can say that proportionality has certainly a role to play in assessing whether police actions have fulfilled their positive obligation to protect the appellants article 8 rights. One may also say that police took an active and continuing approach to the question of how to deal with the parades. Many officers were injured in the course of policing the flags protest. Many participants were arrested and successfully prosecuted. Constant review of the proper tactical approach was undertaken. A definite area of discretionary judgment must be allowed the police. And a judgment on what is proportionate should not be informed by hindsight. Difficulties in making policing decisions should not be underestimated, especially since these frequently require to be made in fraught circumstances. Beyond these generalities, I do not consider it useful to go. Treacy J has said (in para 136) that the policing operation was characterised by an unjustified enforcement inertia. I do not understand him to suggest that this was the result of studied indifference or deliberate lack of response to the very difficult situation faced by the residents of Short Strand. The absence of a more proactive approach was due to a concatenation of unfortunate circumstances. These included the misunderstanding by PSNI of the powers available to them; their failure (at least in the early stages) to appreciate that the Parades Commission was powerless to intervene; a lack of insight into the central importance of ensuring that unnotified parades were not permitted to take place; the placing of too great an emphasis on the possible article 11 rights of protesters; and that the matter of controlling unnotified parades was legally complicated. Review by an appellate court of findings at first instance On several occasions in the recent past this court has had to address the issue of the proper approach to be taken by an appellate court to its review of findings made by a judge at first instance. For the purposes of this case, perhaps the most useful distillation of the applicable principles is to be found in the judgment of Lord Reed in the case of McGraddie v McGraddie [2013] UKSC 58; [2013] 1 WLR 2477. In para 1 of his judgment he referred to what he described as what may be the most frequently cited of all judicial dicta in the Scottish courts the speech of Lord Thankerton in Thomas v Thomas [1947] AC 484 which sets out the circumstances in which an appeal court should refrain from or consider itself enabled to depart from the trial judges conclusions. Lord Reeds discourse on this subject continued with references to decisions of Lord Shaw of Dunfermline in Clarke v Edinburgh & District Tramways Co Ltd 1919 SC (HL) 35, 36 37, where he said that an appellate court should intervene only it is satisfied that the judge was plainly wrong; that of Lord Greene MR in Yuill v Yuill [1945] P 15, 19, and that of Lord Hope of Craighead in Thomson v Kvaerner Govan Ltd [2003] UKHL 45; 2004 SC (HL) 1, para 17 where he stated that: It can, of course, only be on the rarest occasions, and in circumstances where the appellate court is convinced by the plainest of considerations, that it would be justified in finding that the trial judge had formed a wrong opinion. Lord Reed then addressed foreign jurisprudence on the topic in paras 3 and 4 of his judgment as follows: 3. The reasons justifying that approach are not limited to the fact, emphasised in Clarkes case and Thomas v Thomas, that the trial judge is in a privileged position to assess the credibility of witnesses evidence. Other relevant considerations were explained by the United States Supreme Court in Anderson v City of Bessemer (1985) 470 US 564, 574 575: The rationale for deference to the original finder of fact is not limited to the superiority of the trial judges position to make determinations of credibility. The trial judges major role is the determination of fact, and with experience in fulfilling that role comes expertise. Duplication of the trial judges efforts in the court of appeals would very likely contribute only negligibly to the accuracy of fact determination at a huge cost in diversion of judicial resources. In addition, the parties to a case on appeal have already been forced to concentrate their energies and resources on persuading the trial judge that their account of the facts is the correct one; requiring them to persuade three more judges at the appellate level is requiring too much. As the court has stated in a different context, the trial on the merits should be the main event rather than a tryout on the road. For these reasons, review of factual findings under the clearly erroneous standard with its deference to the trier of fact is the rule, not the exception. Similar observations were made by Lord Wilson JSC in In re B (A Child) [2013] 1 WLR 1911, para 53. 4. Furthermore, as was stated in observations adopted by the majority of the Canadian Supreme Court in Housen v Nikolaisen [2002] 2 SCR 235, para 14: The trial judge has sat through the entire case and his ultimate judgment reflects this total familiarity with the evidence. The insight gained by the trial judge who has lived with the case for several days, weeks or even months may be far deeper than that of the Court of Appeal whose view of the case is much more limited and narrow, often being shaped and distorted by the various orders or rulings being challenged. The statements in all of these cases and, of course, in McGraddie itself were made in relation to trials where oral evidence had been given. On one view, the situation is different where factual findings and the inferences drawn from them are made on the basis of affidavit evidence and consideration of contemporaneous documents. But the vivid expression in Anderson that the first instance trial should be seen as the main event rather than a tryout on the road has resonance even for a case which does not involve oral testimony. A first instance judgment provides a template on which criticisms are focused and the assessment of factual issues by an appellate court can be a very different exercise in the appeal setting than during the trial. Impressions formed by a judge approaching the matter for the first time may be more reliable than a concentration on the inevitable attack on the validity of conclusions that he or she has reached which is a feature of an appeal founded on a challenge to factual findings. The case for reticence on the part of the appellate court, while perhaps not as strong in a case where no oral evidence has been given, remains cogent. In the present appeal, I consider that the Court of Appeal should have evinced a greater reluctance in reversing the judges findings than they appear to have done. Conclusion I would reverse the decision of the Court of Appeal and make a declaration that, in their handling of the flags protest in Belfast during the months of December and January, PSNI misconstrued their legal powers to stop parades passing through or adjacent to the Short Strand area.
+The appeal raises a short issue of construction under the planning Acts, on which differing views have been expressed by experienced planning judges in the courts below. It arises in the context of a planning permission granted by the respondent council for four blocks of student accommodation in proximity to a site used for storage of liquefied petroleum gas (LPG). The question, as agreed by counsel for the purposes of the appeal, is: In considering under section 97 of the Town and Country Planning Act 1990 whether it appears to a local planning authority to be expedient to revoke or modify a permission to develop land, is it always open to that local planning authority to have regard to the compensation that it would or might have to pay under section 107? The Court of Appeal by a majority (Longmore and Sullivan LJJ, Pill LJ dissenting) [2011] PTSR 645 decided it in the affirmative. Unusually, the court is asked to consider this question, not in the context of a specific decision of the council to revoke the permission, but as an abstract point of construction in connection with a decision which may or may not be made in the future. As I understand it, the Court of Appeal has granted permission to appeal on the footing that the point is one of some general importance on which a definitive decision is desirable. The parties The Wolverhampton City Council (the council) is the council for a metropolitan borough in the West Midlands. It is the local planning authority, and also the hazardous substances authority for the relevant area under the Planning (Hazardous Substances) Act 1990 (the PHSA 1990). The Health & Safety Executive (the HSE) is a statutory non departmental public body, established under the Health and Safety at Work etc. Act 1974. It has a general duty under the Act to work with others to secure the health, safety and welfare of people at work, to protect the public against risks to health and safety arising from work activities, and to control dangerous substances. The statutory regime for the control of hazards involving dangerous substances includes the Control of Major Accident Hazards Regulations 1999 (SI 1999/743) (made under European Council Directive 96/82/EC (the Council Directive)). The HSE together with the Environment Agency is the competent authority under that regime, with responsibility to oversee its operation and to co ordinate the regulation of major hazards. As part of that role, the HSE sets acceptable levels for particular classes of risk to the health and safety of the population, measured by the probability of a particular occurrence. The HSE's advice in relation to particular development proposals is, in most cases, generated by a risk model known as Planning Advice for Developments near Hazardous Installations (PADHI). There is a computer based version of this model, known as PADHI+, which allows local planning authorities to consult and obtain the HSE's advice online by entering various site specific details. The distance between the hazardous installation and the proposed development is related to three zones (inner, middle and outer), the inner zone posing the greatest risk. The interested party, Victoria Hall Ltd (the developer), is a private limited company whose main business is the provision of student accommodation, nationally and internationally. It was represented by counsel in the Court of Appeal, but not in this court. Statutory provisions The grant of planning permission is governed by section 70 of the Town and Country Planning Act 1990 (the 1990 Act.) Where an application is made to the local planning authority, they may grant permission (conditionally or unconditionally) or refuse permission. In dealing with the application they must have regard to the provisions of the development plan, so far as material to the application, and to any other material considerations (s 70(2)). Section 97, which is directly relevant to the appeal, provides: Power to revoke or modify planning permission "(1) If it appears to the local planning authority that it is expedient to revoke or modify any permission to develop land granted on an application made under this Part, the authority may by order revoke or modify the permission to such an extent as they consider expedient. (2) In exercising their functions under subsection (1) the authority shall have regard to the development plan and to any other material considerations. In relation to building operations, the power to revoke or modify may be exercised at any time before the operations have been completed, but will not affect those operations so far as previously carried out (section 97(3)(4)). If there are objections, a revocation order made by a local planning authority is subject to confirmation by the Secretary of State (section 98). If the order is confirmed, compensation is payable by the authority for abortive expenditure, and for other loss or damage directly attributable to the revocation or modification (section 107). Section 100 gives the Secretary of State a separate power to make an order under section 97. Such an order has the same effect as one made by the local planning authority (section 100(2)), with the consequence (inter alia) that the authority, not the Secretary of State, are liable to pay compensation. Although not directly relevant to this appeal, parallels have been drawn in argument with the provisions of section 102 (and related sections) for discontinuance orders, that is orders for the discontinuance of any use of land, or for the imposition of conditions on any such use. Under section 102(1) a discontinuance order may be made, if: having regard to the development plan and to any other material considerations, it appears to a local planning authority that [such action] is expedient in the interests of the proper planning of their area (including the interests of amenity) . Finally, reference should be made to the provisions for hazardous substances consent under the PHSA 1990. By section 4, subject to certain limits, the presence of a hazardous substance on, over or under land requires a hazardous substances consent. By section 9, consent may be granted by the hazardous substances authority. In dealing with an application for consent, the authority is required to have regard to material considerations, which are defined as including in particular the existing and likely future uses of land in the vicinity, and the provisions of the development plan (s 9(2)). By section 14 the same authority may make an order revoking or modifying such a consent, if it appears to them, having regard to any material considerations, that it is expedient to revoke or modify it. By section 19, compensation is payable in respect of any loss or damage directly attributable to the revocation or modification. Background facts On 4 August 2008, following an application by the developer, the council granted planning permission for the erection of four blocks (blocks A D) of student accommodation on land between Culwell Street and Lock Street, Wolverhampton. Some 95 metres away from the nearest block (Block D), on the other side of a railway line, there is a LPG facility operated by Carvers LPG (Wolverhampton) Ltd. (Carvers). LPG is a dangerous substance within the meaning of the Council Directive. The site accordingly requires, and has been granted, hazardous substances consent under the PHSA 1990. Because of the proximity of the LPG site, the council was required to consult the HSE on the application. They did so on line (by PADHI+) and received the following response: The assessment indicates that the risk of harm to people at the proposed Development is such that HSE'S advice is that there are sufficient reasons, on safety grounds, for advising against the granting of planning permission in this case. This advice was in due course reported to the planning committee by the officers, with an indication that though not mandatory it should not be overridden without careful consideration. What followed is summarised by Sullivan LJ (para 6): Despite this warning, when considering the planning application Wolverhampton failed to consult further with the HSE, failed to obtain its own advice as to the safety implications of permitting a substantial amount of residential accommodation in this location and, despite being obliged to do so, failed to give the HSE advance notice of its intention to grant planning permission for the development, and failed to notify the HSE that it had granted permission. The HSE first discovered on 16 December 2008 that planning permission had been granted, over four months after the grant of permission and, since works had commenced prior to the grant of permission, five months after the works had commenced. By the time the HSE became aware of the development, work on three of the blocks, A, B and C, was well advanced. Work on block D, which was the closest block to the LPG facility, had not commenced. Sullivan LJ also described the attempts which were made by the HSE over the following weeks to resolve the issue by agreement with the council and the other interested parties. They indicated initially that their preferred option would be to relocate the Carvers installation. But they also pointed out that the councils procedural failures had deprived the HSE of the opportunity to ask the Secretary of State to call in the application for planning permission; and they asked the council to remedy this by making a revocation order under section 97, at least to prevent the construction of block D. The nature of the discussions between the council and the HSE can be seen from the notes of a meeting on 8 April 2009. It was recorded that there was a verbal agreement that building of block D would not be started until market conditions improved. The other blocks were almost complete, in preparation for the first students to take up residence at the beginning of the academic year in October 2009. The HSE representative identified three options to resolve the problem: (i) revoke the planning permission for blocks in the inner and middle zones; (ii) move Carvers from their site; or (iii) reduce the LPG inventory at the Carvers Site and amend the hazardous substance consent to a lower level. (I take the word amend to be a reference to modification under section 14 of PHSA 1990.) The councils representative indicated that no decision had yet been taken by the council on any of the options. The first option (revocation) was considered most unlikely because of the potentially high costs of doing so. It was noted that any of the options would require compensation, and that there would therefore need to be a dialogue between Carvers and Wolverhampton City Council on how best to achieve a positive outcome. The HSE representative emphasised the need for a quick decision by the council, and offered technical support for that purpose. He also advised that the HSE would consider further action, such as judicial review, if a satisfactory response were not received. Thereafter progress was slow. On 18 May the HSE restated its wish to resolve the issue urgently and asked the council to indicate whether it was willing to make a revocation order. The councils reply was terse: The Council has now taken some preliminary legal advice and from a careful consideration of all the information available can see no justification for revoking or modifying the planning permission in question Apart from indicating that they were waiting for further information and would keep the HSE informed, they gave no further reasons for this decision, nor any clear indication of the councils view of the problem, or of how, if not by revocation, they proposed to deal with it. On 22 June solicitors for the HSE gave the council notice of their intention to seek judicial review both of the grant of planning permission and of the decision not to revoke it. They noted that no work had yet started on block D, which was entirely within the inner zone. They suggested two courses open to the council: either to resolve on revocation of the permission in respect of block D, or to consent to the quashing of the permission as a whole. The HSEs preference was for the latter, because it also had concerns about block C, and would welcome the opportunity to ensure that the whole development could be reconsidered. In response the council indicated that, having taken leading counsels advice, and in view of the number of people living in the area, and the scope for further development, it was manifest that the most appropriate course is to relocate the installation, if need be compulsorily. The council would be considering this further with its advisers. It suggested that the HSE itself might wish to consider such a course. The HSEs claim form was filed on 9 July. On 14 October 2009 the matter came before Collins J on a rolled up hearing. He granted permission to apply for judicial review, but declined to quash either the planning permission or the decision not to revoke. Instead he ordered the council to provide a full summary of its reasons for granting planning permission and of the policies taken into account, and made a declaration that the council had acted in breach of the procedural regulations in a number of respects. On the issue of revocation, he noted that this was now impossible in respect of blocks A, B and C, and would be in any event inappropriate because of its serious financial implications for the developer (a relevant factor, as held in Vasiliou v Secretary of State for Transport [1991] 2 All ER 77). In respect of the HSEs submission that the cost of compensation was not a relevant factor (following Alnwick District Council v Secretary of State for the Environment, Transport and the Regions (2000) 79 P & CR 130), he said: I do not need to decide whether this is correct since the impact on the interested party coupled with the completion of three of the four blocks and the reasonable view that the HSE's failure to take immediate action shows that the risk could not be regarded as immediate entirely justifies a refusal to revoke or modify. Certainly, the refusal cannot be regarded as irrational. (para 40) The appeal was heard by the Court of Appeal in May 2010. Judgment was given on 30 July. Sullivan LJ, giving the leading judgment, noted (para 26) the HSEs argument that it had been seeking revocation only in respect of block D, and that in this respect Collins J had proceeded on a false premise. Sullivan LJ thought that, whatever confusion there might have been about the HSEs own position until the letter of 22 June 2009, it should before then have become clear to the council that the only practical possibility was the revocation of block D; and that this was an option which they should have considered with care (paras 29 30). Their failure to do so meant that their decision of 29 May 2009 not to make a revocation order was unlawful, and they should be ordered to reconsider (para 38). On that point the court was unanimous. As to whether compensation would be a material issue in that reconsideration (the issue now before this court), the Court of Appeal was divided. Longmore LJ agreed with Sullivan LJ that it was capable in law of being a material factor, and ordered the council to reconsider the issue on that basis. Pill LJ disagreed. As already noted, they granted permission to appeal to this court. I shall return to their reasoning below. On the material before this court, the position remains that the council has not made a formal decision on whether to make a revocation order in respect of block D. We were told by Mr Griffiths QC on instructions that the council had obtained its own expert advice as to the degree of risk posed by the proximity of the LPG business, and he also gave us some information about the progress of discussions for the relocation of the Carvers business to another site owned by the council. However, since that information is not in evidence, and the HSE has not had an opportunity to respond to it, I leave it out of account for the purposes of this judgment. A simple view I start by looking at the position in general terms, before considering whether there is anything in the particular statute, or the relevant authorities, which requires a different approach. In simple terms, the question is whether a public authority, when deciding whether to exercise a discretionary power to achieve a public objective, is entitled to take into account the cost to the public of so doing. Posed in that way, the question answers itself. As custodian of public funds, the authority not only may, but generally must, have regard to the cost to the public of its actions, at least to the extent of considering in any case whether the cost is proportionate to the aim to be achieved, and taking account of any more economic ways of achieving the same objective. Of course, the weight attributable to cost considerations will vary with the context. Where, for example, the authority is faced with an imminent threat to public security within its sphere of responsibility, cost could rarely be a valid reason for doing nothing, but could well be relevant to the choice between effective alternatives. So much is not only sound administrative practice, but common sense. Does section 97 require a different approach? On an ordinary reading, the answer must be no. The section requires the authority to satisfy itself that revocation is expedient, and in so doing to have regard to the development plan and other material considerations. It is not suggested in this case that the development plan throws any light on this issue. The other two expressions are, at least at first sight, capable of encompassing the cost consequences of revocation. The word expedient implies no more than that the action should be appropriate in all the circumstances. Where one of those circumstances is a potential liability for compensation, it is hard to see why it should be excluded. Similarly, at least at first sight, there is nothing in the expression material considerations to exclude cost. Material in ordinary language is the same as relevant. Where the exercise of the power, in the manner envisaged by the statute, will have both planning and financial consequences, there is no obvious reason to treat either as irrelevant. The practical sense of this approach is illustrated by the facts of the present case. The safety concerns highlighted by the HSE would have made it hard for the council to justify doing nothing, at least once there was a risk of block D being built. But, assuming the need for compulsion, it appears that they had a choice of at least three statutory routes: an order under section 97 of the 1990 Act to prevent the building of block D, an order under section 14 of the PHSA to limit the hazardous substances which could be stored at the LPG site, or a compulsory purchase order to remove the Carvers installation altogether. Action under any of these powers would result in a claim for compensation, but not necessarily of the same order. The choice between the options would no doubt involve a range of planning and other issues, but it would be curious if comparative cost could not be at least one factor in the overall balance. Authorities The principal authority relied for the contrary view, which had the support of Pill LJ in the present case, is the judgment of Richards J in the Alnwick District Council case 79 P & CR 130. The district council had granted permission for a large superstore, under a misapprehension as to the size of what was proposed, and in contravention (as the inspector found) of national planning policy. In the face of the councils objections, the Secretary of State made a revocation order, the compensation for which (estimated at 3 4m) would fall on the council. The inspector described the decision as grossly wrong and seriously perverse, and likely to cause significant harm to Alnwicks vitality and viability as a shopping centre. He indicated that he regarded the issue of compensation as irrelevant. The Secretary of State adopted his reasoning. The council applied to the High Court to quash the order. The principal argument was that liability for compensation of this order would put the council in severe financial difficulties, and in particular would put at risk a planned development of leisure facilities elsewhere in the district. This argument had been touched on only lightly at the inquiry, and seems to have been developed largely by counsel in the High Court. The Secretary of State submitted that compensation was irrelevant as a matter of law, but also that, even if it had been relevant, relief should be refused as a matter of discretion, because on the material before the Secretary of State there was no likelihood of it having led to a different decision. Richards J accepted both submissions. The second, which is not in dispute, is sufficient to support the decision in the case. On the first, in view of the importance attached to his reasoning by the appellants, I will quote most of the relevant passage, at pp 142 143, in full: A decision maker will often be entitled, if not required, to take into account as a relevant or material consideration the financial consequences of his decision. Consideration of the effects of a decision on others is a normal aspect of the decision making function and there is no difference of principle between financial effects and other effects. The observations of Nicholls LJ, in Vasiliou v Secretary of State for Transport [1991] 2 All ER 77 as to the relevance of the adverse effects of a ministerial order were directed to the specific context of an order extinguishing or expropriating an individual's rights but are in my view capable of more general application. Nor is the point limited to the effects of a decision on others. It also applies to the financial consequences for the decision maker himself. Where decisions involve the expenditure of public funds, the decision maker will normally be entitled or required to take into account matters such as the availability of funds and competing demands on those funds. All that, however, is at a level of generality. Whether a particular consideration is one that a decision maker is entitled or required to take into account in the exercise of a statutory power depends ultimately on the statute conferring that power. A statute may restrict the range of permissible considerations either expressly or by implication. Whether it does so is to be determined by reference to its provisions and to the statutory purpose. In the exercise of their functions under sections 97 and 100 of the 1990 Act with regard to the revocation and modification of planning permissions, local planning authorities and the Secretary of State are required to have regard to "material considerations" (see section 97(2)). What is capable of amounting to a material consideration for this purpose must in my view be the same as in relation to the initial determination of planning applications, i.e. the material considerations referred to in sections 70(2) and 54A. Although the courts have adopted a flexible approach towards the concept, a consideration must in broad terms be a planning consideration in order to be material for that purpose. Any consideration which relates to the use and development of land is capable of being a planning consideration (see Stringer v Minister of Housing and Local Government [1970] 1 WLR 1281, 1294). It follows that financial consequences are capable of amounting to a material consideration in so far as they relate to the use and development of land. R v Westminster City Council, Ex p Monahan [1990] 1 QB 87 is an example. The need for a connection with the use and development of land was helpfully spelled out in the application of that decision in Northumberland County Council v Secretary of State for the Environment (1989) 59 P & CR 468. It also follows, however, that in so far as financial consequences do not relate to the use and development of land, they are not capable of amounting to material considerations. In my view that is fatal to the general proposition for which [leading counsel on behalf of the council] contends, that the cost to the local authority may be taken into account irrespective of land use consequences. I see no warrant for treating cost as a permissible consideration even where it is not a material consideration within the meaning of the legislation. It is wholly consonant with the statutory purpose that decisions under sections 97 and 100 should be guided only by planning considerations. It cannot have been the legislative intention, in introducing provision for the payment of compensation, that the impact of such payment upon a local planning authority's financial position should condition the exercise of the powers to revoke or modify planning permissions. Payment of compensation enters into the picture only after a decision to revoke or modify has been taken. Its purpose is simply to ensure that persons interested in the land are compensated for any loss they suffer by reason of the revocation or modification of the permission. (Emphasis added) It is to be noted that Richards J accepted as a general proposition that, where a decision involves the expenditure of public funds, the decision maker will normally be entitled or required to take into account matters such as the availability of funds and competing demands on those funds. His reasoning for taking a different view in the present context depended (as seen in the emphasised passages) on three steps: i) The meaning of the term material considerations must be consistent throughout the Act, including as between section 70 and section 97. ii) The authorities show that financial considerations unrelated to the use and development of land are not material in relation to the grant or refusal of planning permission. They cannot therefore be material in relation to the making of a revocation order. iii) Under the statutory scheme compensation enters the picture only after the order has been made. I say at once that I find the third point very difficult to follow. The fact that a restaurant bill normally arrives after the meal does not mean that the likely cost of the meal has to be ignored in deciding where and what to eat. Similarly, potential liability to compensation cannot be said to be irrelevant merely because it is not fixed and payable at the outset. I will return to the other points when considering the appellants arguments in this court. It is necessary first to refer to the other main first instance authority, and the judgments of the Court of Appeal in the present case. In R (Usk Valley Conservation Group) v Brecon Beacons National Park Authority [2010] 2 P & CR 198 (relating to a discontinuance order under section 102), Ouseley J disagreed with Richards Js interpretation. He was willing to accept step (i) of the argument, that the term material considerations required a consistent interpretation, which limited it to planning considerations (para 202); but he thought that the concept of expediency implied a wider approach: 198. An expedient decision would, to my mind, necessarily require attention to be paid to the advantages and disadvantages of taking one or other or none of the available steps under section 102. These advantages and disadvantages should not be confined to those which the subject of the notice would face; they should be measured against the advantages and disadvantages to the public interest at large, including the costs and effectiveness of the various possibilities. The question of whether the cost to the public is worth the gain to the public is, I would have thought, the obvious way of testing expediency. At least, it is difficult to see that expediency could be tested without consideration of that factor. In the Court of Appeal in the present case, Sullivan LJ thought that the introduction of the word expedient was not of itself sufficient to justify a different approach as between section 70 and section 97 (para 47). He also accepted (para 46) that there must be a consistent approach to the meaning of material considerations in the enactments which comprise the planning code, a term which he treated as including the provisions both for the grant of permission (section 70), and those for revocation (section 97) and discontinuance (section 102) (para 45). However, as I understand his reasoning, he saw the two expressions as working together. First, he highlighted the different decision making process as between section 70 on the one hand, and sections 97 and 102 on the other. The authority does not initiate the decision making process under section 70, and a decision to take no action is not an option: para 49. By contrast, under section 97 or 102, the authority initiates the decision making process, and, having done so, may decide to take no action because it considers it not expedient to do so. In that process it needs to consider the consequences under the Act, and whether action under some other provision would be more appropriate. He continued: The 1990 Act must be read as a whole for the purpose of ascertaining Parliaments intention. Since Parliament expressly provided that the local planning authorities will be liable to pay compensation if they decide that action should be taken under certain powers conferred by the Act, it must be inferred, in the absence of clear words to the contrary, that Parliament expected that a local planning authority would have regard to its liability to pay compensation under one part of the Act when deciding whether or not to exercise a power under another part of the Act. A decision under section 97 is not taken in isolation, it is taken within the statutory framework of the 1990 Act. If that statutory framework imposes a liability to pay compensation if a certain course of action is taken, there is no sensible reason why that liability should be ignored (in the absence of an express instruction to do so) when a decision is reached under the Act as to whether that action should be taken. (para 50) Longmore LJ agreed with Sullivan LJ, partly because of the differences between section 70 and section 97, but also because he considered brightline rules to be much more troublesome in public law than in private law: The view that the fact and the amount of compensation can never be taken into account by a planning authority has, to my mind, an inappropriately absolute ring to it. A private pocket may be required to pay up although the heavens fall around it, but such a principle can be awkward where the public purse is involved and public authorities have budgets within the limits of which they must, if possible, keep. (para 66) He added that a planning authority would not be entitled to refuse to modify or revoke a planning permission by invoking a vague concept of cost to the public purse: They would have to say in terms what the amount of compensation is likely to be and precisely why it is expedient for that sum not to be paid in circumstances in which modification or revocation might otherwise be appropriate. That is unlikely to be an easy or straightforward exercise. (para 67) Pill LJ took a different view: I agree with Richards J in the Alnwick case that what is capable of amounting to a material consideration for the purposes of section 97 must be the same as in relation to the determination of planning applications under section 70. Its use in a context in which compensation may follow from a decision does not affect what is comprehended by the term "material considerations", which are planning considerations related to the character, use or development of the land. (para 76) He noted, but was unimpressed by, the argument (reflected in the judgment of Sullivan LJ at para 53) that, when the original version of section 102 was enacted in 1947, Parliament cannot have intended financial considerations to be ignored, since that would have led to a spate of expensive discontinuance orders to put right the legacy of numerous inappropriately sited uses and buildings: I do not accept that analysis. The consistent theme in the legislation has been that planning decisions should be made in accordance with the development plan and any other material considerations. The 1947 Act introduced the concept of the development plan which became the primary planning document for the local planning authority's area. A good environment and development were to be achieved by means of a development plan, or a series of development plans. It was not contemplated in 1947 that England (and Wales) would be transformed overnight into Blake's Jerusalem. The route to progress was through the new development plans and not through extensive use of discontinuance orders. (para 87) The introduction of the word expedient made no difference: The word expedient must be read in context: is it expedient having regard to the development plan and to any other material considerations? The word permits latitude in an evaluation but the evaluation must be based on matters lawfully taken into account, in my view considerations relating to the character, use or development of the land. (para 91) From a practical point of view, he saw a risk that, if undue weight were given to financial considerations, the careful procedures normally followed to ensure that decisions inappropriate on planning grounds are not taken will operate less effectively, and a deterrent to facile decision making would be removed. (para 107) The appellants arguments Mr Coppel QC, for the HSE, has helpfully grouped his submissions under four main heads: (1) Consistency In his printed case, Mr Coppel went to some lengths to counter the various elements in Ouseley Js detailed reasoning in Usk. However, the key points, and those most directly relevant to the majoritys reasoning in this case, can I think be summarised as follows: i) There is a presumption that words are used with a consistent meaning throughout a statute. There is no good reason to depart from that presumption in this case. ii) The meaning of the phrase material considerations in the planning Acts is well established. It does not include financial considerations, except where they have planning consequences. iii) Consistent with that principle, it is axiomatic that a planning permission cannot be bought and sold. iv) The majority were right to accept in principle that the expression material considerations should be given the same meaning throughout the planning code. v) They were wrong to hold in respect of section 97 that either the nature of the decision making process, or the inclusion of the concept of expediency, altered the range of factors to be taken into account. That term gave the decision maker a wide latitude when evaluating the development plan and . other material considerations; but it did not widen the range of matters to which the authority could properly have regard when carrying out that evaluation. (2) Effective judicial supervision The majoritys interpretation would deprive the court of any effective power to control the exercise of the discretion under section 97. The word expedient has been interpreted as giving the decision maker a wide latitude, which allows little room for intervention by the courts. Further, the courts are reluctant to interfere with decisions involving allocation of limited resources, or to substitute their own views of relative priorities. If material considerations include the financial impact on the authority, a case for revocation, however compelling on planning grounds, could lawfully be overridden by other demands on limited resources. The authoritys functions under the planning Acts, including those relating to hazardous substances, should not capable of being traded against its other functions. (3) Self interest The corollary of the proposition that a planning permission cannot be bought or sold is that the decision to revoke or modify a permission cannot be devalued by consideration of its cost to the authority. This lessens the independence of the local planning authority, and is alien to the integrity of the planning system. The authority should not be tempted to deviate from the best planning decision by financial self interest. (4) The importance of the development plan Mr Coppel echoes Pill LJ (para 87) in emphasising the consistent theme of the legislation, that planning decisions should start from the development plan. If material considerations extend to non planning considerations, the importance of the development plan is weakened, and its paramountcy cannot be secured against the wildcard of financial considerations (printed case, paragraph 78). Discussion In considering these arguments, and the reasoning of the courts below, I hope I will be forgiven for going back to the simple approach with which I started. As I said then, and as Richards J accepted, general principles would normally dictate that a public authority should take into account the financial consequences for the public purse of its decisions. I also said that, at least at first sight, I could find nothing in section 97 which requires it to be treated as an exception to those principles. Nothing I have heard or read in this case has led me to change that view. The principal argument to the opposite effect is the appeal to consistency. I accept of course the ordinary presumption that Parliament is taken as using the same words in the same sense. I am aware also that in planning law the apparently innocent expression material considerations has acquired an impressive overburden of case law going back more than 40 years. However, none of the authorities before Alnwick were directed to the provisions related to revocation or discontinuance. Sufficient consistency is given to the expression if the word material considerations is treated as it is elsewhere in administrative law: that is, as meaning considerations material (or relevant) to the exercise of the particular power, in its statutory context and for the purposes for which it was granted. So read, the Court of Appeals interpretation creates no inconsistency between section 70 and section 97. The meaning is the same, but the statutory context is different. Under section 70 the planning authority has a duty to act, and it has a limited choice. It must either grant or refuse permission. Its decision must be governed by considerations material to that limited choice. Further, the decision normally has no direct cost consequences for the authority (unless exceptionally it has a direct financial interest in the development, when other constraints come into play). Under section 97, by contrast, the authority has no obligation to do anything at all; it has a discretion whether to act, and if so how. Secondly, if it does decide to act, it must bear the financial consequences, in the form of compensation. No doubt under section 70, planning permission cannot be bought or sold. But section 97 creates a specific statutory power to buy back a permission previously granted. Cost, or value for money, is naturally relevant to the purchasers consideration. To speak of the self interest of the authority in this context is unhelpful. A public authority has no self interest distinct from that of the public which it serves. The same result can be achieved even on a narrower interpretation of the expression material considerations. In other words, planning considerations, including the development plan, are the starting point. Thus the primacy of the plan, if it has anything relevant to say on the issue, is not in doubt, but it may need to give way to other factors, including practicalities. A decision to act under section 97 must be motivated by planning considerations, and directed to a planning objective. But the converse does not follow. Inaction is also an option. In exercising its choice not to act under section 97, or in choosing between that and other means of achieving its planning objective, the authority is to be guided by what is expedient. No principle of consistency requires that process to be confined to planning considerations, or to exclude cost. This approach to the section does not exclude effective judicial supervision when necessary. It is true that the word expedient normally implies a wide discretion reviewable only on conventional public law grounds. However, as already noted, its scope in practice depends on the circumstances. A public authority, faced with a serious threat to public safety within its sphere of responsibility, would find it difficult to defend the rationality of a refusal to act, if the only reason were other demands on its budget. In any event, the Act contains its own remedy. If the authority fails to act, the Secretary of State may be asked to make a revocation order (as happened in Alnwick), leaving the planning authority to pick up the bill. I see no reason to doubt Richards Js actual conclusion in Alnwick. On the facts and arguments as presented to the Secretary of State, it is difficult to see how his decision could have been different. However, Richards J, with respect, took too narrow a view of the law. Had there been more substantial evidence that the order would leave the authority in serious financial difficulties, I see no reason why the Secretary of State should have been obliged to leave it out of account, at least to the extent of considering whether a financial contribution might have been available from central or other sources. Finally I should comment briefly on the point made at the end of Longmore LJs judgment. I agree with his instinctive reaction against brightline rules governing the exercise of discretionary powers in public law. I have more difficulty with his comment on the level of precision required to justify refusal to make an order. Mr Coppel made a similar point, suggesting that authorities might find it difficult in practice to arrive at a clear estimate of the likely level of compensation, particularly in the absence of co operation from the landowner. I do not see these as practical issues. It is not possible in the abstract to say what kind of information, or what degree of precision, may be required by, or available to, the authority when making a decision of this kind. It will depend on the circumstances. That is neither unusual nor a cause for concern. The same issues may arise, for example, whenever an authority is considering a major compulsory purchase project. It will need at the planning stage to form a general view of the overall cost, including the cost of compensation, and of the resources available to meet it. Initially, this view will need to be based largely on the advice and estimates of its expert advisers, the precision and certainty of which will depend on the timing and subject matter. That uncertainty is not a reason for not conducting the exercise, still less for leaving cost considerations out of account altogether. Conclusion For these reasons, which essentially follow those of the majority of the Court of Appeal, I would dismiss the appeal.
+These appeals are brought by a Polish national, Roksana Mirga, and an Austrian national, Wadi Samin, against decisions of the Court of Appeal upholding determinations that they were not entitled to certain benefits, namely income support and housing assistance respectively, pursuant to the provisions of United Kingdom domestic law. The arguments have changed somewhat over the course of the two sets of proceedings, but the essential issue raised now is whether the provisions and the current implementation of the domestic law in question infringe the rights of residence in the UK of citizens of European Union member states. Shortly before this judgment was to be delivered, counsel for the appellants informed us of an Opinion which had been delivered by Advocate General Wathelet in Jobcenter Berlin Neuklln v Alimanovic (Case C 67/14) [2016] 2 WLR 208, which they contended assisted their arguments. We decided to await the judgment of the Court of Justice in that case. Judgment was given on 15 September 2015, and the parties have had the opportunity to make written submissions as to its effect on these appeals. It should perhaps be added that, after we received those further submissions, the appellants counsel drew to our attention Advocate General Cruz Villalns Opinion in European Commission v United Kingdom (Case C 308/14), and suggested that we await the judgment of the Court of Justice in that case, or alternatively that we refer these two cases to that court. In my opinion, following the judgment in Alimanovic, any issue on which we have to rule in these appeals is acte clar, and accordingly we should now determine these two appeals. The factual background The facts relating to Ms Mirga Ms Mirga was born in 1988 in Poland. In 1998, she came to this country with her parents and three siblings, but they returned to Poland in 2002 after being refused asylum. Two years later, in June 2004, on Polands accession to the EU, the family returned to the UK. Sadly, her mother died four months later, and her father, who had been working, gave up his job owing to depression a few months afterwards. He received income support until late 2007, when it was decided that he should not have been receiving it, on the ground that he did not have the right of residence in the UK. Meanwhile, Ms Mirga finished her education in April 2005 and embarked on registered work within the meaning of the Accession (Immigration and Worker Registration) Regulations 2004 (SI 2004/1219) (the A8 Regulations). She continued with that registered work until November 2005. In February 2006, she became pregnant and started to do unregistered work, which she continued for two months or so. In June 2006, she left home for rented accommodation, and did a months further unregistered work around June 2006. In August 2006, she claimed income support under the Income Support (General) Regulations 1987 (SI 1987/1967) (the Income Support Regulations) on the grounds of her pregnancy. Her baby son was born in October 2006. The Secretary of State for Work and Pensions refused Ms Mirgas application for income support, and his decision was upheld by the First tier Tribunal, whose decision was affirmed, albeit for different reasons, by Judge Rowland in the Upper Tribunal. The Upper Tribunal decided that the Secretary of State was entitled to refuse Ms Mirgas application because she did not have a right of residence in the UK under the A8 Regulations and therefore was excluded from the ambit of income support by virtue of the Income Support Regulations. The Upper Tribunals decision was upheld by the Court of Appeal in a judgment given by Laws LJ, with which Tomlinson LJ and Sir David Keene agreed [2012] EWCA Civ 1952. The facts relating to Mr Samin Mr Samin was born in Iraq in 1960. After ten years military service, he successfully sought asylum in Austria in 1992, together with his wife and children, and he was accorded Austrian citizenship the following year. Sadly, he became wholly estranged from his wife and children, and he came to the UK in December 2005, since when he has lived in this country on his own. During the ten months following his entry into the UK, he had some paid employment on occasions, often part time, but he has not worked since some time in 2006, and has not been looking for work since 2007. Mr Samin is socially isolated and suffers from poor mental health, principally from clinical depression and post traumatic stress disorder. Having attempted to kill himself in the past, he remains a moderately high risk of suicide in the medium term. He also suffers from diabetes, hypertension and kidney stones, and he needs physiotherapy. After occupying temporary accommodation, Mr Samin lived in a studio flat in North London, which he had to vacate after four years in June 2010. He then applied to Westminster City Council (the Council) for housing under the homelessness provisions in Part VII of the Housing Act 1996 (the Housing Act). After making inquiries, the Council decided that he was a person from abroad who is not eligible for housing assistance within the meaning of section 185(1) of the Housing Act, because he did not have the right of residence in the UK under the Immigration (European Economic Area) Regulations 2006 (SI 2006/1003) (the EEA Regulations). That decision was affirmed in the Central London County Court by His Honour Judge Mitchell, whose decision was in turn upheld by the Court of Appeal for reasons given by Hughes LJ, with which Etherton and Tomlinson LJJ agreed [2012] EWCA Civ 1468; [2012] WLR(D) 336. The legislative background The Treaty on the Functioning of the European Union Under article 18 of the Treaty on the Functioning of the European Union (TFEU), any discrimination on grounds of nationality is prohibited in so far as it is [w]ithin the scope of application of the Treaties. The importance of avoiding discrimination is emphasised by article 19 of TFEU which states that the Council may take appropriate action to combat discrimination . Article 20 of TFEU states in para 1 that every national of an EU member state shall be a citizen of the Union, and, in para 2(a), that citizens of the Union should have the right to move and reside freely within the territory of the member states, albeit that that right is to be exercised in accordance with the conditions and limits defined by the Treaties and by the measures adopted thereunder. Article 21.1 of TFEU provides as follows: Every citizen of the Union shall have the right to move and reside freely within the territory of the member states, subject to the limitations and conditions laid down in the Treaties and in the measures adopted to give them effect. Article 45 of TFEU, which is also concerned with freedom of movement for workers, requires the abolition of any discrimination based on nationality between workers of the member states as regards employment, remuneration and other conditions of work and employment. The 2003 Accession Treaty In 2004, ten countries, including Poland, acceded to the EU pursuant to the Treaty on Accession 2003 (the 2003 Accession Treaty). By virtue of articles 10 and 24 of the Act of Accession forming the second part of the Treaty, existing member states, including the UK, were accorded, by way of derogation, certain transitional powers. Those powers included a right to derogate in relation to the free movement of workers within the EU, which was then governed by Regulation (EEC) No 1612/68 (the 1968 Regulation), in relation to nationals (known as A8 nationals) of eight of the ten new member states. Those powers of derogation in relation to Polish nationals were contained in paragraphs 1 14 of Part 2 of Annex 12 to the 2003 Accession Treaty. So long as these provisions were in force, they enabled a host member state to exclude Polish nationals from freedom of movement rights unless they had been working in that state for an uninterrupted period of 12 months following accession. The 2004 Directive The right of EU nationals to reside in all member states of the EU has been qualified and regulated by EU Instruments, most notably by the 1968 Regulation and by Directive 2004/38/EC of 30 April 2004 (the 2004 Directive), which made substantial amendments to the 1968 Regulation. The 2004 Directive is concerned with the right of citizens of the Union and their family members to move and reside freely within the territory of the member states. The preamble to the 2004 Directive includes the following: (10) Persons exercising their right of residence should not become an unreasonable burden on the social assistance system of the host member state during an initial period of residence. Therefore, the right of residence for Union citizens and their family members for periods in excess of three months should be subject to conditions. (16) As long as the beneficiaries of the right of residence do not become an unreasonable burden on the social assistance system of the host member state they should not be expelled. Therefore, an expulsion measure should not be the automatic consequence of recourse to the social assistance system. The host member state should examine whether it is a case of temporary difficulties and take into account the duration of residence, the personal circumstances and the amount of aid granted in order to consider whether the beneficiary has become an unreasonable burden on its social assistance system and to proceed to his expulsion. In no case should an expulsion measure be adopted against workers, self employed persons or job seekers as defined by the Court of Justice save on grounds of public policy or public security. Recital (31) emphasises that the 2004 Directive should be implemented in a non discriminatory way. Article 6 states that Union citizens shall have the right of residence on the territory of another member state for a period of up to three months without any conditions or any formalities, and that the right extends to family members. Article 7 is concerned with the Right of Residence for more than three months, and it starts as follows: 1. All Union citizens shall have the right of residence on the territory of another member state for a period of longer than three months if they: are workers or self employed persons in the host (a) member state; or (b) have sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host member state during their period of residence and have comprehensive sickness insurance cover in the host member state. Para 1(c) of article 7 deals with students, and para 1(d) and para 2 deal with family members. Article 7.3 provides that a person does not lose the status of a worker or self employed person on ceasing to work in certain circumstances. Those circumstances include (a) if he or she is temporarily unable to work as the result of an illness or accident, and (b) if he or she has been employed for more than a year, is involuntarily unemployed and has registered as a job seeker. Article 8 is concerned with Administrative formalities for Union citizens, and articles 8.1 and 8.2 deal with the right of member states to require Union citizens residing for more than three months to register with the relevant authorities. Articles 8.3 and 8.4 include the following: 3. For the registration certificate to be issued, member states may only require that: Union citizens to whom point (b) of article 7(1) applies present a valid identity card or passport and provide proof that they satisfy the conditions laid down therein; 4. Member states may not lay down a fixed amount which they regard as sufficient resources but they must take into account the personal situation of the person concerned. In all cases this amount shall not be higher than the threshold below which nationals of the host member state become eligible for social assistance, or, where this criterion is not applicable, higher than the minimum social security pension paid by the host member state. Article 14.1 states that the three months right of residence under article 6 applies as long as [the citizen and his or her family] do not become an unreasonable burden on the social assistance system of the host member state. Article 14.2 provides that Union citizens and their family members have the right of residence provided for in [article 7] as long as they meet the conditions set out therein. But article 14.3 states that an expulsion measure should not be the automatic consequence of recourse to the social assistance system. Article 14.4 provides that an expulsion measure shall not be adopted against Union citizens who (a) are workers or self employed persons, or (b) entered the host state to seek employment and can provide evidence that they are continuing to seek employment and that they have a genuine chance of being engaged. Article 24.1 states that all Union citizens residing on the basis of this Directive in the territory of the host member state shall enjoy equal treatment with the nationals of that member state, albeit subject to such specific provisions as are expressly provided for in the Treaty and secondary law. Article 24.2 specifically entitles a member state to refuse social assistance during the first three months of residence, or, where appropriate, the longer period provided for in article 14(4)(b). Article 28 is concerned with Protection against expulsion, and para 1 provides that: Before taking an expulsion decision on grounds of public policy or public security, the host member state shall take account of considerations such as how long the individual concerned has resided on its territory, his/her age, state of health, family and economic situation, social and cultural integration into the host member state and the extent of his/her links with the country of origin. Articles 30 and 31 are concerned with protecting the rights that are the subject of the Directive (and the width of their ambit is emphasised by article 15.1). Article 30 deals with notification, and article 31 deals with Procedural safeguards, including access to judicial redress procedures. Domestic legislation: the EEA Regulations On 30 April 2006, the EEA Regulations came into force in the United Kingdom. They were, as the Explanatory Note explains, intended to implement the 2004 Directive. Regulation 13 of the EEA Regulations provides that all EEA nationals have the right to reside in the UK for three months. Regulation 14 provides that a qualified person is entitled to remain in the UK so long as he is so qualified. Regulation 6 of the EEA Regulations defines what is meant by qualified person. It includes a jobseeker, a worker, a self employed person, a self sufficient person, and a student. Regulation 4, which has been amended on various occasions, is concerned with definitions of most of those expressions, including worker and self sufficient person. Regulation 4(1)(a) defines worker by reference to the TFEU. Regulations 5 and 15 certain workers who [have] ceased activity have a permanent right of residence, and they include (2) those who have retired having worked in the UK for at least 12 months and resided there for at least three years, and (3) those who have stopped working as a result of permanent incapacity, having resided in the UK for at least two years. Regulation 6 extends qualified person status to people who are temporarily no longer working owing to illness or accident, or who worked but are now involuntarily unemployed and registered as jobseekers (but only for six months if they were employed for less than a year), or who have lost their jobs and are in vocational training. Regulation 4(1)(c) of the EEA Regulations provides that: self sufficient person means a person who has i) sufficient resources not to become a burden on the social assistance system of the United Kingdom during his period of residence; and ii) United Kingdom. comprehensive sickness insurance cover in the Regulation 4(2), (3) and (4) contain further provisions dealing with what constitutes sufficient resources, but only para (4) is of any relevance in these proceedings. It has been amended at least twice. Ignoring references to family members which are irrelevant in these two cases, regulation 4(4) now provides that resources are to be regarded as sufficient if (a) they exceed the maximum level which a British citizen may possess if he is to become eligible for social assistance in the UK, or (b) taking into account the personal situation of the person concerned it appears that [his] resources should be regarded as sufficient. The paragraph originally only included what is now sub para (a), and sub para (b) was added in 2011. Regulation 19 of the EEA Regulations is concerned with refusal of admission and removal, and para 3 provides that a person who has been admitted into, or acquired a right to reside in, the UK may be removed if he does not have or ceases to have a right to reside. However regulation 19(4) states that a person cannot be removed as an automatic consequence of having recourse to the social assistance system of the [UK]. Domestic legislation: the A8 Regulations Pursuant to the terms of the 2003 Accession Treaty, the European Union (Accessions) Act 2003 was enacted, which, under section 2, permitted the Secretary of State to make the A8 Regulations (which were revoked in May 2011). Regulations 2 and 5 of the A8 Regulations provided that A8 nationals would only have full access to the UK labour market if they had been in registered employment under the Worker Registration Scheme for a continuous period of 12 months. The consequence was that, so long as the A8 Regulations were in force, A8 nationals could not become qualifying persons under the EEA Regulations unless and until they had performed registered employment for a continuous period of at least 12 months. Domestic legislation: income support Entitlement to income support arises under section 124 of the Social Security Contributions and Benefits Act 1992 and the Income Support Regulations. In very summary terms, income support is available for certain people provided that they are not engaged in relevant work or receiving relevant education, and their income is below the applicable amount. The effect of regulation 21 of the Income Support Regulations, however, is that a person from abroad is to be treated as having an applicable amount of nil, and is therefore not eligible for income support. Regulation 21AA(1) (3) of the Income Support Regulations states that certain people will be treated as persons from abroad unless they are habitually resident in the UK (and certain other places, including Ireland), and have the right to be so under certain statutory provisions not germane to the present appeals. Regulation 21AA(4) provides, however, that a person is not a person from abroad if he is, inter alia, a worker (or self employed person, or is to be treated as a worker or self employed person) within the meaning of the 2004 Directive. Domestic legislation: housing assistance Part VII of the Housing Act imposes duties on local housing authorities in relation to homeless people. The duty extends, under section 193, to providing them with accommodation where they are involuntarily homeless and in priority need unless they are not eligible for assistance. Eligibility for assistance is dealt with in section 185 of the Housing Act, which provides, inter alia, that a person who is subject to immigration control is ineligible for housing assistance unless of a class prescribed by regulations, along with any other person from abroad treated as ineligible by virtue of regulations. The Allocation of Housing and Homelessness (Eligibility) (England) Regulations 2006 (SI 2006/1294) (the Eligibility Regulations) define the classes of persons subject to immigration control who are eligible for housing assistance and the classes of other persons from abroad who are ineligible, and the effect of regulations 2(2) and 6(2) is that a person from abroad is eligible if he is a worker for the purposes of the definition of a qualified person in regulation 6(1) of the EEA Regulations. The issues raised on these appeals Mr Coppel QC and Ms Rogers, on behalf of the Secretary of State, contend that, at the time that Ms Mirga applied for income support, she was ineligible for income support under the Income Support Regulations, because she was a person from abroad. This was on the basis that she could not claim to be a worker as she was an A8 national who had not done 12 months registered employment (under the A8 Regulations), and thus could not be a qualifying person for the purpose of the EEA Regulations. Even if the A8 Regulations did not apply, Mr Coppel argues that Ms Mirga would still not have been a worker, as the EEA Regulations would have required her to have worked for at least 12 months before she claimed income support. There is no question of Ms Mirga having been a jobseeker, a self employed person, or a student under the EEA Regulations. Further, it seems clear that Ms Mirga could not claim to be a self sufficient person under the EEA Regulations, as she had no significant means of support and no health insurance (but if she had had been a self sufficient person she would presumably not have needed income support anyway). With the support of the Secretary of State for Communities and Local Government, Mr Peacock contends for the Council that Mr Samin is not a worker within the EEA Regulations because he is now permanently incapable of work, and in any event he cannot claim to be a worker because he has not worked for 12 months in the UK. Accordingly, argues Mr Peacock, Mr Samin is not a qualified person under the EEA Regulations, from which it follows that he is ineligible for the purposes of the Housing Act. It is also said that Mr Samin cannot claim to be a self sufficient person within the EEA Regulations because he has no assets and no health insurance. The first argument raised by Mr Drabble QC, who appears with Ms Leventhal on behalf of Ms Mirga, is that, in the light of her right to respect for her private and family life, under article 8 of the European Convention on Human Rights, she cannot be removed from the UK, and therefore her right of residence in the UK, as accorded by article 21.1 of TFEU, cannot be limited or cut back in the way that the Income Support Regulations seek to do, namely by restricting her rights to income support because she has not achieved a continuous 12 month period in registered employment. His alternative argument is that, even if it would be permissible to refuse Ms Mirga income support on that ground, it is only possible in practice if it would be proportionate to do so, and in particular if the grant of income support to her would place an unreasonable burden on the social assistance system of the UK, and there has been no inquiry into that question. The first argument raised on behalf of Mr Samin by Mr Drabble, appearing with Mr Carter and Mr Cowan, is that the refusal of housing assistance to Mr Samin constituted unlawful discrimination in breach of article 18 of the TFEU, even though he may not have had a right of residence in the UK. The alternative argument raised on behalf of Mr Samin reflects the alternative argument in Ms Mirgas case, namely that there should have been an investigation as to whether it was proportionate to refuse Mr Samin housing assistance, in particular on the ground that it represented an unreasonable burden of the UK social assistance system. Mr Drabbles arguments were supported by Ms Demetriou QC, assisted by Mr Banner and Ms MacLeod, on behalf of The AIRE Centre, and it is right to record the courts appreciation of their pro bono work in this case, and their assistance to the court. Discussion Issue one: do the domestic Regulations infringe the appellants TFEU rights? Mr Drabbles first contention on behalf of Ms Mirga is that, as she is a worker (albeit one whose work was temporarily interrupted owing to her pregnancy), article 21.1 of TFEU accords her the right to reside freely within the EU, and therefore within the UK, and that the denial of income support to her, at a time when she needed it in order to be able to live in the UK, was an impermissible interference with that right, as she would, in practice, be forced to return to Poland. That argument can be said to reflect the fundamental importance of freedom of movement and freedom of establishment to the single market concept, as well as the significance attached in articles 18 and 19 of TFEU to the avoidance of discrimination between citizens of a member state and other EU nationals. A similar argument cannot be run in relation to Mr Samin, because it is now accepted that owing to his inability to work he cannot claim to be a worker, even in the light of the extended definition in article 7.3 of the 2004 Directive and regulation 6 of the EEA Regulations. Accordingly, Mr Drabbles first line of argument on behalf of Mr Samin is that the Councils refusal to provide Mr Samin with housing assistance under Part VII of the Housing Act constituted discrimination on grounds of nationality prohibited by article 18 of TFEU, because such assistance would have been accorded to a citizen of the UK, or a qualifying worker from another member state, who was otherwise in the same position as Mr Samin. It seems to me that these arguments face real difficulties. The right accorded by article 21.1 of TFEU, which is relied on by Ms Mirga, although fundamental and broad, is qualified by the words subject to the limitations and conditions laid down in the Treaties and in the measures adopted to give them effect. In the present case, the measures include the 2004 Directive, and presumably include the 2003 Accession Treaty, which was adopted under article 49 of the Treaty on European Union. It appears clear from the terms of paragraph 10 of the preamble that it was a significant aim of the 2004 Directive that EU nationals from one member state should not be able to exercise their rights of residence in another member state so as to become an unreasonable burden on the social assistance system. It also seems clear that any right of residence after three months can be subject to conditions. This is reflected in the terms of article 7.1, in that it limits the right of residence after three months to those who are workers, self employed, students, or with sufficient resources and health insurance not to become a burden on the social assistance system of the host member state. Indeed, it is worth noting that article 14.1 even limits the right of residence in the first three months. It further appears clear from article 24, that EU nationals right of equal treatment in host member states is subject to secondary law, and in particular that they can be refused social assistance where appropriate. Accordingly, when one turns to the 2003 Accession Treaty and the 2004 Directive, I consider that, because Ms Mirga has not done 12 months work in this country, she cannot claim to be a worker, and, because she is not a jobseeker, self employed, a student, or self sufficient, it would seem to follow that she can be validly denied a right of residence in the UK, and therefore can be excluded from social assistance. In those circumstances, it must follow that article 21.1 TFEU cannot assist her. The fact that Ms Mirga may have to cease living in the UK to seek assistance in Poland does not appear to me to assist her argument. Although the refusal of social assistance may cause her to leave the UK, there would be no question of her being expelled from this country. I find it hard to read the 2004 Directive as treating refusal of social assistance as constituting a species of constructive expulsion even if it results in the person concerned leaving the host member state. As I see it, the Directive distinguishes between the right of residence and the act of expulsion. However, quite apart from this, the Directive makes it clear that the right of residence is not to be invoked simply to enable a national of one member state to obtain social assistance in another member state. On the contrary: the right of residence is not intended to be available too easily to those who need social assistance from the host member state. Mr Samins first argument appears to me to face similar difficulties. The article 18 right which he relies on does not constitute a broad or general right not to be discriminated against. First, its ambit is limited to the scope of the Treaties, which means that it only comes into play where there is discrimination in connection with a right in the TFEU or another EU Treaty. Secondly, the article 18 right is without prejudice to any special provisions contained [in the Treaties]. That brings one back to the argument raised on behalf of Ms Mirga. Contrary to the appellants argument, I do not consider that the decision of the Third Chamber in Pensionsversicherungsanstalt v Brey (Case C 140/12) [2014] 1 WLR 1080 provides the appellants with much assistance. However, it is unnecessary to consider that possibility, because it seems to me clear that the first point raised by each appellant must be rejected as acte clar following the recent Grand Chamber judgments in Dano and another v Jobcenter Leipzig (Case C 333/13) [2015] 1 WLR 2519 (which was published after the Court of Appeal decided these cases) and in Alimanovic (Case C 67/14) EU:C:2015:597, which, as mentioned above, was published some time after the hearing of these appeals. It is appropriate to set out in summary terms the effect of those three decisions, not least because they have relevance to the second issue raised on behalf of each appellant, as well as the first. In Brey, the applicant was a German national residing in Austria, who received a German pension and care allowance insufficient for his needs, and who was refused a compensatory supplement from the Austrian government, because he did not meet the necessary national residency requirements, which excluded those who did not have sufficient resources not to be a burden on the Austrian social security system. Shortly after that refusal, the Austrian government issued the applicant with an EEA citizen registration certificate. The question referred to the Court of Justice by the Austrian Oberster Gerichtshof was whether article 7(1)(b) of Directive 2004/38 should be interpreted as meaning that, for the purposes of that provision, the concept of social assistance covers a benefit such as the compensatory supplement (para 26). The Chamber ruled, at para 80, that the 2004 Directive precluded national legislation which automatically whatever the circumstances bars the grant of a benefit, such as the compensatory supplement to a national of another member state who is not economically active, on the grounds that, despite having been issued with a certificate of residence, he does not meet the necessary requirements for obtaining the legal right to reside since obtaining that right of residence is conditional on that national having sufficient resources not to apply for the benefit. In Dano, the applicant and her son were Romanian nationals living in Germany (where the son had been born), and she had been issued with an unlimited residence certificate. The applicant neither had worked nor was looking for work, and she and her son were refused maintenance payments. The Sozialgericht Leipzig referred a number of questions to the Court of Justice, and the Grand Chamber concluded that article 24 of the 2004 Directive and article 4 of Regulation 883/2004 (which concerns the coordination of social security systems, and includes a similar anti discrimination provision to the 2004 Directive): must be interpreted as not precluding legislation of a member state under which nationals of other member states are excluded from entitlement to certain special non contributory cash benefits within the meaning of article 70(2) of Regulation 883/2004, although those benefits are granted to nationals of the host member state who are in the same situation, in so far as those nationals of other member states do not have a right of residence under Directive 2004/38 in the host member state. (para 84) In Alimanovic, Mrs Alimanovic and her three children were Swedish nationals who had gone to Germany and had been issued with a certificate of right to permanent residence. She and her children were refused subsistence and social allowances, and when they challenged this, the Bundessozialgericht referred three questions to the Court of Justice. The Grand Chamber ruled, at para 63, that article 24 of the 2004 Directive: must be interpreted as not precluding legislation of a member state under which nationals of other member states who are in a situation such as that referred to in article 14(4)(b) of that Directive are excluded from entitlement to certain special non contributory cash benefits within the meaning of article 70(2) of Regulation No 883/2004, which also constitute social assistance within the meaning of article 24(2) of Directive 2004/38, although those benefits are granted to nationals of the member state concerned who are in the same situation. In para 60 of Dano, the Grand Chamber said that the right granted by article 18 of TFEU was subject to the restrictions I have mentioned in paras 43 and 44 above, and the court referred in support to the decision in Brey, and in particular paras 46ff. In para 46 of Brey, the Chamber had referred to the right of nationals of one member state to reside in the territory of another members state without being employed or self employed as being not unconditional. It is also worth noting that the Grand Chamber also referred to article 20 of TFEU and article 24 of the 2004 Directive in terms which made it clear that the rights they grant should, in the instant context, be treated similarly to the rights granted by article 18. In para 61 of Dano, the Grand Chamber described the right under article 18 of the TFEU as having been given more specific expression in article 24 of [the 2004 Directive]. In para 63, citing Brey, para 61, the court pointed out that if someone has recourse to assistance schemes established by the public authorities, he may during his period of residence, become a burden on the public finances of the host member state which could have consequences for the overall level of assistance which may be granted by that state. In para 69, it was made clear that a Union citizen can claim equal treatment with nationals of the host member state only if his residence in the territory of the host member state complies with the conditions of [the 2004 Directive]. In para 73, the court summarised the effect of article 7(1) of the 2004 Directive, and said in the following paragraph that, if persons who do not have a right of residence under [the 2004 Directive] may claim entitlement to social benefits under the same conditions as those applicable to nationals [that] would run counter to an objective of the Directive. In para 76, the purpose of article 7(1)(b) of the 2004 Directive was described as being to prevent economically inactive Union citizens from using the host members states welfare system to fund their means of subsistence. Finally, in para 80 the Grand Chamber said that a persons financial situation should be examined specifically in order to determine whether he meets the condition of having sufficient resources to qualify under article 7.1(b). As already mentioned, the authority of the decision in Dano has been reinforced by the decision in Alimanovic, where, in paras 44 and 50 respectively, the Grand Chamber specifically referred to what was said in paras 63 and 69 of the judgment in Dano with approval. More broadly, as explained more fully below, the Grand Chamber in Alimanovic confirmed that a Union citizen can claim equal treatment with nationals of a country, at least in relation to social assistance, only if he or she can satisfy the conditions for lawful residence in that country. Thus, it was confirmed that article 24.2 of the 2004 Directive was, in effect, a valid exception to the principle of non discrimination. Dano and Alimanovic clearly demonstrate that the jurisprudence of the Grand Chamber of the Court of Justice is inconsistent with Mr Drabbles first argument on behalf of Ms Mirga and Mr Samin, at least in so far as his argument is focussed on the 2004 Directive. It is fair to say that those cases were not concerned with the 2003 Accession Treaty. However, the House of Lords concluded in Zalewska v Department for Social Development [2008] 1 WLR 2602 that the A8 Regulations, which reflect the provisions of the 2003 Accession Treaty, were consistent with EU law, and nothing I have heard or read in connection with this appeal casts doubt on that conclusion. In particular, it appears to be consistent with the reasoning in Brey, Dano and Alimanovic. The only possible remaining issue in relation to this first set of arguments could be whether (i) in the case of Ms Mirga, the provisions of the Income Support Regulations, when read together with the A8 Regulations and the EEA Regulations, and (ii) in the case of Mr Samin, the provisions of the Eligibility Regulations, when read together with the EEA Regulations, complied with the requirements of the 2003 Accession Treaty and the 2004 Directive. As I understood his contentions, Mr Drabble did not suggest any discrepancy in the domestic regulations unsurprisingly, as they were clearly intended to implement the EU instruments. Accordingly, in my judgment, following the clear guidance from the Grand Chamber in Dano and Alimanovic, the first arguments raised on behalf of Ms Mirga and Mr Samin cannot be maintained. That leaves their alternative arguments raised in the two appeals, based on proportionality. Issue two: the appellants argument based on lack of proportionality Mr Drabbles second argument in both appeals is that the determination of the authorities and the courts and tribunals below in the case of both Ms Mirga and Mr Samin was flawed because no consideration was given to the proportionality of refusing each of them social assistance bearing in mind all the circumstances of their respective cases, and in particular that the authority or tribunal concerned failed to address the burden it would place on the system if they were to be accorded the social assistance which they sought. In that connection, Mr Drabble relied on the Court of Justices decisions in St Prix v Secretary of State for Work and Pensions (Case C 507/12) [2014] PTSR 1448, Baumbast v Secretary of State for the Home Department (Case C 413/99) [2003] ICR 1347 and Brey. St Prix was concerned with the question whether a person ceased automatically to be a worker for the purpose of the 2004 Directive, and therefore the EEA Regulations, if she temporarily ceased work owing to the fact that she was pregnant. It provides no assistance to the appellants arguments as advanced by Mr Drabble, except to emphasise the purposive approach to be adopted to the interpretation of the 2004 Directive. The effect of the decision of Baumbast is that the fact that an applicant may fall short of the strict requirements of having self sufficiency status under what are now the 2004 Directive and the EEA Regulations cannot always justify the host member state automatically rejecting his or her right to reside on the ground that the requirements for that status are not wholly complied with. In Baumbast the court was concerned, inter alia, with the issue whether an applicant could exercise the right to reside in the UK in circumstances where he was resting his case on the ground that he was a self sufficient person. It is clear from paras 88 and 89 of the judgment that the applicant had sufficient resources to be self sufficient in practice, and that he had medical insurance. His only possible problem was that the insurance may have fallen short of being comprehensive in one respect, namely that it was not clear whether it covered emergency treatment. The court held that, on the assumption that the insurance fell short in this connection, it would nonetheless be disproportionate to deprive the applicant of his right to reside. In para 92, the court pointed out that there were strong factors in the applicants favour, namely that he had sufficient resources, that he had worked and resided in the UK for several years, that his family had also resided in the UK for several years, that he and his family had never received any social assistance, and that he and his family had comprehensive medical insurance in Germany. In those circumstances, the court said in para 93 that it would be a disproportionate interference with the exercise of the applicants right of residence conferred by what is now article 21.1 of TFEU to refuse to let him stay in the UK because of a small shortfall in the comprehensiveness of his medical insurance. I do not consider that the appellants derive any assistance from Baumbast. Mr Baumbasts case was predicated on the fact that he did not need any assistance from the state. Even if the decision is relied on by analogy, it is of no help to the appellants. The thrust of the courts reasoning in that case was that, where an applicants failure to meet the requirements of being a self sufficient person was very slight, his links with the host member state were particularly strong, and his claim was particularly meritorious, it would be disproportionate to reject his claim to enjoy the right of residence in that host state. Even though the applicant had a very strong case in the sense that he fell short of the self sufficiency requirements in one very small respect, the court decided that he could rely on disproportionality only after considering the position in some detail. Mr Drabbles argument appears to derive greater assistance from some of the reasoning of the Third Chamber in Brey, where the Third Chamber held that the complementary supplement was social assistance within the meaning of the 2004 Directive and also that it was open to member states to provide such assistance to economically inactive citizens of other member states in any circumstances. Crucially, argues Mr Drabble, the Austrian governments refusal of the complementary supplement to the applicant was held to be unlawful. The central reasoning of the Third Chamber in Brey for present purposes is in paras 75 78. In para 75, having considered a number of points, the court concluded that the mere fact that a national of a member state receives social assistance is not sufficient to show that he constitutes an unreasonable burden on the social assistance system of the host member state. In the following paragraph, the court stated that the fact that a non national has applied for the benefit in issue in that case was not sufficient to preclude [him] from receiving it, regardless of the duration of residence, the amount of the benefit, and the period for which it is available. In para 77, the court made the point that domestic legislation, such as the Austrian law in that case, could not provide that a national of another member state, who was not a worker, self employed or a student, should be automatically barred from receiving a social benefit. In the next paragraph, the court stated that the competent authorities should be able when examining the application of a Union citizen who is not economically active and is in Mr Breys position to take into account certain factors. They included the amount and regularity of [the applicants] income, the fact that he had received a certificate of residence, the period for which he would receive the benefit, and the extent of the burden [it] would place on the social security system (which as Advocate General Wathelet said in Dano at paras 111 112 of his Opinion, must be a collective assessment, which was confirmed by the Grand Chamber in para 62 of Alimanovic). These factors were, the court said in para 78 of the judgment in Brey, for the domestic court to assess. Brey was an unusual case, because the applicant had been issued with a certificate of residence by the Austrian government, a factor which appears to have played a significant part in the courts thinking, as it was recited in the re formulated question (in para 32) and it is referred to expressly and impliedly in the crucial para 78 of the judgment, and indeed in the final ruling of the Third Chamber (see para 49 above). However, it is not necessary to address that point further, as it appears to me that the reasoning in Brey cannot assist the appellants on the instant appeals, in the light of the subsequent reasoning of the Grand Chamber in the subsequent decisions in Dano and Alimanovic. The observations of the Grand Chamber in Dano discussed in para 53 above are in point. In Alimanovic, para 59, the Grand Chamber specifically mentioned that the court in Brey had stated that a member state [was required] to take account of the individual situation of the person concerned before it finds that the residence of that person is placing an unreasonable burden on its social assistance system. However, the Grand Chamber went on to say that no such individual assessment is necessary in circumstances such as those in issue in this case. In para 60, the Grand Chamber explained that: Directive 2004/38, establishing a gradual system as regards the retention of the status of worker which seeks to safeguard the right of residence and access to social assistance, itself takes into consideration various factors characterising the individual situation of each applicant for social assistance and, in particular, the duration of the exercise of any economic activity. The court then went on to explain that article 7 of the 2004 Directive, when read with other provisions, guarantees a significant level of legal certainty and transparency in the context of the award of social assistance by way of basic provision, while complying with the principle of proportionality. (In this connection, the Grand Chamber took a different view from that taken by Advocate General Wathelet in paras 105 111 of his Opinion, upon which Mr Drabble had understandably relied.) In my view, this makes good sense: it seems unrealistic to require an individual examination of each particular case. I note that this was a proposition which the Second Chamber rejected, albeit in a somewhat different (and probably less striking) context, on the ground that the management of the regime concerned must remain technically and economically viable see Dansk Jurist og konomforbund v Indenrigs og Sundshedsministeriet (Case C 546/11) [2014] ICR 1, para 70, which was cited with approval in the present context by Advocate General Wahl in Dano at para 132 of his Opinion. Where a national of another member state is not a worker, self employed or a student, and has no, or very limited, means of support and no medical insurance (as is sadly the position of Ms Mirga and Mr Samin), it would severely undermine the whole thrust and purpose of the 2004 Directive if proportionality could be invoked to entitle that person to have the right of residence and social assistance in another member state, save perhaps in extreme circumstances. It would also place a substantial burden on a host member state if it had to carry out a proportionality exercise in every case where the right of residence (or indeed the right against discrimination) was invoked. Even if there is a category of exceptional cases where proportionality could come into play, I do not consider that either Ms Mirga or Mr Samin could possibly satisfy it. They were in a wholly different position from Mr Baumbast: he was not seeking social assistance, he fell short of the self sufficiency criteria to a very small extent indeed, and he had worked in this country for many years. By contrast Ms Mirga and Mr Samin were seeking social assistance, neither of them had any significant means of support or any medical insurance, and neither had worked for sustained periods in this country. The whole point of their appeals was to enable them to receive social assistance, and at least the main point of the self sufficiency test is to assist applicants who would be very unlikely to need social assistance. Whatever sympathy one may naturally feel for Ms Mirga and Mr Samin, their respective applications for income support and housing assistance represent precisely what was said by the Grand Chamber in Dano, para 75 (supported by its later reasoning in Alimanovic) to be the aim of the 2004 Directive to stop, namely economically inactive Union citizens using the host member states welfare system to fund their means of subsistence. Conclusion I would dismiss both these appeals.
+These two appeals relate to one of the rules currently in force by which the appellant, the Secretary of State for the Home Department, determines an application for a visa to enter or remain in the United Kingdom made by the spouse of a person who is present and settled in the UK (a marriage visa). The Secretary of State appeals against the order of the Court of Appeal dated 21 December 2010 (Sedley, Pitchford and Gross LJJ) [2010] EWCA Civ 1482, [2011] 3 All ER 81) by which it declared that her application of the rule so as to refuse marriage visas to the two effective respondents was unlawful as being so the majority concluded in breach of their rights under article 8 of the European Convention on Human Rights and Fundamental Freedoms 1950 (the ECHR). In effect pursuant to supplementary orders made by the Court of Appeal the Secretary of State has now granted marriage visas to each of the two respondents. But her appeals to this court, although academic for them, retain a general importance which has justified their continued prosecution. The rule is rule 277 of the Immigration Rules 1994 (HC395). The version of the rule which, as substituted by HC1113, came into force on 27 November 2008 was as follows: Nothing in these Rules shall be construed as permitting a person to be granted entry clearance, leave to enter, leave to remain or variation of leave as a spouse or civil partner of another if either the applicant or the sponsor will be aged under 21 on the date of arrival in the United Kingdom or (as the case may be) on the date on which the leave to remain or variation of leave would be granted. That rule therefore governed a spouse or civil partner. There were parallel rules which governed a fianc(e) or proposed civil partner (rule 289AA) and an unmarried or same sex partner (rule 295AA). A sponsor is defined by rule 6 as the person in relation to whom an applicant is seeking leave to enter or remain as their spouse (etc). Thus, for present purposes, the sponsor is the spouse who is present and settled in the UK, for example (as in each of the cases before the court) a British citizen present and ordinarily resident in the UK. The applicant is the other spouse. Prior to 27 November 2008 rule 277 like the parallel rules was in the same terms save only that its reference to age was under 18 rather than under 21. Such had been the rule since December 2004, when the minimum age for the applicant had been raised from 16 to 18 so as to become the same as the minimum age for the sponsor, which had been raised to the same extent in April 2003. With effect from 6 April 2010 rule 277 like the parallel rules was amended in a small and largely irrelevant respect. After the words under 21 were inserted, in parenthesis, the words or aged under 18 if either party is a serving member of HM Forces. The appeals require focus upon the Secretary of States purpose in amending rule 277 so as to provide that, with effect from 27 November 2008, a marriage visa should not in the absence of exceptional, compassionate circumstances which would attract the exercise of her discretion outside the ambit of the rules be granted until both the sponsor and the applicant had attained the age of 21. The Secretary of States purpose is clear. It was not to control immigration. It was to deter forced marriages. At the heart of the appeals is her analysis of the nexus between entry into a forced marriage and the increase in the minimum ages requisite for the grant of a marriage visa. No one could contend that the nexus is very obvious. B. FORCED MARRIAGE A forced marriage is a marriage into which one party enters not only without her or his free and full consent but also as a result of force including coercion by threats or by other psychological means: section 63A(4) and (6) of the Family Law Act 1996, inserted into it by section 1 of the Forced Marriage (Civil Protection) Act 2007 (the Act of 2007). The forcing of a person into marriage is a gross and abhorrent violation of her or his rights under, for example, article 16(2) of the Universal Declaration of Human Rights 1948, article 23(3) of the International Covenant on Civil and Political Rights 1966 and article 12 of the ECHR. A forced marriage is entirely different from an arranged marriage in which, in conformity with their cultural expectations, two persons consent to marry each other pursuant to an arrangement negotiated between their respective families. The prevalence of forced marriage within sections of our community in the UK has come increasingly to the attention of a shocked public during, say, the last 12 years as victims of it, or witnesses to it, have at last and less infrequently summoned the courage to report it. In 1999 the Home Office established a Forced Marriage Working Group, which published its findings in 2000. Parliament has responded actively to revelation of the problem by enactment of the Act of 2007, which provides the court with a flexible jurisdiction to make orders protective of a person who may be, or has been, forced into marriage. Under renewed discussion is whether there is any value in also making the act of forcing a person into marriage into a specific criminal offence. The other main instrument of the states response to the revelation of the problem has been the creation in 2005 by the Home Office and the Foreign and Commonwealth Office of the Forced Marriage Unit (the FMU). In November 2008 the Secretary of State published guidance under section 63Q of the Family Law Act 1996, as inserted by the Act of 2007. It was for the benefit of those exercising public functions potentially relevant to instances of forced marriage. In the guidance the Secretary of State addressed the motives of those who forced a person to marry in the following terms: 36 Some of the key motives that have been identified are: Controlling unwanted sexuality (including perceived promiscuity, or being lesbian, gay, bisexual or transgender) particularly the behaviour and sexuality of women. Controlling unwanted behaviour, for example, alcohol and drug use, wearing make up or behaving in a westernised manner. Preventing unsuitable relationships, e.g. outside the ethnic, cultural, religious or caste group. Protecting family honour or izzat. Responding to peer group or family pressure. Attempting to strengthen family links. Achieving financial gain. Ensuring land, property and wealth remain within the family. Protecting perceived cultural ideals. Protecting perceived religious ideals which are misguided. Ensuring care for a child or vulnerable adult with special needs when parents or existing carers are unable to fulfil that role. Assisting claims for UK residence and citizenship. Long standing family commitments. Thus Assisting claims for UK residence and citizenship was one of 13 suggested motives. Data included in the guidance or otherwise provided by the FMU suggest the following: (a) most persons forced into marriage in the UK are female; (b) for example 86% of the 815 possible cases of forced marriage considered by the FMU between September 2009 and February 2010 related to female victims; (c) most victims are aged between 13 and 29; (d) more particularly, of the 145 cases in 2005 in which the FMU provided direct support (as opposed to general or preliminary advice) to victims or potential victims of forced marriage, 44, i.e. 30%, related to victims aged between 18 and it is usually the parents (or one of them) of the victim who apply the force; 20; in 2006 the number of victims of that age was again 44 albeit out of 167 cases, i.e. 26%; and in 2007 the number was 69 out of 212 cases, i.e. 33%; (e) (f) most victims are members of South Asian families; and for example, of the cases in which the FMU gave general or preliminary (g) advice in 2008, 2009 and 2010, over 70% related to families of Pakistani, Bangladeshi or (to a much lesser extent) Indian origin. THE FACTS Mr Aguilar Quila, the first respondent, is a national of Chile who was born on 12 July 1990. His wife, Ms Amber Aguilar, is a British citizen who was born on 25 April 1991 and who until 2009 lived in England. They began a relationship in 2006 when, with his parents, the first respondent was living temporarily in London. Later, on 17 August 2008, he returned to the UK on a student visa which was expressed to expire on 3 August 2009. In September 2008 they became engaged and on 22 November 2008 they were married. The Secretary of State acknowledges that they married because they were in love. By then they were aware of the imminent change in the rule; but even under the old rule the first respondent was not then entitled to a marriage visa because, although he had attained the age of 18, his wife would not attain it until 25 April 2009. On 23 November 2008 the first respondent sought a marriage visa on the basis of exceptional, compassionate circumstances. The Secretary of State responded to the effect that the first respondents wife had not attained the age of 18 and that there were no such exceptional, compassionate circumstances as would justify a discretionary grant. On 1 May 2009, acting by the Joint Council for the Welfare of Immigrants, the first respondent sought a fresh decision on the basis that his wife had by then attained the age of 18 and by reference to fresh material which was said to call for the exercise of the Secretary of States discretion. But she responded to the effect that, because of the serious nature of forced marriages, the minimum age of both parties had been raised to 21; that by then the first respondents case fell to be determined and inevitably refused by reference to that new minimum age; and that, as before, there was no basis for a discretionary grant. She reminded the first respondent that, by virtue of the fact that he had leave to remain in the UK until 3 August 2009 and of the terms of section 82(2)(d) of the Nationality, Immigration and Asylum Act 2002, he had no right of appeal against her decision. Thus, on 31 July 2009, the first respondent, accompanied by his wife, duly returned to Chile. But by then he had issued the claim for judicial review, which was to be dismissed by Burnett J in the Queens Bench Division, Administrative Court, on 7 December 2009 but was to be the subject of the successful appeal to the Court of Appeal. The exceptional, compassionate circumstances which the first respondent had pressed unavailingly on the Secretary of State related in particular to the position of his wife. He stated that it would be intolerable for them not to live together for the following three years but that the effect on her of removal to Chile for such a period would be highly detrimental. He explained that both her parents were teachers; that she wanted to become a teacher of modern languages; that it would take five years for her so to qualify in the attainment of an undergraduate degree for four years and of a Post Graduate Certificate of Education for the fifth year; that she had been offered a place at Royal Holloway, University of London, to study French and Spanish for four years beginning in October 2009, provided that (as later she duly did) she were to attain the requisite grades at A level; and that life in Chile for three years would set back the plans for her career to a grossly unfair and in that the marriage was not forced to a wholly unnecessary extent. In August 2010 the first respondent and his wife, who had been staying with his family in cramped conditions in Santiago, moved to Ireland, where she embarked on a course at University College, Dublin. The paradox that the first respondent and his wife were entitled to live in Ireland but not in the UK arose from the fact that, as an EEA citizen exercising treaty rights to live in an EU state, the first respondents wife had a right to live there with him. In February 2011 the Secretary of State granted the marriage visa to the first respondent with the result that, with his wife, he moved back to the UK. Bibi (as she invites the court to describe her), the effective second respondent, is a citizen of Pakistan who was born on 7 July 1990 and has always lived there. Her husband, Mohammed (as he invites the court to describe him), is a British citizen who was born on 8 April 1990 and who, save for some weeks in 2008, has always lived in England. They were married in Pakistan on 30 October 2008. It was a marriage which, in accordance with their cultural traditions, their two sets of parents had arranged. They allege and the Secretary of State does not dispute that each of them freely consented to the marriage and that they had been engaged since October 2007, whereupon they had begun to speak occasionally on the telephone. They had first met in Pakistan about a week prior to the marriage. On 1 December 2008 the second respondent, with the help of her father in law, applied to the Entry Clearance Officer (the ECO) in Islamabad, for a marriage visa. But the ECO had already told the father in law that, unless she were to apply prior to 27 November 2008 (which was to prove impracticable for her), her application would be rejected on the basis that, although both she and her husband had attained the age of 18, neither had attained the age of 21. On 19 January 2009 the ECO duly refused the application on that ground. Following the marriage the second respondent and her husband appear to have cohabited briefly in Pakistan perhaps only for some weeks whereupon he returned to England. In April 2009, together with her husband, she applied to the Administrative Court for permission to apply for judicial review of the ECOs refusal. It was against His Honour Judge Pearls refusal of permission on 5 August 2009 that she brought her successful appeal to the Court of Appeal. In May 2011 the Secretary of State granted the marriage visa to her, with the result, I presume, that she has joined her husband in the UK. D. THE GENESIS OF THE AMENDMENT TO RULE 277 On 22 September 2003 the Council of the European Union adopted Directive 2003/86/EC. Its purpose was to determine the conditions under which third country nationals, i.e. not citizens of the EU, who were residing lawfully in an EU state could, by sponsorship, secure entry to it for their spouses and other family members. It did not address, even implicitly, how an EU state should respond to such requests when made by one of its own citizens or by a citizen of another EU state. Article 4(5) provided: In order to ensure better integration and to prevent forced marriages Member States may require the sponsor and his/her spouse to be of a minimum age, and at maximum 21 years, before the spouse is able to join him/her. The UK, Ireland and Denmark were not bound by the directive. As it happens, Denmark had already in 2002 raised to 24 the minimum ages both for the applicant and for the sponsor, and indeed in effect for all sponsors permanently resident in Denmark: see now section 9(1)(i) of the Aliens (Consolidation) Act 2009. At the time when the ages were raised, it was argued not only that the change would promote better integration of foreign spouses into Danish society but also that it would contain forced marriage. But subsequent research in Denmark did not confirm that the reform had reduced forced marriage; and it highlighted negative and socially alienating effects on the reasonable aspirations of young spouses whose marriages were not forced. In about 2004, in the wake of the directive, several other EU states, such as Germany and the Netherlands, raised their minimum ages to 21 and, again at least in the case of some such states, not merely in the case of the limited category of potential sponsors who had been the subject of the directive. I will assume that such states made the change in the hope of achieving each of the goals described in the article: but there is no evidence as to whether their hope has proved to be justified in either respect. In the above circumstances it was entirely appropriate that the Secretary of State should examine whether the minimum ages for a marriage visa should be raised to 21 or 24 in the UK. In 2006 she commissioned Professor Hester and a team at Bristol University to prepare a report on the merits of any such change. But Professor Hesters report, dated 15 February 2007, was expressly negative. Her first recommendation was that [t]he age of sponsorship/entry should not be raised either to 21 or 24. She said that the predominant view across all aspects of the research was that any such increase would be detrimental and, in particular, discriminatory on racial and ethnic grounds and with regard to arranged and love marriages. The Secretary of State did not publish Professor Hesters report; and it was later published independently. It was the view of the Secretary of State and of two external peer reviewers that, while the methodology used for the research had been sound, the report was marred by unsubstantiated statements, unclear terminology and sampling bias, and thus that its findings should be treated with considerable caution. In these proceedings there has been no debate about the validity of these criticisms. In December 2007 the Secretary of State issued a consultation paper entitled Marriage to Partners From Overseas. The main questions were whether, in order to reduce the incidence of forced marriage, the minimum ages for a marriage visa should be increased to 21. A subsidiary question was whether a person should be required to declare her intention to be a sponsor prior to departure from the UK in order to contract a marriage abroad. On 13 June 2008 the Home Affairs Select Committee of the House of Commons published a report entitled Domestic Violence, Forced Marriage and Honour Based Violence. It was a magisterial report upon various types of domestic abuse in the UK and it extended far beyond the subject of forced marriage. But the report included a section on the question which the Secretary of State had put out for consultation. It noted that the use of visa application rules in order to tackle forced marriage was controversial. It concluded as follows: 110. The testimony we heard from forced marriage survivors suggests that the desire to procure a marriage visa for a spouse can be an important factor in forced marriage. When we asked for their views on this issue, survivors told us that raising the age of sponsorship for marriage visas from 18 to 21 could better equip victims to refuse an unwanted marriage. However, associated with such a change is a significant risk that young people would be kept abroad for sustained periods between a marriage and being able to return to the UK with their spouse. 111. We have not seen sufficient evidence to determine whether or not raising the age of sponsorship would have a deterrent effect on forced marriage. Given the potential risks involved, we urge the Government to ensure that any changes it proposes to its policy on visa application procedures in respect of sponsorship are based on further research and conclusive evidence as to the effect of those changes. This evidence must demonstrate that any changes will not inadvertently discriminate against any particular ethnic groups. In July 2008, in the light, inter alia, of the responses to the consultation, the Secretary of State issued her proposals for reform in a report entitled Marriage Visas: The Way Forward. Although there were proposed provisions which would equip applicants for marriage visas with greater knowledge of English, its main proposal was to increase the minimum ages from 18 to 21. The report stated as follows: 3.4 We believe that there will be a number of benefits involved in raising the age, these include: It will provide an opportunity for individuals to develop maturity and life skills which may allow them to resist the pressure of being forced into a marriage. It will provide an opportunity to complete education and training. It will delay sponsorship and therefore time spent with (sometimes abusive) spouse if the sponsor returns to the UK. It will allow the victim an opportunity to seek help/advice before sponsorship and extra time to make a decision about whether to sponsor. CONSULTATION RESPONSES 3.5 Supporters of the increased sponsorship age felt the proposal: provided an opportunity for individuals to develop maturity and life skills. removed young people from parental pressure to marry. gave them an opportunity to complete education and training. Opponents raised a variety of reasons against the proposal, stating that it: could be perceived as discrimination based on cultural differences. was detrimental to the human rights of young people. would not prevent forced marriage since this affects people of all ages. would penalise those with genuine marriage intentions. Then the report quoted the urgent request recently made by the Home Affairs Select Committee that no increase in the minimum ages be made without conclusive evidence that it would deter forced marriage and not be discriminatory. The reports response was as follows: 3.8 We believe there is such conclusive evidence because reports of forced marriage peak sharply at ages 18 and above. By age 21, reports of forced marriage begin to decline sharply. There was then a reference, in tabular form, to the statistics provided by the FMU about the age of victims of forced marriage, to which I have referred in para 11(d) above. But the response at para 3.8 above to the Select Committees call for conclusive evidence was wholly inadequate: for the call had been for evidence not about the age of victims of forced marriage but about whether an increase in the minimum ages for a marriage visa would deter it. The relevant section of the report concluded as follows: 3.14 We have carefully considered the issues raised by the Home Affairs Select Committee and the respondents to the consultation. We have paid particular attention to whether an increase in age from 18 21 would be proportionate given concerns that raising the age would penalise a number of genuine couples and discriminates against specific religious communities where the average age of marriage is likely to be lower including such communities where forced marriage is uncommon. 3.15 The committee was also concerned that there is a significant risk that young people would be kept abroad for sustained periods between a marriage and being able to return to the UK with their spouse. However, this has not been the general pattern of movement observed by the Forced Marriage Unit who indicated that sponsors generally return to the UK until they reach the sponsorship age. There was no attempt in the document to explain why the Secretary of State had concluded that the increase would indeed be proportionate in the light of its effect on those who entered into marriages which were not forced and of whom at least one was aged between 18 and 21. There was no attempt even to address the size of that constituency. In an annexe to the report there was an analysis of the responses to the consultation. It was to the effect that, of the 89 relevant respondents, 45 had supported the increase, 41 had opposed it and three had expressed mixed views. Of the 45 in support, most had suggested that an increasing level of maturity and education during the three years would help a potential sponsor to resist being forced to marry but four of them had nevertheless doubted whether the increase would achieve its stated aim. Of the 41 in opposition, many had suggested that it would be discriminatory towards ethnic communities in which marriage at a young age was the cultural norm and would impact unfairly on the parties to marriages in which at least one of them was aged between 18 and 21 in that most of such marriages were not forced. In general the analysis of responses in the annexe was fairly summarised in para 3.5 of the document, set out at para 27 above. THE ENGAGEMENT OF ARTICLE 8, ECHR In R (Razgar) v Secretary of State for the Home Department [2004] UKHL 27, [2004] 2 AC 368, Lord Bingham suggested, at para 17, that the engagement of article 8 depended upon an affirmative answer to two questions, namely whether there had been or would be an interference by a public authority with the exercise of a persons right to respect for his private or family life and, if so, whether it had had, or would have, consequences of such gravity as potentially to engage the operation of the article. Having analysed the authority, namely Costello Roberts v United Kingdom (1993) 19 EHRR 112, which, at para 18, Lord Bingham had cited by way of justification of the terms in which he had cast his second question, the Court of Appeal in AG (Eritrea) v Secretary of State for the Home Department [2007] EWCA Civ 801, [2008] 2 All ER 28, observed, at para 28, that the threshold requirement referable to the nature of the consequences was not a specially high one. Mr McCullough QC, on behalf of the Secretary of State, concedes that family life arose upon the marriage of each of the respondents to their sponsors notwithstanding that, at the date of the refusals of the marriage visas, it had scarcely been established in the case of the second respondent and was relatively undeveloped in the case of the first respondent. Counsel correctly suggests, however, that the more exiguous is the family life, the more substantial are the requisite consequences. These were two British citizens who had lived throughout their lives in the UK and who, aged 17 and 18 respectively, had just embarked upon a consensual marriage. The refusal to grant marriage visas either condemned both sets of spouses to live separately for approximately three years or condemned the British citizens in each case to suspend plans for their continued life, education and work in the UK and to live with their spouses for those years in Chile and Pakistan respectively. Unconstrained by authority, one could not describe the subjection of the two sets of spouses to that choice as being other than a colossal interference with the rights of the respondents to respect for their family life, however exiguous the latter might be. But central to this appeal is Mr McCulloughs reliance in this regard on the decision of the ECtHR in Abdulaziz v United Kingdom (1985) 7 EHRR 471. Three women, all lawfully settled in the UK, had married third country nationals but at any rate at first the Secretary of State had refused permission for their husbands to remain with them, or join them, in the UK. In the second and third cases, as a result of a relaxation of the Immigration Rules, adequate permissions had ultimately been granted and had rendered the applications largely academic. In the present proceedings the Court of Appeal distinguished the courts decision in Abdulaziz on the ground that the three women were not British citizens but women of other nationalities with, therefore, a right of abode elsewhere. But in the first case the woman had been deprived of her Malawi citizenship and, at the date of the refusal, was stateless; she almost certainly had no right of abode in Malawi. In the second case the woman had become a British citizen albeit following the date of the refusal. And in the third case the woman, albeit not a British citizen until later, was a citizen of the United Kingdom and Colonies at the date of the refusal. In these circumstances it is accepted on behalf of the respondents that the ground of distinction favoured by the Court of Appeal is untenable. The decision of the ECtHR in Abdulaziz was that the refusals of permission had not infringed the rights of the women and of their husbands to respect for their family life under article 8 but that, in that the ground for the refusals had been a rule which had afforded a different and unjustified treatment of male, as opposed to female, spouses of persons lawfully settled in the UK, the women had suffered discrimination on the ground of sex in violation of their rights under article 14, taken together with article 8, of the Convention. The importance of the decision for present purposes is the route by which the court came to reject the complaint under article 8 alone. The majority held that article 8 was not engaged; two judges, however, concurred in the conclusion in relation to article 8 only on the basis that, although the article had been engaged, the interference with respect for the family life of the applicants had been justified under article 8(2). In para 66 to para 68 of their judgment the majority stressed that: (a) the suggested obligation of the state was a positive one i.e. to take active steps to admit the husbands and especially as far as positive obligations are concerned, the notion of respect is not clear cut; immigration control was an area in respect of which states enjoyed a wide margin of appreciation; (b) (c) (d) the rights of the husbands to enter, or remain in, the UK under the rules were known to be precarious when the marriages were contracted; and the extent of a states obligation to admit spouses of settled immigrants depended upon the circumstances of each case and the women had not shown that they could not establish family life in their own or their husbands home countries. The majority also said, at para 68: 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 the country of their matrimonial residence and to accept the non national spouses for settlement in that country. The above proposition has recently been cited with approval both in the ECtHR (see Y v Russia (2008) 51 EHRR 21, at para 103) and in this court (see ZH (Tanzania) v Secretary of State for the Home Department [2011] UKSC 4, [2011] 2 WLR 148, at para 19, per Baroness Hale). Four decisions of the ECtHR subsequent to Abdulaziz deserve attention. First, Gl v Switzerland (1996) 22 EHRR 93. A Turkish father, who had been permitted on humanitarian grounds to reside with his wife in Switzerland, failed to establish that, by refusing to allow their seven year old son to join them in Switzerland, the state had interfered with respect for his family life. Although, therefore, the court applied the decision in Abdulaziz, it stressed, at para 41, that the father and his wife had no permanent right of abode in Switzerland. In a powerful dissenting opinion two judges explained why in their opinion the state had not only interfered with the applicants right under article 8 but, by reference to the terms of its paragraph two, had violated it. In effect they pointed out, at para 7 and para 8, that in Abdulaziz stress had been laid on the fact that the disputed obligation was positive (to allow the husbands to reside in the UK); that the disputed obligation in the present case was similar (to allow the son to reside in Switzerland); that, where the challenge was to the states removal of a person, the disputed obligation was negative (not to remove him); that it would be illogical if this elusive difference were to affect whether there had been interference with rights under article 8; and that indeed, since the decision in Abdulaziz in 1985, the difference in the courts treatment of positive and negative obligations had dwindled away. Second, Boultif v Switzerland (2001) 33 EHRR 1179. An Algerian citizen married a Swiss citizen and was permitted to reside in Switzerland. Following his conviction for a robbery the state refused to extend his residence permit and he was removed from Switzerland. The court found that his right under article 8 had been infringed. The court, at para 40, summarily addressed the initial question whether the state had interfered with his right as follows: In the present case, the applicant, an Algerian citizen, is married to a Swiss citizen. Thus, the refusal to renew the applicants residence permit in Switzerland interfered with the applicants right to respect for his family life The question whether the couple could reasonably live together in Algeria was answered, negatively, at para 53, only in the course of the courts enquiry into whether the interference was justified. Third, Tuquabo Tekle v The Netherlands [2006] 1 FLR 798. A mother, father and their three sons were of Eritrean ethnicity but lived in the Netherlands and had acquired Dutch citizenship. When leaving Eritrea in 1989, the mother had left behind a daughter, then aged eight. When she was aged 15, an application was made for her to be allowed to enter the Netherlands in order to live with the family; but it was refused. The court held that, by the refusal, the state had violated the rights under article 8 of all six of its members. The court observed, at para 41 and para 42, that the asserted obligation of the state was positive, that the boundaries between the states positive and negative obligations under this provision do not lend themselves to precise definition and that the applicable principles are, nonetheless, similar. The minority view in Gl had become that of the majority. The court did not tarry to consider interference: it moved straight to justification. And fourth, Rodrigues da Silva, Hoogkamer v Netherlands (2006) 44 EHRR 729. A Brazilian citizen lived, albeit unlawfully, in the Netherlands. She gave birth to a daughter who lived with the father but with whom she had contact. The court held that the states refusal to grant a residence permit to the mother had violated her right and that of the daughter under article 8. The court acknowledged, at para 38, that, in that the state had never granted a residence permit to the mother, its breach was of a positive, rather than of a negative, obligation. The difficulty for the respondents which arises out of the case of Abdulaziz lies less in the proposition at para 68 of the judgment, set out in para 36 above, and more in the actual decision of the majority. The proposition is only to the effect that article 8 imposes no general obligation on a state to facilitate the choice made by a married couple to reside in it. On analysis, the proposition is unexceptionable: it invites, instead, a fact specific investigation, which logically falls within the realms of whether the states obstruction of that choice is justified under paragraph 2. But the actual decision enables Mr McCullough to ask: inasmuch as there was not even an interference with the rights under article 8 of the three women in Abdulaziz in refusing to allow their husbands to join them, or remain with them, how can the analogous decisions of the state in the present cases generate a different conclusion? Having duly taken account of the decision in Abdulaziz pursuant to section 2 of the Human Rights Act 1998, we should in my view decline to follow it. It is an old decision. There was dissent from it even at the time. More recent decisions of the ECtHR, in particular Boultif and Tuquabo Tekle, are inconsistent with it. There is no clear and consistent jurisprudence of the ECtHR which our courts ought to follow: see R (Alconbury Developments Ltd) v Secretary of State for the Environment, Transport and the Regions [2001] UKHL 23, [2003] 2 AC 295 at para 26, per Lord Slynn. The court in Abdulaziz was in particular exercised by the fact that the asserted obligation was positive. Since then, however, the ECtHR has recognised that the often elusive distinction between positive and negative obligations should not, in this context, generate a different outcome. The area of engagement of article 8 in this limited context is, or should be, wider now. In that in Tuquabo Tekle the states refusal to admit the 15 year old daughter of the mother, in circumstances in which they had not seen each other for seven years, represented an interference with respect for their family life, the refusals of the Secretary of State in the present case to allow the foreign spouses to reside in the UK with the British citizens with whom they had so recently entered into a consensual marriage must a fortiori represent such an interference. The only sensible enquiry can be into whether the refusals were justified. F. JUSTIFICATION UNDER ARTICLE 8(2) The burden is upon the Secretary of State to establish that the interference with the rights of the applicants under article 8, wrought by the amendment to rule 277 effective from 27 November 2008 (the amendment), was justified under paragraph 2 of the article: see Marcic v Thames Water Utilities Ltd [2003] UKHL 66, [2004] 2 AC 42, para 37. But in an evaluation which transcends matters of fact it is not in my view apt to describe the requisite standard of proof as being, for example, on the balance of probabilities. The amendment had a legitimate aim: it was for the protection of the rights and freedoms of others, namely those who might otherwise be forced into marriage. It was in accordance with the law. But was it necessary in a democratic society? It is within this question that an assessment of the amendments proportionality must be undertaken. In Huang v Secretary of State for the Home Department [2007] 2 AC 167, Lord Bingham suggested, at para 19, that in such a context four questions generally arise, namely: a) b) c) d) is the legislative objective sufficiently important to justify limiting a fundamental right? are the measures which have been designed to meet it rationally connected to it? are they no more than are necessary to accomplish it? do they strike a fair balance between the rights of the individual and the interests of the community? In the present case the requisite enquiry may touch on question (b) but the main focus is on questions (c) and (d). But what is the nature of the courts enquiry? In R (SB) v Governors of Denbigh High School [2007] 1 AC 100 Lord Bingham said, at para 30: it is clear that the court's approach to an issue of proportionality under the Convention must go beyond that traditionally adopted to judicial review in a domestic setting There is no shift to a merits review, but the intensity of review is greater than was previously appropriate, and greater even than the heightened scrutiny test The domestic court must now make a value judgment, an evaluation, by reference to the circumstances prevailing at the relevant time. Proportionality must be judged objectively, by the court Lord Browns call, at para 91 below, for the courts in this context to afford to government a very substantial area of discretionary judgement is at odds with my understanding of the nature of their duty. Indeed, in the case of Huang cited above, Lord Bingham proceeded to explain, at para 16, that it would be wrong to afford deference to the judgments of the Secretary of State on matters related to the above questions albeit that appropriate weight had to be given to them to the extent, in particular, that she was likely to have had access to special sources of knowledge and advice in connection with them. He added, at para 17, that, notwithstanding the limited right of Parliament to call upon the Secretary of State to reconsider proposed changes in the Immigration Rules provided by section 3(2) of the Immigration Act 1971, it would go too far to say that any changes ultimately made had the imprimatur of democratic approval such as would be relevant in particular to any answer to question (d) set out in para 45 above. In the present appeals the questions identified above fall upon two sides. One side asks whether, and if so to what extent, the amendment is likely to have deterred, and to continue to deter, forced marriages. The other side asks how many parties to unforced marriages are likely to be condemned by the amendment to suffer the interference with their rights exemplified in the two cases before the court. The Secretary of States contention that the amendment is likely to deter forced marriages remains based upon the four bullet points included in para 34 of her report entitled Marriage Visas: The Way Forward, set out in para 27 above. Her main suggestion is that the passage of up to three years should strengthen the ability of either the intended or the actual victim of a forced marriage to resist either entry into it or her later act of sponsorship which, were she to have remained living in the UK, would enable the spouses to cohabit here. The suggestion is tenable. But ten other questions arise and, since they are but questions, there is no need for me to identify in the materials and submissions presented to the court the source from which they come. In what follows I will, for convenience, take the victim of a forced marriage to be a girl present and settled in the UK whose parents force her to marry a man resident abroad without a pre existing right of abode in the UK. The ten questions are as follows: a) Of the 13 motives for forcing a marriage suggested in para 36 of the guidance published by the Secretary of State in November 2008, set out in para 10 above, how prevalent in the genesis of forced marriages is that of Assisting claims for UK residence and citizenship? b) From the fact that a forced marriage has precipitated an application for a marriage visa does it follow that the motive behind it was immediately to secure the visa and that, were it not immediately available, the marriage would not have occurred? c) Even if by virtue of the amendment, the ages of the girl and/or of the man were such as to preclude the grant of a marriage visa for up to three years, might the parents nevertheless force the girl into the marriage in order, for example, to prevent her from entering into a consensual marriage which they regarded as unsuitable? d) Even if the effect of the amendment were to preclude the immediate grant of a marriage visa, might the girl nevertheless be forced to marry the man abroad and thereupon be kept under control abroad until their ages were such as to enable her successfully to sponsor his application for a visa? In the example at (d) might the girl kept under control abroad there have a lesser opportunity to escape from the forced marriage than if the rules had enabled her to set up home with the man in the UK immediately following the marriage? e) f) Alternatively to the example at (d), might the girl be brought to the UK following the forced marriage and be kept under control in the UK until their respective ages were such as to enable her successfully to sponsor the mans application for a visa? g) Even if the preclusion of the grant of a marriage visa for up to three years were to deter her parents from forcing the girl to marry at that stage, might the result be an increased intensity of control on their part over her for that period whether by moving her abroad or by continuing to keep her in the UK and, in either event, would her increasing maturity be likely to enable her to combat it? h) How readily could one or more false certificates of birth be obtained which would deceive the immigration authorities into accepting that the girl and the man were both aged over 21? i) Might the effect of the amendment be to precipitate a swift pregnancy in the girl, following the forced marriage and an act or acts of rape, such as might found an application for a discretionary grant of a marriage visa by reference to exceptional, compassionate circumstances? j) Even if the effect of the amendment were to deter her parents from forcing the girl to marry a man resident abroad without a pre existing right of abode in the UK, might they instead force her to marry a man with UK or EU citizenship or some other pre existing right of abode in the UK? The ten questions are not easily answered. Professor Hester and her team attempted to address most, if not all, of them but, for reasons good or bad, the Secretary of State did not accept her report. In June 2008 the Home Affairs Select Committee urged the Secretary of State not to introduce the amendment until, following further research, there was conclusive evidence about its effect. But she proceeded to introduce it. The questions remain unanswered. The Secretary of State has failed to demonstrate that, when she introduced it, she had robust evidence of any substantial deterrent effect of the amendment upon forced marriages. I turn to unforced marriages. What was the likely scale of the inevitably detrimental effect of the amendment on unforced marriages. A subsidiary question, raised by the Home Affairs Select Committee in June 2008, was whether the detrimental effect was likely to be visited disproportionately upon members of communities with a tradition of marriage at a young age. In this regard the evidence of the Secretary of State in these proceedings was provided by Ms Smith, Deputy Director of Immigration Policy. She said: 17. The question of proportionality in terms of the impact upon couples intending to enter a marriage that was not forced where one or both of the couple are aged under 21 was considered carefully when drafting the policy. 20. the numbers affected by the rule change constituted a very small proportion of those applying for marriage visas for the UK. In 2006, for example, 7% (3,420) of spouses granted leave to enter the UK were aged between 18 and 20 and 2.5% (520) of people granted leave to remain in the UK as a spouse were within this age group. In 2007, 2.7% (1,245) of spouses granted leave to enter and 2.6% (700) of spouses granted leave to remain in the UK as a spouse were aged 18 to 20 21. We concluded that as the policy would affect less than 3% of those granted both leave to enter and leave to remain in the UK as a spouse in 2007, and as the evidence demonstrated that the rates of forced marriage were highest amongst those aged 17 20 in 2005 2008, the policy would represent a proportionate response to the issue of forced marriage, and the importance of protecting the rights and freedoms of vulnerable persons who might be forced into marriage would outweigh the significance of any adverse impact on particular communities or age groups But it establishes nothing to note first that 3,940 and 1,945 marriage visas were granted in 2006 and 2007 respectively to those aged between 18 and 20; second that at any rate the figure for 2007 was less than 3% of all marriage visas granted in that year (therefore presumably amounting to about 65,000); and that the rates of forced marriage were highest (ie about 30% see para 11(d) above) among those aged between 17 or 18 and 20. To deny marriage visas to 3,940 or even only to 1,945 applicants in a year is, irrespective of percentages, to deny them in a vast number of cases. The relevant question relates to the likely size of forced marriages within these numbers. The evidence does not begin to provide an answer to this question. By referring back to para 11(d) above, we can compare the number of cases in 2006 in which the FMU provided support to victims or potential victims of forced marriage aged between 18 and 20, namely 44, with the number of visas granted to that age group, in that year, namely 3,940; for 2007, the comparison is of 69 with 1,945; and, albeit only partly visible in what I have set out above, the evidence suggests a comparison for 2005 of 44 with 3,065. But the above exercise is hardly worth the undertaking. For on the one hand the FMUs figures relate to all forced marriages, irrespective of whether the spouse may reside in the UK only pursuant to a marriage visa. On the other hand and no doubt much more importantly the FMUs figures understandably represent only a proportion of all intended forced marriages. So double them? Or treble them? Or multiply them by ten? The only conclusion soundly available on the evidence before the court not challenged by the Secretary of State save in relation to the emotive word exile is, in the words of Sedley LJ in the Court of Appeal, that rule 277 is predictably keeping a very substantial majority of bona fide young couples either apart or in exile and that it has a drastic effect on thousands of young adults who have entered into bona fide marriages. As the Secretary of State acknowledges, the amendment is, in the words of Gross LJ, a blunt instrument. On 10 May 2011 the Home Affairs Select Committee of the House of Commons published a report, entitled Forced Marriage, by which it reviewed developments in relation to the matters which it had addressed in its report published on 13 June 2008. In a short section it noted the amendment introduced by the Secretary of State and the decision of the Court of Appeal in these proceedings. It then summarised evidence which it had received both from Karma Nirvana, a respected organisation providing support to victims or potential victims of forced marriage, and from Southall Black Sisters, an intervener in these appeals and an equally respected organisation dedicated to the protection of black and Asian women from abuse of all types including forced marriage. The committee stated: 16. Karma Nirvana supported the change in the Immigration Rules on the grounds that: We at Karma Nirvana have received feedback from victims that they have been helped by the rule. On the helpline we receive a number of calls from potential victims (and professionals on their behalf) under the age of 21 years asking about their legal position. Most, if not all, seem quite relieved to find that they have extra breathing space in which to make up their minds. 17. However, Southall Black Sisters disagreed that the change has had a positive effect, stating that it does not in reality protect victims from forced marriage, but simply increases pressure on them to remain within an abusive situation, and discriminates against migrant communities. In evidence to our predecessor Committee in March 2010, Nazir Afzal of the Crown Prosecution Service, had mixed views: I have spoken to several members of the third sector and police officers and they tell me that it has had a very positive effect in terms of the people who would ordinarily have been forced into marriage at an earlier age several hundred women have not been forced into marriage because they have been given the opportunity to wait until beyond 21 It has sent out a message to some families and to some communities that they need to be taking this a little bit more seriously than they have done. However, there has been an increase in relation to fraud involving birth certificates obtained abroad for individuals who are trying to pretend that they are 21 when they are not. 18. We have received mixed evidence about the impact of the change in the Immigration Rules in 2008 to require sponsors of marriage visas and their incoming spouses to be over the age of 21. We recognise that the change may be seen as discriminatory and has the potential for young people to be held in abusive situations for longer; however, it has undoubtedly helped a number of young people to resist forced marriage. The Secretary of State suggests that the Select Committees recent report, not available to the Court of Appeal, remedies any deficiencies in her case in relation to the proportionality of the amendment and thus to the justification for her interference with the rights of the respondents. I disagree. Although its reference to discrimination against migrant communities is, by implication, a reference to unforced marriages within those communities, the Select Committees report is, as its title suggests, upon forced marriage; and the focus of the conflicting evidence which it surveyed related to whether the amendment had succeeded in deterring it. The committee did not also weigh its effect on unforced marriages in the manner mandated of the court by article 8(2). There is a helpful parallel with the decision in R (Baiai) v Secretary of State for the Home Department [2008] UKHL 53, [2009] AC 287. In order to prevent marriages of convenience in the UK the Secretary of State introduced a scheme under which certain persons subject to immigration control required her written permission to marry and would not receive it unless they were present in the UK pursuant to a grant of leave for more than six months of which at least three months was unexpired. The House of Lords held that, notwithstanding that the right to marry under article 12 was not qualified in the way in which article 8(2) qualified the right in article 8(1), the state could take reasonable steps to prevent marriages of convenience; but that the scheme represented a disproportionate interference with the right to marry. It was, said Lord Bingham at para 31, a blanket prohibition on exercise of the right to marry by all in the specified categories, irrespective of whether their proposed marriages are marriages of convenience. The scheme, said Lady Hale at para 43, was overinclusive and [m]aking a serious attempt to distinguish between the sham and the genuine was considered too difficult and too expensive. On 14 December 2010, in ODonoghue v United Kingdom (Application No 34848/07), the ECtHR approved the decision in Baiai and extended it to two later versions of the Secretary of States scheme. Furthermore, in Thlimmenos v Greece (2000) 31 EHRR 411 it held that the application of a rule that a felon could not become a chartered accountant infringed the rights under article 14, taken in conjunction with article 9, of a pacifist convicted of the felony of refusing to perform military service. The court observed, at para 47, that it was legitimate to exclude some felons from entitlement to become chartered accountants but that there was no objective and reasonable justification for having treated the applicant in that way. I would, in conclusion, acknowledge that the amendment is rationally connected to the objective of deterring forced marriages. So the Secretary of State provides a satisfactory answer to question (b) set out in para 45 above. But the number of forced marriages which it deters is highly debatable. What seems clear is that the number of unforced marriages which it obstructs from their intended development for up to three years vastly exceeds the number of forced marriages which it deters. Neither in the material which she published prior to the introduction of the amendment in 2008 nor in her evidence in these proceedings has the Secretary of State addressed this imbalance still less sought to identify the scale of it. Even had it been correct to say that the scale of the imbalance was a matter of judgement for the Secretary of State rather than for the courts, it is not a judgement which, on the evidence before the court, she has ever made. She clearly fails to establish, in the words of question (c), that the amendment is no more than is necessary to accomplish her objective and, in the words of question (d), that it strikes a fair balance between the rights of the parties to unforced marriages and the interests of the community in preventing forced marriages. On any view it is a sledge hammer but she has not attempted to indentify the size of the nut. At all events she fails to establish that the interference with the rights of the respondents under article 8 is justified. By refusing to grant marriage visas to the respondents the Secretary of State infringed their rights under article 8. Her appeals must be dismissed. In line with the helpful analysis of the Upper Tribunal (Immigration and Asylum Chamber) conducted in somewhat similar circumstances in FH (Post flight spouses: Iran) v Entry Clearance Officer, Tehran [2010] UKUT 275 (IAC), I consider that, while decisions founded on human rights are essentially individual, it is hard to conceive that the Secretary of State could ever avoid infringement of article 8 when applying the amendment to an unforced marriage. So in relation to its future operation she faces an unenviable decision. LADY HALE I agree that the Secretary of State has infringed the article 8 rights of the parties to each of the marriages with which we are concerned and that these appeals should therefore be dismissed. Lord Wilson has dealt comprehensively with the relevant evidence, information and arguments and I add these few comments only because we are not all of the same mind. The issue, as Mr Drabble reminded us at the outset of his submissions, is whether the Secretary of State has acted incompatibly with the Convention rights of these particular young people. By reason of section 6(1) of the Human Rights Act 1998, it is unlawful for her to do so. This is subject to section 6(2), where a public authority is acting, to put it loosely, in compliance with primary legislation which cannot be read or given effect in any other way. That is not this case. The Secretary of State has acted in compliance with her own Immigration Rules, which do not even have the status of delegated legislation: see Odelola v Secretary of State for the Home Department [2009] UKHL 25, [2009] 1 WLR 1230. She does have a choice and it is her duty to act compatibly with the Convention rights of the people with whom she is concerned. Of course, where delicate and difficult judgments are involved in deciding whether or not she has done so, this Court will treat with appropriate respect the views taken by those whose primary responsibility it is to make the judgments in question. But those views cannot be decisive. Ultimately, it is for the court to decide whether or not the Convention rights have been breached: R (SB) v Governors of Denbigh High School [2006] UKHL 15, [2007] 1 AC 100; Belfast City Council v Miss Behavin Ltd [2007] UKHL 19, [2007] 1 WLR 1420. The immigration rules in question, paragraph 277 (which applies to spouses and civil partners) and its counterpart in paragraph 289AA (which applies to fianc(e)s and proposed civil partners), make an exception to the general rules governing the admission of spouses and fianc(e)s, civil partners and proposed civil partners, of people who are present and settled or being admitted for settlement here. Those rules (paragraphs 281 and 290) require principally that the parties have met and intend to live permanently with each other as spouses or civil partners; there are also requirements as to self sufficiency and knowledge of the English language. These requirements have a discernible connection with immigration control. The rules reflect a general policy that, subject to such conditions, spouses, partners and fianc(e)s should be able to join their spouses, partners and fianc(e)s who are settled here. The exception with which we are concerned prohibits the grant of a marriage visa (strictly, entry clearance, leave to enter, leave to remain or variation of leave on marriage grounds) unless both parties to the marriage or civil partnership will be aged 21 or over on the date of the applicants arrival in the United Kingdom or the grant of leave to enter, leave to remain or variation of leave, as the case may be. We happen to be concerned with the extension of that exception from those below 18 to those below 21. No one challenged its introduction for 16 and 17 year olds, so we cannot speculate about them. The crucial point is that, as the Secretary of State assures us, and the other parties accept, the purpose of this exception has nothing to do with immigration control. Its sole purpose is to deter or prevent forced marriages. Forced marriage can be defined in a number of different ways. There is a definition in section 63A(4) and (6) of the Family Law Act 1996 for the purpose of the power to grant civil protection orders, which was inserted into the 1996 Act by the Forced Marriage (Civil Protection) Act 2007: see para 68 earlier. In 2000 a Home Office Working Group, in A Choice by Right, defined forced marriage as a marriage conducted without the valid consent of both parties where duress is a factor (p 6). But the Group took a broad view of what constituted duress. They pointed out that, for the purpose of rendering a marriage voidable under section 12(c) of the Matrimonial Causes Act 1973, the Court of Appeal in Hirani v Hirani (1984) 4 FLR 232 had defined the test for duress as whether the mind of the applicant (the victim) has in fact been overborne, howsoever that was caused (p 7). They went on to explain that There is a spectrum of behaviours behind the term forced marriage, ranging from emotional pressure, exerted by close family members and the extended family, to the more extreme cases, which can involve threatening behaviour, abduction, imprisonment, physical violence, rape and in some cases murder (p 11). More recently, The Right to Choose: Multi agency statutory guidance for dealing with forced marriage (2008), takes a similar broad view, defining a forced marriage as one in which one or both spouses do not (or, in the case of some vulnerable adults, cannot) consent to the marriage and duress is involved. The duress in question is not limited to physical duress, but may involve emotional, psychological, financial or sexual duress. An example given of emotional duress is making the individual feel as though she is bringing shame upon her family by not entering into the marriage. Hence both the definitions of a forced marriage referred to above give a wider meaning to duress than its traditional definition in the criminal law, which is limited to threats of physical harm (Archbold, Criminal Pleading Evidence and Practice 2011, para 17.120). But most forced marriages will be legally valid unless or until they can be avoided or dissolved. Forced marriages, even in the wider sense set out in these definitions, are quite different from arranged marriages, in which the families of both spouses take a leading role in arranging the marriage, but the choice whether to solemnise the arrangement remains with the spouses and can be exercised at any time (A Choice by Right, p 10). In various forms this has been a common and perfectly acceptable practice in many, even most, societies throughout history. The idea that young (and not so young) people should find and choose their partners without either the help or approval of their families is a comparatively modern one. But clearly the dividing line between an arranged and a forced marriage may be difficult to draw, particularly in communities where there is a strong cultural tradition that it is for the parents to control their childrens marriages. But anyone who has read Jasvinder Sangheras powerful novel based on her own experiences, Shame (Hodder and Staughton, 2007), can be in no doubt that the difference is real and the consequences of forcing anyone into a marriage which she does not want are grave indeed, not only for the victims but often also for their families. As the Working Group pointed out, the perpetrators aim may be to strengthen the family and protect their culture, but it may have the reverse effect of turning their children against their background because of their experiences (A Choice by Right, p 20). In todays world, it is recognised that everyone has the right to decide whether or not to enter a particular marriage. Article 23(3) of the International Covenant on Civil and Political Rights (ICCPR), in an exact echo of article 16(2) of the Universal Declaration of Human Rights, requires that No marriage shall be entered into without the full and free consent of the intending spouses: see also article 1 of the Convention on Consent to Marriage, Minimum Age for Marriage and Registration of Marriages, article 10(1) of the International Covenant on Economic, Social and Cultural Rights (ICESC), article 16(1)(b) of the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW). Full and free means that the marriage should be entered into without improper pressure of any kind. Equally, it is recognised that anyone of marriageable age is free to marry whom they choose: see article 16(1) of the Universal Declaration, article 23(2) of the ICCPR, article 16(1)(a) of CEDAW, and of course article 12 of the ECHR. The right to marry is just as important as the right not to marry. Married couples also have the right to live together. This is inherent in the right to found a family, which is coupled with the right to marry in the Universal Declaration, the ICCPR and the ECHR. But the ECHR goes further, because article 8 protects the right to respect for family life. Family life arises virtually automatically upon a genuine marriage. In Abdulaziz, Cabales and Balkandali v United Kingdom (1985) 7 EHRR 471, at para 62, the European Court of Human Rights observed that Whatever else the word family may mean, it must at any rate include the relationship that arises from a lawful and genuine marriage, such as that contracted by Mr and Mrs Abdulaziz and Mr and Mrs Balkandali, even if a family life of the kind referred to by the Government has not yet been fully established. The Court also decided, at para 63, that family life had been established between Mr and Mrs Cabales, even though there was a question mark over the formal validity of their marriage, because they had gone through a ceremony of marriage, believed themselves to be married and genuinely wished to cohabit and lead a normal family life. Hence all three marriages were sufficient to attract such respect as may be due under article 8. Most significantly for our purposes, the Court held at para 62 that the expression family life in the case of a married couple, normally comprises cohabitation. The latter proposition is reinforced by the existence of article 12, for it is scarcely conceivable that the right to found a family should not encompass the right to live together. However, in the context of immigration control, the court went on to hold, at para 68, that 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 the country of their matrimonial residence and to accept the non national spouses for settlement in that country. In all three cases, the marriage had been contracted after the UK spouse had become settled here as a single person, at a time when they must have known that there was no right for the non UK spouse to join them here, and it had not been shown that there were obstacles to establishing family life in their husbands countries or the countries from which they had originally come, or that there were special reasons why this should not be expected of them. The majority therefore held that there was no lack of respect for family life and thus no breach of article 8. A minority held that there was a lack of respect, but that it was justified under article 8(2) in the interests of the economic well being of the country. Although it has not wholly disappeared, subsequent developments have eroded the distinction between the negative obligation, not to interfere in family life by expelling one member of the family, and the positive obligation, to respect family life by allowing family reunion to take place. Many later cases have repeated the principle stated in Gl v Switzerland (1996) 22 EHRR 93, at para 38, that the boundaries between the states positive and negative obligations under this provision do not lend themselves to precise definition. The applicable principles are, none the less, similar. In both contexts regard must be had to the fair balance that has to be struck between the competing interests of the individual and of the community as a whole; and in both contexts the state enjoys a certain margin of appreciation. The language of fair balance is much more compatible with a search for justification under article 8(2) than with identifying a lack of respect under article 8(1). Nevertheless, the Court continues to state that, in expulsion cases, the question is whether the interference with the family life established in the host country can be justified, whereas in reunion cases, the question is whether the host country should be obliged to allow the family to settle there: for a recent example, see Haghighi v Netherlands (2009) 49 EHRR SE8. The factors applicable in deciding whether an expulsion can be justified under article 8(2) have been laid down in the Chamber decision in Boultif v Switzerland (2001) 33 EHRR 1179, approved and augmented in the Grand Chamber in ner v Netherlands (2006) 45 EHRR 421. A similar but not identical set of factors has been referred to when deciding whether a failure to grant a permit for family reunion violates article 8, in cases such as Sen v Netherlands (2001) 36 EHRR 81, Tuquabo Tekle v Netherlands [2006] 1 FLR 798, Rodrigues da Silva v Netherlands (2006) 44 EHRR 729 and Y v Russia (2008) 51 EHRR 531. However, the reunion cases do draw upon the distinction, which they attribute to Abdulaziz, between cases where family life was established in another country, which the parents left to come to the host country, and now wish to bring a left behind child to the host country, and cases, like Abdulaziz itself, where a couple marry when one is settled in the host country and wish to establish a home there. In the former type of case, apart from Gl itself, the Court has often found a violation in failing to allow the left behind member to join the family in the host country. In Y v Russia, on the other hand, the Court found no violation in refusing to allow a failed asylum seeker from China to remain with his Russian wife in Russia. Significantly, however, he had made no attempt to obtain a residence permit as the husband of a Russian national (to which it appears that he would prima facie have been entitled under Russian law) so it was an open question whether he could have done so or whether his wife could join him in China. Even more significantly, perhaps, while drawing its statement of principle, in para 103, virtually word for word from para 39 of Rodrigues da Silva, the Court referred to Boultif in one of its footnotes. It would appear, therefore, that although all these cases depend upon their particular facts and circumstances, the approach is now similar in all types of case. The Courts approach is much more compatible with an analysis in terms of justification under article 8(2) than with an analysis of the extent to which respect is due under article 8(1): and in Omoregie v Norway [2009] Imm AR 170, the Court expressly analysed a reunion case in article 8(2) terms. It would seem, therefore, that we can safely consign the no lack of respect aspect of Abdulaziz to history. But in this case that debate seems to me to be something of a red herring. In Abdulaziz itself it was clearly established that family life exists between husband and wife by virtue of their marriage and that family life normally comprises cohabitation. Absent the immigration dimension, there can be no doubt that forcing a married couple to choose either to live separately for some years or to suspend their plans to live in one place and go to live where neither of them wishes to live, is, as Lord Wilson puts it at para 32, a colossal interference with their right to respect for family life. And in this case, the immigration dimension can be ignored. This measure has not been adopted as a measure of immigration control. The United Kingdom has no objection to admitting genuine spouses who fulfil certain self sufficiency and language requirements to this country. The Secretary of State cannot at one and the same time say that she is not doing this for the purpose of controlling immigration and rely upon jurisprudence which is wholly premised on the states right to control immigration. So the only question is whether this colossal interference can be justified under article 8(2). The justification claimed is that this measure will prevent, deter or delay forced marriages. This is undoubtedly a legitimate aim, in article 8(2) terms, for the protection of the rights and freedoms of others. The action taken was undoubtedly in accordance with the law. The sole question is whether it was necessary in a democratic society, in other words, whether it was a proportionate response to a pressing social need. As Lord Wilson has shown, there are many reasons to conclude that it was not. First and foremost, although nobody knows the figures, it is clear that the rule will interfere with many more entirely voluntary marriages than it will prevent, deter or delay forced marriages. The scale and severity of the impact upon these unforced marriages has scarcely been considered. Nicola Smith, in her first witness statement on behalf of the Secretary of State, says that it was considered carefully, but the reasoning was that, as only a small proportion of foreign spouses are from this age group, the impact was proportionate. No one has said: We know that many innocent young people will be caught by this rule but we think that the impact upon them will not be so great while the protection given to victims of forced marriage will be so much greater. There are, of course, circumstances in which the imposition of a blanket rule can be justified. The best known example is the ban on assisting suicide, upheld by the Strasbourg Court even though not every would be suicide was vulnerable and in need of its protection: see Pretty v United Kingdom (2002) 35 EHRR 1. But even then, an important factor in the Courts decision was the prosecutors discretion: It does not appear to be arbitrary to reflect the importance of the right to life, by prohibiting assisted suicide while providing for a system of enforcement and adjudication which allows due regard to be given in each particular case to the public interest in bringing a prosecution . (para 76). We know from cases such as Hirst v United Kingdom (No 2) (2005) 42 EHRR 849, para 82, that a general, automatic, indiscriminate restriction (their word) on a vitally important Convention right falls outside any acceptable margin of appreciation. We are, of course, concerned with a restriction rather than a perpetual ban, but it is none the less general, automatic and indiscriminate. In this case, it is understood that individualised decisions may create their own problems, because taking steps to determine whether or not the marriage is forced may exacerbate the risks to the reluctant spouse. But, as the House of Commons Home Affairs Committee has pointed out, the Government has a mechanism to help reluctant sponsors: Domestic Violence, Forced Marriages and Honour based Violence, 6th Report of Session 2007 08, HC 263 I, paras 112114. Secondly, it is entirely unclear whether the rule does have the desired effect upon the marriages which it is designed to prevent or deter. Karma Nirvana gave evidence that some girls ringing their helpline have found it helpful to be able to say to their families that they will not be able to sponsor an immigrant spouse until they are both 21: House of Commons Home Affairs Committee, Forced Marriage, 8th Report of Session 2010 12, HC 880, para 16. But there is also evidence that the desire to obtain a visa is not the predominant motive for forcing a child into marriage. It is only the 12th of the list of 13 motives given in the statutory guidance: see para 10 earlier. We have no idea how many forced marriages with non resident spouses have been deterred. We have no idea how many forced marriages with resident spouses have been substituted for those which have been deterred. We do know that the rule can have no effect at all upon the forced marriages which take place within this country or within the European Union. Thirdly, we also know that if the rule is not effective in preventing a forced marriage it may do a great deal more harm than good. A young woman may be sent abroad and forced to marry against her will and kept there until she can sponsor her husband to come here. During this time she may be raped many times, bear children she does not want to have and be deprived of the education and life which she would otherwise have had here. Even if she is allowed to come home, she will not be able to escape from the marriage. She will be obliged to stay married so that she can sponsor her husband to come here. The rule will have made her life more difficult. The cases coming before the Family Division of the High Court, although only the tip of the iceberg, provide ample illustration of the difficulties of rescuing a young person who has been trapped into marriage abroad: see, for example, In re KR (Abduction: Forcible Removal by Parents) [1999] 2 FLR 542. Hence it is scarcely surprising that the views of knowledgeable people and organisations are so divided. While Karma Nirvana support the change, Southall Black Sisters and the Henna Foundation do not. In 2008, the Home Affairs Committee concluded, at para 111, that there was not sufficient evidence to determine whether it would have the desired deterrent effect. Given the potential risks involved, it urged that the age should not be raised without further research and conclusive evidence. There certainly was no conclusive evidence when the change was made. The Department had previously commissioned research from Bristol and Manchester Universities, which found that the change would be unlikely to prevent forced marriages, and indeed might increase the risk of negative actions associated with the increased age (Hester and others, Forced Marriage: the risk factors and the effect of raising the minimum age for a sponsor, and of leave to enter the United Kingdom as a spouse or fianc(e), 2007, chapter 3). The Department concluded that, because of methodological difficulties, these findings should be treated with caution and not regarded as representative. They went on to publish their own consultation paper, Marriage to Partners from Overseas (December, 2007). Six months later, they published their conclusions, in Marriage Visas: The Way Forward (July, 2008). Clearly, those who choose to respond to consultation papers are even less representative than the organisations, individuals and focus groups who were chosen for the purpose of the academic research. Even so, the response was hardly a ringing endorsement: 15 of the 29 individual respondents supported the change, the organisations were evenly divided between supporters and opponents and three organisations had mixed views. None of this amounts to the conclusive evidence for which the Home Affairs Committee called in 2008. None of it amounts to a sufficient case to conclude that the good done to the few can justify the harm done to the many, especially when there are so many other means available to achieve the desired result. There is a further reason for holding the interference disproportionate. Although the means used is an interference with article 8 rights, the object is to interfere with article 12 rights. The aim is to prevent, deter or delay marriage to a person from abroad. The right to marry is a fundamental right. It does not include the right to marry in any particular place, at least if it is possible to marry elsewhere: see Savoia and Bounegru v Italy (Application No 8407/05) (unreported), Admissibility Decision of 11 July 2006. But it is not a qualified right: the state can only restrict it to a limited extent, and not in such a way or to such an extent as to impair its very essence. In ODonoghue v United Kingdom (Application No 34848/07) (unreported) given 14 December 2010, the Court was concerned with the Home Office scheme for approving marriages with people from abroad, the first version of which was struck down by the House of Lords in R (Baiai) v Secretary of State for the Home Department [2008] UKHL 53, [2009] 1 AC 287. The Court agreed that a system of approval designed to establish the capacity of the parties to marry and whether or not it is a marriage of convenience is not objectionable. But this scheme was objectionable for a number of reasons: first, the decision to grant a certificate was not based on the genuineness of the marriage; second, it imposed a blanket prohibition on certain categories of people; and third, the fee was set at a level which the needy could not pay. A fee fixed at such a level could impair the essence of the right to marry. This scheme shares all three characteristics. The delay on entry is not designed to detect and deter those marriages which are or may be forced. It is a blanket rule which applies to all marriages, whether forced or free. And it imposes a delay on cohabitation in the place of their choice which may act as at least as severe a deterrent as a large fee. I say this, not to conclude that there has been a violation of these couples right to marry. They have in fact both been able to get married, one in England and one in Pakistan. But these factors lend weight to the conclusion that it is a disproportionate and unjustified interference with the right to respect for family life to use that interference for the purpose of impeding the exercise of another and even more fundamental Convention right in an unacceptable way. Like Lord Wilson, therefore, I would hold that the Secretary of State has acted incompatibly with the Convention rights of these two couples. I also agree with him that, although we are only concerned with these young people, it is difficult to see how she could avoid infringing article 8 whenever she applied the rule to an unforced marriage. LORD BROWN Forced marriages are an appalling evil. Most commonly the victims are young women and all too often such marriages occur within the immigrant community. One reason for this, amongst several identified by the National Centre for Social Research (NCSR) in their July 2009 report, is that: FM can be a way of ensuring land, property and wealth remain within a family. It may take place because of a long standing family commitment or to appease an aggrieved family member. This is often associated with assisting a claim for UK residency and citizenship. (para 2.1) One way of seeking to combat this aspect at least of the problem of forced marriages has been by raising the age at which a UK national or settled resident can sponsor a fiance or spouse seeking admission to this country (and also the age at which a fiance or spouse may gain entry). In April 2003 the age for sponsorship was raised from 16 to 18 and in December 2004 the age for those seeking entry was similarly raised. As stated in the July 2008 Home Office UK Border Agency Report (proposing a further such increase from 18 to 21) Marriage Visas: The Way Forward: These measures were introduced to help tackle the problem of forced marriage with the aim of giving young people extra time to mature which would help them to resist inappropriate family pressure to marry. (para 3.1) The proposed further increase from 18 to 21 was implemented by the amendment of paragraph 277 of the Immigration Rules (HC 395) with effect from 27 November 2008. It is this increase which by order made on 21 December 2010 the Court of Appeal declared to be unlawful, at least where, as in the present cases, one party to the (actual or proposed) marriage is a UK national. The essential ground on which the Court of Appeal held the increase to be unlawful was that its interference with the respondents article 8(1) rights was unjustified and disproportionate (indeed, in Gross LJs view, irrational or unreasonable in the traditional, common law, Wednesbury sense). It is my misfortune to disagree with what I understand will be the decision of the majority of the court on this further appeal to uphold the Court of Appeals conclusion. The Court of Appeal did not have, as this Court has had, the advantage of the May 2011 report (with evidence annexed) of the House of Commons Home Affairs Committee on Forced Marriage. This report, having noted the Court of Appeals ruling in the present case and that this matter is still currently before the courts continues: 16. Karma Nirvana [the largest NGO concerned with the victims of forced marriage and an organisation of unchallenged repute] supported the change in the Immigration Rules on the grounds that: We at Karma Nirvana have received feedback from victims that they have been helped by the rule. On the helpline we receive a number of calls from potential victims (and professionals on their behalf) under the age of 21 years asking about their legal position. Most, if not all, seem quite relieved to find that they have extra breathing space in which to make up their minds. 17. However, Southall Black Sisters disagreed that the change has had a positive effect, stating that it does not in reality protect victims from forced marriage, but simply increases pressures on them to remain within an abusive situation and discriminates against migrant communities. In evidence to our predecessor Committee in March 2010, Nazir Afzal of the Crime Prosecution Service, had mixed views: I have spoken to several members of the third sector and police officers . and they tell me that it has had a very positive effect in terms of the people who would ordinarily have been forced into marriage at an earlier age . several hundred women have not been forced into marriage because they have been given the opportunity to wait until beyond 21 . It has sent out a message to some families and to some communities that they need to be taking this a little bit more seriously than they have done. However, there has been an increase in relation to fraud involving birth certificates obtained abroad for individuals who are trying to pretend that they are 21 when they are not. 18. We have received mixed evidence about the impact of the change in the Immigration Rules in 2008 to require sponsors of marriage visas and their incoming spouses to be over the age of 21. We recognise that the change may be seen as discriminatory and has the potential for young people to be held in abusive situations for longer; however, it has undoubtedly helped a number of young people to resist forced marriage. The overall balance of this latest report, as it seems to me, is in favour of the rule change. True, Southall Black Sisters (one of the interveners before this court) are against it. But their view is more than offset by that of Karma Nirvana and Mr Afzals only concern appears to be in respect of forged birth certificates. There is furthermore before this court information about the practice of other EU countries which impose minimum ages for marriage visas. Germany, Austria and the Netherlands impose an age requirement of 21 for both parties (including their own citizens) precisely as the UK does. Belgium is planning to have the identical rule (although at present it does not apply to Belgian citizens or EU nationals). Denmark has the same rule except that it imposes a minimum age requirement of 24 rather than 21. In addition our attention is drawn to Council Directive 2003/86/EC of 22 September 2003 on the right to family reunification which, with regard to third country national sponsors, provides (by article 4(5)): In order to ensure better integration and to prevent forced marriages Member States may require the sponsor and his/her spouse to be of a minimum age, and at maximum 21 years, before the spouse is able to join him/her. (emphasis added) The October 2008 Report from the Commission to the European Parliament and the Council on the application of that Directive stated in respect of article 4(5): Most Member States made use of this optional clause, arguing that it can help prevent forced marriages. Now it is of course obvious that this rule has significant disruptive effects on many young couples whose actual or proposed marriages are entirely voluntary indeed, the very substantial majority of those affected. Predictably these couples, whether or not they marry, will be kept apart or have to live abroad. As, moreover, is recognised in a recent statement (dated 9 June 2011) from Suzelle Dickson, the Joint Head of the Forced Marriage Unit (FMU): The FMU is aware of a concern that the increase in the minimum age for obtaining a marriage visa would lead to young people being kept abroad against their will for an extended period following the marriage until reaching the age for sponsorship. She adds, however: From the FMUs experience the majority of reluctant sponsors return to the UK soon after the marriage although there are no statistics or data held in relation to this. This is generally so that the sponsor can establish themselves financially, gaining employment so that they can support the visa application. It is also perfectly true that, certainly at the time this measure was introduced in November 2008, there had been little in the way of research to indicate just how far the rule would help in combating forced marriages. As, indeed, the 2011 Home Affairs Committee Report noted (at para 14), their predecessor committee in May 2008 had concluded: We have not seen sufficient evidence to determine whether or not raising the age of sponsorship would have a deterrent effect on forced marriage. Given the potential risks involved, we urge the government to ensure that any changes it proposes to its policy on visa application procedures in respect of sponsorship are based on further research and conclusive evidence as to the effect of those changes. The unfortunate fact is, however, that, by the same token that the full extent of the problem of forced marriage is impossible to gauge as stated in the NCSR July 2009 report (para 3), it is likely that there are a large number of victims who have not come to the attention of any agencies or professionals, described as hidden cases so too research is problematic and conclusive evidence impossible to come by. The reason forced marriages are hard to detect is, of course, that victims inevitably risk yet further serious harm and suffering if they reveal the true facts. Lord Wilson (at para 49 of his judgment) poses ten questions all, I readily accept, perfectly good questions which (at para 50) he recognises are not easily answered and remain unanswered. The unfortunate fact is, however, that these questions can never be satisfactorily answered and that a judgment call is therefore required. This is a matter to which I return at para 91 below. Or is it to be said that the whole matter is all just too difficult and uncertain and that the Secretary of State is therefore disabled from taking the course adopted by those other EU countries which share her view on the best way forward (although not apparently from increasing the sponsoring age from 16 to 18 as was earlier done)? For my part, therefore, I would be less critical than the majority of the Secretary of States view the Hester Research Report having been analysed by Immigration Research and Statistics and two external peer reviewers as not of sufficient quality to be published by the Home Office that, public consultation [having] found that a small majority of respondents were in favour . , raising the marriage visa age would represent a robust and publicly endorsed approach to the problem of forced marriage. (para 33 of Nicola Smiths witness statement for the appellant dated 30 October 2009). Altogether more important than this, however, as it seems to me, is that this courts duty is to decide the appeal, not by a reference to the sufficiency or otherwise of the research carried out by the Home Office before the new rule was introduced, but rather by reference to the proportionality as perceived today between the impact of the rule change on such innocent young couples as are adversely affected by it and the overall benefit of the rule in terms of combating forced marriage. As Lord Bingham of Cornhill said in R (SB) v Governors of Denbigh High School [2007] 1 AC 100, 116, para 31: what matters in any case is the practical outcome, not the quality of the decision making process that led to it. In the light of all the material now before this court, most notably the May 2011 Home Affairs Committee Report and Karma Nirvanas evidence before it, the evidence of other EU countries imposing similar minimum age requirements for sponsoring marriages, the 2003 EC Directive (and the 2008 Council Report on its application) recognising that such requirements are widely regarded as helping to prevent forced marriages, the original, never disputed, increase in the age requirement for sponsorship from 16 to 18 with that aim in mind, together with such (admittedly, albeit to my mind inevitably, limited) Home Office statistical evidence as suggests the benefit of a further such increase from 18 to 21, I find it hard to see how this court can properly strike down the rule as incompatible with article 8. The extent to which the rule will help combat forced marriage and the countervailing extent to which it will disrupt the lives of innocent couples adversely affected by it is largely a matter of judgment. Unless demonstrably wrong, this judgment should be rather for government than for the courts. Still more obviously, the comparison between the enormity of suffering within forced marriages on the one hand and the disruption to innocent couples within the 18 21 age group whose desire to live together in this country is temporarily thwarted by the rule change, is essentially one for elected politicians, not for judges. Lady Hale suggests (at para 66 of her judgment) that: The right to marry is just as important as the right not to marry. But she cannot possibly mean by this that the postponement by up to three years of a couples wish to live together as man and wife in this country involves just as great a violation of human rights as a forced marriage. What value, then, is to be attached to preventing a single forced marriage? What cost should each disappointed couple be regarded as paying? Really these questions are questions of policy and should be for government rather than us. Of course, the ultimate decision on article 8(2) proportionality must be for the courts but in this particular context the courts should to my mind accord government a very substantial area of discretionary judgment. Huang v Secretary of State for the Home Department [2007] 2 AC 167 (to which Lord Wilson refers at para 46 of his judgment) was a very different sort of case from the present, concerning as it did the article 8 claims of two particular individuals on their own special facts. No one was seeking there, as here, actually to strike down an immigration rule. Certainly, at paragraph 16 of the committees opinion (given by Lord Bingham) in Huang, we deprecated the use of the term deference to describe the weight to be given to certain factors considered important by the Secretary of State. But we expressly recognised the need to accord appropriate weight to the judgment of a person with responsibility for a given subject matter and access to special sources of knowledge and advice. That is precisely what I am suggesting should be done here: it is the Secretary of State who has the responsibility for combating forced marriages in the context of immigration and who should be recognised as having access to special sources of knowledge and advice in that regard. Lady Hale (at para 74 of her judgment) says that: We know from cases such as Hirst v United Kingdom (No 2) (2005) 42 EHRR 849, para 82, that a general, automatic, indiscriminate restriction on a vitally important Convention right falls outside any acceptable margin of appreciation. I confess to the greatest difficulty in understanding the suggested relevance of Hirst in the present context. Were the UK government now to legislate to accord the vote, say, to all prisoners serving less than four year terms of imprisonment, could it then seriously be argued that the rule (denying the vote to those serving four years or more) would still fall foul of some principle against a general, automatic, indiscriminate restriction? I suggest not and that that would be the real parallel with the rule in the present case (just as with the previous rule postponing sponsorship from 16 to 18 as to which Lady Hale says nothing as, indeed, she says nothing about the similar rules adopted in other Council of Europe states). In any event, it is not as if the Secretary of State makes no exception whatever to the operation of the rule. Obviously, given the difficulty of discovering which marriages (or proposed marriages) are forced, exceptions cannot be too readily made if the rule is to have its intended effect. But, in exceptional compassionate circumstances (perhaps, for example, where children are involved or the woman is pregnant) or where, indeed, on the particular facts of an individual case article 8 would otherwise be breached (the demonstrable disadvantage to a particular couple plainly outweighing the public interest in maintaining a general rule for the benefit of the wider community, a category of exception likely to overlap with the first), the rule will be disapplied. Such exceptions, one may note, are broadly mirrored in the Danish legislation (helpfully supplied to us following the hearing by Mr Setright QC acting on behalf of the second interveners) which, by section 9c(i) of the Aliens (Consolidation) Act 2009, provides for a resident permit to be issued to an alien under 24 upon the fulfilment of certain specified conditions if exceptional reasons make it appropriate, including regard for family unity. Similarly the exception to rule 277 constituted by its further amendment with effect from 6 April 2010 to reduce the minimum age to 18 if either party is a serving member of HM Forces, so far from mak[ing] all but untenable the Home Secretarys contention that an all embracing rule, making no distinction of persons, is necessary if the objective is to be met (Sedley LJs judgment at para 57), is to my mind convincingly explained in Nicola Smiths third witness statement (before the Court of Appeal) dated 14 October 2010: The change reflects the unique circumstances in which military personnel operate. Additional support provided by the Armed Forces to families during deployments is more efficiently delivered if they live close to the Service persons duty station. This support gives a Service person a degree of reassurance when they are deployed on operations and is considered to have a positive effect on families at home. It is the Ministry of Defences view that military personnel will be more operationally effective when deploying to difficult environments if they have increased certainty that their spouse or partner will not be excluded from the UK. Mr Al Mustakim on behalf of the respondents in the second appeal and all the interveners (although conspicuously not Mr Drabble QC for the respondents in the first appeal) seek to rely on the decision of the House of Lords in R (Baiai) v Secretary of State for the Home Department [2009] AC 287 in support of an argument under article 12 of the Convention. As Sedley LJ records (para 47 of his judgment), Mr Al Mustakim and the AIRE Centre placed the right to marry at the centre of their arguments and, indeed, Mr Satvinder Juss for the third intervener contends before us (para 1 of his written case) that Baiai is dispositive of this appeal. In my judgment, however, the differences between the two cases are altogether more striking than their similarities and reliance here on the decision in Baiai is entirely misplaced. Baiai involved a direct contravention of the first limb of article 12, the right to marry. Here by contrast the case cannot be put higher than an interference with the right to found a family. As stated in Clayton and Tomlinsons The Law of Human Rights, 2nd ed, (2009) para 13.114: a claim that legal restrictions preclude a couple from marrying will come under article 12 whereas complaints concerning the states failure to provide the material circumstances which make marriage effective will engage article 8. Secondly, the legitimate aim advanced for the blanket prohibition in Baiai was the combating of marriages of convenience, ie marriages designed to defeat immigration control. Here by contrast the aim is to combat forced marriages, obviously a more compelling objective. Thirdly, the justification advanced for adopting a blanket prohibition rather than investigating each application individually has been very different in the two cases. It is one thing to stigmatize a rule as insufficiently precisely targeted (Ms Monaghan QCs characterisation of the respective policies at para 20 of her written argument for the AIRE Centre) if the only reason put forward for not considering cases individually is that such investigation is too expensive and administratively burdensome (para 31 of Lord Bingham of Cornhills judgment in Baiai); quite another to do so given, as here, the impossibility (explicitly recognised by Mr Setright in argument) of satisfactorily investigating individual applications in the context of forced marriages. It is now an established principle of our law that the Convention should not be interpreted and applied more generously in favour of an applicant than the Strasbourg jurisprudence clearly warrants. If this court now concurs in striking down rule 277 on article 8 grounds, there is nothing the Secretary of State can do by way of an appeal to Strasbourg to reinstate it. Are we really to say that the position is plain and that Germany, Austria, the Netherlands, Belgium, Denmark and other such Council of Europe states with similar rules must also necessarily be in breach of article 8? What if the equivalent rule is later challenged elsewhere in Europe and eventually upheld in Strasbourg? Article 8 is a difficult provision which has already led to some highly contentious, not to say debateable, decisions. Upon that I am sure we would all agree. In a sensitive context such as that of forced marriages it would seem to me not merely impermissible but positively unwise for the courts yet again to frustrate government policy except in the clearest of cases. To my mind this cannot possibly be regarded as such a case. I would allow these appeals. LORD PHILLIPS AND LORD CLARKE We agree that these appeals should be dismissed for the reasons given by Lord Wilson and Lady Hale.
+Para 352D of the Immigration Rules provides for the grant of leave to enter to the child of a parent who has been admitted to the UK as a refugee. The issue in this case is whether the Para extends, or should be treated as extending, to a child for whom a family member has taken parental responsibility under the Islamic procedure known as Kafala (described in the agreed statement of issues as a process of legal guardianship akin to adoption). The facts are fully set out in the judgment of Davis LJ in the Court of Appeal. The following is a sufficient summary for present purposes. i) AA was born in Somalia on 21 August 1994. Her family was torn apart by events in Somalia. Her father was killed in the mid 1990s. ii) An elder sister, Ms A, married Mohamed on 10 January 2001. In 2002 she came home to find that he, her daughter Fadima, and her step daughter Amaani had been abducted. She eventually left Somalia and came to the United Kingdom in October 2002. She was later granted indefinite leave to remain, on compassionate grounds. Her husband had in the meantime escaped from his abductors and had gone to live elsewhere in Mogadishu. iii) AA became separated from her mother and other siblings during the fighting. Around the end of 2002 she went to live with Mohamed, Fadima and Amaani and was accepted as a family member. iv) In October 2007 Mohamed left Somalia, and came to the United Kingdom in November 2007, where he was reunited with Ms A. He was granted asylum on 21 July 2008. The three girls AA, Fadima and Amaani were left with a maternal aunt in Mogadishu. v) At the end of 2008 the three girls went to live with neighbours. Contact with Ms A and Mohamed was renewed in March 2009. Applications for entry into the UK were made for all three girls. Entry clearance was granted to Fadima and Amaani, who came to the United Kingdom on 22 January 2010. (I shall refer to them for convenience, and without legal implications, as AAs adoptive siblings.) It was refused for AA, who remained in Addis Ababa pending her appeal. vi) Her appeal was heard in the First tier Tribunal on 3 September 2010. Expert evidence, accepted by the tribunal, was to the effect that, although adoption as such does not exist under Islamic law, under the legal institution known as Kafala, a person may become a protg and part of the household of an adult; and that this only falls short of a full blown adoption in that such adoptee does not enjoy a right of inheritance under Islamic law (FTT para 21). vii) The tribunal allowed the appeal both under para 352D and article 8 of the European Convention on Human Rights, the former on the basis that AA falls into a specific category of persons who have been taken into guardianship or the care of others under a transfer of responsibility such that Islamic law would recognise the legal status of the appellant in relation to [Ms A and Mohamed] as their child for all purposes and in the circumstances in which the appellant was an orphan. (para 31) viii) On 23 May 2011, the Upper Tribunal (Judge Grubb) allowed the Secretary of States appeal in respect of para 352D, but confirmed the tribunals decision under article 8. On 14 May 2012 AA was given entry clearance and she arrived in this country on 4 June 2012. The Court of Appeal accepted that notwithstanding the grant of entry clearance under article 8, the appeal was not academic. The answer provided is that if entry is permitted under the Immigration Rules the entitlement of AA to remain thereafter will in effect align with the sponsor's entitlement, whereby indefinite leave to remain can be expected to be granted after the expiry of the five year period: whereas grant of leave to remain under article 8 is discretionary and not necessarily so linked to the sponsor's position. In this court, Mr Gill has provided further details of the differences, legal and practical, between clearance under the rules and discretionary leave to remain (DLR) under article 8. For example, under policies current at the time a person admitted under article 8 would take longer to reach the point of claiming indefinite leave to remain (ILR) than a person admitted under the rules. Mr Gill submits that DLR status is not easily understood by employers, educational institutions and others with whom the holder will need to have dealings in ordinary life. He pointed to other practical disadvantages, such as in relation to travel documents. Some of his points were contentious. However, it was not in dispute as I understand it that AAs status, following admission under article 8, might be materially less advantageous than that of someone (such as her adoptive siblings) admitted under Para 352D. The Rules The critical provision is Para 352D, in Part 11 of the Immigration Rules which relates to asylum: 352D. The requirements to be met by a person seeking leave to enter or remain in the United Kingdom in order to join or remain with the parent who is currently a refugee granted status as such under the immigration rules in the United Kingdom are that the applicant: (i) is the child of a parent who is currently a refugee granted status as such under the immigration rules in the United Kingdom; and (ii) is under the age of 18, and (iii) is not leading an independent life, is unmarried and is not a civil partner, and has not formed an independent family unit; and (iv) was part of the family unit of the person granted asylum at the time that the person granted asylum left the country of his habitual residence in order to seek asylum; The principal issue which arises in AAs case is whether her relationship with her brother in law Mohamed can be regarded as that of the child of a parent (under (i)). For that it is necessary to turn to the interpretation provision, Para 6, which defines parent as follows: a parent includes: (a) the stepfather of a child whose father is dead and the reference to stepfather includes a relationship arising through civil partnership; (b) the stepmother of a child whose mother is dead and the reference to stepmother includes a relationship arising through civil partnership and; (c) the father as well as the mother of an illegitimate child where he is proved to be the father; (d) an adoptive parent, where a child was adopted in accordance with a decision taken by the competent administrative authority or court in a country whose adoption orders are recognised by the United Kingdom or where a child is the subject of a de facto adoption in accordance with the requirements of Para 309A of these Rules (except that an adopted child or a child who is the subject of a de facto adoption may not make an application for leave to enter or remain in order to accompany, join or remain with an adoptive parent under Paras 297 303); (e) in the case of a child born in the United Kingdom who is not a British citizen, a person to whom there has been a genuine transfer of parental responsibility on the ground of the original parent(s)' inability to care for the child. Thus an adoptive parent under a de facto adoption is included, but subject to the requirements of Para 309A. This is underlined in turn by the definition of adoption: adoption unless the contrary intention appears, includes a de facto adoption in accordance with the requirements of Para 309A of these Rules, and adopted and adoptive parent should be construed accordingly. Para 309A is in Part 8 of the Immigration Rules relating to Family Members (in the particular group relating to children). Its present form dates from 2003. It provides so far as relevant: 309A For the purposes of adoption under Paras 310 316C a de facto adoption shall be regarded as having taken place if: (a) at the time immediately preceding the making of the application for entry clearance under these Rules the adoptive parent or parents have been living abroad (in applications involving two parents both must have lived abroad together) for at least a period of time equal to the first period mentioned in sub Para (b)(i) and must have cared for the child for at least a period of time equal to the second period material in that sub Para; and (b) during their time abroad, the adoptive parent or parents have: (i) lived together for a minimum period of 18 months, of which the 12 months immediately preceding the application for entry clearance must have been spent living together with the child; and (ii) have assumed the role of the child's parents, since the beginning of the 18 month period, so that there has been a genuine transfer of parental responsibility. Paras 310 316C (referred to in the opening words) form a group of Paras under the general heading Adopted Children, dealing with the general requirements for entry as an adopted child, unconnected with circumstances which might lead to an asylum claim. We were given little information about the thinking behind these rules, either in the present form, or as introduced in 2000. Before 2000 a more flexible approach had been applied. In R v Immigration Appeal Tribunal Ex p Tohur Ali [1988] 2 FLR 523, the Court of Appeal considered rule 50 as it then stood, under which parent was defined as including an adoptive parent, where there has been a genuine transfer of parental responsibility on the ground of the original parents inability to care for the child The court, by a majority, held that this expression was not confined to adoption under a legally recognizable adoptive process. Para 352D was originally introduced in October 2000, at the same time as the Human Rights Act 1998 came into effect. At that time the relevant part of the definition of parent in Para 6 included an adoptive parent but only where a child was adopted in accordance with a decision taken by a competent administrative authority or court in a country whose adoption orders are recognised by the United Kingdom (except where an application for leave to enter or remain is made under Paras 310 316). HC 538 of 31 March 2003 altered the definition of parent to its present form and introduced Para 309A. We were not given any explanation for these changes, but neither side relies on them as throwing any light on the issue we have to decide. Para 352D was considered by the Court of Appeal in MK (Somalia) v Entry Clearance Officer [2009] Imm AR 386. It had been argued that, notwithstanding the introduction of the new rule, reliance could be placed on a free standing policy, outside the rules, expressed in a Ministerial Statement dated 17 March 1995, under which following grant of asylum status to a parent reunion of the immediate family would be permitted as a concession outside the rules. The court held that this policy had been supplanted by the rules in their amended form. Discussion As I understand them, Mr Gills submissions, carefully and fully developed in his printed case and in oral argument, have three main strands: i) Construction To make sense of Para 352D in the context of the family of a refugee, the definitions must be interpreted broadly so as to include a child in the position of AA. ii) International obligations Effect must be given to the UKs international obligations relating to the treatment of children, including a broad approach to the recognition of adoptive children. iii) Discrimination Children who are members of a family unit should not be put at a disadvantage because they come from countries which have no formal system of adoption. Construction I would accept that the requirements of Para 309A (b)(i) and (ii) seem ill adapted to the purposes of Para 352D. They assume a degree of stability in the home country which is likely to be wholly inappropriate to those like AA seeking refuge from war torn Somalia, and indeed for most asylum seekers. Mr Eadie did not argue otherwise, although he suggested some theoretical scenarios in which the requirements might be achievable. As appears from its introduction the definition seems to have been designed principally to deal with ordinary applications to enter by adopted children, covered by the immediately following Paras. It finds its way into Para 352D by a somewhat circuitous route, which suggests that careful thought may not have been given to its practical implications. If there were any way in which we could legitimately rewrite the rule to produce a fairer result, I could see a persuasive case for doing so. Unfortunately I do not think this possible. The correct approach to construction of the rules is well settled, as explained by Lord Brown in Mahad v Entry Clearance Officer [2010] 1 WLR 48: The Rules are not to be construed with all the strictness applicable to the construction of a statute or a statutory instrument but, instead, sensibly according to the natural and ordinary meaning of the words used, recognising that they are statements of the Secretary of State's administrative policy the court's task is to discover from the words used in the Rules what the Secretary of State must be taken to have intended that intention is to be discerned objectively from the language used, not divined by reference to supposed policy considerations. (para 10) Read in accordance with those principles, it is clear to my mind that Para 352D does not cover AAs case, and cannot be rewritten in order to do so. Whether or not Kafala could be treated as a form of adoption for other purposes, the definition of adoptive parent in Para 6 is more restricted. It extends to de facto adoption only within the limitations laid down by Para 309A, which do not cover this case. Although in terms directed to the succeeding provisions, the definition is also incorporated specifically into the general definition of adoptive parent and hence into that of parent in Para 6. Mr Gill sought to make something, first, of the fact that the definition of parent is expressed as inclusive, and, secondly, of the words unless the contrary intention appears in the definition of adoption. Neither point assists. The word includes in the definition of parent is readily explicable, having regard to the fact that the particular Paras do not include a biological parent. They are rather designed to extend the natural meaning of the term. The specific treatment of adoption in Para (d) excludes any intention to cover other forms of de facto adoption outside the definition. Similarly, the reference to contrary intention in the definition of adoption, in context, cannot be read as designed to extend the scope of the definition, but rather to indicate that there may be contexts in which the extension to de facto adoption does not apply. On this aspect, I cannot usefully add to the reasoning of Davis LJ said in the Court of Appeal. As he said, the wording of the rules is plain and unambiguous. International obligations Mr Gill has referred us to a number of international instruments which call for a broad approach to the protection of the interests of children. As he rightly says, the best interests principle is now, in appropriate areas of law, recognised both by domestic and international law (see ZH(Tanzania) v Secretary of State for the Home Department [2011] 2 AC 166). Without in any way detracting from the importance of the principles affirmed in those instruments, I do not find it necessary to review them in any detail. Taking them at their highest, Mr Gill is unable to point to any specific obligation covering the position of someone in the position of AA in the present case. LJ concluded: In response to similar submissions in MK (Somalia) (above), Maurice Kay Do these documents establish or evidence an obligation of customary international law that is positively protective of de facto adopted children? In my judgment they do not. At best they illustrate an increasing awareness of the need for a flexible approach to the concept of family but they do not address in terms the question of de facto adoption which, because of its very lack of formality, presents a receiving state with obvious problems of verification. There is no material referred to by Mr Pleming which demonstrates a clear international consensus about the particular problem of de facto adoption quite the contrary. Whilst there is a perceptible concern that the concept of family, in the context of family reunion, should not be resistant to social and cultural change, I do not consider that there is a precise, identifiable obligation of customary international law that is prescriptive of the national approach to de facto adoption. (para 12) I respectfully agree. Mr Gill also referred us to Secretary of State for Home Department v Abdi [1996] Imm AR 148. The Court of Appeal noted a Home Office letter dated 17 May 1990 relating to Somali Family Reunion Applications, which included the following: 8.1.1 If the United Kingdom sponsor has been recognised as a refugee here under the terms of the 1951 United Nations Convention relating to the Status of Refugees then, like most countries, we follow the policy on family reunion agreed by the Conference which adopted the Convention. We will agree to the admission of the spouse and minor children of the refugee. However given the nature of the Somali family we are prepared to be flexible and if a refugee is able to show that a person not covered by the policy was a dependent member of the refugee's immediate family unit before the refugee came to the United Kingdom, then we would be prepared to consider exceptionally extending the refugee family reunion provision to cover that person. Although this is a clear recognition of the importance attached internationally to family reunion, it is equally clear that the more flexible approach proposed for Somali applicants is not treated as a matter of legal obligation, but as a matter for exceptional consideration. In that respect Mr Gill faces a further difficulty. It is accepted by the Secretary of State that the rules on this issue are not exhaustive of this countrys obligations under international law. Hence the decision to allow AA entry under article 8 of the European Convention on Human Rights. Subject to the issue of discrimination, to which I will come, Mr Gill is unable to point to any international obligation which goes further in practical terms than the protection which has been afforded to AA under human rights law. Discrimination Mr Gill relies on what he calls the principle of non discrimination as recognised in a number of international instruments, for example: i) UN Convention on the Rights of the Child article 2, under which states parties are required to ensure the rights in the Convention to each child within their jurisdiction without discrimination of any kind ii) The Refugee Convention, the preamble of which reaffirms the principle that human beings shall enjoy fundamental rights and freedoms without discrimination iii) The European Convention on Human Rights article 14, under which the rights set out in the Convention are to be secured without discrimination on any of the grounds there set out. Mr Gill submits that the discrimination in this case arises on a number of grounds under article 14, including race, religion and nationality, and also (as he puts it in his printed case) other status (the statuses of being a child of a refugee and/or of being a de facto adopted child, ie a child who is not a biological child nor a child adopted in accordance with procedures recognised by the UK.) I accept that it appears harsh, to put it no higher, that under the rules AA is treated less favourably than her adoptive siblings, largely because of the tragic circumstances in which parental responsibility passed to her brother in law, taken with the lack of any functioning legal system allowing for formal adoption in the country from which she comes. It is however unnecessary to decide in the context of the present appeal whether or not such treatment could give rise to a claim for unlawful discrimination under article 14 or otherwise. This is because any rights which AA has in that respect would apply equally to her position in this country, regardless of the basis of her admission. Mr Gill did not suggest otherwise. In exercising any discretion in relation to the grant or extension of DLR, the Secretary of State is obliged to act in conformity with the Convention, including article 14. It is not necessary to reinterpret the rules to achieve that result. I would add one comment. As I have made clear, I see great force in Mr Gills criticisms of the use of the Para 309A definition in the context of a rule which is concerned with the treatment of refugees and their dependants. Mr Eadies only answer, as I understood him, was that clear definitions were needed to establish bright lines. That answer loses most of its force if the bright lines are drawn so restrictively that they have in practice to be supplemented by the much fuzzier lines drawn by article 8. In the interests of both applicants and those administering the system, it seems much preferable that the rules should be amended to bring them into line with the practice actually operated by the Secretary of State, including that dictated by her obligations under international law. Conclusion For these reasons, which substantially follow those of the Court of Appeal, I would dismiss this appeal.
+This case is about the employment status of individuals who are resident in Great Britain and are employed by a British company but who travel to and from home to work overseas. Halliburton Manufacturing & Services Ltd (the appellant) is a UK company which is based at Dyce, near Aberdeen. It is one of about 70 subsidiary or associated companies of Halliburton Inc, which is a US corporation. It supplies tools, services and personnel to the oil industry. The employee, Ismail Ravat (the respondent), lives in Preston, Lancashire and is a British citizen. He was employed by the appellant from 2 April 1990 as an accounts manager until he was dismissed with effect from 17 May 2006. The reason for his dismissal was redundancy. The respondent complains that he was unfairly dismissed. The complication in his case is that at the time of his dismissal he was working in Libya. The question is whether the employment tribunal has jurisdiction to consider his complaint. An employment tribunal sitting in Aberdeen (Mr RG Christie, sitting alone) held on 23 November 2007 that it had jurisdiction. That decision was set aside by the Employment Appeal Tribunal (Lady Smith, sitting alone) in a judgment which was given on 14 November 2008. The respondent appealed under section 37(1) of the Employment Tribunals Act 1996 to the Inner House of the Court of Session. On 22 June 2010 an Extra Division (Lord Osborne and Lord Carloway, Lord Brodie dissenting) allowed his appeal: 2011 SLT 44. The appellant now appeals to this court. The question whether the respondents complaint of unfair dismissal can be heard in Scotland is, as the decisions below show, not an easy one to answer. Section 94(1) of the Employment Rights Act 1996 provides: An employee has the right not to be unfairly dismissed. Section 230(1) of that Act provides that employee means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment. Neither of these provisions contains any geographical limitation. Nor is any such limitation to be found anywhere else in the Act. As Lord Hoffmann observed in Lawson v Serco Ltd [2006] UKHL 3, [2006] ICR 250, para 1, the statement in section 244(1) that the Act extends to England and Wales and Scotland means only that it forms part of the law of Great Britain and does not form part of the law of any other territory, such as Northern Ireland (to which the subsection states the Act does not apply), for which Parliament could have legislated. Yet it is plain that some limitation must be implied. As Lady Hale noted in Duncombe v Secretary of State for Children, Schools and Families (No 2) [2011] UKSC 36, [2011] ICR 1312, para 5, it was agreed in that case that section 94(1) could not apply to all employment anywhere in the world. That must indeed be so: see also Lawson, para 6, where Lord Hoffmann said that all the parties in that case were agreed that the scope of section 94(1) must have some territorial limits. But this does not solve the problem as to where the line is to be drawn between those cases to which section 94(1) applies and those to which it does not. It is not straightforward. As Louise Merrett, The Extra Territorial Reach of Employment Legislation (2010) 39 Industrial Law Journal 355, has pointed out, increasing labour mobility together with the proliferation of multinational companies and groups of companies has made the international aspects of employment law important in an ever growing number of cases. The present case is an illustration of the problems that this gives rise to. The facts As I have already said, the respondent was working in Libya when his employment was terminated. From 1990 to 1995 he worked for the appellant in London. For the remainder of the period that he was employed by it he worked overseas, initially in Algeria. In March 2003 he was offered and accepted a transfer to Libya. The arrangement was on what was known as a commuter or rotational basis: employment tribunals judgment, para 5. The appellant described the respondents status in documentation attached to his employment contract as that of a UK commuter. This was because he continued to live in Great Britain and travelled to and from his home to work for short periods overseas. He worked for 28 consecutive days in Libya, followed by 28 consecutive days at home in Preston. In effect he was job sharing, working back to back with another employee. During the 28 days when he was at home the work was done in his place by another employee on the same arrangement. His rotational work pattern was in accordance with the appellants international commuter assignment policy. Some of its overseas employees were accorded expatriate status. But that was not done in the respondents case because he did not live abroad full time. His travel arrangements and costs for commuting between his home in Preston and his workplace in Libya were paid for by the appellant. The work that the respondent carried out in Libya was for the benefit of Halliburton Co Germany GmbH, which was another subsidiary or associated company of Halliburton Inc. The German company was charged by the appellant for the respondents services. His duties included dealing with statutory compliance in relation to tax, audits and financial control and ensuring that all day to day transactions were reported to the German company in Germany. He reported on a daily basis to an operations manager based in Libya, but on policy and compliance issues he reported to an African Region Finance Manager, Mr Strachan, who was employed by another UK Halliburton subsidiary, Halliburton Management Ltd, based in Cairo. On human resources his contact was with the appellants human resources department in Aberdeen and with another of its employees who was its human resources representative in Libya. The respondent had little by way of day to day contact with the Aberdeen office while he was in Libya, and he had no formal obligation to do any work during the 28 days while he was at home. Any duties that he performed in Great Britain, such as responding while at home to emails, were incidental to that overseas employment. A feature of the appellants commuter policy was that while he was working on a foreign assignment the employees terms were such as to preserve the benefits, such as pay structure and pensions, for which he would normally be eligible had he been working in his home country other than those which were purely local such as a car allowance: employment tribunals judgment, para 6. The respondent was remunerated on the normal UK pay and pension structure that applied to the appellants home based employees. He was paid in Sterling into a UK bank account, and he paid UK income tax and national insurance on the PAYE basis. In 2003, when he started work in Libya, the respondent was concerned to know whether his employment contract would remain governed by UK employment law: employment tribunals judgment, para 13. He asked his manager there what his position was and was assured that he would continue to have the full protection of UK law while he worked abroad. He was given a copy of a document in which overseas managers were told to contact the appellants human resources team in Aberdeen when they were considering action in relation to poor performance, misconduct, dismissal or redundancy. The decision to dismiss him was taken by Mr Strachan of Halliburton Management Ltd under guidance from the Aberdeen human resources department. The respondent then invoked the appellants UK grievance procedure, as he was advised that he was entitled to do by the human resources department. The grievance hearing, the redundancy consultations and the respondents appeal against his dismissal all took place in the appellants offices in Aberdeen. The respondent received a redundancy payment from the appellant. It was stated to have been paid to him in accordance with the Employment Rights Act 1996: see section 135, which confers the right to a redundancy payment to an employee who is dismissed by the employer by reason of redundancy. The implied limitation The question as to what connection between Great Britain and the employment relationship was required to confer rights on employees working abroad was considered in Lawson v Serco Ltd [2006] UKHL 3, [2006] ICR 250. Three appeals were heard together in that case, as illustrations of the situations in which the question of territorial scope might arise. Mr Lawson was employed as a security adviser at the British RAF base on Ascension Island. Mr Botham was employed as a youth worker at various Ministry of Defence establishments in Germany. Mr Crofts was a pilot employed by a Hong Kong airline but was based at Heathrow. Having been presented with these examples, the appellate committee sought to identify the principles which should be applied to give effect to what Parliament might reasonably be supposed to have intended and attributing to Parliament a rational scheme: para 23, per Lord Hoffmann. As Lord Hoffmann, with whom all the other members of the committee agreed, observed in the final sentence of that paragraph, that involved the application of principles, not supplementary rules. Lord Hoffmann took first what Parliament must have intended as the standard, normal or paradigm case: the employee who was working in Great Britain at the time of his dismissal: paras 25, 27. Then there were peripatetic employees. The former rule, which was introduced by section 22 of the Industrial Relations Act 1971, was that the right not to be unfairly dismissed did not apply to an employment where under his contract of employment the employee ordinarily works outside Great Britain. The solution that was adopted in the application of that formula to peripatetic employees was to ask where the employee was based: Wilson v Maynard Shipbuilding Consultants AB [1978] QB 665, per Megaw LJ; Todd v British Midland Airways Ltd [1978] ICR 959, 964, per Lord Denning MR. Adopting this approach, Lord Hoffmann said that the common sense of treating the base of a peripatetic employee as, for the purposes of the statute, his place of employment remained valid: para 29. That dealt with the case of Mr Croft, the airline pilot, who was based at Heathrow. This left the cases of Mr Lawson and Mr Botham, neither of whom was working in Great Britain at the time when he was dismissed. Lord Hoffmann called them expatriate employees, and he acknowledged that the problem in their case was more difficult: para 35. He recognised that the circumstances would have to be unusual for an employee who works and is based abroad to come within the scope of British labour legislation. But he thought there were some who did, and that one should go further and try, without drafting a definition, to identify the characteristics which such exceptional cases will ordinarily have: para 36. He then mentioned a number of characteristics which should be regarded as sufficient to take such cases out of the general rule that the place of employment is decisive. It would be very unlikely that someone working abroad would be within the scope of section 94(1) unless he was working for an employer based in Great Britain. But that would not be enough. Something more was necessary: para 37. He went on in paras 38 39 to give examples of cases in which section 94(1) might apply to an expatriate employee: the employee posted abroad to work for a business conducted in Great Britain, and the employee working in a political or social British enclave abroad, which were sufficient to cover the cases of Mr Lawson and Mr Botham. In para 40 he added this comment: I do not say that there may not be others, but I have not been able to think of any and they would have to have equally strong connections with Great Britain and British employment law. Pausing there, it is plain that it would be difficult to fit the respondents case into any of the categories identified by Lord Hoffmann in Lawson. He was not working in Great Britain at the time of his dismissal. He was not a peripatetic employee. He was not working abroad as an expatriate in a political or social British enclave. Nor had he been posted abroad to work for a business conducted in Great Britain, as he was commuting from his home in Preston and the company for whose benefit he was working in Libya was a German company. But in Duncombe v Secretary of State for Children, Schools and Families (No 2) [2011] ICR 1312, para 8 Lady Hale sounded a salutary warning against that approach to the problem. After summarising the principles that were to be derived from Lawson, she said: It is therefore clear that the right will only exceptionally cover employees who are working or based abroad. The principle appears to be that the employment must have much stronger connections both with Great Britain and with British employment law than with any other system of law. There is no hard and fast rule and it is mistake to try and torture the circumstances of one employment to make it fit one of the examples given, for they are merely examples of the application of the general principle. One has to search quite carefully through Lord Hoffmanns speech for statements of general principle. But they are there. In para 1 he said: Putting the question in the traditional terms of the conflict of laws, what connection between Great Britain and the employment relationship is required to make section 94(1) the appropriate choice of law in deciding whether and in what circumstances an employee can complain that his dismissal was unfair? The answer to this question will also determine the question of jurisdiction, since the employment tribunal will have jurisdiction to decide upon the unfairness of the dismissal if (but only if) section 94(1) is the appropriate choice of law. In para 36, having said that the circumstances would have to be unusual for an employee who works and is based abroad to come within the scope of British labour legislation but that he thought that there were some who do, he said: I hesitate to describe such cases as coming within an exception or exceptions to the general rule [that section 94(1) applies to persons employed in Great Britain] because that suggests a definition more precise than can be imposed upon the many possible combinations of factors, some of which may be unforeseen. Mr Crow submitted that in principle the test was whether, despite the workplace being abroad, there are other relevant factors so powerful that the employment relationship has a closer connection with Great Britain than with the foreign country where the employee works. The response that Lord Hoffmann then gave to that submission needs to be carefully noted: This may well be a correct description of the cases in which section 94(1) can exceptionally apply to an employee who works outside Great Britain, but like many accurate statements, it is framed in terms too general to be of practical help. I would also not wish to burden tribunals with inquiry into the systems of labour law of other countries. In my view one should go further and try, without drafting a definition, to identify the characteristics which such exceptional cases will ordinarily have. Lord Hoffmann was dealing in that passage with those whom he had called expatriate employees. Mr Crow appeared for the Secretary of State for Foreign and Commonwealth Affairs and the Ministry of Defence, whose interest was to argue that the employment tribunal did not have jurisdiction to hear Mr Bothams claim for unfair dismissal. Lord Hoffmanns rejection of Mr Crows test as too general to be of practical help in that context, where it was possible to identify the guiding characteristics more precisely, is understandable. But it is important not to lose sight of the fact that he acknowledged that the principle that Mr Crow had identified might well be a correct description of the cases in which section 94(1) could exceptionally apply to an employee who works outside Great Britain. He also described it as an accurate statement. His reasons for declining to adopt it in the case of the expatriate employees were (1) that it was framed in terms that were too general to be of practical help in their case and (2) that tribunals should not be burdened with inquiry into the systems of labour law of other countries. But I do not see these as reasons for rejecting it in a case such as this which cannot readily be fitted into one or other of Lord Hoffmanns three categories. Neither of the specific examples of expatriate employees given by Lord Hoffmann in Lawson applied to the employees in Duncombe. They were teachers employed by the British Government to work in European schools abroad. They were employed in an international enclave, not a British enclave. But their employment had no connection with the country where they happened to work. Also discussed in Duncombe were the cases of Wallis and Grocott, who were employed by the British government in NATO establishments in Europe where their servicemen husbands were working (Ministry of Defence v Wallis [2011] ICR 617). The Secretary of States argument that their cases did not come within the scope of section 94(1) because they fell within neither of the cases identified as exceptional in Lawson was rejected. In para 16 of Duncombe Lady Hale, delivering the judgment of the court, said: In our view, these cases do form another example of an exceptional case where the employment has such an overwhelmingly closer connection with Britain and with British employment law than with any other system of law that it is right to conclude that Parliament must have intended that the employees should enjoy protection from unfair dismissal. She went on to identify what in para 17 she referred to as a very special combination of factors on which that conclusion depended. They included the fact that the teachers and the wives were employed under contracts governed by English law, which she said must be relevant to the expectation of each party as to the protection which the employees would enjoy. The respondents case does not fall within the further example of the expatriate employee within the scope of section 94(1) provided by Duncombe. But Lady Hales remark in para 8 that it is a mistake to try and torture the circumstances of one employment to make it fit one of the examples given, for they are merely examples of the application of the general principle, is directly in point. The judgment in that case was delivered on 15 July 2011, just over a year after the date when the judges of the Extra Division delivered their opinions. Their reasoning and that of Mr Christie in the employment tribunal and Lady Smith in the Employment Appeal Tribunal was based entirely on the guidance that they took from Lord Hoffmanns speech in Lawson. They did not have the advantage of reading Lady Hales judgment in Duncombe. The decisions below The differences of opinion in the employment tribunal, the EAT and the Extra Division are striking. On the one hand, the respondents case was seen as that of an expatriate employee whose case could not be brought within Lord Hoffmanns examples of cases falling within that category. On the other, it was seen as a case which could be resolved in the respondents favour by applying principles that can be derived from his analysis. In the employment tribunal Mr Christie said in para 39 of his judgment that, having regard to what he took to be the general principle to be applied in the case of employees working outside Great Britain, it did not seem to him to be necessary as a first step to place any particular claimant into one or other of Lord Hoffmanns categories: Nothing which he says suggests that that is an essential. It seems perfectly conceivable that an employee may have his place of work in another country abroad, but carries it out in a manner or in circumstances where he cannot properly be described as peripatetic or expatriate, and yet be operating in an employment relationship which has a substantial connection with the UK. Prior to coming to this particular case, I have had in mind a British citizen who, for example, works abroad on what is often referred to as a rotational system of working, say, four weeks in Africa followed by three weeks on leave at home with his family in, say, Edinburgh and so on, following the pattern. He referred in the next paragraph, by way of analogy, to the oil rig worker who was flown out to the Continental Shelf to work for two weeks and was then flown back to stay at home in, say, Dundee for the next two weeks. He did not become peripatetic merely because the rig he might be transferred to was in the Norwegian sector or was off the coast of West Africa. Having examined all the circumstances peculiar to this case, he concluded in para 54 of his judgment that there remained a sufficiently substantial connection between the employment relationship and Great Britain to enable him to hold that the tribunal had jurisdiction. In the Employment Appeal Tribunal Lady Smith said in para 14 of her judgment that she took from Lord Hoffmanns judgment that the fact that an employee was recruited by a British company in Great Britain to work for it abroad would not, in itself, be enough for jurisdiction. She referred to the principle identified by him in para 1 of his speech for the appropriateness of recognising jurisdiction in each case (see para 14, above). She then examined what she referred to as his discussion of the different categories into which a persons employment could fall in a case where the jurisdiction question arises. In para 18 she noted that in his discussion of the expatriate category Lord Hoffmann did not approve of a test of substantial connection. On the contrary, he was saying that it was not enough. In para 35 she said that she was satisfied that the tribunal erred in law: It applied a test of substantial connection with Great Britain and should not have done so. A test of substantial connection falls far short of the criteria inherent in the principles identified by Lord Hoffmann, to which principles I have already referred. It also took account of the proper law of the parties contract and the reassurances given to the claimant by the respondents about the availability to him of UK employment law, neither of which was relevant. In paras 37 38 she said that the respondent fell plainly within Lord Hoffmanns third category the expatriate category, and that, far from there being something more to show that it was appropriate that there should be jurisdiction, there was something less. The respondent was not working for the appellants business at home, but was working in the operation of a German company and was dismissed by an employee who had his work base in Cairo. In the Extra Division Lord Osborne said in para 15 that he took from Lord Hoffmanns reference to an employee who works and is based abroad when dealing with what he termed expatriate employees that he meant someone whose place of work and base, which included his place of residence, was situated in a foreign country. Referring to the passage in para 40 of Lord Hoffmanns speech, where he said that he could not think of any other examples of expatriate employees to whom section 94(1) might apply but that they would have to have equally strong connections with Great Britain and with British employment law (see para 12, above), he said: Since, in my view, the respondent cannot properly be seen as an expatriate employee, this particular observation is not of direct relevance to his situation. However, I consider that what is said comes, perhaps, as close as anything in this judgment to an indication of the kind of connection with Great Britain and British employment law that an employee would require to show to be able to invoke successfully the jurisdiction of an employment tribunal in connection with a claim based upon section 94(1). Thus, the reference to strong connections with Great Britain and British employment law seems to me to be important. In para 16 of his opinion Lord Osborne said that it was not necessary for a claimant to demonstrate that he might properly be placed in one of the categories considered in detail by Lord Hoffmann. An employee might have a place of work in a foreign country but carry it out in a manner and in circumstances in which he could not properly be described as peripatetic or expatriate. In para 19 he said that it was not possible, without qualification, to affirm the decision of the employment tribunal as words used by the chairman suggested that he considered that the task that he was undertaking was the exercise of a discretion. Lord Hoffmann had made it clear in para 24 of his speech in Lawson that it was a question of law, although involving judgment in the application of the law to the facts. But Lord Osborne concluded in para 20 that the tribunal ultimately reached a correct conclusion on the facts. Lord Carloway said in para 27 that, as he read Lord Hoffmanns speech, he was setting out three definitive categories of employment, into which every person is capable of being squeezed. In para 29 he said that an expatriate employee is one who lives and works abroad. That did not apply to the respondent, who had his home in England. In para 30 he indicated that he saw the respondent as more peripatetic than expatriate, as these words were used by Lord Hoffmann. But he went on to ask himself a broader question. This was whether, notwithstanding the foreign elements, Parliament intended section 94(1) to apply to someone in the respondents circumstances whose employer did not regard him as an expatriate but as a commuter and dealt with all his contractual entitlements in Dyce. He answered that question in the affirmative. Lord Brodie, who dissented, said in paras 54 55 that in his opinion there was no question but that the respondent fell into Lord Hoffmanns expatriate employee category, that living arrangements did not comprise a necessary element in any of them and that he did not see the respondent as falling within the exceptional cases of persons working abroad that he had identified. Discussion I have set out the reasoning in the judgments below at some length because it shows that, as Mr Christie observed in para 38 of his judgment in the employment tribunal, Lord Hoffmanns analysis in Lawson did not have the effect of eliminating uncertainty and that those who have been looking to it for guidance have found it difficult to apply. Mr Christies complaint was that it seemed to remain a very open question as to what exactly amounts to a sufficient or sufficiently substantial connection with Great Britain, and that there was little by way of guidance which employment tribunals might grasp to assist in what test they are to apply or how to go about their task. Lady Hales comment in Duncombe, para 8, that there is no hard and fast rule and that it is a mistake to try and torture the circumstances of one employment to make it fit one of the examples given, for they are merely examples of the application of the general principle, will have gone a long way to address this problem. But Mr Cavanagh QC for the appellant described this case as much more mainstream because it will cover a much larger class of employees than any one of Lord Hoffmanns categories. The problem that it raises must be resolved by applying the relevant guiding principles to the facts described in the employment tribunals judgment. As I have already indicated (see para 14, above), it is possible on a careful reading of Lord Hoffmanns speech in Lawson to find what he saw as the guiding principles. The question in each case is whether section 94(1) applies to the particular case, notwithstanding its foreign elements. Parliament cannot be taken to have intended to confer rights on employees having no connection with Great Britain at all. The paradigm case for the application of the subsection is, of course, the employee who was working in Great Britain. But there is some scope for a wider interpretation, as the language of section 94(1) does not confine its application to employment in Great Britain. The constraints imposed by the previous legislation, by which it was declared that the right not to be unfairly dismissed did not apply to any employment where under his contract of employment the employee ordinarily worked outside Great Britain, have been removed. It is not for the courts to lay down a series of fixed rules where Parliament has decided, when consolidating with amendments the previous legislation, not to do so. They have a different task. It is to give effect to what Parliament may reasonably be taken to have intended by identifying, and applying, the relevant principles. Mr Cavanagh drew attention to Lord Hoffmanns comment in Lawson, para 37, that the fact that the relationship was rooted and forged in Great Britain because the respondent happened to be British and he was recruited in Great Britain by a British company ought not to be sufficient in itself to take the case out of the general rule. Those factors will never be unimportant, but I agree that the starting point needs to be more precisely identified. It is that the employment relationship must have a stronger connection with Great Britain than with the foreign country where the employee works. The general rule is that the place of employment is decisive. But it is not an absolute rule. The open ended language of section 94(1) leaves room for some exceptions where the connection with Great Britain is sufficiently strong to show that this can be justified. The case of the peripatetic employee who was based in Great Britain is one example. The expatriate employee, all of whose services were performed abroad but who had nevertheless very close connections with Great Britain because of the nature and circumstances of employment, is another. The reason why an exception can be made in those cases is that the connection between Great Britain and the employment relationship is sufficiently strong to enable it to be presumed that, although they were working abroad, Parliament must have intended that section 94(1) should apply to them. The expatriate cases that Lord Hoffmann identified as falling within its scope were referred to by him as exceptional cases: para 36. This was because, as he said in para 36, the circumstances would have to be unusual for an employee who works and is based abroad to come within the scope of British labour legislation. It will always be a question of fact and degree as to whether the connection is sufficiently strong to overcome the general rule that the place of employment is decisive. The case of those who are truly expatriate because they not only work but also live outside Great Britain requires an especially strong connection with Great Britain and British employment law before an exception can be made for them. But it does not follow that the connection that must be shown in the case of those who are not truly expatriate, because they were not both working and living overseas, must achieve the high standard that would enable one to say that their case was exceptional. The question whether, on given facts, a case falls within the scope of section 94(1) is a question of law, but it is also a question of degree. The fact that the commuter has his home in Great Britain, with all the consequences that flow from this for the terms and conditions of his employment, makes the burden in his case of showing that there was a sufficient connection less onerous. Mr Cavanagh said that a rigorous standard should be applied, but I would not express the test in those terms. The question of law is whether section 94 (1) applies to this particular employment. The question of fact is whether the connection between the circumstances of the employment and Great Britain and with British employment law was sufficiently strong to enable it to be said that it would be appropriate for the employee to have a claim for unfair dismissal in Great Britain. The respondent's case It is true that at the time of his dismissal the respondent was working in Libya and that the operations that were being conducted there and in which he worked were those of a different Halliburton associated company which was incorporated and based in Germany. It is true also that the decision to dismiss him was taken by Mr Strachan who was based in Cairo. But I would not attach as much importance to these details as I would have done if the company for which the respondent was working in Libya was not another associated Halliburton company. The vehicles which a multinational corporation uses to conduct its business across international boundaries depend on a variety of factors which may deflect attention from the reality of the situation in which the employee finds himself. As Mr Christie said in the employment tribunal, it is notorious that the employees of one company within the group may waft to another without alteration to their essential function in pursuit of the common corporate purpose: para 53. All the other factors point towards Great Britain as the place with which, in comparison with any other, the respondents employment had the closer connection. The appellants business was based in Great Britain. It was to provide tools, services and personnel to the oil industry. That was why it sent the respondent to Libya, even though the actual work itself was in the furtherance of the business of another Halliburton subsidiary or associate company: see the employment tribunals judgment, para 53. It chose to treat him as a commuter for this purpose, with a rotational working pattern familiar to workers elsewhere in the oil industry which enables them to spend an equivalent amount of time at home in Great Britain as that spent offshore or overseas. In the respondents case this meant that all the benefits for which he would have been eligible had he been working in Great Britain were preserved for him. Lady Smith said in the EAT that the employment tribunal was wrong to take account of the proper law of the parties contract and the reassurance given to the respondent by the appellant about the availability to him of UK employment law, as neither of them were relevant. The better view, I think, is that, while neither of these things can be regarded as determinative, they are nevertheless relevant. Of course, it was not open to the parties to contract in to the jurisdiction of the employment tribunal. As Mr Cavanagh put it, the parties cannot alter the statutory reach of section 94(1) by an estoppel based on what they agreed to. The question whether the tribunal has jurisdiction will always depend on whether it can be held that Parliament can reasonably be taken to have intended that an employee in the claimants position should have the right to take his claim to an employment tribunal. But, as this is a question of fact and degree, factors such as any assurance that the employer may have given to the employee and the way the employment relationship is then handled in practice must play a part in the assessment. The assurances that were given in the respondents case were made in response to his understandable concern that his position under British employment law might be compromised by his assignment to Libya. The documentation he was given indicated that it was the appellants intention that the relationship should be governed by British employment law. This was borne out in practice, as matters relating to the termination of his employment were handled by the appellants human resources department in Aberdeen. This all fits into a pattern, which points quite strongly to British employment law as the system with which his employment had the closest connection. Mr Cavanagh submitted that the fact that the respondents home was in Great Britain was of no relevance. Why, he said, should the place where you are living when you are not working be relevant at all? All that mattered was the place where he was working. His place of residence did not matter, and it should be left out of account. It is true that his place of work was in Libya and not in Preston. But the fact that his home was in Great Britain cannot be dismissed as irrelevant. It was the reason why he was given the status of a commuter, with all the benefits that were attached to it which, as he made clear, he did not want to be prejudiced by his assignment. Here too the fact that his home was in Preston fits in to a pattern which had a very real bearing on the parties employment relationship. As the question is ultimately one of degree, considerable respect must be given to the decision of the employment tribunal as the primary fact finder. Mr Christie said in para 54 of his judgment that his conclusion that the balance was in favour of the respondent fell within the band of reasonable responses available to a reasonable chairman of employment tribunals. This remark was seen by both Lady Smith in para 36 of her judgment in the EAT and by Lord Osborne in the Extra Division, 2011 SLT 44, para 19 as an indication that he considered the task that he was undertaking as the exercise of a discretion. His remark was perhaps not very well chosen, but I do not think that his judgment when read as a whole is open to this criticism. The test which he applied was whether there was a substantial connection with Great Britain: see paras 39 and 47. It would have been better if he had asked himself whether the connection was sufficiently strong to enable it to be said that Parliament would have regarded it as appropriate for the tribunal to deal with the claim: see para 29, above. But I think that it is plain from his reasoning that he would have reached the same conclusion if he had applied that test. Lord Osborne said in para 20 of his opinion that the tribunal reached a conclusion that it was entitled to reach and that it was a correct conclusion. I agree with that assessment. So I too would hold that section 94(1) must be interpreted as applying to the respondents employment, and that the employment tribunal has jurisdiction to hear his claim. Conclusion I would dismiss the appeal. I would also affirm the Extra Divisions interlocutor, the effect of which is that the case will be remitted to the employment tribunal to deal with the merits of the respondents claim that he was dismissed unfairly.
+Vicarious liability in tort requires, first, a relationship between the defendant and the wrongdoer, and secondly, a connection between that relationship and the wrongdoers act or default, such as to make it just that the defendant should be held legally responsible to the claimant for the consequences of the wrongdoers conduct. In this case the wrongdoer was employed by the defendant, and so there is no issue about the first requirement. The issue in the appeal is whether there was sufficient connection between the wrongdoers employment and his conduct towards the claimant to make the defendant legally responsible. By contrast, the case of Cox v Ministry of Justice [2016] UKSC 10, which was heard by the same division of the court at the same time, is concerned with the first requirement. The judgments are separate because the claims and issues are separate, but they are intended to be complementary to each other in their legal analysis. In preparing this judgment I have had the benefit of Lord Reeds judgment in Cox, and I agree fully with his reasoning and conclusion. The question in this appeal concerns an employers vicarious liability in tort for an assault carried out by an employee. It is a subject which has troubled the courts on numerous occasions and the case law is not entirely consistent. In addressing the issues which it raises, it will be necessary to examine how the law in this area has developed, what stage it has reached and whether it is in need of significant change. In this case the victim was a customer. I will call him the claimant although he sadly died from an illness unrelated to his claim before his appeal was heard by this court. The respondent company is a well known operator of a chain of supermarkets. It has premises in Small Heath, Birmingham, which include a petrol station. The petrol station has a kiosk with the usual display of goods and a counter where customers pay for their purchases. One of the companys employees was Mr Amjid Khan. His job was to see that the petrol pumps and the kiosk were kept in good running order and to serve customers. The claimant was of Somali origin. On the morning of 15 March 2008 he was on his way to take part with other members of his community in an event in London. While he was at the petrol station he decided to inquire whether it would be possible to print some documents from a USB stick which he was carrying. The trial judge, Mr Recorder Khangure QC, accepted in full the claimants account of what followed. The claimant went into the kiosk and explained to the staff what he wanted. There were two or three staff present. Mr Khan, who was behind the counter, replied by saying We dont do such shit. The claimant protested at being spoken to in that manner. Using foul, racist and threatening language, Mr Khan ordered the claimant to leave. The claimant walked out of the kiosk and returned to his car by the air pump. He was followed by Mr Khan. The claimant got into his car and switched on the engine, but before he could drive off Mr Khan opened the front passenger door and told him in threatening words never to come back. The claimant told Mr Khan to get out of the car and shut the passenger door. Instead, Mr Khan punched the claimant on his left temple, causing him pain and shock. The claimant switched off the engine and got out in order to walk round and close the passenger door. At this point Mr Khan again punched him in the head, knocked him to the floor and subjected him to a serious attack, involving punches and kicks, while the claimant lay curled up on the petrol station forecourt, trying to protect his head from the blows. In carrying out the attack Mr Khan ignored instructions from his supervisor, who came on the scene at some stage and tried to stop Mr Khan from behaving as he did. The judge concluded that the reasons for Mr Khans behaviour were a matter of speculation. The claimant himself had said and done nothing which could be considered abusive or aggressive. The trial judges decision In a detailed and impressive judgment, the judge reviewed the principal authorities. He expressed great sympathy for the claimant but concluded that the company was not vicariously liable for Mr Khans unprovoked assault. His principal reason was that although Mr Khans job involved some interaction with customers and members of the public who attended the kiosk, it involved nothing more than serving and helping them. There was not a sufficiently close connection between what he was employed to do and his tortious conduct for his employer to be held vicariously liable, applying the close connection test laid down in Lister v Hesley Hall Ltd [2001] UKHL 22; [2001] 1 AC 215 and followed in later cases including Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48; [2003] 2 AC 366. A further reason given by the judge was that Mr Khan made a positive decision to come out from behind the counter and follow the claimant out of the kiosk in contravention of instructions given to him. The Court of Appeals decision The Court of Appeal (Arden, Treacy and Christopher Clarke LJJ) upheld the judges decision that the claim against the company failed the close connection test. The main points made in the judgments were that Mr Khans duties were circumscribed. He was not given duties involving a clear possibility of confrontation or placed in a situation where an outbreak of violence was likely. The fact that his employment involved interaction with customers was not enough to make his employers liable for his use of violence towards the claimant. Christopher Clarke LJ added that if the question had been simply whether it would be fair and just for the company to be required to compensate the claimant for his injuries from the assault, there would be strong grounds for saying that it should. The assault arose out of an interchange which began when the claimant asked to be supplied with a service which he thought the company could provide. Mr Khan, whose job it was to deal with such a request, followed up his refusal with an apparently motiveless attack on the customer, who was in no way at fault. The customer was entitled to expect a polite response. Instead he was struck on the head and kicked when on the ground. In those circumstances it could be said that the employer could fairly be expected to bear the cost of compensation, rather than that the victim should be left without any civil remedy except against an assailant who was unlikely to be able to pay full compensation. However, he concluded that this was not the legal test, and that the fact that Mr Khans job involved interaction with the public did not provide the degree of connection between his employment and the assault which was necessary for the employer to be held vicariously liable. Christopher Clarke LJ said that he was attracted for a time by the proposition that the assault could be looked at as a perverse execution of Mr Khans duty to engage with customers, but he considered that such an approach parted company with reality. Grounds of appeal In this court the claimants primary argument was that the time has come for a new test of vicarious liability. In place of the close connection test the courts should apply a broader test of representative capacity. In the case of a tort committed by an employee, the decisive question should be whether a reasonable observer would consider the employee to be acting in the capacity of a representative of the employer at the time of committing the tort. A company should be liable for the acts of its human embodiment. In the present case, Mr Khan was the companys employed representative in dealing with a customer. What mattered was not just the closeness of the connection between his duties to his employer and his tortious conduct, but the setting which the employer had created. The employer created the setting by putting the employee into contact and close physical proximity with the claimant. Alternatively, it was argued that the claimant should in any event have succeeded because he was a lawful visitor to the premises and Mr Khan was acting within the field of activities assigned to him in dealing with the claimant. Origins and development of vicarious liability The development of the doctrine of vicarious liability can be traced to a number of factors; in part to legal theories, of which there have been several; in part to changes in the structure and size of economic and other (eg charitable) enterprises; and in part to changes in social attitudes and the courts sense of justice and fairness, particularly when faced with new problems such as cases of sexual abuse of children by people in a position of authority. According to Holdsworths A History of English Law (1908) (vol 3, pp 383 387) in medieval times the general principle was that a master was only liable at civil law for misdeeds of his servants if done by his command and consent. It would be against all reason, said counsel in the reign of Henry IV, to impute blame or default to a man, when he has none in him, for the carelessness of his servants cannot be said to be his act (YB 2 Hy IV Pasch pl 5). But there were some exceptions, which today would be classed as instances of non delegable duty. Liability for damage by fire was an example. The law imposed on house holders a duty to keep their fires from damaging their neighbours. If a fire was caused by a servant or guest, and it damaged a neighbours house, the owner was liable. He could escape liability only by showing that the fire originated from the act of a stranger (YB 2 Hy IV Pasch pl 6). The 17th century was a century of expansion of commerce and industry, and vicarious liability began to be broadened. Holt CJ was particularly influential in this development. In Boson v Sandford (1691) 2 Salk 440 a shipper of goods sued the ship owner for damage caused by the negligence of the master. Eyre J held that there was no difference between a land carrier and a water carrier, and therefore the owners were under a special liability as carriers for the acts of their servants; but Holt CJ rested his judgment on the broad principle that whoever employs another is answerable for him, and undertakes for his care to all that make use of him. (The action failed on a technical pleading point.) In Tuberville v Stamp (1698) 1 Ld Raym 264, Skinner 681, SC Comb 459, the plaintiff complained that the defendants servant lit a fire on heath land which destroyed the heath growing on the plaintiffs land. The majority of the judges held that the plaintiff had a cause of action under the medieval rule about liability for fire; but Holt CJ doubted whether that rule applied to fires other than in houses, and he based liability (according to the report in Comb.) on the broader ground that if my servant doth anything prejudicial to another, it shall bind me, when it may be presumed that he acts by my authority, being about my business. Holt CJ did not confine this principle to cases of negligence. In Hern v Nichols (1700) 1 Salk 289, the plaintiff brought an action on the case for deceit, alleging that he bought several parcels of silk under a fraudulent representation by the defendants factor that it was another kind of silk. The factor was operating overseas and there was no evidence of deceit on the part of the defendant personally. Holt CJ held that the defendant was nevertheless liable for seeing somebody must be a loser by this deceit, it is more reason that he that employs and puts a trust and confidence in a deceiver should be a loser, than a stranger. Holt CJ gave the same explanation for the development of the principle in Sir Robert Waylands Case (1706) 3 Salk 234, the master at his peril ought to take care what servant he employs; and it is more reasonable that he should suffer for the cheats of his servant than strangers and tradesmen. Holt CJ also held that for the master to be liable the servants act had to be within the area of the authority given to him: Middleton v Fowler (1699) 1 Salk 282. Holdsworth noted that the first case in which the modern principle can begin to be seen was the admiralty case of Boson v Sandford, and he considered it not unlikely that necessities arising from the demands of the commercial world, and the influence of Roman law on the admiralty courts, led to the introduction of ideas which then permeated to the common law courts (vol 8, p 476). He also observed that this was only one of the influences and that a number of reasons were put forward to explain the basis of vicarious liability. These he summarised as follows (at p 477): It was sometimes put on the ground that the master by implication undertakes to answer for his servants tort which is clearly not true. Sometimes it was put on the ground that the servant had an implied authority so to act which again is clearly not true. Sometimes it was grounded on the fiction that the wrong of the servant is the wrong of the master, from which the conclusion was drawn that the master must be liable because no man shall be allowed to make any advantage of his own wrong; and sometimes on the ground that the master who chooses a careless servant is liable for making a careless choice. Blackstone gives all these reasons for this principle. In addition, he deals with the totally different case where a master has actually authorised the commission of a tort; and cites most of the mediaeval cases of vicarious liability with the special reasons for each of them. It is not surprising that he should take refuge in the maxim qui facit per alium facit per se or that others should have used in a similar way the maxim respondeat superior. His treatment of the matter illustrates the confusion of the authorities; and it is noteworthy that he does not allude to the true reason for the rule the reason of public policy which Holt CJ, gave in Hern v Nichols and in Waylands Case. In Barwick v English Joint Stock Bank (1867) 2 LR Exch 259, 265, Willes J described it as settled since Lord Holts time that a principal is answerable for the act of an agent in the course of his business, but it was argued in that case (despite the decision in Hern v Nichols) that a principal was not liable for a fraudulent act of his agent. Willes J rejected that argument, holding that no sensible distinction can be drawn between the case of fraud and the case of any other wrong. He cited authorities in which the doctrine had been applied, for example, in cases of direct trespass to goods and false imprisonment, and he observed (at p 266): In all these cases it may be said, as it was said here, that the master has not authorized the act. It is true, he has not authorized the particular act, but he has put the agent in his place to do that class of acts, and he must be answerable for the manner in which the agent has conducted himself in doing the business which it was the act of his master to place him in. His judgment gave rise to difficulties of a different kind because it included the following statement (at p 265): The general rule is, that the master is answerable for every such wrong of the servant or agent as is committed in the course of the service and for the masters benefit, though no express command or privity of the master be proved. (Emphasis added.) The words in italics were used in later cases to support the argument that in order to establish vicarious liability it was necessary to show that the employees misdeed was committed for the employers benefit. This argument was rejected by the House of Lords in the landmark case of Lloyd v Grace, Smith & Co [1912] AC 716. A solicitors clerk, who was entrusted by the defendant firm with managing its conveyancing department, defrauded the plaintiff, who had come to the firm for advice about two properties left to her by her late husband. He advised her to sell and procured her signature on documents conveying the properties to himself, which he disposed of for his own benefit. It was held that the firm was liable for his fraud. Lord Macnaghten, who gave the leading judgment (with which Lord Loreburn LC and Lord Atkinson agreed) and Lord Halsbury both referred with approval to the general principle enunciated by Lord Holt (pp 726 727 and 732). Lord Macnaghten, at pp 735 736, also endorsed Lord Blackburns interpretation of Barwicks case in Houldsworth v City of Glasgow Bank (1880) 5 App Cas 317, 339, namely that the substantial point decided in that case was that an innocent principal was civilly responsible for the fraud of his authorised agent, acting within his authority, to the same extent as if it was his own fraud. Lord Macnaghten recognised the difficulty of trying to give a precise meaning to the expression within his authority. He referred at pp 732 734 to the discussion of the subject by Sir Montague Smith in Mackay v Commercial Bank of New Brunswick (1874) LR 5 PC 394, 410, who observed that since it may be generally assumed that, in mercantile transactions, principals do not authorise their agents to act fraudulently, frauds are beyond the agents authority in the narrowest sense of which the expression admits; but that so narrow a sense would be opposed to justice and so a wider construction had been put on the words, and that it was difficult to define how far it went. Lord Macnaghten (at p 736) agreed that what is meant by the expressions acting within his authority, acting in the course of his employment and acting within the scope of his agency (as applied to an agent) is not easy to define, but he said that whichever expression is used, it must be construed liberally. Lord Macnaghten noted that it was within the scope of the clerks employment to advise clients regarding the best way to sell property and the execution of any necessary documents. He concluded that the clerk was therefore acting within the scope of his employment. Lord Macnaghten also made the broader point that it would be unjust if the firm were not held liable. The clerk was its accredited representative: p 738. It was right that the loss from his fraud should be suffered by the person who placed him in that position rather than the client who dealt with him as the firms representative. Although taking properties from the plaintiff was far removed from what the wrongdoer was employed to do, the justice of the decision is obvious. The wrongdoer was trusted both by his firm and by its client. They were each innocent, but one of them had to bear the loss, and it was right that it should be the employer on the principle stated by Lord Holt in Hern v Nichols. The firm employed the wrongdoer and placed him in a position to deal with the claimant; he abused that position and took advantage of her. It was fairer that the firm should suffer for the cheating by their employee than the client who was cheated. In 1907 Salmond published the first edition of his text book on the Law of Torts. He defined a wrongful act by a servant in the course of his employment as either (a) a wrongful act authorised by the master or (b) a wrongful and unauthorised mode of doing some act authorised by the master, with the amplification that a master is liable for acts which he has not authorised if they are so connected with acts which he has authorised, that they may rightly be regarded as modes although improper modes of doing them (pp 83 84). Salmonds formula, repeated in later editions, was cited and applied in many cases, sometimes by stretching it artificially; but even with stretching, it was not universally satisfactory. The difficulties in its application were particularly evident in cases of injury to persons or property caused by an employees deliberate act of misconduct. In Petterson v Royal Oak Hotel Ltd [1948] NZLR 136 a barman refused to serve a drunken customer with more alcohol. As the customer was on his way out of the premises, he threw a glass at the barman which broke in pieces at his feet. The barman picked up a piece of the broken glass and threw it back at the departing customer, but missed him and injured the eye of another customer, who sued for damages. The trial judge found that the barman threw the piece of glass not in order to expedite the departure of the troublesome customer, but as an expression of his personal resentment at the glass being thrown at him. He found for the claimant and his judgment was upheld by the Court of Appeal. The Salmond formula was cited in argument. The Court of Appeal held that the barmans act was an improper mode of doing his job of keeping order in the bar and avoiding altercations, although at the time the customer was leaving. The justice of the result is obvious. The claimant was struck in the eye by a piece of glass thrown by the barman who was on duty, and there would be something wrong with the law if he was not entitled to compensation from the company which employed the barman. A barman needs to be capable of acting with restraint under provocation, for the safety of other customers, and if the proprietor engaged someone who was incapable of doing so and who injured an innocent customer, it would be wrong for the customer to be left with his only remedy against the barman. But to rationalise the result by describing the barmans loss of temper and act of retaliation as a mode, but improper mode, of keeping order and avoiding altercation is an unnatural use of words. Deatons Pty Ltd v Flew (1949) 79 CLR 370 had similarities to Petterson but was decided differently. According to the jurys verdict, the claimant was the victim of an unprovoked attack by a barmaid on duty in a hotel when he asked her for the manager. She threw a glass of beer over him and then threw the glass in his face, causing him the loss of sight in one eye. The High Court of Australia held that there was no basis for finding that the barmaid was acting in the course of her employment. They rejected the argument that her conduct was incidental to her employment in that it was a method, though an improper method, of responding to an inquiry from a customer. They also rejected the argument, which had succeeded in Petterson, that her conduct was an improper mode of keeping order. Dixon J gave two reasons: first, that she did not throw the glass in the course of keeping discipline, and secondly, that she was not in charge of the bar, but was working under the supervision of another woman. I agree that it was tortuous and artificial to describe the barmaids conduct as a mode of performing what she was employed to do, but that does not make the result just. In a broader sense it occurred in the course of her employment. She was employed by the hotel proprietor to serve customers. She was approached in that capacity by a customer, and ordinary members of the public would surely expect the company who employed her to serve customers to have some responsibility for her conduct towards them. And it surely cannot be right that the measure of the companys responsibility should depend on whether she was the head barmaid or an assistant. The customer would have no knowledge what were the exact limits of her responsibilities. In Warren v Henlys Ltd [1948] 2 All ER 935 a customer at a petrol station had an angry confrontation with the petrol station attendant, who wrongly suspected him of trying to make off without payment. The customer became enraged at the manner in which he was spoken to by the attendant. After paying for the petrol, the customer saw a passing police car and drove off after it. He complained to the police officer about the attendants conduct and persuaded the officer to return with him to the petrol station. The officer listened to both men and indicated that he did not think that it was a police matter, whereupon the customer said that he would report the attendant to his employer. The officer was on the point of leaving, when the attendant punched the customer in the face, knocking him to the ground. Hilbery J held that the assault was not committed in the course of the attendants employment, applying the Salmond formula. By the time that the assault happened the customers business with the petrol station had ended, the petrol had been paid for and the customer had left the premises. When he returned with the police officer it was for the purpose of making a personal complaint about the attendant. The attendant reacted violently to being told that the customer was going to report him to his employer, but there was no basis for holding the employer vicariously liable for that behaviour. The judge was right to dismiss the customers claim against the petrol company. At the time of the incident the relationship between the plaintiff and the attendant had changed from that of customer and representative of the petrol company to that of a person making a complaint to the police and the subject of the complaint. In Lister v Hesley Hall Ltd [2002] 1 AC 215 Lord Millett commented, at para 80, that the better view may have been that the employer was not liable because it was no part of the duties of the pump attendant to keep order, but there is no suggestion in the report of the case that there was any other employee in practical charge of the forecourt and cash desk area. If the attendant had punched the customer because he believed, rightly or wrongly, that the customer was leaving without payment, I would regard such conduct as occurring within the course of his employment. In Keppel Bus Co Ltd v Ahmad [1974] 1 WLR 1082 the plaintiff was travelling in a bus when the conductor treated an elderly lady passenger in a high handed and rude fashion. The plaintiff remonstrated with him. An altercation followed in which each tried to hit the other. They were separated by the passengers, but the conductor struck the plaintiff in the eye with his ticket punch, causing loss of sight in the eye. The trial judge and the Singapore Court of Appeal held that the bus company was vicariously liable, but the Privy Council decided otherwise. The Board applied the Salmond formula. It held that the conductors conduct could not be described as a wrong mode of performing the work which he was expressly or impliedly authorised to do. He could not be described as maintaining order in the bus; if anyone was keeping order in the bus, it was the passengers. The Board rejected the argument that his job could be described as managing the bus and that his conduct arose out of his power and duty to do so. The case illustrates again the awkwardness of the Salmond formula when applied to such situations. Looked at more broadly, the bus company selected the conductor for employment and put him in charge of the passenger area of the bus. He abused the position of authority which his employment gave him. Because he was throwing his weight around as the conductor, the plaintiff objected. Because the conductor objected to what he appeared to regard as interference with the exercise of his authority, he struck the plaintiff in the face. (The trial judge summarised it by saying that He was in effect telling the plaintiff by his act not to interfere with him in his due performance of his duties: p 1084.) In such circumstances it was just that the passenger should be able to look to the company for compensation. In two noteworthy cases the court took a broader approach to the question of scope of employment. Their significance is enhanced by the fact that they were cited with approval in Lister. 796, 802, Lord Cullen said: In Central Motors (Glasgow) Ltd v Cessnock Garage and Motor Co 1925 SC The question is not to be answered merely by applying the test whether the act in itself is one which the servant was authorised or ordered or forbidden to do. The employer has to shoulder responsibility on a wider basis; and he may, and often does, become responsible to third parties for acts which he has expressly or impliedly forbidden the servant to do. It remains necessary to the masters responsibility that the servants act be one done within the sphere of his service or the scope of his employment, but it may have this character although it consists in doing something which is the very opposite of what the servant has been intended or ordered to do, and which he does for his own private ends. An honest master does not employ or authorise his servant to commit crimes of dishonesty towards third parties; but nevertheless he may incur liability for a crime of dishonesty committed by the servant if it was committed by him within the field of activities which the employment assigned to him, and that although the crime was committed by the servant solely in pursuance of his own private advantage. The expression within the field of activities assigned to the employee is helpful. It conjures a wider range of conduct than acts done in furtherance of his employment. In Rose v Plenty [1976] 1 WLR 141 a milk roundsman paid a 13 year old boy to help him collect and deliver milk bottles, in disregard of his employers rule prohibiting children from being carried on milk floats. The boy was injured when he fell off a milk float as a result of the employees negligent driving. The trial judge dismissed the boys claim against the employer on the ground that the employee was acting outside the scope of his employment and that the boy was a trespasser on the float, but his decision was reversed by a majority of the Court of Appeal. Lord Denning, MR dealt with the matter briefly, holding that in taking the boy on the milk float the employee was still acting within the sphere of his employment. Scarman LJ considered the point at greater length, at pp 147 148: In words which have frequently been quoted both in the courts and in the universities, Salmond on Torts, 16th ed (1973), p 462, refers to the basis of vicarious liability for accidental damage as being one of public policy. That view is supported by quotations (dated no doubt, but still full of life) of a dictum of Lord Brougham and of another, 100 years or more earlier, of Sir John Holt. That it is socially convenient and rough justice to make an employer liable for the torts of his servant in the cases to which the principle applies, was recognised in Limpus v London General Omnibus Co, 1 H & C 526; see the judgment of Willes J at p 539. I think it important to realise that the principle of vicarious liability is one of public policy. It is not a principle which derives from a critical or refined consideration of other concepts in the common law, for example, the concept of trespass or indeed the concept of agency. No doubt in particular cases it may be relevant to consider whether a particular plaintiff was or was not a trespasser. Similarly, when, as I shall indicate, it is important that one should determine the course of employment of the servant, the law of agency may have some marginal relevance. But basically, as I understand it, the employer is made vicariously liable for the tort of his employee not because the plaintiff is an invitee, nor because of the authority possessed by the servant, but because it is a case in which the employer, having put matters into motion, should be liable if the motion which he has originated leads to damage to another. What is the approach which the cases identify as the correct approach in order to determine this question of public policy? First, one looks to see whether the servant has committed a tort upon the plaintiff The next question is whether the employer should shoulder the liability for compensating the person injured by the tort [I]t does appear to me to be clear, since the decision of Limpus v London General Omnibus Co, 1 H & C 526, that that question has to be answered by directing attention to what the servant was employed to do when he committed the tort that has caused damage to the plaintiff. The servant was, of course, employed at the time of the accident to do a whole number of operations. He was certainly not employed to give the boy a lift, and if one confines ones analysis of the facts to the incident of injury to the plaintiff, then no doubt one would say that carrying the boy on the float giving him a lift was not in the course of the servants employment. But in Ilkiw v Samuels [1963] 1 WLR 991 Diplock LJ indicated that the proper approach to the nature of the servants employment is a broad one. He says, at p 1004: As each of these nouns implies he is referring to the nouns used to describe course of employment, sphere, scope and so forth the matter must be looked at broadly, not dissecting the servants task into its component activities such as driving, loading, sheeting and the like by asking: what was the job on which he was engaged for his employer? and answering that question as a jury would. Lister v Hesley Hall Ltd In Lister the House of Lords was faced with the problem of the application of the doctrine of vicarious liability to the warden of a school boarding house who sexually abused the children in his care. The Salmond formula was stretched to breaking point. Even on its most elastic interpretation, the sexual abuse of the children could not be described as a mode, albeit an improper mode, of caring for them. Drawing on Scarman LJs approach, Lord Steyn (with whom Lords Hutton and Hobhouse agreed) spoke of the pitfalls of terminology and said that it was not necessary to ask whether the acts of sexual abuse were modes of doing authorised acts. He posed the broad question whether the wardens torts was so closely connected with his employment that it would be just to hold the employers liable. He concluded that the employers were vicariously liable because they undertook the care of the children through the warden and he abused them. There was therefore a close connection between his employment and his tortious acts. To similar effect, Lord Clyde said that the warden had a general duty to look after the children, and the fact that he abused them did not sever the connection with his employment; his acts had to be seen in the context that he was entrusted with responsibility for their care, and it was right that his employers should be liable for the way in which he behaved towards them as warden of the house. In adopting the approach which he did, Lord Steyn referred to the judgment of McLachlin J in Bazley v Curry (1999) 174 DLR (4th) 45. McLachlin J summarised the public policy justification for imposing vicarious liability, at para 31, in a similar fashion to Holt and Scarman LJ: The employer puts in the community an enterprise which carries with it certain risks. When those risks materialize and cause injury to a member of the public despite the employers reasonable efforts, it is fair that the person or organisation that creates the enterprise and hence the risk should bear the loss. Compare Scarman LJs statement that the employer, having put matters into motion, should be liable if the motion which he has originated leads to damage to another. This thinking has been prominent in cases since Lister as the social underpinning of the doctrine of vicarious liability, but the court is not required in each case to conduct a retrospective assessment of the degree to which the employee would have been considered to present a risk. As Immanuel Kant wrote, Out of the crooked timber of humanity, no straight thing was ever made. The risk of an employee misusing his position is one of lifes unavoidable facts. In Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48; [2003] 2 AC 366, the House of Lords applied the Lister approach to vicarious liability in a case of commercial fraud. Lord Nicholls (with whom Lords Slynn and Hutton agreed) said: 22. [I]t is a fact of life, and therefore to be expected by those who carry on businesses, that sometimes their agents may exceed the bounds of their authority or even defy express instructions. It is fair to allocate risk of losses thus arising to the businesses rather than leave those wronged with the sole remedy, of doubtful value, against the individual employee who committed the wrong. To this end, the law has given the concept of ordinary course of employment an extended scope. If, then, authority is not the touchstone, what is? . 23. Perhaps the best general answer is that the wrongful conduct must be so closely connected with acts the partner or employee was authorised to do that, for the purpose of the liability of the firm or the employer to third parties, the wrongful act may fairly and properly be regarded as done by the partner while acting in the ordinary course of the firms business or the employees employment (Original emphasis) 25. This close connection test focuses attention in the right direction. But it affords no guidance on the type or degree of connection which will normally be regarded as sufficiently close to prompt the legal conclusion that the risk of the wrongful act occurring, and any loss flowing from the wrongful act, should fall on the firm or employer rather than the third party who was wronged. 26. This lack of precision is inevitable, given the infinite range of circumstances where the issue arises. The crucial feature or features, either producing or negativing vicarious liability, vary widely from one case or type of case to the next. Essentially the court makes an evaluative judgment in each case, having regard to all the circumstances and, importantly, having regard to the assistance provided by previous court decisions. The close connection test adumbrated in Lister and Dubai Aluminium has been followed in a line of later cases including several at the highest level: Bernard v Attorney General of Jamaica [2004] UKPC 47; [2005] IRLR 398, Brown v Robinson [2004] UKPC 56, Majrowski v Guys and St Thomass NHS Trust [2006] UKHL 34; [2007] 1 AC 224 and Various Claimants v Catholic Child Welfare Society [2012] UKHL 56; [2013] 2 AC 1 (the Christian Brothers case). In the Christian Brothers case Lord Phillips of Worth Matravers said at para 74 that it is not easy to deduce from Lister the precise criteria that will give rise to vicarious liability for sexual abuse (or, he might have added, other abuse), and that the test of close connection tells one nothing about the nature of the connection. However, in Lister the court was mindful of the risk of over concentration on a particular form of terminology, and there is a similar risk in attempting to over refine, or lay down a list of criteria for determining, what precisely amounts to a sufficiently close connection to make it just for the employer to be held vicariously liable. Simplification of the essence is more desirable. The present law In the simplest terms, the court has to consider two matters. The first question is what functions or field of activities have been entrusted by the employer to the employee, or, in everyday language, what was the nature of his job. As has been emphasised in several cases, this question must be addressed broadly; see in particular the passage in Diplock LJs judgment in Ilkiw v Samuels [1963] 1 WLR 991, 1004 included in the citation from Rose v Plenty at para 38 above, and cited also in Lister by Lord Steyn at para 20, Lord Clyde at para 42, Lord Hobhouse at para 58 and Lord Millett at para 77. Secondly, the court must decide whether there was sufficient connection between the position in which he was employed and his wrongful conduct to make it right for the employer to be held liable under the principle of social justice which goes back to Holt. To try to measure the closeness of connection, as it were, on a scale of 1 to 10, would be a forlorn exercise and, what is more, it would miss the point. The cases in which the necessary connection has been found for Holts principle to be applied are cases in which the employee used or misused the position entrusted to him in a way which injured the third party. Lloyd v Grace, Smith & Co, Peterson and Lister were all cases in which the employee misused his position in a way which injured the claimant, and that is the reason why it was just that the employer who selected him and put him in that position should be held responsible. By contrast, in Warren v Henlys Ltd any misbehaviour by the petrol pump attendant, qua petrol pump attendant, was past history by the time that he assaulted the claimant. The claimant had in the meantime left the scene, and the context in which the assault occurred was that he had returned with the police officer to pursue a complaint against the attendant. Contrary to the primary submission advanced on the claimants behalf, I am not persuaded that there is anything wrong with the Lister approach as such. It has been affirmed many times and I do not see that the law would now be improved by a change of vocabulary. Indeed, the more the argument developed, the less clear it became whether the claimant was advocating a different approach as a matter of substance and, if so, what the difference of substance was. The present case In the present case it was Mr Khans job to attend to customers and to respond to their inquiries. His conduct in answering the claimants request in a foul mouthed way and ordering him to leave was inexcusable but within the field of activities assigned to him. What happened thereafter was an unbroken sequence of events. It was argued by the respondent and accepted by the judge that there ceased to be any significant connection between Mr Khans employment and his behaviour towards the claimant when he came out from behind the counter and followed the claimant onto the forecourt. I disagree for two reasons. First, I do not consider that it is right to regard him as having metaphorically taken off his uniform the moment he stepped from behind the counter. He was following up on what he had said to the claimant. It was a seamless episode. Secondly, when Mr Khan followed the claimant back to his car and opened the front passenger door, he again told the claimant in threatening words that he was never to come back to the petrol station. This was not something personal between them; it was an order to keep away from his employers premises, which he reinforced by violence. In giving such an order he was purporting to act about his employers business. It was a gross abuse of his position, but it was in connection with the business in which he was employed to serve customers. His employers entrusted him with that position and it is just that as between them and the claimant, they should be held responsible for their employees abuse of it. Mr Khans motive is irrelevant. It looks obvious that he was motivated by personal racism rather than a desire to benefit his employers business, but that is neither here nor there. LORD DYSON: As Lord Toulson has explained, the test for holding an employer vicariously liable for the tort of his employee has troubled the courts for many years. The close connection test (whether the employees tort is so closely connected with his employment that it would be just to hold the employer liable) was first articulated in this jurisdiction by the House of Lords in Lister v Hesley Hall Ltd [2002] 1 AC 215. It has been subsequently followed in many cases, including several at the highest level: see para 42 above. As Lord Nicholls said in Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48; [2003] 2 AC 366, para 26, the test is imprecise, but that is inevitable given the infinite range of circumstances where the issue of vicarious liability arises. The court, he said, has to make an evaluative judgment in each case, having regard to all the circumstances and to the assistance provided by previous court decisions on the facts of other cases. I would allow the appeal. The appellant in his application for permission to appeal in the present case argued that this court should reformulate the close connection test. In his written case, he submitted that it should be refined or replaced altogether in order to reflect modern views of justice; to advance the doctrines underlying policy considerations [underlying vicarious liability]; and to set clearer and less arbitrary boundaries. Accordingly, he submitted that the test for vicarious liability should be whether the employee (described as an authorised representative of the employer) commits the tort in circumstances where the reasonable observer would consider the employee to be acting in that representative capacity. The close connection test has now been repeatedly applied by our courts for some 13 years. In my view, it should only be abrogated or refined if a demonstrably better test can be devised. Far from being demonstrably better, the proposed new test is hopelessly vague. What does representative capacity mean in this context? And by what criteria is the court to determine the circumstances in which the reasonable observer would consider the employee to be acting in a representative capacity? I do not see how this test is more precise than the close connection test or how it better reflects modern views of justice. The attraction of the close connection test is that it is firmly rooted in justice. It asks whether the employees tort is so closely connected with his employment as to make it just to hold the employer liable. It is true that the test is imprecise. But this is an area of the law in which, as Lord Nicholls said, imprecision is inevitable. To search for certainty and precision in vicarious liability is to undertake a quest for a chimaera. Many aspects of the law of torts are inherently imprecise. For example, the imprecise concepts of fairness, justice and reasonableness are central to the law of negligence. The test for the existence of a duty of care is whether it is fair, just and reasonable to impose such a duty. The test for remoteness of loss is one of reasonable foreseeability. Questions such as whether to impose a duty of care and whether loss is recoverable are not always easy to answer because they are imprecise. But these tests are now well established in our law. To adopt the words of Lord Nicholls, the court has to make an evaluative judgment in each case having regard to all the circumstances and having regard to the assistance provided by previous decisions on the facts of other cases. In Various Claimants v Catholic Child Welfare Society [2012] UKSC 56; [2013] 2 AC 1 Lord Phillips said at para 19 the law of vicarious liability is on the move. It is true that there have been developments in the law as to the type of relationship that has to exist between an individual and a defendant for vicarious liability to be imposed on the defendant in respect of a tort committed by that individual. These developments have been a response to changes in the legal relationships between enterprises and members of their workforces and the increasing complexity and sophistication of the organisation of enterprises in the modern world. A good example is provided by the facts of the Catholic Child Welfare Society case itself. But there is no need for the law governing the circumstances in which an employer should be held vicariously liable for a tort committed by his employee to be on the move. There have been no changes in societal conditions which require such a development. The changes in the case law relating to the definition of the circumstances in which an employer is vicariously liable for the tort of his employee have not been made in response to changing social conditions. Rather they have been prompted by the aim of producing a fairer and more workable test. Unsurprisingly, this basic aim has remained constant. The Salmond test defined a wrongful act by a servant in the course of his employment as either (a) a wrongful act authorised by the master or (b) a wrongful and unauthorised mode of doing some act authorised by the master: Salmond, Law of Torts, 1st ed (1907), p 83; and Salmond & Heuston on the Law of Torts, 21st ed (1996), p 443. As Lord Steyn said in Lister at para 20, this was simply a practical test serving as a dividing line between cases where it is or is not just to impose vicarious liability (emphasis added). The importance of Lister (and the Canadian case of Bazley v Curry (1999) 174 DLR (4th) 45 whose reasoning it adopted) is that it recognised the difficulty created by the second limb of the Salmond test. This was not effective for determining the circumstances in which it was just to hold an employer vicariously liable for committing an act not authorised by the employer. The close connection test was introduced in order to remedy this shortcoming. This improvement was achieved by the simple expedient of explicitly incorporating the concept of justice into the close connection test. The new test was, therefore, by definition more effective than the Salmond test for determining the circumstances in which it is just to hold an employer vicariously liable for the unauthorised acts of his employee. It is difficult to see how the close connection test might be further refined. It is sufficient to say that no satisfactory refinement of the test has been suggested in the present case. As regards the facts of the present case, I agree with the analysis of Lord Toulson and the reasons he gives at paras 47 and 48 for holding that the defendants are liable for the assault committed by Mr Khan. For these reasons as well as those given by Lord Toulson, I would allow this appeal.
+On 21 March 2016, this court gave a father permission to appeal against the decision of the Court of Appeal that a custody order which he had obtained in Romania should not be enforced in this country under the Brussels II (Revised) Regulation (BIIR), because it had been given without the child having been given an opportunity to be heard, in violation of fundamental principles of procedure in this country. In the view of the panel giving permission to appeal, the judgment of the Court of Appeal raised an arguable point of law of general public importance, as to the precise extent to which it is a fundamental principle of the procedure relating to all cases about children in the courts of England and Wales that the child should be given an opportunity to be heard. This is a question of importance in all childrens cases, not just those where the court here is asked to enforce a judgment given in another member state of the European Union. However, it has now become clear that under BIIR this court has no jurisdiction to entertain such an appeal. This point was not raised by the respondent mother in her notice of objection to the application for permission to appeal. No doubt, had she done so, the court would have listed it for oral argument before deciding whether or not to give permission. In the event, once it was raised, we were able to arrange a hearing at short notice, in advance of the date set for the substantive appeal. As a point of jurisdiction, it could not be ignored, however inconveniently late in the day it was raised. We are grateful to the parties for the speed with which they have prepared their written and oral arguments and, in particular, to the Ministry of Justice, whom we asked to intervene in order to give us an account of the relevant history. The history of the case The circumstances in which this question arises are deeply unfortunate, not least because of the delays there have been, not only in Romania but also in this country, but they are largely irrelevant to the question of law which we have to decide. The child in question, DD, was born in Romania on 8 November 2006 and so is now aged nine and a half. His parents are both Romanian but met while working in this country. They returned briefly to Romania, where they got married and the child was born, but by January 2007 both parents had returned to live in this country with the child. They separated in November 2007. DD has continued to live here with his mother, his main carer, ever since. The father returned to live in Romania in 2009, but has kept a second home here and for most of the intervening years (with a long gap from November 2012 until March 2014) has shared the care of DD with the mother. He has a significant relationship with his son. Although DD is undoubtedly habitually resident in this country, the parties chose to litigate about his future in Romania. The father issued divorce and custody proceedings there in November 2007. The couple were divorced in April 2008. The father was awarded custody of DD, but the mother successfully appealed. At the retrial, the father was again awarded custody, but first the mother and then the father successfully appealed. At a further retrial in a different court, in December 2011, the court awarded joint parental authority to both parents, while finding that DDs domicile and residence were at the mothers address in England. Both parties appealed, but their appeals were dismissed in March 2013, on the basis that joint custody is the norm and sole custody the exception. Nevertheless, the child should remain living with his mother in England, as it was not in his best interests to change his living arrangements. The father launched a further appeal, to the Bucharest Court of Appeal. Its final decision, in November 2013, was that the child should live with the father, on the basis that he could provide the best moral and material conditions. In February 2014, the father applied for the recognition and enforcement of this order by the English court. The result was the re establishment of contact between father and son and a High Court ordered arrangement that the parents share his care in this country while the fathers application proceeded. On 1 May 2014, Peter Jackson J ordered that DD be made a party to the enforcement proceedings: see the summary of the history in In re D (Recognition and Enforcement of Romanian Order) [2014] EWHC 2756 (Fam), [2015] 1 FLR 1272. He quotes, in para 33, the reasons given in his earlier judgment. This was not so as to make inquiries as to his welfare, which would be inappropriate in enforcement proceedings, but because Ds rights as an individual child are engaged in his fathers application and whatever has happened in this case he bears no responsibility for it (para 15). His interest was not being represented (para 16) and the facts were egregious (para 10) neither the judge, nor counsel, nor the Childrens Guardian had experienced a case in which enforcement is being sought with regard to a child who has attained the age of seven and has never lived in the country from which the relevant order emanates (para 11). The registration of an order under BIIR is essentially administrative, although it requires a judicial act: see In re S (Foreign Contact Order) [2009] EWCA Civ 993, [2010] 1 FLR 982, para 12. Judicial consideration of any dispute occurs at the first appeal stage. This came before Peter Jackson J who determined it in July 2014 (reference above). Article 23 lays down seven grounds for non recognition. The judge rejected the mothers case on article 23(a), that recognition was manifestly contrary to the public policy of the member state in which recognition is sought taking into account the best interests of the child. This ground is to be narrowly construed and the Bucharest decision was not so extreme as to require recognition to be withheld on this ground (para 74). However, he did refuse recognition under article 23(b), which provides that a judgment shall not be recognised if it was given, except in case of urgency, without the child having been given an opportunity to be heard, in violation of fundamental principles of procedure of the member state in which recognition is sought. The Bucharest Court of Appeals conclusion about DDs wishes and feelings, namely that he constantly craves for [the fathers] permanent presence, had not arisen from any direct or indirect enquiry involving the child himself (para 83). It had a report from a Cafcass officer in earlier enforcement proceedings when DD was two years old. It had a report from a social worker when he was five and a half, in response to the fathers concerns about the mothers care. At the first tier appeal in February 2013, the father had asked the court to hear the child, but the mother had opposed this (interestingly, given her current stance), and the court had deemed it not useful given the age of the minor. Peter Jackson J disagreed: The childs entitlement to a voice is a fundamental procedural principle in our system. If he is old enough, it will be his voice and his words. An adult voice will convey the younger childs point of view. Younger children are less able to articulate their wishes, but their feelings may be more vivid than those of older children and of adults, whose views we canvass without a second thought. (para 96) A report from a court social worker, containing the childs perspective, would be fundamental to the decision of any English court, faced with a striking application of this kind (peremptory change of lifelong carer, country and language) (para 103). He therefore allowed the mothers appeal on this ground. He also allowed her appeal on the grounds contained in article 23(c) (lack of service) and (d) (not giving the mother an opportunity of being heard). The Court of Appeal dismissed the mothers cross appeal on article 23(a), allowed the fathers appeal on article 23(c) and (d), but dismissed the fathers appeal on article 23(b): [2016] EWCA Civ 12, [2016] 1 WLR 2469. The question of whether and how the childs voice was to be heard in the proceedings was a separate question from the weight to be given to his wishes and feelings: the rule of law in England and Wales includes the right of the child to participate in the process that is about him or her. That is the fundamental principle that is reflected in our legislation, our rules and practice directions and jurisprudence. At its most basic level it involves asking at an early stage in family proceedings whether and how that child is going to be given the opportunity to be heard. The qualification in section 1(3)(a) [of the Children Act 1989] like that in article 12(1) [of the United Nations Convention on the Rights of the Child 1989] relates to the weight to be put upon a childs wishes and feelings, not their participation. (para 44) This court is not concerned with whether the decisions reached by the trial judge and Court of Appeal in this particular case were right or wrong. They may very well have been right. Nor is it concerned with the extent to which the childs right to be heard is a fundamental principle of the procedure in the courts of England and Wales in cases relating to the future of children. That is a very large question and views may differ as to precisely what the effect is of the Court of Appeals judgment. This court is solely concerned with whether we have any jurisdiction to entertain an appeal against the decision of the Court of Appeal that the Romanian order should not be registered and enforced in this country. The jurisdiction question The jurisdiction of the Supreme Court of the United Kingdom is governed by section 40 of the Constitutional Reform Act 2005. So far as material, this provides: (2) An appeal lies to the Court from any order or judgment of the Court of Appeal in England and Wales in civil proceedings. (6) An appeal under subsection (2) lies only with the permission of the Court of Appeal or the Supreme Court; but this is subject to provision under any other enactment restricting such an appeal. The question, therefore, is whether the provisions of BIIR constitute an enactment restricting such an appeal from the Court of Appeal or otherwise override the provisions of the 2005 Act. This encompasses two questions: first, what is the meaning and effect of the provisions of BIIR in European Union law; and second, what is their effect upon the provisions of an Act of the United Kingdom Parliament? The Brussels II Revised Regulation By article 28 of BIIR, a judgment on parental responsibility which is enforceable in the member state where it was given shall be enforced in another member state when it has been declared enforceable there. (In the United Kingdom, this means the part of the United Kingdom where it has been registered.) By article 29, the application for such a declaration shall be submitted to the court appearing in the list notified by each member state to the Commission pursuant to article 68. The High Court of Justice Principal Registry of the Family Division has been notified for this purpose. Rule 31.4 of the Family Procedure Rules 2010 provides that applications should be made to a district judge (as had previously been indicated should be the case by Thorpe LJ in In re S, above, at para 16). By article 31, the court applied to must give its decision without delay and neither the person against whom enforcement is sought nor the child is entitled to make any submissions about it. Although the application may be refused for one of the reasons set out in articles 22, 23 and 24, under no circumstances may a judgment be reviewed as to its substance (article 31.3). In essence, therefore, this is intended to be a speedy ex parte (and essentially administrative) process. The first opportunity for inter partes debate comes with the first appeal under article 33. Under article 33.1, either party may appeal the decision on the application for a declaration. Once again it is to be lodged with the court notified under article 68 (article 33.2). The High Court of Justice Principal Registry of the Family Division has again been notified for this purpose, but rule 31.15(1) of the Family Procedure Rules provides that the appeal must be made to a judge of the High Court (again as advised by Thorpe LJ in In re S). The appeal must be lodged within one month of service of the declaration, or two months if the person against whom enforcement is sought is habitually resident in a member state other than that where the declaration was given (article 33.5). Once again, the need for speed is emphasised. Then comes article 34, the provision which is crucial to this case: The judgment given on appeal may be contested only by the proceedings referred to in the list notified by each member state to the Commission pursuant to article 68. Article 68 provides that member states shall notify to the Commission the lists of courts and redress procedures referred to (relevantly) in articles 29, 33 and 34 and any amendments thereto. The Commission is to keep the information up to date and to make it publicly available. The reference to the United Kingdom in its consolidated list of notifications reads as follows: The appeals provided for in article 34 may be brought only: in the United Kingdom, by a single further appeal on a point of law: (a) in England and Wales, to the Court of Appeal. On the face of it, therefore, the position under BIIR is quite clear. There is to be a largely formal first stage when (no doubt usually) the judgment is declared enforceable; there is to be a first appeal when the enforceability decision can be contested; and the decision on that appeal can only be contested by the notified proceedings. It follows that if there were no notification under articles 34 and 68, as is the case with Cyprus and Malta, there would be no appeal possible under article 34. The UKs notification expressly limits the proceedings to a single further appeal on a point of law which must be made, in England and Wales, to the Court of Appeal. No mention is made of a further appeal to the Supreme Court of the United Kingdom. This too accords with the understanding of Thorpe LJ in In re section The United Kingdom notification may be contrasted with the notification given by Ireland under articles 33 and 71 of Council Regulation (EC) No 4/2009 on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation in matters relating to maintenance obligations (the Maintenance Regulation). Article 33 provides that the decision given on appeal may be contested only by the procedure notified by the member state concerned to the Commission in accordance with article 71. Article 71 requires member states to communicate to the Commission the redress procedures referred to in article 33. Irelands notification says this: An appeal on a point of law to the Court of Appeal (it should be noted, however, that in accordance with the provisions of the Irish Constitution, the Supreme Court shall have appellate jurisdiction from a decision of the High Court if it is satisfied that there are exceptional circumstances warranting a direct appeal to it. The Supreme Court shall also have appellate jurisdiction from a decision of the Court of Appeal if it is satisfied that certain conditions laid down in the Constitution are satisfied. It would appear, therefore, that at least one member state considers it possible to provide for two tiers of appeal from the first appeal. It is not for this court to say whether that is consistent with either article 34 of BIIR or article 33 of the Maintenance Regulation. Whether or not the United Kingdom could have provided for a further appeal to the Supreme Court, which some might think necessary if only to resolve inconsistent decisions in different parts of the United Kingdom concerning a Regulation which applies throughout, the fact remains that it did not do so. Furthermore, the approach adopted by the United Kingdom in all previous European instruments concerned with the free movement of judgments and judicial cooperation within the European Union has been to provide for only one tier of further appeal. The first of these was the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (the 1968 Convention), concluded by the original six member states of the European Economic Community in 1968, later amended to include the United Kingdom. The courts and methods of appeal are specified in article 37 of the Convention itself, in England and Wales the first appeal going to the High Court (or in the case of a maintenance judgment, to the magistrates court), and that decision being contested only by a single further appeal on a point of law. As the official Explanatory Report comments, the object of the Convention was to ensure that the judgment given on the appeal may be contested only by an appeal in cassation and not by any other form of appeal or review (OJ 1979 C 59, pp 1, 51 52). This was because An excessive number of avenues of appeal might be used by the losing party purely as delaying tactics, and this would constitute an obstacle to the free movement of judgments which is the object of the Convention. Of course, this rationale only really applies to attempts by the person against whom enforcement is sought, such as the mother in this case, to resist enforcement, but what is sauce for the goose must also be sauce for the gander. The 1968 Convention (along with its 1971 Protocol and the 1978 Convention on the accession of Denmark, Ireland and the United Kingdom to them both) was given effect in United Kingdom law by the Civil Jurisdiction and Judgments Act 1982. Interestingly, section 6(1) specifies that the single further appeal on a point of law lies in England and Wales either to the Court of Appeal or to the Supreme Court (formerly to the House of Lords) under the leap frog procedure provided for in the Administration of Justice Act 1969. Council Regulation (EC) 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Brussels I Regulation) was designed to replace the 1968 Convention with directly applicable Community legislation. The approach to avenues of challenge was the same, save that instead of containing each countrys permitted avenues in the text of the relevant articles, these referred to lists contained in Annexes to the Regulation. Thus article 43.2 provided that the first appeal should be lodged with the court indicated in Annex III, which for England and Wales was the High Court of Justice (except for maintenance judgments); and article 44 provided that the judgment given on appeal might be contested only by the appeal referred to in Annex IV, which was once again a single further appeal on a point of law. The Civil Jurisdiction and Judgments Order 2001 (SI 2001/3929) specified, once again, that in England and Wales this would lie either to the Court of Appeal or on a leap frog appeal to the House of Lords (article 4). In 1998, the Council approved a Convention extending the scope of the Brussels regime to matrimonial matters. This took the same approach to the methods of challenging enforcement applications as had the 1968 Convention. The 1998 Convention never became applicable but was the source of the 2000 Council Regulation (EC) 1347/2000 on jurisdiction and the recognition and enforcement of judgments in matrimonial matters and in matters of parental responsibility for children of both spouses (the Brussels II Regulation), which was the immediate predecessor to the BIIR Regulation. This adopted the same method as the Brussels I Regulation was to adopt some seven months later. Article 26.2 provided that the first appeal should be lodged with the court listed in Annex II, which for England and Wales was the High Court of Justice. Article 27 provided that the judgment given on appeal might be contested only by the proceedings listed in Annex III, which for the UK was by a single further appeal on a point of law. However, the European Communities (Matrimonial Jurisdiction and Judgments) Regulations 2001 (SI 2001/310), unlike the 2001 Order relating to the Brussels I Regulation, did not specify what was meant by a single further appeal on a point of law, nor did the new Chapter 5 of the Family Proceedings Rules 1991, introduced by article 29 of the Family Proceedings (Amendment) Rules 2001 (SI 2001/821) to cater for the Brussels II Regulation. However, BIIR, which replaced the Brussels II Regulation, adopts a slightly different technique. Instead of describing the appeal processes in the text, or in Annexes, it provides for each member state to communicate the avenues of first appeal and further contestation to the Commission thus enabling member states to change the processes without the need to revise the Regulation. Unlike both the Brussels II and the Brussels I Regulations, BIIR does not contain either in its main text or in Annexes a reference to a single further appeal on a point of law. There is no express limit in article 34 to the number of proceedings whereby the judgment on the first appeal may be contested (although article 35 refers to the appeal under article 34 rather than an appeal). This more flexible approach is also taken in the 2009 Maintenance Regulation (which removed maintenance obligations from the scope of the Brussels I Regulation). While article 33 provides that the decision given on first appeal may be contested only by the procedure notified in accordance with article 71, article 71 requires member states to communicate the redress procedures referred to in article 33. For what it is worth, the recast version of the Brussels I Regulation, Regulation (EU) 1215/2012 of the European Parliament and of the Council, on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, also adopts this more flexible technique. Article 50 provides that the judgment given on the first appeal can only be contested by an appeal where the courts with which any further appeal is to be lodged have been communicated to the Commission under article 75(c), which also refers to courts. The United Kingdom has retained the previous reference (for England and Wales) to an appeal either to the Court of Appeal or under the leap frog procedure to the Supreme Court. The purpose of all these instruments is that, save in very narrowly defined circumstances, member states should recognise and enforce one anothers judgments. The recitals to BIIR are typical: The European Community has set the objective of creating an area of freedom, security and justice, in which the free movement of persons is ensured (Recital 1). The recognition and enforcement of judgments given in a member state should be based on the principle of mutual trust and the grounds for non recognition should be kept to the minimum required (Recital 21). From the very outset, in 1968, member states were anxious that there should not be too many avenues and methods of challenging enforcement decisions, hence the restriction to cassation type further appeals. It may well be, as Mr Richard Harrison QC has argued very ably on behalf of the father, that the strict approach taken in the earlier instruments has had to give way to the more flexible approach taken more recently. It may well be that it would be open to the United Kingdom to do as Ireland has done and notify the possibility, not only of leap frog appeals from the High Court to the Supreme Court, but also of appeals from the Courts of Appeal in each part of the United Kingdom to the Supreme Court. The fact remains that it has not done so. It is also true to say that the policy of the United Kingdom has not been entirely consistent. In relation to civil and commercial judgments, the 1968 Convention, the Brussels I Regulation and the recast Brussels I Regulation provide for the possibility of either an appeal to the Court of Appeal or a leap frog appeal to the House of Lords or Supreme Court (thus, it would appear, giving the Supreme Court jurisdiction where the Court of Appeal has gone wrong in law in an earlier case, but not if it does so in the current case). It has not been possible to discover why a different approach, excluding the House of Lords or Supreme Court altogether, was taken in relation to family matters in the Brussels II Regulation and BIIR. It is known that the President of the Family Division, the Solicitors Family Law Association, The Law Society, the Family Law Bar Association, Reunite, Pact, and the Child Abduction Unit in the Office of the Official Solicitor were consulted on the Commissions revised draft text of BIIR and that the Lord Chancellors Department continued to consult the President of the Family Division, Thorpe LJ (Chairman of the Presidents International Committee), senior practitioners and Reunite during the negotiations. But it is not known precisely how and why the decision was taken to adopt the new approach in article 34 or how and why the United Kingdom government chose to make the notification which it did. The Minutes of the International Family Law Committee of the Family Justice Council held on 8 November 2004, at which the proposed BIIR was discussed, do not record any discussion of these matters. But it is not surprising that the notification was to the same effect as Annex III to the Brussels II Regulation, nor is it unlikely that limiting the scope for multiple appeals was seen as an important consideration. The fact remains that the United Kingdom did make the notification in question. The question, therefore, is whether BIIR, combined with that notification, is effective to restrict what would otherwise be the jurisdiction of the Supreme Court under section 40 of the 2005 Act. The effect of BIIR in United Kingdom law Mr Harrison faces the serious difficulty that article 34 clearly states that the decision on appeal may only be contested by the notified proceedings. On the face of it, therefore, as Mr Hugh Mercer QC submits on behalf of the Ministry of Justice, if there were no relevant notification, there would be no possibility of further challenge (as is apparently the case with Cyprus and Malta). Mr Harrison seeks to avoid this problem in two ways. First, he argues that the notification, being an act of the executive without any Parliamentary scrutiny or approval, cannot be an enactment for the purpose of section 40(6). He is of course quite correct that the executive has no power to amend or qualify primary or delegated legislation unless Parliament has given it the power to do so. An example is the power given by the United Nations Act 1946 to make Orders in Council without Parliamentary scrutiny where necessary to comply with the United Kingdoms obligations under the United Nations Charter. Express language would be required for such a power to permit the executive to abrogate fundamental rights such as the right of access to a court: see A v HM Treasury (JUSTICE intervening) [2010] UKSC 2; [2010] 2 AC 534. In fact, such delegated legislative powers are far more frequently exercised by statutory instrument which has to be laid before, and in some cases positively approved by, Parliament. It is also correct that the power to amend primary legislation and otherwise to legislate for the purpose of complying with the United Kingdoms obligations in European Union law, conferred by section 2(2) of the European Communities Act 1972, has to be exercised by Order in Council or by orders, rules, regulations or schemes. The notification was none of these things. By itself, therefore, it could not be effective to amend or qualify section 40(2) of the Constitutional Reform Act 2005. However, we are concerned, not with the notification alone, but with the combined effect of article 34 of BIIR and the notification. It is trite law that European Regulations are directly applicable in all member states without the need for further legislative implementation there: Treaty on the Functioning of the European Union, article 288. It was, of course, necessary for the United Kingdom to legislate to make this treaty provision the law in the United Kingdom. This it did by section 2(1) of the European Communities Act 1972: (1) All such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties, and all such remedies and procedures from time to time provided for by or under the Treaties, as in accordance with the Treaties are without further enactment to be given legal effect or used in the United Kingdom shall be recognised and available in law, and be enforced, allowed and followed accordingly; Furthermore, by section 2(4): (4) any enactment passed or to be passed shall be construed and have effect subject to the foregoing provisions of this section Thus, Parliament has decreed that its own legislation is to have effect subject to the requirements of directly applicable European Union law. This includes section 40(2) of the 2005 Act. Mr Harrison is therefore driven to argue that articles 34 and 68 of BIIR are not, in fact, directly applicable. This is because they require measures of application to be adopted by member states in order to be implemented. He relies, in particular, on the cases of Azienda Agricola Monte Arcosu Srl v Regione Autonoma Della Sardegna and Others (Case C 403/98) [2001] ECR I 103; [2002] 2 CMLR 14 and OBB Personenverkehr AG v Schienen Control Kommission (Case C 509/11) [2014] 1 CMLR 51. His best example is the OBB case, which concerned a Regulation (1371/2007) providing for rail passengers to be compensated for delay. Under article 30, each member state was to designate a body responsible for enforcing the Regulation. But the Regulation did not define the specific measures which that body had to be able to adopt to secure compliance. The relevant body in Austria, the Kommission, required the railway company, OBB, to alter the terms and conditions of its tickets so as to comply with the compensation requirements of article 17 of the Regulation. But under Austrian law the Kommission did not have the power to do so. The Court held that article 30 by itself did not give it the power to impose terms on the railway company. (I note that it would be a completely separate question whether the passenger could rely on the direct effect of the Regulation in order to claim the compensation which it prescribed.) The Azienda case concerned Regulation No 797/85, which provided for certain payments to farmers practising farming as [their] main occupation. Member states were required to define what that meant, both for natural and non natural persons. The relevant Italian law defined it for individuals and certain other entities, such as farming co operatives, but did not provide for limited companies at all. The Court held that, as the Regulation required a definition before it could be operated, a limited company conducting farming operations could not make claims under the Regulation. The principle was stated thus: 26. In this respect, although, by virtue of the very nature of regulations and of their function in the system of sources of Community law, the provisions of those regulations generally have immediate effect in the national legal systems without its being necessary for the national authorities to adopt measures of application, some of their provisions may nonetheless necessitate, for their implementation, the adoption of measures of application by the member states. Thus, says Mr Harrison, as articles 34 and 68 of BIIR required further measures of implementation in the form of notifications by the member states, they cannot be directly applicable. The simple answer to this argument is that articles 34 and 68 are not comparable with the articles under consideration in these two cases. Article 34 does not depend for its implementation upon the member states choice of avenue of appeal. If the member state fails to notify any such avenue of appeal, then none will exist. But in any event, the member state in question did make a relevant notification. There is nothing in these cases to suggest that, if the required measures of implementation are adopted in a member state, the Regulation is not directly applicable there (and indeed effective to create individual rights). The farmers who were covered by the Italian definition would no doubt have been able to claim their rights under the Regulation. Mr Harrisons final argument is that the notification cannot be effective if it does not give an accurate picture of the appellate rights under United Kingdom law. Article 68 requires member states to supply information as to the position in their country; it does not permit them to change the position as it would otherwise be. However, so to interpret article 68 would run counter to the purpose of the provisions relating to routes of challenge which date back to the 1968 Convention and continue through all the European instruments discussed earlier. This is to limit the avenues and methods of appeal so as to avoid delays and manoeuvrings which will defeat the object of effective enforcement of one anothers orders. This object may have become slightly diluted in the more recent instruments, but the Regulation clearly contemplates the possibility that Member States will make notifications which cut down the routes of appeal which would otherwise be available. Conclusion I am therefore satisfied that the Supreme Court of the United Kingdom has no jurisdiction to entertain an appeal in this case. The appeal which has been lodged should therefore be struck out.
+This appeal raises a question as to the scope of the exceptions to the principle that statements made in the course of without prejudice negotiations are not admissible in evidence (the without prejudice rule). Specifically, the question is whether facts which (a) are communicated between the parties in the course of without prejudice negotiations and (b) would, but for the without prejudice rule, be admissible as part of the factual matrix or surrounding circumstances as an aid to construction of an agreement which results from the negotiations, should be admissible by way of exception to the without prejudice rule. The dispute between the parties relates to a series of forward freight agreements (FFAs) and is set against the background of the extraordinary volatility of the freight markets in 2008. Capesize bulk carriers are large vessels, so called because they were historically too large to pass through the Suez Canal. The Baltic Exchange index of daily rates of time charter hire for such vessels fell from about US$200,000 per day in May 2008 to US$3,000 per day in December 2008. Each FFA was a swap agreement which consisted of a bet on whether the settlement rate (being the average of the published rates, as stated in the relevant index, for each index publication day in the relevant settlement month) would, on specified future settlement dates, be higher or lower than the contract rate as defined in the FFA. Under each FFA the seller bet that the market rate on the settlement dates would be lower than the contract rate and the buyer bet that it would be higher. If it was higher on a given settlement day, the seller was obliged to pay the difference between the two rates multiplied by the contract period, which was usually the number of days in the month. If it was lower the buyer was obliged to pay the seller the appropriate amount. The relevant FFAs had settlement days at the end of one or more months within the period May to December 2008. At the end of each month all settlement sums due under all the FFAs were to be netted off and payment made by the indebted party under the net position to the other party. (I use the word bet because it was used by the parties in the agreed statement of facts and issues and because it appears to me to be accurate, but in doing so I do not intend to suggest that the FFAs were unenforceable or that FFAs are not a commonly used method of hedging against market fluctuations.) All the FFAs were on the same underlying terms. As at the end of May 2008 the appellants, whom I will together call TMT, were short against the market and, as a result of the netting off process, owed the respondent (Oceanbulk) more than US$40m for that month and were likely to owe a further US$30m for the following month. If Oceanbulk had terminated the FFAs on the basis of an event of default, TMT would have been potentially liable for some US$300 to 400m by way of liquidated damages. TMT failed to pay the May 2008 instalment when it fell due and sought time for payment. The parties entered into settlement negotiations which were expressed to be without prejudice. They were between the parties representatives and solicitors. The negotiations were partly in writing but included two lengthy meetings on 19 and 20 June 2008 which were attended both by the parties representatives and their solicitors. The parties entered into a written settlement agreement dated 20 June, in which they agreed (among other things): (a) to crystallise 50 per cent of each of the FFAs for 2008 based on the difference between the contract rate and the average of the ten day closing prices for the relevant Baltic indices from 26 June 2008; and (b) to co operate to close out the 50 per cent balance of the open 2008 FFAs against the market on the best terms achievable by 15 August 2008. There is no issue between the parties as to the existence or terms of the settlement agreement. It is common ground that all the terms of the agreement between them are accurately recorded in the written settlement agreement. For that reason neither party seeks rectification of it. There is however a dispute between the parties as to the true construction of one of the terms of the agreement. The issue which divides the parties in this appeal is whether it is permissible to refer to anything written or said in the course of the without prejudice negotiations as an aid to the interpretation of the agreement. The issues Construction of the settlement agreement Oceanbulks claim is based on the alleged breach by TMT of clause 5 of the agreement, which provides as follows: In respect of FFA open contracts between TMT interests and [Oceanbulk] for 2008, the parties shall crystallise within the ten trading days following 26 June 2008, as between them, 50 per cent of those FFAs at the average of the ten days closing prices for the relevant Baltic Indices from 26 June 2008 and will co operate to close out the balance of 50 per cent of the open FFAs for 2008 against the market on the best terms achievable by 15 August 2008. The parties crystallised 50 per cent of the contracts within ten days following 26 June. There is accordingly no dispute about that part of the clause. However, Oceanbulk says that TMT is in breach of the second part of the clause (the co operation term) on the basis that, so it is said, TMT did not co operate to close out the balance of 50 per cent of the open FFAs for 2008 against the market on the best terms achievable by 15 August. By way of damages Oceanbulk claims the difference between the sums it says would have been owed by TMT had the FFAs been closed out by 15 August, when the market was still in Oceanbulks favour, and the amount that is said to be due to TMT under the FFAs as a result of those positions having remained open. The loss arises (in part at least) out of the dramatic fall in the market to which I have referred. Oceanbulks case is that, on the true construction of the co operation term, the parties obligation was to close out the open FFAs bilaterally, that is as between Oceanbulk and TMT. TMTs case is that the meaning of the term depends upon a fact which it says was in the contemplation of both parties: viz that the FFAs between Oceanbulk and TMT were sleeved by Oceanbulk. In para 5 of his judgment Andrew Smith J (the judge) quoted Oceanbulks summary of what the parties meant by sleeving, which the parties have agreed is sufficient for the purposes of this appeal. It is in these terms: Sleeving is an arrangement by which one party (party B) will, at the request of another party (party A), enter into a specific FFA trade with a third party (party C) and party B will then replicate that position back to back with party A. The usual reasons for such an arrangement are that (i) party C would not be willing to trade with party A (eg because of perceived counterparty risk) and/or (ii) party A does not wish to reveal to the market that he is seeking that position, eg because he is concerned that he will move the market. However, once the contracts have been concluded then (absent eg an agency arrangement), the two contracts are independent and each party acts as a principal: the contracts do not necessarily remain coupled. In para 18(1)(ii) of the re re amended defence and counterclaim TMT pleads that, in the context of the relevant negotiations, the words co operate to close out against the market mean that TMT would (if Oceanbulk so requested) assist Oceanbulk to agree fixed figures payable by Oceanbulk to counterparties to close out Oceanbulks opposite market positions; that Oceanbulk would then close out those positions; and that thereafter the FFAs between Oceanbulk and TMT would be crystallised at rates to be agreed. As it is put in the agreed statement of facts and issues, there is therefore a dispute as to whether the closing out process envisaged by the co operation term was bilateral (on Oceanbulks case) or trilateral (on TMTs case). The phrase opposite market position is defined in para 18(1)(i) of TMTs re re amended defence and counterclaim by references to sleeves. TMT pleads that both parties understood that, in respect of all or substantially all the FFAs between Oceanbulk and TMT, Oceanbulk held an opposite position with other participants in the FFA market so that the liabilities TMT had to Oceanbulk were sleeved by Oceanbulk in that they were equal in amount to liabilities Oceanbulk had to counterparties under equivalent swap agreements. In support of its case that the parties understood that the FFAs were sleeved, TMT relies upon four representations made or allegedly made by Mr Pappas on behalf of Oceanbulk. They are pleaded in para 18(1)(i) of the re re amended defence and counterclaim and are summarised in the agreed statement of facts and issues. i) In an email dated 1 June 2008 from Mr Pappas to Mr Su of TMT he said that Oceanbulk was expecting US$40.5m from TMT on Friday, 5 June and that most of this position is in any case due to sleeves we did for you when you asked us in the past to assist. It is common ground that this was an open communication and that it is arguably admissible in evidence on the issue of construction as part of the factual matrix. ii) TMT says that at a meeting on 5 June Mr Pappas said that he had sleeved TMTs trading at Mr Sus request. It is common ground that this was an open meeting and that, to the extent that any such representation was made, it is arguably admissible in evidence on the same basis. In an email dated 10 June from Mr Pappas to Mr Su he said that Oceanbulk had to pay US$40.5m on TMTs behalf against zero receipts. The judge held that this email was sent without prejudice and there was no appeal against that finding. iii) iv) TMT says that at meetings on 19 and 20 June Mr Pappas again asserted (or allowed the negotiations to proceed on the assumption) that the FFAs were sleeved. It is common ground that these meetings were without prejudice. The issue between the parties is whether TMT are entitled to rely upon representations or alleged representations iii) and iv) as an aid to interpretation of the agreement. Oceanbulk seeks to exclude the evidence relating to them on the ground that they were made in the course of without prejudice negotiations. The construction of clause 5 will of course be a matter for the trial judge. At para 35 of his judgment the judge expressed the view that the evidence was potentially of significant probative value and might possibly be crucial upon an issue of construction that is central to these proceedings. By contrast, in the Court of Appeal, Longmore LJ said at para 22 that it was not entirely easy to see how the facts relied upon by TMT assisted the construction of clause 5. It is not for this court to express a view on that question in this appeal. For present purposes it is sufficient to note that, at any rate at this interlocutory stage, Oceanbulk does not seek to exclude the evidence simply on the ground that it does not form part of the admissible factual matrix. It follows that it must be assumed for the purpose of this appeal that, subject to the question whether it is excluded by the without prejudice rule, the evidence will be admissible at the trial on the issue of construction of the agreement. Indeed, given the conclusion reached by the judge, it must be assumed that (in the judges phrase already quoted) the evidence is potentially of significant probative value and might possibly be crucial upon an issue of construction that is central to these proceedings. The judge held that the evidence was admissible notwithstanding the without prejudice rule. The majority of the Court of Appeal (Longmore and Stanley Burnton LJJ) allowed Oceanbulks appeal, holding that the evidence was not admissible. Ward LJ agreed with the judge and thus dissented. This appeal is brought with the permission of this court. Estoppel pleads an estoppel in these terms: In para 18(1)(ia) of the re re amended defence and counterclaim TMT In its amended reply and defence to counterclaim Oceanbulk has denied that all the transactions were in fact sleeved. [TMT] will say that for the reasons pleaded in para 18(1)(i) above Oceanbulk is estopped from denying that the swap agreements Oceanbulk had entered into with [TMT] were sleeved transactions; alternatively Oceanbulk is estopped from denying that in negotiating and entering into the settlement agreement the parties were proceeding on the common assumption that they were sleeved transactions. In support of that plea TMT seeks to rely upon representations iii) and iv). Oceanbulk says that such reliance is excluded by the without prejudice rule. Remoteness Essentially the same issues arise under this head. In para 27(2)(iii) of the re re amended defence and counterclaim TMT denies that Oceanbulk is entitled to recover the loss and damage it asserts because: (1) As pleaded in para 18 above, clause 5 of the settlement agreement was agreed in reliance upon and on the basis of Mr Pappass representation or representations on behalf of Oceanbulk and the parties understood that the swap agreements between Oceanbulk and [TMT] were sleeved transactions with the Oceanbulk opposite market positions; and (2) Accordingly, it was or should have been in the parties reasonable contemplation that closing out the 2008 FFAs left the risk of the market rising and the benefit of the market falling on [TMT] but no risk or benefit on Oceanbulk because Oceanbulk was (until completion of the closing out process) protected by Oceanbulks opposite market positions; accordingly, the loss which Oceanbulk seeks to claim is too remote and/or is not loss for which [TMT] had assumed responsibility TMT seeks to rely upon representations iii) and iv) in support of the case that Oceanbulks loss is too remote to be recoverable and/or that it is not a loss for which TMT assumed responsibility. Oceanbulk says that TMT is not entitled to rely upon those representations for the same reasons as stated above, namely that they were made (if at all) in the course of without prejudice negotiations. Without prejudice the legal principles The approach to without prejudice negotiations and their effect has undergone significant development over the years. Thus the without prejudice principle, or, as it is usually called, the without prejudice rule, initially focused on the case where the negotiations between two parties were regarded as without prejudice to the position of each of the parties in the event that the negotiations failed. The essential purpose of the original rule was that, if the negotiations failed and the dispute proceeded, neither party should be able to rely upon admissions made by the other in the course of the negotiations. The underlying rationale of the rule was that the parties would be more likely to speak frankly if nothing they said could subsequently be relied upon and that, as a result, they would be more likely to settle their dispute. Thus in Walker v Wilsher (1889) 23 QBD 335 at 337 Lindley LJ asked what was the meaning of the words without prejudice in a letter written without prejudice and answered the question in this way: I think they mean without prejudice to the position of the writer of the letter if the terms he proposes are not accepted. If the terms proposed in the letter are accepted a complete contract is established, and the letter, although written without prejudice, operates to alter the old state of things and to establish a new one. It is now well settled that the rule is not limited to such a case. This can be seen from a series of decisions in recent years, including most clearly from Cutts v Head [1984] Ch 290, Rush & Tompkins Ltd v Greater London Council [1989] AC 1280, Muller v Linsley & Mortimer [1996] PNLR 74, Unilever plc v The Procter & Gamble Co [2000] 1 WLR 2436 and most recently Ofulue v Bossert [2009] UKHL 16, [2009] AC 990. In particular, in Unilever Robert Walker LJ (with whom Simon Brown LJ and Wilson J agreed) set out the general position with great clarity at pp 2441 2444 and 2448 2449. He first quoted from Lord Griffiths speech in Rush & Tompkins, with which the other members of the appellate committee agreed. Rush & Tompkins is important because it shows that the without prejudice rule is not limited to two party situations or to cases where the negotiations do not produce a settlement agreement. It was held that in general the rule makes inadmissible in any subsequent litigation connected with the same subject matter proof of any admissions made with a genuine intention to reach a settlement and that admissions made to reach a settlement with a different party within the same litigation are also inadmissible, whether or not settlement is reached with that party. The passage quoted by Robert Walker LJ is at p 1299 of the report of Rush & Tompkins as follows: The without prejudice rule is a rule governing the admissibility of evidence and is founded upon the public policy of encouraging litigants to settle their differences rather than litigate them to a finish. It is nowhere more clearly expressed than in the judgment of Oliver LJ in Cutts v Head [at] 306: That the rule rests, at least in part, upon public policy is clear from many authorities, and the convenient starting point of the inquiry is the nature of the underlying policy. It is that parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations (and that includes, of course, as much the failure to reply to an offer as an actual reply) may be used to their prejudice in the course of the proceedings. They should, as it was expressed by Clauson J in Scott Paper Co v Drayton Paper Works Ltd (1927) 44 RPC 151, 156, be encouraged fully and frankly to put their cards on the table. The public policy justification, in truth, essentially rests on the desirability of preventing statements or offers made in the course of negotiations for settlement being brought before the court of trial as admissions on the question of liability. The rule applies to exclude all negotiations genuinely aimed at settlement whether oral or in writing from being given in evidence. Robert Walker LJ observed at p 2442D that, while in that well known passage the rule was recognised as being based at least in part on public policy, its other basis or foundation is in the express or implied agreement of the parties themselves that communications in the course of their negotiations should not be admissible in evidence if, despite their negotiations, a contested hearing ensues. Robert Walker LJ further noted that these two justifications for the rule are referred to in some detail by Hoffmann LJ in Muller v Linsley & Mortimer. At pp 2442 and 2443 he quoted two substantial passages from the judgment of Hoffmann LJ in that case which it is not necessary to repeat here because in this appeal the issue is not so much about the scope of the rule as about the extent of the exceptions to it. It is therefore sufficient to quote two paragraphs from the judgment of Robert Walker LJ which show that the rule is not limited to admissions but now extends much more widely to the content of discussions such as occurred in this case. He said this at pp 2443H 2444C: Without in any way underestimating the need for proper analysis of the rule, I have no doubt that busy practitioners are acting prudently in making the general working assumption that the rule, if not sacred (Hoghton v Hoghton (1852) 15 Beav 278, 321), has a wide and compelling effect. That is particularly true where the without prejudice communications in question consist not of letters or other written documents but of wide ranging unscripted discussions during a meeting which may have lasted several hours. At a meeting of that sort the discussions between the parties representatives may contain a mixture of admissions and half admissions against a partys interest, more or less confident assertions of a partys case, offers, counter offers, and statements (which might be characterised as threats, or as thinking aloud) about future plans and possibilities. As Simon Brown LJ put it in the course of argument, a threat of infringement proceedings may be deeply embedded in negotiations for a compromise solution. Partial disclosure of the minutes of such a meeting may be, as Leggatt LJ put it in Muller, a concept as implausible as the curates egg (which was good in parts). Finally, at pp 2448 2449 Robert Walker LJ expressed his conclusions on the cases as follows: [they] make clear that the without prejudice rule is founded partly in public policy and partly in the agreement of the parties. They show that the protection of admissions against interest is the most important practical effect of the rule. But to dissect out identifiable admissions and withhold protection from the rest of without prejudice communications (except for a special reason) would not only create huge practical difficulties but would be contrary to the underlying objective of giving protection to the parties in the words of Lord Griffiths in Rush & Tompkins [at p 1300] to speak freely about all issues in the litigation both factual and legal when seeking compromise and, for the purpose of establishing a basis of compromise, admitting certain facts. Parties cannot speak freely at a without prejudice meeting if they must constantly monitor every sentence, with lawyers or patent agents sitting at their shoulders as minders. The without prejudice rule is thus now very much wider than it was historically. Moreover, its importance has been judicially stressed on many occasions, most recently perhaps in Ofulue, where the House of Lords identified the two bases of the rule and held that communications in the course of negotiations should not be admissible in evidence. It held that the rule extended to negotiations concerning earlier proceedings involving an issue that was still not resolved and refused, on the ground of legal and practical certainty, to extend the exceptions to the rule so as to limit the protection to identifiable admissions. The speeches of the majority contain a number of references to the importance of the rule which are relied upon on behalf of Oceanbulk. I take some examples. Lord Hope said at para 12: The essence of [the rule] lies in the nature of the protection that is given to parties when they are attempting to negotiate a compromise. It is the ability to speak freely that indicates where the limits of the rule should lie. Far from being mechanistic, the rule is generous in its application. It recognises that unseen dangers may lurk behind things said or written during this period, and it removes the inhibiting effect that this may have in the interests of promoting attempts to achieve a settlement. It is not to be defeated by other considerations of public policy which may emerge later, such as those suggested in this case, that would deny them that protection. In para 2 Lord Hope had said that where a letter is written without prejudice during negotiations conducted with a view to a compromise, the protection that these words claim will be given to it unless the other party can show that there is a good reason for not doing so. In para 43 Lord Rodger recognised the breadth of the without prejudice rule and rejected the proposed exception. So too did Lord Walker. He said at para 57 that he would not restrict the without prejudice rule unless justice clearly demands it. This seems to me to be entirely consistent with the approach of Lord Griffiths in Rush & Tompkins at p 1300C, where he said that the rule is not absolute and that resort may be had to the without prejudice material for a variety of reasons where the justice of the case requires it. See also per Lord Neuberger at para 89, endorsing the passage from the judgment of Robert Walker LJ in Unilever at pp 2448 2449 (referred to above). The exceptions to the without prejudice rule The cases to which I have referred (and others) show that, because of the importance of the without prejudice rule, its boundaries should not be lightly eroded. The question in this appeal is whether one of the exceptions to the rule should be that facts identified during without prejudice negotiations which lead to a settlement agreement of the dispute between the parties are admissible in evidence in order to ascertain the true construction of the agreement as part of its factual matrix or surrounding circumstances. This issue must be put in the context of the exceptions which have already been permitted to the rule. In this connection I again turn to the illuminating judgment of Robert Walker LJ in Unilever. Having set out the general principles at pp 2443 2444 (quoted above), which included the general working assumption that the rule has a wide and compelling effect, he said at p 2444C D that there are nevertheless numerous occasions on which the rule does not prevent the admission into evidence of what one or both parties said or wrote in the course of without prejudice negotiations. Robert Walker LJ then set out (at pp 2444D 2446D) a list of what he called the most important instances. He described them thus (omitting some of the references): (1) when the issue is whether without prejudice communications have resulted in a concluded compromise agreement, those communications are admissible. (2) Evidence of the negotiations is also admissible to show that an agreement apparently concluded between the parties during the negotiations should be set aside on the ground of misrepresentation, fraud or undue influence. Underwood v Cox (1912) 4 DLR 66, a decision from Ontario, is a striking illustration of this. (3) Even if there is no concluded compromise, a clear statement which is made by one party to negotiations and on which the other party is intended to act and does in fact act may be admissible as giving rise to an estoppel. That was the view of Neuberger J in Hodgkinson & Corby Ltd v Wards Mobility Services [1997] FSR 178, 191 and his view on that point was not disapproved by this court on appeal. (4) Apart from any concluded contract or estoppel, one party may be allowed to give evidence of what the other said or wrote in without prejudice negotiations if the exclusion of the evidence would act as a cloak for perjury, blackmail or other unambiguous impropriety But this court has, in Forster v Friedland and Fazil Alizadeh v Nikbin, [1993 CAT 205], warned that the exception should be applied only in the clearest cases of abuse of a privileged occasion. (5) Evidence of negotiations may be given (for instance, on an application to strike out proceedings for want of prosecution) in order to explain delay or apparent acquiescence. Lindley LJ in Walker v Wilsher [at] 338, noted this exception but regarded it as limited to the fact that such letters have been written and the dates at which they were written. But, occasionally, fuller evidence is needed in order to give the court a fair picture of the rights and wrongs of the delay. (6) In Mullers case (which was a decision on discovery, not admissibility) one of the issues between the claimant and the defendants, his former solicitors, was whether the claimant had acted reasonably to mitigate his loss in his conduct and conclusion of negotiations for the compromise of proceedings brought by him against a software company and its other shareholders. Hoffmann LJ treated that issue as one unconnected with the truth or falsity of anything stated in the negotiations, and as therefore falling outside the principle of public policy protecting without prejudice communications. The other members of the court agreed but would also have based their decision on waiver. (7) The exception (or apparent exception) for an offer expressly made 'without prejudice except as to costs' was clearly recognised by this court in Cutts v Head, and by the House of Lords in Rush & Tompkins, as based on an express or implied agreement between the parties. It stands apart from the principle of public policy (a point emphasised by the importance which the new Civil Procedure Rules, Part 44.3(4), attach to the conduct of the parties in deciding questions of costs). There seems to be no reason in principle why parties to without prejudice negotiations should not expressly or impliedly agree to vary the application of the public policy rule in other respects, either by extending or by limiting its reach. In Cutts v Head Fox LJ said (at p 316) what meaning is given to the words without prejudice is a matter of interpretation which is capable of variation according to usage in the profession. It seems to me that, no issue of public policy being involved, it would be wrong to say that the words were given a meaning in 1889 which is immutable ever after. (8) In matrimonial cases there has developed what is now a distinct privilege extending to communications received in confidence with a view to matrimonial conciliation: Although it is not included in that list, it is not in dispute between the parties that another of the exceptions to the rule is rectification. A party to without prejudice negotiations can rely upon anything said in the course of them in order to show that a settlement agreement should be rectified. It was so held at first instance in Canada in Pearlman v National Life Assurance Co of Canada (1917) 39 OLR 141 and in New Zealand in Butler v Countrywide Finance Ltd (1992) 5 PRNZ 447. Neither case contains much reasoning but both courts treated the point as self evident. In my opinion the parties correctly recognised such an exception because it is scarcely distinguishable from the first exception. No sensible line can be drawn between admitting without prejudice communications in order to resolve the issue of whether they have resulted in a concluded compromise agreement and admitting them in order to resolve the issue of what that agreement was. This can be seen most clearly where the alleged agreement is oral but, in my opinion, must equally apply where the agreement is partly oral and partly in writing and where the agreement is wholly in writing but the issue is whether it reflects the common understanding of the parties. It was submitted on behalf of Oceanbulk that none of those exceptions applies here and that the general principle that one party should not be permitted to cross examine the other party (or its witnesses) on matters disclosed or discussed in without prejudice negotiations should be applied in its full rigour. Although it was correctly accepted that the point for decision in this appeal was not decided in Unilever or any of the other cases, it was submitted that the decided cases, especially Unilever and Ofulue, strongly point the way. By contrast, it was submitted on behalf of TMT that facts which (a) are communicated between the parties in the course of without prejudice negotiations, (b) form part of the factual matrix or surrounding circumstances and (c) would, but for the without prejudice rule, be admissible as an aid to construction of a settlement agreement which results from the negotiations should be admissible in evidence by way of exception to the rule because the agreement cannot otherwise be properly construed in accordance with the well recognised principles of contractual interpretation and because there is no distinction in principle between this exception (the interpretation exception) and, for example, the rectification exception. Should the interpretation exception be recognised as an exception to the without prejudice rule? I have reached the conclusion that this question should be answered in the affirmative for these reasons. The principles which govern the correct approach to the interpretation of contracts have been the subject of some development, or at least clarification, in recent years as a result of a number of important decisions of the House of Lords. The position was clearly stated by Lord Steyn in R (Westminster City Council) v National Asylum Support Service [2002] UKHL 38, [2002] 1 WLR 2956. He summarised the position thus in para 5: The starting point is that language in all legal texts conveys meaning according to the circumstances in which it was used. It follows that the context must always be identified and considered before the process of construction or during it. It is therefore wrong to say that the court may only resort to evidence of the contextual scene when an ambiguity has arisen. In regard to contractual interpretation this was made clear by Lord Wilberforce in Prenn v Simmonds [1971] 1 WLR 1381, 1384 1386, and in Reardon Smith Line Ltd v Yngvar Hansen Tangen [1976] 1 WLR 989, 995 996. Moreover, in his important judgment in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 912 913, Lord Hoffmann made crystal clear that an ambiguity need not be established before the surrounding circumstances may be taken into account. As Lord Hoffmann himself put it in para 14 of his speech in Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] AC 1101, in every case in which the interpretation of the language used in the contract is in issue, the question is what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean. In Chartbrook the House of Lords considered and rejected the submission that what at para 42 Lord Hoffmann called the exclusionary rule, which excludes evidence of what was said or done in the course of negotiating an agreement for the purpose of drawing inferences about what the contract means, should now be abolished. It accordingly remains part of English law. The exclusionary rule does not exclude such evidence for all purposes. Lord Hoffmann put it thus in para 42: It does not exclude the use of such evidence for other purposes: for example, to establish that a fact which may be relevant was known to the parties, or to support a claim for rectification or estoppel. These are not exceptions to the rule. They operate outside it. It is not in dispute that, where negotiations which culminate in an agreement are not without prejudice, the exclusionary rule applies to the correct approach to the construction of the agreement. Nor is it in dispute that in those circumstances evidence of the factual matrix is admissible as an aid to interpretation even where the evidence formed part of the negotiations. The distinction between objective facts and other statements made in the course of negotiations was clearly stated by Lord Hoffmann in para 38 of Chartbrook: Whereas the surrounding circumstances are, by definition, objective facts, which will usually be uncontroversial, statements in the course of pre contractual negotiations will be drenched in subjectivity and may, if oral, be very much in dispute. Trial judges frequently have to distinguish between material which forms part of the pre contractual negotiations which is part of the factual matrix and therefore admissible as an aid to interpretation and material which forms part of the pre contractual negotiations but which is not part of the factual matrix and is not therefore admissible. This is often a straightforward task but sometimes it is not. In my opinion this problem is not relevant to the question whether, where the pre contractual negotiations that form part of the factual matrix are without prejudice, evidence of those negotiations is admissible as an aid to construction of the settlement agreement. The two questions are, as I see it, entirely distinct. In these circumstances, I see no reason why the ordinary principles governing the interpretation of a settlement agreement should be any different regardless of whether the negotiations which led to it were without prejudice. The language should be construed in the same way and the question posed by Lord Hoffmann should be the same, namely what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean. That background knowledge may well include objective facts communicated by one party to the other in the course of the negotiations. As I see it, the process of interpretation should in principle be the same, whether the negotiations were without prejudice or not. In both cases the evidence is admitted in order to enable the court to make an objective assessment of the parties intentions. The parties entering into such negotiations would surely expect the agreement to mean the same in both cases. I would not accept the submission that to hold that the process of interpretation should be the same in both cases would be to offend against the principle underlying the without prejudice rule. The underlying principle, whether based in public policy or contract, is to encourage parties to speak frankly and thus to promote settlement. As I see it, the application in both cases of the same principle, namely to admit evidence of objective facts, albeit based on what was said in the course of negotiations, is likely to engender settlement and not the reverse. I would accept the submission made on behalf of TMT that, if a party to negotiations knows that, in the event of a dispute about what a settlement contract means, objective facts which emerge during negotiations will be admitted in order to assist the court to interpret the agreement in accordance with the parties true intentions, settlement is likely to be encouraged not discouraged. Moreover this approach is the only way in which the modern principles of construction of contracts can properly be respected. Any other approach would be to introduce an unprincipled distinction between this class of case and two others which have already been accepted as exceptions to the without prejudice rule. I have already expressed the view that the rectification exception is correctly accepted because no sensible line can be drawn between admitting without prejudice communications in order to resolve the issue whether they have resulted in a concluded compromise agreement, which was the first exception identified by Robert Walker LJ in Unilever, and admitting them in order to resolve the issue what that agreement was. There is also no sensible basis on which a line can be drawn between the rectification case and this type of case. This can clearly be seen by a consideration of Sir Richard Buxtons article at [2010] CLJ 253 entitled Construction and Rectification after Chartbrook, where he compares the fifth principle identified by Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society (the ICS case) and the principles of rectification. It is not necessary to set out in full the five principles which Lord Hoffmann set out in that case at [1998] 1 WLR 896, 912H 913E. However, his fourth and fifth principles were in these terms: (4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749. 5) The rule that words should be given their natural and ordinary meaning reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. In his article Sir Richard Buxton expresses the view at p 256 that the fifth principle was revolutionary because it overrode the previous understanding that, rectification apart, the court could not depart from the words of a document to find an agreement different from that stated in the document. Whether that is so or not, Sir Richard is in my opinion correct when he notes that the principles enshrined in ICS, especially the fifth principle, point to the close relationship between interpretation and rectification. He notes at p 257 the essence of rectification as described in the judgment of Slade LJ (with whom Oliver and Robert Goff LJJ agreed) in Agip SpA v Navigazione Alta Italia SpA (The Nai Genova) [1984] 1 Lloyds Rep 353 at 359: In principle, the remedy of rectification is one permitted by the Court, not for the purpose of altering the terms of an agreement entered into between two or more parties, but for that of correcting a written instrument which, by a mistake in verbal expression, does not accurately reflect their true agreement. Sir Richard then says that a closer expression of the process necessarily envisaged by principle 5 of ICS could scarcely be found. I am not sure that I would put it quite as high as Sir Richard does but I entirely agree with him that the problems with which both the principles of rectification and the principles of construction (as explained in recent cases) grapple are closely related. This is an important factor in leading to the conclusion that evidence of what was said or written in the course of without prejudice negotiations should in principle be admissible, both when the court is considering a plea of rectification based on an alleged common understanding during the negotiations and when the court is considering a submission that the factual matrix relevant to the true construction of a settlement agreement includes evidence of an objective fact communicated in the course of such negotiations. For these reasons I would hold that the interpretation exception should be recognised as an exception to the without prejudice rule. I would do so because I am persuaded that, in the words of Lord Walker in Ofulue (at para 57), justice clearly demands it. In doing so I would however stress that I am not seeking either to underplay the importance of the without prejudice rule or to extend the exception beyond evidence which is admissible in order to explain the factual matrix or surrounding circumstances to the court whose responsibility it is to construe the agreement in accordance with the principles identified in ICS and Chartbrook. In particular nothing in this judgment is intended otherwise to encourage the admission of evidence of pre contractual negotiations. Conclusion For these reasons, I would hold that evidence in support of representations iii) and iv) is in principle admissible as part of the factual matrix or surrounding circumstances on the true construction of the agreement. It is I think common ground that it follows that it is also in principle admissible on the issues of estoppel and remoteness. In short I have reached a different conclusion from the majority of the Court of Appeal but essentially the same conclusion as was reached by Andrew Smith J at first instance and by Ward LJ in the Court of Appeal. For the reasons I have given I would allow the appeal. LORD PHILLIPS I agree with the reasoning and the conclusion of Lord Clarke. The principle to be derived from this appeal can be shortly stated. When construing a contract between two parties, evidence of facts within their common knowledge is admissible where those facts have a bearing on the meaning that should be given to the words of the contract. This is so even where the knowledge of those facts is conveyed by one party to the other in the course of negotiations that are conducted without prejudice. This principle applies both in the case of a contract that results from the without prejudice negotiations and in the case of any other subsequent contract concluded between the same parties. Accordingly I would allow this appeal.
+These proceedings arise out of the deaths of three young men who lost their lives while serving in the British Army in Iraq and the suffering by two other young servicemen of serious injuries. The units in which they were serving were sent to Iraq as part of Operation TELIC. This operation, which lasted from January 2003 to July 2009, had two distinct phases of military activity. The first began on 19 March 2003 when Iraq was invaded by coalition forces including those from the United Kingdom. The second phase began on 1 May 2003 when major combat operations ceased and were replaced by a period of military occupation. During much of that time there was a constant threat of enemy action by insurgents opposed to the interim Iraqi government. On 25 March 2003 Corporal Stephen Allbutt, who was the husband of the claimant Ms Deborah Allbutt, Lance Corporal Daniel Twiddy and Trooper Andrew Julien were serving with the Queens Royal Lancers as part of the Royal Regiment of Fusiliers battle group during the fourth day of the offensive by British troops to take Basra. They were in one of a number of Challenger II tanks which had been placed at a dam in hull down positions to minimise their visibility to the enemy. Just after midnight a Challenger II tank of the Second Royal Tank Regiment which had been assigned to the 1st Battalion Black Watch battle group and was commanded by Lt Pinkstone crossed over onto the enemy side of a canal to take up a guarding position some distance to the south east of the dam. At about 0050 hrs Lt Pinkstone identified two hot spots through his thermal imaging sights which he thought might be personnel moving in and out of a bunker. He described the location to Sgt Donlon who was unable to identify the hot spots for himself because the description he was given was incorrect. After Lt Pinkstone had identified a further four hot spots in the same area he was given permission to fire by Sgt Donlon. Lt Pinkstones tank fired a first round of high explosive shell at about 0120 hrs and a second round shortly afterwards. The hot spots that he had observed were in fact men on top of Cpl Albutts Challenger II tank at the dam. The first shell landed short of the tank, but the explosion blew off the men who were on top of it including Lance Corporal Twiddy. The second shell entered the tank and killed Cpl Allbutt, injured Trooper Julien and caused further injury to Lance Corporal Twiddy. It also killed Trooper David Clarke: see R (Gentle and another) v Prime Minister [2008] UKHL 20, [2008] AC 1356, para 1. Lt Pinkstone did not know of the presence at the dam of the Royal Regiment of Fusiliers battle group. He did not realise that he was firing back across the canal, as he was disorientated and believed that he was firing in a different direction. In 2005 Private Phillip Hewett, who was the son of the claimant Susan Smith, was serving with 1st Battalion the Staffordshire Regiment. On 10 May 2005 he was deployed to Camp Abu Naji, near the town of Al Amarah in the Maysan Province of Iraq. He was assigned to a battle group working alongside soldiers from other battalions. In mid July 2005 there was a substantial threat against Camp Abu Naji from rocket attacks and an operation was launched to counter this threat by restricting the movement of insurgent anti Iraqi forces. On 15 July 2005 Pte Hewett was assigned to a mobile unit which was sent that evening to patrol around Al Amarah. The unit consisted of three Snatch Land Rovers. Snatch Land Rovers are lightly armoured. Their armour is designed to provide limited protection against ballistic threats, such as those from small arms fire. It provided no protection, or no significant protection, against improvised explosive devices (IEDs). It was escorted into, but not around, the town by a Warrior fighting vehicle. Warriors are heavily armoured and tracked, and are capable of carrying seven or eight personnel as well as the crew. Pte Hewett was in the lead Snatch Land Rover as its driver with 2nd Lt Richard Shearer. It had no electronic counter measures (ECMs) to protect it against the threat of IEDs. At about 0115 hrs on 16 July 2005 an explosion was heard in the vicinity of the stadium in Al Amarah. 2nd Lt Shearer decided to investigate the explosion. As the Snatch Land Rovers were driving down the single road to the stadium an IED detonated level with the lead vehicle. Pte Hewett, 2nd Lt Shearer and another soldier who was acting as top cover died in the explosion, and two other occupants of the vehicle were seriously injured. In 2006 Private Lee Ellis, who was the father of the claimant Courtney Ellis and the brother of the claimant Karla Ellis, was serving with the 2nd Battalion the Parachute Regiment. His unit was attached to the Royal Scots Dragoon Guards and was based at Camp Abu Naji. On 28 February 2006 Pte Ellis was the driver of a Snatch Land Rover in a patrol of three Warriors and two Snatch Land Rovers which made a journey from the Camp to the Iraqi police headquarters in Al Amarah. Captain Richard Holmes and another soldier were in the same vehicle. On the return journey from the police headquarters an IED was detonated level with the lead Snatch Land Rover driven by Pte Ellis. He and Captain Holmes were killed by the explosion and another soldier in the vehicle was injured. The vehicle had been fitted with an ECM, but a new part of that equipment known as element A was not fitted to it at that time. Element A was fitted to the other Snatch Land Rovers used in the Camp within a few days of the incident. The claims The claims by Ms Deborah Allbutt, Lance Corporal Daniel Twiddy and Trooper Andrew Julien (the Challenger claims) are brought in negligence at common law only. They make two principal claims. First, they allege a failure to ensure that the claimants tank and the tanks of the battle group that fired on it were properly equipped with the technology and equipment that would have prevented the incident. That equipment falls into two categories: target identity devices that provide automatic confirmation as to whether a vehicle is a friend or foe; and situational awareness equipment that permits tank crews to locate their position and direction of sight accurately. Secondly, they allege that the Ministry of Defence (the MOD) was negligent in failing to provide soldiers with adequate recognition training pre deployment and also in theatre. The claims by Susan Smith and by Courtney and Karla Ellis (the Snatch Land Rover claims) fall into two parts. The first, which is common to all three claimants, is that the MOD breached article 2 of the European Convention on Human Rights by failing to take measures within the scope of its powers which, judged reasonably, it might have been expected to take in the light of the real and immediate risk to life of soldiers who were required to patrol in Snatch Land Rovers. The second, which is brought by Courtney Ellis only, is based on negligence at common law. The particulars of the Smith claim under article 2 of the Convention are that the MOD (i) failed to provide better/medium armoured vehicles for use by Pte Hewetts commander which, if provided, would have been used for Pte Hewetts patrol, (ii) failed to ensure that any patrol inside Al Amarah was led by a Warrior, (iii) caused or permitted a patrol of three Snatch Land Rovers to proceed inside Al Amarah, especially when there was no ECM on the lead Snatch Land Rover and it knew or ought to have known that ECMs were ineffective against the triggers that were in use by the insurgents and no suitable counter measures had been provided, (iv) permitted the patrol of Snatch Land Rovers to investigate the bomb blast, especially when there was only one road to the decoy bomb site, (v) failed to provide other vehicles for route clearing and route planning ahead of the Snatch Land Rovers, (vi) failed to provide suitable counter measures to IEDs in the light of the death of Lance Corporal Brackenbury, who was killed by an IED while in a Snatch Land Rover on 29 May 2005 and (vii) failed to use means other than patrols to combat the threat posed by the insurgents. The particulars of the Ellis claim under article 2 and in negligence are that the MOD failed (i) to limit his patrol to better, medium or heavily armoured vehicles, (ii) to provide any or any sufficient better or armoured vehicle for use by Pte Elliss commander which, had they been provided, would or should have been used for his patrol and (iii) to ensure that Element A had been fitted to the ECM on Pte Elliss Snatch Land Rover, without which it should not have been permitted to leave the Camp. The MODs primary case in reply to the Challenger claims and the Ellis claim in negligence is that they should all be struck out on the principle of combat immunity. It also pleads that it would not be fair, just or reasonable to impose a duty of care on the MOD in the circumstances of those cases. Its case for a strike out in reply to the Snatch Land Rover claims under article 2 of the Convention falls into two parts. First, it submits that at the time of their deaths Pte Hewett and Pte Ellis were not within the jurisdiction of the United Kingdom for the purposes of article 1 of the Convention. Secondly, it submits that on the facts as pleaded the MOD did not owe a duty to them at the time of their deaths under article 2. The strike out applications were heard by Owen J, who handed down his judgment on 30 June 2011: [2011] EWHC 1676 (QB), [2011] HRLR 795. He struck out the Snatch Land Rover claims under article 2 on the ground that Pte Hewett and Pte Ellis were not within the jurisdiction of the United Kingdom for the purposes of article 1 of the Convention when they died: para 48. He based this decision on R (Smith) v Oxfordshire Assistant Deputy Coroner (Equality and Human Rights Commission intervening) [2010] UKSC 29, [2011] 1 AC 1. He went on nevertheless, in a carefully reasoned judgment, to address the question whether, if the deceased were within the Convention jurisdiction, the MOD was under a substantive article 2 duty of the kind that the Snatch Land Rover claimants were contending for. He said that he would not have struck out their claims relating to the supply of equipment: para 80. But in his judgment there was no sound basis for extending the scope of the implied positive duty under article 2 to decisions made in the course of military operations by commanders: para 81. Holding that the doctrine of combat immunity should be narrowly construed, he refused to strike out the Challenger claims and the second and third of the three Ellis claims in negligence because he was not persuaded that their equipment and pre deployment training claims were bound to fail: paras 110, 111. But he struck out the first of the Ellis claims because he was of the opinion that this claim fell squarely within the scope of combat immunity: para 114. On 19 October 2012 the Court of Appeal (Lord Neuberger MR, Moses and Rimer LJJ) dismissed appeals by the Snatch Land Rover claimants on the question whether the deceased were within the jurisdiction of the United Kingdom for the purposes of article 1 of the Convention: [2012] EWCA Civ 1365, [2013] 2 WLR 27. It found it unnecessary to deal with the extent of the substantive obligations implicit within that article. It also dismissed the MODs appeal against the judges refusal to strike out the Challenger claims and the second and third of the Ellis claims in negligence on the ground of combat immunity. But it allowed a cross appeal by the Ellis claimants against the striking out of the first Ellis claim. This was because, although the allegation was of failures of the MOD away from the theatre of war, there might be factual questions as to the circumstances in which the decisions were made which would enable the MOD to raise the defence of combat immunity at the trial: para 63. All these issues are now the subject of appeals by the claimants and a cross appeal by the MOD to this court. It will be convenient to take first the question whether at the time of their deaths Pte Hewett and Pte Ellis were within the jurisdiction of the United Kingdom for the purposes of article 1 of the Convention. If they were, I propose to consider next the question whether article 2 imposes positive obligations on the states party to the Convention with a view to preventing the deaths of their own soldiers in active operations against the enemy. Finally, there are the claims made at common law where the question is whether the allegations of negligence by the Challenger and Ellis claimants should be struck out because they fall within the scope of combat immunity or because it would not be fair, just or reasonable to impose a duty to take care to protect against such death or injury. I. Jurisdiction: article 1 ECHR (a) the domestic authorities Article 1 of the Convention provides as follows: The High Contracting Parties shall secure to everyone within their jurisdiction the rights and freedoms defined in section 1 of this Convention. In Soering v United Kingdom (1989) 11 EHRR 439 at para 86 the Strasbourg court said that article 1 sets a limit, notably territorial, on the reach of the Convention and that the engagement undertaken by a contracting state is confined to securing the listed rights and freedoms to persons within its own jurisdiction. It does not govern the actions of states not parties to it, nor does it purport to be a means of requiring the contracting state to impose Convention standards on other states. The essentially territorial notion of jurisdiction was also emphasised by the Grand Chamber in Bankovic v Belgium (2001) 11 BHRC 435, para 67, where it said that it is only in exceptional cases that acts of the contracting states performed, or producing effects, outside their territories can constitute an exercise of jurisdiction by them within the meaning of article 1 of the Convention. In Andrejeva v Latvia, (Application No 55707/00), given 18 February 2009, para 56, the Grand Chamber reiterated that the concept of jurisdiction for the purposes of article 1 reflects that terms meaning in public international law and that it is closely linked to the international responsibility of the state concerned. The question that the Snatch Land Rover claims raise is whether the jurisdiction of the United Kingdom extends to securing the protection of article 2 of the Convention to members of the armed forces when they are serving outside its territory. For that to be so it would have to be recognised that service abroad by members of the armed forces is an exceptional circumstance which requires and justifies the exercise by the State of its jurisdiction over them extra territorially. In R (Al Skeini) v Secretary of State for Defence [2007] UKHL 26, [2008] AC 153 (Al Skeini (HL)) the House of Lords was asked to consider the case of the deaths of six Iraqi civilians which were the result of actions by a member or members of the British armed forces in Basra. One of them, Mr Baha Mousa, had died as a result of severe maltreatment in a prison occupied and run by British military personnel. It was argued for the civilians that, because of the special circumstances in which British troops were operating in Basra, the conduct complained of, although taking place outside the borders of the United Kingdom and any other contracting state, fell within the exceptions recognised by the Strasbourg jurisprudence. The House held that, although one such exception was recognised where a state through effective control of another territory exercised powers normally exercised by the government of that territory, the obligation to secure the Convention rights would arise only where a contracting state had such effective control over an area as to enable it to provide the full package of rights and freedoms guaranteed by article 1 of the Convention to everyone within that area: Lord Rodger of Earlsferry at para 79; Lord Brown of Eaton under Heywood at para 129. The United Kingdoms presence in Iraq fell far short of such control. As Lord Rodger put it in para 78, the idea that the United Kingdom was obliged to secure the observance of all the rights and freedoms as interpreted by the European court in the utterly different society of southern Iraq was manifestly absurd. The Secretary of State accepted that, as the events occurred in a British detention unit, Mr Mousa met his death within the jurisdiction of the United Kingdom for the purposes of article 1 of the Convention: Lord Rodger at para 61. So far as the other appellants were concerned, the United Kingdom did not have the kind of control of Basra and the surrounding area that would have allowed it to have discharged its obligations, including its positive obligations, as a contracting state under article 2. Three aspects of the discussion of the issue in that case should be noted at this stage. First, the appellants were all citizens of Iraq. They were not state agents of the United Kingdom or otherwise subject to its control or authority. British servicemen, on the other hand, are under the complete control of the UK authorities and are subject exclusively to UK law. Secondly, the House was plainly much influenced by the ruling on jurisdiction by the Grand Chamber in Bankovic which emphasised the centrality of territorial jurisdiction, the regional nature of the Convention and the indivisibility of the package of rights in the Convention: Lord Rodger at para 69. As Lord Brown noted in para 109, Bankovic stood, among other things, for the proposition that the rights and freedoms defined in the Convention could not be divided and tailored. In para 75 of Bankovic the proposition which attracted these observations was in these terms: . the Court is of the view that the wording of article 1 does not provide any support for the applicants suggestion that the positive obligation in article 1 to secure the rights and freedoms defined in section 1 of this Convention can be divided and tailored in accordance with the particular circumstances of the extra territorial act in question. In para 65 of its judgment in that case the Grand Chamber said that the scope of article 1 was determinative of the very scope of the contracting parties positive obligations and, as such, of the scope and reach of the entire Convention system of human rights protection. Thirdly, it was recognised that it was for the Strasbourg court to define the exceptions and evaluate the grounds for departing from the general rule: Lord Bingham of Cornhill at para 29. As Lord Brown put it at para 105, the ultimate decision on the question must necessarily be for that court. Lord Rodger referred at para 67 to the problem which the House had to face, which was that the judgments and decisions of the European court did not speak with one voice. On the one hand there was Issa v Turkey (2004) 41 EHRR 567, where the court said at para 71 that accountability for violation of the Convention rights and freedoms of persons in another state stems from the fact that article 1 of the Convention cannot be interpreted so as to allow a state party to perpetrate violations of the Convention on the territory of the other state which it could not perpetrate on its own territory. This appeared to focus on the activity of the contracting state, whereas the emphasis in Bankovic was on the requirement that the victim should be within the jurisdiction. In these circumstances the House was of the view that it would not be proper to proceed beyond the jurisprudence of the European court on jurisdiction as analysed and declared by the Grand Chamber in Bankovic. The appellants then sought just satisfaction in Strasbourg. In the meantime the jurisdiction question was considered by the domestic court in two further cases: R (Gentle) v Prime Minister [2008] AC 1356 and R (Smith) v Oxfordshire Assistant Deputy Coroner (Equality and Human Rights Commission intervening) [2010] UKSC 29, [2011] 1 AC 1 (Catherine Smith). The question in Gentle was whether article 2 of the Convention imposed a substantive duty on the state to take timely steps to obtain reliable legal advice before committing its troops to armed conflict: see para 3. The claimants were the mothers of two soldiers who were killed while serving in Iraq, one of whom was killed by the same shell as killed Cpl Allbutt and injured Trooper Julien and Lance Corporal Twiddy: see para 3, above. The issue which the claimants wished to explore was the lawfulness of the military action on which the United Kingdom had been engaged in Iraq before it was legitimised by United Nations Security Council Resolution 1546 of 8 June 2004. Lord Bingham said at para 8(3) that, although the soldiers were subject to the authority of the United Kingdom, they were clearly not within its jurisdiction as that expression in the Convention had been interpreted in Al Skeini (HL), paras 79 and 129. But the case was decided on the basis that the claimants were unable to establish the duty which they asserted: see Lord Bingham at para 6. In para 39 Lord Rodger said article 2 of the Convention did not impose an obligation on the government not to take part in an invasion that was unlawful in international law: see also Baroness Hale of Richmond, para 57. In para 19 I said that the guarantee in the first sentence of that article was not violated simply by deploying servicemen and women on active service overseas as part of an organised military force which was properly equipped and capable of defending itself, even though the risk of their being killed was inherent in what they were being asked to do. The issue in Catherine Smith was whether a British soldier in Iraq when outside his base was within the scope of the Convention. The appellant was the mother of Private Jason Smith who had been mobilised for service in Iraq as a member of the Territorial Army and was stationed at Camp Abu Naji. He collapsed while working off base. He was rushed by ambulance to the Camps medical centre but died there almost immediately of heat stroke. The issue in the case concentrated on the question whether the inquest into his death had to satisfy the procedural requirements of article 2. The Secretary of State conceded that, as Private Smith was on the base when he died, Mrs Smith was entitled to the relief which she sought. This meant that the issue had become largely academic, as Lord Phillips recognised in para 2. But on this occasion the Court decided to examine the question and express its opinion on it. The Court was divided on the issue by six to three. The majority held that the contracting states, in concluding the provisions of the Convention, would not have intended it to apply to their armed forces when operating outside their territories. Lord Collins, who delivered the leading judgment on behalf of the majority, said in para 307 that the case came within none of the exceptions recognised by the Strasbourg court, and that there was no basis in its case law, or in principle, for the proposition that the jurisdiction which states undoubtedly have over their armed forces abroad both in national law and international law means that they are within their jurisdiction for the purposes of article 1. Repeating a point that had been made by Lord Rodger in Al Skeini (HL), he said that, to the extent that Issa v Turkey stated a principle of jurisdiction based solely on authority and control by state agents, it was inconsistent with Bankovic. In para 308 he said that there were no policy grounds for extending the scope of the Convention to armed forces abroad, as this would ultimately involve the courts in issues relating to the conduct of armed hostilities which was essentially non justiciable. The leading judgment for the minority was delivered by Lord Mance, with whom Lady Hale and Lord Kerr agreed. It is not possible to do justice to it in a brief summary. But some points that are of particular importance should be noted. In para 188 he said that, to the extent that jurisdiction under the Convention exists over occupied territory, it does so only because of the occupying states pre existing authority and control over its own armed forces. An occupying state cannot have any jurisdiction over local inhabitants without already having jurisdiction over its own armed forces, in both cases in the sense of article 1 of the Convention. In para 194 he said that the United Kingdoms jurisdiction over its armed forces was essentially personal. It could not be expected to take steps to provide in Iraq the full social and protective framework and facilities which it would be expected to provide domestically. But the United Kingdom could be expected to take steps to provide proper facilities and proper protection against risks falling within its responsibility or its ability to control or influence when despatching and deploying armed forces overseas. In paras 195 197 he examined the question whether there would be consequences beyond or outside any that the framers of the Convention could have contemplated and concluded that none of the matters that might give cause for concern justified giving to the concept of jurisdiction a different or more limited meaning to that which in his opinion followed from the guidance that the Strasbourg court had already given in Bankovic. It is however worth noting that he did not attach the same importance as the majority did to the proposition in Bankovic that the rights and freedoms defined in the Convention could not be divided and tailored, and that he was inclined to give more weight than they were to a principle of jurisdiction based on the authority and control which the contracting state had over its armed forces. (b) Al Skeini in Strasbourg The structure of the relevant part of the Grand Chambers judgment, at (2011) 53 EHRR 589, falls into two parts. First, there is a comprehensive statement of general principles relevant to the issue of jurisdiction under article 1 of the Convention. Secondly, those principles are applied to the facts of the case. Although the facts of that case are different from those which are before this Court in these appeals, both parts of the judgment provide important guidance as to how we should resolve the issue with which we have to deal. The statement of general principles begins in para 130 with the observation that the exercise of jurisdiction, which is a threshold condition, is a necessary condition for a contracting state to be able to be held responsible for acts or omissions imputable to it which give rise to an allegation of the infringement of rights and freedoms set forth in the Convention. The significance of this observation in the context of these appeals is that it is not disputed that the United Kingdom has authority and control over its armed forces when serving abroad. It has just as much authority and control over them anywhere as it has when they are serving within the territory of the United Kingdom. They are subject to UK military law without any territorial limit: Armed Forces Act 2006, section 367(1). The extent of the day to day control will, of course, vary from time to time when the forces are deployed in active service overseas, especially when troops are in face to face combat with the enemy. But the legal and administrative structure of the control is, necessarily, non territorial in character. are set out: In paras 131 132 the general principles relevant to the territorial principle 131 A states jurisdictional competence under article 1 is primarily territorial. Jurisdiction is presumed to be exercised normally throughout the states territory. Conversely, acts of the contracting states performed, or producing effects, outside their territories can constitute an exercise of jurisdiction within the meaning of article 1 only in exceptional cases. 132 To date, the Court in its case law has recognised a number of exceptional circumstances capable of giving rise to the exercise of jurisdiction by a contracting state outside its own territorial boundaries. In each case, the question whether exceptional circumstances exist which require and justify a finding by the Court that the state was exercising jurisdiction extra territorially must be determined with reference to the particular facts. One can take from these paragraphs two important points. First, the word exceptional is there not to set an especially high threshold for circumstances to cross before they can justify a finding that the state was exercising jurisdiction extra territorially. It is there to make it clear that, for this purpose, the normal presumption that applies throughout the states territory does not apply. Secondly, the words to date in para 132 indicate that the list of circumstances which may require and justify a finding that the state was exercising jurisdiction extra territorially is not closed. In Catherine Smith, para 303 Lord Collins said that Bankovic made it clear in paras 64 and 65 that article 1 was not to be interpreted as a living instrument in accordance with changing conditions. That can no longer be regarded as an entirely accurate statement. The general principles are derived from the application to particular facts of the requirement of jurisdictional competence. The particular facts to which those principles must now be applied may be the product of circumstances that were not foreseen by the framers of the Convention. But that is no reason to disregard them if they can be shown to fall within the general principles relevant to jurisdiction under article 1. The Grand Chamber in Al Skeini then set out to divide the general principles relevant to jurisdiction into three distinct categories: state agent authority and control; effective control over an area; and the Convention legal space. We are not concerned in the case of the Snatch Land Rover claims with a situation where, as a consequence of military action, the United Kingdom was in effective control of an area outside its territory. Its presence in Iraq in 2005 and 2006 was to provide security and help with the reconstruction effort in that country pursuant to a request by the Iraqi government. The local administration was in the hands of the Iraqi government. Nor are we concerned with the risk of a vacuum in the Convention legal space. The category relevant to this case is that of state agent authority and control, which is described in paras 133 to 137. This category is introduced by para 133, which is in these terms: The Court has recognised in its case law that, as an exception to the principle of territoriality, a contracting states jurisdiction under article 1 may extend to acts of its authorities which produce effects outside its own territory: see Drozd and Janousek v France and Spain (1992) EHRR 745, para 91; Loizidou v Turkey (1995) 20 EHRR 99 (preliminary objections), para 62; Loizidou v Turkey (1997) 23 EHRR 513 (merits), para 52; Bankovic v Belgium (2004) 44 EHRR SE75, para 69. The statement of principle, as it appears in Drozd and the other cases just cited, is very broad: the Court states merely that the contracting partys responsibility can be involved in these circumstances. It is necessary to examine the Courts case law to identify the defining principles. There then follow three paragraphs in which the principles are defined by reference to the Courts case law. The first principle is set out in para 134. It refers to the acts of diplomatic and consular agents, who are present on foreign territory in accordance with provisions of international law. This may amount to an exercise of jurisdiction when these agents exert authority and control over others. The cases cited are X v Federal Republic of Germany (1965) 8 Yearbook of the European Convention on Human Rights 158; X v United Kingdom (1977) 12 DR 73; M v Denmark (1992) 73 DR 193; and Bankovic, para 73, where the Court noted that other recognised instances of the extra territorial exercise of jurisdiction by a state include cases involving the activities of its diplomatic or consular agents abroad and on board craft and vessels registered in, or flying the flag of, that state. In these specific situations, customary international law and treaty provisions have recognised the extra territorial exercise of jurisdiction by the relevant state. The second principle is set out in para 135. It refers to the fact that the Court has recognised the exercise of extra territorial jurisdiction by a contracting state when, through the consent, invitation or acquiescence of the government of that territory, it exercises all or some of the public powers normally to be exercised by that government: Bankovic, para 71. So, where in accordance with custom, treaty or other agreement, authorities of the contracting state carry out executive or judicial functions on the territory of another state, the contracting state may be responsible for breaches of the Convention that result from their exercise, so long as the acts in question are attributable to it rather than to the state in whose territory the acts take place. The cases cited are Drozd and Janousek v France and Spain (1992) 14 EHRR 745; Gentilhomme v France (Application Nos 48205, 48207 and 48209), given 14 May 2002; and X and Y v Switzerland (1977) 9 DR 57. The third principle is set out in para 136. It refers to the fact that the Courts case law demonstrates that in certain circumstances the use of force by a states agents operating outside its territory may bring the individual thereby brought under control of the states authorities into the states article 1 jurisdiction. Four examples are given of the application of this principle to cases where an individual was taken into the custody of state agents abroad: calan v Turkey (2005) 41 EHRR 985, where an individual was handed over to Turkish officials outside the territory of Turkey by officials from Kenya; Issa v Turkey (2004) 41 EHRR 567, where the Court indicated in paras 74 77 that if it had been established that Turkish soldiers had taken the shepherds into custody in a nearby cave in Northern Iraq and executed them, the deceased would have been within Turkish jurisdiction by virtue of the soldiers authority and control over them; Al Saadoon v United Kingdom (2009) 49 EHRR SE95 where the Court held that two Iraqi nationals detained in a British controlled prison in Iraq fell within the jurisdiction of the United Kingdom as the United Kingdom exercised total control over the prison and the individuals detained in them; and Medvedyev v France (2010) 51 EHRR 899, where crew members of a Cambodian registered merchant ship suspected of drug smuggling were taken into custody and detained on a French frigate while it was taken to France. A more recent example of the application of the same principle is to be found in Jamaa v Italy (2012) 55 EHRR 627, where the applicant asylum seekers were detained on an Italian ship after their vessels had been intercepted by the Italian Revenue Police and Coastguard. The following words are set out at the end of para 136 which sum up the essence of the general principle: The Court does not consider that jurisdiction in the above cases arose solely from the control exercised by the contracting state over the buildings, aircraft or ship in which the individuals were held. What is decisive in such cases is the exercise of physical power and control over the person in question. The description of the category of state agent authority and control concludes with an important statement in para 137. It is in these terms: It is clear that, whenever the state through its agents exercises control and authority over an individual, and thus jurisdiction, the state is under an obligation under article 1 to secure to that individual the rights and freedoms under section 1 of the Convention that are relevant to the situation of that individual. In this sense, therefore, the Convention rights can be divided and tailored . I do not read the first sentence of this paragraph as adding a further example to those already listed in paras 134 136. No further cases are cited in support of it, which the Court would have been careful to do if that were the case. The point that the Grand Chamber was making in para 137, as is made clear by the last sentence, is that the package of rights in the Convention is not indivisible, as Bankovic, para 75, which is cited here, appeared to indicate. The Grand Chamber had stated in that paragraph of its judgment in Bankovic that it was of the view that the wording of article 1 did not provide any support for the applicants suggestion that the positive obligation in article 1 to secure the rights and freedoms defined in section 1 of this Convention can be divided and tailored in accordance with the particular circumstances of the extra territorial act in question. The effect of para 137 of the Al Skeini judgment is that this proposition, which informed much of the thinking of the House of Lords in Al Skeini (HL) and of the majority in Catherine Smith, that the rights in Section 1 of the Convention are indivisible, is no longer to be regarded as good law. The extra territorial obligation of the contracting state is to ensure the observance of the rights and freedoms that are relevant to the individual who is under its agents authority and control, and it does not need to be more than that. The dividing and tailoring concept relative to the situation of the individual was applied in the Hirsi Jamaa case to resolve the issue whether the asylum seekers were subject to the jurisdiction of Italy while they were detained on the ship flying the Italian flag: 55 EHRR 627, para 74. The second part of the judgment of the Grand Chamber applies the principles described in the first part to the facts of the case. The state of affairs in Iraq during the period when the applicants deaths at the hands of British forces occurred is reviewed in paras 143 to 148. They were killed on various dates between May and September 2003. This was during a period when the United States and the United Kingdom were exercising the powers of government for the provisional administration of Iraq through a Coalition Provisional Authority, which had been created for the purpose in May 2003. They included the maintenance of civil law and order. That remained the position until 28 June 2004, when full authority for governing Iraq passed from the Coalition Provisional Authority to the Interim Iraqi Government. In the light of these facts the Court held in para 149 that the United Kingdom, through its soldiers engaged in security operations in Basra during the period in question, exercised authority and control over individuals killed in the course of such security operations. This established a jurisdictional link between the deceased and the United Kingdom for the purposes of article 1 of the Convention. The Court does not say which of the general principles led it to this conclusion, but it is reasonably clear that the facts come closest to those referred to in para 135. The United Kingdom was not exercising public powers through the consent, invitation or acquiescence of the government of Iraq as during the relevant period no such government was in existence. But it was exercising powers normally to be exercised by that government had it existed. The case thus fell within the general principle of state authority and control. It should be noted, however, that the situation in Iraq had changed by the time the incidents that have given rise to the Snatch Land Rover claims occurred. These incidents took place on 16 July 2005 and 28 February 2006. By that stage the occupation of Iraq had come to an end and the Coalition Provisional Authority had ceased to exist. Full authority for governing the country had passed to the Interim Iraqi Government. The United Kingdom was no longer exercising the public powers normally to be exercised by that countrys government. (c) discussion The question whether at the time of their deaths Pte Hewett and Pte Ellis were within the jurisdiction of the United Kingdom for the purposes of article 1 of the Convention does not receive a direct answer from the Grand Chamber in its Al Skeini judgment. This is not surprising, as that was not the question it had to decide. As it made clear in para 132, the question whether the state was exercising jurisdiction extra territorially in any given case must be determined with reference to the particular facts of that case. But the insertion of the words to date at the beginning of that paragraph indicate that one should not be too troubled by the fact that no case has yet come before the Strasbourg court which required it to consider whether the jurisdiction which states undoubtedly have over their armed forces abroad in both national and international law means that they are within their jurisdiction for the purposes of article 1 of the Convention. Care must, of course, be exercised by a national court in its interpretation of an instrument, the correct interpretation of which can be authoritatively expounded only by the Strasbourg court: R (Ullah) v Special Adjudicator [2004] UKHL 26, [2004] 2 AC 323, para 20 per Lord Bingham. He had already acknowledged in Brown v Stott [2003] 1 AC 681 that, as an important constitutional instrument, the Convention was to be seen as a living tree capable of growth and expansion within its natural limits (Edwards v Attorney General for Canada [1930] AC 124 at p 136 per Lord Sankey LC). But he said that those limits will often call for very careful consideration. As he put it at the end of para 20 in Ullah, the duty of national courts is to keep pace with the Strasbourg jurisprudence as it evolves over time. Lord Binghams point was that Parliament never intended by enacting the Human Rights Act 1998 to give the courts of this country the power to give a more generous scope to the Convention rights than that which was to be found in the jurisprudence of the Strasbourg court. To do so would have the effect of changing them from Convention rights, based on the treaty obligation, into free standing rights of the courts own creation. In Al Skeini (HL), paras 105 106, Lord Brown of Eaton under Heywood saw a greater danger in the national court construing the Convention too generously in favour of an applicant than in construing it too narrowly. The question before us here, however, is not one as to the scope that should be given to the Convention rights, as to which our jurisprudence is still evolving. It is a question about the states jurisdictional competence under article 1. In this context, as the question of jurisdiction is so fundamental to the extent of the obligations that must be assumed to have been undertaken by the contracting states, the need for care is all the greater. In Catherine Smith, para 93, I endorsed the view expressed by Lord Brown in Al Skeini (HL), para 107 that article 1 should not be construed as reaching any further than the existing Strasbourg jurisprudence clearly shows it to reach. I would take that as being for us, as a national court, the guiding principle. It seems to me that three elements can be extracted from the Grand Chambers Al Skeini judgment which point clearly to the conclusion that the view that was taken by the majority in Catherine Smith that the states armed forces abroad are not within its jurisdiction for the purposes of article 1 can no longer be maintained. The first is to be found in its formulation of the general principle of jurisdiction with respect to state agent authority and control. The whole structure of the judgment is designed to identify general principles with reference to which the national courts may exercise their own judgment as to whether or not, in a case whose facts are not identical to those which have already been held by Strasbourg to justify such a finding, the state was exercising jurisdiction within the meaning of article 1 extra territorially. While the first sentence of para 137 does not add a further example of the application of the principle to those already listed in paras 134 136, it does indicate the extent to which the principle relating to state agent authority and control is to be regarded as one of general application. The words whenever the state through its agents exercises control and authority over an individual, and thus jurisdiction, can be taken to be a summary of the exceptional circumstances in which, under this category, the state can be held to be exercising its jurisdiction extra territorially. As I said in para 30, above, the word exceptional does not set an especially high threshold for circumstances to cross before they can justify such a finding. It is there simply to make it clear that, for this purpose, the normal presumption that applies throughout the states territory does not apply. Lord Collinss comment in Catherine Smith, para 305, that other bases of jurisdiction are exceptional and require special justification should be understood in that sense. The second is to be found in the way, albeit with a degree of reticence, that this formulation resolves the inconsistency between Issa v Turkey and Bankovic on the question whether the test to be applied in these exceptional cases can be satisfied by looking only at authority and control or is still essentially territorial. The problem that was created by this inconsistency was articulated most clearly by Lord Rodger in Al Skeini (HL), paras 71 75. How can one reconcile the decision in Bankovic, which showed that an act which would engage the Convention if committed on the territory of a contracting state does not ipso facto engage the Convention if carried out by that contracting state on the territory of another state outside the Council of Europe, with the test that was described in Issa that required the court to ascertain whether the deceased were under the authority and control of the respondent state? We now know that Issa cannot be dismissed as an aberration because, as Lord Collins said in Catherine Smith, para 307, it is inconsistent with Bankovic. It is Bankovic which can no longer be regarded as authoritative on this point. The fact that Issa is included in para 136 as one of the examples of cases that fall within the general principle of state agent authority and control is particularly noteworthy. It anchors that case firmly in the mainstream of the Strasbourg courts jurisprudence on this topic. The third is to be found in the way that the Grand Chamber has departed from the indication in Bankovic that the package of rights in the Convention is indivisible and cannot be divided and tailored to the particular circumstances of the extra territorial act in question. It was always going to be difficult to see how, if that was to be the guiding principle, it could be possible to accept that a states armed forces abroad in whatever circumstances were within their jurisdiction for the purposes of article 1 as its ability to guarantee the entire range of the Convention rights would in many cases be severely limited. The problem was solved in the case of the actions of Turkish soldiers in northern Cyprus because the Convention rights were also engaged by the acts of the local administration which survived by virtue of Turkish military and other support: Cyprus v Turkey (Application No 25781/94), given 10 May 2001, para 77. Other cases were likely to be more difficult, and Lord Collins recognised in Catherine Smith, para 302 that cases such as Markovic v Italy (2006) 44 EHRR 1045 suggested that some qualification would have to be made to the principle of indivisibility of Convention rights. The Grand Chamber has now taken matters a step further. The concept of dividing and tailoring goes hand in hand with the principle that extra territorial jurisdiction can exist whenever a state through its agents exercises authority and control over an individual. The court need not now concern itself with the question whether the state is in a position to guarantee Convention rights to that individual other than those it is said to have breached: see Jamaa v Italy 55 EHRR 627. There is one other point arising from the Grand Chambers Al Skeini judgment that should not pass unnoticed. The Equality and Human Rights Commission points out in para 49 of its written case that the anterior question that presents itself in state agent cases is whether the state agent himself is within his states jurisdiction within the meaning of article 1. As Lord Mance observed in Catherine Smith, para 188, to the extent that a states extra territorial jurisdiction over local inhabitants exists because of the authority and control that is exercised over them, this is because of the authority and control that the state has over its own armed forces. It would seem to follow therefore that an occupying state cannot have any jurisdiction over local inhabitants without already having jurisdiction over its own armed forces, in each case in the sense of article 1 of the Convention. That this is so has never been questioned by the Strasbourg court, and it may be said that it is the premise from which extra territorial jurisdiction based on state agent authority and control has been developed. In Cyprus v Turkey (1975) 2 DR 125, which appears to have been the first case in which the concept of state agent authority and control was mentioned (see Al Skeini, para 121), the European Commission of Human Rights observed at p 136, para 8, that authorised agents of a state, including diplomatic or consular agents and armed forces, not only remain under its jurisdiction when abroad but bring other persons or property within the jurisdiction of that state, to the extent that they exercise authority over such person or property. In so far as, by their acts or omissions, they affect such persons or property, the responsibility of the state is engaged. The same formulation is to be found in the Commissions decisions in W v Ireland (1983) 32 DR 211, 215 and Vearncombe v Germany and United Kingdom (1989) 59 DR 186, 194. It no longer appears in references by the Strasbourg court to the acts of diplomatic and consular agents present on foreign territory in accordance with provisions of international law: see X and Y v Switzerland 9 DR 57, para 2; Bankovic, para 73; Al Skeini, para 134. But it has never been disapproved. It was quoted without comment or criticism in Chrysostomos v Turkey (1991) 34 Yearbook of the European Convention on Human Rights 35, para 32. The Grand Chamber in Al Skeini was referred by the applicants to the same passage in the Cyprus judgment: see para 121. The quotation from it in that paragraph includes the proposition that authorised agents of a state remain under its jurisdiction when abroad. The Grand Chamber had the opportunity to say that there was something wrong with it, but it did not do so. The Cyprus case was referred to by Lord Phillips in Catherine Smith, paras 49 50. He did not attach any significance to it, as it seemed to him that the reasoning of the Commission was far wider than that of the Court when it dealt with Turkeys jurisdiction in Northern Cyprus in Loizidou v Turkey (1995) 20 EHRR 99. It receives a passing mention also by Lord Collins in para 249 in the course of a brief review of the cases on acts of diplomatic and consular officials abroad. As matters now stand, given the guidance that has now been given in Al Skeini, it deserves more attention. The logic which lies behind it, as explained by Lord Mance in Catherine Smith, para 188, is compelling. It is plain, especially when one thinks of the way the armed forces operate, that authority and control is exercised by the state throughout the chain of command from the very top all the way down to men and women operating in the front line. Servicemen and women relinquish almost total control over their lives to the state. It does not seem possible to separate them, in their capacity as state agents, from those whom they affect when they are exercising authority and control on the states behalf. They are all brought within the states article 1 jurisdiction by the application of the same general principle. In Demir and Baykara v Turkey (Application No 34503/97), given 12 November 2008, para 74, the Grand Chamber said that in a number of judgments it had used, for the purposes of interpreting the Convention, intrinsically non binding instruments of Council of Europe organs, in particular recommendations and resolutions of the Committee of Ministers and the Parliamentary Assembly. These resolutions and recommendations constitute agreements within the meaning of article 31(3)(a) of the Vienna Convention, account of which may be taken in the interpretation of a treaty or the application of its provisions. It is therefore worth noting recommendation 1742 (2006) of the Parliamentary Assembly on the human rights of members of the armed forces of 11 April 2006, which was made in the light of a debate on a report on this issue of its Committee on Legal Affairs and Human Rights (doc 10861). In para 2 of recommendation 1742 the point was made that members of the armed forces are citizens in uniform who must enjoy the same fundamental freedoms and the same protection of their rights and dignity as any other citizen, within the limits imposed by the specific exigencies of military duties. In para 3 it was emphasised that members of the armed forces cannot be expected to respect humanitarian law and human rights in their operations unless respect for human rights is guaranteed within the army ranks. The Parliamentary Assembly recommended that the Committee of Ministers should prepare and adopt guidelines in the form of a new recommendation to member states designed to guarantee respect for human rights by and within the armed forces. A draft recommendation prepared by a steering committee was adopted by the Committee of Ministers on 24 February 2010 with an explanatory memorandum (CM/Rec (2010) 4) in which it was stated that member states should, so far as possible, apply the principles set out in the recommendation to their armed forces in all circumstances, including in time of armed conflict. The conclusion which I would draw from the jurisprudence of the Strasbourg court derives further support from these non binding recommendations. For these reasons I would hold that the decision in Catherine Smith should be departed from as it is inconsistent with the guidance that the Grand Chamber has now given in its Al Skeini judgment. I would also hold that the jurisdiction of the United Kingdom under article 1 of the Convention extends to securing the protection of article 2 to members of the armed forces when they are serving outside its territory and that at the time of their deaths Pte Hewett and Pte Ellis were within the jurisdiction of the United Kingdom for the purposes of that article. To do so would not be inconsistent with the general principles of international law, as no other state is claiming jurisdiction over them. The extent of that protection, and in particular whether the MOD was under a substantive duty of the kind for which the Snatch Land Rover claimants contend, is the question which must now be considered. The article 2 ECHR claims Article 2(1) of the Convention provides as follows: Everyones right to life shall be protected by law. No one shall be deprived of his life intentionally save in the execution of a sentence of a court following his conviction of a crime for which this penalty is provided by law. The relevant guarantee for the purposes of this case is set out in the first sentence. It has two aspects: one substantive, the other procedural. We are not concerned here with the procedural obligation which is implied into the article in order to make sure that the substantive right is effective in practice: see R (Gentle) v Prime Minister [2008] AC 1356, para 5, per Lord Bingham. The Snatch Land Rover claims, details of which are set out in paras 11 and 12, above, are all directed to the substantive obligation, which requires the state not to take life without justification and also, by implication, to establish a framework of laws, precautions, procedures and means of enforcement which will, to the greatest extent reasonably practicable, protect life: R (Middleton) v West Somerset Coroner [2004] UKHL 10, [2004] 2 AC 182, para 2. As Owen J pointed out, these claims involve issues of procurement as well as allegations relating to operational decisions made by commanders: [2011] EWHC 1676 (QB), para 51. (a) preliminary observations Lord Collins said in Catherine Smith, para 308 that to extend the scope of the Convention to armed forces abroad would ultimately involve the courts in issues relating to the conduct of armed hostilities which are essentially non justiciable. That some issues relating to the conduct of armed hostilities are non justiciable is not really in doubt. But in my opinion a finding that in all circumstances deaths or injuries in combat that result from the conduct of operations by the armed forces are outside the scope of article 2 would not be sustainable. It would amount, in effect, to a derogation from the states substantive obligations under that article. Such a fundamental departure from the broad reach of the Convention should not be undertaken without clear guidance from Strasbourg as to whether, and in what circumstances, this would be appropriate. It may be noted in this context that the intervener JUSTICE drew attention to article 15 of the Convention in reply to concerns about the practical consequences of finding that soldiers are within the jurisdiction of the United Kingdom under article 1. It provides that in time of war or other public emergency threatening the life of the nation any High Contracting Party may take measures derogating from its obligations under the Convention to the extent required by the exigencies of the situation. But the phrase threatening the life of the nation suggests that the power to derogate under this article is available only in an exceptional situation of crisis or emergency which affects the whole population and constitutes a threat to the organised life of the community of which the state is composed: Lawless v Ireland (No 3) (1961) 1 EHRR 15, para 28. It will be recalled that in A v Secretary of State for the Home Department [2004] UKHL 56, [2005] 2 AC 68 it was held that the Human Rights Act 1998 (Designed Derogation) Order 2001, which had been made to derogate from the right to personal liberty under article 5(1) to enable the appellants to be detained indefinitely without trial, should be quashed. And in R (Al Jedda) v Secretary of State for Defence (JUSTICE intervening) [2007] UKHL 58, [2008] AC 332, para 38, Lord Bingham said that it was hard to think that the conditions of article 15 could ever be met when a state had chosen to conduct an overseas peacekeeping operation, however dangerous the conditions, from which it could withdraw. He also noted that it had not been the practice of states to derogate in situations such as those in Iraq in 2004 and that as subsequent practice in the application of a treaty may, under article 31(3)(b) of the Vienna Convention, be taken into account in interpreting the treaty it seemed proper to regard the power in article 15 as inapplicable. I do not think therefore that it would be right to assume that concern about the practical consequences in situations such as those with which we are dealing in this case can be answered by exercising the power to derogate. The circumstances in which that power can properly be exercised are far removed from those where operations are undertaken overseas with a view to eliminating or controlling threats to the nations security. The jurisprudence of the Strasbourg court shows that there are other ways in which such concerns may be met. The Strasbourg court has repeatedly emphasised that, when it comes to an assessment of the positive obligations that are to be inferred from the application in any given case of the Convention rights, a fair balance must be struck between the competing interests of the individual and of the community as a whole. It has also recognised that there will usually be a wide margin of appreciation if the state is required to strike a balance between private and public interests and Convention rights: Hristozov v Bulgaria (Application Nos 47039/11 and 358/12), given 13 November 2012, paras 118, 124. That was a case about a refusal to authorise an experimental medicinal product which the applicants had wished to be administered to them. But the competition between the interests of the state and those of the individual is no less acute where issues arise about the risk to life of soldiers in the context of military operations conducted on the states behalf. The challenge this court faces when dealing with the Snatch Land Rover claims is to determine where the boundary lies between the two extremes in the circumstances that the armed forces were facing in Iraq in 2005 and 2006. In Gentle, para 19, I said that the proper functioning of an army in a modern democracy includes requiring those who serve in it to undertake the operations for which they have been recruited, trained and equipped, some of which are inherently dangerous, and that the jurisprudence developed from the decision in Soering v United Kingdom (1989) 11 EHRR 439 about decisions taken in this country to send people abroad to places where they face a real risk of being subjected to torture or to inhuman or degrading treatment or punishment does not apply. The guarantee in the first sentence of article 2(1) is not violated simply by deploying servicemen and women on active service overseas as part of an organised military force which is properly equipped and capable of defending itself, even though the risk of their being killed is inherent in what they are being asked to do. The other side of the coin, as Lord Mance explained in Catherine Smith, para 195, is that there is nothing that makes the Convention impossible or inappropriate of application to the relationship between the state and its armed forces as it exists in relation to overseas operations in matters such as, for example, the adequacy of equipment, planning or training. Lord Rodger recognised in the same case at para 126 that, while a coroner will usually have no basis for considering at the outset that there has been a violation of article 2 where a serviceman or woman has been killed by opposing forces in the course of military operations, new information might be uncovered as the investigation proceeds which does point to a possible violation of the article. He referred to the death of a soldier as a result of friendly fire from other British forces as an extreme example. And, as I said in Catherine Smith, para 105, one must not overlook the fact that there have been many cases where the death of service personnel indicates a systemic or operational failure on the part of the state, ranging from a failure to provide them with the equipment that was needed to protect life on the one hand to mistakes in the way they are deployed due to bad planning or inadequate appreciation of the risks that had to be faced on the other. So failures of that kind ought not to be immune from scrutiny in pursuance of the procedural obligation under article 2 of the Convention. The extent to which the application of the substantive obligation under article 2 to military operations may be held to be impossible or inappropriate will, however, vary according to the context. Military operations conducted in the face of the enemy are inherently unpredictable. There is a fundamental difference between manoeuvres conducted under controlled conditions in the training area which can be accurately planned for, and what happens when troops are deployed on active service in situations over which they do not have complete control. As Lord Rodger observed in Catherine Smith, para 122, the job of members of the armed forces involves their being deployed in situations where, as they well know, opposing forces will be making a determined effort, and using all their resources, to kill and injure them. The best laid plan rarely survives initial contact with the enemy. The best intelligence cannot predict with complete accuracy how the enemy will behave, or what equipment will be needed to meet the tactics and devices that he may use to achieve his own ends. Speed may be essential if the momentum of an attack is to be maintained or to strengthen a line of defence. But lines of communication may become stretched. Situations may develop where it is simply not possible to provide troops in time with all they need to conduct operations with the minimum of casualties. Things tend to look and feel very different on the battlefield from the way they look on such charts and images as those behind the lines may have available to them. A court should be very slow indeed to question operational decisions made on the ground by commanders, whatever their rank or level of seniority. Then there is the issue of procurement. In A v Secretary of State for the Home Department [2005] 2 AC 68, para 29, Lord Bingham said that the more purely political (in a broad or narrow sense) the question is, the more appropriate it would be for political resolution, and the less likely it is to be an appropriate matter for judicial decision. The allocation of resources to the armed services and as between the different branches of the services, is also a question which is more appropriate for political resolution than it is by a court. Much of the equipment in use by the armed forces today is the product of advanced technology, is extremely sophisticated and comes at a very high price. Procurement depends ultimately on the allocation of resources. This may in turn be influenced as much by political judgment as by the judgment of senior commanders in Whitehall as to what they need for the operations they are asked to carry out. It does not follow from the fact that decisions about procurement are taken remote from the battlefield that they will always be appropriate for review by the courts. This, then, is a field of human activity which the law should enter into with great caution. Various international measures, such as those contained in the 3rd Geneva Convention of 1929 to protect prisoners of war, have been entered into to avoid unnecessary hardship to non combatants. But subjecting the operations of the military while on active service to the close scrutiny that may be practicable and appropriate in the interests of safety in the barrack block or in the training area is an entirely different matter. It risks undermining the ability of a state to defend itself, or its interests, at home or abroad. The world is a dangerous place, and states cannot disable themselves from meeting its challenges. Ultimately democracy itself may be at risk. (b) the Strasbourg authorities Fundamentally, article 2 requires a state to have in place a structure of laws which will help to protect life: Savage v South Essex NHS Trust [2008] UKHL 74, [2009] AC 681, para 19, per Lord Rodger. As he explained, with reference to the European courts discussion of this issue in Osman v United Kingdom (1998) 29 EHRR 245, para 115, the primary duty is to secure the right to life by putting in place effective criminal law offences backed up by law enforcement machinery. But the states duty goes further than that. It may also imply, in certain well defined circumstances, a positive obligation on the authorities to take preventive operational measures to protect the lives of those within their jurisdiction. In para 88 of its judgment in Keenan v United Kingdom (2001) 33 EHRR 913, the court began by reciting the high level of duty of the state to put in place effective criminal law sanctions to deter the commission of offences against prisoners. But that was just part of what Lord Rodger described in para 30 of Savage as the tralatician jurisprudence of the court on positive obligations under article 2. The positive duties on the state operate at various levels, as one idea is handed down to another. There is a lower level, but still general, duty on a state to take appropriate measures to secure the health and well being of prisoners or people who are in some form of detention. This in its turn gives rise, at a still lower level, to two general obligations: Savage, para 36; Rabone v Pennine Care NHS Trust (INQUEST and others intervening) [2012] UKSC 2, para 12, per Lord Dyson; neryildiz v Turkey (2004) 41 EHRR 325, para 89. The first is a systemic duty, to put in place a legislative and administrative framework which will make for the effective prevention of the risk to their health and well being or, as it was put in neryildiz, para 89, effective deterrence against threats to the right to life. Depending on the facts, this duty could extend to issues about training and the procurement of equipment before the forces are deployed on operations that will bring them into contact with the enemy. The second, which is also directly in point in this case, is to ensure that, where there is a real and immediate risk to life, preventative operational measures of whatever kind are adopted to safeguard the lives of those involved so far as this is practicable. The Strasbourg court has not had occasion to examine the extent to which article 2(1) offers protection at any level to a states armed forces when engaged in operations such as those that were being conducted in Iraq in 2005 and 2006. But there are some straws in the wind which may offer some guidance. In Engel v The Netherlands (No 1) (1976) 1 EHHR 647, para 54, in a well known passage, the Court said that, when interpreting and applying the rules of the Convention, the court must bear in mind the particular characteristics of military life and its effect on the situation of individual members of the armed forces. That was a case about the preservation of military discipline, as were en v Turkey (Application No 45824/99), given 8 July 2003) and Grigoriades v Greece (1997) 27 EHHR 464, where it was observed at p 8 that the extent of the protection given to members of the armed forces must take account of the characteristics of military life, the nature of the activities they are required to perform and of the risk that they give rise to. These comments, however brief, do seem to make it clear that it would not be compatible with the characteristics of military life to expect the same standard of protection as would be afforded by article 2(1) to civilians who had not undertaken the obligations and risks associated with life in the military. That is plainly so in the context of the exercise of military discipline over members of the armed forces when they are on active service. It is hard to see why servicemen and women should not, as a general rule, be given the same protection against the risk of death or injury by the provision of appropriate training and equipment as members of the police, fire and other emergency services. But it is different when the serviceman or woman moves from recruitment and training to operations on active service, whether at home or overseas. It is here that the national interest requires that the law should accord the widest measure of appreciation to commanders on the ground who have the responsibility of planning for and conducting operations there. This approach receives some support from Stoyanovi v Bulgaria (Application No 42980/04), given 9 November 2010, where an application was made under article 2(1) by the family of a soldier who had died during a parachute exercise. In paras 59 61 the Court examined the difference between the primary positive obligation under that article to establish a framework of laws and procedures to protect life and the obligation to take preventative operational measures to protect the life of an individual which may be imposed by implication, as it was put in Osman v United Kingdom (1998) 29 EHRR 245, para 115, only in certain and well defined circumstances. In para 59, recalling what was said in para 116 of Osman where the allegation was of a failure to take preventive measures where there was a known risk of a real, direct and immediate threat to the life of an individual posed by another individual, the Court said: Subject to considerations as to the difficulties involved in policing modern societies, the unpredictability of human conduct and the operational choices which must be made in terms of priorities and resources, such an obligation must be interpreted in a way which does not impose an impossible or disproportionate burden on the authorities and which also conforms with the other rights guaranteed by the Convention. In para 61 it observed that positive obligations will vary in their application depending on the context. Having noted that the case concerned an accident during a military training exercise and that parachute training was inherently dangerous but an ordinary part of military duties, it said: Whenever a state undertakes or organises dangerous activities, or authorises them, it must ensure through a system of rules and through sufficient control that the risk is reduced to a reasonable minimum. If nevertheless damage arises, it will only amount to a breach of the states positive obligations if it was due to insufficient regulations or insufficient control, but not if the damage was caused through the negligent conduct of an individual or the concatenation of unfortunate events. That was a case where the state was in control of the situation, as the accident occurred during a training exercise. It was not claimed that any specific risk to the life of the deceased should have been foreseen in advance, nor was it argued that the legislative and administrative framework was defective in any general or systemic sense: paras 62 63. The whole focus of the courts supervision was on the authorities response to the accident. It was not suggested that there could not have been a breach of the general or systemic duties in such a case. There is, however, a sharp contrast between that situation and operations undertaken in a situation where it was known or could reasonably have been anticipated that troops were at risk of attacks from insurgents by unconventional means such as by the planting of IEDs. Regulation and control of the kind contemplated in Stoyanovi is likely to be very difficult, if not impossible, to achieve on the ground in situations of that kind. Even where those directing operations are remote in place and time from the area in which the troops are operating, great care is needed to avoid imposing a burden on them which is impossible or disproportionate. Another example of the Strasbourg courts concern not to impose a disproportionate and unrealistic obligation on the state is provided by Giuliani and Gaggio v Italy (Application No 23458/02), given 24 March 2011. The applicants in that case complained of the death of their son and brother during demonstrations surrounding the G8 summit in Genoa which had degenerated into violence. The Court held that the Italian authorities did not fail in their obligation to do what could reasonably be expected of them to provide the level of safeguards required during operations potentially involving the use of lethal force. It drew a contrast between dealing with a precise and identifiable target and the maintenance of order in the face of possible disturbances spread over the entire city as regards the extent to which the officers involved could be expected to be highly specialised in dealing with the tasks assigned to them. So too, in the case of the armed forces, a contrast can be drawn between their situation in the training area that can be planned for precisely and that which they are likely to encounter during operations when in contact with the enemy. The same approach is indicated by Finogenov v Russia (Application Nos 18299/03 and 27311/03), given 20 December 2011, para 213, where the Court was prepared to give a margin of appreciation to the domestic authorities, in so far as the military and technical aspects of the situation were concerned, in connection with the storming of a theatre in which many people were held hostage by terrorists, even if with hindsight some of the decisions they took might appear open to doubt. The guidance which I would draw from the Courts jurisprudence in this area is that the court must avoid imposing positive obligations on the state in connection with the planning for and conduct of military operations in situations of armed conflict which are unrealistic or disproportionate. But it must give effect to those obligations where it would be reasonable to expect the individual to be afforded the protection of the article. It will be easy to find that allegations are beyond the reach of article 2 if the decisions that were or ought to have been taken about training, procurement or the conduct of operations were at a high level of command and closely linked to the exercise of political judgment and issues of policy. So too if they relate to things done or not done when those who might be thought to be responsible for avoiding the risk of death or injury to others were actively engaged in direct contact with the enemy. But finding whether there is room for claims to be brought in the middle ground, so that the wide margin of appreciation which must be given to the authorities or to those actively engaged in armed conflict is fully recognised without depriving the article of content, is much more difficult. No hard and fast rules can be laid down. It will require the exercise of judgment. This can only be done in the light of the facts of each case. (c) should the claims be struck out? The circumstances of the Snatch Land Rover cases are not precisely analogous to those of any previous case in which the implied positive obligation under article 2 has been imposed, and the allegations made in each of the claimants particulars of claim (see paras 11 and 12, above) are not identical. This is because the explosion in which Pte Hewett was killed occurred more than six months before that which killed Pte Ellis. The claim in Pte Elliss case concentrates on the provision of what is said, in the light of experience, to have been inadequate equipment and a failure to limit his patrol to vehicles which offered better protection or had been fitted with element A. The claims in Pte Hewetts case are less precise and range more widely. But they too extend to criticism of operational decisions taken by those in charge of the patrols as well as to alleged failures in the provision of appropriate vehicles and equipment in the light of the death of L Cpl Brackenbury in similar circumstances seven weeks previously. I am conscious, however, of the fact that these particulars are no more than the briefest outline of the case that the claimants seek to make. Account should also be taken of the fact that the claims were issued in January 2008, in the case of Pte Hewett, and in February 2009, in the case of Pte Ellis. In both cases this was before the judgment was delivered in Stoyanovi v Bulgaria. The European Court has now provided greater clarity as to the approach that should be taken to claims of this kind, as has the discussion about the distinct elements that are to be found in the positive duty to protect life that is to be found in Savage and Rabone. Some of the failures which the claimants allege appear to be of the systemic kind (see para 68, above). Others are of the operational kind that was described in the Osman case, where there was an implied positive obligation to take preventative operational measures to protect those who were at risk of a real, direct and immediate threat to life. Measures of that kind could extend to procurement decisions taken on the ground about the provision of vehicles and equipment, as well as to decisions about their deployment. How precisely the allegations fit into the structure of the duties implied by the article cannot be determined without knowing more about the facts, bearing in mind that it must be interpreted in a way which does not impose an unrealistic or disproportionate burden on the authorities. The overall aim of the courts procedure must be to achieve fairness, and I think that it would be unfair to the relatives of the deceased to apply too exacting a standard at this stage to the way the claims have been pleaded. The circumstances in which the various decisions were made need to be inquired into before it can be determined with complete confidence whether or not there was a breach of the implied positive obligation. The details which are needed to place those circumstances into their proper context will only emerge if evidence is permitted to be led in support of them. This seems to me to be a classic case where the decision on liability should be deferred until after trial. I agree with Owen J that the procurement issues may give rise to questions that are essentially political in nature but that it is not possible to decide whether this is the case without hearing evidence. He said that there was no sound basis for the allegations that relate to operational decisions made by commanders, and for this reason took a different view as to whether they were within the reach of article 2. But it seems to me that these allegations cannot easily be divorced from the allegations about procurement, and that here too the question as to which side of the line they lie is more appropriate for determination after hearing evidence. Much will depend on where, when and by whom the operational decisions were taken and the choices that were open to them, given the rules and other instructions as to the use of equipment under which at each level of command they were required to operate. I would therefore dismiss the MODs appeal against Owen Js decision, which the Court of Appeal found it unnecessary to consider, that none of these claims should be struck out. The claimants are, however, on notice that the trial judge will be expected to follow the guidance set out in this judgment as to the very wide measure of discretion which must be accorded to those who were responsible on the ground for the planning and conduct of the operations during which these soldiers lost their lives and also to the way issues as to procurement too should be approached. It is far from clear that they will be able to show that the implied positive obligation under article 2(1) of the Convention to take preventative operational measures was breached in either case. III. Combat immunity (a) background The Challenger claims proceed on the basis that there is no common law liability for negligence in respect of acts or omissions on the part of those who are actually engaged in armed combat. So it has not been suggested that Lt Pinkstone or anyone else in the Black Watch battle group was negligent. Nor, as his decision to fire was taken during combat, would it have been appropriate to do so. The Challenger claimants concentrate instead on an alleged failure to ensure that the claimants tank and the tanks of the battle group that fired on it were properly equipped with technology and equipment that would have prevented the incident, and an alleged failure to ensure that soldiers were provided with adequate recognition training before they were deployed and also in theatre. Their case is founded entirely on failings in training and procurement. The Ellis claim at common law also raises issues about procurement. The MOD invokes in reply the doctrine of combat immunity, which it says should be given a sufficiently broad scope to cover all acts or omissions that are alleged to have caused death or injury in the course of combat operations. It is plain that the effect of the doctrine, if it applies, would be to remove the issue of liability for negligence from the jurisdiction of the court altogether. But the MOD also submits that, if the court does have jurisdiction, it would not be fair, just or reasonable to impose a duty of care on it to protect the soldiers in such circumstances against death or injury. The justification for these arguments is the same, whichever of the two formulations is adopted. It is that the interests of the state must prevail over the interests of the individual. As Mr Eadie QC for the MOD put it, the fair, just and reasonable test chimes with the doctrine of combat immunity. His appeal against the Court of Appeals decision that the negligence claims should not be struck out was directed primarily to that doctrine. This may be considered to be an application to given facts of the test as to what is fair, just and reasonable. But the structure of the law is important and combat immunity is best thought of as a rule, because once a case falls within it no further thought is needed to determine the question whether a duty of care was owed to the claimant. The scope of this rule deserves attention as a separate issue in its own right. (b) the authorities Combat immunity made its first appearance in Shaw Savill & Albion Co Ltd v Commonwealth (1940) 66 CLR 344. A collision had occurred between HMAS Adelaide and a civilian vessel, the MV Coptic. It took place on 3 December 1940 while the civilian vessel was on a voyage from Brisbane to Sydney. The owners of the civilian vessel claimed that the collision had been caused by negligence on the part of the naval authorities and sought damages. The High Court was adjudicating on the plaintiffs demurrer to the defence and a strike out summons by the Commonwealth. The defence was that, while in the course of actual operations against the enemy, the forces of the Crown are under no duty of care to avoid loss or damage to private individuals. Both applications were dismissed and the case proceeded to trial. The Commonwealth was ultimately found liable on the ground of the captains fault in his navigation of the Adelaide: see Attorney General (New South Wales) v Perpetual Trustee Co Ltd (1952) 85 CLR 237, 252 per Dixon CJ. Dixon J, with whom Rich ACJ and McTiernan J agreed, said in the demurrer proceedings at p 361 that it could hardly be maintained that during an actual engagement with the enemy the navigating officer of a ship of war was under a common law duty to avoid harm to such non combatant ships as might appear in the theatre of operations: To concede that any civil liability can rest upon a member of the armed forces for supposedly negligent acts or omissions in the course of an actual engagement with the enemy is opposed alike to reason and to policy. But the principle cannot be limited to the presence of the enemy or to occasions when contact with the enemy has been established. Warfare perhaps never did admit of such a distinction, but now it would be quite absurd. The development of the speed of ships and the range of guns were enough to show it to be an impracticable refinement, but it has been put out of question by the bomber, the submarine and the floating mine. The principle must extend to all active operations against the enemy. At p 362 he acknowledged that it might not be easy under conditions of modern warfare to say in a given case upon which side of the line an act or omission falls. But the uniform tendency of the law had been to concede to the armed forces complete legal freedom in the field, that is to say in the course of active operations against the enemy, so that the application of private law by the ordinary courts may end where the active use of arms begins. Starke J said at pp 355 356 that acts done in the course of operations of war are not justiciable and that this had been decided by Ex P D F Marais [1902] AC 109, where the Judicial Committee of the Privy Council applied the test of whether actual war was raging at the time of the incident. In Groves v Commonwealth (1982) 150 CLR 113, para 3 Gibbs CJ said that he had no difficulty in accepting the correctness of what was said by Dixon J: To hold that there is no civil liability for injury caused by negligence of persons in the course of an actual engagement with the enemy seems to me to accord with common sense and sound policy. In Mulcahy v Ministry of Defence [1996] QB 732 Neill LJ said at p 746 that it seemed to have been recognised in the Australian cases that warlike activities fell into a special category. He concluded at p 748 that an English court should approach a claim of negligence by a soldier who was injured while a gun of whose team he was a member was fired into Iraq during the first Iraq war in the same way as in the High Court of Australia did in the Shaw Savill case. At pp 749 750 he examined what the position would have been, in the absence of the Australian cases, as to whether it would have been fair, just or reasonable to impose a duty of care on one soldier in his conduct to another when engaging the enemy during hostilities. Echoing the words of Gibbs CJ in Groves, he reached the same conclusion, as there was no duty on the defendants in battle conditions to maintain a safe system of work. Sir Iain Glidewell said at p 751 that at common law one soldier does not owe a duty of care to another member of the armed forces when engaging the enemy in the course of hostilities. In his judgment in this case, at para 93, Owen J referred to his judgment in Multiple Claimants v The Ministry of Defence [2003] EWHC 1134 (QB) in which he drew from the cases the proposition that the immunity is not limited to the presence of the enemy or the occasions when contact with the enemy has been established. It extends to all active operations against the enemy in which service personnel are exposed to attack or the threat of attack, including the planning and preparation for the operations in which the armed forces may come under attack or meet armed resistance. He qualified the latter part of this proposition by saying that the extension of the immunity to the planning of and preparation for military operations applied to the planning of and preparation for the operations in which injury was sustained, and not to the planning and preparation in general for possible unidentified further operations. (c) discussion: combat immunity There is not much by way of close reasoning in Shaw Savill and Groves, apart from assertions that where combat immunity applies the doctrine is justified by reason and policy. But the doctrine itself, as explained in Mulcahy, is not in doubt. The question is as to the extent of the immunity. With great respect, I doubt the soundness of the extension of it that in the Multiple Claimants case Owen J drew from the very few cases on this topic. They included Burmah Oil Co Ltd v Lord Advocate [1965] AC 75, where the House held that the destruction of oil installations to avoid their falling into the hands of the enemy did not fall into the category of damage done during the course of battle. That was a very unusual case, which does not really bear on the issue we have to decide. It seems to me that the extension of the immunity to the planning of and preparation for the operations in which injury was sustained that the judge seems to have favoured is too loosely expressed. It could include steps taken far away in place and time from those operations themselves, to which the application of the doctrine as a particular application of what is just, fair and reasonable would be at the very least questionable. Such an extension would also go beyond the situations to which the immunity has so far been applied. In Bici v Ministry of Defence [2004] EWHC 786 (QB), para 90, Elias J noted that combat immunity was exceptionally a defence to the government, and to individuals too, who take action in the course of actual or imminent armed conflict and cause damage to property or death or injury to fellow soldiers or civilians. It was an exception to the principle that was established in Entick v Carrington (1765) 19 State Tr 1029 that the executive cannot simply rely on the interests of the state as a justification for the commission of wrongs. In his opinion the scope of the immunity should be construed narrowly. That approach seems to me to be amply justified by the authorities. The Challenger claims are about alleged failures in training, including pre deployment and in theatre training, and the provision of technology and equipment. They are directed to things that the claimants say should have been done long before the soldiers crossed the start line at the commencement of hostilities. The equipment referred to consists of target identity devices to provide automatic confirmation as to whether a vehicle is a friend or a foe, and situation awareness equipment that would permit tank crews to locate their position and direction of sight accurately. The claim is that, if the Challenger II tanks that were involved in this incident had been provided with this equipment before they went into action, the claimants tank would not have been fired on. The training referred to is described as recognition training. It is said that this should have been provided pre deployment and in theatre. Here too the essence of the claim is that these steps should have been taken before the commencement of hostilities. The claimants are careful to avoid any criticism of the actions of the men who were actually engaged in armed combat at the time of the incident. The question which these claims raise is whether the doctrine of combat immunity should be extended from actual or imminent armed conflict to failures at that earlier stage. I would answer it by adopting Elias Js point, with which Owen J agreed in para 99 of his judgment in this case, that the doctrine should be narrowly construed. To apply the doctrine of combat immunity to these claims would involve an extension of that doctrine beyond the cases to which it has previously been applied. That in itself suggests that it should not be permitted. I can find nothing in these cases to suggest that the doctrine extends that far. In the Shaw Savill case the argument for the Commonwealth at the demurrer stage was that at the time of the collision the warship was engaged in active naval operations against the enemy, that those operations were urgently required and necessary for the safety of the realm and that the national emergency called for the taking of the measures that the warship adopted. Both vessels were said to have been proceeding without any navigation or other lights, in pursuance of instructions from the Australian naval authorities which had been authorised to give them as part of the Crowns function of waging war by sea and protecting vessels from enemy action. It was not said where the enemy were, or what exactly the warship was doing when the collision occurred. But the phrase active naval operations against the enemy makes the point that it was assumed that it occurred during, and not before, the vessels engagement in those operations. The fact that the Commonwealth was ultimately found liable at trial suggests that the judge found that at the material time the warship was not, after all, engaged in actual operations against the enemy. The accident in Mulcahys case occurred while the gun was being fired into Iraq during, and not before, the actual engagement with the enemy. Then there is the point that, as was noted in Jones v Kaney [2011] UKSC 13, [2011] 2 AC 398, paras 108 and 161, any extension of an immunity needs to be justified. It has to be shown to be necessary. Starke J observed in the Shaw Savill case at p 354 that not every warlike operation done in time of war is an operation or an act of war. It is to operations or acts of war only that the doctrine extends, on the ground that the armed forces must be free to conduct such operations without the control or interference of the courts of law. As Dixon J said in the same case at p 361, no one can imagine a court undertaking the trial of an issue as to whether a soldier on the field of battle or a sailor fighting on his ship might reasonably be more careful to avoid causing civil loss or damage. The principle, as he described it, is not limited to acts or omissions in the course of an actual engagement with the enemy. It extends to all active operations against the enemy. While in the course of actually operating against the enemy, the armed forces are under no duty of care to avoid causing loss or damage to those who may be affected by what they do. But, as Dixon J also said at p 362, there is a real distinction between actual operations against the enemy and other activities of the combatant services in time of war. He referred by way of example to a warship proceeding to her anchorage or manoeuvring among other ships in a harbour. At that stage no reason was apparent for treating her officers as under no civil duty of care, remembering always that the standard of care is that which is reasonable in the circumstances. The same point can be made about the time when the failures are alleged to have taken place in the Challenger claimants case. At the stage when men are being trained, whether pre deployment or in theatre, or decisions are being made about the fitting of equipment to tanks or other fighting vehicles, there is time to think things through, to plan and to exercise judgment. These activities are sufficiently far removed from the pressures and risks of active operations against the enemy for it to not to be unreasonable to expect a duty of care to be exercised, so long as the standard of care that is imposed has regard to the nature of these activities and to their circumstances. For this reason I would hold that the Challenger claims are not within the scope of the doctrine, that they should not be struck out on this ground and that the MOD should not be permitted, in the case of these claims, to maintain this argument. The Ellis common law claim relates to a different phase of the United Kingdoms engagement in Iraq, but it was a phase during which there was a constant threat of enemy action by insurgents which was liable to cause death or injury. These claims are less obviously directed to things done away from the theatre in which Pte Ellis was engaged at the time of his death: see para 12, above. Their wording suggests that at least some of the failures alleged may have been due to decisions taken by local commanders during active operations on the ground. If that was the situation, it may be open to argument that these claims are within the doctrine. As Moses LJ recognised in the Court of Appeal, para 63, factual issues of that kind must be left for determination at the trial. The information that would be needed for a decision either way is lacking at this stage. As in the case of their claims under article 2 of the Convention, the details that are needed to place the claims in context will only emerge if evidence is permitted to be led in support of them. So I would hold that it would be premature for these claims to be struck out on the ground of combat immunity. I would leave this issue open to further argument in the light of the evidence. (d) discussion: fair, just and reasonable Mr Eadie QC also renewed the argument that was advanced below that the common law claims should be struck out on the ground that it would not be fair, just and reasonable to impose a duty of care at common law to protect against such death or injury as occurred in these cases. He referred, for example, to Van Colle v Chief Constable of Hertfordshire Police [2008] UKHL 50, [2009] AC 225, Brooks v Comr of Police of the Metropolis [2005] UKHL 24, [2005] 1 WLR 1495 and Stovin v Wise [1996] AC 923 in support of this part of his argument. In Brooks, para 30 Lord Steyn affirmed what he described as the core principle in Hill v Chief Constable of West Yorkshire [1989] AC 53, where it was held on grounds of public policy that the police did not owe legal duties to victims or witnesses in the performance of their function in keeping the Queens peace: see also Elguzouli Daf v Commissioner of Police of the Metropolis [1995] QB 335, where Lord Steyn held, also on grounds of public policy, that the Crown Prosecution Service did not owe a duty of care to those whom it was prosecuting; and Hughes v National Union of Mineworkers [1991] ICR 669, where May J held that it would be detrimental to the public interest if police officers charged with deploying of other officers in times of serious public disorder were to have to concern themselves with possible negligence claims from their subordinates. These can all be seen as cases where, for reasons of public policy, it was not fair, just or reasonable for the defendant to be under a duty of care to avoid injury. The closest the cases have come to applying that reasoning to cases involving members of the armed forces is Mulcahy v Ministry of Defence [1996] QB 732, where Neill LJ said at p 750 that there was no duty on the defendants in battle conditions to maintain a safe system of work and Sir Iain Glidewell said at p 751 that one soldier does not owe to another a duty of care when engaged in battle conditions. As in the other cases, the question whether a duty should be held not to exist depends on the circumstances on who the potential claimants are and when, where and how they are affected by the defendants acts. The circumstances in which active operations are undertaken by our armed services today vary greatly from theatre to theatre and from operation to operation. They cannot all be grouped under a single umbrella as if they were all open to the same risk, which must of course be avoided, of judicialising warfare. For these reasons, I think that the question whether the claims in this case fall within the exclusion that was recognised in Mulcahy or any extension of it that can be justified on grounds of public policy cannot properly be determined without hearing evidence. In Van Colle, para 58 Lord Bingham said that one would ordinarily be surprised if conduct which violated a fundamental right or freedom of the individual under the Convention did not find a reflection in a body of law as sensitive to human needs as the common law. So Lord Rodgers observation in Catherine Smith, para 126 that there would be reason to believe that the military authorities may have failed in their article 2 duty if a soldier dies as a result of friendly fire from other British forces is capable of being read across as indicating that the question in the case of the Challenger claims is not whether a duty was owed but whether, on the facts, it was breached. Whether the situation in Iraq at the time of the incidents that gave rise to the Ellis claims was comparable to battle conditions when a nation is at war is a matter that also needs to be investigated. It needs to be emphasised, however, that the considerations mentioned in paras 64 66 and 76 81, above in the context of the claims made under article 2 of the Convention are just as relevant in the context of the common law claims. Close attention must be paid to the time when the alleged failures are said to have taken place, and to the circumstances in which and the persons by whom the decisions that gave rise to them were taken. It will be easier to find that the duty of care has been breached where the failure can be attributed to decisions about training or equipment that were taken before deployment, when there was time to assess the risks to life that had to be planned for, than it will be where they are attributable to what was taking place in theatre. The more constrained he is by decisions that have already been taken for reasons of policy at a high level of command beforehand or by the effects of contact with the enemy, the more difficult it will be to find that the decision taker in theatre was at fault. Great care needs to be taken not to subject those responsible for decisions at any level that affect what takes place on the battlefield, or in operations of the kind that were being conducted in Iraq after the end of hostilities, to duties that are unrealistic or excessively burdensome. The sad fact is that, while members of the armed forces on active service can be given some measure of protection against death and injury, the nature of the job they do means that this can never be complete. They deserve our respect because they are willing to face these risks in the national interest, and the law will always attach importance to the protection of life and physical safety. But it is of paramount importance that the work that the armed services do in the national interest should not be impeded by having to prepare for or conduct active operations against the enemy under the threat of litigation if things should go wrong. The court must be especially careful, in their case, to have regard to the public interest, to the unpredictable nature of armed conflict and to the inevitable risks that it gives rise to when it is striking the balance as to what is fair, just and reasonable. Conclusion For these reasons I would allow the Snatch Land Rover claimants appeal against the decision of the Court of Appeal that the soldiers in these cases were not within the United Kingdoms jurisdiction for the purposes of article 2 of the Convention at the time of their deaths. I would, however, dismiss the MODs application that the Snatch Land Rover claims should be struck out on the ground that the claims are not within the scope of that article. I would dismiss the MODs application that the Challenger claims should be struck out on the ground of combat immunity and on the ground that it would not be fair, just or reasonable to extend the duty of care to those cases. I would also dismiss the MODs cross appeal against the decision of the Court of Appeal to dismiss its application to strike out the Ellis claim based on negligence. LORD MANCE (with whom Lord Wilson agrees) Introduction This first issue is whether soldiers in the British army are within the jurisdiction of the United Kingdom when serving both on and off base in Iraq for the purposes of article 1 of the European Convention on Human Rights. On this issue, I am in complete agreement with Lord Hope. I have nothing to add to what he says in his paragraphs 17 55. On this basis, this case raises once again for consideration the difficult line or inter relationship between national law and substantive Convention rights, to which I referred in Rabone v Pennine Care NHS Trust [2012] UKSC 2; [2012] 2 AC 72, para 121. It is in general terms clear from Strasbourg jurisprudence that article 2 of the Human Rights Convention includes substantive duties on the part of the state, namely (a) a systems or framework duty, viz to establish a framework which is appropriately protective of life and (b) an operational duty, viz in appropriate circumstances, a positive duty to take preventive operational measures to protect an individual whose life is at risk: Watts v United Kingdom (2010) 51 EHRR SE66, para 82. Although the operational duty was said in Osman v United Kingdom (1998) 29 EHRR 245 to apply in certain well defined circumstances, the subsequent recognition of its application in new sets of circumstances (including by this Court in Rabone) leaves its scope uncertain. As Lady Hale notes in Rabone, para 97 99, it is conceivable that the Strasbourg jurisprudence accepts or is moving towards a broad principle that engages article 2 and requires the state to react reasonably in any situation where the state knows or ought to know of a real and immediate threat to human life. It is also unclear how far the two substantive duties are separated, with middle ground between them, or form part of a continuum covering almost every aspect of state activity. In neryildiz v Turkey (2005) 41 EHRR 325, paras 89 90 the Strasbourg court treated the framework duty as indisputably apply[ing] in the particular context of dangerous activities, where special emphasis must be placed on regulations geared to the special features of the activity in question, adding that They must govern the licensing, setting up, operation, security and supervision of the activity and must make it compulsory for all concerned to take practical measures to ensure the effective protection of citizens whose lives might be endangered by the inherent risks. On the other hand, there are some circumstances in which death occurs as a result of the activities of state agents, but article 2 is not engaged. They include casual errors of judgment or acts of negligence (which I described in R (Catherine Smith) v Oxfordshire Assistant Deputy Coroner [2010] UKSC 29; [2011] 1 AC 1, para 201, as operational as opposed to systematic failures), a principle established in the context of medical negligence. The present appeal concerns the operation and application of the principles of common law negligence and of article 2 in a factual context which is very largely uncharted by previous authority. The right approach is I believe to take first the common law position. A primary aspect of the framework duty on states is to have a legislative and administrative framework appropriately protective of life: neryildiz, para 89, quoted in Rabone, para 12. So article 2 naturally directs attention first to the question whether domestic law provides such a framework, including the recourse to compensation for non pecuniary damages which the Strasbourg court has indicated should in principle be available as part of the range of redress where a state is held responsible for a death: Z v United Kingdom (2001) 34 EHRR 97, para 109. The claims I gratefully adopt Lord Hopes summary of the various claims in paras 9 to 12 of his judgment. Some preliminary observations may be made. First, although the Challenger claims are based only on allegations of lack of technology, equipment and/or training, the Particulars of Claim alone show that the factual circumstances of these sad deaths would require examination and that failings on the ground of those with command over the firing tank are in fact held directly responsible for such deaths. In particular, it is alleged that Major McDuff under whose command the firing tank fell was told of the presence of the tanks subsequently fired upon and had such tanks visually identified to him, that he was shown, but refused to accept, the boundaries of responsibility marked on a map which had been given to such tanks and that he failed to communicate any of this information to anyone, with the result that, some 12 hours later, the firing tank wrongly identified the tanks fired on as enemy. Second, the particulars relied upon in Mrs Smiths claim under article 2 include both decisions or omissions on the ground and equipment and tactical decisions at a higher level. Third, the particulars relied upon in the Ellis claims in negligence and/or under article 2 relate mainly at least to equipment and tactical decisions at a higher level (although they also embrace allegations as to what equipment should have been used if available). As pleaded, the complaint regarding the decision to deploy Snatch Land Rovers on the patrol might be read as a complaint about a decision made on the ground. But their case (para 188) explains that it relates to a decision made well away from the heat of battle at a time when the decision maker was neither under attack nor threat of attack. It did not form part of the planning of this particular patrol. Common law The questions arising are (i) the existence and scope of any common law responsibility on the part of the state towards its soldiers, in particular in respect of deaths in active service and (ii) the nature and scope of any common law doctrine of combat immunity. The claimants starting point is that the state owes to its soldiers a general duty to take appropriate measures to secure their safety, like that owed by any other employer, and that it must also answer vicariously for any breach of duty by one soldier killing or injuring another. It is only therefore by virtue of some exceptional immunity that the state can escape liability for breach of any such duty, and the only principle giving any such immunity is a limited principle of combat immunity. That the Crown is in tort generally in the same position as any employer follows from s.2 of the Crown Proceedings Act 1947, providing Liability of the Crown in tort. (1) Subject to the provisions of this Act, the Crown shall be subject to all those liabilities in tort to which, if it were a private person of full age and capacity, it would be subject: (a) in respect of torts committed by its servants or agents; (b) in respect of any breach of those duties which a person owes to his servants or agents at common law by reason of being their employer; and (c) in respect of any breach of the duties attaching at common law to the ownership, occupation, possession or control of property: Provided that no proceedings shall lie against the Crown by virtue of paragraph (a) of this subsection in respect of any act or omission of a servant or agent of the Crown unless the act or omission would apart from the provisions of this Act have given rise to a cause of action in tort against that servant or agent or his estate. However, there is authority that where actual war is raging acts done by the military authorities are not justiciable by the ordinary tribunals: Ex p Marais [1902] AC 109, 114. That was a case of alleged wrongful detention where the Privy Council declared that the principle applied where martial law had been declared, even though the military commander had allowed ordinary courts, before which the claimant might have been brought, to continue in operation. In Burmah Oil Co Ltd v Lord Advocate [1965] AC 75, Lord Reid recognised (at p 110) an exception (to the Crowns liability to pay compensation for property seized or destroyed) in relation to battle damage consisting of accidental or deliberate damage done in the course of fighting operations. In Shaw Savill & Albion Co Ltd v Commonwealth (1940) 66 CLR 344, Ex p Marais was cited by Starke and Williams JJ, but all the members of the High Court also assimilated the question of justiciability with the question whether the state owed a legal duty to take care in the particular circumstances. Starke J stated that it is for the court to determine whether a state of war exists and whether the matters complained of were done or omitted in the conduct of an operation or act of war. He added (consistently with Ex p Marais) that the immunity arising from conduct of war cannot be confined to the theatre of operations where combatants are actively engaged: it must extend, in modern times, to all theatres in which action on the part of the Kings enemies is imminent. In terms of the modern law of tort, the right analysis is, I consider, that combat immunity is not so much an entirely separate principle as the result of a general conclusion that it is not fair, just or reasonable to regard the Crown or its officers, soldiers or agents as under a duty of care to avoid injury or death in their acts or omissions in the conduct of an active military operation or act of war. That is how the matter was seen in Mulcahy v Ministry of Defence [1996] QB 732. The Court of Appeal there, rightly in my view, followed the approach in Shaw Savill in holding that a gun commander firing live rounds into Iraq during the first Gulf War in 1991 owed the claimant, a serving soldier in the same team, no duty of care for breach of which the Ministry could be held vicariously liable. It held equally that the Ministry itself owed the claimant no duty to maintain a safe system of work. Among the points considered in Mulcahy was whether the repeal of the immunity in tort formerly provided by section 10 of the Crown Proceedings Act 1947, subject to the right (never yet utilised) to revive section 10 for all or limited purposes under s.2 of the Crown Proceedings (Armed Forces) Act 1987 bore on the existence or scope of any doctrine of combat immunity. Neill LJ held it did not, because it was still necessary to consider the common law position. I agree. In Bici v Ministry of Defence [2004] EWHC 786 (QB), concerning the killing of two civilians by British soldiers during the course of peace keeping operations in Kosovo, Elias J treated separately the doctrine of combat immunity and the question whether there existed a duty of care, viewing the former as an exclusion of justiciability and so as a doctrine to be strictly confined on constitutional grounds. But on that basis it was still necessary to consider whether any duty of care existed. Elias J held it did, because the case involved the single question whether the soldiers were justified in firing on the civilians, and there was no basis for concluding that they did not owe a duty of care in doing so: Troops he said (para 104) frequently have to carry out difficult and sensitive peace keeping functions, such as in Northern Ireland, whilst still being subject to common law duties of care. The difficulties of their task are reflected in the standard of the duty rather than by denying its applicability. As Lord Hope has noted, the cases on combat immunity are focused on acts or omissions occurring and causing injury or death in the course of hostilities. In the present case the Challenger claimants are careful to put their case in a way which relies solely on allegedly negligent conduct occurring prior to and distant from the actual hostilities, and involving failures, in Whitehall or elsewhere, properly to equip and train the soldiers sent to fight in Iraq. The same applies, at least for the most part, to the Ellis claims. The question is whether the state, or indeed those of its officers responsible for procurement and training decisions, owe any duty of care in respect of injury or death in the course of combat operations allegedly attributable to their negligence in the performance of such responsibility. This is a question of public policy about the answer to which Lord Rodger (at para 127), with whom Lord Walker expressly agreed (at para 131), can, I think, have had no doubt in R (Catherine Smith) v Oxfordshire Assistant Deputy Coroner [2010] UKSC 29, [2011] 1 AC 1. Although they were addressing explicitly the position under article 2, they cannot have thought that their remarks were or could be made irrelevant simply be reformulating a claim in negligence. It is not difficult to identify situations in which the common law has concluded on policy grounds that no duty of care should exist. I agree with all that Lord Carnwath has said in this connection in paras 161 to 175 of his judgment. In Hill v Chief Constable of West Yorkshire [1989] AC 53, the House held that the police had owed no enforceable duty of care with respect to the last victim of the Yorkshire Ripper, properly to investigate the crimes committed by the Yorkshire Ripper before the murder of, and so to save the life of, the last victim. Lord Keith said, at p 63: From time to time they [the police] make mistakes in the exercise of that function, but it is not to be doubted that they apply their best endeavours to the performance of it. In some instances the imposition of liability may lead to the exercise of a function being carried on in a detrimentally defensive frame of mind. The possibility of this happening in relation to the investigative operations of the police cannot be excluded. Further it would be reasonable to expect that if potential liability were to be imposed it would be not uncommon for actions to be raised against police forces on the ground that they had failed to catch some criminal as soon as they might have done, with the result that he went on to commit further crimes. While some such actions might involve allegations of a simple and straightforward type of failure for example that a police officer negligently tripped and fell while pursuing a burglar others would be likely to enter deeply into the general nature of a police investigation, as indeed the present action would seek to do. The manner of conduct of such an investigation must necessarily involve a variety of decisions to be made on matters of policy and discretion, for example as to which particular line of inquiry is most advantageously to be pursued and what is the most advantageous way to deploy the available resources. Many such decisions would not be regarded by the courts as appropriate to be called in question, yet elaborate investigation of the facts might be necessary to ascertain whether or not this was so. A great deal of police time, trouble and expense might be expected to have to be put into the preparation of the defence to the action and the attendance of witnesses at the trial. The result would be a significant diversion of police manpower and attention from their most important function, that of the suppression of crime. Closed investigations would require to be reopened and retraversed, not with the object of bringing any criminal to justice but to ascertain whether or not they had been competently conducted. In Brooks v Comr of Police of the Metropolis [2005] 1 WLR 1495, the House applied similar reasoning when holding that the police have no duty of care not to cause by positive acts or omissions harm to victims of serious crime, or witnesses to serious crime, with whom they have contact. Lord Steyn said (para 30): It is, of course, desirable that police officers should treat victims and witnesses properly and with respect: compare the Police (Conduct) Regulations 2004 (SI 2004/645). But to convert that ethical value into general legal duties of care on the police towards victims and witnesses would be going too far. The prime function of the police is the preservation of the Queen's peace. The police must concentrate on preventing the commission of crime; protecting life and property; and apprehending criminals and preserving evidence: . A retreat from the principle in Hill's case would have detrimental effects for law enforcement. Whilst focusing on investigating crime, and the arrest of suspects, police officers would in practice be required to ensure that in every contact with a potential witness or a potential victim time and resources were deployed to avoid the risk of causing harm or offence. Such legal duties would tend to inhibit a robust approach in assessing a person as a possible suspect, witness or victim. By placing general duties of care on the police to victims and witnesses the police's ability to perform their public functions in the interests of the community, fearlessly and with despatch, would be impeded. It would, as was recognised in Hill's case, be bound to lead to an unduly defensive approach in combating crime. Van Colle v Chief Constable of the Hertfordshire Police (Secretary of State for the Home Department intervening) [2008] UKSC 50, [2009] AC 225 is a further case in which there was in Lord Hopes words a highly regrettable failure to react to a prolonged campaign by Jeffrey threatening the use of extreme criminal violence against Mr Smith, which in the event did culminate in Jeffrey attacking Mr Smith and very severely injuring him. The House again applied the approach in Hill and Brooks in concluding that there was no actionable duty of care. In all these cases the existence of a duty of care was negatived, although it could not be said that the police action or inaction occurred in the heat of the moment and the failings occurred over considerable periods when the police had the opportunity to think about and investigate the position and take protective measures. In Multiple Claimants v Ministry of Defence [2003] EWHC 1134 (QB), it was claimed that the Ministry was in breach of a duty of care to provide service personnel with a safe system of work. Owen J considered (para 2.C.16) that In aggressive operations the objective will be defeat of the enemy; in defensive operations the successful repulse of the enemy. In the planning of and preparation for such operations the interests of service personnel must be subordinate to the attainment of the military objective. In my judgment the military cannot be constrained by the imposition of civil liability in the planning of and preparation for such operations any more than in their execution. The planning of and preparation for military operations will include decisions as to the deployment of resources. On that basis, he dismissed a claim that the Ministry had failed to make proper arrangements for psychiatric support in combat on the basis that Decisions as to the deployment of medical resources in operations in which service personnel may engage in hostilities fall within the combat immunity . (para 10.12). However, he disagreed with the Ministrys more extended submission that no cause of action can arise in relation to injury sustained in combat irrespective of whether the acts or omissions to which such injury is attributable fall within the combat immunity (para 2.C.18). He reiterated his view on this point in his judgment at first instance in the present cases concerning the Challenger and Ellis claims. Mr Eadie QC takes issue with Owen J on the point. However, it was explained by Owen J with an example which suggests that he had in mind a relatively narrow situation not presently relevant. The explanation was in these terms: If the restriction to the duty of care does not arise on the facts, and a claimant is able to demonstrate breach of duty resulting in injury and consequential loss and damage, it is immaterial that the injury was sustained in the course of combat. The question with regard to the injury is then simply one of causation; is it attributable to the breach of duty? The point can be illustrated by reference to the claimants' contention that the MoD was under a duty to devise and implement a system for screening recruits so as, and I paraphrase, to eliminate those vulnerable to stress, and that as a result of breach of that duty recruits who should have been rejected were enlisted, and subsequently sustained psychiatric injury when exposed to the trauma of battle. If that contention is well founded, it will obviously not be open to the MoD to argue that the combat immunity applies to the relevant acts or omissions. The injury will have been sustained in combat; but the exposure to stress in combat is simply the mechanism by which the breach causes injury. In considering the Challenger claims and the Ellis claim for negligence, Owen J referred to his previous decision in Multiple Claimants as well as to Elias Js decision in Bici. He accepted the latter as standing for the proposition that any exception on grounds of combat immunity should be narrowly construed. He confined the extension of the doctrine of combat immunity, recognised in Multiple Claimants, to the planning and preparation of the particular operations in which injury was sustained, as opposed to planning and preparation made . in general for possible unidentified further military operations (para 94). He was not persuaded that the fact that the equipment claims were likely to give rise to issues of procurement and allocation of resources demonstrated conclusively that it would not be fair, just and reasonable to impose the duties of care for which the claimants contend (para 107). He was not persuaded that either the equipment or the claims based on lack of pre deployment training had no real prospect of success. He thought that different considerations might apply to the claims so far as based on lack of in theatre training, but that this issue would be better determined by the trial judge. He struck out the Ellis claim for negligence in para 26.1 (failure to limit patrols to other vehicles) as falling squarely within combat immunity. The Court of Appeal upheld Owen Js conclusion that the equipment and training claims arguably fall outwith the scope of combat immunity, and also allowed the appeal in respect of para 26.1. Three points arise. First, in my opinion, the decisions below underestimate the inevitable inter linking of issues relating to the supply of technology and equipment and to training for active service with decisions taken on the ground during active service. As noted in para 110 above, it is not possible to consider the Challenger claims without considering the conduct of those on the ground. If it were suggested, as might be possible, that the real cause of the incident was the failings of a local commander, the court would, on the claimants case, find itself having to adjudicate on this suggestion in order to establish whether there was any relevant causative failure regarding the prior supply of equipment or training. As Lord Hope notes (para 91), the claimants have, quite naturally, been careful not to make any criticism of those actually engaged on the ground. But that indicates, rather than resolves, the problem. The proper attribution of responsibility cannot depend upon how a claimant frames his case. The Ministry of Defence could itself advance a case that the real cause was not the fault of someone responsible for procurement, but of someone on the ground. In any event, as the present pleadings show, all the facts would be laid before the court, which would have to decide upon causation looking at them as a whole. Allegations about procurement cannot in the case of the Challenger claims be divorced from consideration of the conduct of those using the equipment on the ground. Lord Hope recognises this in paragraph 80, but draws the opposite conclusion to that which I would draw. He considers that all such circumstances must be evaluated with a view to striking a balance between competing considerations (paras 61, 78 80 and 98 99). I would conclude the opposite that all such circumstances are inter related and essentially non justiciable. Second, Mr Hermer QC for the Challenger claimants accepts that tactical decisions, wherever taken, are not actionable. Mr Hermer must on any view be correct, I consider, on this point. But, if so, it opens the question in relation to the Snatch Land Rover claim by Ms and Mrs Ellis whether a complaint of failure to supply a better armoured or equipped vehicle is not really a complaint about tactics. (In contrast to Mr Hermer, Mr Weir QC for the Smith and Ellis claimants would confine combat immunity so narrowly that it could not embrace in the case of the Ellis claimants either a question why allegedly available equipment (Element A) was not fitted to Private Elliss Snatch Land Rover on the day of the casualty or a question why the patrol to the Iraqi police station was not delayed a day or two to enable it to be fitted.) Third, both in that connection and more widely, I consider that Owen J was clearly right to conclude in Multiple Claimants that the military cannot be constrained by the imposition of civil liability in the planning of and preparation for such operations any more than in their execution. The planning of and preparation for military operations will include decisions as to the deployment of resources. I would also refer to cautionary words of Lord Keith in Rowling v Takaro Properties Ltd [1988] AC 473, 502D F: The third [matter] is the danger of overkill. It is to be hoped that, as a general rule, imposition of liability for negligence will lead to a higher standard of care in the performance of the relevant type of act; but sometimes not only may this not be so, but the imposition of liability may even lead to harmful consequences. In other words, the cure may be worse than the disease. The claims that the Ministry failed to ensure that the army was better equipped and trained involve policy considerations of the same character as those which were decisive in Hill, Brooks and Van Colle. They raise issues of huge potential width, which would involve courts in examining procurement and training policy and priorities over years, with senior officers, civil servants and ministers having to be called and to explain their decisions long after they were made. Policy decisions concerning military procurement and training involve predictions as to uncertain future needs, the assessment and balancing of multiple risks and the setting of difficult priorities for the often enormous expenditure required, to be made out of limited resources. They are often highly controversial and not infrequently political in their nature. These may well also be influenced by considerations of national security which cannot openly be disclosed or discussed. Lord Rodger summarised the position in relation to responsibility, accountability and investigation in Catherine Smith (para 127) in terms with which, as I have said, Lord Walker agreed, as I also do: Once it is established, say, that a soldier died because the blast from a roadside bomb penetrated the armour plating on his vehicle, it may well be inferred that he would not have died if the plating had been stronger. And that simple fact may be worth pointing out as a possible guide for the future. But questions, say, as to whether it would have been feasible to fit stronger protection, or as to why the particular vehicles were used in the operation or campaign, or as to why those vehicles, as opposed to vehicles with stronger protection, were originally purchased by the Ministry of Defence, or as to whether it would have been better to have more helicopters available etc, all raise issues which are essentially political rather than legal. That being so, a curious aspect of counsel's submissions before this court was the complete absence of any reference to Parliament as the forum in which such matters should be raised and debated and in which ministers should be held responsible. Of course, in consequence of pressure brought to bear by Parliament, the government might set up an independent inquiry with wide terms of reference to look into all aspects of a situation, including the political aspects. Also in Catherine Smith Lord Brown at para 146 asked rhetorically: Is it really to be suggested that even outside the area of the Council of Europe Strasbourg will scrutinise a contracting state's planning, control and execution of military operations to decide whether the state's own forces have been subjected to excessive risk (risk, that is, which is disproportionate to the objective sought) ? May Strasbourg say that a different strategy or tactic should have been adopted perhaps the use of airpower or longer range weaponry to minimise the risk to ground troops notwithstanding that this might lead to higher civilian casualties? The question was asked in the context of jurisdiction, but, jurisdiction having been established under article 1, both the question and Lord Browns evident scepticism remain relevant. The claimants case is that during or after any war any injured soldier or the relatives or dependants of any soldier killed in combat could sue the state for alleged failures in the preparation or equipping of the armed forces for combat. Logically, if that is so, then a soldier might, even during the war, complain that his or her equipment or training was inadequate and that it would be a breach of the states common law duty of care and/or duties under the Human Rights Convention even to order him or her to go into combat with it. If domestic legislation compelled this, then the soldier could seek relief in the Strasbourg court maybe even interim relief prohibiting the further use or giving of orders to use the allegedly defective equipment. One may also recall the facts of R v Jones (Margaret) [2006] UKHL 16; [2007] 1 AC 136, where protestors sought to disrupt Fairford Airbase in order to prevent intervention in Iraq, and pleaded in defence that they were preventing the international crime of aggression. Pointing to defective equipment and seeking to ban its use could have a considerable disruptive effect. Not only would there be a huge potential diversion of time and effort in litigation of such issues in an area of essential national interest (whether before, during or after hostilities). There must be risks that the threat of exhaustive civil litigation following any active military operation would affect decision making and lead to a defensive approach, both at the general procurement and strategic stages and at the tactical and combat stages when equipment was being deployed. The duties of care owed by soldiers to civilians during peace keeping operations or by the state to its soldiers in peace are not in issue and raise different considerations. I examined some of the cases which the Strasbourg court has decided in this area in para 196 of my judgment in Catherine Smith. When considering whether a duty of care exists, it is always relevant to ask in what context and to avoid what consequences. (Compare in another branch of the law South Australia Asset Management Corporation v York Montague Ltd [1997] AC 191 and Nykredit Mortgage Bank plc v Edward Erdman Group Ltd (No 2) [1997] 1 WLR 1627.) Equipment should at least be safe and training adequate for peacetime training and activities, and its adequacy in the face of enemy action will not be tested in the same way. But procurement and training decisions and priorities are geared primarily to the needs and risks inherent in active military operations, when enemy activity will be aimed at killing British soldiers in as many unexpected ways as possible. It is after a death or injury occurring in such operations that, as the present cases show, questions can be raised as to whether different technology, equipment or training or different decisions regarding deployment and use of equipment like vehicles might not have made all the difference to the incidence of the death or injury. The relevant question for present purposes is therefore whether the state owed a duty of care to avoid the death or injury during the course of active service which actually occurred. It will often not be difficult with hindsight to point to different decisions that might have been made or preparations made. Would the disaster of Isandlwana have been avoided had the army command equipped Lord Chelmsfords forces with the heliograph? Or was the cause the failure to form a laager? Or the deployment of troops over too wide a perimeter? Or the lack of screwdrivers to open the ammunition boxes quickly enough? And would many disastrous casualties of the First World War have been avoided if the War Office had recognised the significance of the proposal for a tank put to it in 1912, 1914 and 1916 by the Australian engineer Lancelot de Mole of whom a post war Commission on Awards to Inventors said in 1919: We consider that he is entitled to the greatest credit for having made and reduced to practical shape as far back as the year 1912 a very brilliant invention which anticipated and in some respects surpassed that actually put into use in the year 1916. It was this claimant's misfortune and not his fault that his invention was in advance of his time, and failed to be appreciated and was put aside because the occasion for its use had not then arisen. Was the fall of Singapore to numerically inferior forces, with the ensuing slaughter and torture, due to culpable failures to fortify the Malay peninsular or landward side of Singapore or to provide armoured vehicles or aircraft to protect both? Or was it due to failures of military commanders on the ground? Or was it inevitable in the context of what Churchill described as our bitter needs elsewhere? To offer as a panacea in relation to these points the injunction that courts should be very cautious about accepting such claims is to acknowledge the problem, but to offer no real solution. Had it been, the same panacea would have been adopted as the solution by the House in Hill, Brooks and Van Colle. My conclusions do not mean that every death or injury occurring in the course of military conflict falls necessarily outside the scope of any duty of care. There will be deaths and injuries occurring during active service which are unconnected with the risks of active combat or which arise, as Owen J recognised was possible (para 123 above), from breaches of duty independent of active combat. An accident arising from a defect in equipment which could just as well have occurred on Salisbury Plain and owed nothing significant to any risk of war would be an example. Private Smiths sad death in Catherine Smith likewise. I consider that that the Challenger claims, which are only in common law negligence, should be struck out in their entirety on the basis that the state owes no such duty of care as alleged with regard to the provision of technology, equipment or training to avoid death or injury in the course of an active military operation. Similarly, with regard to the Ellis claim in negligence, I would hold that there was no such duty of care as alleged regarding the provision of different or differently equipped vehicles or, a fortiori, regarding the deployment on patrol on 28 February 2006 of the Snatch Land Rovers which were deployed. Moses LJ suggested in the Court of Appeal (para 60) that it was necessary to consider the evidence in order to decide when active operations start and when they finish and that Owen J had recognised that the present cases may not fall within the scope of combat immunity. But, so far as this suggests that Owen J doubted whether active operations were afoot at the dates relevant to either the Smith claim (16 July 2005) or the Ellis claim (28 February 2006), it is wrong. No such argument even appears to have been raised before Owen J or before the Court of Appeal, in relation to either claim. Further, in paras 113 114 of his judgment Owen J expressly struck out the Ellis claim, so far as it relied on the failure to limit the patrol, on the basis that combat immunity did apply as at 28 February 2006. Before the Supreme Court, the nearest there is to any suggestion is the elliptical statement made in para 186 of the Ellis case in the context of combat immunity that Private Ellis was not engaged in a major combat operation that had ended in May 2003. He was part of an armed force providing security and stability to a region of Iraq; at the time of his death he was on a patrol returning from a trip to the Iraqi police headquarters in Al Amarah. It is the Ellis claimants case that this activity should be treated as akin to a peace keeping, police or anti terrorist activity so that the ambit of combat immunity should be very tightly constrained around the actual patrol in question. Even that statement does not challenge the existence of a combat operation involving the patrol, and in any event there is no basis for allowing an entirely new point, contrary to the basis on which the matter was put before the judge, to be raised at this stage. I would therefore also hold that the Ellis claim should be struck out in so far as it is made for common law negligence. Article 2 As stated in para 103 above, article 2 is said to involve two substantive obligations: framework and operational. In Stoyanovi v Bulgaria (Application No 42980/04) decided 9 November 2010, the Strasbourg court was concerned with an accidental death in a military training exercise a practice parachute jump during which the deceaseds head hit the aircrafts wheel rendering him unconscious and so unable to open his parachute. The court referred to the operational duty arising, on the authority of Osman v United Kingdom and neryildiz v Turkey, where authorities know or ought to know of a real and immediate risk to life, or of a situation inherently dangerous to life, and to the framework duty in the public health sphere to make regulations compelling hospitals to adopt appropriate measures to protect patients lives and to have an effective independent judicial system to determine the cause of death of patients in hospital and make those responsible accountable. It then went on, at para 61, Positive obligations will vary therefore in their application depending on their context. In the present case, which concerns an accident during a military training exercise, the Court notes that while it may indeed be considered that the armed forces' activities pose a risk to life, this is a situation which differs from those dangerous situations of specific threat to life which arise exceptionally from risks posed by violent, unlawful acts of others or man made or natural hazards. The armed forces, just as doctors in the medical world, routinely engage in activities that potentially could cause harm; it is, in a manner of speaking, part of their essential functioning. Thus, in the present case, parachute training was inherently dangerous but an ordinary part of military duties. Whenever a State undertakes or organises dangerous activities, or authorises them, it must ensure through a system of rules and through sufficient control that the risk is reduced to a reasonable minimum. If nevertheless damage arises, it will only amount to a breach of the State's positive obligations if it was due to insufficient regulations or insufficient control, but not if the damage was caused through the negligent conduct of an individual or the concatenation of unfortunate events (see, for comparison, Kalender v Turkey, Application No 4314/02), 43 47, 15 December 2009). The courts reasoning appears to have been that, in so far as military life is inherently dangerous, there could be no question of any operational duty to prevent that danger. This seems fairly self evident, and is certainly consistent with the Strasbourg courts recognition in other cases of the need to bear in mind the particular characteristics of military life and its effects on the situation of individual members of the armed forces (Engel v The Netherlands (No 1) (1976) 1 EHRR 647, para 54), meaning, for example, also that many acts that would constitute degrading or inhuman treatment in respect of prisoners may not reach the threshold of ill treatment when they occur in the armed forces, provided that they contribute to the specific mission of the armed forces in that they form part of, for example, training for battlefield conditions (Chember v Russia, (Application No 7188/03) (unreported) given 3 July 2008, para 49). However, as the court stated in Stoyanovi, the state must by the same token have a system of rules and sufficient control to reduce the risks to a reasonable minimum. In Kalender v Tutrkey (Application No 4314/02) (unreported) given 15 December 2009, cited by the court, liability under the substantive aspect of article 2, was held to exist in the light of numerous failings in the structure and operation of a railway station, leading to passengers having, without supervision or warning, to disembark and cross a line used by other trains and being killed in the process. Accordingly, it appears that the framework duty may in appropriate circumstances operate at a low level. In domestic contexts where the state is taking armed action affecting or liable to affect third persons, the court has undertaken quite close and in the upshot critical examination of the states conduct. I cited examples in para 196 of my judgment in Catherine Smith: Such cases start with McCann v United Kingdom (1995) I EHRR 97, relating to the shooting by SAS officers of members of the Provisional IRA suspected of planning to attack the Royal Anglian Regiment in Gibraltar, and include Isayeva, Yusupova and Bazayeva v Russia (Applications Nos 57947/00, 57948/00 and 57949/00), 24 February 2005, and Isayeva v Russia (Application No 57950/00), 24 February 2005, relating to the conduct of military operations by the Russian armed forces against Chechen separatist fighters which led to the deaths of civilians. In such cases, it appears that the exigencies of military life go to the standard and performance, rather than the existence of, any Convention duty. The question is whether the Strasbourg court would take a similar attitude to the responsibility of a state for the death of a member of its own armed forces in circumstances alleged to have involved mistaken decisions in the course of an operation or act of war (such as alleged by Mrs Smith in at least paragraphs 26.2 to 26.5 of her claim), or failings in planning or in the equipping or training of such forces (such as alleged by Mrs Smith in paras 26.1 and it seems paras 26.6 and 26.7 of her claim and by the Ellis claimants in probably all three particulars in their para 26). In this connection it is relevant to bear in mind that the Strasbourg court has curtailed the operational duty, so that it does not embrace mere casual acts of negligence, certainly in the field of health care and, as appears logical, in other fields: see my judgment in Catherine Smith, para 201 and the cases there cited, to which can now be added Stoyanovi v Bulgaria (Application No 42980/04), para 61, where the European Court of Human Rights said that a death occurring during an inherently dangerous training activity (parachute jumping) undertaken by a soldier would not involve any breach of article 2 if caused through the negligent conduct of an individual (see para 138 above). Mr Weir QC regretted this qualification as deeply unsatisfactory, and as a manifestation of the fact that (in his words) the search for principle has been called off in this area. An alternative view might be that it would have been better if the Strasbourg court had left the development and application of the law of tort to domestic legal systems, subject to clearly defined criteria, rather than set about creating what amounts in many respects to an independent substantive law of tort, overlapping with domestic tort law, but limited to cases involving death or the risk of death. Be that as it may be, the exception for casual acts of negligence is relevant to show that liability under article 2 can be tailored and limited in what the Strasbourg court regards as appropriate circumstances. In the present circumstances, the question arises whether that the Strasbourg court would regard article 2 in its substantive aspect as making the state liable for the death in combat of one soldier due to alleged negligence of his commander or of another soldier. The prospect of the Strasbourg court reviewing the conduct of combat operations in this way seems to me sufficiently striking, for it to be impossible to give this question a positive answer. If the European Court considers that the Convention requires it to undertake the retrospective review of armed conflicts to adjudicate upon the relations between a state and its own soldiers, without recognising any principle similar to combat immunity, then it seems to me that a domestic court should await clear guidance from Strasbourg to that effect. That leaves for consideration whether the framework duty involves an obligation on the part of the state to exercise due care in the course of planning armed operations, and in equipping and training its armed forces, so as to reduce or limit the risks to life involved in such operations. In my opinion it is not possible to conclude that the Strasbourg court would hold that such matters are justiciable under the Convention, any more than they are at common law. I am not over enamoured of the cautionary warning to this court that the road to Strasbourg is a one way street, which a claimant can tread if this Court has not gone far enough, but which the state cannot tread if this Court goes too far. If it is clear from prior authority or this Court is otherwise confident about what Strasbourg will decide, then we should decide the issue as we believe correct. But in the present very difficult case, two connected considerations lead me to consider that caution is called for. First, having decided that the common law recognises no such duty or care or claims as the claimants advance, we should not lightly conclude, in so important and sensitive an area of national life, that the Strasbourg court would take a different view. Second, since I have no confidence about the scope or application of any positive duties which the Strasbourg court might recognise under article 2 in the area, I believe it would be wrong for this Court to advance way ahead of anything that it has yet decided. It should be for the Strasbourg court to decide whether it will review the procurement and training policy of the British army over recent decades in the context of claims under article 2 for compensation arising from deaths of serving soldiers during active military operations. Support for the view that the Strasbourg court does recognise areas of policy into which the Convention protection does not stretch is afforded by two cases. First, in Taylor v United Kingdom (Application No 23412/94) (unreported) 30 August 1994, the Commission held that article 2 did not require the investigation into the killing by Beverley Allitt, a hospital nurse, of child patients to enquire into the responsibility in the NHS for alleged inadequate systems, resource shortages and weak leadership. In holding the application manifestly ill founded and inadmissible, it stated: The Commission acknowledges that neither the criminal proceedings nor the Inquiry addressed the wider issues relating to the organisation and funding of the National Health Service as a whole or the pressures which might have led to a ward being run subject to the shortcomings apparent on Ward Four. The procedural element contained in article 2 of the Convention however imposes the minimum requirement that where a state or its agents potentially bear responsibility for loss of life, the events in question should be subject to an effective investigation or scrutiny which enables the facts to become known to the public, and in particular to the relatives of any victims. The Commission finds no indication that the facts of this case have not been sufficiently investigated and disclosed, or that there has been any failure to provide a mechanism whereby those with criminal or civil responsibility may be held answerable. The wider questions raised by the case are within the public domain and any doubts which may consequently arise as to policies adopted in the field of public health are, in the Commissions opinion, matters for public and political debate which fall outside the scope of article 2 and the other provisions of the Convention. The second case concerned article 3 of the Convention. In Banks v United Kingdom (2007) 45 EHRR SE2, the ECtHR rejected a claim that article 3 required a public inquiry into allegations of torture and inhuman treatment of prisoners at a UK prison. The Court held that the facts had been sufficiently investigated and that: The wider questions raised by the case as to the background of assaults and the remedial measures apt to prevent any recurrence in a prison in the future are, in the Courts opinion, matters for public and political debate which fall outside the scope of article 3 of the Convention. In my opinion therefore this Court should proceed on the basis that the policy considerations which guide its domestic law in the present area of national interest will find an echo in Strasbourg, and not invade a field which would involve, in the context of claims for civil compensation, extensive and highly sensitive review with the benefit of hindsight the United Kingdoms countrys policies, strategy and tactics relating to the deployment and use of its armed forces in combat. The United Kingdoms performance of its investigatory and procedural duties under article 2 is not in doubt, as attested by the sadly numerous inquests (investigating and recording the circumstances of each death) and the still incomplete Chilcot Enquiry (delayed inter alia it is understood by problems relating to the release or use of documents with national security implications). The issue with which this judgment is concerned is whether deaths and (at common law) injuries in combat fall to be investigated in the civil courts, at whatever level in the armed forces, Whitehall or the government responsibility for them is suggested to arise. The answer I would give is, no. The majority approach I agree with Lord Hope (para 100) about the paramount importance that the work that the armed services do in the national interest should not be impeded by having to prepare for or conduct active operations against the enemy under the threat of litigation if things should go wrong. But I do not consider that the majority approach reflects or meets this imperative. In summary, I understand that this approach: (a) recognises at common law a principle of combat immunity, as excluding liability for negligence in respect of any act or omission on the part of those who are actually engaged in active combat (paragraph 82), since no one can imagine a court undertaking the trial of an issue as to whether a soldier on the field of battle or a sailor on his ship might reasonably be more careful to avoid causing civil loss or damage (para 94); (b) recognises allegations as beyond the reach of article 2 . if they relate to things done or not done when those who might be thought to be responsible for avoiding the risk of death or injury to others were actively engaged in direct contact with the enemy (para 76), and extends this to operational decisions made on the ground by commanders, whatever their rank or level of seniority (para 64); but also; (c) suggests that liability (under the Osman v United Kingdom principle, (1998) 29 EHRR 245, para 115) for failure to take preventative operational measures in the face of a real, direct and immediate threat to life could extend to procurement decisions taken on the ground about the provision of vehicles or equipment, as well as to decisions taken about their deployment (para 78); (d) recognises that the more political (in a broad or narrow sense) a decision, the slower a court should be to impose liability at common law and/or under article 2 (para 65), so that it will easy to find that allegations are beyond the reach of article 2 and do not give rise to liability in common law negligence if they concern decisions that were or ought to have been taken about training, procurement or the conduct of operations . at a high level of command and closely linked to the exercise of political judgment and issues of policy (paras 76 and 99). It is unclear to me whether on this approach liability is said to be beyond the reach of article 2 because of its nature or simply because of an injunction that courts should be very slow to find fault in the areas concerned. Whatever the position in that respect, I see real difficulties in the undefined boundaries and the suggested middle ground between on the one hand (a) and (b) and on the other (d). The suggestion in para 78 that Osman type liability could exist as mentioned in point (c) would also appear liable to extend fault based liability to all aspects of decision making during combat operations. What is the logical distinction between deployment of equipment and of troops? The inter twining of issues of procurement and training with issues relating to the causation of injury or death on the battlefield seems highly likely to lead to a court undertaking the trial of unimaginable issues as to whether a soldier on the field of battle or a sailor on his ship might reasonably have been more careful. Further, I see little attraction in a scheme according to which the acts or omissions of the man on the ground and the policy maker in Whitehall give rise either to no liability at all or only to liability in egregious cases, but the procurement, training and deployment decisions of a middle rank commander (query, in Whitehall or in local headquarters or both) are subject to scrutiny under conventional principles of fault based liability. All depends, as I understand it, under article 2 upon balancing private and public interests and Convention rights (para 61); or upon balancing (i) the need to avoid undermining the ability of a state to defend itself, or its interests, at home or abroad (para 66) and the paramount importance of not impeding the armed forces against (ii) the consideration that (at common law) soldiers injured or (at common law and under the Convention) the relatives and dependants of soldiers killed should be able, wherever possible, to benefit by the more substantial civil measure of recovery that fault based liability brings, over and above the no fault compensation available in cases of injury or death as described by Lord Carnwath in para 181 of his judgment. Still more fundamentally, the approach taken by the majority will in my view make extensive litigation almost inevitable after, as well as quite possibly during and even before, any active service operations undertaken by the British army. It is likely to lead to the judicialisation of war, in sharp contrast with Starke Js dictum in Shaw Savill (1940) 66 CLR 344 that war cannot be controlled or conducted by judicial tribunals. No doubt it would be highly desirable if all disputes with international legal implications were to be submitted to international judicial resolution, with those involved abiding by the outcome; and if wars were no more. But, in the present imperfect world, there is no precedent for claims to impose civil liability for damages on states whose armed forces are killed or injured in armed combat as a result of alleged failures of decision making either in the course of, or in procuring equipment or providing training for, such combat. All the claims made in these appeals fall in my view within one or other of these areas where the common law should not tread. Similarly, we should not assume that the European Court of Human Rights would regard it as appropriate to enter such areas under article 2, and there is to my mind wholly insufficient guidance to lead to any conclusion that it would. We cannot, at least at present, refer a case to Strasbourg to seek its guidance on the proper interpretation of article 2. But my conclusions as to the common law position and its rationale, the dearth of any authority for any like claim in the Strasbourg jurisprudence and statements in that jurisprudence showing that policy decisions can be non justiciable all lead me to conclude that we should for the present proceed on the basis that the outcome in Strasbourg would in the present areas be no different from the outcome at common law. Conclusion The upshot is that, in my opinion, although the soldiers involved in these cases were within the United Kingdoms jurisdiction for the purposes of article 2 of the Convention of Human Rights at the material times, the claims made under article 2 and/or in negligence in respect of their deaths were, in the case of the Smith and Ellis claims, rightly struck out by the courts below and the Ministry of Defences appeal seeking to strike out the Challenger claims should be allowed. LORD CARNWATH Introduction I agree entirely with Lord Hopes treatment of the jurisdiction issue. There is also much with which I agree in his discussion of the substantive issues, in particular his comment (para 100) on the paramount importance that the preparation for and conduct of active operations should not take place under the threat of litigation if things should go wrong. However, in agreement with Lord Mance, I do not think it is an adequate response at this level for us simply to send the claims for trial with general injunctions to exercise great caution or special care. Having heard full argument on all these issues, we should be able to rule whether the claims are in principle viable or not; or at least to give clearer guidance as to what answers to what questions of fact may or may not lead to a favourable result following trial. I also agree with Lord Mance that, contrary to the approach adopted by Lord Hope, we should first concentrate on the common law aspects of the claims. In this respect, the balance of the relevant issues may have been distorted by the sequence of submissions at the hearing. It is understandable, given the importance of the jurisdictional issues arising under the Convention, that much of the oral hearing time was taken up with submissions on that subject, and as a natural extension with arguments about the substantive scope of article 2 itself. On the latter aspect, I have nothing to add to Lord Mances reasoning and conclusions, with which I agree. However, like him, I consider that our primary responsibility should be for the coherent and principled development of the common law, which is within our own control. We cannot determine the limits of article 2. Indeed, the multiplicity of views expressed by the nine members of this court, when this issue was previously considered in Catherine Smith, shows how difficult and unproductive it can be, even at this level, to attempt to predict how Strasbourg will ultimately draw the lines. The trial judge will be in no stronger position. With respect to Lord Hope (para 79), if the problem is a lack of directly relevant guidance from Strasbourg, it is hard to see how, simply by hearing further evidence or finding further facts, he or she will be better able to fill that gap, still less to do so with complete confidence. Common law the nature of the issues It is important to recognise that we are being asked to authorise an extension of the law of negligence (as indeed of article 2), into a new field. We have not been referred to any authority in the higher courts, in this country or any comparable jurisdiction, in which the state has been held liable for injuries sustained by its own soldiers in the course of active hostilities. Further we are concerned only with duties at common law, rather than under statute. As the Court of Appeal recognised [2013] 2 WLR 27 (para 38), statutory regulations governing the responsibilities of the Ministry as employers do not apply outside the United Kingdom. Mr Eadies case, on behalf of the Ministry, was advanced on a broad front. As formulated in his printed case, this involved a root and branch objection to any form of civil liability in this area. It was introduced by a lengthy section headed: The difficulties courts would face grappling with the issues raised in these claims (paras 72 92). Not only were the courts institutionally incompetent to resolve such issues which are essentially matters of political and military judgement; but there are strong reasons both of public policy and democratic accountability for them not seeking to do so. There is some common ground. There is no dispute as to the existence in domestic law of a principle known as combat immunity, relating to decisions and actions in the heat of battle. Furthermore, at the other end of the spectrum Lord Hope accepts, as I understand it, that high level decisions about procurement or conduct of operations are not open to review in the courts. This dichotomy is most clearly stated in his para 76: It will be easy to find that allegations are beyond the reach of article 2 if the decisions that were or ought to have been taken about training, procurement or the conduct of operations were at a high level of command and closely linked to the exercise of political judgment and issues of policy. So too if they relate to things done or not done when those who might be thought to be responsible for avoiding the risk of death or injury to others were actively engaged in direct contact with the enemy. Although this comes as part of his consideration of article 2, he treats it as equally relevant to the common law claims (para 99). On that view, the difference between us is over the extent (if any) of what he calls the middle ground, and whether its boundaries can only be determined after the finding of further facts. Here too the balance of the discussion may have been distorted by the course of the submissions at the hearing. The emphasis of the common law debate was directed mainly to the scope of the combat immunity defence as such, rather than issues arising under the general law of negligence. No doubt reflecting that emphasis, the wider issues are dealt with relatively shortly at the end of Lord Hopes judgment. In my view, however, it is within that broader compass that the solution to these difficult questions must be found if not at this preliminary stage, then following the trial. In truth, the claimants are caught on the horns of a dilemma. The operational phases of the undertaking, which might otherwise under ordinary principles have been expected to give rise to a duty of care (see eg Wade and Forsyth Administrative Law, 10th ed (2009), p 653ff; Craig Administrative Law, 7th ed (2012), p 908ff) are, as the claimants accept, the very phases which are excluded from review by the combat immunity defence. On the other hand the further back in time they seek to direct their challenge so as to include issues of planning, procurement, and training, the more they have to confront the competing principle that discretionary decisions about policy and resources are not justiciable. The issue is whether it is possible to carve out some middle ground of potential liability. The answer to that question raises issues of principle, policy and practicality. Mr Weir QC rightly emphasises that the importance of another policy consideration, the principle that where there is a wrong there should be a remedy, described by Lord Dyson JSC as a cornerstone of our system of justice (Jones v Kaney [2011] UKSC 13; [2011] 2 AC 398, para 113). From that principle he draws the submission that: The default position is one whereby the MoD owes its soldiers an orthodox employers duty of care. So it falls for the MoD to establish that public policy must operate to deny the existence of that recognised duty of care. However, that formulation begs a logically prior question. I agree that it is for the Ministry to make the case for any policy exception to any recognised duty of care. But the scope and content of any such duty of care are themselves matters for determination. In the modern law of negligence, the starting point for determining that issue is the application of the familiar three fold test laid down in Caparo Industries plc v Dickman [1990] 2 AC 605, 618 per Lord Bridge. In that context, the scope of any so called immunity necessarily overlaps with the question, under the third part of that test, whether it is fair, just and reasonable for the law to impose a duty of care at all (see Clerk & Lindsell On Torts 20th ed (2010), para 14 39ff Immunities). As Lord Browne Wilkinson has said: a holding that it is not fair, just and reasonable to hold liable a particular class of defendants whether generally or in relation to a particular type of activity is not to give immunity from a liability to which the rest of the world is subject. It is a prerequisite to there being any liability in negligence at all that as a matter of policy it is fair, just and reasonable in those circumstances to impose liability in negligence. (Barrett v Enfield London Borough Council [2001] 2 AC 550, 559) For that reason I agree with Lord Mance that the scope of combat immunity should now be discussed, not as a separate principle, but as part of the third element of the Caparo analysis. Equally, in my view, we should not see ourselves as necessarily constrained by the limits illustrated by the existing case law on combat immunity, developed in very different circumstances and (until Mulcahy) without reference to the modern law of negligence. Working by analogy In determining whether a duty of care should be imposed in a new factual situation, precedent is an important guide. In Caparo Lord Bridge proposed that the emphasis should be less on the search for underlying general principles, but rather on the development of the law incrementally and by analogy with established categories (ibid p 618, quoting Brennan J. in the High Court of Australia, Sutherland Shire Council v Heyman (1985) 60 ALR 1, 43 44). In the present context, apart from the cases on combat immunity as such (discussed by Lord Hope and Lord Mance) the closest analogies in my view are to be found in two lines of authority: first, the sequence of authorities relating to the immunity of the police, culminating in Van Colle v Chief Constable of the Hertfordshire Police (Secretary of State of the Home Department intervening) [2009] AC 225; secondly, in respect of the issue of breach, assuming an actionable duty of care is established, the cases relating to the law of negligence as applied to the emergency services, in particular to claims by employees. Police immunity On the issue whether a duty of care should be imposed, the most useful parallel in the modern law, in my view, is to be found in the sequence of authorities dealing with the possible liability of the police for alleged negligence in the course of investigating crime. In Hill v Chief Constable of West Yorkshire [1989] AC 53 it was held that for reasons of public policy the police owed no actionable duty of care to a victim in such circumstances. They were said to be immune from actions of this kind (p 64, per Lord Keith). Initial concerns that this approach might conflict with article 6 of the Convention by precluding consideration of the merits of the claim (see Osman v United Kingdom (1998) 29 EHRR 245) were dispelled by the Strasbourg court in Z v United Kingdom (2001) 34 EHRR 97. The Grand Chamber, following the lead of Lord Browne Wilkinson (X (Minors) v Bedfordshire County Council [1995] 2 AC 633,751) accepted the legitimate role of policy in determining the limits of liability: the Court is not persuaded that the House of Lords' decision that as a matter of law there was no duty of care in the applicants' case may be characterised as either an exclusionary rule or an immunity which deprived them of access to court the House of Lords was concerned with the issue whether a novel category of negligence, that is a category of case in which a duty of care had not previously been held to exist, should be developed by the courts in their law making role under the common law. The House of Lords, after weighing in the balance the competing considerations of public policy, decided not to extend liability in negligence into a new area. In so doing, it circumscribed the range of liability under tort law. (para 96, emphasis added) Echoing that approach, in Brooks v Comr of Police of the Metropolis [2005] UKHL 24; [2005] 1 WLR 1495, the House confirmed but qualified the core principle established in Hill. In his leading speech Lord Steyn said: since the decision of the European Court of Human Rights in Z v United Kingdom (2001) 34 EHRR 97, 138, para 100, it would be best for the principle in Hills case to be reformulated in terms of the absence of a duty of care rather than a blanket immunity. (para 27) Finally, in Van Colle v Chief Constable of the Hertfordshire Police [2009] AC 225, the House by a majority held that the same principle applied even where the police were aware of a specific threat to an individual witness. That is particularly helpful in the present context because it was concerned with the scope of the states liability both at common law and under article 2 of the Convention. I draw the following points from the judgments: The common law claim was to be considered on its own merits i) (stand on its own feet) rather than assimilated with the article 2 claim (para 82, per Lord Hope; para 136, Lord Brown). ii) The common law analysis began from the three fold test laid down in Caparo by which it must be shown that harm to B was a reasonably foreseeable consequence of what A did or failed to do, that the relationship of A and B was one of sufficient proximity, and that in all the circumstances it is fair, just and reasonable to impose a duty of care on A towards B. (para 42, per Lord Bingham). iii) The majority were able to support an exception based on public policy reasons which were accommodated within the third element of that test, that being accepted as a price to be paid by individuals denied for public policy reasons (as not being fair, just and reasonable within the Caparo principle) a civil claim in the interests of the community as a whole (para 139, per Lord Brown) iv) There was no suggestion that, because the core principle involved an exception to ordinary principles of liability, it should be narrowly construed. On the contrary, as Lord Brown put it, the wider public interest is best served by maintaining the full width of the Hill principle (para 139). v) The House was able to determine the limits of this principle on the basis of the pleadings. Again I quote Lord Brown (para 140): In common, I think, with all your Lordships, I regards this issue as plainly one which the House should decide one way or the other on the pleaded facts. Either a duty of care arises on these facts or it does not. No useful purpose would be served by allowing the action to go to trial for facts to be found and then for further consideration to be given to the applicable law. vi) Finally, the policy considerations justifying immunity in respect of the polices function of investigating crime were contrasted with civil operational tasks, in relation to which liability had been accepted in some decided cases (Lord Hope, para 79). Those examples were not regarded as undermining the core principle. This line of cases shows that it remains a proper function of the court, faced with a potential clash between public and private interests, to determine as a matter of policy the limits of any actionable duty of care, and to do so at the preliminary stage (see also Jonathan Morgan, Negligence into Battle [2013] CLJ 14, commenting on the Court of Appeals reasoning in the present case). Furthermore, so to determine the limits of liability in negligence in a new area, by balancing competing considerations of public policy, is within the margin allowed to the national courts by Convention law. Lord Hope acknowledges this line of authority, but declines to apply the same approach to the present context (paras 97 98). With respect, I find this difficult to understand. If this was an appropriate exercise in relation to the purely domestic policy concerns arising from police powers of investigation, how much more so in relation to the issues of vital national security raised by the preparation for and conduct of war? Negligence and the emergency services Assuming a duty of care is not excluded under the principles considered so far, the closest analogies are to be found in cases relating to the duties owed by employees to their staff in the context of the delivery of emergency services. King v Sussex Ambulance Service NHS Trust [2002] ICR 1413 contains an authoritative exposition of the relevant principles. The Court of Appeal dismissed a claim related to injuries sustained by an ambulance technician, who was required in the course of an emergency call to help in carrying a patient downstairs. Hale LJ, giving the majority judgment, summarised the relevant law (paras 21 23): The starting point is that an ambulance service owes the same duty of care towards its employees as does any other employer. There is no special rule in English law qualifying the obligations of others towards fire fighters, or presumably police officers, ambulance technicians and others whose occupations in the public service are inherently dangerous: see Ogwu v Taylor [1988] 1 AC 431. Such public servants accept the risks which are inherent in their work, but not the risks which the exercise of reasonable care on the part of those who owe them a duty of care could avoid. An employer owes his employees a duty to take reasonable care to provide safe equipment and a safe system of work, which includes assessing the tasks to be undertaken, training in how to perform those tasks as safely as possible, and supervision in performing them. This was subject to two qualifications: first, the further dimension identified by Denning LJ (Watt v Hertfordshire County Council [1954] 1 WLR 835, 838): It is well settled that in measuring due care you must balance the risk against the measures necessary to eliminate the risk. To that proposition there ought to be added this: you must balance the risk against the end to be achieved. and secondly (citing Colman J in Walker v Northumberland County Council [1995] ICR 702, 712): what is reasonable may have to be judged in the light of the service's duties to the public and the resources available to it to perform those duties In Hughes v National Union of Mineworkers ([1991] 4 All ER 278, cited by Lord Hope, para 97), this approach was taken a stage further so as to deny the existence of a duty of care at all. The claim was by a police officer who had been injured when, in the course of policing a strike at a colliery, he was knocked to the ground by an advancing crowd of pickets. He alleged negligence by the police officers on the day, rather than wider issues relating to police deployment generally or training (p 281a). The claim was rejected. It was held by May J, applying Caparo principles, and following Hill v Chief Constable of West Yorkshire that public policy requires that senior police officers should not generally be liable to their subordinates who may be injured by rioters or the like for on the spot operational decisions taken in the course of attempts to control serious public disorder. That, in my judgment, should be the general rule in cases of policing serious public disorders. (p 288d e). In Multiple Claimants (at para 2.C.17) Owen J treated Hughes as example of the application of the combat immunity defence, noting that it had been cited in that context by the Court of Appeal in Mulcahy v Ministry of Defence [1996] QB 732, ((at pp 747, 751). He was considering the question: Does the immunity apply to anti terrorist, policing and peace keeping operations of the kind in which British forces were engaged in Northern Ireland and in Bosnia? (para 2.C.17) He gave a qualified yes, concluding that the immunity would apply to peace keeping/policing operations in which service personnel are exposed to the attack or threat of attack (para 2.C.20). This interpretation seems open to question. However violent was the situation facing the police during the mineworkers strike, there could be no argument that it had anything to do with the conduct of war, nor was the judges reasoning linked to that group of cases. While I would not wish to question the actual decision in Hughes, it is in my view better seen as an application of King principles in an extreme situation. The decisions in both King and Hughes were concerned with the operations, rather than with prior policy decisions about the nature of the service and the resources to be committed to them, or issues such as procurement and training. To illustrate the possible limits of operational liability in relation to the emergency services, a useful analogy can be found in Rigby v Chief Constable of Northamptonshire [1985] 1 WLR 1242. The police were held liable by Taylor J for damage caused by firing a gas canister into the plaintiffs premises without having fire fighting equipment available. On the other hand (relying on Dorset Yacht Co Ltd v Home Office [1970] AC 1004, and cases following it) the judge rejected a claim based on the failure of the Chief Constable to equip the force with an alternative CS gas device, known as Ferret, which did not carry the same fire risk. In that respect he accepted the submission that the constable was exercising a statutory discretion which could not be impugned if exercised bona fide (pp 1250 1251). That decision, which is cited by Wade (op cit p 656) as an illustration of the policy operational decision, has not as far as I aware been questioned in later authority. Statutory intervention Before drawing some conclusions, and for completeness, although it did not figure prominently in the oral argument, I should address the suggestion that the claim gains at least implicit support from the Crown Proceedings (Armed Forces) Act 1987. In short, it is said, there is no policy reason to extend the scope of immunity beyond acts or omissions occurring in the heat of battle, given that Parliament has now provided a new statutory framework covering both general liability and the means to secure greater protection where exceptionally it is required. It was the Crown Proceedings Act 1947 which opened the way generally to proceedings in tort against the Crown. However, section 10 preserved a specific and precisely defined statutory exception for the armed forces in relation to injury or death on service subject to the conditions outlined in the section, one being a certificate of entitlement to a service pension (see Clerk & Lindsell op cit para 5 08ff). That exclusion was repealed by the 1987 Act, but (by section 2) subject to a power for the Secretary of State to make an order reviving the effect of section 10 in certain circumstances. By section 2(2): The Secretary of State shall not make an order reviving the effect of the said section 10 for any purposes unless it appears to him necessary or expedient to do so (a) by reason of any imminent national danger or of any great emergency that has arisen; or (b) for the purposes of any warlike operations in any part of the world outside the United Kingdom or of any other operations which are or are to be carried out in connection with the warlike activity of any persons in any such part of the world. Although we were not referred by the parties to any background materials relating to that change, the Parliamentary history is of some interest. A written answer by the Secretary of State for Defence explains that it followed a review of the working of section 10 (Hansard HC Deb 08 December 1986 vol 107 cc85 86W). He said: Section 10 was included in the 1947 Act on the grounds that members of the Armed Forces, by the very nature of their profession, undertake hazardous tasks which ordinary members of the public do not. At that time it was believed that this provision would not result in any overall financial penalty against servicemen, because they received benefits, payable regardless of fault, which were in most cases comparable with those which a civilian might expect from the courts. Our review has, however, shown that damages which courts have awarded in some cases of personal injury have now risen to a level which can considerably exceed the benefits which the serviceman receives. The Government have concluded that repeal of section 10 is the only satisfactory course which will remove this disadvantage We shall need to be able to reactivate the provisions of section 10 in the event of impending or actual hostilities or grave national emergency. It was indicated that, while the government did not have time to promote its own legislation within the current programme, it would be ready to support a suitable Bill brought by a private Member. This invitation was taken up by Mr Winston Churchill MP (HC Deb 13 February 1987 vol 110 cc567 609). The Parliamentary Under Secretary of State, welcoming the Bill on the part of the government commented: The Bill seeks to retain the power to reactivate section 10 at a time of great national emergency or in the event of actual or impending hostilities. That is widely accepted by the House. Indeed, I have not heard any hon. Member advocate in the debate that section 10 should not be reimposed in time of war. It is not possible or desirable to draw hard and fast definitions of the circumstances in which the Government might seek to reimpose section 10, but the wording of clause 2 is satisfactory in this respect, making it clear from that the Secretary of State will need to consider it necessary or expedient to make an order to reactivate section 10 by reason of a great national emergency or imminent national danger or in the event of warlike operations or connected activities outside the United Kingdom. We are talking about a grave situation in Britain or elsewhere, and I draw the attention of the House to the fact that the wording of clause 2 to a large extent mirrors the wording of the provisions of the Reserve Forces Act 1980 dealing with the call up of reserves. Although there is no intention to create a formal link between, say, mobilisation and the reimposition of section 10, hon Members will recognise that that gives an indication of the gravity of the circumstances in which reimposition of section 10 would arise. Those passages raise a number of possible issues, on which we have heard no argument, as to either relevance or substance. One indeed might be the scope of phrase warlike activities (cf Reserve Forces Act 1996, s 54) in its possible application to peace keeping operations such as are in issue in the Snatch claims. We cannot resolve those questions within the scope of the arguments we have heard, and it is unnecessary to do so. It should be noted in any event that the provisions for no fault compensation have changed materially since 1987 when that debate took place. The governing legislation is now the Armed Forces (Pensions and Compensation) Act 2004, with the Armed Forces Compensation Scheme made under it. Awards are based on a detailed tariff, which is kept under review, and there is provision for appeal to a specialised tribunal. The scheme was most recently revised in 2011, following a review by Lord Boyce. However, it was not part of Mr Eadies case that the existence of that scheme, or its overlap with the law of negligence, should affect our consideration of the issues before us. In my view these two sets of statutory provisions are no more than neutral, and neither assists in establishing the limits of the duty of care in the present context. It is not argued for the claimants that the 1987 Act impinges in any way on the defence of combat immunity as hitherto understood. At most it is said to be relevant in determining what is fair, just and reasonable under Caparo principles. However, there is nothing in the 1987 Act to suggest that it was intended to inhibit the ordinary, and logically prior, function of the court in determining the limits of potential liability under the law of negligence. It is only in so far as liability is so established that the scope of immunity under the Act becomes relevant. Finally, under this section, it is of interest to note how similar issues have been dealt with in the USA, although again we have not heard any submissions on this aspect. Until 1946 claims against the Federal Government without its consent were barred by the doctrine of sovereign immunity. This position was altered by the Federal Tort Claims Act (FTCA), 28 U.S.C.A 1346(b), which can be seen as the equivalent of the Crown Proceedings Act 1947 in the United Kingdom. The FTCA abrogated sovereign immunity in relation to the Federal Government in most circumstances. However, pursuant to 28 U.S.C.A. 2680(j), the sovereign immunity of the Federal Government is not abrogated in respect of [a]ny claim arising out of the combatant activities of the military or naval forces, or the Coast Guard, during time of war. A further exception relating to injuries incident to service has been developed judicially, known as the Feres doctrine (Feres v United States, 340 U.S. 135 (S.Ct. 1950)). According to a leading textbook (Speiser, Krause and Gans The American Law of Torts (2010) para 17:5): The critical and lasting rationale of the Feres doctrine is the third one the military disciplinary structure. The lawsuit cannot require a civilian court to second guess military decisions [see Stencel Aero Engineering Corp v United States, 431 U.S. 666, 673 (1977)], and the suit cannot conceivably impair essential military discipline [see Chappell v Wallace, 462 U.S. 296, 300, 302, 304 (1983) (such complex, subtle and professional decisions as the composition, training . and control of a military force are essentially professional military judgments]. Despite certain confusion in the broad statements of the courts, and notwithstanding critical comments, the Feres doctrine of denial of recovery has displayed a charmed life and continuing vitality. The cases show that in practice the Feres doctrine has been applied so as to give immunity in a wide range of situations, not directly linked to armed conflict. Conclusions I have discussed these issues at some length, albeit in a minority judgment, because in my view they deserve greater attention than they have been given in the oral argument or the majority judgment. They remain matters which will need to be considered when the case goes to trial. In this respect I do not regard my analysis as conflicting significantly with the majoritys approach. The main difference is that I would have preferred to reach decisions at this stage. In agreement with Lord Mance, and for the same reasons, I would have struck out the Challenger claims. As I have said, in considering the scope of any actionable duty of care relating to the preparation for or conduct of war activities in the modern law of negligence, I do not think we should regard ourselves as constrained by the limits of combat immunity as established in the earlier cases. The proper application of Caparo principles, as illustrated by the sequence of authorities on police liability, enables us to extend and adapt those limits within the scope of the modern law of negligence, and to hold that there is no middle ground of potential liability in relation to the preparation for, or conduct of, war. As I understand Lord Hopes judgment, it leaves the trial judge free, albeit after further factual inquiry, to reach the same conclusion. In my view, differing from Lord Mance in this respect only, we should apply different considerations to the later Snatch claims. They occurred in July 2005 and February 2006, after the time (May 2003) when (as Lord Hope explains: para 1) major combat operations ceased and were replaced by a period of military occupation. Now that the cases are to go to trial, I would not regard consideration of this issue as necessarily constrained by the shape of the arguments in the lower courts or before us. It is not surprising that Owen J drew no such distinction since, as I have noted, he had already held in Multiple Claimants that such operations were in principle within the scope of the combat immunity defence. The Court of Appeal did not address this issue in detail, but as I understand their judgment left it as raising questions of fact to be decided at trial. If as I believe the policy reasons for excluding liability are related to the special features of war or active hostilities, it would be wrong in my view to apply the same approach to peace keeping operations, however intrinsically dangerous. The ordinary principles of negligence, as illustrated by cases such as Hughes and Rigby, can when necessary be sufficiently restrictive to ensure that most such claims, whether relating to advance procurement and training, or decisions on the ground, will be doomed to failure. On the other hand, the pleaded claims in the present cases go further. It is alleged, as I understand, that there was an unjustified failure, following earlier incidents, to take readily available steps to deal with a known and preventable risk. I would not regard such claims as necessarily excluded as a matter of general policy, either at common law or under article 2. Since all the issues will now have to be considered at trial, it is unnecessary and probably undesirable for me to say more.
+The seventh chapter of Deuteronomy records the following instructions given by Moses to the people of Israel, after delivering the Ten Commandments at Mount Sinai: 1. When the Lord thy God shall bring thee into the land whither thou goest to possess it, and hath cast out many nations before thee, the Hittites, and the Girgashites, and the Amorites, and the Canaanites, and the Perizzites, and the Hivites, and the Jebusites, seven nations greater and mightier than thou; 2 And when the Lord thy God shall deliver them before thee; thou shalt smite them, and utterly destroy them; thou shalt make no covenant with them, nor show mercy unto them: 3. Neither shalt thou make marriages with them; thy daughter thou shalt not give unto his son, nor his daughter shalt thou take unto thy son. 4. For they will turn away thy son from following me, that they may serve other gods: so will the anger of the Lord be kindled against you, and destroy thee suddenly. The third and fourth verses appear to be a clear commandment against intermarriage lest, at least in the case of a Jewish man, the foreign bride persuade her husband to worship false gods. It is a fundamental tenet of Judaism, or the Jewish religion, that the covenant at Sinai was made with all the Jewish people, both those then alive and future generations. It is also a fundamental tenet of the Jewish religion, derived from the third and fourth verses that I have quoted, that the child of a Jewish mother is automatically and inalienably Jewish. I shall describe this as the matrilineal test. It is the primary test applied by those who practise or believe in the Jewish religion for deciding whether someone is Jewish. They have always recognised, however, an alternative way in which someone can become Jewish, which is by conversion. Statistics adduced in evidence from the Institute for Jewish Policy Research (the Institute) show that in the first half of the 20th century over 97% of the Jews who worshipped in this country did so in Orthodox synagogues. Since then there has been a diversification into other denominations, and a minority of Jews now worship in Masorti, Reform and Progressive synagogues. The Institute records a significant decline in the estimated Jewish population in the United Kingdom, which now numbers under 300,000, of which about 70% are formally linked to a synagogue and 30% unaffiliated. Those who convert to Orthodox Judaism in this country number only 30 or 40 a year. The requirements for conversion of the recently formed denominations are less exacting than those of Orthodox Jews. Lord Jonathan Sacks, Chief Rabbi of the United Hebrew Congregation of the Commonwealth and leader of the Orthodox Jews in this country, issued a paper about conversion, through his office (the OCR) on 8 July 2005. In it he stated that conversion was irreducibly religious. He commented: Converting to Judaism is a serious undertaking, because Judaism is not a mere creed. It involves a distinctive, detailed way of life. When people ask me why conversion to Judaism takes so long, I ask them to consider other cases of changed identity. How long does it take for a Briton to become an Italian, not just legally but linguistically, culturally, behaviourally? It takes time. A Jew by conversion is a Jew for all purposes. Thus descent by the maternal line from a woman who has become a Jew by conversion will satisfy the matrilineal test. JFS is an outstanding school. For many years far more children have wished to go there than there have been places in the school. In these circumstances it has been the policy of the school to give preference to those whose status as Jews is recognised by the OCR. That is to children whose mothers satisfy the matrilineal test or who are Jews by conversion by Orthodox standards. The issue raised by this appeal is whether this policy has resulted in an infringement of section 1 of the Race Relations Act 1976 (the 1976 Act). These proceedings were brought on the application of E in relation to M, his 13 year old son. E wished to send M to JFS and M wished to go there. He was refused admission because he was not recognised as a Jew by the OCR. His father is recognised as such but the OCR does not regard that as relevant. What matters is whether his mother was a Jew at the time of his birth. She is Italian by birth. As she was not born of a Jewish mother she could only have been recognised by the OCR as a Jew and as capable of conferring Jewish status on M if she had converted to Judaism before M was born. She had undergone a course of conversion to Judaism before Ms birth under the auspices of a non Orthodox Synagogue, not in accordance with the requirements of Orthodox Jews. The result is that, while her conversion is recognised by Masorti, Reform and Progressive Jews, it is not recognised by the OCR. E and his wife are divorced. They practise the Jewish faith and worship at a Masorti synagogue. E failed in these judicial review proceedings in which he challenged the admissions policy of JFS before Munby J, but succeeded on an appeal to the Court of Appeal. The question of Ms admission has already been resolved between the parties, but the Governing Body of JFS is concerned at the finding of the Court of Appeal that the schools admissions policy infringes the 1976 Act, as are the United Synagogue and the Secretary of State for Children, Schools and Families. Indeed this case must be of concern to all Jewish faith schools which have admissions policies that give preference to Jews. While the court has appreciated the high standard of the advocacy addressed to it, it has not welcomed being required to resolve this dispute. The dissatisfaction of E and M has not been with the policy of JFS in giving preference in admission to Jews, but with the application of Orthodox standards of conversion which has led to the OCR declining to recognise M as a Jew. Yet this appeal necessarily raises the broader issue of whether, by giving preference to those with Jewish status, JFS is, and for many years has been, in breach of section 1 of the 1976 Act. The implications of that question extend to other Jewish faith schools and the resolution of the bone of contention between the parties risks upsetting a policy of admission to Jewish schools that, over many years, has not been considered to be open to objection. This demonstrates that there may well be a defect in our law of discrimination. In contrast to the law in many countries, where English law forbids direct discrimination it provides no defence of justification. It is not easy to envisage justification for discriminating against a minority racial group. Such discrimination is almost inevitably the result of irrational prejudice or ill will. But it is possible to envisage circumstances where giving preference to a minority racial group will be justified. Giving preference to cater for the special needs of a minority will not normally involve any prejudice or ill will towards the majority. Yet a policy which directly favours one racial group will be held to constitute racial discrimination against all who are not members of that group see, for instance, Orphanos v Queen Mary College [1985] AC 761 at p. 771. Nothing that I say in this judgment should be read as giving rise to criticism on moral grounds of the admissions policy of JFS in particular or the policies of Jewish faith schools in general, let alone as suggesting that these policies are racist as that word is generally understood. Direct discrimination I propose in the first instance to consider whether the admissions policy of the JFS has led it to discriminate directly against M on racial grounds. The relevant provisions of the 1976 Act are as follows. Racial discrimination (1) A person discriminates against another in any circumstances relevant for the purposes of any provision of this Act if (a) On racial grounds he treats the other less favourably than he treats or would treat other persons 3. Meaning of racial grounds (1) In this Act, unless the context otherwise requires racial grounds means any of the following grounds, namely colour, race, nationality or ethnic or national origins; racial group means a group of persons defined by reference to colour, race, nationality, or ethnic or national origins; (2) The fact that a racial group comprises two or more distinct racial groups does not prevent it from constituting a particular racial group for the purposes of this Act. Section 17 deals with educational establishments and provides that it is unlawful for the governors of a maintained school, such as JFS, to discriminate against a person in the terms on which it offers to admit him to the establishment as a pupil. It is common ground that JFS discriminated against M in relation to its terms of admission to the school. The issue of whether this amounted to unlawful direct discrimination on racial grounds depends on the answer to two questions: (1) What are the grounds upon which M was refused entry? (2) Are those grounds racial? Grounds In the phrase grounds for discrimination, the word grounds is ambiguous. It can mean the motive for taking the decision or the factual criteria applied by the discriminator in reaching his decision. In the context of the 1976 Act grounds has the latter meaning. In deciding what were the grounds for discrimination it is necessary to address simply the question of the factual criteria that determined the decision made by the discriminator. This approach has been well established by high authority. In R v Birmingham City Council, Ex p Equal Opportunities Commission [1989] AC 1155 the entry criteria applied by the Council for admission to selective single sex grammar schools was in issue. More places were available in boys schools than in girls schools. The result was that girls had to obtain higher marks in the entry examination than boys. The motive for the disparity was, no doubt, that this was necessary to ensure that entry to the schools was determined on merit. The House of Lords held, none the less, that the disparity constituted unlawful discrimination contrary to the Sex Discrimination Act 1975 which prohibited discrimination against a woman on the ground of her sex. Lord Goff of Chieveley, with whom the other members of the Committee agreed, said at p. 1194: There is discrimination under the statute if there is less favourable treatment on the ground of sex, in other words if the relevant girl or girls would have received the same treatment as the boys but for their sex. The intention or motive of the defendant to discriminate, though it may be relevant so far as remedies are concerned (see section 66(3) of the Act of 1975), is not a necessary condition of liability; it is perfectly possible to envisage cases where the defendant had no such motive, and yet did in fact discriminate on the ground of sex. Indeed, as Mr. Lester pointed out in the course of his argument, if the councils submission were correct it would be a good defence for an employer to show that he discriminated against women not because he intended to do so but (for example) because of customer preference, or to save money, or even to avoid controversy. In the present case, whatever may have been the intention or motive of the council, nevertheless it is because of their sex that the girls in question receive less favourable treatment than the boys, and so are the subject of discrimination under the Act of 1975. The difference between the motive for discrimination and the factual criteria applied by the discriminator as the test for discrimination lay at the heart of the division between the majority and the minority of the House of Lords in James v Eastleigh Borough Council [1990] 2 AC 751, another case where sex discrimination was in issue. The Council discriminated between men and women, aged between 60 and 65, in relation to the terms on which they were admitted to swim in a leisure centre run by the Council. Women in this age band were admitted free whereas men had to pay an entry charge. The motive for this discrimination could perhaps be inferred by the manner in which this rule was expressed, namely that those of pensionable age were to be admitted free of charge; women became of pensionable age when they were 60, men when they were 65. Counsel for the Council explained at p. 758 that the councils reason for giving free access to those of pensionable age was that their resources were likely to have been reduced by retirement. The Court of Appeal had treated this motive as being the relevant ground for discriminating in favour of women and against men rather than the factual criterion for discrimination, which was plainly the sex of the person seeking admission to the centre. Lord Bridge, delivering the first opinion of the majority, held that the reasoning of the Court of Appeal was fallacious and that the Councils policy discriminated on the ground of sex. At p. 764 he said of their judgment: The Court of Appeals attempt to escape from these conclusions lies in construing the phrase on the ground of her sex in section 1(1)(a) as referring subjectively to the alleged discriminators reason for doing the act complained of. As already noted, the judgment had earlier identified the councils reason as to give benefits to those whose resources would be likely to have been reduced by retirement and to aid the needy, whether male or female. But to construe the phrase, on the ground of her sex as referring to the alleged discriminators reason in this sense is directly contrary to a long line of authority confirmed by your Lordships House in Reg. vs Birmingham City Council, Ex parte Equal Opportunities Commission. Having cited the passage from Lord Goffs judgment that I have set out at paragraph 12 above, he commented, at p 765: Lord Goffs test, it will be observed, is not subjective, but objective. Adopting it here the question becomes: Would the plaintiff, a man of 61, have received the same treatment as his wife but for his sex? An affirmative answer is inescapable. This but for test was another way of identifying the factual criterion that was applied by the Council as the basis for their discrimination, but it is not one that I find helpful. It is better simply to ask what were the facts that the discriminator considered to be determinative when making the relevant decision. Lord Ackner, concurring, remarked at pp. 769 770: There might have been many reasons which had persuaded the council to adopt this policy. The Court of Appeal have inferred that the councils reason for giving free swimming to those of pensionable age was to give benefits to those whose resources would be likely to have been reduced by retirement: per Sir Nicolas Browne Wilkinson V. C. [1990] 1 Q.B. 61, 73D. I am quite prepared to make a similar assumption, but the councils motive for this discrimination is nothing to the point: see the decision of this House in Reg. vs Birmingham City Council, Ex parte Equal Opportunities Commission [1989] AC 1155. Lord Griffiths, giving the first of the minority opinion, took a different view. He said at p. 768: The question in this case is did the council refuse to give free swimming to the plaintiff because he was a man, to which I would answer, no, they refused because he was not an old age pensioner and therefore could presumably afford to pay 75p to swim. In a lengthy opinion Lord Lowry concurred with Lord Griffiths. The essence of his reasoning appears in the following passage at pp. 775 776: section 1(1)(a) refers to the activities of the discriminator: the words on the ground of his sex provide the link between the alleged discriminator and his less favourable treatment of another. They introduce a subjective element into the analysis and pose here the question Was the sex of the appellant a consideration in the councils decision? Putting it another way, a ground is a reason, in ordinary speech, for which a person takes a certain course. He knows what he is doing and why he has decided to do it. In the context of section 1(1)(a) the discriminator knows that he is treating the victim less favourably and he also knows the ground on which he is doing so. In no case are the discriminators thought processes immaterial. The contrast between the reasoning of the majority and of the minority in this case is, I believe, clear. I find the reasoning of the majority compelling. Whether there has been discrimination on the ground of sex or race depends upon whether sex or race was the criterion applied as the basis for discrimination. The motive for discriminating according to that criterion is not relevant. The observations of Lord Nicholls in Nagarajan v London Regional Transport [2000] 1 AC 501 and Chief Constable of West Yorkshire Police v Khan [2001] 1 WLR 1947, cited by Lord Hope at paragraphs 193 and 194 of his judgment, throw no doubt on these principles. Those observations address the situation where the factual criteria which influenced the discriminator to act as he did are not plain. In those circumstances it is necessary to explore the mental processes of the discriminator in order to discover what facts led him to discriminate. This can be illustrated by a simple example. A fat black man goes into a shop to make a purchase. The shop keeper says I do not serve people like you. To appraise his conduct it is necessary to know what was the fact that determined his refusal. Was it the fact that the man was fat or the fact that he was black? In the former case the ground of his refusal was not racial; in the latter it was. The reason why the particular fact triggered his reaction is not relevant to the question of the ground upon which he discriminated. In Nagarajan, Lord Nicholls approved the reasoning in both the Birmingham City Council case and the Eastleigh Borough Council case. At p. 511 he identified two separate questions. The first was the question of the factual basis of the discrimination. Was it because of race or was it because of lack of qualification? He then pointed out that there was a second and different question. If the discriminator discriminated on the ground of race, what was his motive for so doing? That question was irrelevant. When, at para 29 in Khan, Lord Nicholls spoke of a subjective test he was speaking of the exercise of determining the facts that operated on the mind of the discriminator, not his motive for discriminating. The subjective test, described by Lord Nicholls, is only necessary as a seminal step where there is doubt as to the factual criteria that have caused the discriminator to discriminate. There is no need for that step in this case, for the factual criteria that governed the refusal to admit M to JFS are clear. The JFS Admissions Policy The admissions policy published by JFS for the 2007/8 academic year began as follows: 1.1 It is JFS (the School) policy to admit up to the standard admissions number children who are recognised as being Jewish by the Office of the Chief Rabbi of the United Hebrew Congregation of the Commonwealth (OCR) or who have already enrolled upon or who have undertaken, with the consent of their parents, to follow any course of conversion to Judaism under the approval of the OCR. The passage that I have placed in italics was introduced in the 2007/8 year for the first time. No candidate has yet satisfied that criterion, and for present purposes it can be disregarded. In recent years there have been more applicants for entry to JFS who were recognised as Jewish by the OCR than there were places in the school. The admissions policy, somewhat confusingly, describes this as a situation where the school is oversubscribed. Further criteria are laid down for establishing priority in this situation. Here also there has recently been a significant change. Children in care and children with a sibling in the school were and are given priority; the change comes at the next stage. Up to the 2007/8 year priority was next given to applicants who had attended a Jewish primary school. This has now been changed so that these are pro rated with children who have attended a non Jewish primary school. The former criterion would have been likely to favour Jewish children who were being brought up in the Jewish faith. We were not told the reason for this change, and it has no direct bearing on the issues raised by this appeal. The criteria whose application debarred M from entry to JFS are readily identified. They are the criteria recognised by the OCR as conferring the status of a Jew. The child will be a Jew if at the time of his birth his mother was a Jew. His mother will be a Jew if her mother was a Jew or if she has converted to Judaism in a manner that satisfies the requirements of the Orthodox religion. M does not satisfy those criteria because of his matrilineal descent. His mother was not born of a Jewish mother and had not at the time of his birth complied with the requirements for conversion, as laid down by the OCR. Accordingly M does not satisfy the Orthodox test of Jewish status. Are the grounds racial? In answering this question it is important to distinguish between two different, albeit not wholly independent, considerations. The first is the reason or motive that leads the OCR to impose these criteria. The second is the question of whether or not the criteria are characteristics of race. The reason why the OCR has imposed the criteria is that the OCR believes that these are the criteria of Jewish status under Jewish religious law, established at and recognised from the time of Moses. This is not the end of the enquiry. The critical question is whether these requirements of Jewish law are racial, as defined by section 3 of the 1976 Act. Do the characteristics define those who have them by reference to colour, race, nationality or ethnic or national origins? The JFS case I shall summarise the case advanced by Lord Pannick QC for JFS in my own words. There exists a Jewish ethnic group. Discrimination on the ground of membership of this group is racial discrimination. The criteria of membership of this group are those identified by Lord Fraser of Tullybelton in Mandla v Dowell Lee [1983] 2 AC 548. In that case a declaration was sought that refusing admission to a school of a Sikh wearing a turban was indirect racial discrimination. The critical question was whether Sikhs comprised a racial group for the purposes of the 1976 Act. It was common ground that they were not a group defined by reference to colour, race, nationality or national origins. It was contended, however, that they were a group defined by ethnic origins. In considering the meaning of this phrase, Lord Fraser at pp 561 562 referred to a meaning of ethnic given by the Supplement to the Oxford English Dictionary (1972): pertaining to or having common racial, cultural, religious, or linguistic characteristics, esp. designating a racial or other group within a larger system. His comments in relation to this definition have been set out in full by Lord Mance at paragraph 83 of his judgment and as Lord Mance remarked they merit reading in full. It suffices, however, to cite the passage at p. 562 where Lord Fraser set out the seven characteristics, some of which he held would be shared by, and would be the touchstone of, members of an ethnic group: The conditions which appear to me to be essential are these: (1) a long shared history, of which the group is conscious as distinguishing it from other groups, and the memory of which it keeps alive; (2) a cultural tradition of its own, including family and social customs and manners, often but not necessarily associated with religious observance. In addition two essential characteristics the following characteristics are, in my opinion, relevant; (3) either a common geographical origin, those to or descent from a small number of common ancestors; (4) a common language, not necessarily peculiar to the group; (5) a common literature peculiar to the group; (6) a common religion different from that of neighbouring groups or from the general community surrounding it; (7) being a minority or being an oppressed or a dominant group within a larger community, for example a conquered people (say, the inhabitants of England shortly after the Norman conquest) and their conquerors might both be ethnic groups. A group defined by reference to enough of these characteristics would be capable of including converts, for example, persons who marry into the group, and of excluding apostates. Provided a person who joins the group feels himself or herself to be a member of it, and is accepted by other members, then he is, for the purposes of the Act, a member. The Orthodox test of who is a Jew focuses on matrilineal descent. Discrimination on the basis of descent simpliciter is not necessarily discrimination on racial grounds. To discriminate against someone because he is not the son of a peer, or the son of a member of the SOGAT printing union, is not racial discrimination. Under the Orthodox test the Jewish woman at the head of the maternal line may be a convert of any nationality and from any ethnic background. Furthermore, because the Orthodox test focuses exclusively on the female line, any Jewish national or ethnic blood can become diluted, generation after generation, by the blood of fathers who have no Jewish characteristics of any kind. This is likely to happen if a Jewish woman marries out of and abandons the Jewish faith. It is possible today to identify two different cohorts, one by the Mandla criteria and one by the Orthodox criteria. The cohort identified by the Mandla criteria forms the Jewish ethnic group. They no longer have a common geographical origin or descent from a small number of common ancestors, but they share what Lord Fraser regarded as the essentials, a long shared history, of which the group is conscious as distinguishing it from other groups and the memory of which it keeps alive and a cultural tradition of its own, including family and social customs and manners, often but not necessarily associated with religious observance. The man in the street would recognise a member of this group as a Jew, and discrimination on the ground of membership of the group as racial discrimination. The Mandla group will include many who are in the cohort identified by the Orthodox criteria, for many of them will satisfy the matrilineal test. But there will be some who do not. So far as the cohort identified by the Orthodox test is concerned, many of these will also fall within the Mandla group. But there will be some, indeed many, who do not. Most of these will be descendants from Jewish women who married out of and abandoned the Jewish faith. They will not satisfy the two vital criteria identified by Lord Fraser. Indeed, they may be unaware of the genetic link that renders them Jewish according to the Orthodox test. Thus, in Lord Pannicks submissions the Orthodox test is not one that necessarily identifies members of the Jewish ethnic group. It is a test founded on religious dogma and discrimination on the basis of that test is religious discrimination, not racial discrimination. Discussion Initially I found Lord Pannicks argument persuasive, but on reflection I have concluded that it is fallacious. The fallacy lies in treating current membership of a Mandla ethnic group as the exclusive ground of racial discrimination. It ignores the fact that the definition of racial grounds in section 3 of the 1976 Act includes ethnic or national origins (my emphasis). Origins require one to focus on descent. Lord Pannick is correct to submit that descent simpliciter is not a ground of racial discrimination. It will only be such a ground if the descent in question is one which traces racial or ethnic origin. This leads me to a further argument advanced on behalf of JFS, which found favour with Munby J and is accepted by Lord Hope. This is that the matrilineal test is a religious test and that discrimination on the basis of that test is religious, not racial. This argument falls into two parts: (i) the matrilineal test is a test laid down by Jewish religious law; (ii) the matrilineal test is not a test of ethnic origin or ethnic status but a test of religious origin and religious status. The first part of this argument focuses, as has Lord Hope, on the reason why the matrilineal test is applied. The reason is that the JFS and the OCR apply the test for determining who is a Jew laid down by Orthodox Jewish religious law. What subjectively motivates them is compliance with religious law, not the ethnicity of the candidates who wish to enter the school. My reaction to this argument will already be clear. It is invalid because it focuses on a matter that is irrelevant the motive of the discriminator for applying the discriminatory criteria. A person who discriminates on the ground of race, as defined by the Act, cannot pray in aid the fact that the ground of discrimination is one mandated by his religion. The second argument requires more detailed analysis. It is that the criteria applied by the matrilineal test are religious criteria. They identify the religious status of the woman at the head of the maternal line and the religious status of the child at the end of the line. They have nothing to do with ethnicity. Lord Hope suggests that the validity of this argument can be demonstrated by contrasting the position of a person descended from a woman converted a century ago in an Orthodox synagogue with the position of a person descended from a woman converted a century ago in a non Orthodox synagogue. JFS would recognise the former as having Jewish status, but not the latter but the discrimination would result from the application of religious criteria. This example illustrates the fact that today, although not a century ago, in the very small number of cases where the question of whether someone is Jewish depends upon conversion, there is a possibility that different denominations will, as a result of differences between the criteria that they require for conversion, differentiate between them. If so, identifiable sub groups of Jews may develop, distinguished by religious criteria. This does not, however, help to determine whether the sub groups are sub groups of those who share the Jewish religion or sub groups of those who share Jewish ethnicity, or indeed both. Conversion has, for millennia, been accepted by all Jews as one of the ways in which a person can become a Jew, and the evidence that we have seen does not suggest that different tests of conversion have been applied until recent times. One of the difficulties in this case lies in distinguishing between religious and ethnic status. One of the criteria of ethnicity identified by Lord Fraser is a shared religion. In the case of Jews, this is the dominant criterion. In their case it is almost impossible to distinguish between ethnic status and religious status. The two are virtually co extensive. A woman who converts to Judaism thereby acquires both Jewish religious status and Jewish ethnic status. In the Chief Rabbis paper about conversion that I quoted at the beginning of this judgment he says: What is conversion? People often refer to the case of Ruth the Moabite, whose story is told with such beauty in the book that bears her name. It is from Ruths reply to her mother in law Naomi that the basic principles of conversion are derived. She said: Where you go, I will go. Where you stay, I will stay. Your people will be my people, and your God my God. That last sentence a mere four words in Hebrew defines the dual nature of conversion to this day. The first element is an identification with the Jewish people and its fate (Your people will be my people). The second is the embrace of a religious destiny, the covenant between Israel and God and its commands (Your God will be my God). I also found helpful in this context a passage in the response to a request for information from the Treasury Solicitor by Rabbi Dr Tony Bayfield, the head of the movement for Reform Judaism. It is headed Background Information and I do not believe it to be controversial: I believe that you are correct in your understanding of the OCRs criteria for determining whether a child is Jewish. This definition is, in essence, shared by the entire Jewish world both in Britain and globally. There are nuances the most significant of which is that the Liberal Movement (Liberal Judaism) in Britain regards as Jewish a child either of whose parents is Jewish (Liberal Judaism represents about 8% of synagogue affiliations; the other 92% of affiliations are to groupings which follow the tradition of the maternal line). However, all Jewish institutions worldwide as far as I know would say that Jewish identity is determined by either descent or conversion. There is a verse in the Book of Deuteronomy (Ch 29 v14) which describes the covenant between God and the Jewish people made at Sinai as being made both with those who stood there [at the foot of Sinai on] that day and also with those who were not there that day. Tradition defines those who were not there as descendants and converts. Conversion has been a feature of Jewish life for thousands of years. It has been most prolific when Jews have lived in tolerant, open societies and least prolific when Jews have been persecuted and state law has prohibited conversion to Judaism. But it has always taken place and means that Jews exhibit a range of facial features any visit to Israel will reveal Jews of different skin colours and appearance. Jews are not a race within any accepted or acceptable definition of the word. The phrase ethnic group is sometimes suggested but since ethnic can mean either cultural or racial or a mixture of the two, it is not very helpful. The best definition or description that I know is that Jews are a people bound together by ties of history and culture. Which brings us back to the verse from Deuteronomy. Jews are a people defined by the Sinai myth (not a pejorative term) of descent, of a continuous chain made up of descendants and converts, the latter becoming parts of the chain, indistinguishable from those who are Jewish by descent, inheriting the history, the culture (at core a religious culture) and at once becoming part of it. So, the OCRs definition of Jewish status is, in its essence, universal descent or conversion. This passage demonstrates a number of matters. First that the test of descent is not restricted to Orthodox Jewry but is a universal test applied by those who consider themselves to be Jews. Secondly that, whatever their racial, national and ethnic background, conversion unquestionably brings the convert within the Mandla definition of Jewish ethnicity. She becomes a member of the Jewish people. See also the comparison made by the Chief Rabbi between conversion and changing nationality in my earlier quotation. Thirdly the passage demonstrates that the religious test of matrilineal descent does not apply an idiosyncratic criterion that has no connection to race. It is a test which focuses on the race or ethnicity of the woman from whom the individual is descended. Where a Jew is descended by the maternal line from a woman who has converted to Judaism, the matrilineal link is with an ethnic Jew. There is this further important point. Focusing on conversion ignores the fact that the matrilineal test is not restricted to descent from Jews by conversion. The Jews to whom Moses spoke at Mount Sinai would have shared all seven of the characteristics of ethnic identity itemised by Lord Fraser in Mandla. The passage in Deuteronomy to which Jews look as the basis of the matrilineal test plainly focuses on race. Many Jews are highly conscious of their particular geographical and national roots. We had evidence of Cohens who trace their ancestry back to the servants at the Temple and who, for that reason, are prohibited from marrying a convert. For these reasons it is plain that the relevant characteristics of the relative to whom the maternal line leads are not simply religious. The origin to which the line leads can be racial and is, in any event, ethnic. Thus we are not here dealing with descent from a peer, or from a member of SOGAT, but a woman whose race, possibly, and her ethnicity, certainly, as well as her religion, are Jewish. David Frei, the Registrar of the London Beth Din, states in his witness statement that matrilineal descent is a criterion of Jewish identity, that being Jewish is a matter of religious status under Jewish religious law and that in orthodoxy, Jewish status is solely and irreducibly a religious issue. I take these statements to mean that the test of Jewish status is a test laid down exclusively by religion. It would not be right to read them as meaning that the only thing that matrilineal descent does is to identify religious status, whether of the ancestor at the head of the line or of the descendant at the other. This would not be consistent with the first element of the dual nature of conversion, as described by the Chief Rabbi. Nor would it be consistent with the fact that the matrilineal test embraces racial origin. To the Jew the matrilineal descendant is a member of the Jewish family and a member of the Jewish religion. The two are inextricably intertwined. The descendant will not necessarily be a member of a Mandla Jewish ethnic group; that is the group that has the essential criteria identified by Lord Fraser. He may, indeed, have none of the seven criteria in the list. The gentile in the street would not identify such a person as a Jew. Equally, he would not identify such a person as a member of the Jewish religion. Membership of a religion or faith normally indicates some degree of conscious affiliation with the religion or faith on the part of the member. The question of the status of the matrilineal descendant may thus depend upon whether one is applying the subjective viewpoint of a Jew or the objective Mandla test. But one thing is clear about the matrilineal test; it is a test of ethnic origin. By definition, discrimination that is based upon that test is discrimination on racial grounds under the Act. Lord Pannick is correct to say that it is possible to identify two different cohorts, or groups, with an overlapping membership, those who are descended by the maternal line from a Jew, and those who are currently members of the Jewish ethnic group. Discrimination against a person on the grounds that he or she is, or is not, a member of either group is racial discrimination. JFS discriminates in its admission requirements on the sole basis of genetic descent by the maternal line from a woman who is Jewish, in the Mandla as well as the religious sense. I can see no escape from the conclusion that this is direct racial discrimination. The consequences of the majority decision. The website of the JFS states that Whilst two thirds or more of our students have attended Jewish primary schools, a significant number of our year 7 intake has not attended Jewish schools and some enter the school with little or no Jewish education. Many come from families who are totally committed to Judaism and Israel; others are unaware of Jewish belief and practice. Initially this gave me the impression that successful candidates for entry to JFS included a significant number who had no connection with Judaism other than a matrilineal link with a Jewish woman, so that they fell outside the Mandla ethnic Jewish group. On reflection I found this an unlikely scenario. Any parents who apply to send their children to JFS relying on matrilineal Jewish descent must, at least, have an awareness of that link with Judaism. Evidence from the JFS suggests rather more than this. The schools information sheet which is sent to prospective teaching staff states: The modern JFS serves almost the whole breadth of the Anglo Jewish community in Greater London. About 85% of its students come from Barnet, Harrow, Brent and Hertsmereour students come from the widest possible range of social, economic and religious backgrounds. Our parents represent a very broad range of society. They all, however, share two things in common; a strong sense of Jewish identity and, in almost all cases, a keen sense of ambition for their children (emphasis added). This suggests that those who decide to send their children to JFS satisfy the Mandla criteria for belonging to an ethnic group, even though some of them do not attend a synagogue. They live in the same part of London, they are conscious of the wifes Jewish descent, and they have a strong sense of Jewish identity. This is likely to include an appreciation of Jewish history and culture. If this is correct, then the reality is that the JFS, in common with other Jewish faith schools, is in practice discriminating in favour of a sub group of Mandla ethnic Jews, who also satisfy the matrilineal requirement. The fact that the JFS conditions of admission would give precedence to candidates who satisfy the descent requirement but do not satisfy the Mandla test of Jewish ethnicity is of no practical significance. This appeal has been concerned with what has, in practice, been only the threshold test for admission to the JFS; matrilineal descent. For at least the last ten years the JFS has been oversubscribed with candidates for admission who satisfy this test. The problem has been how to choose between them. The evidence does not suggest that anyone has challenged the matrilineal test in principle. It is, after all, a test that has general acceptance as the criterion of being a Jew. Apart from Ms challenge, evidence has been given of two others, but each of these was a challenge on the ground of a failure to recognise the mothers conversion, not a challenge against the admission criteria themselves. Concern has been expressed that the majority decision will compel Jewish faith schools to admit children whom the Jewish religion does not recognise as being Jewish, that is children who are not descended from Jews by the maternal line. It is not clear that this is so. As a result of the decision of the Court of Appeal the JFS has published a new admission policy for admission in September 2010. This applies a test of religious practice, including synagogue attendance, Jewish education and/or family communal activity. As matrilineal descent or conversion is the requirement for membership of the Jewish faith according to the law of that faith, those who satisfy a practice test are likely to satisfy this requirement. Thus, instead of applying the matrilineal descent test by way of direct discrimination, the school will be applying a test that will indirectly discriminate in favour of those who satisfy the matrilineal descent test. It is not clear that the school will now be faced with applications from those who do not satisfy the test. Indirect discrimination Having decided that there has been in this case direct racial discrimination, it would be possible to go on to consider the hypothetical question of whether, if JFSs admissions policy had constituted indirect discrimination, it would have been justifiable. I do not propose to embark on that exercise, which would involve, among other considerations, an analysis of the policy underlying the exception made for faith schools in relation to religious discrimination by section 50 of the Equality Act 2006. I have not found it necessary to consider the provisions of that Act, for they have no bearing on the issue of direct racial discrimination. For the reasons that I have given I would dismiss the substantive appeal. The United Synagogue has appealed against the order for Costs made by the Court of Appeal. I concur in the basis upon which Lord Hope has held that this appeal should be allowed. Submissions in writing as to the appropriate order in respect of the costs of both appeals to the Supreme Court should be submitted within 14 days. LADY HALE No one in this case is accusing JFS (as the Jews Free School is now named) or the Office of the Chief Rabbi of discrimination on grounds of race as such. Any suggestion or implication that they are racist in the popular sense of that term can be dismissed. However, the Race Relations Act 1976 caters also for discrimination on grounds of colour, nationality or ethnic or national origins: see s 3(1). This case is concerned with discrimination on account of ethnic origins. And the main issue is what that means specifically, do the criteria used by JFS to select pupils for the school treat people differently because of their ethnic origins? My answer to that question is the same as that given by Lord Phillips, Lord Mance, Lord Kerr and Lord Clarke and for the same reasons. That we have each written separate opinions underlines the fact that we have each reached the same conclusion through a process of independent research and reasoning. It is only because the debate before us and between us has called in question some fundamental principles of discrimination law that I feel it necessary to underline them yet again. First, the Race Relations Act 1976 creates two different statutory torts, direct and indirect discrimination. It also creates two different forms of indirect discrimination, the original form provided for in section 1(1)(b) and the later form derived from the European Directive (2000/43 EC), provided for in section 1(1A). The later form applies to the discrimination prohibited by section 17, in admission to educational establishments, which is the context here: see s 1(1B)(b). If the later form applies, the original form does not: see s 1(1C). The basic difference between direct and indirect discrimination is plain: see Mummery LJ in R (Elias) v Secretary of State for Defence [2006] EWCA 1293, [2006] 1 WLR 3213, para 119. The rule against direct discrimination aims to achieve formal equality of treatment: there must be no less favourable treatment between otherwise similarly situated people on grounds of colour, race, nationality or ethnic or national origins. Indirect discrimination looks beyond formal equality towards a more substantive equality of results: criteria which appear neutral on their face may have a disproportionately adverse impact upon people of a particular colour, race, nationality or ethnic or national origins. Direct and indirect discrimination are mutually exclusive. You cannot have both at once. As Mummery LJ explained in Elias, at para 117, The conditions of liability, the available defences to liability and the available defences to remedies differ. The main difference between them is that direct discrimination cannot be justified. Indirect discrimination can be justified if it is a proportionate means of achieving a legitimate aim. But it is significant that section 57(3) provides that, in respect of the earlier form of indirect discrimination under section 1(1)(b), no award of damages shall be made if the respondent proves that the requirement or condition in question was not applied with the intention of treating the claimant unfavourably on racial grounds. We are concerned with the later form of indirect discrimination, under section 1(1A), to which section 57(3) does not apply, but the fact that this exception to the available remedies was made suggests that Parliament did not consider that an intention to discriminate on racial grounds was a necessary component of either direct or indirect discrimination. One can act in a discriminatory manner without meaning to do so or realising that one is. Long standing authority at the highest level confirms this important principle. The leading case on direct discrimination is R v Birmingham City Council, ex p Equal Opportunities Commission [1989] 1 AC 1155. So far as I am aware, it has never previously been suggested that it set the law on the wrong track: quite the reverse. As is well known, there were more grammar school places for boys than for girls in Birmingham with the result that girls had to do better than boys in the entrance examination in order to secure a place. The council did not mean to discriminate. It bore the girls no ill will. It had simply failed to correct a historical imbalance in the places available. It was nevertheless guilty of direct discrimination on grounds of sex. Lord Goff of Chieveley said this, at p 1194A: There is discrimination under the statute if there is less favourable treatment on the ground of sex, in other words if the relevant girl or girls would have received the same treatment as the boys but for their sex. The intention or motive of the defendant to discriminate, although it may be relevant so far as remedies are concerned . is not a necessary condition of liability; it is perfectly possible to envisage cases where the defendant had no such motive, and yet did in fact discriminate on the ground of sex. Indeed, . if the councils submission were correct it would be a good defence for an employer to show that he discriminated against women not because he intended to do so but (for example) because of customer preference, or to save money, or even to avoid controversy. In the present case, whatever may have been the intention or motive of the council, nevertheless it is because of their sex that the girls in question receive less favourable treatment than the boys, and so are the subject of discrimination under the Act of 1975. He went on to point out that this was well established in a long line of authority, citing Jenkins v Kingsgate (Clothing Productions) Ltd [1981] 1 WLR 1485, 1494, per Browne Wilkinson J; R v Secretary of State for Education and Science, Ex parte Keating (1985) 84 LGR 469, 475, per Taylor J; and Ministry of Defence v Jeremiah [1980] QB 87, 98, per Lord Denning MR. The but for test was endorsed again by the House in the rather more controversial case of James v Eastleigh Borough Council [1990] 2 AC 751. Again, the facts are well known. A husband and wife, both aged 61, went to their local swimming pool. The husband was charged 75 pence and the wife was let in free. Once again the council had the best of motives. People who had reached pensionable age were let in free. But pensionable age directly discriminated between men and women on grounds of their sex. It followed that the swimming pool admission charges did so too. As Lord Bridge of Harwich said, at pp 765 6, the purity of the discriminators subjective motive, intention or reason for discriminating cannot save the criterion applied from the objective taint of discrimination on the ground of sex. Lord Ackner was to the same effect, at p 769: The policy itself was crystal clear if you were a male you had, vis vis a female, a five year handicap. The reason why this policy was adopted can in no way affect or alter the fact that the council had decided to implement and had implemented a policy by virtue of which men were to be treated less favourably than women, and were to be so treated on the ground of, i.e. because of, their sex. Lord Goff of Chieveley amplified what he had said in Birmingham, at p 774: Whether or not the treatment is less favourable in the relevant sense, i.e. on the ground of sex, may derive either from the application of a gender based criterion to the complainant, or from selection by the defendant of the complainant because of his or her sex; but, in either event, it is not saved from constituting unlawful discrimination by the fact that the defendant acted from a benign motive. However, in the majority of cases, I doubt if it is necessary to focus upon the intention or motive of the defendant in this way. This is because, as I see it, cases of direct discrimination under section 1(1)(a) can be considered by asking the simple question: would the complainant have received the same treatment from the defendant but for his or her sex. Although this decision was clearly on all fours with the Birmingham case, it was reached only by a majority. Lord Lowry preferred a subjective rather than an objective approach to on grounds of sex. Lord Griffiths, interestingly, pointed out that to impose a retirement age of 60 on women and 65 on men was discriminatory on the grounds of sex. It would result in women being less well off than men at 60. But what I do not accept is that an attempt to redress the result of that unfair act of discrimination by offering free facilities to those disadvantaged by the earlier act of discrimination is, itself, necessarily discriminatory on grounds of sex (p 768). Lord Griffiths was there challenging the concept of symmetrical formal equality: that it is just as discriminatory to treat a man less favourably than a woman, even though the object is to redress the impact of previous less favourable treatment of a woman. But there can be no doubt that the original sex and race discrimination legislation intended, through the mechanism of direct discrimination, to achieve symmetrical formal equality between men and women, black and white, rather than to redress any historic disadvantage of one against the other. Attempts to do so, for example by quotas or all women shortlists, are still highly controversial. Despite this difference of opinion, the decisions in Birmingham and James have been applied time and time again. They were affirmed by the House of Lords in the victimisation case of Nagarajan v London Regional Transport [2000] 1 AC 501. As Lord Nicholls of Birkenhead said, at p 511: Racial discrimination is not negatived by the discriminators motive or intention or reason or purpose (the words are interchangeable in this context) in treating another person less favourably on racial grounds. In particular, if the reason why the alleged discriminator rejected the complainants job application was racial, it matters not that his intention may have been benign. However, Lord Nicholls had earlier pointed out that there are in truth two different sorts of why question, one relevant and one irrelevant. The irrelevant one is the discriminators motive, intention, reason or purpose. The relevant one is what caused him to act as he did. In some cases, this is absolutely plain. The facts are not in dispute. The girls in Birmingham were denied grammar school places, when the boys with the same marks got them, simply because they were girls. The husband in James was charged admission to the pool, when his wife was not, simply because he was a man. This is what Lord Goff was referring to as the application of a gender based criterion. But, as Lord Goff pointed out, there are also cases where a choice has been made because of the applicants sex or race. As Lord Nicholls put it in Nagarajan, in every case it is necessary to inquire why the complainant received less favourable treatment. This is the crucial question. Was it on grounds of race? Or was it for some other reason, for instance, because the complainant was not so well qualified for the job? Save in obvious cases, answering the crucial question will call for some consideration of the mental processes of the alleged discriminator (pp 510 511). In James, Lord Bridge was not to be taken as saying that the discriminators state of mind is irrelevant when answering the crucial, anterior question: why did the complainant receive less favourable treatment? The distinction between the two types of why question is plain enough: one is what caused the treatment in question and one is its motive or purpose. The former is important and the latter is not. But the difference between the two types of anterior enquiry, into what caused the treatment in question, is also plain. It is that which is also explained by Lord Phillips, Lord Kerr and Lord Clarke. There are obvious cases, where there is no dispute at all about why the complainant received the less favourable treatment. The criterion applied was not in doubt. If it was based on a prohibited ground, that is the end of the matter. There are other cases in which the ostensible criterion is something else usually, in job applications, that elusive quality known as merit. But nevertheless the discriminator may consciously or unconsciously be making his selections on the basis of race or sex. He may not realise that he is doing so, but that is what he is in fact doing. As Lord Nicholls went on to say in Nagarajan, An employer may genuinely believe that the reason why he rejected an applicant had nothing to do with the applicants race. After careful and thorough investigation of a claim members of an employment tribunal may decide that the proper inference to be drawn from the evidence is that, whether the employer realised it at the time or not, race was the reason why he acted as he did . Conduct of this nature by an employer, when the inference is legitimately drawn, falls squarely within the language of section 1(1)(a) (p 512). This case is not in that category. There is absolutely no doubt about why the school acted as it did. We do not have to ask whether they were consciously or unconsciously treating some people who saw themselves as Jewish less favourably than others. Everything was totally conscious and totally transparent. M was rejected because he was not considered to be Jewish according to the criteria adopted by the Office of the Chief Rabbi. We do not need to look into the mind of the Chief Rabbi to know why he acted as he did. If the criterion he adopted was, as in Birmingham or James, in reality ethnicity based, it matters not whether he was adopting it because of a sincerely held religious belief. No one doubts that he is honestly and sincerely trying to do what he believes that his religion demands of him. But that is his motive for applying the criterion which he applies and that is irrelevant. The question is whether his criterion is ethnically based. So at long last I arrive at what, in my view, is the only question in this case. Is the criterion adopted by the Chief Rabbi, and thus without question by the school, based upon the childs ethnic origins? In my view, it clearly is. M was rejected because of his mothers ethnic origins, which were Italian and Roman Catholic. The fact that the Office of the Chief Rabbi would have over looked his mothers Italian origins, had she converted to Judaism in a procedure which they would recognise, makes no difference to this fundamental fact. M was rejected, not because of who he is, but because of who his mother is. That in itself is not enough. If M had been rejected because his mother shopped in Waitrose rather than Marks and Spencer, that would not have been because of her or his ethnicity. But it was because his mother was not descended in the matrilineal line from the original Jewish people that he was rejected. This was because of his lack of descent from a particular ethnic group. In this respect, there can be no doubt that his ethnic origins were different from those of the pupils who were admitted. It was not because of his religious beliefs. The school was completely indifferent to these. They admit pupils who practise all denominations of Judaism, or none at all, or even other religions entirely, as long as they are halachically Jewish, descended from the original Jewish people in the matrilineal line. There is no doubt that the Jewish people are an ethnic group within the meaning of the Race Relations Act 1976. No Parliament, passing legislation to protect against racial discrimination in the second half of the twentieth century, could possibly have failed to protect the Jewish people, who had suffered so unspeakably before, during and after the Holocaust. If Parliament had adopted a different model of protection, we would not be here today. Parliament might have adopted a model of substantive equality, allowing distinctions which brought historically disadvantaged groups up to the level of historically advantaged groups. But it did not do so. It adopted a model of formal equality, which allows only carefully defined distinctions and otherwise expects symmetry. A man must be treated as favourably as a woman, an Anglo Saxon as favourably as an African Caribbean, a non Jew as favourably as a Jew. Any differentiation between them, even if it is to redress historic disadvantage, must be authorised by legislation. This means that it is just as unlawful to treat one person more favourably on the ground of his ethnic origin as it is to treat another person less favourably. There can be no doubt that, if an employer were to take exactly the same criterion as that used by the Office of the Chief Rabbi and refuse to employ a person because the Chief Rabbi would regard him as halachically Jewish, the employer would be treating that person less favourably on grounds of his ethnic origin. As Lord Kerr explains, there can be no logical distinction between treating a person less favourably because he does have a particular ethnic origin and treating him less favourably because he does not. Some may feel that discrimination law should modify its rigid adherence to formal symmetry and recognise a greater range of justified departures than it does at present. There may or may not be a good case for allowing Jewish schools to adopt criteria which they believe to be required by religious law even if these are ethnically based. As far as we know, no other faith schools in this country adopt descent based criteria for admission. Other religions allow infants to be admitted as a result of their parents decision. But they do not apply an ethnic criterion to those parents. The Christian Church will admit children regardless of who their parents are. Yet the Jewish law has enabled the Jewish people and the Jewish religion to survive throughout centuries of discrimination and persecution. The world would undoubtedly be a poorer place if they had not. Perhaps they should be allowed to continue to follow that law. But if such allowance is to be made, it should be made by Parliament and not by the courts departing from the long established principles of the anti discrimination legislation. The vehicle exists in the Equality Bill, which completed its committee stage in the House of Commons in the 2008 09 session and will be carried over into the 2009 10 session. The arguments for and against such a departure from the general principles of the legislation could then be thoroughly debated. The precise scope of any exception could also be explored. We know from the helpful intervention of the Board of Deputies of British Jews that the Masorti, Reform and Liberal denominations of Judaism have welcomed the result, if not the reasoning, of the decision of the Court of Appeal and would not wish for the restoration of the previous admission criteria. That is a debate which should not be resolved in court but by Parliament. We must not allow our reluctance to enter into that debate, or to be seen to be imposing our will upon a well meaning religious body, to distort the well settled principles of our discrimination law. That is to allow the result to dictate the reasoning. This was, in my view, a clear case of direct discrimination on grounds of ethnic origin. It follows that, however justifiable it might have been, however benign the motives of the people involved, the law admits of no defence. It also follows that it cannot be a case of indirect discrimination. There is indeed some difficulty in fitting this case into the model of indirect discrimination. The discriminator has to apply to the complainant a provision, criterion or practice which he applies or would apply equally to persons not of the same race or ethnic or national origins as [the complainant]. But if the criterion we are talking about is being halachically Jewish, then it is not applied equally between those who are and those who are not. And there is no question of those who are not being at a particular disadvantage when compared with others persons in the sense that more of the others can comply than they can. None of the non halachically Jewish can comply, while all of the halachically Jewish can do so. There is an exact correspondence between compliance and the criterion, just as there was in the Birmingham and James cases. This too suggests, although it does not prove, that the criterion is itself ethnically based. If not, I would agree with Lord Mance on this issue. I have tried only to explain how the long established principles of discrimination law apply in this case. In agreement with the more ample reasoning of Lord Phillips, Lord Mance, Lord Kerr and Lord Clarke on the facts of the case, I would dismiss the appeal of JFS on the main issue. On the United Synagogues costs appeal, I agree with the reasoning and conclusions of Lord Hope. LORD MANCE Introduction Two issues arise: whether the admissions policy adopted by JFS for 2007/08 involved direct discrimination, and, if not, whether it involved indirect discrimination, in each case against M, represented by his respondent father, E. M applied for admission to year 7 at JFS commencing in September 2007. The school was over subscribed and by letter dated 13 April 2007 it refused, because the school has not received evidence of [Ms] Jewish status, to consider M for a place unless and until all those applicants whose Jewish status has been confirmed have been offered places. An appeal to the independent admission appeal panel for JFS failed on 11 June 2007. The schools admissions policy (determined by its governing body pursuant to the School Standards and Framework Act 1998, ss.88 and 88C) treated an applicant in Ms position less favourably than other persons. The policy was to admit children recognised as being Jewish by the Office of the Chief Rabbi of the United Hebrew Congregation of the Commonwealth (OCR) or who have already enrolled upon or who have undertaken, with the consent of their parents, to follow any course of conversion to Judaism under the approval of the OCR. In the event of oversubscription, only children satisfying this test were to be considered for admission, in the following order: looked after children, those with one or more siblings attending JFS and then other applicants (the last category on a pro rata basis within each ability band according to the numbers of applicants attending respectively Jewish and non Jewish primary schools). The OCR, applying the Orthodox Jewish test, recognises as Jewish children who can show an Orthodox Jewish mother or ancestress in the matrilineal line. The mother or matrilineal ancestress can be Orthodox Jewish by birth or by conversion prior to the birth of her relevant child. The respondent is unable to show such descent, because his mother was a non Jewish Italian by birth and converted to Judaism before Ms birth not in the Orthodox tradition, but with the assistance of a non Orthodox Rabbi. The respondent and his father, with whom he now lives, practise Masorti Judaism, and M is recognised as Jewish by Reform and Masorti synagogues. (Before the late eighteenth century, the Court was told, these distinctions in Jewish observance did not exist.) The first question is whether the respondents less favourable treatment was on the grounds of his ethnic origins within s.1(1)(a) of the Race Relations Act 1976. JFS supported by the United Synagogue and the Secretary of State for Children, Schools and Families as interveners submit that M was treated as he was not on ethnic, but on purely religious grounds, while E and M, supported by the Equality and Human Rights Commission and the British Humanist Association as interveners submit that, although the schools motivation was and is religious, the treatment derived from a test which was, or was substantially, based on inherently ethnic grounds. JFS is a school designated as having a religious (Jewish) character under the School Standards and Framework Act 1998, s.69(3), and is accordingly exempted by the Equality Act 2006, s.50(1) from the prohibition against discrimination on the grounds of religion or belief which would otherwise apply under ss.45 and 47 of that Act. But this exemption does not affect the pre existing prohibition of discrimination on the grounds of ethnic origin, under the 1976 Act. The difficulty of the present case is that the word Jewish may refer to a people, race or ethnic group and/or to membership of a religion. In the case of JFS, JFS submits that it refers only to the latter. Munby J found that common to all Jewish denominations is a belief that being Jewish is a matter of status, defined in terms of descent or conversion, and not a matter of creed or religious observance (para. 21). However, JFS exists as an Orthodox Jewish institution, and (while Judaism is not a proselytising religion those who are not Jews can still earn salvation) Education about the Jewish faith is considered by Orthodox Jews to be a fundamental religious obligation on all Jews . An understanding and appreciation of the Jewish faith takes many years . This is one of the primary purposes of schools such as JFS, which seek to help those who are Jewish (or who are undergoing conversion) understand, learn about and follow their faith (the words come from a statement of Dayan Gelley dated 26 February 2008 approved by the Chief Rabbi, and were quoted by Munby J in para. 13). JFSs Instrument of Government, with which its governing body, when determining its admissions policy, was obliged to comply under Education Act 2002 s.21(4), records the schools ethos as being to preserve and develop its religious character in accordance with the principles of Orthodox Judaism, under the guidance of the Chief Rabbi of the United Hebrew Congregations . JFS has further explained in answers dated 17 December 2007 (to questions put by Ms solicitors in a letter dated 17 August 2007 written pursuant to the judicial review protocol and s.65(2) of the Race Relations Act) that JFSs admission criteria seek to maintain the schools religious ethos. In his statement dated 8 February 2008, para. 27, the chair of JFSs admissions committee described the admissions policy as pursuing a legitimate aim because it is developing the religious character of JFS in accordance with the principles of Orthodox Judaism. The same aim was reflected in para. 14 of a determination dated 27 November 2007, made by an Adjudicator appointed under the School Standards and Framework Act 1998 to consider Es objection to JFSs admissions policy. The Adjudicator added the further explanation that the legitimate aim being pursued is seeking to ensure that those children who are Jewish (applying Orthodox Jewish principles) are admitted to the school. While many who are eligible for and obtain admission to JFS as Orthodox Jews do not practise and may profess no or a different religious faith, the schools aim is to inculcate the ethos and, so far as possible, encourage the practice and observance of Orthodox Judaism in and by all who attend. In formulating the schools admissions policy, it was also the governing bodys duty under s.84(3) of that Act to act in accordance with the relevant provisions of the code for school admissions prepared under s.84(1) by the Secretary of State. The Secretary of States Schools Admissions Code for 2003 stated that schools like JFS designated as having a religious character might give preference in their admission arrangements to members of a particular faith or denomination , providing this does not conflict with other legislation, such as race relations legislation (para. 3.9), and that, where they do, their admissions arrangements should make clear whether a statement of religious affiliation or commitment would be sufficient, or whether it is to be tested and if so how and what if any references from a religious leader will be required. The Code for 2007 permits priority in case of over subscription to children who are members of, or who practise, their faith or denomination (para. 2.41) and states that It is primarily for the relevant faith provider group or religious authority to decide how membership or practice is to be demonstrated (para 2.43). Quite apart from the fact that they are subject to the application of the Race Relations Act 1976, the references to membership in the Codes do not specifically address descent based membership which may exist in the eyes of the faith provider or religious authority, while not doing so in the eyes of the child or his or her parents. Direct discrimination Direct discrimination can arise in one of two ways: because a decision or action was taken on a ground which was, however worthy or benign the motive, inherently racial within the meaning of s.1(1)(a), or because it was taken or undertaken for a reason which was subjectively racial: R v Birmingham City Council, ex p Equal Opportunities Commission [1989] AC 1155, 1194C D per Lord Goff of Chieveley, James v Eastleigh Borough Council [1990] 2 AC 751, 772B G per Lord Goff, and Nagarajan v London Regional Transport [2000] 1 AC 501, 511A per Lord Nicholls of Birkenhead and 520H 521B per Lord Steyn. In the Birmingham City Council case, girls were required to achieve a higher standard than boys for grammar school entry because of a disparity in the number of grammar school places available for boys and girls. Whatever may have been the intention or motive of the council, nevertheless it [was] because of their sex that the girls in question receive[d] less favourable treatment than the boys, and so [were] the subject of discrimination: per Lord Goff at p.1194C D. It was for the council to find some way of avoiding this, e.g. by balancing the places available. In James the motive for adopting as the test for free entry to the swimming pool to people who had reached state pension age was no doubt benign (it was probably because they were perceived as more likely to be needy). But being of pensionable age is not to be equated with ceasing to work or being in receipt of a pension, and the difference between the ages (65 and 60 respectively) at which men and women became of pensionable age made the test inherently discriminatory on the ground of sex. In Nagarajan at p.511A Lord Nicholls noted that Save in obvious cases, answering the crucial question will call for some consideration of the mental processes of the alleged discriminator, while Lord Steyn at pp.520H 521B approved the statements in the Birmingham City Council and James cases. The allegation in the present case is that a decision or action was taken on inherently ethnic grounds within s.1(1)(a), although the schools subjective motivation was its purely religious convictions. I appreciate that even the first part of this allegation involves what may be described as a subjective element a question of fact in Lord Nicholls words in Chief Constable of West Yorkshire Police v Khan [2001] UKHL 48, [2001] 1 WLR 1947, para, 29 in so far as it requires an answer to the question: why in fact was M refused a place? But there is here no room for doubt about the answer. He was refused a place by reason of the application of the admissions policy set out in para 74 above. With that answer, the next, relevant question is simply whether that policy, religiously motivated as it was, involved grounds for admission or refusal of admission which were in their nature inherently ethnic. Lord Pannick submits that, taking the test of an ethnic group recognised by the House of Lords in Mandla v Dowell Lee [1983] 2 AC 548, Jews constitute an ethnic group, but a group which embraces, on the one hand, a wide spectrum of Jewish observance (including that practised by the respondent) and excludes, on the other hand, many individuals who would, on Orthodox Jewish principles, be regarded as Jewish (e.g. a lapsed Jew who had converted to Catholicism or an atheist with a matrilineal Orthodox Jewish ancestress). There is thus no complete identity between a Jew in the sense suggested by that test and an Orthodox Jew according to Orthodox Jewish principles. He relies upon this as reinforcing his submission that JFSs admissions policy is based, and based solely, on religious grounds. I do not, however, consider that this submission resolves the issue. First, Mandla was a case of alleged indirect discrimination under s.1(1)(b) of the Act, which addresses differential treatment between persons of different racial groups. The test under s.1(1)(a) is whether a person has treated another person less favourably on racial grounds, defined by s.3 as meaning on any of the following grounds, namely colour, race, nationality or ethnic or national origins. This test is not expressed to be limited by reference to a need to identify a difference in treatment of persons currently members of different ethnic groups. Further, subsequent to the enactment by the European Community of Council Directive 2000/43/EC of 29th June 2000, which addresses both direct and indirect discrimination without using the concept of racial group in either connection, and since the consequent introduction of s.1(1A) of the Race Relations Act 1976 which equally omits any such concept, it seems to me inappropriate to read s.1(1)(a) as importing any such concept. All that is required is discrimination on grounds of a persons ethnic origins. A second, point, based on the international legal background and of possible relevance to the construction of s.1(1)(a), derives from the International Convention on the Elimination of All Forms of Racial Discrimination (CERD), in force since 1969, to which the United Kingdom is party and to which Directive 2000/43/EC recites that it was intended to give effect. Article 1(1) of CERD defines racial discrimination to mean any distinction, exclusion, restriction or preference based on race, colour, descent, or national or ethnic origin which has the purpose or effect of nullifying or impairing the recognition, enjoyment or exercise, on an equal footing, of human rights and fundamental freedoms in the political, economic, social, cultural or any other field of public life. The reference to descent (although not explicitly repeated after the general prohibition on racial discrimination in article 5) is, on its face, very pertinent in the present case. However, it is suggested that, having been introduced on a proposal by India, the word descent is limited to caste, but India itself disputes this, and it has been forcefully suggested that the background to its introduction indicates that it was not concerned with caste at all: Caste based Discrimination in International Human Rights Law, David Keane (Brunel University, Ashgate Publishing Ltd., 2007, chap. 5). Nevertheless, the Committee established to monitor implementation of CERD under article 8 has itself treated descent as including caste in its General Recommendation XXIX A/57/18 (2002) 111, where it recommended, in para 1, that states take steps to identify those descent based communities under their jurisdiction who suffer from discrimination, especially on the basis of caste and analogous systems of inherited status. Whether or not descent embraces caste, the concepts of inherited status and a descent based community both appear wide enough to cover the present situation. That in turn tends to argue for a wide understanding of the concept of discrimination on grounds of ethnic origins, although the point is a marginal one. Thirdly, and in any event, the Mandla test is broad, flexible and judgmental. It was adopted in order to embrace a group such as the Sikhs, of whom it could not be said that they were a different race in any narrow sense. There is some irony in the fact that, prior to the decision of the House in Mandla, there would have been little doubt that a narrow test based on birth or descent would have been regarded as required in order for there to be discrimination on the ground of ethnic origins. That was the gist of the judgments in the early case of Ealing London Borough Council v Race Relations Board [1972] AC 342. Unlike Mandla, the Ealing case was a case of alleged direct discrimination under s.1(1)(a), and in it statements were made to the effect that discrimination on account of race, or ethnic or national origins involved consideration of a persons antecedents (per Viscount Dilhorne at p.359E), that Origin, in its ordinary sense, signifies a source, someone or something from which someone or something has descended (per Lord Simon of Glaisdale at p.363H) and that national origins normally indicated a connection arising because the parents or one of the parents are or is identified by descent with the nation in question, but it may also sometimes arise because the parents have made their home among the people in question (per Lord Cross of Chelsea at p.365E F). The Court of Appeal in Mandla [1983] QB 1 picked up this approach in relation to indirect discrimination. It identified an ethnic group as one with common ancestral origins, however remote (see per Lord Denning MR at p.10A B and p.11B, expressly instancing Jews as an ethnic group, and per Kerr LJ at p.22B E), and on that basis excluded Sikhs on the ground that they constituted essentially a religious and cultural group. The House disagreed and developed the wider test, but there may still, in my view, be discrimination on grounds of ethnic origin in the narrower and more traditional sense, even under s.1(1)(b), let alone under the differently worded s.1(1)(a). The following passage in which Lord Fraser of Tullybelton developed the test in Mandla [1983] 2 AC 548, 561 563 is also worth quoting in full: I turn, therefore, to the third and wider meaning which is given in the Supplement to the Oxford English Dictionary (1972). It is as follows: 'pertaining to or having common racial, cultural, religious, or linguistic characteristics, esp. designating a racial or other group within a larger system . ' Mr Irvine, for the appellants, while not accepting the third (1972) meaning as directly applicable for the present purpose, relied on it to this extent, that it introduces a reference to cultural and other characteristics, and is not limited to racial characteristics. The 1972 meaning is, in my opinion, too loose and vague to be accepted as it stands. It is capable of being read as implying that any one of the adjectives, 'racial, cultural, religious or linguistic', would be enough to constitute an ethnic group. That cannot be the sense in which 'ethnic' is used in the Act of 1976, as that Act is not concerned at all with discrimination on religious grounds. Similarly, it cannot have been used to mean simply any 'racial or other group'. If that were the meaning of 'ethnic', it would add nothing to the word group, and would lead to a result which would be unacceptably wide. But in seeking for the true meaning of 'ethnic' in the statute, we are not tied to the precise definition in any dictionary. The value of the 1972 definition is, in my view, that it shows that ethnic has come to be commonly used in a sense appreciably wider than the strictly racial or biological. That appears to me to be consistent with the ordinary experience of those who read newspapers at the present day. In my opinion, the word 'ethnic' still retains a racial flavour but it is used nowadays in an extended sense to include other characteristics which may be commonly thought of as being associated with common racial origin. For a group to constitute an ethnic group in the sense of the Act of 1976, it must, in my opinion, regard itself, and be regarded by others, as a distinct community by virtue of certain characteristics. Some of these characteristics are essential; others are not essential but one or more of them will commonly be found and will help to distinguish the group from the surrounding community. The conditions which appear to me to be essential are these: (1) a long shared history, of which the group is conscious as distinguishing it from other groups, and the memory of which it keeps alive (2) a cultural tradition of its own, including family and social customs and manners, often but not necessarily associated with religious observance. In addition to those two essential characteristics the following characteristics are, in my opinion, relevant; (3) either a common geographical origin, or descent from a small number of common ancestors (4) a common language, not necessarily peculiar to the group (5) a common literature peculiar to the group (6) a common religion different from that of neighbouring groups or from the general community surrounding it (7) being a minority or being an oppressed or a dominant group within a larger community, for example a conquered people (say, the inhabitants of England shortly after the Norman conquest) and their conquerors might both be ethnic groups. A group defined by reference to enough of these characteristics would be capable of including converts, for example, persons who marry into the group, and of excluding apostates. Provided a person who joins the group feels himself or herself to be a member of it, and is accepted by other members, then he is, for the purposes of the Act, a member. That appears to be consistent with the words at the end of section 3(1) 'references to a person's racial group refer to any racial group into which he falls.' In my opinion, it is possible for a person to fall into a particular racial group either by birth or by adherence, and it makes no difference, so far as the Act of 1976 is concerned, by which route he finds his way into the group. This view does not involve creating any inconsistency between direct discrimination under paragraph (a) and indirect discrimination under paragraph (b). A person may treat another relatively unfavourably 'on racial grounds' because he regards that other as being of a particular race, or belonging to a particular racial group, even if his belief is, from a scientific point of view, completely erroneous. This passage makes clear that Lord Fraser was not excluding the relevance of descent from a small number of common ancestors. It was one among a number of factors which included, he considered essentially, a long shared history distinguishing a group from other factors and a shared cultural tradition, but which could also include a common geographical origin, language and/or religion and a status as a minority group. The whole passage emphasises the flexibility of the test adopted, and it is consistent with this that its application should depend on the context. A fourth, important point appears from the final sentence in the passage quoted from Lord Frasers speech: A person may treat another relatively unfavourably 'on racial grounds' because he regards that other as being of a particular race, or belonging to a particular racial group, even if his belief is, from a scientific point of view, completely erroneous. Lord Fraser probably had in mind a situation such as that where A, who dislikes Sikhs, discriminates against B in the (in fact erroneous) belief that B is a Sikh. Whether the victim actually has the sexual orientation or racial origins on the ground of which he or she is treated less favourably is irrelevant: English v Thomas Sanderson Blinds Ltd. [2008] EWCA Civ 1421; [2009] ICR 543 (where the majority also held it to be irrelevant whether the discriminator believed the victim to have, or whether the victim thought that the discriminator believed the victim to have, the relevant sexual orientation on the ground of which he was harassed). If A, applying his own view of the relative significance of the various factors mentioned by the House in Mandla, identifies a particular group of people as an ethnic group and discriminates against them on that ground that would, in my view (and as Lord Pannick accepted, with the proviso that there would have to be some basis in the Mandla criteria) be embraced by s.1(1)(a) of the Act. Any definition of an ethnic group applying the Mandla criteria is on this basis also flexible, whether the definition is undertaken for religious, charitable or educational purposes or, as happened only too terribly in Nazi Europe, for entirely malign purposes. In the present case, many of Lord Frasers factors could be seen as pointing without more to a conclusion that Orthodox Judaism should be regarded as a separate ethnic group or sub group including the sharing of a long history distinguishing themselves from other groups, a shared cultural tradition, a common religion and a separate status within any wider Jewish community. Others, such as a common geographical origin and a common language, they share with that wider community. Munby Js reasons for rejecting any suggestion that Orthodox Jews could be regarded as a separate ethnic group or sub group were that there was no evidence that they had separate ethnic origins from other, or most other, Jews. That may be said to focus purely on ethnic origins in a way which the Mandla test was intended to discourage. But, assuming that Orthodox Jews are not a separate ethnic group or sub group for the purposes of indirect discrimination (the relevant subsection for that purpose being now s.1(1A), rather than s.1(1)(b)), I consider that the Orthodox Jewish test of descent in the matrilineal line must still be regarded as a test based on ethnic origins, for the purposes of direct discrimination under s.1(1)(a) of the Act. On the evidence, it is at its core a test by which Orthodox Judaism identifies those to be regarded today as the descendants of a particular people, enlarged from time to time by the assimilation of converts, that is the Jewish people whose ancestor was the patriarch Jacob (Israel) and with whom the covenant of Mount Sinai was made through Moses upon the Exodus from Egypt. That the Jewish people was from its outset also defined by its religion does not lead to a different conclusion. A test of membership of a religion that focuses on descent from a particular people is a test based on ethnic origins. Whether matrilineal descent was originally chosen because it was an easy and secure way of identifying ancestry or because some other special significance was attached to womens role is not relevant. Other tests identifying a people by drawing on descent or ancestry can of course exist, for example, a test based on patrilineal origins, or on the origins of both parents. Some other Jewish denominations, the Court was told, have other tests, e.g. looking, or looking also, at the patrilineal line. But all such tests look, in one way or another, at ethnic origins. They merely take different views as to the form of descent or birth link by reference to which a persons origins in a particular (here biblical) people can be defined. I find instructive in this connection and generally the Background Information provided by Rabbi Dr Tony Bayfield which Lord Phillips quotes in paragraph 40. If a school admissions policy identifying Jews by descent is inadmissible, this will be the case in relation to any denomination of Jewish school applying such a policy, however the relevant descent is identified. This case cannot therefore be viewed as a mere disagreement between different Jewish denominations, for example about the criteria for conversion. It turns, more fundamentally, on whether it is permissible for any school to treat one child less favourably than another because the child does not have whatever ancestry is required, in the schools view, to make the child Jewish. Fifthly, there is, not surprisingly in the circumstances, also material tending positively to confirm that there is in the eyes of JFS no distinction between Jewishness in the religious sense and Jewishness on account of ethnic origins. The Agreed Statement of Facts records that M was refused admission for the year 2007 8, on the ground that he was not recognised as being Jewish by the Office of the Chief Rabbi . The same answer (that this child cannot be recognised as Jewish) was given by the OCR in relation to the child of the marriage of a Cohen (member of the Jewish priestly class) and an English woman who had undertaken conversion with an Orthodox Jewish Beth Din in Israel, on the ground that she had intended to marry her future husband at the time of her conversion, contrary to a prohibition on the marriage of Cohens with converts, with the consequence that her conversion could not have been sincere and was accordingly invalid in the eyes of the OCR. By their letter dated 17 August 2007 Ms solicitors asked JFS, with reference to the time when children applied and/or when a decision on admission was taken, how many children were Jewish on account of their race and/or ethnic origins and how many were not. The schools answer given through its solicitors on 17 December 2007 was that Those children confirmed as Halakhically Jewish were treated as Jewish by the school and those not so confirmed were treated as not Jewish. M set out this answer in his further response dated 19 December 2007 to the appellants notice of acknowledgement of service, in support of a plea that the appellants now belatedly, but rightly, accept that Halakhical Jewish status is synonymous with membership of a racial group for the purposes of section 3 of the Act a plea to which there was no response before the matter came to court. Further, according to a statement quoted in the respondents case, which JFS has not challenged or controverted, the Chair of JFSs Governors responded to fears about the opening in future of new Jewish schools (including or consisting of non Orthodox Jewish schools), by saying: If we are going to be able to maintain the three [existing Orthodox Jewish] schools, we are going to need to supply children out of thin air. The only way to fill all of those places would be to open the doors to children who are not Jewish by ethnicity or not at all. The inference is that the school recognises no distinction even today between Jewishness in a religious and in an ethnic sense. The one dictates the other. When Lord Pannick said on behalf of JFS that JFS does not dispute that there are thousands with Jewish ethnic claims in the Mandla sense who fail the test for a religious reason, that may be the effect of the Mandla test, applied objectively; if so, it is a conclusion about English law which no one could sensibly gainsay. But it does not follow that JFS or the Chief Rabbi themselves concur with or take the view of ethnicity which would follow from applying the Mandla test and the passages which I have quoted indicate that they do not (quite apart from the fact that the Mandla test was not directed to the present issue of less favourable treatment on the ground of ethnic origins). Apart from descent a person may become an Orthodox Jew by conversion. Conversion, in accordance with the principles of Orthodox Judaism, is recognised by Orthodox Judaism as making a person an Orthodox Jew. Some of the greatest figures in Jewish history have been converts, starting with Ruth the Moabite, great grandmother of King David, and Onkelos, Rabbi Akiva and other sages. From conversion, a convert is treated as an Orthodox Jew, and so too is any child of a female convert born after the completion of the mothers conversion (although some distinction exists between converts and other Orthodox Jews: witness the prohibition on the former marrying a Cohen, to which reference is made above). The Chief Rabbi has in 2005 compared conversion with acquiring a changed, foreign identity, while adding that the analogy is imperfect: Converting to Judaism is a serious undertaking, because Judaism is not a mere creed. It involves a distinctive, detailed way of life. When people ask me why conversion to Judaism takes so long, I ask them to consider other cases of changed identity. How long does it take for a Briton to become an Italian, not just legally but linguistically, culturally, behaviourally? It takes time. The analogy is imperfect, but it helps to explain the most puzzling aspect of conversion today the sometimes different standards between rabbinical courts in Israel and Britain. Several decades ago an Israeli Chief Rabbi argued that Israeli rabbinical courts should be more lenient than their counterparts in the Diaspora. His reasons were technical, but they make sense. It is easier to learn Italian if you are living in Italy. In Israel, many aspects of Jewish identity are reinforced by the surrounding culture. Its language is the language of the Bible. Its landscape is saturated by Jewish history. Shabbat is the day of rest. The calendar is Jewish. The reason for Ms ineligibility can be said to be that his mother converted to Judaism under a procedure and principles other than those accepted by Orthodox Jews. However, M remains at a disadvantage because of his descent, and, speaking generally, the test for admission of any child to JFS is for practical purposes one of descent. The possibility of a child applying to JFS being him or herself a convert, or even in the course of converting, appears negligible. JFS in its answers dated 17 December 2007 believed there never to have been any such child in the three years preceding the answers. Further, discrimination may be on an ethnic ground, even though this is not the sole ground for the decision, so long as an ethnic ground was a cause, the activating cause, a substantial and effective cause, a substantial reason, an important factor: Nagarajan, per Lord Nicholls at pp.512H 512B. As Miss Rose QC for E pointed out, an organisation which admitted all men but only women graduates would be engaged in direct discrimination on the grounds of sex. Similar reasoning would apply here to any suggestion that the possibility of conversion eliminated any possibility of direct discrimination on ethnic grounds. Finally, I also consider it to be consistent with the underlying policy of s.1(1)(a) of the Act that it should apply in the present circumstances. The policy is that individuals should be treated as individuals, and not assumed to be like other members of a group: R (European Roma Rights Centre) v Immigration Officer at Prague Airport [2005] 2 AC 1, paras 82 and 90, per Baroness Hale of Richmond and R (Gillan) v Commissioner of Police for the Metropolis [2006] 2 AC 307, paras. 44 and 90 per Lords Hope of Craighead and Brown of Eaton under Heywood. To treat individual applicants to a school less favourably than others, because of the happenstance of their respective ancestries, is not to treat them as individuals, but as members in a group defined in a manner unrelated to their individual attributes. JFS, supported on this point by the British Board of Deputies, argue that respect for religious freedom under article 9(1) of the European Convention on Human Rights and the importance attaching to the autonomous existence of religious communities (emphasised for example in Lffelmann v Austria (Application no. 42967/98, 12 March 2009, para 47) militate in favour of a conclusion upholding JFSs admissions policy. But freedom to manifest one's religion or beliefs is, under article 9(2) of the Convention, subject to such limitations as are prescribed by law and are necessary in a democratic society for the protection of the rights and freedoms of others. Under the United Nations Convention on the Rights of the Child 1989, article 3, it is the best interests of the child which the United Kingdom is obliged to treat as a primary consideration. Under Protocol 1, article 2 to the European Convention on Human Rights, it is the right of parents to ensure education and teaching in conformity with their own religions and philosophical convictions that the state must ensure in the exercise of any functions which it assumes in relation to education and to teaching. (I note in parenthesis that this has, since the hearing before the Supreme Court, been emphasised by the second section of the European Court of Human Rights in its judgment in Affaire Lautsi c. Italie (Requte no. 30814/06, 3 November 2009, paras. 47(b) and (c)). I express no further view on the reasoning or decision in that case, which may well go to the Grand Chamber. To treat as determinative the view of others, which an applicant may not share, that a child is not Jewish by reason of his ancestry is to give effect not to the individuality or interests of the applicant, but to the viewpoint, religiously and deeply held though it be, of the school applying the less favourable treatment. That does not seem to me either consistent with the scheme or appropriate in the context of legislation designed to protect individuals from discrimination. I accept that parental responsibility and choice relating to a child can determine the extent to which children are treated as having certain attributes, e.g. membership of a particular religion in the case of Christian baptism. But neither parental birth nor the fact that a mother has not converted to Orthodox Judaism at a time prior to a childs birth can be regarded as within the concept of parental responsibility and choice. Emphasis was put in submissions on difficulties which Orthodox or indeed other Jewish schools face in adopting any admissions policy other than that based on Jewish status. It was not, and could not, be suggested that these present any absolute legal answer to Ms case, but rather that they should cause any court to think very hard about whether the legislation can really require the result for which E and M contend and which the Court of Appeal accepted. How far such difficulties exist is contentious. Just before the hearing in the Supreme Court, statements were tendered by two interveners, in the case of the British Board of Deputies a statement dated 15 October 2009 from its chief executive, Mr Jon Benjamin, and in the case of the United Synagogue a statement dated 18 October 2009 from its chief executive, Mr Jeremy Jacobs. These came too late for proper investigation or answer and their contents are in issue, though there is evidence of Orthodox Jewish schools which in addition to a test based on Orthodox Jewish descent also apply tests based on religious observance. What can be said is that, since the Court of Appeals judgment, JFS and other Orthodox Jewish schools have instituted admissions policies based, in one way or another, on religious observance, but they have done so very reluctantly, and submit that its introduction is inconsistent with such schools missions to all Orthodox Jews. However, as I have said, such considerations cannot be decisive either way. For the reasons I have given, the Court of Appeal in my view reached the correct conclusion, when it held that as a matter of law the admissions policy followed by JFS was inherently discriminatory, contrary to s.1(1)(a) of the 1976 Act, although the policy was adopted by the school for the most benign, religious motives. On that basis, the issue of indirect discrimination cannot arise. However, I will address some words to it. This must, necessarily, be on the hypothesis that a different answer is given on the issue of direct discrimination to that which I have given. Indirect discrimination The relevant statutory provision governing indirect discrimination is s.1(1A). This was introduced into the 1976 Act by the Race Relations Act 1976 (Amendment) Regulations (SI 2003/1626), in order to implement in Great Britain Council Directive 2000/43/EC of 29th June 2000 (which contains a number of references showing its intended application to education). Subsequent Regulations (SI 2008/3008) have added the presently immaterial words or would put in s.1(1A)(b). The first question arising under s.1(1A) is whether JFSs admissions policy involved a provision, criterion or practice which puts persons of the same race or ethnic origins at a particular disadvantage when compared with other persons. Lord Pannick submits not. He accepts that the policy had the effect of putting at a disadvantage applicants with no ethnic link with Judaism. But, in his submission, it did not discriminate against M, because both M and those eligible for admission had the same Jewish ethnic origin, and the distinction drawn between them by the policy was on the basis of their religious, not ethnic status. Here too, the Mandla test of ethnicity is relied upon to assimilate M and those eligible for admission. As I have pointed out, Mandla was decided under s.1(1)(b) of the Race Relations Act 1976. Since the introduction of s.1(1A) to give effect to Council Directive 2000/43/EC of 29th June 2000, Lord Pannick accepts that any allegation of indirect discrimination falls to be considered primarily (and in reality, despite s.1(1C), almost certainly only) under s.1(1A). Assuming, contrary to my view, that the Mandla test of ethnic grouping controls the question whether there has been direct discrimination on ethnic grounds within s.1(1)(a), I do not consider that it can do so under s.1(1A). I see no reason under Community law to suppose that the Directive is limited to discrimination against ethnic groups in the Mandla sense, and s.1(1A) should, so far as possible, be construed consistently with the Directive. The language of s.1(1A) is general (although in one respect, the effect if any of which I need not consider, it adopts less exhaustive terminology than s.1(1)(a) and (b), in so far as it omits express reference to colour and nationality). On any ordinary understanding, Ms ethnic origins differed from those of most Orthodox Jews, because he had a non Jewish Italian mother. As Munby J said (para. 34), M is in Es eyes, and doubtless in the eyes of many who would consider themselves Jews, of mixed Jewish and (through the maternal line) Italian ethnic origins. True, some Orthodox Jews become such by conversion rather than birth, and some children of non Jewish Italian mothers can be Orthodox Jews by virtue of their mothers conversion according to Orthodox Jewish principles before their birth. But, both in general terms and in the case of M in particular, his mothers non Jewish Italian birth and so his ethnic origins led to M being at a particular disadvantage when compared with persons recognised as Orthodox Jews by JFS and by Orthodox Jewish authorities. The next question is whether JFS has shown that the disadvantage at which M was put was a proportionate means of achieving a legitimate end. Munby J in para. 192 of his judgment summarised the aim or objective of JFS as spelled out in the materials before him (and indicated out in paragraph 76 above) as being: to educate those who, in the eyes of the [Office of the Chief Rabbi] are Jewish, irrespective of their religious beliefs, practices or observances, in a school whose culture and ethos is that of Orthodox Judaism. The Court of Appeals reasoning on indirect discrimination appears to have been influenced by this characterisation. The Court of Appeal thought, with some justification, that the aim or objective as so advanced was circular. Sedley LJ, in paras. 45 47, described the schools admissions criteria as explicitly related to ethnicity and as having an ethnic component in character and said that an aim of which the purpose or inevitable effect is to make and enforce distinctions based on race or ethnicity cannot be legitimate. That is no doubt so. But, on the evidence, the truth which Munby Js characterisation can be read as omitting or perhaps obscuring is that, in Orthodox Jewish belief, anyone who is regarded by Orthodox Judaism as a Jew by birth is also regarded as being under a religious duty to educate him or herself about and to observe the tenets of Orthodox Judaism: see the statement of Dayan Gelley dated 26 February 2008 referred to in paragraph 76 above, and also that of Registrar Frei of the London Beth Din dated 6 February 2008. JFSs mission was to encourage and assist children regarded by Orthodox Judaism as being Jews to do this as far as possible. For that reason, the admission to the school of a range of pupils, who are Orthodox Jewish in the schools eyes, but who do not actually practise Orthodox Judaism or necessarily any religion at all, was and would still be regarded as a very positive feature, even if their or their parents actual motivation for seeking their admission to the school were to have been its excellent academic record. On the basis of this explanation of the thinking underlying the schools policy, it is possible to identify a legitimate aim, founded in the schools Orthodox Jewish character and the religious convictions of those responsible for its admissions policy; and the circularity which the Court of Appeal thought existed no longer does. The question thus arises, which the Court of Appeal thought it unnecessary to address, whether JFS as the alleged discriminator can show the differential treatment to be a proportionate means of achieving a legitimate aim: s.1(1A)(c). JFS accepts that its admissions policy treated the schools religious aim as an over riding absolute. Prior to the Court of Appeals decision, it had not considered or sought to weigh the practical implications or effect of adopting either it or any alternative policy, though it was aware both that the school included many non observing pupils and that there were many ineligible pupils who were intensely religious. No information is in these circumstance available as to the extent to which children admitted to the school were or became interested in learning to observe Orthodox Judaism, or to which the schools policy excluded other children who would be deprived of Jewish based schooling which they were keen for religious reasons to pursue. Munby J recorded (para. 8) that until the 1940s over 97% of synagogue membership was of Orthodox (United Synagogue) synagogues, but that by 2000, according to a report A Community of Communities, published under the auspices of the Institute for Jewish Policy Research, current membership of Jews affiliated to a synagogue consisted of 60.7% Orthodox, 10.5% Strictly Orthodox (Haredi), 27.3% Progressive (Reform and |Liberal), and 1.5% Masorti (Conservative), while 30% of all Jews were not affiliated to any synagogue at all. There has been and is a paucity of available and accessible Jewish schools other than Orthodox Jewish schools it appears that 29 of the total of 36 Jewish schools in England are Orthodox Jewish and applied a similar admissions policy to JFSs. JFS also regarded as irrelevant when formulating the admissions policy whether it might lead to unhappiness in relations between adherents to different Jewish denominations. The standard set in s.1(1A)(c) is a high one, adopting the more exacting EC test of proportionality: R (Elias) v Secretary of State for Defence [2006] 1 WLR 3213, para. 151, per Mummery LJ. The Directive also provides, in article 2(2)(b) that any indirectly discriminatory provision, criterion or practice is only justifiable if it is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary, but it refers to the European Convention on Human Rights and the language used equates with the test of proportionality which appears in s.1(1A)(c) of the 1976 Act. An ex post facto justification for a measure which is prima facie indirectly discriminatory can prove difficult to show: Elias, para.129 per Mummery LJ. It is for the school to show, in the circumstances, that its aim or objective corresponds to a real need and that the means used are appropriate and necessary to achieving that aim, and any decision on these points must weigh the need against the seriousness of the detriment to the disadvantaged group: Elias, para. 151 per Mummery LJ. The interests of society must also be considered: Huang v Secretary of State for the Home Department [2007] UKHL 11; [2007] 2 AC 167, para. 19, per Lord Bingham of Cornhill. In the case of JFS, as an educational establishment maintained by a local education authority, its general duty was supplemented by specific duties under s.71 of the 1976 Act, according to which it was incumbent on its governing body in carrying out its functions, [to] have due regard to the need (a) to eliminate unlawful racial discrimination; and (b) to promote equality of opportunity and good relations between persons of different racial groups. Munby J held that the school had, despite the good intentions and work which had gone into its race equality policy, failed to comply in full with s.71 of the 1976 Act. The schools race equality policy, which indicated that the school would disregard considerations based upon colour, disability, ethnic or racial origins, gender, marital status, nationality or religion except as provided for in the Schools authorised Admissions Policy, showed that it had in a general sense considered matters of racial discrimination. But it had not specifically considered either of the goals mentioned in s.71(1)(a) and (b) or, more particularly, specific ways in which these goals might be achieved (Munby J, para. 213). Nonetheless, Munby J considered that the schools policy satisfied the requirements of s.1(1A)(c), saying at paras. 199 202, first, that JFSs admissions policy was not, properly analysed, materially different from that which gives preference in admission to a Muslim school to those who were born Muslim or preference in admission to a Catholic school to those who have been baptised and, secondly, that some alternative admissions policy based on such factors as adherence or commitment to Judaism (even assuming that such a concept has any meaning for this purpose in Jewish religious law) would not be a means of achieving JFSs aims and objectives; on the contrary it would produce a different school ethos. JFS exists as a school for Orthodox Jews. If it is to remain a school for Orthodox Jews it must retain its existing admissions policy; if it does not, it will cease to be a school for Orthodox Jews. On that basis, Munby J held that the policy constituted a proportionate means of achieving a legitimate aim, and that the claim of indirect discrimination failed. Munby J also thought it quite idle to imagine that the fullest and most conscientious compliance with s.71 would have led to any difference either in the crucial part of JFSs admissions policy or in its application in Ms case (para. 214). On the evidence before the Court, and in the absence of any actual consideration or weighing of the need [to pursue the schools aim] against the seriousness of the detriment to the disadvantaged group (see Elias [2006] 1 WLR 3213, para 151), I find it impossible to reach the same conclusion. There is, as I have indicated, no information about the extent to which the school succeeds in its stated aim of inculcating Orthodox Judaism in the minds and habits not only of those who already practise it, but also of those pupils who gain admission as Orthodox Jews in the eyes of Orthodox Judaism. The latter may not on entry practise or have any interest in practising Orthodox Judaism. They or their parents may adhere in religious observance to a Jewish denomination other than the Orthodox Jewish and be concerned that their children receive a, rather than no, Jewish education; or they or their parents may be seeking entry for reasons associated with the schools acknowledged educational excellence, and may be themselves agnostic or atheist. The schools policy was formulated without considering the extent to which others professing the Jewish faith, but not in the Orthodox Jewish tradition, were separated by it from friends and from the general Jewish community by the schools admissions policy, or about the extent to which this might cause grief and bitterness in inter or intra community relations matters about which some evidence was tendered before the Court. It would, in parenthesis, also appear difficult to regard a school not considering such matters as complying with the School Admissions Code 2007, para. 2.48, which requires that admission authorities for faith schools should consider how their particular admission arrangements impact on the communities in which they are physically based and those faith communities which they serve. It was submitted that the school would become less diverse in a practising religious sense, if it admitted pupils only by reference to a test of Jewish religious observance. This could be so, but no consideration has been given to any possibility of ensuring continuing diversity on a structured basis, rather than simply excluding, by reference essentially to birth link criteria, all those not regarded by Orthodox Judaism as Orthodox Jews. Paragraph 1.4 of the schools existing admissions policy already provides that The School recruits from the whole range of ability, and this policy has the objective of securing a balanced, comprehensive, co educational intake. The schools Information Sheet for staff describes the modern JFS as serving almost the whole breadth of the Anglo Jewish community in Greater London and its admissions policy (not further detailed in this connection) as reflect[ing] positive selection to ensure a truly comprehensive ability intake. It continues: We aim to achieve a balanced intake across four ability bands. In addition to a thoroughly comprehensive spread of ability, our students come from the widest possible range of social, economic and religious backgrounds. On the information available, it is not shown that inability to select on the basis of birth link criteria will prevent the school from serving the wider community and achieving diversity in accordance with these stated aims. I would also not be as confident as Munby J was with regard to s.71. But, in any event, the test is not what the school would have done in the past if it had fully and properly considered its obligations under s.71. The test is whether objectively it can justify its present policy under s.1(1A)(c), once the test set by that subsection is fully and properly addressed. Munby Js comparison in para. 200 with the position of Catholic or Muslim children would, if exact, be no more than another way of stating the issue, but in reality it is not exact, at least if one takes the parental choice to baptise. His other reason echoes the schools case that its policy of giving preference to those regarded as Orthodox Jews by Orthodox Jews must, in case of over subscription, prevail over all other considerations, with which I have already dealt. It must, furthermore, be an exaggeration to say that the school would cease (or, presumably, with the introduction of its new policy after the Court of Appeals decision, has ceased) to be a school for Orthodox Jews (para. 214). If and when the number of places exceeds the number of those applying who are regarded by the school as Orthodox Jews, the school is anyway obliged under the legislation and paragraph 1.3 of its own admissions policy to admit other pupils. Until the matter came before the Adjudicator, Appendix A to its admissions policy in fact indicated that the remaining places would be filled according to the following criteria in this order: (1) looked after children, (2) children with one Jewish parent, (3) children with one or more Jewish grandparents and, finally, (4) all other applicants. (The Adjudicator by his Determination of 27 November 2007 held that criteria (2) and (3) involved indirect ethnic discrimination by reference to ancestry, which could not be justified by any presumption that children with one Jewish parent or one or more Jewish grandparents were more likely to be receptive or sympathetic to the schools Jewish Orthodox ethos than children of other parentage or grand parentage, and required the deletion of those two criteria on that basis. He rejected a suggestion that criteria (2) and (3) involved direct discrimination on the ground that they were based on religious grounds not racial grounds, despite the absence of any apparent basis in Orthodox Judaism for attaching any significance to fatherhood or grand parentage, except in the matrilineal line. Miss Rose QC for E submits, correctly in my view as I have already indicated, that the Adjudicator should logically have gone further by recognising criteria (2) and (3) as involving direct discrimination). In my view and (I emphasise) on the material before the Court, JFS has not and could not have justified its admissions policy. Accordingly, had the matter arisen for decision, I would have held that its admissions policy discriminated against M in a way which was not justified under s.1(1A), and was invalid accordingly. However, for reasons given earlier, I conclude that the policy was directly discriminatory, because it depended on birth link criteria which led to M being less favourably treated on ethnic grounds within s.1(1)(a) and 3(1) of the 1976 Act, and invalid on that basis. I would therefore dismiss the schools appeal. On the United Synagogues appeal in respect of costs, I agree with the reasoning and conclusions of Lord Hope. LORD KERR This case gives rise to perplexing issues of law. It involves an examination of the interface between religion and legal principle. It requires a close scrutiny of the statutory definition of racial discrimination. At its heart, however, lies the simple issue of a young boys desire to attend a particular school; his familys earnest wish that he be educated there; and the reasons that he was refused admission. That JFS is the school of choice for very many Jewish families is not in the least surprising. As well as achieving excellent academic results for its pupils, it promotes indeed embodies the values that most, if not all, practising Jews regard as central to their faith. It is therefore inevitably and regularly oversubscribed, that is to say, it attracts many more applicants for places than it can accommodate. The criteria for admission to the school are of intense interest to aspiring pupils and their parents. Those who devise and apply those criteria have a formidable, not to say daunting, responsibility. This situation is by no means unique. All over the United Kingdom and, no doubt, in many other parts of the world, every year, conscientious parents, anxious for their childrens continuing education at secondary level, pore over the entrance requirements for schools that they hope their sons and daughters will attend and strive to bring their childrens circumstances and in many instances, their own within the stipulated standards. Where JFS is unique, however, is in its imposition of a criterion that can only be achieved by an accident of birth or by conversion to the Orthodox Jewish faith. Apart from conversion, a child who wishes to be educated at JFS must be born of an Orthodox Jewish mother or have a female antecedent who is recognised as an Orthodox Jew by the Office of the Chief Rabbi (OCR). That condition of Orthodox Jewishness is normally acquired by the female by reason of the circumstances in which she herself was born; less commonly, it arises by her conversion to Judaism before the childs birth. In the latter case the circumstances of her conversion must be such as to satisfy the requirements of the OCR. Common to both situations, however, is the unalterable requirement that, at the moment of birth, the child must be a Jew as the Chief Rabbi, in his application of what he considers to be the requirements of Jewish law, defines that status. Central to the question of direct discrimination in this case is the breadth of meaning to be given to the phrase ethnic origins. The conventional meaning of origin is something from which anything arises or is derived. It also means ancestry, parentage, or extraction. Although ethnic is normally used as pertaining to or characteristic of a people or a group, clearly there can be mixed ethnic origins that do not fall neatly into one group or category. Thus, in this case, it is undeniable that M has mixed ethnic origins. He has derived these, as everyone derives their ethnicity, from his parents. At the moment of birth we are all endowed with characteristics that are as inalienable as they are inevitable. Our DNA is inescapable. Our parentage and the ancestry that it brings are likewise fixed and irreversible. These are part and parcel of our ethnic origins. M is not simply a Jew. His ethnic origins comprehend much more than his Jewishness. He is born of an Italian. He is, in the colloquial, half Italian. He would be recognised indeed, no doubt, claimed as such by his mothers family. He cannot disavow his mothers former Catholicism. That is as much part of his undeniable ethnic make up as is his fathers Masorti Jewishness and Englishness. M is, therefore, half English and half Italian; he is a Masorti Jew with an Italian mother who was once Catholic. All of these are aspects of his ethnic origins. And those origins are defined as much by what they do not contain as they are by what they include. What, of course, Ms ethnic origins do not and can never include is a matrilineal connection to Orthodox Jewry. That is an unchangeable aspect of his parentage, of his origins and of his ethnicity. He cannot be categorised as and can never claim to be born of an Orthodox Jewish mother as recognised by OCR. That this forms part of his ethnic origins can perhaps best be illustrated by comparing his situation with that of someone whose mother is recognised by OCR as Jewish. An assertion by such a person that this matrilineal feature formed part of his ethnic origins could surely not be challenged. Logically, therefore, the absence of such a feature from Ms heritage cannot be denied, and must be accepted, as a defining characteristic of his ethnicity. Direct discrimination The basic question that arises on the issue of direct discrimination can be simply stated. It is, Was M treated less favourably on racial grounds? Racial grounds being defined (in section 3 (1) of the Race Relations Act 1976) as including ethnic origins, and there being no dispute between the parties that he was treated less favourably than those who, by reason of their matrilineal connection to an Orthodox Jewish mother, were admitted to the school, the basic question can be refined to the following formulation, Was M refused admission to the school on grounds of his ethnic origins? It has been strongly asserted that the Chief Rabbi was not remotely interested in Ms ethnic origins for other than religious reasons. This is no doubt true, but the decision to refuse M entry to the school was unquestionably bound up with those origins. It was because of what was missing from Ms ethnic origins; because they did not include the indispensable matrilineal connection to Orthodox Judaism that the less favourable treatment occurred. Does this mean that he was discriminated against on ethnic grounds? Or does the fact that the refusal to admit him to the school was based on a decision on a religious issue remove the case from the sphere of racial discrimination altogether? These questions focus attention on the problematical issue of what is meant by discrimination on racial grounds. As Lord Hope has observed, the opinions in cases such as R v Birmingham City Council, Ex p Equal Opportunities Commission [1989] AC 1155 and James v Eastleigh Borough Council [1990] 2 AC 751 tended to dismiss as irrelevant any consideration of the subjective reasons for the alleged discriminator having acted as he did unless it was clear that the racial or sex discrimination was overt. A benign motivation on the part of the person alleged to have been guilty of discrimination did not divest the less favourable treatment of its discriminatory character if he was acting on prohibited grounds. Later cases have recognised that where the reasons for the less favourable treatment are not immediately apparent, an examination of why the discriminator acted as he did may be appropriate. In Nagarajan v London Transport [2000] 1 AC 501, 511A, Lord Nicholls of Birkenhead, having identified the crucial question as why did the complainant receive less favourable treatment, said this: Save in obvious cases, answering the crucial question will call for some consideration of the mental processes of the alleged discriminator. It is, I believe, important to determine which mental processes Lord Nicholls had in mind in making this statement. It appears to me that he was referring to those mental processes that are engaged when the discriminator decides to treat an individual less favourably for a particular reason or on a particular basis. That reason or the basis for acting may be one that is consciously formed or it may operate on the discriminators subconscious. In my opinion Lord Nicholls was not referring to the mental processes involved in the alleged discriminator deciding to act as he did. This much, I believe, is clear from a later passage of his opinion, at p 511B where he said: The crucial question just mentioned is to be distinguished sharply from a second and different question: if the discriminator treated the complainant less favourably on racial grounds, why did he do so? The latter question is strictly beside the point when deciding whether an act of racial discrimination occurred. This latter passage points clearly to the need to recognise the distinction between, on the one hand, the grounds for the decision (what was the basis on which it was taken) and on the other, what motivated the decision maker to make that decision. The need for segregation of these two aspects, vital to a proper identification of the grounds on which the decision was made, is well illustrated, in my view, by the circumstances of this case. The school refused entry to M because an essential part of the required ethnic make up was missing in his case. The reason that they took the decision on those grounds was a religious one OCR had said that M was not a Jew. But the reason that he was not a Jew was because of his ethnic origins, or more pertinently, his lack of the requisite ethnic origins. The basis for the decision, therefore, or the grounds on which it was taken, was Ms lack of Jewishness. What motivated the school to approach the question of admission in this way was, no doubt, its desire to attract students who were recognised as Jewish by OCR and that may properly be characterised as a religious aspiration but I am firmly of the view that the basis that underlay it (in other words, the grounds on which it was taken) was that M did not have the necessary matrilineal connection in his ethnic origin. This conclusion appears to me to be inescapable from Lord Nicholls analysis of the two aspects of decision making and to chime well with a later passage in his speech where he said: Racial discrimination the is not negatived by discriminators motive or intention or reason or purpose (the words are interchangeable in this context) in treating another person less favourably on racial grounds. In particular, if the reason why the alleged discriminator rejected the complainants job application was racial, it matters not that his intention may have been benign. In the present case, the reason why the school refused M admission was, if not benign, at least perfectly understandable in the religious context. But that says nothing to the point. The decision was made on grounds which the 1976 Act has decreed are racial. The recognition of Jewishness a religious question? As Lord Brown has pointed out, all Jews define membership of their religion by reference to descent or conversion. It is therefore quite logical to describe the decision, taken as a matter of Jewish law, as to whether one is or is not a Jew, as a religious one. Descent is employed as a means of determining an essentially religious question. But, when the answer to that religious question has consequences in the civil law sphere, its legality falls to be examined. If the decision has consequences that are not permitted under the law, the fact that it was taken for a religious purpose will not save it from the condition of illegality. In this case the OCR decision that M was not a Jew had profound consequences for him since he was denied admission to an educational establishment that he wished to attend. The fact that the decision not to admit him was based on the determination of a religious issue cannot, of itself, insulate it from the charge of discrimination on racial grounds. Once it is recognised that Ms ethnic origins underpinned the conclusion on the religious issue, it becomes plain that it cannot be characterised as an exclusively religious question. The terminus for OCR was a decision on a matter of religion but the route to that terminus was one of ethnic origin. Ethnic groups It is unquestionably true that Jews, whether they be Orthodox, Masorti, Liberal or Progressive, constitute an ethnic group. It is also undoubtedly the case that M belongs to that ethnic group. He is an ethnic Jew. But, belonging to that group is not comprehensive of his ethnicity. As I have said (at 109 above) Ms ethnic origins extend well beyond the fact that he is a Jew. The circumstance that he is an ethnic Jew in the Mandla [Mandla v Dowell Lee [1983] 2 AC 548] sense does not assist, in my opinion, in determining whether he has been discriminated against on racial grounds. Although those who receive the more favourable treatment (in being admitted to the school) belong to the same racial or ethnic group as M, this does not, of itself, preclude a finding that he has been treated less favourably on account of his ethnic origins. This might be so if his ethnic origins were confined to his Jewishness. They are not. It is because of his lack of the requisite feature of Jewishness that he has received less favourable treatment. That perceived deficiency is as much part of his ethnic make up as is the fact that he is an ethnic Jew in the Mandla sense. Indirect discrimination Since I have reached the conclusion that this is a case of direct discrimination, it is unnecessary to say anything about the alternative case made on Ms behalf on indirect discrimination, particularly in light of Lord Mances discussion of that subject. I find myself in complete agreement with all that he has had to say on that issue and, incidentally, with all that he has had to say on the issue of direct discrimination. Conclusion One can have sympathy with the school authorities in their wish to pursue what must have seemed to them an entirely legitimate religious objective. It is plain that the Chief Rabbi and the governors of JFS are entirely free from any moral blame. That they have fallen foul of the 1976 Act does not involve any reprehensible conduct on their part for it is accepted on all sides that they acted on sincerely and conscientiously held beliefs. Their motives are unimpeachable. The breach of the legislation arises because of the breadth of its reach. The grounds on which the rejection of M was made may well be considered perfectly reasonable in the religious context but it is because they amount to ethnic grounds under the legislation that a finding against the school became, in my opinion, inescapable. I would dismiss the appeal. LORD CLARKE The division of opinion in this court and in the courts below demonstrates that this appeal raises issues which are difficult to resolve. The issues have been discussed in detail in all the above judgments. I have reached the same conclusion as Lord Phillips, Lady Hale, Lord Mance and Lord Kerr, essentially for the reasons they have given. Rather against my general principle, which is that there should be fewer judgments in the Supreme Court and not more, I add a judgment of my own in order to explain my own reasons for agreeing that the appeal should be dismissed. Direct discrimination The facts have been fully set out by others. I therefore refer only to those facts which seem to me to be critical. The policy of JFS, when oversubscribed, was to admit children who are recognised as being Jewish by the Office of the Chief Rabbi (OCR) or who have already enrolled upon or undertaken, with the consent of their parents, to follow a course of conversion to Orthodox Judaism under the approval of the OCR. As I understand it, nobody has ever been enrolled at JFS under the second head. Leaving adopted children on one side, children recognised by the OCR as being Orthodox Jewish are only those with a biological mother who is either Orthodox Jewish by birth or who has converted to Orthodox Judaism before the birth of the child by a process approved by the OCR. As I see it, the sole question for decision is whether those criteria offend section 1(1)(a) of the 1976 Act (as amended) by discriminating against some children (here M) on racial grounds, which, by section 3, include ethnic origin. On the facts of this case I prefer to ask whether the criteria offend against some children on the ground of their ethnic origin. To my mind the answer to that question does not depend upon the subjective state of mind of the Chief Rabbi or anyone else. Moreover, I do not think that the correct question to ask is whether OCRs guidance was given either on grounds of ethnic origin or on grounds of religion. That is because, so formulated, the test suggests that, if the guidance was given on the grounds of religion, it was not given on the grounds of ethnic origin. So formulated, the question could have only one answer because I entirely accept that the guidance was given on grounds of religion. That is clear from the guidance itself and indeed from a wealth of evidence before the court. Moreover, I fully understand that it can in one sense be said that those not recognised by the criteria as Orthodox Jews are, as Lord Brown puts it, being treated less favourably, not because of their ethnic origins, which he says are a matter of total indifference to the OCR, but rather because of their religion because they are not members of the Orthodox Jewish religion. However, again as Lord Brown puts it, the reason they are not members of the Orthodox Jewish religion is that their forbears in the matrilineal line were not recognised as Jewish by Orthodox Jews and in this sense their less favourable treatment is determined by their descent. Thus the ground upon which the OCR criteria defined those children to be admitted was that their forbears in the matrilineal line must be recognised as Jewish by Orthodox Jews. As I see it, in agreement with Lord Phillips, Lady Hale, Lord Mance and Lord Kerr, that is an ethnic ground, so that the discrimination was on both ethnic grounds and religious grounds. It is, in my opinion, wrong in principle to treat the question as an either/or question because that excludes the possibility that there were two grounds for the decision to exclude M, one religious and the other ethnic. If the religious ground was itself based upon an ethnic ground, then in my opinion the question asked by section 1(1)(a) of the 1976 Act, namely, whether M was discriminated against on ethnic grounds must be answered in the affirmative. It would be too narrow a construction of section 1(1)(a) to hold that that was not to discriminate on ethnic grounds. M was excluded because his mother was not Orthodox Jewish, whether by birth or conversion. That conclusion does not depend upon the state of mind of the OCR, but follows from an examination of the criteria laid down by the OCR. The question is not whether the guidance was given on religious grounds but whether the admitted discrimination was on ethnic grounds. In my opinion the answer is that the discrimination was on both religious and ethnic grounds because the criteria were arrived at on religious grounds but, since those religious grounds involved discrimination on ethnic grounds, it follows that the admissions policy of JFS was contrary to section 1(1)(a) because it discriminated against M and others on racial grounds. To hold that there were two grounds for the discrimination, both religious and ethnic, is not in my opinion to reduce, as Lord Rodger suggests, the religious element to the status of a mere motive. It is to recognise that the ethnic element is an essential feature of the religious ground. If Ms mother had been born a Masorti Jew (because someone in her matrilineal line been converted to Masorti Judaism) and had not been converted to Orthodox Judaism before Ms birth, Ms application would have been rejected because his mother was not, in the relevant sense, Jewish by birth. As I see it, for the reasons given in much more detail by others (and in particular Lord Mance) that would be discrimination on the ground of his ethnicity. To my mind the same is true on the facts of this case since at the time of Ms birth his mother was not, in the relevant sense, Jewish because she had not been converted to Orthodox Judaism in the manner accepted by the OCR. In both cases, as Lord Kerr puts it, the problem would be that M does not have the necessary matrilineal connection in his ethnic origin. Again as Lord Kerr puts it, the terminus for the OCR was a decision on a matter of religion but the route to that terminus was one of ethnic origin. In my opinion the state of mind of JFS, the Chief Rabbi and the OCR are all irrelevant to the determination of the critical question under section 1(1)(a). I agree with Lord Mance that there are two ways in which direct discrimination can be established. The first is where, whatever the motive and whatever the state of mind of the alleged discriminator, the decision or action was taken on a ground that was inherently racial and the second is where the decision or action was taken on a ground that was subjectively racial. Until now this distinction has not perhaps been as clearly identified in the authorities as it should be. The first class of case was established by R v Birmingham County Council ex p Equal Opportunities Commission [1989] AC 1155, where (as Lord Mance puts it) girls were required to achieve a higher standard than boys for grammar school entry because of a disparity in the number of grammar school places for boys and girls. Lord Goff, with whom the other members of the appellate committee agreed, made it clear at page 1194B that the question was simply whether there was less favourable treatment on the ground of sex, in other words if the relevant girl or girls would have received the same treatment as the boys but for their sex. The intention or motive of the council was not a necessary condition of liability. That was a question of fact and it was held by Lord Goff in the passage quoted by Lord Mance from page 1194C D that whatever may have been the intention or motive of the council, nevertheless it is because of their sex that the girls in question receive less favourable treatment than the boys, and so are the subject of discrimination under the Act of 1975. In James v Eastleigh Borough Council [1990] 2 AC 751, the swimming pool case, it was held that the test for free entry to the swimming pool at pensionable age unlawfully discriminated against men because men did not reach pensionable age until 65 whereas women reached it at 60. It is true that the House of Lords divided three to two but that seems to me to be irrelevant. The simple question was again a question of fact, namely whether men and women were treated differently. It was held that they were, even though, as Lord Mance has suggested, the test was probably adopted because it was thought that those of pensionable age would be more needy. Lord Goff said much the same as he had said in the Birmingham case. He put it thus at page 772B G: I turn to that part of the Vice Chancellor's reasoning which is based upon the wording of section 1(1)(a). The problem in the present case can be reduced to the simple question did the defendant council, on the ground of sex, treat the plaintiff less favourably than it treated or would treat a woman? As a matter of impression, it seems to me that, without doing any violence to the words used in the subsection, it can properly be said that, by applying to the plaintiff a gender based criterion, unfavourable to men, which it has adopted as the basis for a concession of free entry to its swimming pool, it did on the ground of sex treat him less favourably than it treated women of the same age and in particular Mrs. James. In other words, I do not read the words on the ground of sex as necessarily referring only to the reason why the defendant acted as he did, but as embracing cases in which a gender based criterion is the basis upon which the complainant has been selected for the relevant treatment. Of course, there may be cases where the defendant's reason for his action may bring the case within the subsection, as when the defendant is motivated by an animus against persons of the complainant's sex, or otherwise selects the complainant for the relevant treatment because of his or her sex. But it does not follow that the words on the ground of sex refer only to case where the defendants reason for his action is the sex of the complainant; and, in my opinion, the application by the defendant to the complainant of a gender based criterion which favours the opposite sex is just as much a case of unfavourable treatment on the ground of sex. Such a conclusion seems to me to be consistent with the policy of the Act, which is the active promotion of equal treatment of men and women. Indeed, the present case is no different from one in which the defendant adopts a criterion which favours widows as against widowers, on the basis that the former are likely to be less well off; or indeed, as my noble and learned friend, Lord Bridge of Harwich has pointed out, a criterion which favours women between the ages of 60 and 65, as against men between the same ages on the same basis. It is plain to me that, in those cases, a man in either category who was so treated could properly say that he was treated less favourably on the ground of sex, and that the fact that the defendant had so treated him for a benign motive (to help women in the same category, because they are likely to be less well off) was irrelevant. Lord Bridge and Lord Ackner said much the same. For example, Lord Bridge said at page 763H that the use of the statutory criterion for pensionable age, being fixed at 60 for women and 65 for men, was to use a criterion which directly discriminated between men and women. See also per Lord Bridge at page 765G. Lord Ackner said at page 769F H that the formula used was inherently discriminatory. He noted that no evidence had been given in the county court as to why the council had decided on the policy. He said that such evidence would have been irrelevant because, as he put it, the policy was crystal clear. If you were a woman you could swim at 60 without payment whereas if you were a man you had to wait until you were 65. The reason why the policy was adopted could in no way affect or alter the fact that the council had decided to implement a policy by virtue of which men were to be treated less favourably than women and were to be treated on the ground of, ie by reason of, their sex. In my opinion that analysis applies here. Just as in that case the admissions criteria were gender based and thus discriminatory on the ground of sex contrary to section 1(1)(a) of the Sex Discrimination Act 1975, so here the JFS admissions criteria were based on ethnicity and thus discriminatory on racial grounds as defined in section 1(1)(a) of the 1976 Act. For my part I do not accept that more recent decisions of the House of Lords call for a more nuanced approach than that stated in the Birmingham and Eastleigh cases. As I read the later cases, they simply accept, as Lord Goff accepted in the passage from his speech in the Eastleigh case quoted above, that there may be cases where the defendant's reason for his action may bring the case within the subsection, as when the defendant is motivated by an animus against persons of the complainant's sex, or otherwise selects the complainant for the relevant treatment because of his or her sex or (I am sure he would have added) because of his or her race or ethnicity. As I see it, this is a separate basis on which direct discrimination can be established. It does not involve any alteration to the principle stated by Lord Goff, Lord Bridge and Lord Ackner and set out above. In Nagarajan v London Regional Transport [2000] 1 AC 501 the House of Lords was concerned with an allegation of alleged unlawful victimisation under section 2 of the 1976 Act. It applied the same principles as those applicable under section 1(1)(a). The leading speech was given by Lord Nicholls, Lord Steyn made a concurring speech, Lord Hutton and Lord Hobhouse agreed with Lord Nicholls and Lord Steyn, and Lord Browne Wilkinson dissented. Lord Steyn said at page 520H that the Birmingham and Eastleigh cases established the principle that conscious motivation is not required for direct discrimination. In these circumstances it is inherently unlikely that there is any distinction between the principles established by those cases and the reasoning in Nagarajan. In my opinion there is not. Reliance was placed on part of the speech of Lord Nicholls. Read in context, the relevant passage is in these terms at pages 510H 511E: The first point raised is whether conscious motivation is a prerequisite for victimisation under section 2 of the Act. Section 2 should be read in the context of section 1. Section 1(1)(a) is concerned with direct discrimination, to use the accepted terminology. To be within section 1(1)(a) the less favourable treatment must be on racial grounds. Thus, in every case it is necessary to inquire why the complainant received less favourable treatment. This is the crucial question. Was it on grounds of race? Or was it for some other reason, for instance because the complainant was not so well qualified for the job? Save in obvious cases, answering the crucial question will call for some consideration of the mental processes of the alleged discriminator. Treatment, favourable or unfavourable, is a consequence which follows from a decision. Direct evidence of a decision to discriminate on racial grounds will seldom be forthcoming. Usually the grounds of the decision will have to be deduced, or inferred, from the surrounding circumstances. The crucial question just mentioned is to be distinguished sharply from a second and different question: if the discriminator treated the complainant less favourably on racial grounds, why did he do so? The latter question is strictly beside the point when deciding whether an act of racial discrimination occurred. For the purposes of direct discrimination under section 1(1)(a), as distinct from indirect discrimination under section 1(1)(b), the reason why the alleged discriminator acted on racial grounds is irrelevant. Racial discrimination is not negatived by the discriminator's motive or intention or reason or purpose (the words are interchangeable in this context) in treating another person less favourably on racial grounds. In particular, if the reason why the alleged discriminator rejected the complainant's job application was racial, it matters not that his intention may have been benign. For instance, he may have believed that the applicant would not fit in, or that other employees might make the applicant's life a misery. If racial grounds were the reason for the less favourable treatment, direct discrimination under section 1(1)(a) is established. (My emphasis) Lord Nicholls then added at page 511E H that this law, which is well established was confirmed by the House of Lords in the Birmingham and Eastleigh cases as described above. He said that in the Birmingham case the answer to the crucial question was plain because, as a matter of fact, girls received less favourable treatment than boys. It followed that there was direct sex discrimination and the reason for it was irrelevant. The same was true in Eastleigh because the reduction in swimming pool charges was geared to a criterion which was itself gender based. It is true that Lord Nicholls added this: Lord Bridge of Harwich, at p 765, described Lord Goff's test in the Birmingham case as objective and not subjective. In stating this he was excluding as irrelevant the (subjective) reason why the council discriminated directly between men and women. He is not to be taken as saying that the discriminator's state of mind is irrelevant when answering the crucial, anterior question: why did the complainant receive less favourable treatment? The essence of Lord Nicholls view can be seen in the italicised passages in the quotation at para 139 above. If, viewed objectively, the discriminator discriminated against the claimant on racial grounds the reason why he did so is irrelevant. Thus in Birmingham and Eastleigh the sex discrimination was objectively plain from the criteria adopted. Once that was established, the state of mind of the discriminator was, as Lord Nicholls put it, strictly beside the point. That, as I see it, is this case. This is a plain or obvious case of the kind Lord Nicholls had in mind because the position is clear from the OCRs criteria. When he said in the first of the italicised passages that, save in obvious cases, answering the crucial question will call for some consideration of the mental processes of the alleged discriminator, he had in mind, not this kind of case, which he would have regarded as obvious, but the kind of case he had just mentioned namely where the claimant was discriminated against but it was not clear whether that was because of unlawful discrimination on the ground of, say, race or sex, or for some other reason, for instance, because the complainant was not so well qualified for the job. This is not such a case. In this connection I cannot agree with Lord Hopes analysis of the passage quoted at para 194 from page 512 of Lord Nicholls speech in Nagarajan. Lord Nicholls was there considering the question of unconscious motivation. He was doing so because that was not a case of discrimination inherent in the relevant rules such as existed in Birmingham, Eastleigh and this case. In these circumstances it is not, in my opinion, possible to draw from that passage in Lord Nicholls speech the proposition that if, after careful and thorough investigation, the tribunal were to conclude that the employers actions were not racially motivated, in the sense that race was not the reason why he acted as he did, it would be entitled to draw the inference that the complainant was not treated less favourably on racial grounds. It would not be so entitled for the reasons given in Birmingham and Eastleigh, namely that this is a case of inherent discrimination. Equally, when Lord Nicholls said in Chief Constable of West Yorkshire Police v Khan [2001] 1 WLR 1947, para 29 that the question was why the discriminator acted as he did or, put another way, what consciously or unconsciously was his reason, Lord Nicholls was not considering this kind of case. For the same reason I do not think that the decision in Shamoon v Chief Constable of the Royal Ulster Constabulary [2003] UKHL 11, [2003] ICR 337, is of any assistance in this kind of case. In these circumstances I agree with Lord Hope at para 195 that at the initial stage, when the question is whether or not the discrimination was on racial grounds, the alleged discriminators motivation may not only be relevant but also necessary, in order to reach an informed decision as to whether or not this was a case of racial discrimination. However, I emphasize the word may because, for the reasons I have already given, the discriminators motivation or subjective reasoning is not in my opinion relevant in every case. The authorities, namely Birmingham, Eastleigh and Nagarajan show that it is not relevant where the criteria adopted or (in Lord Ackners words) the formula used are or is inherently discriminatory on ethnic grounds. Lord Nicholls has however shown that it is relevant in other cases where, without investigating the state of mind of the alleged discriminator, it is not possible to say whether the discrimination was on ethnic grounds or not. The question arises what considerations are relevant in answering the question whether the criteria were inherently racial. I entirely accept (and there is indeed no dispute) that JFS, the Chief Rabbi and the OCR are, as Lord Hope puts it at para 201, thoughtful, well intentioned and articulate and that, as Lord Pannick submitted, the Chief Rabbi was not in the least interested in Ms ethnicity. It is true that, if the Chief Rabbi were asked why he acted as he did, he would say that his reason was that this was what was required of him by fundamental Orthodox Jewish religious law. Again as Lord Hope puts it, Jewishness based on matrilineal descent from Jewish ancestors has been the Orthodox religious rule for many thousands of years, subject only to the exception for conversion. I agree so far. However, I do not agree that to say that his ground was a racial one is to confuse the effect of the treatment with the ground itself. The reason I disagree with Lord Hope (or perhaps the ground on which I do so) is that his opinion depends upon the state of mind of the Chief Rabbi. Thus in the passage in Lord Nicholls speech to which Lord Hope refers Lord Nicholls was considering the kind of case in which it is necessary to consider the mental processes of the alleged discriminator. Lord Hope makes it clear at para 201 that to categorise the criteria as based on racial grounds might be justified if there were reasons for doubting the Chief Rabbis frankness or good faith. However, to my mind it does not follow that the criteria were not based on racial grounds because neither the Chief Rabbi nor the OCR thought that they were. If the religious grounds were themselves based on racial (or ethnic) grounds then one of the grounds upon which there was discrimination based on the criteria was ethnic. This appears from both the Birmingham and the Eastleigh cases. I have already expressed the view that the principles in those cases apply here. Lord Rodger however says that they do not come into the picture. As I see it, that could only be on the basis that the issue is resolved by the subjective state of mind of the Chief Rabbi, the OCR and the governors of JFS. It is said that the governors were not asked to consider and, did not actually consider, Ms ethnic origins and, if they had done so, that they would have regarded them as irrelevant. However, they considered the criteria which Orthodox Judaism had applied for very many years and, although I entirely accept that they did so for religious reasons, I do not accept they were not considering Ms ethnic origins or making a decision on ethnic grounds. Such a view would be to take too narrow a view of the concept of ethnic origins or of the meaning of ethnic origin in sections 1(1)(a) and 3 of the 1976 Act. As I see it, once it is accepted (as Lord Brown does) that the reason M is not a member of the Jewish religion is that his forbears in the matrilineal line were not Orthodox Jews and that, in that sense his less favourable treatment is determined by his descent, it follows that he is discriminated against on ethnic grounds. It makes no difference whether the reason M is not acceptable is that neither his mother nor anyone in his matrilineal line was born Jewish or that his mother was not converted to Orthodox Judaism. The question is, in my opinion, not that espoused by Lord Rodger, but whether it is discrimination on ethnic grounds to discriminate against all those who are not descended from Jewish women. In my opinion it is. Lord Phillips, Lady Hale, Lord Mance and Lord Kerr have explained in detail why in their view the criteria were indeed discriminatory on ethnic and therefore racial grounds. I agree with their reasoning and do not wish further to add to it. In short, it is not in dispute that the decision in Ms case was taken on the basis of the criteria laid down by the OCR and followed by JFS. It follows that, if the criteria involved discrimination based on ethnic grounds, the decision was taken on a ground that was inherently racial and there was direct discrimination within section 1(1)(a) of the 1976 Act. If that is so, as I see it, the fact that the discrimination was also on religious grounds is irrelevant, as are both the fact that the religious grounds have been adopted for thousands of years and the fact that the Chief Rabbi and the OCR (and therefore JFS) concentrated wholly on the religious questions. In the Court of Appeal at para 30 Sedley LJ, with whom Smith LJ and Rimer LJ agreed, expressed the view that if that were not so, a person who honestly believed, as the Dutch Reformed Church of South Africa until recently believed, that God had made black people inferior and had destined them to live separately from whites, would be able to discriminate openly against them without breaking the law. I agree. It is to my mind no answer to say that the discrimination invited by the belief, on the grounds of colour, was overtly racist. It is true that such discrimination would be overtly on racial grounds but that is because the criteria were inherently based on racial grounds and not because of the subjective state of mind of the members of the Dutch Reformed Church or because of some principle of public policy. However, the 1976 Act banning direct discrimination is an application of public policy, rather like the decision of the of the United States Supreme Court in Bob Jones University v United States 461 US 574 (1983). I would however add that if, contrary to the views I have expressed, the state of mind of the Chief Rabbi and the OCR are relevant they must surely have subjectively intended to discriminate against applicants like M on the grounds set out in the criteria so that, again, if the criteria are based on ethnic grounds contrary to section 1(1)(a), they must surely have subjectively intended that result, however much the reason they did so was, as they saw it, religious. Finally, under the heading of direct discrimination, I would like to identify some of the aspects of the argument that I regard as irrelevant to the resolution of the single question whether the OCR criteria discriminate against applicants who do not meet the criteria on ethnic, and thus racial, grounds contrary to section 1(1)(a) of the 1976 Act. They include the following. i) It is suggested that the 1976 Act does not outlaw discrimination by an ethnic group against the same ethnic group. However, as I see it, the question is simply whether the discrimination is on ethnic grounds. The discrimination is not in dispute. I do not see that the identity of the discriminator is of any real relevance to the answer to the question. There is certainly nothing in the language or the context of section 1 of the Act or in its statutory purpose to limit the section in that way. ii) Like any statutory provision, the language of section 1(1)(a) should be construed in its context and having regard to its statutory purpose. Parliament decided to distinguish between direct and indirect discrimination. Adopting that approach, I am not persuaded that it is appropriate to construe section 1(1)(a) narrowly because it is not possible to justify the discrimination outlawed by it. Parliament could, like the European Convention on Human Rights, have permitted justification but, for policy reasons, chose not to. iii) For whatever reason, the question of construction of section 1(1)(a) has not arisen before. I do not, however, think that it can be relevant to that question that, if the respondents argument is correct, JFS has been acting unlawfully for more than thirty years. The question is the same now as it would have been if it had been raised thirty years ago. The provisions of the Equality Act 2006 are irrelevant for the same reasons. I accept that this case is curious in that both M and E are Masorti Jews who, like Orthodox Jews, recognise those whose mothers or others in the matrilineal line were Jews by descent or conversion. The real complaint is that the OCR does not accept conversion as practised by Masorti Jews because otherwise M would have qualified. I take Lord Browns point at para 248, (a) that E is not really seeking to prevent JFS from adopting oversubscription criteria which give priority to Jews but rather for JFS to define Jews more expansively than Orthodox Jews in fact do, and (b) that on the respondents argument it is strictly immaterial that E is Jewish or that Ms mother converted to Judaism, so that the policy could by struck down by anyone excluded by the application of the criteria. I recognise that there is an irony here but I do not see that that fact is relevant in answering the question posed by the statute, namely whether the discrimination is on ethnic grounds. I do not regard the consequences of the conclusion that the OCR criteria discriminate on ethnic grounds as relevant to the question whether they do or not. I am in any event not persuaded that they are anything like as serious as was suggested in argument. iv) v) It follows that I too would dismiss the appeal. Indirect discrimination Like Lord Kerr, I entirely agree with the reasoning and conclusion of Lord Mance on this issue, although if the appeal is dismissed on the direct discrimination issue, the issue of indirect discrimination does not arise. I agree with Lord Hopes reasoning and conclusions on costs. Postscript I wish to stress that nothing in the reasoning which has led me (or I believe others) to the conclusion that the criteria adopted by JFS discriminated against applicants on ethnic grounds is based on the view that the Chief Rabbi, the OCR or JFS acted in a racist way. In this regard I entirely agree with Lord Phillips and Lady Hale that any suggestion that they acted in a racist way in the popular sense of that term must be dismissed. Finally I direct the reader to the final paragraph in the judgment of Lord Kerr, at para 124 above, with which I am in complete agreement. The Minority Judgments LORD HOPE It has long been understood that it is not the business of the courts to intervene in matters of religion. In R v Chief Rabbi of the United Hebrew Congregations of Great Britain and the Commonwealth, ex p Wachmann [1992] 1 WLR 1036, 1042 1043, Simon Brown J observed that the court was hardly in a position to regulate what was essentially a religious function in that case, the determination whether someone was morally and religiously fit to carry out the spiritual and pastoral duties of his office. As he put it, the court must inevitably be wary of entering so self evidently sensitive an area, straying across the well recognised divide between church and state. This too is the approach of the legislature, as Hoffmann LJ said in R v Disciplinary Committee of the Jockey Club, ex p Aga Khan [1993] 1 WLR 909, 932: religion is something to be encouraged but it is not the business of government. It is just as well understood, however, that the divide is crossed when the parties to the dispute have deliberately left the sphere of matters spiritual over which the religious body has exclusive jurisdiction and engaged in matters that are regulated by the civil courts. In Percy v Board of National Mission of the Church of Scotland [2005] UKHL 73, [2006] 2 AC 28, for example, the appellant was employed by the Board of Mission under a contract personally to execute work within the meaning of section 82(1) of the Sex Discrimination Act 1975. The articles declaratory of the constitution of the Church of Scotland set forth in the Schedule to the Church of Scotland Act 1921 contain an assertion that the civil authority has no right of interference in the proceedings and judgments of the Church within the sphere of its spiritual government and jurisdiction. But it was held that by entering into a contract binding under the civil law the parties had put themselves within the jurisdiction of the civil courts and that the appellants claim of sex discrimination could not be regarded as a spiritual matter. The same approach to arguments based on religious doctrine has been adopted by the Supreme Court of Israel. In No'ar K'halacha v The Ministry of Education, HCJ 1067/08, 6 August 2009 the Court held that, although religious affiliation as a basis for treating students differently was recognised by Israeli law, it was not an absolute claim and could not prevail over the overarching right to equality. The school in question had established a two tier, ethnically segregated system by which students of Ashkenazi descent were automatically assigned to one group and those of Sephardi descent were assigned to another. Although this was purportedly on religious grounds, the thinly disguised subtext was that the Ashkenazi group were superior to the Sephardi and that, as they were the elite, their education should be organised accordingly. The Supreme Court rejected the schools argument that this was due to religious considerations, holding that they were a camouflage for discrimination cloaked in cultural disparity. It ordered the school to end all discriminatory practices against students who were of Sephardi ethnic origin. It is accepted on all sides in this case that it is entirely a matter for the Chief Rabbi to adjudicate on the principles of Orthodox Judaism. But the sphere within which those principles are being applied is that of an educational establishment whose activities are regulated by the law that the civil courts must administer. Underlying the case is a fundamental difference of opinion among members of the Jewish community about the propriety of the criteria that the Office of the Chief Rabbi of the United Hebrew Congregation of the Commonwealth (the OCR) applies to determine whether a person is or is not Jewish. It is not for the court to adjudicate on the merits of that dispute. But the discrimination issue is an entirely different matter. However distasteful or offensive this may appear to be to some, it is an issue in an area regulated by a statute that must be faced up to. It must be resolved by applying the law laid down by Parliament according to the principles that have been developed by the civil courts. By far the most important issue in the appeals which are before this court is whether it is unlawful direct or indirect race discrimination for a faith school to adopt oversubscription criteria which give priority to children who are recognised by the OCR to be Jewish according to Orthodox Jewish principles. There is also an appeal by the United Synagogue in relation to a costs order made against it by the Court of Appeal, which I shall deal with briefly at the end of this opinion. Almost everything that I wish to say will be devoted to the main issue. I should make it clear at the outset that I agree with everything that Lord Rodger and Lord Brown say on the issue of direct discrimination. With much regret, I differ from them on the indirect discrimination issue. But I differ from them only when I reach the final step in that part of the argument. On both issues I agree entirely with Lord Walker. As for the facts, I have dealt with them more fully than would normally be appropriate in a minority judgment. I hope that, by doing so, I will have made it easier for all other members of the court to concentrate on the issues of law that arise in this case. The facts JFS, formerly the Jewish Free School, is a voluntary aided comprehensive secondary school which is maintained by the local authority, the London Borough of Brent. It has a long and distinguished history which can be traced back to 1732. It has over 2000 pupils, and for more than the past 10 years it has been over subscribed. It regularly has twice the number of applicants for the places that are available. Clause 8 of its Instrument of Government dated 18 October 2005 provides: Statement of School Ethos Recognising its historic foundation, JFS will preserve and develop its religious character in accordance with the principles of orthodox Judaism, under the guidance of the Chief Rabbi of the United Hebrew Congregations of the Commonwealth. The School aims to serve its community by providing education of the highest quality within the context of Jewish belief and practice. It encourages the understanding of the meaning of the significance of faith and promotes Jewish values for the experience of all its pupils. Further information is given by the school on its website, which states: The outlook and practice of the School is Orthodox. One of our aims is to ensure that Jewish values permeate the School. Our students reflect the very wide range of the religious spectrum of British Jewry. Whilst two thirds or more of our students have attended Jewish primary schools, a significant number of our Year 7 intake has not attended Jewish schools and some enter the School with little or no Jewish education. Many come from families who are totally committed to Judaism and Israel; others are unaware of Jewish belief and practice. We welcome this diversity and embrace the opportunity to have such a broad range of young people developing Jewish values together. The culture and ethos of the school is Orthodox Judaism. But there are many children at JFS whose families have no Jewish faith or practice at all. Prior to the decision of the Court of Appeal in this case the principal admissions criterion of JFS was that, unless undersubscribed, it would admit only children who were recognised as being Jewish by the OCR. Its policy for the year 2008/09, which can be taken to be the same as that for the year in question in this case, was as follows: It is JFS (the School) policy to admit up to the standard admissions number children who are recognised as being Jewish by the Office of the Chief Rabbi of the United Hebrew Congregation of the Commonwealth (OCR) or who have already enrolled upon or who have undertaken, with the consent of their parents, to follow any course of conversion to Judaism under the approval of the OCR. The Chief Rabbi is the head of the largest groups of Orthodox synagogues in the United Kingdom. But he does not represent all Orthodox communities, nor does he represent the Masorti, Reform and Progressive Jewish communities. In accordance with Jewish law, the OCR recognises as Jewish any child who is descended from a Jewish mother. The mother herself must be descended from a Jewish mother or must have been converted to Judaism before the birth of the child in a manner recognised as valid by the OCR. Such a child is recognised by the OCR as Jewish regardless of the form of Judaism practised by the family (Orthodox, Masorti, Reform or Progressive). He is so recognised even if the entire family has no Jewish faith or observance at all. A family may be entirely secular in its life and outlook. Its members may be atheists or even be practising Christians or practising Muslims. Yet, if the child was himself born of a Jewish mother, he will be recognised as Jewish by the OCR and eligible for a place at JFS. These proceedings have been brought in relation to a child, M on the application of his father, E. Ms father is of Jewish ethnic origin. Ms mother is Italian by birth and ethnic origin. Before she married E she converted to Judaism under the auspices of a non Orthodox synagogue. Her conversion is recognised as valid by the Masorti, Reform and Progressive Synagogues. But it was undertaken in a manner that is not recognised by the OCR. She and E are now divorced and M lives mainly with his father. He and his father practise Judaism, and they are both members of the Masorti New London Synagogue. M practices his own Jewish faith, prays in Hebrew, attends synagogue and is a member of a Jewish Youth Group. But the OCR does not recognise him as of Jewish descent in the maternal line. His mother is not recognised as Jewish by the OCR and he has not undergone, or undertaken to follow, a course of approved Orthodox conversion. Consequently he was unable to meet the schools criterion for admission. In April 2007 he was refused a place at JFS for year 7 in the academic year 2007 2008. The effect of this decision on M and his family was profound and it was distressing. There was no other Jewish secondary school in London to which he could be admitted. So he was denied the opportunity of obtaining a Jewish secondary education in accordance with the familys religious beliefs and preference. On 15 April 2007 E notified JFSs Admission Appeals Panel that he wished to appeal. After a hearing on 5 June 2007, the Appeal Panel dismissed his appeal. In its decision letter of 11 June 2007 the Appeal Panel said that a challenge to the admissions criteria was outside its remit. On 2 July 2007 E referred his objection to the Schools Adjudicator, challenging JFSs admissions criteria for both under subscription and oversubscription. On 27 November 2007 the Schools Adjudicator upheld his complaint about the under subscriptions criteria, but he dismissed it in relation to the oversubscription criteria with which this case is concerned. E then raised proceedings for judicial review of JFSs decision to refuse M a place at the school and of the decision of the Appeal Panel to dismiss his appeal. In separate proceedings he sought judicial review of the decision of the Schools Adjudicator. On 3 July 2008 Munby J dismissed both claims for judicial review, except for Es claim that the Governing Body of JFS was in breach of its duty under section 71 of the Race Relations Act 1976 to have due regard to the need to eliminate racial discrimination and to promote equality of opportunity and good race relations: [2008] EWHC 1535 (Admin); [2008] ELR 445. He rejected Es argument that there had been direct discrimination on the grounds of race or ethnic origins, holding that it was based on religion: para 174. He also rejected his argument that there was indirect race discrimination, holding that, as JFS exists as a school for Orthodox Jews, its admissions policy of giving preference to children who were Jewish by reference to Orthodox Jewish principles was a proportionate means of achieving a legitimate aim within the meaning of section 1(1A)(c) of the 1976 Act: paras 201 202. He made a declaration to the effect that JFS was in breach of section 71. But in para 214 of his judgment he said that even the fullest and most conscientious compliance with that section would not have led to any difference in the crucial part of the admissions policy or its application in Ms case. On 25 June 2009 the Court of Appeal (Sedley, Smith and Rimer LJJ) allowed the appeal by E in both sets of proceedings: [2009] EWCA Civ 626; [2009] 4 ALL ER 375. Sedley LJ said that the courts essential difference with Munby J was that what he characterised as religious grounds were, in its judgment, racial grounds notwithstanding their theological motivation: para 48. As that observation indicates, the point at issue in this case is how the grounds are to be characterised. It is, in the end, a very narrow one. But it is by no means a simple one to resolve, as the division of opinion in this court indicates. The Race Relations Act 1976 Section 1 of the Race Relations Act 1976 defines race discrimination. It was amended by the Race Relations Act 1976 (Amendment) Regulations 2003 (SI 2003/1626) which, implementing Council Directive 2000/43 EC of 29 June 2000, rewrote in European terms the concept of indirect discrimination. So far as material it provides as follows: (1) A person discriminates against another in any circumstances relevant for the purposes of any provision of this Act if (a) on racial grounds he treats that other less favourably than he treats or would treat other persons (1A) A person also discriminates against another if, in any circumstances relevant for the purposes of any provision referred to in subsection (1B), he applies to that other a provision, criterion or practice which he applies or would apply equally to persons not of the same race or ethnic or national origins as that other, but (a) which puts or would put persons of the same race or ethnic or national origins as that other at a particular disadvantage when compared with other persons, (b) which puts or would put that other at that disadvantage, and (c) which he cannot show to be a proportionate means of achieving a legitimate aim. (1B) The provisions mentioned in subsection (1A) are (b) section 17; (c) section 19B Section 3 of the 1976 Act provides: (1) In this Act, unless the context otherwise requires racial grounds means any of the following grounds, namely colour, race, nationality or ethnic or national origins; racial group means a group of persons defined by reference to colour, race, nationality or ethnic or national origins, and references to a persons racial group refer to any racial group into which he falls. (2) The fact that a racial group comprises two or more distinct racial groups does not prevent it from constituting a particular racial group for the purposes of this Act. (4) A comparison of the case of a person of a particular racial group with that of a person not of that group under section 1(1) or (1A) must be such that the relevant circumstances in the one case are the same, or not materially different, in the other. Section 17 makes it unlawful for the governing body of a maintained school to discriminate against a person in the terms that it offers to admit him to the establishment as a pupil, or by refusing or deliberately omitting to accept an application for his admission to the establishment as a pupil. Section 19B(1) provides that it is unlawful for a public authority in carrying out any functions of the authority to do any act which constitutes discrimination. These provisions make it clear that the sphere within which the OCR was providing guidance to JFS was firmly within the jurisdiction of the civil courts. The admission arrangements The context in which JFSs admissions criteria must be examined is provided by statute. The functioning of publicly funded schools is governed by the School Standards and Framework Act 1998 (the 1998 Act). Schools maintained by local authorities are referred to as maintained schools. They include voluntary aided schools such as JFS: section 20(1)(c). Section 20(1) of the Education Act 2002 provides that for every maintained school there shall be an instrument of government which determines the constitution of the governing body and other matters relating to the school. Section 69 of the 1998 Act imposes duties in regard to the provision of religious education in community, foundation and voluntary schools. Section 69(3) provides that a foundation or voluntary school has a religious character if it is designated as a school having such a character by an order made by the Secretary of State. Section 69(4) requires such an order to state the religion or religious denomination in accordance with whose tenets religious education is, or may be, required to be provided at the school. Under the Religious Character of Schools (Designation Procedure) Regulations 1998 (SI 1998/2535) the Secretary of State is required to designate the religion or religious denomination he considers relevant, following consultation with the schools governing body. By the Designation of Schools Having a Religious Character (England) Order 1999 (SI 1999/2432) the Secretary of State designated JFS as having a religious character which is Jewish. Some other schools have been designated as Orthodox Jewish. By the Designation of Schools Having a Religious Character (Independent Schools) (England) (No 2) Order 2003 (SI 2003/3284) two schools were designated under this description. Part 2 of the Equality Act 2006 introduced a prohibition on discrimination on grounds of religion or belief in the provision of goods and services. Section 49 provides that it is unlawful for the responsible body of, among others, a school maintained by a local education authority to discriminate against any person by, among other things, refusing to accept an application to admit him as a pupil. Section 50 contains a list of exceptions to section 49, among which is one in favour of a school designated under 69(3) of the 1998 Act. As Munby J pointed out, this provision does no more than immunise the school from liability for religious discrimination under the 2006 Act: para 137. It does not immunise it from any liability for racial discrimination that it may have under the Race Relations Act 1976. Section 84 of the 1998 Act provides that the Secretary of State shall issue, and may from time to time revise, a code of practice for the discharge of their functions under Chapter 1 of Part III of the Act by, among others, the governing bodies of maintained schools and that the governing bodies must act in accordance with the code. Paragraphs 2.41 2.43 of the School Admissions Code for 2007 deals with faith based oversubscription criteria. Paragraph 2.41 states that schools designated by the Secretary of State as having a religious character (faith schools) are permitted by section 50 of the Equality Act 2006 to use faith based oversubscription criteria in order to give priority in admission to children who are members of, or who practise, their faith or denomination. It also states that faith based criteria must be framed so as not to conflict with other legislation such as equality and race relations legislation. Paragraph 2.43 of the 2007 Code states: It is primarily for the relevant faith provider group or religious authority to decide how membership or practice is to be demonstrated, and, accordingly, in determining faith based oversubscription criteria, admission authorities for faith schools should only use the methods and definitions agreed by their faith provider group or religious authority. Paragraph 2.47 states: Religious authorities may provide guidance for the admission authorities of schools of their faith that sets out what objective processes and criteria may be used to establish whether a child is a member of, or whether they practise, the faith. The admission authorities of faith schools that propose to give priority on the basis of membership or practice of their faith should have regard to such guidance, to the extent that the guidance is consistent with the mandatory provisions and guidelines of this Code. Section 88C(2) and (3) of the 1998 Act provides that Regulations may prescribe who should be consulted by the admission authority about admission arrangements. Regulation 12 of and Schedule 2 to the School Admissions (Admission Arrangements) (England) Regulations 2008 (SI 2008/3089) provide that the person that the governing body of JFS must consult about the admission arrangements for JFS for the academic year 2010 2011 is the Chief Rabbi. The regulations that were in force in 2007 when M was seeking admission to JFS were the Education (Determination of Admission Arrangements) Regulations 1999 (SI 1999/126) as amended which, by Regulation 5ZA and the Schedule, introduced provisions similar to those in the 2008 Regulations. The Chief Rabbi was the person to be consulted at the time when Ms application for admission was being considered. Provision has been made under section 88H (formerly section 90) of the 1998 Act for parents of a child of primary school age to refer an objection to a schools admission arrangements to the Schools Adjudicator. The procedure for determining admission arrangements is governed by section 88C of the 1998 Act, formerly (as regards England) section 89. It states that the admission arrangements are to be determined by the admission authority. For a voluntary aided school the governing body is the admission authority: see section 88(1). The governing body of JFS adopted an admissions policy which set out the schools over subscription criteria. The policy that was in force in 2007 stated: 1.1 It is JFS (the School) policy to admit up to the standard admissions number children who are recognised as being Jewish by the Office of the Chief Rabbi of the United Hebrew Congregation of the Commonwealth (OCR) or who have already enrolled upon or who have undertaken, with the consent of their parents, to follow any course of conversion to Judaism under the approval of the OCR. 1.2 In the event that the School is oversubscribed then only children who satisfy the provisions of paragraph 1.1 above will be considered for admission, in accordance with the oversubscription criteria set out in Section 2 below. JFS cannot be criticised for basing its oversubscription criteria on the guidance that it received from the OCR. But this does not excuse it from liability for racial discrimination under the Race Relations Act 1976 if the guidance that it received was itself racially discriminatory. The OCR's guidance In connection with JFSs admissions for the year 2009 an application form, Application for Confirmation of Jewish Status, was issued by the OCR. Parents were required to select from the following options: (a) I confirm that the childs biological mother is Jewish by birth. (b) I confirm that the childs biological mother has converted to Judaism. (c) I confirm that the child is adopted [in which case the childs Jewish status must be separately verified]. The guidance notes to the application form state: Jewish status is not dependent on synagogue affiliation per se, though Jewish status will not be confirmed if the child, or any of his/her maternal antecedents, converted to Judaism under non orthodox auspices. If the childs parents were not married under orthodox auspices, further investigation will be necessary before confirmation of Jewish status is issued. This usually entails obtaining additional documentary evidence down the maternal line. If the childs mother was not herself born to a Jewish mother but converted to Judaism before the birth of the child, further inquiries are undertaken by the OCR before it is prepared to recognise the child as Jewish. The OCR does not recognise the validity of conversions carried out by non Orthodox authorities, as they do not require converts to subscribe fully to the tenets of Orthodox Judaism. The exacting process that is indicated by the wording of the application form is firmly rooted in Orthodox Jewish religious law. Religious status is not dependent on belief, religious practice or on attendance at a synagogue. It is entirely dependent upon descent or conversion. It depends on establishing that the person was born to a Jewish mother or has undergone a valid conversion to Judaism. That is a universal rule that applies throughout all Orthodox Judaism. Ms ineligibility for admission to JFS was due to the fact that different standards are applied by the Chief Rabbi from those applied by the Masorti, Reform and Progressive communities in the determining of a persons religious status. Nothing that I say in this opinion is to be taken as calling into question the right of the OCR to define Jewish identity in the way it does. I agree with Lord Brown that no court would ever dictate who, as a matter of Orthodox religious law, is to be regarded as Jewish. Nor is it in doubt that the OCRs guidance as to the effect of Orthodox Jewish religious law was given in the utmost good faith. The question that must now be faced is a different question. It is whether it discriminates on racial grounds against persons who are not recognised by the OCR as Jewish. The Jewish race and ethnicity It is common ground that for the purposes of the Race Relations Act 1976 Jews can be regarded as belonging to a group with common ethnic origins. As Lord Brown says (see paras [245] and [250]), it is possible (leaving aside those with no connection with Judiasm at all) to regard those who are being treated less favourably and those being treated more favourably by JFSs admissions policy as being all in the same ethnic group since they are all Jews. Lord Mance says (see paras 79, 80 and 86) that Orthodox Jews according to Orthodox Jewish principles and Jews who are not Orthodox should be regarded as forming separate ethnic groups or subgroups for present purposes. But the evidence in this case shows that it all depends on the context. Out on the shop floor, for example, all Jews are Jews and an employer who discriminates against them because they are Jews will be in breach of the Act. The problem in this case is that the Chief Rabbi does not recognise as a Jew anyone who is not a Jew according to Orthodox Jewish principles. So far as he is concerned and his concern is only with the Jewish religion there is no division of Jews into separate ethnic groups. I agree with Lord Brown that the difficulty in this case arises because of the overlap between the concepts of religious and racial discrimination and, in the case of Jews, the overlap between ethnic Jews and Jews recognised as members of the Jewish religion. The case does not fit easily into the legislative pattern. It was designed to deal with obvious cases of discrimination on racial grounds. Of course, as we are dealing in this case with faith schools, the religious test has come under scrutiny in the educational context. But the test that is employed is nevertheless a religious one, as that is what faith schools are expected to do. An approach to this case which assumes that Jews are being divided into separate subgroups on the grounds of ethnicity is an artificial construct which Jewish law, whether Orthodox or otherwise, does not recognise. The Act invites this approach, as it is clear that M was being treated less favourably than other persons and this raises the question whether this was on racial grounds. But it must be handled with very great care. As both Lord Phillips in para 9 and Lady Hale in para 54 have emphasised, no one in this case is suggesting that the policy that JFS has adopted is racist. The choice of words is important, and I too would wish to avoid that appalling accusation. The use of the word racial is inevitable, however, although the discrimination that is perceived in this case is on grounds of ethnicity. In DH v Czech Republic (2007) 47 EHRR 59, para 176, the European Court said: Discrimination on account of, inter alia, a persons ethnic origin is a form of racial discrimination. Racial discrimination is a particularly invidious kind of discrimination and, in view of its perilous consequences, requires from the authorities special vigilance and a vigorous reaction. It is for this reason that the authorities must use all available means to combat racism, thereby reinforcing democracys vision of a society in which diversity is not perceived as a threat but as a source of enrichment. One has to ask whether, on the facts of this case, we really are in that territory. The problem is that section 1(1) of the 1976 Act which prescribes direct discrimination does not distinguish between discrimination which is invidious and discrimination which is benign. A defence of justification is not available. In Mandla v Dowell Lee [1983] 2 AC 548 Lord Fraser of Tullybelton discussed the meaning of the word ethnic in the context of the refusal by a private school to admit a Sikh pupil whose religion and culture would not permit him to comply with the schools rules on uniform. At p 562 he said: For a group to constitute an ethnic group in the sense of the 1976 Act, it must, in my opinion, regard itself, and be regarded by others, as a distinct community by virtue of certain characteristics. Some of these characteristics are essential; others are not essential but one or more of them will commonly be found and will help to distinguish the group from the surrounding community. The conditions which appeared to him to be essential were (1) a long shared history, of which the group is conscious as distinguishing it from other groups, and the memory of which it keeps alive; (2) a cultural tradition of its own, including family and social customs and manners, often but not necessarily associated with religious observance. At p 564 he quoted with approval a passage from the judgment of Richardson J in King Ansell v Police [1979] 2 NZLR 531, 543, where he said: a group is identifiable in terms of its ethnic origins if it is a segment of the population distinguishable from others by a sufficient combination of shared customs, beliefs, traditions and characteristics derived from a common or presumed common past, even if not drawn from what in biological terms is a common racial stock. It is that combination which gives them an historically determined social identity in their own eyes and in the eyes of those outside the group. They have a distinct social identity based not simply on group cohesion and solidarity but also on their belief as to their historical antecedents. It is not disputed that the group or groups to which Jews belong are ethnic according to this analysis. They have a shared history which extends back for over three thousand years. Their traditions and practices are maintained with much devotion and attention to detail, in a manner that is designed to keep the memory of that shared history alive. Less favourable treatment of a person because he is, or is thought to be Jewish may therefore be regarded as discrimination against him on racial grounds: see, for example, Seide v Gillette Industries Ltd [1980] IRLR 427, paras 21 22, per Slynn J. In that case the Employment Appeal Tribunal upheld the tribunals decision that the anti semitic comments that were made by Mr Seides fellow worker were made because he was a member of the Jewish race, not because of his religion. The same would be true if he were to be discriminated against because he is, or is thought to be, of a particular Jewish ethnic origin. In Mandla v Dowell Lee at p 562 Lord Fraser said that the 1976 Act is not concerned at all with discrimination on religious grounds. But a finding that a person was treated less favourably on religious grounds does not exclude the possibility that he was treated in that way on racial grounds also. I agree with Lord Clarke that it would be wrong in principle to treat this as an either/or question. Direct discrimination At one level there is no dispute about the reason why M was denied admission to JFS. The schools admissions policy was based on the guidance which it received from the OCR. Thus far the mental processes of the alleged discriminator do not need to be examined to discover why he acted as he did. The dispute between the parties is essentially one of categorisation: was the OCRs guidance given on grounds of race, albeit for a religious reason, or was it solely on religious grounds? For JFS, Lord Pannick QC submits that M failed only because JFS was giving priority to members of the Jewish faith as defined by the religious authority of that faith, which was a religious criterion. That was the ground of the decision. The Court of Appeal was wrong to hold that the ground was that M was not regarded as of Jewish ethnic origin, and that the theological reasons for taking this view was the motive for adopting the criterion: para 29. For E, Ms Rose submits that Lord Pannicks submissions confused the ground for the decision with its motive. The ground spoke for itself. It was that M was not regarded according to Orthodox Jewish principles as Jewish. This meant that he was being discriminated against on grounds relating to his ethnicity. This was racial discrimination within the meaning of the statute. These contradictory assertions must now be resolved. I wish to stress again that the issue is not simply whether M is a member of a separate ethnic group from those who are advantaged by JFSs admissions policy. That is not where the argument in this case stops. I agree with Lord Rodger that the decision of the majority which, as it respectfully seems to me, does indeed stop there leads to extraordinary results. As he puts it in para 226, one cannot help feeling that something has gone wrong. Lord Brown makes the same point when, in para 247 he stresses the importance of not expanding the scope of direct discrimination and thereby placing preferential treatment which could be regarded as no more than indirectly discriminatory beyond the reach of possible justification. The crucial question is whether M was being treated differently on grounds of that ethnicity. The phrase racial grounds in section 1(1)(a) of the 1976 Act requires us to consider what those words really mean whether the grounds that are revealed by the facts of this case can properly be described as racial. Only if we are satisfied that this is so would it be right for this Court to hold that this was discrimination on racial grounds. The development of the case law in this area has not been entirely straightforward. The problem is that, in a new and difficult field, the need for the court to clarify one issue may result in a principle being stated too broadly. This may make it more difficult for it to resolve other different but interlocking issues when they arise at a later date. In Ealing London Borough Council v Race Relations Board [1972] AC 342 the House of Lords considered the phrase on the ground of colour, race or ethnic or national origins in section 1(1) of the Race Relations Act 1968 in the context of an application for housing by a Polish national It held (Lord Kilbrandon dissenting) that national origins meant something different from nationality and that it did not include it since, as Viscount Dilhorne put it at p 358, the word national in national origins means national in the sense of race and not citizenship. There was no discussion of the meaning of the word ethnic. Lady Hale has commented that Lord Simon of Glaisdales speech at p 364 is an interesting example of stereotyping which might raise judicial eyebrows today: The Judicial House of Lords (2009), p 578, fn 32. The House of Lords returned to this topic in Mandla v Dowell Lee [1983] 2 AC 548. By then nationality had been included in the definition of racial grounds in section 3(1) of the Race Relations Act 1976. There was still no statutory prohibition of discrimination on religious grounds. A Sikh schoolboy had been refused a place at a private school because he would not agree to cut his hair and stop wearing a turban. The question was whether this was discrimination on grounds of race as defined in section 3(1). The essential issue was how wide a meaning should be given to ethnic origins. Lord Fraser, with the agreement of the other members of the Appellate Committee, gave these words a wide meaning: see para 185, above. The next important case, which as this case shows may have sent the laws development off in the wrong direction, was R v Birmingham City Council, Ex p Equal Opportunities Commission [1989] AC 1155. The council had three grammar schools for girls and five grammar schools for boys. This was a historical fact, and it was not the councils policy to discriminate. But the House held that it was unlawful for it to provide fewer grammar school places for girls than for boys. The decision was plainly right. But the reasons given by Lord Goff of Chieveley, with whom the other members of the Appellate Committee agreed, have led to difficulty in other cases. At p 1194 he said: The intention or motive of the defendant to discriminate, though it may be relevant so far as remedies are concerned is not a necessary condition of liability; it is perfectly possible to envisage cases where the defendant had no such motive, and yet did in fact discriminate on the ground of sex. That decision was applied in James v Eastleigh Borough Council [1990] 2 AC 751. This was a case about a municipal swimming pool where there was free swimming for children under three years of age and for persons who had reached the state pension age, which was then 65 for men and 60 for women. Mr James and his wife, who were both aged 61, went swimming and he alone was charged a sum of money for doing so. He complained of sex discrimination. The House of Lords, by a majority of three to two, reversed the Court of Appeal and upheld his complaint. It held that the Court of Appeal had been wrong to treat this as a case of indirect discrimination since the councils policy was, as Lord Ackner put it at p 769, inherently discriminatory. Lord Goff in James deprecated the use, in the present context, of words such as intention, motive, reason and purpose: p 773. He added, at pp 773 774, that: taking the case of direct discrimination under section 1(1)(a) of the Act, I incline to the opinion that, if it were necessary to identify the requisite intention of the defendant, that intention is simply an intention to perform the relevant act of less favourable treatment. Whether or not the treatment is less favourable in the relevant sense, ie on the ground of sex, may derive either from the application of a gender based criterion to the complainant, or from selection by the defendant of the complainant because of his or her sex; but in either event, it is not saved from constituting unlawful discrimination by the fact that the defendant acted from a benign motive. More recent decisions of the House of Lords show, however, that where the facts are not so clear cut a more nuanced approach may be called for. The need to establish an objective link between the conduct of the alleged discriminator and the unequal treatment complained of does not exclude the need to explore why the alleged discriminator acted as he did. As the division of Jews into separate subgroups is in itself such an artificial concept (see paras 183 and 184 above), that seems to me to be the real issue in this case. In Nagarajan v London Regional Transport [2000] 1 AC 501, 510 511 Lord Nicholls of Birkenhead made an important statement of principle which has often been cited and applied: Thus, in every case it is necessary to inquire why the complainant received less favourable treatment. This is the crucial question. Was it on grounds of race? Or was it for some other reason, for instance, because the complainant was not so well qualified for the job? Save in obvious cases, answering the crucial question will call for some consideration of the mental processes of the alleged discriminator. Treatment, favourable or unfavourable, is a consequence which follows from a decision. Direct evidence of a decision to discriminate on racial grounds will seldom be forthcoming. Usually the grounds of the decision will have to be deduced, or inferred, from the surrounding circumstances. Having thus identified the ground of the decision the reason why as the crucial question, he went on to deal with the question of motive: The crucial question just mentioned is to be distinguished sharply from a second and different question: if the discriminator treated the complainant less favourably on racial grounds, why did he do so? The latter question is strictly beside the point when deciding whether an act of racial discrimination occurred. For the purposes of direct discrimination under section 1(1)(a), as distinct from indirect discrimination under section 1(1)(b), the reason why the alleged discriminator acted on racial grounds is irrelevant. Racial discrimination is not negatived by the discriminators motive or intention or reason or purpose (the words are interchangeable in this context) in treating another person less favourably on racial grounds. In particular, if the reason why the alleged discriminator rejected the complainants job application was racial, it matters not that his intention may have been benign. As for Lord Goffs test in Birmingham, which Lord Bridge had described as objective and not subjective, Lord Nicholls said however that: He is not to be taken as saying that the discriminators state of mind is irrelevant when answering the crucial, anterior question: why did the complainant receive less favourable treatment? [my emphasis] Developing the same point in Chief Constable of West Yorkshire Police v Khan [2001] UKHL 48, 1 WLR 1947, para 29, Lord Nicholls said that the question was: [W]hy did the alleged discriminator act as he did? What, consciously or unconsciously, was his reason? Unlike causation, this is a subjective test. At p 512 in Nagarajan Lord Nicholls, considering the question of subconscious motivation, added these words: Many people are unable, or unwilling, to admit even to themselves that actions of theirs may be racially motivated. An employer may genuinely believe that the reason why he rejected an applicant had nothing to do with the applicants race. After careful and thorough investigation of a claim members of an employment tribunal may decide that the proper inference to be drawn from the evidence is that, whether the employer realised it at the time or not, race was the reason why he acted as he did. Conduct of this nature by an employer, when the inference is legitimately drawn, falls squarely within the language of section 1(1)(a). The employer treated the complainant less favourably on racial grounds. I would draw from this passage the proposition that if, after careful and thorough investigation, the tribunal were to conclude that the employers actions were not racially motivated that race was not the reason why he acted as he did it would be entitled to draw the inference that the complainant was not treated less favourably on racial grounds. The use of the words motivated and reason in the passage which I have just quoted appears at first sight not to be in harmony with the passage which I have quoted from p 511 where he said that racial discrimination is not negatived by the discriminators motive or intention or reason or purpose (the words are interchangeable in this context) in treating another person less favourably on racial grounds. But I do not think that, if these passages taken together are properly analysed, there is any inconsistency. The point that he was making on p 512 was that an examination of the employers motivation, or the reason why he acted as he did, may be highly relevant to a determination of the crucial question: was this discrimination on racial grounds. On the other hand, once that conclusion has been reached, the fact that there may have been a benign reason for the discrimination is beside the point. In other words, the statutory ground of discrimination, once it has been established, is unaffected by the underlying motive for it. This may be misguided benevolence as in James, or passive inertia as in Birmingham or racial hatred as in Seide. In the Birmingham case neither the reason nor the underlying motive left much room for argument. It was enough that the council was responsible for the continuation of the discriminatory system of grammar school education. In James there was a worthy underlying motive but, as the sole criterion that had been chosen was the unequal pension ages for men and women, the reason was clearly gender based. But where the complaint is that a black or female employee has not been selected for promotion, or has been taken off some particular duty, there will usually be a disputed issue as to the reason. This will require the tribunal to inquire more closely into the mind of the alleged discriminator. This is illustrated by Nagarajan and also by Shamoon v Chief Constable of the Royal Ulster Constabulary [2003] UKHL 11, [2003] ICR 337. I would hold therefore that Lord Goffs rejection of a subjective approach was expressed too broadly. The proposition that the alleged discriminators motive, or reason, is irrelevant needs therefore to be reformulated. It all depends on the stage of the enquiry at which these words are being used. At the initial stage, when the question is whether or not this was discrimination on racial grounds, an examination of the alleged discriminators motivation may be not only relevant but also necessary, to reach an informed decision as to whether this was a case of racial discrimination. As the issue is a subjective one, his mental processes will, as Lord Nicholls said at p 511, call for some consideration. Everything that may have passed through his mind that bears on the decision, or on why he acted as he did, will be open to consideration. But once it has been determined that this was a case of racial discrimination, that is an end of the matter. The treatment cannot be excused by looking beyond it to why he decided to act in that way. I regret the fact that Lord Clarke does not agree with this analysis. As I understand his position, he prefers a test which makes the state of mind of the alleged discriminator irrelevant where the criteria he adopts are inherently discriminatory: see paras 127, 132. The question which divides us is whether his approach is supported by Lord Nicholls statements in Nagarajan and later in Khan. Lord Clarkes reading of the passage in Nagarajan which he has highlighted in para 139 of his opinion is that in the obvious cases, where discrimination is inherent, there is a prohibition on looking at the motivation of the alleged discriminator: see also his para 142. But Lord Nicholls does not say this. He makes no mention of any such prohibition. It may be that the tribunal will not need to look at the alleged discriminators mental processes in obvious cases, as his mental state is indeed obvious. But he does not say that the tribunal is precluded from doing so. Lord Steyn said in Nagarajan at pp 520H 521A that conscious motivation is not required. But, as he made clear, this does not mean that the alleged discriminators state of mind is always irrelevant. Confirmation that this is not Lord Nicholls approach is to be found in the last full paragraph on p 511 of Nagarajan, where he explains Lord Bridges description of the test which Lord Goff adopted in Birmingham. Lord Bridge described it as objective. But Lord Nicholls said that he is not to be taken as saying that there is no investigation into the mind of the alleged discriminator. He does not draw any distinctions here between cases like Birmingham and James, which Lord Clarke describes as cases of inherent discrimination (see para 142, above), and other types of cases. The point that he is making is that even in obvious cases such as Birmingham the tribunal is not precluded from looking at the state of mind of the discriminator. The passage from his speech in Khan to which I refer in para 193 supports this conclusion. He describes the test as a subjective one. Here again he does not distinguish between different types of cases. I believe therefore that an accurate reading of what Lord Nicholls actually said, and did not say, supports my analysis. There are few reported cases in which the tribunal has had to decide as between two prohibited reasons, such as race and gender or (since 2006) race and religion or belief. The only authority referred to by the parties was Seide v Gillette Industries Ltd [1980] IRLR 427. The appeal turned on the question of causation relating to the aftermath of a series of incidents of anti Semitic abuse of Mr Seide by a fellow worker. The report does not give any details of the content of the abuse. The only relevant passage in the judgment is at paras 21 22, recording that it was common ground that Jewish could refer to a member of an ethnic group or to a member of a religious faith, and that the tribunals decision, which it was entitled to reach on the facts, was that Mr Seide was subjected to anti Semitic abuse because of his Jewish origin. It is reasonable to infer that it would have been open to the members of the tribunal to conclude that the abuse was as much on the ground of ethnicity as on the ground of religion and that that was enough to constitute discrimination on a prohibited ground. This would be consistent with the principle that this is not an either/or question. As for this case, it is as different from Seide as it is possible to imagine. This was not a case of foul mouthed anti Semitic abuse. Those who are said to have been responsible for the discrimination, whether at the level of the school authorities, the OCR or the Chief Rabbi himself, are thoughtful, well intentioned and articulate. I would accept Lord Pannicks submission that the Chief Rabbi was not in the least interested in Ms ethnicity. The OCR has left us in no doubt as to why it was acting as it did. If the Chief Rabbi were to be asked the question that was framed by Lord Nicholls, he would say his reason was that this was what was required of him by fundamental Orthodox Jewish religious law. The question whether or not M was Jewish in the secular sense was of no interest to him at all. His advice was based simply and solely on his understanding of Jewish law. Jewishness based on matrilineal descent from Jewish ancestors has been the Orthodox religious rule for many thousands of years, subject only to the exception for conversion. To say that his ground was a racial one is to confuse the effect of the treatment with the ground itself. It does have the effect of putting M into an ethnic Jewish group which is different from that which the Chief Rabbi recognises as Jewish. So he has been discriminated against. But it is a complete misconception, in my opinion, to categorise the ground as a racial one. There is nothing in the way the OCR handled the case or its reasoning that justifies that conclusion. It might have been justified if there were reasons for doubting the Chief Rabbis frankness or his good faith. But no one has suggested that he did not mean what he said. As Lord Rodger points out, to reduce the religious element to the status of a mere motive is to misrepresent what he is doing. This case is quite different too from the example of the Dutch Reformed Church that was referred to by Sedley LJ in the Court of Appeal, para 30, and referred to again during the argument in this court. The discrimination that its belief invited, on grounds of colour, was overtly racist. A court would have no difficulty in dismissing the religious belief as providing no justification for it at all; see also Bob Jones University v United States, 461 US 574 (1983), where the US Supreme Court upheld the decision of the Inland Revenue Service to revoke the Universitys tax exempt status because, while permitting unmarried people who were black to enrol as students, it had adopted a racially discriminatory policy of denying admission to applicants engaged in an interracial marriage or known to advocate interracial marriage or dating although it had been based on sincerely held religious beliefs. Beliefs of that kind are not worthy of respect in a democratic society or compatible with human dignity: Campbell and Cosans v United Kingdom (1982) 4 EHRR 293, para 36. Here the discrimination between those who are, and those who are not, recognised as Jewish was firmly and inextricably rooted in Orthodox Jewish religious law which it is the duty of the Chief Rabbi to interpret and apply. The Chief Rabbis total concentration on the religious issue, to the exclusion of any consideration of ethnicity, can be illustrated by two contrasting examples. Several similar examples were referred to in the course of argument. A is the child of parents, and the grandchild of grandparents, all of whom led wholly secular lives similar to those of their largely secular neighbours. They never observed Jewish religious law or joined in the social or cultural life of the Jewish communities where they lived, but there is unimpeachable documentary evidence that more than a century ago the mother of As maternal grandmother was converted in an Orthodox synagogue. To the OCR A is Jewish, despite his complete lack of Jewish ethnicity. By contrast B is the child of parents, and the grandchild of grandparents, all of whom have faithfully observed Jewish religious practices and joined actively in the social and cultural life of the Jewish community, but there is unimpeachable documentary evidence that more than a century ago the mother of Bs maternal grandmother was converted in a non Orthodox synagogue. To the OCR B is not Jewish, despite his obvious Jewish ethnicity. Descent is only necessary because of the need, in these examples, to go back three generations. But having gone back three generations, the OCR applies a wholly religious test to what has been identified as the critical event. For the reasons given by Lord Rodger, the part that conversion plays in this process is crucial to a proper understanding of its true nature. It cannot be disregarded, as Lady Hale suggests in para 66, as making no difference. It shows that the inquiry is about a religious event to be decided according to religious law. For these reasons I would hold that the decision that was taken in Ms case was on religious grounds only. This was not a case of direct discrimination on racial grounds. On this issue, in respectful agreement with Lord Rodger, Lord Walker and Lord Brown, I would set aside the decision reached by the Court of Appeal. Indirect discrimination An examination of the question whether the application of the oversubscription policy to M amounted to indirect discrimination within the meaning of section 1(1A) of the Race Relations Act 1976 falls into two parts: (1) did the policy put persons of the same race or ethnic or national origins as M at a particular disadvantage when compared with other persons: section 1(1A)(a) and (b); and, if so, (2) can JFS show that the policy was a proportionate means of achieving a legitimate aim: section 1(1A)(c). Lord Pannick did not seek to argue that the first question should be answered in the negative. I think that he was right not to do so, as it is clear that M and all other children who are not of Jewish ethnic origin in the maternal line, together with those whose ethnic origin is entirely non Jewish, were placed at a disadvantage by the oversubscriptions policy when compared with those who are of Jewish ethnic origin in the maternal line. They may in theory gain entry to the school by undergoing a process of conversion that is approved by the OCR, but this in itself is a severe disadvantage. It appears that no child has ever been admitted to JFS on this basis. The issue on this branch of the case, therefore, is whether JFS can show that the policy had a legitimate aim and whether the way it was applied was a proportionate way of achieving it. The burden is on JFS to prove that this was so: R (Elias) v Secretary of State for Defence [2006] EWCA Civ 1293, [2006] 1 WLR 3213, per Mummery LJ at paras 131 132. The Court of Appeal accepted the submission that the admission criteria were explicitly related to ethnicity and so incapable of constituting or forming part of a legitimate aim and that it was not possible to justify indirect discrimination by reliance on the very thing that made the test discriminatory: para 45. But I think that is to misapply the test that the Act lays down. I agree with Lord Brown that there was a failure by the Court to address the questions of legitimate aim and proportionality on the assumption that the admissions policy was not directly discriminatory. For E, Ms Rose submitted that if the aim pursued was itself related to the ethnic origins of the pupils it was not capable of being a legitimate aim. This was how Lord Fraser put it in Mandla v Dowell Lee [1983] 2 AC 548, 566; see also Orphanos v Queen Mary College [1985] AC 761, 772. Those were indirect discrimination cases, but they were decided under section 1(1)(b) of the 1976 Act which has now been superseded by section 1(1A): see para [170], above. An aim which is itself discriminatory in character cannot be legitimate for the purposes of sections 1(1A). So the assumption on which the argument about indirect discrimination proceeds is that, for the reasons I have given, JFSs admission criteria did not discriminate on grounds of ethnicity. The question is whether, given that persons of given ethnic origins were at a particular disadvantage when compared with other persons, the school nevertheless had an aim which was legitimate. That is a different question. In the Administrative Court Munby J said that the aim was to educate those who, in the eyes of the OCR, are Jewish, irrespective of their religious beliefs, practices or observances, in a school whose culture and ethos is that of Orthodox Judaism: para 192. Developing this argument, Lord Pannick submitted that it was legitimate for a faith school to give preference to those children who are members of the faith as recognised by the OCR. If children in Ms position were admitted to the school there would inevitably be fewer places for those recognised as Jewish by the OCR. The policy of the government was to allow schools to give priority to those of the religion for which they have been designated. It was open to the school, under the 2007 Code, to adopt criteria based on membership or practice. As its ethos was that of Orthodox Judaism, which the Chief Rabbi seeks to promote, membership was a legitimate criterion. If that criterion was not adopted it would open the door to children who were not recognised as Jewish and virtually exclude those who were. As against this, Ms Rose submitted that it was impossible to ignore the close relationship between the criterion of membership and the ethnic origins of the children. This made it impossible for JFS to justify the criterion as legitimate. In my opinion, however, it is necessary to look at all the circumstances to test the issue of legitimacy. The assumption on which section 1(1A)(c) proceeds it that the treatment is open to the objection that it puts a person at a disadvantage in comparison with persons not of his race or ethnic or national origins. The question is whether treatment which has that effect can nevertheless be shown to have a legitimate aim. Questions about the motive and aims of the alleged discriminator come in at this stage. An aim may be held to be legitimate even though it discriminates in the ways referred to in section 1(1A)(a) and (b). In my opinion, for the reasons that Lord Brown gives in paras 252 253, JFS has shown that its aim is a legitimate one. The essential point is that a faith school is entitled to pursue a policy which promotes the religious principles that underpin its faith. It is entitled to formulate its oversubscriptions criteria to give preference to those children whose presence in the school will make it possible for it to pursue that policy. The legitimacy of the policy is reinforced by the statutory background. It has not emerged out of nowhere. It has been developed in accordance with the Code which permits faith schools to define their conditions for admission by reference either to membership of the faith or to practice. The justification for the Code lies exclusively in a belief that those who practise the faith or are members of it will best promote the religious ethos of the school. In Orphanos v Queen Mary College [1985] AC 761, 772 773 Lord Fraser said that a typical example of a requirement which could be justified without regard to the nationality or race of the person to whom it was applied was Panesar v Nestl Co Ltd (Note) [1980] ICR 144, where it was held that a rule forbidding the wearing of beards in the respondents chocolate factory was justifiable on hygienic grounds notwithstanding that the proportion of Sikhs who could conscientiously comply with it was considerably smaller than the proportion of non Sikhs who could comply with it. It was, he said, purely a matter of public health and nothing whatever to do with racial grounds. I would apply the same reasoning to this case. This leaves, however, the question of proportionality. The Court of Appeal, having concluded that the criterion did not have an aim that was legitimate, did not attempt to examine this issue: para 47. Before Munby J it was submitted by Ms Rose that JFSs admissions policy did not properly balance the impact of the policy on those like M adversely affected by it and the needs of the school: para 199. He rejected this argument for two reasons. One was that the kind of policy that is in question in this case is not materially different from that which gives preference in admission to a Muslim school to those who were born Muslim or preference in admission to a Catholic school to those who have been baptised. The other was that an alternative admissions policy based on such factors as adherence or commitment to Judaism would not be a means of achieving JFSs aims and objectives: paras 200 201. In my opinion these reasons miss the point to which Ms Roses submission was directed. The question is whether putting M at a disadvantage was a proportionate means of achieving the aim of the policy. It was for JFS to show that they had taken account of the effect of the policy on him and balanced its effects against what was needed to achieve the aim of the policy. As Peter Gibson LJ noted in Barry v Midland Bank plc [1999] ICR 319, 335 336 the means adopted must be appropriate and necessary to achieving the objective. I do not think that JFS have shown that this was so. Lord Pannick submitted that there was no other way of giving effect to the policy. If the school were to admit M, this would be to deny a place to a child who was regarded as Jewish by the OCR. This was inevitable as the school was oversubscribed. But what is missing is any sign that the schools governing body addressed their minds to the impact that applying the policy would have on M and comparing it with the impact on the school. As Ms Rose pointed out, the disparate impact of the policy on children in Ms position was very severe. They are wholly excluded from the very significant benefit of state funded education in accordance with their parents religious convictions, whereas there are alternatives for children recognised by the OCR although many in the advantaged group do not share the schools faith based reason for giving them priority. The school claimed to serve the whole community. But the way the policy was applied deprived members of the community such as M, who wished to develop his Jewish identity, of secondary Jewish education in the only school that is available. There is no evidence that the governing body gave thought to the question whether less discriminatory means could be adopted which would not undermine the religious ethos of the school. Consideration might have been given, for example, to the possibility of admitting children recognised as Jewish by any of the branches of Judaism, including those who were Masorti, Reform or Liberal. Consideration might have been given to the relative balance in composition of the schools intake from time to time between those recognised as Jewish by the OCR who were committed to the Jewish religion and those who were not, and as to whether in the light of it there was room for the admission of a limited number of those committed to the Jewish religion who were recognised as Jewish by one of the other branches. Ms Rose said that the adverse impact would be much less if a different criterion were to be adopted. But the same might be true if the criterion were to be applied less rigidly. There may perhaps be reasons, as Lord Brown indicates (see para 258), why solutions of that kind might give rise to difficulty. But, as JFS have not addressed them, it is not entitled to a finding that the means that it adopted were proportionate. There are cases, of which R(SB) v Governors of Denbigh High School [2006] UKHL 15, [2007] 1 AC 100 and Belfast City Council v Miss Behavin Ltd [2007] UKHL 19, [2007] 1 WLR 1420 are the best examples, where it can be said in the human rights context that the fact that the public authority had applied its mind to the issue is immaterial. This is because in that context the issue is one of substance, not procedure. Lord Hoffmann in Governors of Denbigh High School, para 68, gave this explanation: In domestic judicial review, the court is usually concerned with whether the decision maker reached his decision in the right way rather than whether he got what the court might think to be the right answer. But article 9 [of the European Convention on Human Rights] is concerned with substance, not procedure. It confers no right to have a decision made in any particular way. What matters is the result: was the right to manifest a religious belief restricted in a way which is not justified under article 9(2)? The problem that JFS faces in this case is a different one, as the context is different. Under section 1(1A)(c) of the Race Relations Act 1976 the onus is on it to show that the way the admissions policy was applied in Ms case was proportionate. It is not for the court to search for a justification for it: see Mummery LJs valuable and instructive judgment in R (Elias) v Secretary of State for Defence [2006] 1 WLR 3213, paras 131 133. JFS failed to discharge its duty under section 71 of the Act to have regard to the need to eliminate discrimination. It is having to justify something that it did not even consider required justification. The question, as to which there is no obvious answer either way, was simply not addressed. As a result the court does not have the statistical or other evidence that it would need to decide whether or not the application of the policy in Ms case was proportionate. It may well be, as Lord Brown indicates, that devising a new oversubscriptions policy that is consistent with the schools legitimate aim would be fraught with difficulty. But it was for JFS to explore this problem and, having done so, to demonstrate that whatever policy it came up with was proportionate. So, although I do not arrive at this conclusion by the same route as Lord Mance, I agree with him that on the material before the Court the admissions policy cannot be held to have been justified. I would hold that, by applying the oversubscription criteria to M in a way that put him at a particular disadvantage when compared with others not of the same ethnicity by reason of matrilineal descent, JFS discriminated against him in breach of section 1(1A) of the Race Relations Act 1976, and that E is entitled to a declaration to that effect. The appeals on costs In its order for costs the Court of Appeal directed that the United Synagogue and the Secretary of State must each pay 20% of Es costs in the Court of Appeal and below, and that the Schools Adjudicator must pay 10% of those costs. The United Synagogue and the Secretary of State have both appealed, the United Synagogue formally and the Secretary of State informally, against that order to this court. I did not understand Mr Linden QC, who appeared for the Secretary of State, to press his informal appeal and, as it has no merit, I would dismiss it. But Mr Jaffey for the United Synagogue did make submissions in support of its appeal. His point was that the United Synagogue had intervened in the Administrative Court on the express basis that it would not be found liable in costs which was not challenged by any other party, and that the basis for its intervention had been endorsed by Munby J when he allowed it to intervene. He submitted that his client ought not to have been found liable by the Court of Appeal for the costs incurred at first instance, nor should it have been found liable for costs in the Court of Appeal as there was no appeal against the basis on which it had been permitted to intervene. The situation is more complicated than that brief summary might suggest. The nature of the United Synagogues intervention was transformed when the case reached the Court of Appeal. Lord Pannick QC, who had not appeared below, was instructed on its behalf and assumed much responsibility for presenting the case on behalf of JFS so much so, that when the case reached this court, he appeared for JFS and not for the United Synagogue. In that situation, as it had assumed a role that went well beyond that of an intervener, the Court of Appeal cannot be faulted for finding it liable for a share of the costs in that court. But I do not think that what happened in the Court of Appeal should deprive the United Synagogue of the protection against an order for costs that it sought and was granted in the Administrative Court. So I would recall that part of the Court of Appeals order. I would replace it by a finding that the United Synagogue must pay 20% of Es costs in the Court of Appeal but not below, and that 20% of Es costs at first instance must be borne by JFS in addition to the 50% that it has already been ordered to pay. Conclusion I would allow the appeal by JFS against the Court of Appeals finding that the Chief Rabbis criteria discriminated directly against M on racial grounds. I would however dismiss its appeal against the Court of Appeals finding that this was a case of indirect discrimination, although on different grounds. I would allow the appeal by the United Synagogue against the Court of Appeals order for costs to the extent that I have indicated. I would dismiss the Secretary of States appeal. LORD RODGER The claimant, E, is Jewish by matrilineal descent. By conviction, he is a Masorti Jew. Masorti Judaism differs in certain respects from what is generally called Orthodox Judaism. Masorti Jews adhere to a set of beliefs and practices which have their origins in Orthodox Judaism but which are not now the same. In particular, while both Masorti and Orthodox Judaism believe that the written and oral Torah (from which the halakhah is derived) are unchangeable and bind Jews today, they differ in their interpretation of some parts of the halakah. Es wife converted to Judaism in an independent synagogue. At the risk of some slight imprecision, her conversion can be described as having taken place under non Orthodox auspices. Since the requirements for Orthodox conversion reflect Orthodox rather than Progressive or Masorti teachings and practices, her conversion is recognised by the Masorti authorities, but is not recognised by the Office of the (Orthodox) Chief Rabbi. Therefore, while the Masorti authorities recognise her son, M, as Jewish, the Office of the Chief Rabbi does not. But, of course, both E and M consider that M is Jewish, on the basis that his mother was Jewish when he was born. JFS is designated by the Secretary of State under the School Standards and Framework Act 1998 as having a Jewish religious character. The relevant regulations provide that the Schools governing body (the governors) must consult the Chief Rabbi about its admission arrangements. Having done so, the governors adopted an admissions policy which provided that, if the School were oversubscribed, then only children who were recognised as being Jewish by the Office of the Chief Rabbi would be considered for admission. E wanted to get M into the School. It has an excellent reputation and has been oversubscribed for many years. So, when E applied to have M admitted, hardly surprisingly, his application was rejected because the Office of the Chief Rabbi would not have recognised M as being Jewish. Indeed the point was so clear that E did not apply to the London Beth Din for a determination of Ms status in Orthodox Jewish law. In theory, the School would have considered admitting him if he had undertaken to convert under Orthodox auspices. But the process would have taken several years and have involved M adhering to a set of beliefs that are materially different from those of Masorti Judaism. E and M decided not to pursue that option. The purpose of designating schools as having a religious character is not, of course, to ensure that there will be a school where Jewish or Roman Catholic children, for example, can be segregated off to receive good teaching in French or physics. That would be religious discrimination of the worst kind which Parliament would not have authorised. Rather, the whole point of such schools is their religious character. So the whole point of designating the Jewish Free School as having a Jewish character is that it should provide general education within a Jewish religious framework. More particularly, the education is to be provided within an Orthodox religious framework. Hence the oversubscription admission criteria adopted after consulting the Chief Rabbi. The Schools policy is to give priority to children whom the Orthodox Chief Rabbi recognises as Jewish. From the standpoint of Orthodoxy, no other policy would make sense. This is because, in its eyes, irrespective of whether they adhere to Orthodox, Masorti, Progressive or Liberal Judaism, or are not in any way believing or observant, these are the children and the only children who are bound by the Jewish law and practices which, it is hoped, they will absorb at the School and then observe throughout their lives. Whether they will actually do so is, of course, a different matter. The dispute can be summarised in this way. E, who is himself a Masorti Jew, wants his son, whom he regards as Jewish, to be admitted to the School as a Jewish child. He complains because the School, whose admission criteria provide that only children recognised as Jewish by the Office of the (Orthodox) Chief Rabbi are to be considered for admission, will not consider admitting his son, who is recognised as Jewish by the Masorti authorities but not by the Chief Rabbi. If anything, this looks like a dispute between two rival religious authorities, the Office of the Chief Rabbi and the Masorti authorities, as to who is Jewish. But E claims and this Court will now declare that, when the governors refused to consider M for admission, they were actually treating him less favourably than they would have treated a child recognised as Jewish by the Office of the Chief Rabbi on racial grounds: Race Relations Act 1976, section 1(1)(a). The decision of the majority means that there can in future be no Jewish faith schools which give preference to children because they are Jewish according to Jewish religious law and belief. If the majority are right, expressions of sympathy for the governors of the School seem rather out of place since they are doing exactly what the Race Relations Act exists to forbid: they are refusing to admit children to their school on racial grounds. That is what the Courts decision means. And, if that decision is correct, why should Parliament amend the Race Relations Act to allow them to do so? Instead, Jewish schools will be forced to apply a concocted test for deciding who is to be admitted. That test might appeal to this secular court but it has no basis whatsoever in 3,500 years of Jewish law and teaching. The majoritys decision leads to such extraordinary results, and produces such manifest discrimination against Jewish schools in comparison with other faith schools, that one cant help feeling that something has gone wrong. The crux of the matter is whether, as the majority hold, the governors actually treated M less favourably on grounds of his ethnic origins. They say the governors did so, but for a bona fide religious motive. If that is really the position, then, as Lord Pannick QC was the first to accept on their behalf, what the governors did was unlawful and their bona fide religious motive could not make the slightest difference. But to reduce the religious element in the actions of those concerned to the status of a mere motive is to misrepresent what they were doing. The reality is that the Office of the Chief Rabbi, when deciding whether or not to confirm that someone is of Jewish status, gives its ruling on religious grounds. Similarly, so far as the oversubscription criteria are concerned, the governors consider or refuse to consider children for admission on the same religious grounds. The only question is whether, when they do so, they are ipso facto considering or refusing to consider children for admission on racial grounds. Lady Hale says that M was rejected because of his mothers ethnic origins which were Italian and Roman Catholic. I respectfully disagree. His mother could have been as Italian in origin as Sophia Loren and as Roman Catholic as the Pope for all that the governors cared: the only thing that mattered was that she had not converted to Judaism under Orthodox auspices. It was her resulting non Jewish religious status in the Chief Rabbis eyes, not the fact that her ethnic origins were Italian and Roman Catholic, which meant that M was not considered for admission. The governors automatically rejected M because he was descended from a woman whose religious status as a Jew was not recognised by the Orthodox Chief Rabbi; they did not reject him because he was descended from a woman whose ethnic origins were Italian and Roman Catholic. As in any complaint of racial discrimination, the point can be tested by reference to the appropriate comparator. The starting point is that both E and M believe M to be Jewish by descent. So E applied to the School to admit M on the basis that he was Jewish because his Italian Catholic mother had converted to Judaism before he was born. The mothers Jewish status as a result of her conversion was accordingly the only issue which the governors were asked to consider or did consider. They refused Es application because her conversion had been under non Orthodox auspices. Therefore the appropriate comparator is a boy with an Italian Catholic mother whom the governors would have considered for admission. He could only be a boy whose mother had converted under Orthodox auspices. The question then is: did the governors treat M, whose mother was an Italian Catholic who had converted under non Orthodox auspices, less favourably than they would have treated a boy, whose mother was an Italian Catholic who had converted under Orthodox auspices, on grounds of his ethnic origins? Plainly, the answer is: no. The ethnic origins of the two boys are exactly the same, but the stance of the governors varies, depending on the auspices under which the mothers conversion took place. Faced with a boy whose mother had converted under Orthodox auspices, the governors would have considered him for admission without pausing for a single second to enquire whether he or his mother came from Rome, Brooklyn, Siberia or Buenos Aires, whether she had once been a Roman Catholic or a Muslim, or whether he or she came from a close knit Jewish community or had chosen to assimilate and disappear into secular society. In other words, the ethnic origins of the child or his mother in the Mandla v Dowell Lee [1983] 2 AC 548 sense would not have played any part in the governors decision to admit him. All that would have mattered was that his mother had converted under Orthodox auspices. Equally, in Ms case, the governors did not refuse to consider admitting him on grounds of his Mandla ethnic origins. Even supposing that the governors knew about his origins, they were quite irrelevant and played no part in their decision. The governors were simply asked to consider admitting him as the son of a Jewish mother. They declined to do so because his mother had not converted under Orthodox auspices. It was her non Orthodox conversion that was crucial. In other words, the only ground for treating M less favourably than the comparator is the difference in their respective mothers conversions a religious, not a racial, ground. Since, therefore, when applying the religious test, the governors were not asked to consider, and did not actually consider, Ms ethnic origins, James v Eastleigh Borough Council [1990] 2 AC 751 and all the other cases to which the majority refer simply do not come into the picture. For these reasons, which are essentially those set out so clearly in the judgment of Munby J, and in agreement with the opinion of Lord Brown, I would hold that the governors did not discriminate against M directly on racial grounds. So far as indirect discrimination is concerned, again I agree with Lord Brown and indeed with Munby J. The aim of the School, to instil Jewish values into children who are Jewish in the eyes of Orthodoxy, is legitimate. And, from the standpoint of an Orthodox school, instilling Jewish values into children whom Orthodoxy does not regard as Jewish, at the expense of children whom Orthodoxy does regard as Jewish, would make no sense. That is plainly why the Schools oversubscription policy allows only for the admission of children recognised as Jewish by the Office of the Chief Rabbi. I cannot see how a court could hold that this policy is a disproportionate means of achieving the Schools legitimate aim. I would accordingly allow the Governing Bodys appeal and restore the order of Munby J. On the United Synagogues costs appeal, I agree with Lord Hope. LORD WALKER I respectfully agree with Lord Hope that this was a case of indirect, but not direct discrimination on grounds of ethnic origins contrary to section 1 of the Race Relations Act 1976 as amended. I do not wish to make any addition or qualification to the reasons set out in Lord Hopes judgment. But I do wish to express my respectful agreement with much of Lady Hales judgment, although we reach different conclusions. In particular I agree with her references to the conspicuously clear and thoughtful judgment of Mummery LJ in R (Elias) vs Secretary of State for Defence [2006] 1 WLR 3213. Lord Hope has rightly referred to Mummery LJs treatment (at paras 128 to 133, in the context of justification of indirect discrimination) of the significance of a failure to address the issue of potential discrimination, especially when section 71 of the Race Relations Act 1976 applies. But the whole of Mummery LJs discussion of the boundary between direct and indirect discrimination (paras 60 to 123) merits close attention. The division of opinion in this Court illustrates that the separateness and mutual exclusivity of direct and indirect discrimination, although immovably established as part of the law (for all the reasons given by Mummery LJ at paras 114 to 122), is sometimes elusive in practice. In consequence the sharp distinction between the impossibility of justifying direct discrimination in any circumstances, and the possibility of justifying indirect discrimination, sometimes seems a little arbitrary. LORD BROWN Jews of all denominations define membership of the Jewish religion by reference to descent or conversion. The question is one of status: you are a Jew if, whether by descent or conversion, your mother (or anyone else up the matrilineal line) was a Jew or if you yourself convert to Judaism. Orthodox Jews require that the conversion be recognised by the Office of the Chief Rabbi (OCR). Other denominations of Jewry (Masorti, Reform and Liberal) apply less exacting criteria for conversion. It is that which has given rise to the underlying dispute between the parties in this case. JFSs oversubscription admissions policy gives priority to those recognised by the OCR as Jewish. M, because his mother converted to Judaism under the auspices of a non Orthodox rabbi and not an orthodox rabbi, is not so recognised. There is much debate within the Jewish community about the proper standards to apply to conversion and many would like JFS to include within their admissions policy anyone recognised as Jewish by any of the denominations. Ms real complaint here is that in deciding who is a Jew the OCRs approach to conversion is misguided. That, however, is not an issue which is, or ever could be, before the Court. No court would ever intervene on such a question or dictate who, as a matter of orthodox religious law, is to be regarded as Jewish. Thus it is that this legal challenge has nothing to do with the standards of conversion to Judaism and who shall be recognised under religious law as Jews but instead, somewhat surprisingly at first blush, invites the Court to decide questions of racial discrimination. Is JFSs policy of giving priority in admissions to those recognised by the OCR as Jewish to be characterised and outlawed as direct racial discrimination contrary to section 1(1)(a) of the Race Relations Act 1976? Is the school on racial grounds (defined by section 3 of the Act to include the ground of ethnic origins) treating others less favourably? That is the central issue before the Court. Ms father (E), supported by the Equality and Human Rights Commission and the British Humanist Society, submits that those not recognised by JFS as Jews are being treated less favourably than those recognised as Jews (so much is obvious) on the ground of the ethnic origins of those not recognised i.e. because no one in their matrilineal line is recognised as Jewish. Integral to the argument is that any definition of Jewish status based on descent is necessarily dependent on ethnic origin and therefore to be regarded as racially discriminatory. In this case the argument arises in the context of an orthodox Jewish school and at the suit of a child who would be regarded as Jewish according to all other Jewish denominations. But the same argument could arise equally in the context of schools giving priority to children recognised as Jews by any other Jewish denomination. I repeat, all Jews define membership of their religion by reference to descent (or conversion). The contrary argument, advanced by JFS, United Synagogue, the Secretary of State for Children, Schools and Families, and the Board of Deputies of British Jews, is that those not recognised by the school as Jews are being treated less favourably not because of their ethnic origins a matter of total indifference to the OCR but rather because of their religion: they are not members of the Jewish religion whereas those preferred are. Of course, the reason they are not members of the Jewish religion is that their forebears in the matrilineal line (or, in the case of Liberal Jews, either ancestral line) were not Jews and in this sense their less favourable treatment is determined by their descent. The ground for their less favourable treatment, however, is religion, not race. Both arguments are to my mind entirely coherent and entirely respectable. Only one, however, can be correct. The difficulty in the case arises because of the obvious overlap here between the concepts respectively of religious and racial discrimination. If the ground for discrimination is racial, it is unlawful. If however the ground (and not merely the motive) is religious, that is lawful. The Equality Act 2006 for the first time outlawed religious discrimination inter alia with regard to school admissions but not in the case of oversubscribed designated faith schools like JFS. Plainly the 2006 Act cannot operate to legitimise what would otherwise be racial discrimination under the 1976 Act. One may note, however, that if Ms argument is correct, JFS (and all other Jewish schools, whether maintained or independent, whose admissions criteria similarly depend upon the child being recognised under religious law as Jewish) have been operating an unlawful directly racially discriminatory policy for upwards of 30 years. There can be no doubt that Jews, including those who have converted to Judaism, are an ethnic group. That, since the decision of the House of Lords in Mandla v Dowell Lee [1983] 2 AC 548, is indisputable. And it is plain too why the courts have given a wide definition to the phrase ethnic origins so as to provide comprehensive protection to those suffering discrimination on racial grounds. Manifestly Jews and those perceived by discriminators to be Jews have welcomed such an approach and benefit from it. It by no means follows, however, that to discriminate against a person on the ground that he or someone else either is or is not Jewish is therefore to discriminate against him on racial grounds (as the Court of Appeal concluded at paragraph 32 of its judgment). That to my mind is a considerable over simplification of an altogether more difficult problem. This is perhaps best illustrated by reference to Ms position relative to those benefited under JFSs admissions policy. True, M was refused admission because his mother, and therefore he himself, although plainly both ethnically Jewish in the Mandla sense, were not recognised by the OCR as Jewish. But those granted admission under the policy were admitted for the very reason that they were recognised as Jewish. Does the 1976 Act really outlaw discrimination in favour of the self same racial group as are said to be being discriminated against? I can find no suggestion of that in any of the many authorities put before us. Nor can I see a parallel between the present case and the example apparently thought indistinguishable by the Court of Appeal of the Dutch Reformed Church of South Africa who until recently honestly believed that God had made black people inferior and had destined them to live separately from whites. The discrimination there was plainly against blacks and in favour of whites self evidently, therefore, on the ground of race and irredeemable by reference to the Churchs underlying religious motive. Ethnic Jews and Jews recognised as members of the religion, distinguishable as groups though they are, clearly overlap. Not so blacks and whites. What I am suggesting here is that it is quite unrealistic, given that those being treated less favourably and those being treated more favourably by JFSs policy are all (save, of course, for those who have no connection with Judaism whatsoever) in the same ethnic group, to regard the policy as discriminatory on racial rather than religious grounds. I recognise, of course, that under section 3(2) of the 1976 Act a particular racial group within a wider racial group still enjoys protection under the Act. The point I am making, however, is that the differential treatment between Jews recognised by the OCR and those not so recognised within the wider group of ethnic Jews (no less obviously than the differential treatment between the former and those with no connection whatever to Judaism) is plainly on the ground of religion rather than race. Still less does it seem to me that this case is covered by the House of Lords decision in James v Eastleigh Borough Council [1990] 2 AC 751. Once it was recognised that the Council there might just as well have said that entry to its swimming pools was free to women, but not men, in the 60 65 age group, the direct discrimination against men became indisputable. The condition of pensionability was itself patently gender based. The position would surely have been different had the policy been instead to admit free, say, those who were in fact retired. That would not have involved direct discrimination and, if challenged as indirect discrimination, would surely have been capable of justification, certainly if free admittance was granted not only to those retired but also if the applicant could otherwise establish that he or she was of limited means. Mandatory retirement age and sex were there precisely coterminous. Even then, the case was decided only by the narrowest majority of the House overturning a unanimous Court of Appeal. The 1976 Act, unlike, for example, article 14 of the European Convention on Human Rights, draws a distinction between direct and indirect discrimination, only the latter being capable of justification. It therefore seems to me of the greatest importance not to expand the scope of direct discrimination and thereby place preferential treatment which could well be regarded as no more than indirectly discriminatory beyond the reach of possible justification. This is especially so where, as here, no one doubts the Chief Rabbis utmost good faith and that the manifest purpose of his policy is to give effect to the principles of Orthodox Judaism as universally recognised for millennia past. There is not the same exact correlation between membership of the Jewish religion and membership of the group regarded on the Mandla approach as being of Jewish ethnicity as there was between retirement age and sex in James v Eastleigh and I for my part would regard the Court of Appeals judgment as going further than that decision and as impermissibly expanding the scope of direct discrimination beyond its proper limits. As I have already indicated, E is not really seeking to prevent JFS from adopting oversubscription criteria which give priority to Jews but rather is asking for JFS to define Jews more expansively than Orthodox Jews in fact do. But it is, of course, the logic of his argument that JFSs policy must be regarded as racially discriminatory not merely because it rules out ethnic Jews like M who are not recognised as Jews by the OCR but also because it rules out all other racial groups whether or not they have any connection with Judaism at all. On this argument, it is strictly immaterial that E is Jewish or that Ms mother converted to Judaism. This policy could as well have been struck down at the suit of anyone desiring admission to the school. If the argument succeeds it follows that Jewish religious law as to who is a Jew (and as to what forms of conversion should be recognised) must henceforth be treated as irrelevant. Jewish schools in future, if oversubscribed, must decide on preference by reference only to outward manifestations of religious practice. The Court of Appeals judgment insists on a non Jewish definition of who is Jewish. Jewish schools, designated as such by the Minister and intended to foster a religion which for over 3000 years has defined membership largely by reference to descent, will be unable henceforth even to inquire whether one or both of the applicant childs parents are Jewish. (Yet is that so very different from a Catholic school asking if the child has been baptised? It is hardly likely to have been unless one at least of its parents was a Christian). The root question for the Court is simply this: can a Jewish faith school ever give preference to those who are members of the Jewish religion under Jewish law. I would answer: yes, it can. To hold the contrary would be to stigmatise Judaism as a directly racially discriminating religion. I would respectfully disagree with that conclusion. Indeed I would greatly regret it. On this issue of direct discrimination my views coincide entirely with those of Lord Rodger. I turn to the question of indirect discrimination. As already noted, it is obvious that JFSs policy involves those not recognised by the OCR as Jews being treated less favourably than those who are so recognised. It is rather less obvious, however, that this policy puts persons of the same race or ethnic or national origins as [M] at a particular disadvantage when compared with other persons and that it puts [M] at that disadvantage (section 1(1A)(a) and (b) of the 1976 Act). After all, as already observed, M is himself, although personally disadvantaged by the policy, a member of the very same ethnic group as the policy advantages. The view could, therefore, be taken that M is disadvantaged not by his ethnic origins but by his inability to satisfy the Orthodox religious test. Put that aside, however, and suppose that section 1(1A) is here engaged and that JFS must establish that its policy is a proportionate means of achieving a legitimate aim pursuant to section 1(1A)(c) as certainly they would need to do were this challenge brought, as theoretically it could have been, at the suit of a child in no way of Jewish ethnic origin. The legitimacy of JFSs aim is surely clear. Here is a designated faith school, understandably concerned to give preference to those children it recognises to be members of its religion, but so oversubscribed as to be unable to admit even all of these. The School Admissions Code expressly allows admission criteria based either on membership of a religion or on practice. JFS have chosen the former. Orthodox Jews regard education about the Jewish faith as a fundamental religious obligation. Unlike proselytising faiths, however, they believe that the duty to teach and learn applies only to members of the religion, because the obligations in question bind only them. JFSs purpose is to develop in those recognised by the OCR as Jewish an understanding and practice of the faith. The fact that many of those admitted do not practise the Jewish faith on their admission is intended and, indeed, welcomed. Such children are admitted and taught alongside children already committed to the Orthodox Jewish faith so as to enhance their level of religious knowledge and observance and in the hope and expectation that they may come to practise it. In short, to impose a religious practice test, besides being felt by many to be invasive, difficult to measure and open to abuse, would be contrary to the positive desire of schools like JFS to admit non observant as well as observant Jewish children. Ironically, moreover, to impose such a test would narrow, rather than widen, the character of the schools intake so as to make it appear more, rather than less, discriminatory. As the Court of Appeal itself noted (at para 44), those presently admitted come from a wide disparity of religious and cultural family backgrounds . even . from atheist or Catholic or Moslem families. Inevitably too, it would require the school to educate those not recognised as Jewish by Orthodox Jewish law at the expense of those who are. The Court of Appeals conclusion that the aim of JFSs admissions policy is illegitimate was based on its view that its purpose or inevitable effect is to make and enforce distinctions based on race or ethnicity (para 46), essentially a repetition of its earlier finding of direct race discrimination. In truth the Court of Appeal never addressed the questions of legitimate aim and proportionality on the assumption (the only basis on which indirect discrimination would fall to be considered) that the policy is not directly discriminatory. I turn finally, then, to the question of proportionality. Given JFSs legitimate aim of educating children recognised to be Jewish, is their policy of invariably giving preference to these children over those not so recognised a proportionate means of achieving that aim? Answering that question in the affirmative, Munby J, in the course of a lengthy, impressive and to my mind convincing judgment, said this: 200. Two quite separate considerations drive me to this conclusion. In the first place, the kind of admissions policy in question here is not, properly analysed, materially different from that which gives preference in admission to a Moslem school to those who were born Moslem or preference in admission to a Catholic school to those who have been baptised. But no one suggests that such policies, whatever their differential impact on different applicants, are other than a proportionate and lawful means of achieving a legitimate end. Why, [counsel] asks rhetorically, should it be any different in the case of Orthodox Jews? . I agree. Indeed, the point goes even wider than the two examples I have given for, as [counsel] submits, if Es case on this point is successful then it will probably render unlawful the admission arrangements in a very large number of faith schools of many different faiths and denominations. 201. The other point is that made both by the Schools Adjudicator and by [counsel for JFS]. Adopting some alternative admissions policy based on such factors as adherence or commitment to Judaism (even assuming that such a concept has any meaning for this purpose in Jewish religious law) would not be a means of achieving JFSs aims and objectives; on the contrary it would produce a different school ethos. If JFSs existing aims and objectives are legitimate, as they are, then a policy of giving preference to children who are Jewish applying Orthodox Jewish principles is, they say, necessary and proportionate indeed, as it seems to me, essential to achieve those aims . JFS exists as a school for Orthodox Jews. If it is to remain a school for Orthodox Jews it must retain its existing admissions policy; if it does not, it will cease to be a school for Orthodox Jews. Precisely. To this argument there is, and can be, no satisfactory answer. I find myself in full agreement with all of that. To ask why JFS should give preference to a Jewish child with little or no interest in Judaism whilst rejecting a committed child like M is to misunderstand the essential aim of an Orthodox Jewish school. This, as I have explained, is to fulfil its core religious duty: the education of members of its religion in the Orthodox faith, whether or not they practise it or will ever come to do so. It can no more be disproportionate to give priority to a Jewish child over that of a child, however sincere and committed, not recognised as Jewish than it would be to refuse to admit a boy to an oversubscribed all girls school. Whilst I respectfully agree with Lord Hopes judgment on the direct discrimination issue, I regretfully find myself differing from his conclusion on indirect discrimination. For my part I would have allowed JFSs appeal in its entirety. I understand Lord Hope to conclude that JFS have never addressed the question of proportionality and must now do so and devise a fresh policy allowing applications for admission by those not recognised as Jewish to be considered on an individual basis. Quite apart from the fact that this approach to my mind runs counter to the schools central aim, it seems to me fraught with difficulty. Quite how such a policy will be formulated and applied on a consistent basis is not easy to discern. That said, I regard it as altogether preferable to the new policy presently dictated by the Court of Appeals judgment: the imposition of a test for admission to an Orthodox Jewish school which is not Judaisms own test and which requires a focus (as Christianity does) on outward acts of religious practice and declarations of faith, ignoring whether the child is or is not Jewish as defined by Orthodox Jewish law. That outcome I could not contemplate with equanimity. JUDGMENT R (on the application of E) (Respondent) v Governing Body of JFS and the Admissions Appeal Panel of JFS (Appellants) and others R (on the application of E) (Respondent) v Governing Body of JFS and the Admissions Appeal Panel of JFS (United Synagogue) and others (Appellants) before LADY HALE LORD BROWN LORD HOPE, Deputy President JUDGMENT GIVEN ON 14th October 2009 Heard on 1st October 2009 Appellant (United Synagogue) Christopher McCrudden (Instructed by Farrer & Co) Ben Jaffey Appellant (Governing Body of JFS and Admissions) Lord Pannick QC Peter Oldham (Instructed by Stone King Sewell LLP) Appellant (Legal Services Commission) David Hart QC Sarah Lambert Commission) (Instructed by Legal Services Respondent (E) Dinah Rose QC Helen Mountfield (Instructed by Bindmans LLP) R (on the application of E) (Respondent) v Governing Body of JFS and the Admissions Appeal Panel of JFS (Appellants) and others R (on the application of E) (Respondent) v Governing Body of JFS and the Admissions Appeal Panel of JFS and others (United Synagogue) (Appellants) [2009] UKSC 1 LORD HOPE, DEPUTY PRESIDENT 1. This is a procedural application under rule 30 of the Supreme Court Rules 2009 (SI 2009/1603). The respondent (E) seeks an order that, whatever the outcome of the appeal, the appellants (JFS and the United Synagogue) shall not be entitled to seek the payment of any costs from himself or from the Legal Services Commission. Having heard argument at its first sitting on 1 October 2009, the Court decided to refuse Es application for a protective costs order for reasons to be given later. The following are our reasons for this decision. Background 2. JFS is a voluntary aided maintained comprehensive school in the London Borough of Brent. The first and second appellants are the Governing Body of JFS (the Governing Body) and its independent admission appeal panel (the Panel). The third appellant, the United Synagogue, is an association of Orthodox synagogues and the foundation body of JFS. E is the father of M, who is now aged 13. E is Jewish by descent and Ms mother, who is of Italian national and ethnic origin, has converted to Judaism. But her conversion is not recognised by the Orthodox Jewish community. M was refused admission to JFS for the year 2007/2008 on the grounds that he was not recognised as being Jewish by the Office of the Chief Rabbi of the United Hebrew Congregations of the Commonwealth and that its admission criteria gave priority, in the event of oversubscription, to Orthodox Jewish children. E sought judicial review of the Governing Bodys refusal to offer M a place at the school, of the Panels decision to uphold the refusal and against them both for failing to comply with the duty imposed on public authorities under section 71 of the Race Relations Act 1976 and against the rejection of his objection by the Schools Adjudicator. On 3 July 2008 Munby J found the school to have been in breach of its duty under section 71 of the 1976 Act, but otherwise rejected the claims: [2008] EWHC 1535/1536 (Admin). The finding of a breach of 3 section 71 was not the subject of any appeal, but Munby J granted leave to appeal on the substantive discrimination issues. 3. On 25 June 2009 the Court of Appeal allowed Es appeal, finding that JFSs oversubscription criteria were unlawful as they amounted to direct, or alternatively indirect, discrimination as defined in section 1 of the Race Relations Act 1976: [2009] EWCA Civ 626; [2009] PTSR 1442. The Governing Bodys refusal to admit M and the dismissal of his appeal by the Panel were both quashed. JFS was directed to reconsider Ms admission in accordance with its admissions policy but without regard to the criteria held by the judgment of the court to be unlawful. Other issues arising in the appeal were adjourned and have yet to be determined. That part of the order directing JFS to reconsider Ms admission was stayed for 14 days and, if a petition for leave to appeal were to be lodged, until the determination of that petition. As to costs, the Court of Appeal ordered that Es costs in that court and before Munby J be paid in the following proportions: 50% from JFS, 20% from the United Synagogue, which had participated in the case as an intervener in support of JFS, and as to the remaining 30% from other parties who are not concerned with this procedural application. Permission to appeal to the House of Lords was refused. 4. On 28 July 2008 an appeal committee of the House of Lords gave leave to the Governing Body and the Panel to appeal to the Supreme Court on the substantive discrimination issues and to the United Synagogue to appeal against the costs order that was made against it. On 31 July 2009 the House of Lords refused an application by the Governing Body and the Panel for a continuation of the stay of that part of the order of the Court of Appeal directing JFS to reconsider Ms admission, with the result that the decision originally challenged in this claim has effectively been superseded. 5. E has had the benefit in the proceedings below, and in the proceedings to date both in the House of Lords and this Court, of funding from the Legal Services Commission. He seeks the benefit of public funding for the substantive hearing of the appeal. But the Legal Services Commission was minded not to provide him with this benefit unless he takes steps to protect it against an order in the appellants favour for the costs of the appeal. On 18 September 2009 Mr David Reddin, a Senior Case Manager in the Legal Services Commission, wrote to his solicitors in these terms: I refer to your letter dated 15 September our telephone conversation of yesterday evening and your email of todays date. For the avoidance of doubt it is correct to say that I am minded to refuse your application for funding [E] as a respondent in the Supreme Court unless the other side is prepared to: 4 (a) Allow the cost [sic] order made in the Court of Appeal to stand in any event (b) Agree an undertaking that there will be no costs order in the Supreme Court with both sides bearing their own costs. If that is not acceptable we would expect an application to be made to the Court to seek an order along those lines failing which funding would not be provided. Our reasoning behind this decision stems from the Funding Code which in the circumstances of this case allows the refusal of funding unless the likely costs are proportionate to the likely benefits of proceedings having regard to the prospects of success and all other circumstances. 6. Mr Reddin then set out a series of factors which he said were clearly relevant to the determination of proportionality. In summary, they were as follows: (1) that E had effectively succeeded in the primary purpose of the litigation and his situation would not change whatever the outcome of the proceedings, (2) the likely consequences for the Community Legal Service Fund if costs were to be awarded to the other side on an inter partes basis in the Court of Appeal and in this Court, (3) that it was not unreasonable to expect the appellants to pay for the case, as the real interest in overturning the decision of the Court of Appeal lay with them and (4) that, although the case was of some public interest, the number of people who were likely to benefit as being in a similar position to M was relatively small. 7. The terms proposed by Mr Reddin on the Legal Services Commissions behalf were not acceptable to the other parties. E wishes to maintain his opposition to the appeals, but he is not in a position to fund the legal representation that he requires himself. The result of the predicament in which he finds himself is that he has been left with no alternative but to apply to the Court for a protective costs order. JFS and the United Synagogue have opposed his application. The issues 8. The order that E seeks is that the Appellants shall not be entitled to seek the payment of any costs from the Legal Services Commission or the Respondent. As Ms Dinah Rose QC in her carefully worded submissions 5 made clear, the real purpose of this application is to ensure that E continues to have the benefit of public funding in this Court. Taking her application at its face value, however, it raises the question whether E and the Legal Services Commission should be protected against orders for costs in three distinct respects: (1) an order in favour of JFS for the costs of its appeal to this Court on the discrimination issues; (2) an order in favour of the United Synagogue for the costs of its appeal on the costs issue; and (3) an order in favour of either or both of these parties for their costs in the Court of Appeal, should they be successful in their appeals to this Court. Mr Reddin also asked in his letter of 18 September 2009 that an order should be sought that both sides should bear their own costs in any event. But Ms Rose did not seek an order in these terms. She said that it would have serious implications for access to justice and that it would be wrong in principle. We will comment briefly below on her reasons for not doing so. 9. Mr Hart QC for the Legal Services Commission very properly conceded at the outset of his submissions that the Commission would not insist as a condition of extending funding to E on his obtaining protection against an order in favour of the United Synagogue for the costs of its appeal to this Court on the costs issue. Nor would it insist on his obtaining protection against an award in favour of JFS or the United Synagogue of their costs in the Court of Appeal in the event of either or both of them being successful in their appeals to this court. Had he not made these concessions we would have had no hesitation in refusing to make orders to either effect. In both cases Es exposure to the risk of these awards is a direct result of the fact that the Legal Services Commission provided funding to E in the Court of Appeal. Having decided to do so, it must be taken to have assumed the risk that any orders as to costs that were made in Es favour in that court would be reversed on appeal by the Supreme Court. E had a legitimate expectation that the funding that was afforded to him in the Court of Appeal would extend to the consequences of any such order. Furthermore, as Mr Jaffey for the United Synagogue pointed out, an order protecting E and the Legal Services Commission against the payment to the United Synagogue of any costs would render its appeal on the costs issue pointless. It does not appear from Mr Reddins letter of 18 September 2009 that he had applied his mind to the issue that the United Synagogue wishes to pursue. It is entirely separate from the discrimination issues raised by JFS. The costs issue raises no question of general public interest. A protective costs order in Es favour in regard to these costs would be entirely inappropriate. 10. The sole remaining issue relates to the costs that will be incurred by JFS in this court. The question is whether the Legal Services Commission is entitled to insist as a condition of extending funding to E to enable him to oppose JFSs appeal that he must obtain a protective order in his favour against these costs. Mr Hart confirmed that funding for this purpose would not be extended to E if an order was not made in his favour to this effect. He submitted that the relevant principles were identified by the Court of Appeal in 6 R (Corner House Research) v Secretary of State for Trade and Industry [2005] EWCA Civ 192, [2005] 1 WLR 2600, para 74, and that they applied by analogy to this case: (1) the issues raised by JFS are of general public importance, (2) the public interest requires that those issues should be resolved, (3) E does not have a private interest in the outcome, (4) having regard to the financial resources of the parties and to the amount of costs that are likely to be involved it is fair and just to make the order and (5) if the order is not made, E will probably discontinue the proceedings and will act reasonably in so doing. That was a case where the party who was seeking the order would discontinue the proceedings if it was not made. In this case, as in Weaver v London Quadrant Housing Trust [2009] EWCA Civ 235, it is the other party who is in control of the appeal. But it was held in Weaver that it was nevertheless appropriate for a protective costs order to be made in the respondents favour to ensure that there was proper representation for both sides before the court: para 7. 11. Funding services as part of the Community Legal Service is available only to individuals: Access to Justice Act 1999, s 7. So the principles that were identified in R (Corner House Research) v Secretary of State for Trade and Industry, where the claimant was a non governmental organisation of limited means and not eligible for public funding, do not provide a complete answer to the question which has been raised by this application. As in Weaver v London Quadrant Housing Trust, the prime mover behind the application in this case is the Legal Services Commission. It is not willing to fund Es legal representation except on its own terms. The question is whether the attitude which it has taken in this case is compatible with the scheme which has been laid down by the statute and in particular with the Code that has been prepared under section 8 of the 1999 Act. Ms Rose said that Mr Reddins letter was hard to reconcile with the Code. Lord Pannick QC for JFS, whose arguments Ms Rose said she was content to follow, went further. He submitted that in the circumstances of this case to withdraw public funding from E at this stage would be unlawful. The statutory framework 12. The basic rule that provides protection for individuals against an award of costs against them personally in cases that are publicly funded is set out in section 11(1) of the 1999 Act, which provides that, except in prescribed circumstances, costs ordered against an individual in relation to any proceedings funded for him shall not exceed the amount (if any) which is a reasonable one for him to pay having regard to all the circumstances, including the financial resources of all the parties to the proceedings, and their conduct in connection with the dispute to which the proceedings relate. Section 11(3) provides that regulations may make provision about costs in relation to proceedings in which services are funded by the Legal Services Commission for any of the parties as part of the Community Legal Service. Section 11(4) 7 sets out various matters with regard to which such regulations may make provision. Regulation 5 of the Community Legal Service (Cost Protection) Regulations 2000 (SI 2000/824) provides cost protection for the Legal Services Commission in cases where funded services are provided to a client in relation to proceedings, those proceedings are finally decided in favour of a non funded party and the limit on costs set out in section 11(1) of the Act applies. In such cases the court may only make an order for payment by the Legal Services Commission to the non funded party of the whole or part of the costs incurred by him in the proceedings in an appellate court if it is satisfied that it is just and equitable in the circumstances that provision for the costs should be made out of public funds: regulation 5(3)(d). The Governing Body is a charity supported by limited funds. Lord Pannick said that the Legal Services Commission was, in effect, seeking to deny it the benefit of this regulation. Mr Hart did not suggest that anything else was to be found in the Community Legal Service (Cost Protection) Regulations 2000 that bears on the issue that has been raised in this case. 13. Section 8(1) of the 1999 Act provides that the Legal Services Commission shall prepare a code setting out the criteria according to which it is to decide whether to fund (or continue to fund) services as part of the Community Legal Service for an individual for whom they may be so funded and, if so, what services are to be funded for him. As E was funded in the courts below his case can be taken then to have met all the relevant criteria, including those relating to financial eligibility. Our attention was drawn to a number of provisions in the Funding Code which might be relevant to the consideration of his case at this stage, faced as he is with an appeal by a party who seeks to reverse orders that were made in his favour in the court below. Part A of the Code sets out the general criteria for funding. Section 7 of this Part sets out the criteria for judicial review. Para 7.5.2 provides: 7.5.2 The Presumption of Funding If the case has a significant wider public interest, is of overwhelming importance to the client or raises significant human rights issues, then, provided the standard criteria in Section 4 and Section 5.4 are satisfied, funding shall be granted save where, in light of information which was not before the court at the permission stage or has subsequently come to light, it appears unreasonable for Legal Representation to be granted. There has been no change to Es financial position or to the merits of the discrimination issues which are the subject of the appeal to this Court. The only change is that, as a result of the lifting of the stay, the decision originally challenged has been superseded. 8 14. Part C of the Funding Code provides guidance about decision making. Para 13.5 of this Part provides: 13.5 Discharge on the Merits 3. The importance of a case to the client must always be considered in decisions to discharge, especially if discharge is being considered at a very late stage in the proceedings. The clients rights under ECHR Article 6 must be considered in such circumstances. Para 13.7 provides: 13.7 Claims Not Subject to cost Benefit Ratios 1. This guidance applies to: . (c) certificates for Full Representation or Litigation Support in proceedings which have a significant wider public interest. 2. The starting point in deciding whether such a certificate should continue or should be discharged is to reapply the relevant Criteria for the Level of Service in question, taking into account the latest available information. 3. If, when prospects of success and cost benefit Criteria are applied to the certificate as interpreted in the way described above, those Criteria are satisfied, funding will continue and the certificate will not be discharged. If those Criteria are not satisfied, the certificate will normally be discharged, but the Commission will retain a discretion to continue funding. This discretion will generally be approached in the following way: (a) funding will be continued if there is a significant wider public interest in doing so (d) if proceedings are at a late stage the clients Article 6 rights must be considered. (e) otherwise the issue for the Commission is whether it is in the interests of the Community Legal Service Fund for funding to 9 continue. The certificate should be continued if it is in the Funds interest to do so, but discharged if it is not 15. The guidance that is given in Part C of the Funding Code appears to be directed primarily to the decisions that need to be taken at the outset of proceedings and about the discharge of certificates while proceedings are still at first instance. Mr Hart admitted that this was the first occasion that the Legal Services Commission had insisted upon a protective costs order as a condition of providing funding for an appeal against orders made in its clients favour by the court below for which the House of Lords had given leave. He was unable point to anything in the Code that provided direct support for the reasons that the Legal Services Commission has given in this case for refusing funding in these circumstances. So far as it goes, however, Part C of the Code suggests that the following considerations are relevant at this stage of the proceedings: (a) the Commission is entitled to consider whether it is in the interests of the Community Legal Service Fund for funding to be continued: para 13.7.3(e); but (b) where the case is of significant wider public interest, the presumption is that funding that has been granted under Part A, para 7.5.2 should continue: para 13.7.3(a); (c) the clients interests must also be considered: para 13.5.3; and (d) especially if proceedings are at a late stage, his Article 6 rights must be considered too: paras 13.5.3 and 13.7.3(d). Discussion 16. It is clear that E would not have made this application had he not been forced to do so by the Legal Services Commission. It is also clear that without the support of public funding he will not be able, as he wishes to do, to continue to resist this appeal. As in Weaver v London Quadrant Housing Trust [2009] EWCA Civ 235, it is essential that there should be representation for both sides before the Court. The case raises issues of considerable public importance, and it is plainly in the public interest that both sides of the argument should be properly presented. The date for the hearing of the appeal, which in view of the importance of the issues has been expedited, has already been fixed. The hearing is to take place at the end of this month. Time is now too short for effective alternative arrangements to be made for the Court to be provided with an amicus to argue the case in Es place. So the real issue that must be addressed is not whether the case is suitable for a protective costs order under the Corner House Research case principles, but whether the decision of the Legal Services Commission to refuse funding in this case unless it has the benefit of a protective costs order is compatible with the Funding Code and open to attack on traditional Wednesbury grounds. 17. The Legal Services Commission seeks protection from the ordinary consequences of the statutory scheme under which public funding is provided. It wishes to eliminate the risk of an order being made against it in favour of JFS under regulation 5(3)(d) of the 2000 Regulations. In Weaver v London 10 Quadrant Housing Trust [2009] EWCA Civ 235, where the applicant was publicly funded, an order was made that the Trust could not recover its costs against the applicant or the Legal Services Commission. That case shows that it cannot be said that an order in such terms will never be appropriate where the applicant is publicly funded. But, as Toulson LJ said in para 16, the background to the application in that case was highly unusual. The appeal had been brought by the Trust, which was a registered social landlord. It was brought to establish a point of general importance, namely whether a registered social landlord was to be regarded as a public authority for the purposes of section 6(3)(b) of the Human Rights Act 1998. The applicant no longer had any interest in the proceedings. The court had dismissed her challenge to the possession order that was made against her on the facts. So, as Elias LJ pointed out in para 12, the possession order against her would stand come what may. Any personal interest that she might derive and it hard to see what this could have been was no greater than that which would accrue to the benefit of all tenants in the same position that she had been before the order was made against her. 18. This case is significantly different, in various respects. In the first place, in Weaver it was inconceivable that, had the Legal Services Commission withdrawn their support and the Trust then succeed in their appeal, any costs order would have been made against the tenant. Here, by contrast, were his certificate to be discharged and the appeal to succeed, there is a real risk that E would be saddled with a very substantial liability for future costs. Furthermore, E maintains that he still has a personal interest in the outcome of this appeal. As he has made clear throughout, he feels strongly that other children should not be denied a school place on the same racially discriminatory basis as the Court of Appeal has held happened in Ms case. The private law claim by M on whose behalf the application for judicial review was brought is still unresolved, and its outcome is dependent upon the result of these proceedings. Moreover the public interest in the substantive discrimination issues which JFS wishes to argue is much greater than Mr Reddin appears to have envisaged. Far from the number of people who are likely to benefit as being in a similar position to M being relatively small, as he said in his letter of 18 September 2009, those who are likely to benefit extend across the widest possible spectrum of children who are exposed to discrimination on racial grounds. The issue is not confined to the Jewish community or even to children who wish to be educated in religious schools. So the case for insisting that JFS should be denied the benefit of regulation 5(3)(d) of the 2000 Regulations by the making of a protective costs order against it is much weaker than it was in Weavers case. 19. Then there is the stage at which this issue has been raised. Leave to appeal was given on 28 July 2009. On 31 July 2009 the House of Lords refused to make a protective costs order in Es favour. He was invited to renew his application if his financial circumstances changed so that his eligibility for 11 public funding came into question. There has been no change in his financial position or in the circumstances that affect the merits of the discrimination issues. All that has changed is the removal of the stay and Ms admission to the school. The prospects of success remain the same as they were in the courts below. It was in these circumstances that immediately after the hearing on 31 July 2009 Es solicitors contacted the Legal Services Commission about the funding for the appeal to this Court. Having attempted without success to obtain funding from another source, they made an application for further funding from the Legal Services Commission on 8 September 2009. Mr Reddins letter of 18 September 2009 was the result. 20. Mr Reddin cannot be criticised for delay. But his refusal to provide funding to enable E to resist JFSs appeal without a protective costs order ignores the consequences of that refusal for access to justice. As Ms Rose pointed out, it would mean that publicly funded litigants would have to be warned that they might be exposed to personal liability for the other sides costs on appeal even if they were entirely successful in the courts below. Many litigants would be unable to face that risk, with the result that they would be shut out of court. In consequence of JFSs appeal against the decision in his favour by the Court of Appeal, for which he was publicly funded, E would be exposed to the risk of having to pay costs incurred after public funding has been withdrawn from him even if he takes no further part in these proceedings. Conversely, the case has only reached this court because E had the benefit of public funding in the Court of Appeal. He had a legitimate expectation that, as he was provided with public funding in the Court of Appeal he would be provided with public funding to enable him to resist this appeal. 21. We take full account of the points made by Mr Reddin in his witness statement of 29 September 2009, and in particular the risk to the Legal Services Commission of an adverse costs order if JFS is successful in its appeal. We take account too of the fact that JFS would not be entitled to recover costs against an amicus were one to be appointed: see Weaver v London Quadrant Housing Trust [2009] EWCA Civ 235, para 7. But the position which Mr Reddin has adopted on the Commissions behalf cannot be reconciled with the statutory scheme. In his letter of 18 September 2009 he said that the Funding Code in the circumstances of this case allows the refusal of funding unless the likely costs are proportionate to the likely benefits of the proceedings and all other circumstances. This takes no account of the stage in the proceedings at which the client is in need of funding. Compelling reasons would have to be shown for withdrawing public funding from a litigant who was publicly funded in the court below, was successful in that court and wished to resist an appeal to a higher court by the unsuccessful party. No such reasons have been demonstrated in this case. 22. It should be understood, as a principle of general application, that if the Legal Services Commission decide to fund a litigant whether by way of claim 12 or a defence who is successful in his cause, that decision must ordinarily be seen to carry with it something close to an assurance that the Commission will continue to support him in any subsequent appeal by the unsuccessful party whilst he remains financially eligible. This will particularly be so where (a) the withdrawal of support would expose the publicly funded litigant to a substantial risk for future costs, (b) he retains a significant interest, quite apart from his interest in resisting any future costs liability, in maintaining his success in the litigation and (c) the issues raised on the appeal are of general public importance which it is in the public interest to resolve and his case on these issues is unlikely to be properly argued unless he continues to be funded by the Legal Services Commission. All three of these circumstances prevail in this case. It should be noted too that in Weaver the Court of Appeal, in making the protective costs order, expressly recognised that, were funding to be withdrawn, the necessary representation would have to be provided either by the Equality and Human Rights Commission or by appointing an amicus, against whom the Trust would not be able to recover its costs: [2009] EWCA Civ 235, paras 7 and 17. Those alternatives are not available here. Although the Equality and Human Rights Commission are intervening in the appeal, they propose to advance different arguments from those which E wishes to advance. As we have said, it is too late for the effective appointment of an amicus. The decision to refuse public funding at this stage appeared to us in all the circumstances to be so unreasonable as to be unlawful. 23. It was suggested that, if the Legal Services Commission adhered to this position despite a finding to that effect, the matter could be taken to judicial review. But time is short. No advantage is to be gained by going through that procedure, and the delay and expense of doing so is best avoided. We concluded that E is entitled to an immediate declaration in these proceedings that the only reasonable decision open to the Legal Services Commission is to continue to provide him with public funding for this appeal. No costs orders 24. As has already been noted, Ms Rose declined to seek an order that each side should be liable for its own costs in any event on the ground that to do so would be wrong in principle. As Scott Baker J observed in R (Boxall) v Waltham Forest London Borough Council (2001) 4 CCLR 258, para 12, the failure of a legally aided litigant to obtain a costs order against another party may have serious consequences. This is because, among other things, the level of remuneration for the lawyers is different between a legal aid and an inter partes determination of costs. This disadvantage is all the greater in a case such as this. It is a high costs case, for which lawyers representing publicly funded parties are required to enter a high costs case plan with the Legal Services Commission. It is a common feature of these plans that they limit the number of hours to an artificially low level and the rates at which solicitors and counsel are paid to rates that are markedly lower than those that are usual in the 13 public sector. Mr Reddin has indicated that, as they are defending a win, Es solicitors would not be expected to be paid at risk rates. Nevertheless the rate of remuneration that is likely to be agreed for this appeal will be considerably lower than that which would be reasonable if costs were to be determined inter partes. 25. It is one thing for solicitors who do a substantial amount of publicly funded work, and who have to fund the substantial overheads that sustaining a legal practice involves, to take the risk of being paid at lower rates if a publicly funded case turns out to be unsuccessful. It is quite another for them to be unable to recover remuneration at inter partes rates in the event that their case is successful. If that were to become the practice, their businesses would very soon become financially unsustainable. The system of public funding would be gravely disadvantaged in its turn, as it depends upon there being a pool of reputable solicitors who are willing to undertake this work. In R (Boxall) v Waltham Forest London Borough Council Scott Baker J said that the fact that the claimants were legally aided was immaterial when deciding what, if any, costs order to make between the parties in a case where they were successful and he declined to order that each side should bear its own costs. It is, of course, true that legally aided litigants should not be treated differently from those who are not. But the consequences for solicitors who do publicly funded work is a factor which must be taken into account. A court should be very slow to impose an order that each side must be liable for its own costs in a high costs case where either or both sides are publicly funded. Had such an order been asked for in this case we would have refused to make it. Conclusion 26. For these reasons we refused Es application for a protective costs order. We declared that the only reasonable decision open to the Legal Services Commission in the circumstances was to continue public funding without a protective costs order. The Legal Services Commission must pay to E, JFS and the United Synagogue the costs of this application. Nothing is to be published which may tend to identify the child who is concerned in these appeals. 14 On the United Synagogues costs appeal I agree entirely with Lord Hope. MICHAELMAS TERM [2009] UKSC 1 On appeal from: [2009] EWCA Civ 626 [2009] EWCA Civ 681
+The appellant, TRA, who was arrested in the United Kingdom on 1 June 2017, is charged with one count of conspiracy to commit torture (count 1) and seven counts of torture (counts 2 8). The substantive offence alleged in each case is that of torture contrary to section 134, Criminal Justice Act 1988 (CJA). The charges relate to events in Liberia in 1990, in the early stages of the first Liberian civil war, when an armed group, the National Patriotic Front of Liberia (NPFL), sought to take control of the country and to depose the then President, Samuel Doe. The leader of the NPFL was Charles Taylor REDACTED. The NPFL eventually succeeded in taking control of Liberia and Charles Taylor became President in 1997. This is an appeal pursuant to section 36, Criminal Procedure and Investigations Act 1996 (CPIA) and section 33(1), Criminal Appeal Act 1968. It arises out of a ruling on a question of law made within a preparatory hearing under section 32(3) CPIA which was amalgamated into a decision on an application for dismissal under the Crime and Disorder Act 1998, Schedule 3 paragraph 2(2). The Criminal Division of the Court of Appeal (Lord Burnett CJ, Popplewell and Whipple JJ) has certified the following point of law of general public importance: What is the correct interpretation of the term person acting in an official capacity in section 134(1) of the Criminal Justice Act 1988; in particular does it include someone who acts otherwise than in a private and individual capacity for or on behalf of an organisation or body which exercises or purports to exercise the functions of government over the civilian population in the territory which it controls and in which the relevant conduct occurs? The prosecution case REDACTED The prosecution maintains that at the time and place of the alleged offences, the NPFL was the de facto military government or government authority and that Charles Taylor and those acting for and with him, including the appellant, were acting in an official capacity for, and on behalf of, the NPFL and had effective control of the area where the various alleged offences occurred at the time they occurred. The prosecutions expert witness acknowledges that identifying a specific date when a particular town fell under NPFL control is difficult. Territory changed hands quickly during the early months of the war. Both the NPFL and the government of Liberia made misleading statements regarding which towns were under their control. During its advance across Nimba County the NPFL did not have a clearly defined military structure, although Charles Taylor was universally recognised as leader of the group during this period. Commanders moved with the fighting and exercised influence based on the number of soldiers they were able to recruit and train. The prosecutions expert witness indicates that within days of falling under NPFL control, villages and towns usually received a visit from an NPFL commander and a detachment of fighters, although the NPFL did not maintain a permanent presence in all locations. Further, he states that his own research suggests that all of Nimba County including the major towns and cities was under NPFL control by early May 1990. In a memorandum served by the prosecution after the hearing before the Court of Appeal, the prosecutions expert clarifies that his use of the term control refers to military rather than administrative control over the area. He states that the NPFL offensives in early 1990 caused the Armed Forces of Liberia (AFL) to withdraw from nearly all areas of Nimba County and consolidate their forces in military bases located in strategic towns. This withdrawal created a situation in which NPFL forces had freedom of movement throughout the County. As a result, the NPFL was the de facto military authority in the area. Such military control is said to be very different from administrative control. He states that before June 1990 the NPFL did not have a sustained presence in much of Nimba County. It did not assign officials to oversee towns or deploy forces to provide security. NPFL forces passed through towns and villages on an ad hoc basis; there was no sustained or coordinated occupation. Much of the population lived in a no mans land, areas without any consistent administrative authority, but with the occasional presence of NPFL fighters. REDACTED Following her arrest on 1 June 2017, the appellant denied involvement in the offences. In her Defence Case Statement, she asserts that at no time did she act in an official capacity for the NPFL and she disputes that the NPFL was the de facto government authority in the relevant locations and at the relevant times. The proceedings The appellant made an application to dismiss the charges pursuant to the Crime and Disorder Act 1998, Schedule 3, paragraph 2. The application came before Sweeney J at the Central Criminal Court in two stages. The parties agreed that the judge should first hear argument as to the correct legal test of official capacity with the intention that, once that ruling had been delivered, the defence could consider whether to continue with a submission that there was no case to answer. The application proceeded on the basis that a submission of no case to answer may include the calling of evidence by the prosecution or the defence and that the determination of such a submission would be a matter of law. The first part of the dismissal application was heard on 26 and 27 March 2018. In his ruling dated 30 July 2018, Sweeney J concluded that section 134 applies, not only to acting for entities either tolerated by, or acting under the authority of the government of a state, but also, in situations of armed conflict, to individuals who act in a non private capacity and as part of an authority wielding entity. Following this ruling, the second part of the defendants dismissal application was heard on 4 October 2018. On 10 October 2018 Sweeney J ruled that there was a case to answer on all counts. In his reasons given in writing on 29 October 2018 the judge explained that, while the questions whether the appellant was acting in a non official capacity on behalf of the NPFL and whether the NPFL was an authority wielding entity would ultimately be for the jury, the dismissal application turned on whether the evidence, taken at its highest, was sufficient for a jury properly to so conclude. He held that it was. The appellant appealed against the ruling dated 30 July 2018, made again within the context of the preliminary hearing on 29 October 2018, to the Court of Appeal which dismissed the appeal on 21 December 2018. It held that the category of perpetrator defined as a public official or person acting in an official capacity in section 134 CJA is not confined to those acting on behalf of a recognised state but covers any person who acts otherwise than in a private and individual capacity for or on behalf of an organisation or body which exercises or purports to exercise the functions of government over the civilian population in the territory which it controls and in which the relevant conduct occurs. Furthermore, it covers any such person whether acting in peace time or in a situation of armed conflict. (para 69) The Court of Appeal noted that it had expressed its conclusion in slightly different language from that of Sweeney J in his ruling, but it considered that the test he adopted and applied was not materially different on the facts of the case and that his subsequent ruling on the factual submission of no case to answer was not affected by the difference. Accordingly, the appeal was dismissed. On 13 February 2019 the Supreme Court (Lady Hale, Lord Reed and Lord Kerr) granted permission to appeal. The UN Convention against Torture and its implementation it is alleged that the offences in the indictment were committed. Section 134 CJA provides in relevant part: It is necessary to identify and apply the law as it existed at the dates on which 134. Torture (1) A public official or person acting in an official capacity, whatever his nationality, commits the offence of torture if in the United Kingdom or elsewhere he intentionally inflicts severe pain or suffering on another in the performance or purported performance of his official duties. (2) A person not falling within subsection (1) above commits the offence of torture, whatever his nationality, if (a) in the United Kingdom or elsewhere he intentionally inflicts severe pain or suffering on another at the instigation or with the consent or acquiescence of a public official; or (i) (ii) of a person acting in an official capacity; and (b) the official or other person is performing or purporting to perform his official duties when he instigates the commission of the offence or consents to or acquiesces in it. (6) A person who commits the offence of torture shall be liable on conviction on indictment to imprisonment for life. Section 134 CJA came into effect on 29 September 1988. It applies to conduct committed after that date. Section 135 provides that prosecutions under section 134 require the consent of the Attorney General. Such consent was given in this case on 2 June 2017. Section 134 CJA implements in domestic law certain obligations of the United Kingdom pursuant to the United Nations Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, New York, 10 December 1984, (1991) (Cm 1775), 1465 UNTS 85 (UNCAT). Article 1 defines torture for the purposes of UNCAT: Article 1 1. For the purposes of this Convention, torture means any act by which severe pain or suffering, whether physical or mental, is intentionally inflicted on a person for such purposes as obtaining from him or a third person information or a confession, punishing him for an act he or a third person has committed or is suspected of having committed, or intimidating or coercing him or a third person, or for any reason based on discrimination of any kind, when such pain or suffering is inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity. It does not include pain or suffering arising only from, inherent in or incidental to lawful sanctions. 2. This article is without prejudice to any international instrument or national legislation which does or may contain provisions of wider application. Under UNCAT each State Party is required to take effective legislative, administrative, judicial or other measures to prevent acts of torture in any territory under its jurisdiction (article 2). No State Party shall expel, return (refouler) or extradite a person to another State where there are substantial grounds for believing that he would be in danger of being subjected to torture (article 3). Each State Party is required to ensure that all acts of torture are offences under its criminal law (article 4) and to establish its jurisdiction over such offences in cases where the alleged offender is present in any territory under its jurisdiction and it does not extradite him (article 5). In such cases each State Party is obliged, if it does not extradite the alleged offender, to submit the case to its competent authorities for the purpose of prosecution (article 7). Each State Party also undertakes to prevent in any territory under its jurisdiction other acts of cruel, inhuman or degrading treatment or punishment which do not amount to torture as defined in article 1, when such acts are committed by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity (article 16). UNCAT entered into force on 26 June 1987, in accordance with article 27(1). It currently has 166 State Parties. Torture in international humanitarian law Torture for the purposes of UNCAT must be distinguished from discrete concepts of torture in international humanitarian law where torture may form the basis of a war crime or a crime against humanity. I would draw attention, in particular, to the following matters. (1) Article 3, common to each of the four Geneva Conventions of 1949, prohibits torture in non international armed conflicts and establishes protections for persons who do not or who no longer take an active part in hostilities. In Military and Paramilitary Activities in and against Nicaragua (Nicaragua v United States of America) (Merits, Judgment) ICJ Rep 1986, 14 at 113 4, para 218, the International Court of Justice held that Common Article 3 establishes minimum guarantees that apply in all armed conflict. (2) The statutes of the ad hoc international tribunals for the former Yugoslavia (ICTY) and Rwanda (ICTR) conferred jurisdiction to try offences of torture committed during armed conflict without defining the offence. The Tribunals produced their own definitions, based heavily on UNCAT. (3) Under the Rome Statute of the International Criminal Court (ICC), 17 July 1988, torture is capable of constituting (1) a crime against humanity when committed as part of a widespread or systematic attack directed against any civilian population (article 7(1)(f)); (2) a war crime when committed in an armed conflict whether international or not of an international character (articles 8(2)(a)(ii) and 8(2)(c)(i)). A vital distinction for present purposes between torture under UNCAT and torture in international humanitarian law is that torture under UNCAT is limited to cases where pain or suffering is inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity. Although the ICTY initially considered that there was a requirement in respect of torture in an armed conflict that at least one of the persons involved in the torture process must be a public official or must at any rate act in a non private capacity, eg as a de facto organ of a State or any other authority wielding entity (Prosecutor v Furundija, Trial Chamber Judgment, 10 December 1998, para 162; see also Appeal Chamber Judgment, 21 July 2000, para 111), it later took the contrary view (Prosecutor v Kunarac, Trial Chamber Judgment, 22 February 2001, para 496; Appeals Chamber Judgment, 12 June 2002, para 148). It is now established that there is no such requirement in the case of war crimes or crimes against humanity in international humanitarian law. In particular, there is no such requirement in the case of torture as a war crime or a crime against humanity under the Statute of the ICC. As a result, it is necessary to exercise caution when referring to materials and authorities on international humanitarian law for the purpose of ascertaining the scope of article 1 of UNCAT. Torture as a crime against humanity and torture as a war crime, as defined in the Statute of the ICC, are both offences contrary to UK law by virtue of sections 50 and 51, International Criminal Court Act 2001. As a result, torture committed in certain circumstances may be prosecuted here as a war crime or a crime against humanity. However, the alleged conduct which gives rise to the current charges against the appellant could not be prosecuted in the United Kingdom on either of these bases, even if the elements of these offences were otherwise established, because section 65A of the International Criminal Court Act 2001, inserted by section 70 of the Coroners and Justice Act 2009, which deals with retrospective application, provides that the relevant sections apply to acts committed on or after 1 January 1991, which is later than the date on which the instant offences are alleged to have been committed. The submissions of the parties On behalf of the appellant Mr Steven Powles QC submits that section 134 CJA and the term person acting in an official capacity apply only to those acting for or on behalf of the government of a State. He submits that this is the ordinary meaning of both section 134 CJA and article 1, UNCAT, in light of the object and purpose of UNCAT, that this is also supported by the travaux preparatoires and that this is further demonstrated by the pronouncements of the UN Committee against Torture. He submits that, as a result, section 134 CJA does not apply to the conduct of an alleged member of an armed opposition group fighting against or seeking to overthrow the government of a State. On behalf of the prosecution Mr David Perry QC submits that section 134(1) CJA covers any person who acts otherwise than in a private and individual capacity for or on behalf of an organisation or body which exercises the functions of government over the civilian population in the territory which it controls and in which the relevant conduct occurs. Furthermore, it covers any such person whether acting in peace time or in a situation of armed conflict. He submits that the concept of official capacity in the Convention extends beyond any formal State structure and even beyond actors who had been invested with authority by the State. It covers all those who exercise a form of public authority over individuals in a manner which might be similar to the authority of a State. Thus, he submits, it would extend to armed groups who seek to depose the government and to exercise State power and would certainly extend to those who in their quest for authority have displaced the legitimate government in those areas where they operate. The approach to interpretation of section 134 CJA and article 1, UNCAT Section 134 CJA was intended to give effect to UNCAT in domestic law. As a result, the words person acting in an official capacity must bear the same meaning in section 134 as in article 1, UNCAT. (See R v Bow Street Metropolitan Stipendiary Magistrate, Ex p Pinochet Ugarte (No 3) (Pinochet No 3) [2000] 1 AC 147 per Lord Browne Wilkinson at p 200A B.) The principles of international law governing the interpretation of treaties are to be found in articles 31 and 32, Vienna Convention on the Law of Treaties, 23 May 1969, (1980) (Cm 7964), 1155 UNTS 331. Article 31. General Rule of Interpretation 1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose. 2. The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including its preamble and annexes: (a) Any agreement relating to the treaty which was made between all the parties in connexion with the conclusion of the treaty; (b) Any instrument which was made by one or more parties in connexion with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty. 3. There shall be taken into account, together with the context: (a) Any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions; (b) Any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation; (c) Any relevant rules of international law applicable in the relations between the parties. 4. A special meaning shall be given to a term if it is established that the parties so intended. Article 32. Supplementary Means of Interpretation Recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of article 31, or to determine the meaning when the interpretation according to article 31: (a) Leaves the meaning ambiguous or obscure; or (b) Leads to a result which is manifestly absurd or unreasonable. Ordinary meaning On behalf of the appellant, Mr Powles submits that the ordinary meaning of both article 1, UNCAT and section 134 CJA is such that section 134 applies only to those acting for or on behalf of the government of a State. He points out, correctly, that while article 1(2) UNCAT is without prejudice to national legislation which does or may contain provisions of wider application, section 134 is not drafted in terms of wider application than article 1. The offence contrary to section 134(1) can be committed only by a public official or person acting in an official capacity. He further draws attention to the fact that both subsections 134(1) and (2) provide that the public official or person acting in an official capacity must be acting in the performance or purported performance of their official duties. He points to the fact that the definition applies to torture both in the United Kingdom and elsewhere and submits that it is hard to envisage that anyone could, in the United Kingdom, commit an act of torture in the performance of their official duties unless they were acting for or on behalf of the State. Anyone not acting either for or on behalf of the State is, he submits, by definition, acting in a private and individual capacity and such conduct, in the United Kingdom, would fall within the jurisdiction of ordinary domestic criminal law and be prosecuted accordingly. The difficulty with the appellants approach is that it seeks to impose a gloss on the ordinary meaning of the words of the two provisions. Those words are apt to describe a person performing official administrative or governmental functions but provide no suggestion that those functions must be performed on behalf of the government of the State concerned. The dichotomy drawn by the provisions is between official conduct and purely private conduct, not between State and non State activity. While in most normal circumstances, such as those prevailing in the United Kingdom to which the appellant refers, official conduct will usually be performed on behalf of a State, it is necessary to consider the applicability of the Convention in less stable situations, including those where more than one body may be performing administrative or governmental functions within the territory of the State. Unhappily, examples of such situations arise not infrequently. In my view the words used do not support a limitation of the kind proposed. On the contrary, the words person acting in an official capacity are apt to include someone who holds an official position or acts in an official capacity in an entity exercising governmental control over a civilian population in a territory over which it holds de facto control. Object and purpose It is well established that a treaty should be interpreted in accordance with the ordinary meaning to be given to its terms in their context and in the light of its object and purpose (Vienna Convention on the Law of Treaties, article 31(1)). It is necessary, however, to sound a cautionary note at this point. While the object of UNCAT was undoubtedly, in one sense, to end impunity for perpetrators of what might be termed official torture it does not follow that the reading of the Convention which would best avoid impunity must be adopted in all circumstances. It is, rather, necessary to give effect to the words used in the light of the object and purpose of the scheme created by the State parties to the Convention. Similarly, the mere fact that a particular reading may be seen as a desirable development of the law is not of itself a valid reason for adopting it. It is not for national courts engaged in interpreting a treaty to seek to force the pace of the development of international law, however tempting that may be. There is an analogy to be drawn here with the consideration by national courts of potential rules of customary international law, addressed by the House of Lords in Jones v Ministry of the Interior of the Kingdom of Saudi Arabia (Secretary of State for Constitutional Affairs intervening) (Jones v Saudi Arabia) [2006] UKHL 26; [2007] 1 AC 270 where Lord Hoffmann observed (at para 63): It is not for a national court to develop international law by unilaterally adopting a version of that law which, however desirable, forward looking and reflective of values it may be, is simply not accepted by other states. Lord Bingham noted, similarly, (at para 22) that one swallow does not make a rule of international law. The principal purpose of UNCAT is not to outlaw torture and other cruel, inhuman or degrading treatment or punishment. On the contrary the Convention is based upon the recognition that such practices are already outlawed under international law and the principal aim of UNCAT is to strengthen the existing prohibition by a number of supportive measures (Burgers and Danelius, The United Nations Convention against Torture A Handbook on the Convention against Torture, (Martinus Nijhoff 1988), p 1). Thus, Lord Browne Wilkinson observed in Pinochet (No 3) at p 199C: The Torture Convention was agreed not in order to create an international crime which had not previously existed but to provide an international system under which the international criminal the torturer could find no safe haven. (See also Lord Hutton at pp 260F 261B) As Judge Crawford points out, UNCAT, in common with similar treaties relating, for example, to the unlawful seizure of aircraft or the taking of hostages, does not impose criminal responsibility directly upon individuals, but rather requires contracting States to prevent and punish the conduct in question. The enforcement of such norms occurs at the domestic rather than the international level, as the treaties envisage punishment only by domestic courts. In addition to obliging states parties to criminalize certain conduct, such treaties generally require them to prosecute or extradite accused persons to other states parties that are willing to prosecute them (aut dedere aut iudicare). While the enforcement of these norms is dependent on domestic legal systems either prosecuting or extraditing accused persons, various treaty bodies such as the Committee against Torture often play an important role in monitoring the implementation of the treaty norms at the domestic level. (James Crawford, Brownlies Principles of Public International Law, 9th ed (2019), p 663.) It can be seen therefore that the object of UNCAT has been to make torture as defined in article 1 a criminal offence of universal jurisdiction enforceable by domestic courts and, by virtue of very extensive State participation in the Convention, to establish a machinery capable of reducing the likelihood of perpetrators of official torture escaping justice before national courts. Article 1 of UNCAT therefore defines a criminal offence which contracting States are required to criminalize and punish within their respective legal systems. The fact that UNCAT is a human rights treaty imposing obligations in international law on the contracting States is not a good reason for limiting the scope of that offence to conduct attributable to the State itself. It does not follow that the reference in the Convention to public officials and those acting in an official capacity must be taken to refer to State actors as opposed to non State actors. Travaux preparatoires We have been referred by the parties to records of the drafting history of article 1, UNCAT and to commentaries on the Convention, including Burgers and Danelius (above) and Nowak and McArthur, Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (OUP, 2008). Both parties submit that these materials are admissible as a supplementary means of interpretation under article 32, Vienna Convention on the Law of Treaties and support their respective interpretations of the words a public official or other person acting in an official capacity in article 1, UNCAT. The UN Declaration on the Protection of All Persons from Being Subjected to Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, adopted by General Assembly resolution 3452 (XXX) of 9 December 1975 (the 1975 Declaration) defined torture in article 1 in terms which required that it be inflicted by or at the instigation of a public official. By Resolution 32/62 of 8 December 1977, the UN General Assembly requested the Commission on Human Rights to draw up a draft convention against torture. The Commission examined the matter at its 34th session and invited comments on the draft articles from the governments of member states of the United Nations and its specialized agencies in advance of its 35th session. The comments received are summarised in three documents published by the Commission on Human Rights (E/CN.4/1314, 19 December 1978; E/CN.4/1314/Add 1, 18 January 1979; E/CN.4/1314/Add 2, 31 January 1979). At that stage, the definition of torture in draft article 1 required that it be inflicted by or at the instigation of a public official. In its response the Austrian Government proposed that the concept of public official be expanded, for example by using the words persons, acting in an official capacity (E/CN.4/1314, para 43). The United States proposed that the term public official be defined in order to clarify the breadth of the concept and to make clear that both civil and military officials are included (E/CN.4/1314, para 45). The United Kingdom proposed that, in order to amplify the definition, the phrase or any other agent of the State be inserted after public official (E/CN.4/1314/Add 1, para 3). The observation of the Federal Republic of Germany was summarised as follows: in particular, it should be made clear that the term public official contained in paragraph 1 refers not only to persons who, regardless of their legal status, have been assigned public authority by State organs on a permanent basis or in an individual case, but also to persons who, in certain regions or under particular conditions, actually hold and exercise authority over others and whose authority is comparable to governmental authority or be it only temporarily has replaced government authority or whose authority has been derived from the aforementioned persons. (E/CN.4/1314/Add 2, para 2) Clearly, the German proposal was not implemented in terms. (See Boulesbaa, The UN Convention on Torture and the Prospects for Enforcement, (Martinus Nijhoff 1999), pp 27 28; Wendland, A Handbook on State Obligations under the UN Convention against Torture, Association for the Prevention of Torture, (2002), p 29.) Nevertheless, it may have influenced the expansion of the concept of public official. Nowak and McArthur summarise the matter as follows: 116. Severe pain or suffering only counts as torture in the understanding of the Convention if it is inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity. The formulation in the 1975 Declaration and the original Swedish draft (by or at the instigation of a public official) reflects the traditional view that States can only be held accountable for human rights violations committed by State actors. Since the main purpose of the Convention was to require States parties to use domestic criminal law for the purpose of punishing perpetrators of torture, several governments, such as France, Barbados, Panama and Spain, advocated an extension of the definition covering also private individuals. Germany did not go as far but wished to include also non State actors who exercise authority over others and whose authority is comparable to government authority. Since other governments, including the United States, United Kingdom, Morocco and Austria, insisted on a traditional State centred definition, the Working Group finally agreed on a US compromise proposal which extended State responsibility to the consent or acquiescence of a public official. Since the delegations could not agree on a definition of the term public official, the Austrian proposal to add the phrase or other person acting in an official capacity was adopted. (footnotes excluded) On this basis Mr Powles submits that the compromise was the inclusion of non State actors who act with the consent or acquiescence of a public official and not the expansion of the definition of person acting in an official capacity beyond persons or entities who in fact act for or on behalf of the State. It seems clear from this account by Nowak and McArthur that, in the result, the intention was at least to exclude from the definition the conduct of private individuals acting in a private capacity. The question is whether it was intended to go further and to include within the definition acts of de facto authorities exercising governmental functions. On behalf of the appellant, Mr Powles draws particular attention to the reference by Nowak and McArthur to insistence on a traditional State centred definition and submits that it supports the view that conduct in an official capacity must be attributable to the State. It is not entirely clear, however, what is meant by this term. A later passage in Nowak and McArthur, on which the prosecution relies, suggests that it may be intended simply to exclude perpetrators acting entirely in a personal capacity. 118. The term other person acting in an official capacity goes, however, clearly beyond State officials. It was inserted on the proposal of Austria in order to meet the concerns of the Federal Republic of Germany that certain non State actors whose authority is comparable to governmental authority should also be held accountable. These de facto authorities seem to be similar to those political organizations which, according to article 7(2)(i) ICC Statute, can be held accountable for the crime of enforced disappearance before the ICC. One might think of rebel, guerrilla or insurgent groups who exercise de facto authority in certain regions or of warring factions in so called failing States. 119. In the case of Elmi v Australia, the Committee had to decide whether the forced return of a Somali national belonging to the Shikal clan to Somalia, where he was at a substantial risk of being subjected to torture by the ruling Hawiye clan, constituted a violation of the prohibition of refoulement pursuant to article 3. The Committee found a violation of article 3 and explicitly rejected the argument of the Australian Government that the acts of torture the applicant feared he would be subjected to in Somalia would not fall within the definition of torture set out in article 1: (original emphasis, footnotes omitted) Article 7(2)(i), ICC Statute, to which Nowak and McArthur refer, provides: Enforced disappearance of persons means the arrest, detention or abduction of persons by, or with the authorization, support or acquiescence of, a State or a political organization, followed by a refusal to acknowledge that deprivation of freedom or to give information on the fate or whereabouts so those persons, with the intention of removing them from the protection of the law for a prolonged period of time. On its face, this passage from Nowak and McArthur strongly supports the prosecutions submission. Mr Powles, however, criticises Nowak and McArthurs statement that the term other person acting in an official capacity was inserted in order to meet the concerns of the Federal Republic of Germany that certain non State actors whose authority is comparable to governmental authority should also be held accountable. He points to the sequence in which comments were submitted, which seems to show that the Austrian amendment was proposed before the German observation was made. On the information presently available to us, it can nevertheless be said that the German observation was under consideration by the Working Group before the amendment proposed by Austria was agreed and the sequence does not necessarily mean that the amendment does not reflect Germanys concern. (In this regard, Mr Perry, on behalf of the prosecution, also draws our attention to the fact that section 312a of the Austrian Criminal Code provides that public officials within the meaning of this provision shall also be those who, in the event of the absence or default of the public authorities, are effectively acting as officials. The significance of this as an aid to interpreting article 1, UNCAT is, however, much reduced by the fact that article 1(2) provides that article 1 is without prejudice to any national legislation which does or may contain provisions of wider application. In other words, UNCAT does not prohibit gold plating by contracting States. Furthermore, although Austria ratified UNCAT in 1987 this amendment to the Austrian Criminal Code was not introduced until 2013.) In the result, therefore, the commentary by Nowak and McArthur and the legislative history to which they refer can be said to provide some support for the interpretation for which the prosecution contends. Mr Powles also relies on passages in Burgers and Danelius concerning the drafting history in support of his reading of article 1. There were different opinions on the question as to whether or not the definition of torture in the convention should be limited to acts of public officials. It was pointed out by many States that the purpose of the convention was to provide protection against acts committed on behalf of, or at least tolerated by, the public authorities, whereas the State could normally be expected to take action according to its criminal law against private persons having committed acts of torture against other persons. However, France considered that the definition of the act of torture should be a definition of the intrinsic nature of the act of torture itself, irrespective of the status of the perpetrator. Although there was little support for the French view on this matter, most States agreed that the convention should not only be applicable to acts committed by public officials, but also to acts for which the public authorities could otherwise be considered to have some responsibility. (Burgers and Danelius (above) at p 45, original emphasis) In principle, the common element of the purposes referred to in the definition should rather be understood to be the existence of some even remote connection with the interests or policies of the State and its organs. It is important to note, in this context, that the primary objective of the Convention is to eliminate torture committed by or under the responsibility of public officials for purposes connected with their public functions. Precisely because the public interest is sometimes seen in such cases as a justification, the authorities may be reluctant to suppress these practices. The provisions of the Convention are intended to ensure that torture does not occur in such cases or that, if it occurs, action is taken against the offender. (Burgers and Danelius (above), at pp 118 119) In a further passage, Burgers and Danelius state: While these passages may be read as providing some support for the appellants case, it is important to bear in mind that neither was addressing the specific question which arises in these proceedings. The first was addressing the distinct questions of whether torture under the Convention should include private acts of torture and whether it should extend beyond acts committed by public officials. The second was addressing the requirement that torture should be committed for a specific purpose connected to the actors public function. As a result, these passages cast little light on the meaning of the words acting in an official capacity. The same is true of the following statement by the Chairman Rapporteur, Mr J H Burgers in his report of the Working Group dated 25 March 1983 addressing whether the offence of torture should attract universal jurisdiction: Most speakers were in favour of the principle of universal jurisdiction, holding it to be essential in securing the effectiveness of the Convention. Territorial jurisdiction would not suffice to punish torture effectively as a State policy, under the definition of article 1. (E/CN.4/1983/63 at para 21) While these aspects of the travaux preparatoires may be inconclusive as to the meaning of the words public official or other person acting in an official capacity in article 1, they do, however, cast some light on certain objectives of the Convention. Two points, in particular, emerge with some clarity. First, it was the intention that the offence defined in article 1 should not include purely private acts of torture with no official character or connection. While the representatives of some States in the Working Group considered that the offence should not be limited to the conduct of public officials since the purpose of the Convention was to eradicate any and all activities which result in torture, others considered that such purely private acts were not matters of particular interest to the international community and that each State could normally be expected to take action according to its criminal law against private persons who had committed such private acts of torture so that there was no need for its regulation by an international convention. The prevailing view was that acts of torture committed by or under the responsibility of public officials for purposes connected with their public functions were different in nature from, and inherently more serious than, those inflicted by a private person, and that the elimination of the former category of torture should be the primary target of the Convention. (See Nowak and McArthur, paras 33, 40; Burgers and Danelius, pp 45, 118 120; E/CN.4/1314, 19 December 1978, para 29.) Thus, international action was primarily designed to cover situations where national action was otherwise least likely (E/CN.4/L.170, 12 March 1979, paras 17, 18). To the extent that the words a public official or other person acting in an official capacity in article 1 were intended to achieve that result, they should not exclude conduct by rebels, outside the authority of the State, exercising governmental functions over the civilian population of territory under its control. On the contrary, such conduct is properly the concern of the international community and requires international regulation, albeit implemented at national level. Official torture is as objectionable and of as much concern to the international community when it is committed by a representative of a de facto governmental authority as when it is committed on behalf of the de jure government. Secondly, there is likely to be reluctance on the part of States to bring to justice perpetrators of torture who have acted in an official capacity, where torture is a State policy, not least because the public interest may be claimed as a justification. (See Burgers and Danelius, pp 45, 118 120; E/CN.4/1982/L.40, para 26; E/CN.4/1983/63, para 21.) As a result, the bringing to justice of perpetrators could not be left to the territorial jurisdiction of the State concerned and a primary objective of the Convention was to establish universal jurisdiction for this reason. To the extent that the words a public official or other person acting in an official capacity in article 1 were intended to achieve that result, the point can fairly be made on behalf of the appellant that this rationale does not apply to torture perpetrated by rebels acting outside the authority of the State. While a case for establishing universal jurisdiction may be made out in such circumstances, its basis would be the inability and not the reluctance of the State to act. Subsequent practice Article 31(2)(b) Vienna Convention on the Law of Treaties provides that in interpreting a treaty there shall be taken into account, together with the context, any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation. In this regard, the appellant relies on the report by the Special Rapporteur dated 19 February 1986 and both parties rely on the decisions and General Comments of the UN Committee Against Torture (CAT). Kooijmans Report, 19 February 1986 UNCAT was adopted on 10 December 1984 and entered into force on 26 June 1987. In his report of 19 February 1986 (E/CN.4/1986/15) the Special Rapporteur, Mr P Kooijmans, made the following reference to the text of article 1. Article 1, para 1, of the Convention reads as follows when such pain or suffering is inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity. The Convention was again following the Declaration of 1975, but developing it by adding the phrases or with the consent or acquiescence of and or other person acting in an official capacity. Consequently, State responsibility is apparent even when the authorities resort to the use of private gangs or paramilitary groups in order to inflict severe pain or suffering with the intention and purposes already mentioned. However, private acts of brutality even the possible sadistic tendencies of particular security officials should not imply State responsibility, since these would usually be ordinary criminal offences under national law. (at para 38) In this passage Mr Kooijmans is focussing on the circumstances in which a State may be responsible for acts of torture. He emphasises the distinction between official and private acts and the extension of the States responsibility in cases of consent or acquiescence within article 1. Contrary to the appellants submission, this passage does not support the proposition that a state nexus requirement is inherent in the term official capacity, such that the term only applies to persons acting on behalf of the State. The relevance of state responsibility to the present issue is considered below. Committee Against Torture Part II of UNCAT establishes the CAT which consists of ten experts of high moral standing and recognized competence in the field of human rights, who shall serve in their personal capacity (article 17(1)). The States Parties are required to submit to the CAT reports on the measures they have taken to give effect to their undertakings under UNCAT and the CAT may make general comments on the reports (article 19). In addition, a State Party may declare that it recognises the competence of the CAT to receive and consider communications from individuals subject to its jurisdiction who claim to be victims of a violation by a State Party of the provisions of the Convention. The CAT is required to consider such communications and to forward its views to the State Party and the individual concerned (article 22). The decisions and General Comments of the CAT are clearly entitled to respect. However, in considering the work of the CAT as part of subsequent practice in the application of UNCAT it is necessary to bear in mind the particular status of the Committee. In Jones v Saudi Arabia Lord Bingham observed, at para 23, with regard to a General Comment made by the CAT on the issue of effective measures of redress: [T]he committee is not an exclusively legal and not an adjudicative body; its power under article 19 is to make general comments; the committee did not, in making this recommendation, advance any analysis or interpretation of article 14 of the Convention; and it was no more than a recommendation. Whatever its value in influencing the trend of thinking, international this recommendation is slight. legal authority of the General Comments of the CAT The CAT has published four General Comments on UNCAT. In these proceedings, particular reliance has been placed on General Comment No 2: Implementation of article 2 by States Parties, 24 January 2008 (CAT/C/GC/2) and General Comment No 4: Implementation of article 3 of the Convention in the context of article 22, 4 September 2018 (CAT/C/GC/4). The appellant submits that the CAT has consistently defined official capacity according to whether the person or entity is carrying out a public function on behalf of the State. In this regard, she relies, in particular, on the following passage in General Comment No 2: The Convention imposes obligations on States parties and not on individuals. States bear international responsibility for the acts and omissions of their officials and others, including agents, private contractors and others acting in an official capacity or acting on behalf of the State, in conjunction with the State, under its direction or control, or otherwise under colour of law. (at para 15) It is, of course, correct that UNCAT is binding on the Contracting States in international law and that it does not itself impose obligations on individuals. Rather, it imposes on each State party an obligation to create and enforce in its domestic law an offence which conforms with the definition in article 1. However, it is not possible to derive from this the conclusion that torture within article 1 is limited to conduct attributable to the State as suggested by the appellant. Furthermore, this passage is not necessarily intended to be an exclusive description of the scope of article 1. The appellant also relies on the following passage in General Comment No 4 on the implementation of the non refoulment obligation in article 3: States parties should refrain from deporting individuals to another State where there are substantial grounds for believing that they would be in danger of being subjected to torture or other ill treatment at the hands of non State entities, including groups that are unlawfully exercising actions that inflict severe pain or suffering for the purposes prohibited by the Convention, and over which the receiving State has no or only partial de facto control, or whose acts it is unable to prevent or whose impunity it is unable to counter. (at para 30) This passage accurately describes the non refoulment obligation. However, it does not address the question whether the conduct of such non State entities might constitute torture within article 1 if they are quasi governmental entities performing governmental functions. More generally, the General Comments do not provide any support for the reading of article 1 for which the appellant contends. It is also necessary to address a submission on behalf of the prosecution that the General Comments taken as a whole demonstrate that the actions of non State actors can be considered as acts impermissible under UNCAT. Here it is submitted that if the interpretation of article 1 advanced by the appellant is correct (namely that it only applies to State actors or those acting with the approval or acquiescence of the State) then there would be no obligation on the State to punish acts of torture which violate the Convention committed by non State officials in areas outside the States control (emphasis in original). The prosecution relies in particular on the following passage in General Comment No 2: 18. The Committee has made clear that where State authorities or others acting in an official capacity or under colour of law, know or have reasonable grounds to believe that acts of torture or ill treatment are being committed by non State officials or private actors and they fail to exercise due diligence to prevent, investigate, prosecute and punish such non State officials or private actors consistently with the Convention, the State bears responsibility and its officials should be considered as authors, complicit or otherwise responsible under the Convention for consenting to or acquiescing in such impermissible acts. Since the failure of the State to exercise due diligence to intervene to stop, sanction and provide remedies to victims of torture facilitates and enables non State actors to commit acts impermissible under the Convention with impunity, the States indifference or inaction provides a form of encouragement and/or de facto permission. The Committee has applied this principle to States parties failure to prevent and protect victims from gender based violence, such as rape, domestic violence, female genital mutilation, and trafficking. In this regard the prosecution further relies on passages in the CATs initial report on Iraq, 7 September 2015 (CAT/C/IRQ/CO/1, paras 11 12) and its second periodic report on Afghanistan, 12 July 2017 (CAT/C/AFG/2, para 7). On this basis it submits that it is envisaged that it is not only State agents who should be prosecuted and punished pursuant to the State parties obligations under the Convention but also perpetrators from non State party groups or organisations operating on the territory of the State party. This submission cannot be accepted. Although the matter is awkwardly expressed, in General Comment No 2, para 18, the CAT is stating the proposition that a States failure to fulfil its obligation under the Convention to prevent, investigate, prosecute and punish inhuman treatment committed by non State officials or private actors will amount to the States consent to or acquiescence in those acts within the definition in article 1. It is that consent or acquiescence and not the status of the actor which gives the conduct its official character. This is a principle familiar in the fields of State responsibility and human rights. The State is responsible not because the acts of the individuals concerned are attributable to the State but because of its own failure to act in accordance with its obligations under the Convention. As a result, this passage does not assist the prosecution in establishing that acts of a de facto authority are within the scope of article 1. Indeed, the submission proves too much for, if correct, it would entirely negate the requirement that the conduct be that of a public official or other person acting in an official capacity. As a result, I consider that the General Comments of the CAT cast little light on the present issue. Decisions under article 22(7), UNCAT A series of decisions of the CAT under article 22(7) UNCAT addresses the obligation on State Parties under article 3 not to expel, return or extradite a person to another State where there are substantial grounds for believing that he would be in danger of being subjected to torture. In these decisions the statements by the CAT in relation to the present issue are inconsistent. In SV v Canada (15 May 1996; Communication No 49/1996; UN Doc CAT/C/26/D/49/1996 (2001)) the authors complained that they were at risk of torture by the Sri Lankan authorities, but also complained that they were at risk of torture by the Liberation Tigers of Tamil Eelam (LTTE) a rebel organisation which, the decision recorded, had in 1990 taken control of the Tamil region. The CAT, having referred to the definition in article 1, rejected the latter complaint. The Committee considers that the issue of whether the State party has an obligation to refrain from expelling a person who might risk pain or suffering inflicted by a non governmental entity, without the consent or acquiescence of the Government, falls outside the scope of article 3 of the Convention. Consequently, the issue, on which the authors base part of their claim that they would suffer torture by LTTE or other non governmental entities on return to Sri Lanka, cannot be considered by the Committee. (para 9.5) Similarly, in GRB v Sweden (19 June 1998; CAT/C/20/D/83/1997 at para 6.5) (where the author complained that if returned to Peru she would be at risk of torture both by the State authorities and by Sendero Luminoso) and in MPS v Australia (30 April 2002; CAT/C/28/D/138/1999 at para 7.4) (concerning the risk of torture by the LTTE in Sri Lanka) the CAT repeated this conclusion in almost identical terms. By contrast, in Elmi v Australia (14 May 1999; CAT/C/22D/120/1998) the author, a Somali national of the Shikal clan, claimed that his forced return to Somalia would constitute a violation of article 3 because he was a risk of torture at the hands of the Hawiye clan. The CAT concluded: 6.5 The Committee does not share the State partys view that the Convention is not applicable in the present case since, according to the State party, the acts of torture the author fears he would be subjected to in Somalia would not fall within the definition of torture set out in article 1 The Committee notes that for a number of years Somalia has been without a central government, that the international community negotiates with the warring factions and that some of the factions operating in Mogadishu have set up quasi governmental institutions and are negotiating the establishment of a common administration. It follows then that, de facto, those factions exercise certain prerogatives that are comparable to those normally exercised by legitimate governments. Accordingly, the members of those factions can fall, for the purposes of the application of the Convention, within the phrase public officials or other persons acting in an official capacity contained in article 1. 6.7 The Committee further notes, on the basis of the information before it, that the area of Mogadishu where the Shikal mainly reside, and where the author is likely to reside if he ever reaches Mogadishu, is under the effective control of the Hawiye clan, which has established quasi governmental institutions and provides a number of public services. Three years later, however, in HMHI v Australia (1 May 2002; CAT/C/28/D/177/2001) the CAT distinguished Elmi on the ground that in the exceptional circumstance of State authority that was wholly lacking, acts by groups exercising quasi governmental authority could fall within the definition of article 1, and thus call for the application of article 3 (at para 6.4). It considered that: with three years elapsing since the Elmi decision, Somalia currently possesses a State authority in the form of the Transitional National Government, which has relations with the international community in its capacity as central government, though some doubts may exist as to the reach of its territorial authority and its permanence. Accordingly, the Committee does not consider this case to fall within the exceptional situation in Elmi and takes the view that acts of such entities as are now in Somalia commonly fall outside the scope of article 3 of the Convention. (at para 6.4) The CAT has considered the matter more recently still, in SS v The Netherlands (19 May 2003; CAT/C/30/D/191/2001). The complainant argued that he would be in danger of being tortured by the LTTE if returned to Sri Lanka. Referring to the definition of torture in article 1, the Netherlands submitted that acts by non State entities such as the LTTE could not, for the purposes of the Convention, be considered to constitute torture (para 4.6). The CAT rejected that submission, observing that: the issue whether the State party has an obligation to refrain from expelling a person who might risk pain or suffering inflicted by a non governmental entity, without the consent or acquiescence of the Government, falls outside the scope of article 3 of the Convention, unless the non governmental entity occupies and exercises quasi governmental authority over the territory to which the complainant would be returned. (at para 6.4) The basis on which the CAT sought to distinguish Elmi in HMHI is, with respect, unconvincing. If acts by rebel groups exercising de facto authority are capable of falling within the definition of torture in article 1 at all, then that should be the case regardless of whether there exists a central government. Furthermore, the suggestion on behalf of the appellant that once there was a central government, notwithstanding doubts as to the reach of its territorial authority and permanence, the risk of torture fell outside the scope of the Convention, cannot be accepted. The decision in Elmi did not turn on the notion that refoulement would violate the Convention because there was no effective government in Somalia to protect individuals from non State actors. Rather, the decision in Elmi made clear that the Hawiye were a quasi governmental institution performing functions comparable to those normally performed by legitimate governments and that it was that de facto status which brought its conduct within the scope of article 1. By contrast with HMHI, the ruling on this point in SS makes eminent sense. It reaffirms that acts of a de facto authority are capable of falling within the definition in article 1 and it does so in terms which free it from the unprincipled restriction apparently imposed in HMHI. Despite its manifest inconsistencies, therefore, this line of authority does provide some support for the view that the conduct of non State actors exercising de facto authority over territory which they occupy can fall within article 1 of UNCAT. Context of international law Article 31(2)(c) of the Vienna Convention on the Law of Treaties provides that in interpreting a treaty there shall be taken into account, together with the context, any relevant rules of international law applicable in the relations between the parties. In this regard it is necessary to refer to the possible relevance of two matters: State responsibility and recognition of States and governments. Relevance of State responsibility Before the Court of Appeal the prosecution sought to rely on principles concerning the responsibility of an insurrectional movement which ultimately succeeds in replacing the government of a State, as the NPFL did in Liberia. The General Commentary to the International Law Commission Draft Articles on State Responsibility explains that whereas the conduct of an unsuccessful insurrectional movement is not in general attributable to the State, where the movement achieves its aims and installs itself as the new government of the State it would be anomalous if the new regime could avoid responsibility for conduct earlier committed by it. The continuity which exists between the new organisation of the State and that of the insurrectional movement leads to the attribution to the State of conduct which the insurrectional movement may have committed during the struggle. As a result, article 10 of the Draft Articles provides for the attribution of the conduct of the successful insurrectional movement to the State (J Crawford, The International Law Commissions Articles on State Responsibility: Introduction, Text and Commentaries, (2002), 117). This led the prosecution to submit before the Court of Appeal that it would be anomalous if torture committed by a public official of an insurrectional movement exercising governmental functions over territory in which it exercises de facto control should be treated as outside the scope of the Torture Convention, so as to attract no individual responsibility, because the acts were not those of a de jure State, in circumstances where the very same acts would constitute acts of the State for which the State would assume responsibility, if the insurrectional movement was successful and became the de jure government. This submission was not pursued before the Supreme Court, rightly in my view. The question of the attribution of conduct to States for the purposes of State responsibility is distinct from the responsibility of individuals whether under international law (article 58 of the Draft ILC Articles) or, as in this case, under national law where it implements an international convention. It would, moreover, be an unsatisfactory state of affairs if the question whether conduct constituted torture within article 1 of UNCAT were to depend on whether the entity to which the perpetrators belonged subsequently succeeded in replacing the government of the State concerned. Relevance of recognition of States and Governments The appellants suggested reading of article 1 gives rise to a number of difficulties and anomalies concerning issues of recognition of States and governments. First, before the Court of Appeal the appellant submitted that the term person acting in an official capacity is limited to a person acting for or on behalf of a government authority of a recognised State, a submission which was rejected by the Court of Appeal. At the hearing before the Supreme Court that submission was no longer maintained. For present purposes it is not necessary to embark on a consideration of the relevance, if any, of recognition to statehood in international law. It is sufficient to refer to the following observation of Chief Judge Newman in the US Court of Appeals, Second Circuit in Kadic v Karadic 70 F 3d 232 (2d Cir 1995), at 245 with which I respectfully agree. The customary international law of human rights, such as the proscription of official torture, applies to states without distinction between recognized and unrecognized states It would be anomalous indeed if non recognition by the United States, which typically reflects disfavour with a foreign regime sometimes due to human rights abuses had the perverse effect of shielding officials of the unrecognized regime from liability for those violations of international law norms that apply only to state actors. This observation applies with equal force to the scope of the offence defined in article 1 of UNCAT. While in the present case the statehood of Liberia is not in question, the issue nevertheless serves to demonstrate a difficulty inherent in the appellants proposed reading of article 1 which must be capable of uniform application. As Mr Swaroop QC, on behalf of the intervener, pointed out, it now seems to be accepted on behalf of the appellant that the offence defined in article 1 can apply in the case of a person acting on behalf of a de facto entity which is not recognised as a State. Secondly, in a situation where two or more entities are competing and are both performing governmental functions within the territory of a State, the appellants suggested reading of article 1 would require a determination as to which of them is, at any given time, to be regarded as constituting the government of the State ie which is to be regarded as the de jure government and which is merely exercising de facto control or authority. On the appellants suggested reading of the provisions, only a person acting in an official capacity on behalf of the de jure government of the State could commit the offence defined in article 1. How is such an evaluation to be performed? At the oral hearing before us, Mr Powles stated that he was neutral as to whether recognition of the entity as the de jure government of the State was required and that while it could be relevant in some circumstances it is not relevant in this case. The practice of States in this regard varies enormously and often turns on policy as opposed to legal considerations. Whereas the United Kingdom has in the past recognised governments, it no longer does so (HL Debates, vol 48, cols 1121 1122, 28 April 1980; HC Debates, vol 983, Written Answers, cols 277 279, 25 April 1980 and HC Debates, vol 985, Written Answers, col 385, 23 May 1980; Republic of Somalia v Woodhouse Drake & Carey (Suisse) SA [1993] QB 54; C Warbrick, The New British Policy on Recognition of Governments, (1983) 30 ICLQ 568). Resort to State practice in recognising or not recognising governments is, therefore, incapable of providing a uniform standard by which the Convention can be applied. Thirdly, Mr Powles accepted that in one situation article 1 does apply to a quasi governmental entity exercising de facto control over territory. He accepted that the decision of the CAT in Elmi, considered at paras 49 to 52 above, was correct in applying article 1 to a body exercising de facto control over territory in Somalia, but sought to distinguish this as an exceptional situation because in that case there was no central government. However, it is difficult to see any basis on which this situation can be distinguished from others in which governmental functions are being performed by bodies in de facto control of territory. As the Court of Appeal observed in the present case (at para 55), once it is accepted that the words person acting in an official capacity are wide enough to cover factions exercising governmental functions in territory over which they exercise de facto control, it is difficult to see why there should be any such limitation to the circumstances of Elmi, either as a matter of principle in international law or as a matter of the language of article 1 of UNCAT. UK authorities The appellant draws attention to the following passage in the speech of Lord Millett in Pinochet (No 3) as emphasising the governmental nature of the act of torture in article 1 UNCAT. The definition of torture, both in the Convention and section 134, is in my opinion entirely inconsistent with the existence of a plea of immunity ratione materiae. The offence can be committed only by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity. The official or governmental nature of the act, which forms the basis of the immunity, is an essential ingredient of the offence. No rational system of criminal justice can allow an immunity which is coextensive with the offence. (at p 277D E) So much is uncontroversial. What is more problematical is what constitutes acting in an official capacity, a matter on which, with one exception, the UK authorities provide little assistance. The appellant relies on a line of authority concerning the relevant definition of torture for the purposes of immigration and asylum detention policy which, it is submitted, reveals a clear understanding that person acting in an official capacity in article 1 UNCAT refers to persons acting on behalf of the State. In R (EO) v Secretary of State for the Home Department [2013] EWHC 1236 (Admin), ACD 116 Burnett J concluded that torture in rule 35(3), Detention Centre Rules 2001 (SI 2001/238) (DCR) and in certain policy documents had a broader meaning than the UNCAT definition. It was not confined to acts of public officials or other persons acting in an official capacity or in which they were complicit or acquiesced. Subsequent to EO, the Secretary of State introduced statutory guidance entitled Adults at Risk in Immigration Detention (AARSG). The definition of torture for the purposes of rule 35 of DCR and the AARSG is set out in Detention Services Order, DSO 09/2016 which sets out the definition in article 1 UNCAT but adds: It includes such acts carried out by terrorist groups exploiting instability or civil war to hold territory. In R (Medical Justice) v Secretary of State for the Home Department [2017] EWHC 2461 (Admin); [2017] 4 WLR 198, Ouseley J set out the history of these provisions and noted that: The reference to acts carried out by terrorist groups is not part of the UNCAT definition, but was added following discussions between the SSHD and an NGO, Freedom from Torture; it was suggested by Sir Keir Starmer MP. (at para 33) This, it is said on behalf of the appellant, demonstrates that the courts and the parties to these cases, including the Secretary of State, clearly understood that person acting in an official capacity for the purposes of article 1, UNCAT applies only to a person acting for or on behalf of a State. While this might, at first sight, appear to support the appellants case, I am unable to attach any great weight to it. The precise question in issue here was not under consideration. Moreover, in the particular context of immigration detention it was clearly desirable to include such an express provision for the benefit of persons who, because of their history, should not be detained. We were informed that this is only the third occasion on which a prosecution has been brought in the United Kingdom pursuant to section 134, CJA. In R v Lama [2014] EWCA Crim 1729; [2017] QB 1171 the present issue did not arise. However, in my view considerable assistance is to be found in the first instance decision of Treacy J in R v Zardad, Case No T2203 7676, 7 April 2004. Zardad was charged with a conspiracy to torture in Afghanistan in circumstances where the substantive charge would have been that contrary to section 134, CJA. The case concerned the period between 1992 and 1996 when the Hezb I Islami faction was in control of Laghman Province. During that period Zardad was a chief commander of Hezb I Islami and the military controller of the area of Sarobi. Zardad maintained that he was not a public official since there was a recognised government in Afghanistan at the relevant time and the group to which he belonged was not a part of that government and was actively opposed to it. The prosecution maintained that he was either a public official de jure or a person acting in an official capacity de facto. At a preparatory hearing pursuant to section 29, Criminal Procedure and Investigations Act 1996, Treacy J considered that there was no evidence on which a jury could find that Zardad was a de jure public official. However, having surveyed the evidence of the degree of control exercised by Hezb I Islami, he continued: It seems to me that what needs to be looked at is the reality of any particular situation. Is there sufficient evidence that Hezb I Islami had a sufficient degree of organisation, a sufficient degree of actual control of an area and that it exercised the type of functions which a government or governmental organisation would exercise? It seems to me that I have to take care not to impose Western ideas of an appropriate structure for government, but to be sensitive to the fact that in countries such as Afghanistan different types of structure may exist, but which may legitimately come within the ambit of an authority which wields power sufficient to constitute an official body. (at para 33) He rejected a submission, based on Elmi, that the mere fact that there is a central government in existence precludes there being a de facto authority of which a person might be a public official or on whose behalf a person might act in a similar capacity. He considered that the words person acting in a public capacity included those acting for an entity which had acquired de facto effective control over an area of a country and was exercising governmental or quasi governmental functions in that area. In his view, there was material on which a jury could conclude that Zardad was such a de facto public official in an area totally controlled by his organisation which exercised, with a degree of permanence, functions which would be functions of a state authority (at paras 34 38). Mr Powles submits that Zardad is wrongly decided. However, I find the approach of Treacy J compelling and in conformity with the preponderant weight of material relevant to the interpretation of article 1, UNCAT. Zardad is also instructive as to which features are indicative of governmental activity. There, in support of its contention that Zardad should be treated as a public official on a de facto basis, the prosecution maintained that Zardad was akin to a Military Governor in control of a province and that he was, accordingly, to be regarded as a quasi official and amenable to the provisions of section 134 CJA. Treacy J drew attention, inter alia, to Zardads admission that he was a general within Hekmatyars army (Hekmatyar being the leader of the Hezb I Islami faction), which controlled the Sarobi area, and to the clear command structure within that force. The judge referred to the fact that prisons within the controlled area were run by Hezb I Islami which was the only law enforcement authority in the area and to the role of Hezb I Islami and Zardad personally in arresting and imprisoning lawbreakers and in mediating and resolving disputes between individuals. Representatives of international organisations and aid agencies would make representations to Zardad, as opposed to any central government authority, if equipment was seized or delayed at any of the checkpoints for which Zardads force was responsible. Those who complained of ill treatment, torture and hostage taking regarded Zardad and Hekmatyar as the only official authority in the area which was dominated and controlled by them. Against this background Treacy J concluded: The material to which I have referred in this judgment leaves it open for a jury to conclude that Mr Zardad was a de facto public official in an area which was totally controlled by Hezb I Islami and controlled by them with a degree of permanence. There is no evidence to show that at any material time the central government exercised any governmental function over the area controlled by Hezb I Islami. Such evidence as there is tends to show that Hezb I Islami had total control of the area in question. There is evidence that the Hezb I Islami faction exercised functions which could be functions of a state authority. (at para 35) US authorities The appellant relies on a number of US authorities concerning the Alien Tort Claims Act (ATCA). First, reliance is placed on certain passages in the judgment of Chief Judge Newman in Kadic v Karadzic (above). The plaintiffs sought remedies against Karadzic, the president of a three man presidency of the self proclaimed Bosnian Serb Republic of Srpska in respect of alleged atrocities including torture committed in Bosnia Herzegovina. The complaints alleged that Karadzic acted in an official capacity, either as titular head of Srpska or in collaboration with the government of the recognised nation of the former Yugoslavia. Subject matter jurisdiction was grounded, inter alia, in ATCA and the Torture Victim Protection Act of 1991 (TVPA). A motion for dismissal succeeded in the District Court, inter alia, on the ground of lack of subject matter jurisdiction. The Court of Appeals considered that the requirement of ATCA that the tort be committed in violation of the law of nations was satisfied. With regard to torture, the Court of Appeals observed, at p 243: However, torture and summary execution when not perpetrated in the course of genocide or war crimes are proscribed by international law only when committed by state officials or under color of law. and then recited the definition in article 1, UNCAT. In a passage cited earlier in this judgment at para 56 the Court of Appeals held that the proscription of official torture applied without distinction to both recognised and non recognised States and continued, at p 245: Appellants allegations entitle them to prove that Karadzics regime satisfies the criteria for a state, for purposes of those international law violations requiring state action. Srpska is alleged to control defined territory, control populations within its power, and to have entered into agreements with other governments. It has a president, a legislature, and its own currency. These circumstances readily appear to satisfy the criteria for a state in all aspects of international law. Moreover, it is likely that the state action concept, where applicable for some violations like official torture, requires merely the semblance of official authority. The inquiry, after all, is whether a person purporting to wield official power has exceeded internationally recognized standards of civilized conduct, not whether statehood in all its formal aspects exists. On behalf of the appellant it is submitted that the Court of Appeals here placed considerable emphasis on the need for the entity under consideration to possess significant State like qualities. Moreover, it is said that the State like qualities possessed by Srpska were of a considerably different order from those of NPFL as it existed during the relevant period of 1990 in Liberia. However, in common with most of the other US authorities relied on by the appellant, Kadic concerns the distinct question of actionability under ATCA. Furthermore, to the extent that it may be relevant, Kadic, notwithstanding the use of the language of statehood, does not support the appellants reading of article 1, UNCAT. On the contrary, the Court of Appeals apparently considered that official torture required merely the semblance of official authority and could be committed by a person purporting to wield official power who had exceeded internationally recognised standards of civilised conduct. In the result, the conduct of a de facto governmental authority was held to constitute official torture. The same is true of a further US decision on which the appellant relies, Mehinovic v Vuckovic, 198 F Supp 2d 1322 (2002) (US District Court, N D Georgia, Atlanta Division). The plaintiffs sued a former soldier in the Bosnian Serb Army alleging, inter alia, acts of torture. The District Court held that it had jurisdiction under both ATCA and TVPA. With regard to ATCA, it noted that official torture violated obligatory norms of customary international law and, after referring to the definition in article 1, UNCAT observed that the beatings carried out by Vuckovic and his accomplices were clearly perpetrated, instigated, and acquiesced in, by persons acting in an official capacity as part of the police or military forces of Republika Srpska. (at p 1346) The appellant relies in particular on the following passage: Vuckovic clearly committed abuses against plaintiffs under official authority. In light of the de facto governmental authority of the Republika Srpska, under which Vuckovic served as a soldier, and the control exerted over it by the Serbian government, Vuckovic may be considered also to have been acting under the authority of a foreign nation. (at p 1347) (Emphasis added) In this second passage, the court was considering whether the claim also satisfied the requirement of TVPA that the torture be under actual or apparent authority, or color of law, of any foreign nation. This does not detract in any way from the courts earlier conclusion that the conduct was that of persons acting in an official capacity. On the contrary, the courts reasoning supports the view that conduct of a de facto governmental authority can constitute official torture within article 1, UNCAT. The appellant also relies on further US cases concerning the scope of application of ATCA, in particular the requirement that the tort alleged should have been committed in violation of the law of nations. Tel Oren v Libyan Arab Republic, 726 F 2d 774, 233 US App DC 384 (1984), a decision which pre dated UNCAT, concerned the murder of civilians in a terrorist attack on a bus in Israel in March 1978. The three members of the court, for different reasons, provided support for the view that torture claims against non State actors were not within the jurisdictional grant of ATCA. In particular, Judge Edwards considered that the Palestine Liberation Organisation was not a recognised member of the community of nations and that there was insufficient consensus in 1984 that torture by private actors violated international law. In Ali Shafi v Palestinian Authority 642 F 3d 1088 (2011), the US Court of Appeals, Second Circuit endorsed this approach concluding, similarly, that in 2011 the appellants in that case had not demonstrated a consensus in the law of nations that torture by private actors violates international law. These cases were concerned with whether under ATCA there is a cause of action for torture against non State actors. Neither case was directly concerned with the question whether the conduct of an individual acting on behalf of a quasi governmental entity which is in de facto control of territory may give rise to official torture under UNCAT. Nor, in my respectful view, does the decision of the US Supreme Court in Sosa v Alvarez Machain 542 US 692 (2004) on the scope of ATCA cast any light on the present issue. Finally, in this regard, I should refer to United States of America v Belfast (US Court of Appeals, 11th Circuit, 15 July 2010) which concerned a series of constitutional challenges to the Torture Act, 18 USC para 2340 2340A. In rejecting a challenge brought on the ground that the official conduct requirement of the Act used the phrase under color of law rather than the phrase in an official capacity as found in UNCAT, the Court of Appeals referred to the view of the Senate Executive Committee charged with evaluating UNCAT that there is no distinction between the phrases. The scope of the Convention is limited to torture inflicted by or at the instigation or with the consent or acquiescence of a public official or other person acting in an official capacity. Thus, the Convention applies only to torture that occurs in the context of governmental authority, excluding torture that occurs as a wholly private act or, in terms more familiar in US law, it applies to torture inflicted under color of law. The appellant points to the fact that the Court of Appeals then went on to draw attention to the definition of under color of law in the different context of 42 USC para 1983 ([t]he traditional definition of acting under color of state law requires that the defendant have exercised power possessed by virtue of state law and made possible only because the wrongdoer is clothed with the authority of state law: West v Atkins, 487 US 42, 49 (1988) quoting in turn from United States v Classic, 313 US 299, 326 (1941)). Notwithstanding this equiparation of official conduct under UTCA and acting under color of law in a different context, the statement by the Senate Executive Committee and its adoption by the Court of Appeals makes clear that the distinction both sought to draw was between torture that occurs in a the context of governmental authority and torture that occurs as a wholly private act. Furthermore, Belfast was concerned solely with conduct which took place in Liberia after Charles Taylor had established himself as President of that State. Accordingly, it was not directly concerned with the question whether the conduct of a person acting on behalf of a quasi governmental entity which is in de facto control of territory may give rise to official torture. Academic commentators We have been referred to academic commentary which tends to support the reading of article 1 for which the prosecution contends. Thus, for example, Professor Paola Gaeta (When is the Involvement of State Officials a Requirement for the Crime of Torture?, Journal of International Criminal Justice 6 (2008), 183) explains that, whereas criminal law is usually the prerogative of each State, exceptionally international law is used by States for criminal issues as a tool to achieving stronger cooperation in judicial matters, when they want to oppose forms of trans national criminality jeopardizing their collective interests. This premise, , helps clarify why the Torture Convention sets out the requirement of the involvement of state officials for torture. The requirement of a state official is therefore needed to avoid that under international law a single conduct although consisting of an infliction of severe mental or physical pain or suffering be considered criminal when it is carried out by private individuals for private purposes. Such conduct is not of international concern and is therefore not covered by the Convention. In other words, the state official requirement constitutes what one could term the quid pluris, transforming an ordinary criminal offence into an international crime. It simply serves the purpose of precluding every single wicked act carried out by private individuals against other private individuals from being elevated to the international level. (at p 190) Similarly, Burgers and Danelius (above) observe (at p 1) that UNCAT does not deal with cases of ill treatment which occur in an exclusively non governmental setting. It only relates to practices which occur under some sort of responsibility of public officials or other persons acting in an official capacity. Other writers go further in addressing the particular issue with which we are concerned. Reference has been made above (at para 31) to the commentary by Nowak and McArthur in which they conclude that the conduct of rebel, guerrilla or insurgent groups which exercise de facto authority in certain regions or of warring factions in so called failing States would fall within the scope of article 1. Similarly, the editors of Casseses International Criminal Law, 3rd ed (2013) state: Finally, under the UN Torture Convention, the pain and suffering that is a necessary ingredient of torture must be inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity. The need for this sort of participation of a de jure or de facto state official stems from: i) the fact that in this case torture is punishable under international rules even when it constitutes a single or sporadic episode; and ii) the consequent necessity to distinguish between torture as a common or ordinary crime (for example, torture of a former intimate partner by a sadist) and torture as an international crime covered by international rules on human rights. (at p 133) Professor Gaeta returns to this issue in Clapham and Gaeta, Torture by Private Actors and Gold Plating the Offence in National Law, in Guzman et al (eds), Arcs of Global Justice: Essays in Honour of William Schabas, (OUP 2018), Ch 15, which is a dialogue between Professor Gaeta and Professor Andrew Clapham. While Professor Gaetas contributions largely address the extent to which States may choose to exceed the scope of article 1 UNCAT, Professor Clapham in the following passage is clearly addressing the scope of article 1. But I would go further than you one does not even need the involvement of a state official under the Convention. The Convention uses the expression official capacity in contrast to state official. As you know, in the Zardad case in the UK this was interpreted to cover a person working against the state as part of a rebellion. One could not say that the state acquiesced in the torture, and yet the defendant was convicted and sentenced to 20 years. The judge said that in Afghanistan there may be different types of structure which may come within the ambit of an authority which wields power sufficient to constitute an official body. It seems to me that one can have torture by an authority even where that authority is fighting against the state. I admit that this is just one case. But as we know it is more likely that prosecutions will be brought for international crimes against non state actors than against state actors. I have not found many national prosecutions for torture by state actors. (at p 292, footnotes omitted) The committee stressed in the later HMHI v Australia, in which it distinguished Elmi on the facts, that its finding in Elmi as to groups exercising quasi governmental authority was restricted to the exceptional circumstances of state authority that was wholly lacking. But notwithstanding what the Committee reiterated was the exceptional situation in Elmi, the Committees view is open to doubt. Even more doubtful is the ruling in the English criminal case of R v Zardad (Faryadi) that, even where there exists a government within a state, the expression a public official or other person acting in an official capacity in article 1 of the Torture Convention can extend to people who are acting for an entity which has acquired de facto effective control over an area of a country and is exercising governmental or quasi governmental functions in that area. (at para 7.121, footnotes omitted) The only unequivocal academic statement of the contrary view to which we were referred was that of Professor Roger OKeefe, International Criminal Law, OUP, 2015, Ch 7. Having referred to the decision of the CAT in Elmi he continued: It is time to draw the threads together. Unfortunately, however, in the absence of any further explanation it is difficult to understand the basis of the authors objection. Conclusion First, I am persuaded that the prosecution is correct in its interpretation of article 1 UNCAT and section 134 CJA. I consider that the words of those provisions in their ordinary meaning support this reading. They are sufficiently wide to include conduct by a person acting in an official capacity on behalf of an entity exercising governmental control over a civilian population in a territory over which it exercises de facto control. In particular, I can see no justification for imposing the limitation on those words for which the appellant contends, which would require the conduct to be on behalf of the government of the State concerned. On the contrary, the words in their ordinary meaning are apt to include conduct on behalf of a de facto authority which seeks to overthrow the government of the State. This reading also conforms with the object and purpose of the provisions. Here I attach particular significance to the purpose of the Convention in seeking to establish a regime for the international regulation of official torture as opposed to private acts of individuals. Torture perpetrated on behalf of a de facto governmental authority is clearly a matter of proper concern to the international community and within the rationale of the scheme. In addition, some support for this conclusion can be found in the decisions of the CAT under article 22(7), UNCAT and it is favoured by the preponderant weight of academic comment. I would express the principle in the following terms. A person acting in an official capacity in section 134(1) of the Criminal Justice Act 1988 includes a person who acts or purports to act, otherwise than in a private and individual capacity, for or on behalf of an organisation or body which exercises, in the territory controlled by that organisation or body and in which the relevant conduct occurs, functions normally exercised by governments over their civilian populations. Furthermore, it covers any such person whether acting in peace time or in a situation of armed conflict. Secondly, I would emphasise, that exercise of governmental functions is a core requirement. It will be noted that the formulation of the principle set out above differs from that of the Court of Appeal, which referred to a person acting for or on behalf of an organisation or body which exercises or purports to exercise the functions of government . Section 134(1) refers to a person acting in the performance or purported performance of his official duties. In the Court of Appeals formulation, however, the adjective purported has been transposed so as to refer to the function being exercised by the organisation or body. This is an error as the functions being exercised by the organisation or body must be governmental in character. Purporting to exercise such functions would not be sufficient. Thirdly, the exercise of a governmental function must be distinguished from purely military activity not involving any governmental function. I note that, in this regard, Treacy J in Zardad distinguished governmental functions from the activities of a rebel faction which has not acquired a sufficient degree of control, permanence, authority or organisation to fulfil criteria sufficient for it to be recognised as an authority wielding official or quasi official powers (at para 36). However, insurrectional forces engaged in fighting the forces of the central government of a State may nevertheless exercise sufficient governmental authority over territory and persons under their control for acts done on their behalf to be official acts for this purpose. Thus, in Zardad the area controlled by Hezb I Islami was controlled essentially by military force but the group also exercised governmental functions. The failure to take account of the distinction between governmental and military activity leads me to the view that the formulation adopted by Sweeney J in the present case in situations of armed conflict, individuals who act in a non private capacity and as part of an authority wielding entity is too broad. It is also necessary to bear in mind that there are circumstances in which torture might constitute a crime against humanity or a war crime contrary to UK law, whether or not performed by a public official or a person acting in an official capacity. However, for reasons explained at para 20 above, that is not so with regard to the alleged facts in the present case. Fourthly, it is necessary to say something about what may be the indicative features of governmental authority in any particular case. I consider that Treacy J in Zardad correctly identified the required approach when he observed that it is necessary to look at the reality of any particular situation and to consider whether, at the relevant time, the entity in question had a sufficient degree of organisation and actual control over an area and whether it exercised the type of functions which a government or governmental organisation would exercise. This will require examination of evidence as to the position on the ground. In doing so it will be necessary to make allowance for the particular conditions which may make administration difficult and for different views of appropriate structures of government. The question will be whether the entity has established a sufficient degree of control, authority and organisation to become an authority exercising official or quasi official powers, as opposed to a rebel faction or a mere military force. The one reservation I have about the approach of Treacy J. in Zardad is his view that the entity would be required to establish itself with a degree of permanence. This, it seems to me, is likely to be a flexible concept and the fact that the long term survival of an entity may be an unlikely prospect should not prevent it from being considered a de facto government provided that it has effectively established itself as such. Furthermore, it is clear that the continued existence of a central government would not prevent an entity exercising the authority described above from being a de facto government in respect of the territory under its control. The application of this approach to the particular facts in Zardad has been considered at para 65 above. Fifthly, if this matter proceeds to trial, the question whether the appellant acted in an official capacity as alleged in the indictment will be a matter for the jury and it will be open to the defence to argue that the evidence does not come up to the mark. However, this appeal arises out of a ruling at a preparatory hearing under section 31(3) CPIA and the issue for the judge at that hearing was the correct interpretation of the words person acting in an official capacity in section 134 CJA. The Court of Appeal expressed its conclusion on the legal test in different terms from those of Sweeney J but, nevertheless, considered that the test the judge applied was not materially different on the facts of the case and that his ruling on the factual submission of no case to answer was not affected. Since the hearing in the Court of Appeal, however, the prosecution has served a further memorandum in which its expert witness clarifies that his use of the term control in his evidence refers to military rather than administrative control over the area. In particular, he states that NPFL were the de facto military authority but that military control is very different from administrative control. (See para 7, above.) This is a matter of some importance for the reasons expressed at para 79, above. Furthermore, for the reasons set out in para 77 above, I would modify the test adopted by the Court of Appeal. Accordingly, in these circumstances, I consider that it is necessary for this matter to be remitted to the judge for him to reconsider it in the light of these further developments and in the light of further expert evidence. I would, therefore, on this narrow basis, allow the appeal, quash the determination of the Court of Appeal and remit the matter to the judge for further consideration in the light of the new evidence from the prosecution expert and the judgment of this Court. For this purpose, I would make an order under rule 9.16(5), Criminal Procedure Rules that the appellant be permitted to make, within 28 days from the date on which judgment is given in this appeal, a new application to dismiss. Lord Reed: (dissenting) I regret that I am unable to agree with the careful reasoning of Lord Lloyd Jones. Bearing in mind in particular that this courts decision may be considered in other jurisdictions, it is right that I should indicate briefly the reasons why I find more persuasive the arguments advanced on behalf of the appellant. First, article 31(1) of the Vienna Convention on the Law of Treaties sets out the general rule of interpretation of treaties: A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose. Applying that general rule to article 1 of the UN Convention Against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (UNCAT), the ordinary meaning of the phrase a public official or other person acting in an official capacity does not in my opinion extend to a member of an insurgent group engaged in armed insurrection against the government of the country. That point does not admit of much elaboration. The ordinary meaning of the words a public official is reasonably clear, and would not in my opinion apply to such a person. The words or other person acting in an official capacity would, in their ordinary meaning, extend to persons who were not public officials but who were acting in a similar capacity, by reason for example of the outsourcing of public functions to private agencies. The core idea seems to me to be that the person in question is acting on behalf of the state. I have difficulty in applying the words acting in an official capacity to persons participating in an armed insurrection against the government. Secondly, article 31(1) of the Vienna Convention requires the terms used in a treaty to be given their ordinary meaning in their context. The context, so far as UNCAT concerns the position of the state where the torture occurs, includes in the first place the final sentence in article 1, which excludes from the definition of torture pain or suffering arising only from, inherent in or incidental to lawful sanctions. The reference to lawful sanctions supports the view that article 1 is concerned with conduct for which the state bears responsibility. It is far from obvious how the exclusion of lawful sanctions is to be applied if the conduct of insurgents controlling an area of territory falls within the scope of article 1. Are they to be regarded as being in a position to impose lawful sanctions, despite their lack of any lawful authority for their conduct? If so, by what standards is the lawfulness of any sanctions they might impose to be judged? But if not, can no distinction be drawn between punishment which falls within the scope of UNCAT and punishment which does not? The context also includes article 2(1): Each State Party shall take effective legislative, administrative, judicial or other measures to prevent acts of torture in any territory under its jurisdiction. The territory under the jurisdiction of a state would ordinarily be understood as being the territory over which it has de jure control. If torture carried out by insurgents in territory under their de facto control falls within the scope of UNCAT, it follows that article 2(1) imposes an obligation on states with which they cannot comply: they cannot take effective measures in relation to territory which they do not control. UNCAT cannot sensibly be interpreted in a way which would have the effect of imposing an obligation on states with which they cannot comply: lex non cogit ad impossibilia. That strongly suggests that article 2(1) cannot have been intended to apply in those circumstances, which in turn implies that the definition of torture in article 1 cannot have been intended to apply to torture committed by insurgent forces, without the consent or acquiescence of the state in question. Thirdly, article 31(1) of the Vienna Convention requires a treaty to be interpreted in the light of its object and purpose. UNCAT is intended, as its preamble recites, to make more effective the struggle against torture and other cruel, inhuman or degrading treatment or punishment throughout the world. Nevertheless, by the time UNCAT was concluded, the prohibition of torture was already recognised as a peremptory norm of international law, enshrined in article 7 of the International Covenant on Civil and Political Rights (ICCPR). The objective of UNCAT, as appears from its substantive provisions, was more specific: to impose obligations on states actively to prevent and punish torture, including by means of universal jurisdiction. Thus, as I have explained, article 2 requires states to take effective measures to prevent acts of torture, as defined in article 1, in any territory under their jurisdiction. Article 3 prohibits states from expelling, returning or extraditing persons to other states where they are liable to be tortured. Articles 4 to 9 make provision for states to exercise an extra territorial jurisdiction in respect of acts of torture, requiring them to prosecute persons within their jurisdiction who are alleged to be responsible for torture, wherever it occurred, and to punish them if convicted. It is for the purpose of those obligations that article 1 adopts a definition of torture which is specifically concerned with the conduct of public officials and other persons acting in an official capacity: a definition which is narrower than the concept of torture in the ICCPR (or in other international law instruments, such as common article 3 of the Geneva Conventions, the Rome Statute of the International Criminal Court, or the statutes of the International Criminal Tribunal for the Former Yugoslavia and the International Criminal Tribunal for Rwanda). Articles 4 to 9 of UNCAT, in requiring states to exercise a universal jurisdiction in respect of acts committed in other states and having no connection to themselves, are particularly significant in international law, since they make inroads into national sovereignty. Two implications follow. First, if there is a real doubt as to the interpretation of article 1, it is more likely, other things being equal, that the states parties will have intended a narrower rather than a more expansive reading, since they are unlikely to have intended to diminish their sovereignty further than they had made reasonably clear. Secondly, one would expect there to be a compelling justification for states to accept the presence in an international treaty of provisions having the effect of diminishing their sovereignty. Such a justification exists if article 1 is understood as applying to persons exercising official functions on behalf of the state, or at least acting with its consent or acquiescence, since states might be reluctant to prosecute such persons for acts committed in the course of their duties. There would be no reason to apprehend such reluctance, on the other hand, if torture were committed by persons who were unconnected with the state and had neither its authority nor consent, nor even its acquiescence. That is indeed the explanation given in Burgers and Danelius, The United Nations Convention against Torture A Handbook on the Convention against Torture (1988), p 120: The problem with which the Convention was meant to deal was that of torture in which the authorities of a country were themselves involved and in respect of which the machinery of investigation and prosecution might therefore not function normally. A typical case is torture inflicted by a policeman or an officer of the investigating or prosecuting authority. But many variations are conceivable. It could be that the torturer is not directly connected with any public authority but that the authorities have hired him to help gather information or have at least accepted or tolerated his act. All such situations where the responsibility of the authorities is somehow engaged are supposed to be covered by the rather wide phrase appearing in article 1: inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity. The two authors were actively involved in the preparation of UNCAT, Herman Burgers as chairman rapporteur of the Working Group set up to draw up the text of the Convention, and Hans Danelius as the author of the initial draft of the Convention and as an active participant in all sessions of the Working Group. Other respected experts in this field have also interpreted article 1 as being confined to situations where the responsibility of state authorities is engaged: that is my understanding of what is said, for example, in Boulesbaa, The UN Convention on Torture and the Prospects for Enforcement (1999), pp 27 28; in Gaeta, When is the Involvement of State Officials a Requirement for the Crime of Torture? (2008) 6 JICJ 183, 184 and 190, and in Gaeta and Clapham, Torture by Private Actors and Gold Plating the Offence in National Law: An Exchange of Emails in Honour of William Schabas, in de Guzman and Amann (eds), Arcs of Global Justice: Essays in Honour of William Schabas (2018), p 290; and, perhaps most emphatically, in OKeefe, International Criminal Law (2015), Part Two, para 7.121. Fourthly, it is apparent that while many states parties, including the United Kingdom, have followed the wording of article 1 when implementing UNCAT in their domestic law, there are also states which have adopted a definition based on the understanding that article 1 is confined to situations where the responsibility of state authorities is engaged. Examples include Norway (where section 174 of the Penal Code of 2005 imposes liability on any public official, defined as any person in central or local government service, or engaged by central or local government to perform a service or work), Spain (where article 174(1) of the Criminal Code provides that torture is committed by the public authority or officer who, abusing his office ). Turkey (where article 94(1) of the Criminal Code imposes liability on any civil servant ; article 94(4) imposes an ancillary liability on any other person found to have participated in this offence, who shall be subject to the same punishment as the civil servant). The implication of the respondents argument is that those states parties have failed to implement UNCAT correctly. Counsel for the respondent emphasised that Austria, whose representatives had proposed the wording adopted in article 1, provides in the relevant provision of its Criminal Code (section 312a) that public officials within the meaning of this provision shall also be those who, in the event of the absence or default of the public authorities, are effectively acting as officials. What is of greater interest, however, is that this provision was only introduced in 2013. Is it to be inferred that, until then, Austria had failed to implement correctly a provision of UNCAT which had been adopted at its own suggestion? Fifthly, an interpretation of article 1 which confined it to situations where the conduct was the responsibility of the state was consistently adopted by the United Nations Committee Against Torture in its decisions prior to about 2003. In GRB v Sweden, Communication No 83/1997, 15 May 1998, para 6.5, the Committee stated: The Committee considers that the issue whether the State party has an obligation to refrain from expelling a person who might risk pain or suffering inflicted by a non governmental entity, without the consent or acquiescence of the Government, falls outside the scope of article 3 of the Convention. The Committee went somewhat further in Elmi v Australia, Communication No 120/98, 14 May 1999, para 6.5, but in circumstances where there was no functioning state: The Committee notes that for a number of years Somalia has been without a central government, that the international community negotiates with the warring factions and that some of the factions operating in Mogadishu have set up quasi governmental institutions and are negotiating the establishment of a common administration. It follows then that, de facto, those factions exercise certain prerogatives that are comparable to those normally exercised by legitimate governments. Accordingly, the members of those factions can fall, for the purposes of the application of the Convention, within the phrase public officials or other persons acting in an official capacity contained in article 1. The following day, in SV v Canada, Communication No 49/1996, 15 May 1999, para 9.5, the Committee reiterated its established position: The Committee considers that the issue of whether the State party has an obligation to refrain from expelling a person who might risk pain or suffering inflicted by a non governmental entity, without the consent or acquiescence of the Government, falls outside the scope of article 3 of the Convention. That was repeated in MPS v Australia, Communication No 138/1999, 30 April 2002, para 7.4: The Committee recalls its previous jurisprudence that the issue whether the state party has an obligation to refrain from expelling a person who might risk pain or suffering inflicted by a non governmental entity, without the consent or acquiescence of the Government, falls outside the scope of article 3 of the Convention. The special nature of the Elmi case was made clear by the Committee in the case of HMHI v Australia, Communication No 177/2001, 1 May 2002, para 6.4: The Committee recalls its jurisprudence that the State partys obligation under article 3 to refrain from forcibly returning a person to another State where there are substantial grounds of a risk of torture, as defined in article 1 of the Convention, which requires actions by a public official or other person acting in an official capacity. Accordingly, in GRB v Sweden, the Committee considered that allegations of a risk of torture at the hands of Sendero Luminoso, a non state entity controlling significant portions of Peru, fell outside the scope of article 3 of the Convention. In Elmi v Australia, the Committee considered that, in the exceptional circumstance of State authority that was wholly lacking, acts by groups exercising quasi governmental authority could fall within the definition of article 1, and thus call for the application of article 3. The Committee considers that, with three years elapsing since the Elmi decision, Somalia currently possesses a State authority in the form of the Transitional National Government, which has relations with the international community in its capacity as central government, though some doubts may exist as to the reach of its territorial authority and its permanence. Accordingly, the Committee does not consider this case to fall within the exceptional situation in Elmi, and takes the view that acts of such entities as are now in Somalia commonly fall outside the scope of article 3 of the Convention. A different approach was, however, adopted by the Committee in SS v Netherlands, Communication No 191/2001, 5 May 2003, para 6.4: The Committee observes that the issue whether the State party has an obligation to refrain from expelling a person who might risk pain or suffering inflicted by a non governmental entity, without the consent or acquiescence of the Government, falls outside the scope of article 3 of the Convention, unless the non governmental entity occupies and exercises quasi governmental authority over the territory to which the complainant would be returned. The Committees change of approach was neither acknowledged nor explained. On the contrary, the passages quoted above from Elmi v Australia, SV v Canada and MPS v Australia were cited as supporting this approach. The approach adopted by the Committee more recently in MKM v Australia, Communication No 681/2015, 10 May 2017, was seemingly more orthodox. It referred at para 8.6 to the failure of the state in question to provide protection from torture by non state actors, and referred in para 8.7 to its General Comment No 2 (2008), discussed below, and to the failure on the part of a state party to exercise due diligence to intervene and stop the abuses [by non state actors] that are impermissible under the Convention, for which it may bear responsibility. A parallel but slower development to that in SS v Netherlands can be seen in the Committees General Comments. In its General Comment No 2: Implementation of article 2 by States Parties, 24 January 2008, CAT/C/GC/2, the Committee adopted an approach which treated article 1 of the Convention as not normally applying to the actions of non state actors. In that regard, it stated at para 15: States bear international responsibility for the acts and omissions of their officials and others, including agents, private contractors, and others acting in official capacity or acting on behalf of the State, in conjunction with the State, under its direction or control, or otherwise under colour of law. The only situations in which the actions of non state actors would be relevant were where the state consented or acquiesced in them, or failed in its duty under article 2 to take effective measures to prevent them. In that regard, the Committee stated at para 18: where State authorities or others acting in official capacity or under colour of law, know or have reasonable grounds to believe that acts of torture or ill treatment are being committed by non state officials or private actors and they fail to exercise due diligence to prevent, investigate, prosecute and punish such non state officials or private actors consistently with the Convention, the State bears responsibility and its officials should be considered as authors, complicit or otherwise responsible under the Convention for consenting to or acquiescing in such impermissible acts. Since the failure of the State to exercise due diligence to intervene to stop, sanction and provide remedies to victims of torture facilitates and enables non State actors to commit acts impermissible under the Convention with impunity, the States indifference or inaction provides a form of encouragement and/or de facto permission. Following that approach, UNCAT would not normally apply to the conduct of insurgent forces within territory under their control. Ten years later, however, the Committee adopted a different approach in its General Comment No 4 (2017): Implementation of article 3 of the Convention in the context of article 22, 4 September 2018, CAT/C/GC/4. Citing Elmi v Australia and MKM v Australia, it stated at para 30: States parties should refrain from deporting individuals to another State where there are substantial grounds for believing that they would be in danger of being subjected to torture or other ill treatment at the hands of non state entities, including groups that are unlawfully exercising actions that inflict severe pain or suffering for purposes prohibited by the Convention, and over which the receiving State has no or only partial de facto control, or whose acts it is unable to prevent or whose impunity it is unable to counter. There appears, therefore, to have been a development in the Committees interpretation of article 1 in relatively recent times, which may be reflected also in the amendment of Austrian law mentioned earlier. Indeed, the Committee has in recent years been urging a number of states to amend their domestic law so as to conform to its current interpretation of article 1: see, for example, its Concluding Observations on the sixth periodic report on Austria dated 27 January 2016, CAT/C/AUT/CO/6, para 5(a), and its Concluding Observations on the seventh periodic report on the Netherlands dated 18 December 2018, CAT/C/NLD/CO/7, para 7. This development may reflect wider changes. The period since the end of the Cold War has witnessed a proliferation of non international armed conflict. In that context, the use of torture by non state actors has become an increasingly serious problem. Against that background, to the extent that the Committees current approach to the interpretation of UNCAT departs from the meaning which might have been envisaged in 1984, that development might perhaps be argued to be an example of evolutionary interpretation. That there has been a development must however be borne in mind when considering the relevance of the Committees interpretation to the present proceedings, which are concerned with events alleged to have occurred during 1990. An interpretation of UNCAT which was only adopted by the Commission in relatively recent times, long after the events in question, cannot be applied when assessing the criminality of those events, bearing in mind the fundamental principle, recognised in both international and domestic law, of nulla poena sine lege. That principle must be respected in relation to section 134 of the Criminal Justice Act 1988, having regard to the Human Rights Act 1998 and the Convention right arising under article 7 of the European Convention on Human Rights (ECHR). Accordingly, even if article 1 of UNCAT might now be interpreted, consistently with the Committees recent statements, as extending to the actions of non state entities exercising quasi governmental functions over which the state has no control, it does not follow that it should be interpreted in the same way when considering the criminality of actions which took place in 1990. Finally, it is essential, both under our domestic law and under international law (for example, article 7 of the ECHR and article 15 of the ICCPR), that the principle of legal certainty should be respected, above all in criminal proceedings. As the law of this country has long recognised, that means that criminal legislation whose meaning is unclear should be given a restrictive rather than an expansive interpretation. The fact that considerations of policy might be better served by a broad construction do not justify a departure from that principle. For the foregoing reasons, I would have allowed the appeal.
+It is the role of the common law to adapt to meet new circumstances and challenges. Mesothelioma has been and is a tragedy for individuals and families. It is caused by exposure to the inhalation of asbestos dust, and has a gestation period measured typically in decades. The more fibres inhaled, the greater the risk of contracting mesothelioma. But, beyond that, its specific causation is highly uncertain: see Sienkiewicz v Greif (UK) Ltd [2011] UKSC 10, [2011] 2 AC 229, para 19, Durham v BAI (Run off) Ltd [2012] UKSC 14, [2012] 1 WLR 867, para 6. It was thought it might be caused by a single fibre, but Lord Phillips annex to his judgment in Sienkiewicz, part A, paras 10 11, notes that the process of causation may involve (different) fibres acting in a way which gives rise to a series of as many as six or seven genetic alterations, ending with a malignant cell in the pleura. In any event, the evidential uncertainties about its causation led the House of Lords in Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22, [2003] 1 AC 32 to create a special common law rule, operating within what may be called the Fairchild enclave, to govern liability between victims and those who in breach of duty had exposed them to asbestos dust. Following the Houses decision in Barker v Corus UK Ltd [2006] UKHL 20, [2006] 2 AC 572, this special rule was fortified by the Compensation Act 2006. Unsurprisingly, the courts are still working out the implications. Courts which have embarked on it have had to focus on disputes gradually shifting from (a) the position between victims and those responsible for their exposure, on which substantial authority now exists under English law, to (b) the position between persons so responsible and their insurers. This appeal and the conclusions I reach on it are concerned exclusively with situations falling within the special rule. The appeal, brought by Zurich Insurance plc (Zurich) as appellant against International Energy Group Ltd (IEG) as respondent, raises points under both (a) and (b). The issues under (a) are subject to Guernsey law, and there is a difference between the English and Guernsey statute law. The parties are however agreed that Guernsey common law is to be treated as identical with English common law on this appeal. According to the special rule recognised by the House of Lords, a person contracting mesothelioma, after being exposed to significant quantities of asbestos dust originating from different sources over the same or different periods, can sue any person who was (negligently or in breach of duty) responsible for any such source of exposure, although unable to show which exposure in probability actually led or contributed to the disease: Fairchild and Barker. This rule applies even if the only potential sources consist in the ambient environmental exposure which the population generally experiences and some other negligently created source which only increases this ambient exposure by a small percentage 18% in the case so holding: Sienkiewicz. The special rule confers a right of suit on victims of mesothelioma by reference to each significant exposure, rather than any probability that the particular exposure relied upon led or contributed to the disease. As formulated in Fairchild, it left open the damages recoverable from a person responsible for an exposure. In Barker the House of Lords held that a person responsible was liable not for the whole damages attributable to the mesothelioma, but only in proportion to his own contribution to the overall exposure, probably measured by the duration and intensity of the particular exposure for which he was responsible. This proportionate recovery applied whether the other sources were tortious, non tortious, by natural causes or by the victim him or herself. The United Kingdom Parliament reacted immediately, reversing the Houses ruling that recovery should be proportionate by the Compensation Act 2006. This Act preserves all other aspects of the special rule, as is apparent from section 3(1) and (2): Mesothelioma: damages (1) This section applies where (a) a person (the responsible person) has negligently or in breach of statutory duty caused or permitted another person (the victim) to be exposed to asbestos, (b) the victim has contracted mesothelioma as a result of exposure to asbestos, (c) because of the nature of mesothelioma and the state of medical science, it is not possible to determine with certainty whether it was the exposure mentioned in paragraph (a) or another exposure which caused the victim to become ill, and (d) the responsible person is liable in tort, by virtue of the exposure mentioned in paragraph (a), in connection with damage caused to the victim by the disease (whether by reason of having materially increased a risk or for any other reason). (2) The responsible person shall be liable (a) in respect of the whole of the damage caused to the victim by the disease (irrespective of whether the victim was also exposed to asbestos (i) other than by the responsible person, whether or not in circumstances in which another person has liability in tort, or (ii) by the responsible person in circumstances in which he has no liability in tort), and (b) jointly and severally with any other responsible person. Industry guidelines for apportioning and handling employers liability mesothelioma claims were developed in October 2003, taking account of the Financial Services Compensation Scheme (FSCS) available under the Policyholders Protection Act 1975 and the Financial Services and Markets Act 2000 in relation to insolvent insurers. These guidelines were also reflected in the Industrial Disease Claims Working Party handling guidelines issued in 2006, which were themselves revised in 2008 following the expansion of the FSCS by the Compensation Act 2006 (Contribution for Mesothelioma Claims) Regulations 2006 (SI 2006/3259). Lord Sumption has described some of the features of the guidelines, which, it appears, achieved general acceptance in the industry, by the FSCS and by reinsurers, before the decision of the Court of Appeal in the present case on 6 February 2013 appeared to undermine their application. Most recently, after consultations going back to 2010 and to meet the possibility that a mesothelioma victim might be unable to identify any solvent employer with an identifiable insurer, the Mesothelioma Act 2014 has established an insurance industry fund to pay out in such a case a sum fixed by schedule initially at about 80% but since a Ministerial announcement on 10 February 2015 at 100% of the average damages recovery which a victim of the particular victims age would be expected to recover in a civil claim. In Durham v BAI (Run Off) Ltd [2012] UKSC 14, [2012] 1 WLR 867 (the Trigger litigation), the Supreme Court held that, where an employer is insured against liability for a disease suffered by an employee which has been caused during the insurance period, the necessary causal requirement or link is satisfied in the case of mesothelioma by the employers negligent exposure of the victim during such period to asbestos (and so to the risk of suffering mesothelioma), with the result that the insurer must indemnify the employer against the liability so incurred. Guernsey has not passed any equivalent of the United Kingdoms Compensation Act 2006. The first main question on this appeal is whether, apart from that Act, the proportionate recovery rule in Barker still exists at common law. Guernsey common law is, as stated, to be taken to be the same as English common law. IEGs case is that Barker has become past history after the 2006 Act and in the light of the Supreme Courts decision in the Trigger litigation. The second main question concerns the position where the person responsible for exposing a mesothelioma victim has the benefit of liability insurance covering only part of the period for which he exposed the victim. If in such a case the person responsible incurs an expense or liability which is not proportionate, must an insurer who has covered only part of the whole exposure period bear the whole expense or liability? Before the Supreme Court, the parties and interveners accepted that such an insurer must, at least in the first instance, answer for the whole expense or liability, but Lord Sumptions judgment on this appeal raises for consideration whether they were correct to do so. Assuming they were, the further question arises whether such an insurer is in any way entitled to recoup himself proportionately, and if so from whom, when during the remaining period of exposure the employer chose either to insure with other insurers or not to insure at all or no identifiable insurer can now be shown to have covered the employer. If Barker no longer represents the common law, this question arises directly on this appeal. Zurich submits that it anyway also arises in respect of defence costs incurred by or on behalf of a person responsible for a particular exposure, where the overall exposure is greater. Most obviously, it is a question of general importance in the United Kingdom in relation to claims under the 2006 Act, though the present appeal concerns no such claim. The facts The facts can be shortly stated. IEG is a solvent Guernsey company, a supplier of gas to the Channel Islands and a subsidiary of a global utilities, transport, energy and timber company quoted on the New York Stock Exchange. IEG is the successor in title of Guernsey Gas Light Co Ltd (GGLCL), which for a period of over 27 years from 13 November 1961 to 31 December 1988 employed Mr Carr and during such employment exposed him to asbestos dust. Mr Carr subsequently contracted and died of mesothelioma. It is common ground for present purposes that Mr Carr was exposed with the same degree of frequency and intensity throughout the 27 year period, without adequate protection being provided by GGLCL, under circumstances that materially increased the risk of his contracting mesothelioma and constituted breaches of duty by GGLCL towards him. On 22 September 2008 Mr Carr brought proceedings against IEG claiming that he had sustained mesothelioma consequent on his exposure to asbestos dust throughout his 27 year period of employment with GGLCL. IEG settled his claim on 19 December 2008 by a compensation payment consisting of 250,000 in damages and interest plus 15,300 towards Mr Carrs costs. IEG also incurred defence costs of 13,151.60. Thereafter IEG looked to GGLCLs liability insurers under policies in force during the period of exposure. Two have been identified, first the Excess Insurance Co Ltd, which provided employers liability insurance for two years from 31 December 1978 to 30 December 1980, and, second the Midland Assurance Ltd, to whose insurance liabilities Zurich has succeeded, which provided such insurance for six years from 31 December 1982 to 31 December 1988. The present appeal thus proceeds on the basis that GGLCL had insurance for eight of the 27 years throughout which it exposed Mr Carr to asbestos dust. Guernsey did not have legislation making employers liability insurance compulsory until 1993, when the Employers Liability (Compulsory Insurance) (Guernsey) Law 1993 came into effect. Each of the Midland policies issued during the six years when it was on risk provided that: Whereas the Insured carrying on the business described in the Schedule and no other for the purposes of this insurance has applied to Midland Assurance Limited (hereinafter called the Company) for the insurance hereinafter contained and has paid or agreed to pay the premium as consideration for such insurance during the period stated in the Schedule or for any subsequent period for which the Company shall have accepted the premium required for renewal of this policy. If any person under a contract of service or apprenticeship with the Insured shall sustain any bodily injury or disease caused during any period of insurance and arising out of and in the course of his employment by the Insured in the business above mentioned, the Company will indemnify the Insured against all sums for which the Insured shall be liable in respect of any claim for damages for such injury or disease settled or defended with the consent of the Company. The Company will in addition pay claimants costs and expenses and be responsible for all costs and expenses incurred with the consent of the Company in defending any such claim for damages. IEG notified a claim for its total loss to Zurich, which offered to meet 72/326ths of the damages and interest paid to Mr Carr and of the defence costs incurred. The proportion reflected the relationship between the six years of the Midland insurance and the 27 year period of Mr Carrs exposure by GGLCL. It was arrived at on the basis that IEGs liability to Mr Carr was incurred and increased from day to day throughout the 27 years, while only six years of such liability fell within the period of the Midland insurance. (Any slight inaccuracy in equating a period of 27 years one month 17 days with 326 months can be ignored. Cooke J at trial converted 72/326ths into a percentage of 22.08%, which has not been challenged.) A trial was ordered on the basis of a statement of facts and issues recording the common ground between the parties, and on 24 January 2012 (two months before this court handed down judgment in the Trigger litigation) Cooke J accepted Zurichs case regarding the compensation, but not the defence costs, paid in respect of Mr Carr. He held it liable to pay 71,729.84 in full discharge of its policy liabilities, being its relevant proportion of such compensation plus 100% of the defence costs: [2012] EWHC 69 (Comm). On 6 February 2013 the Court of Appeal allowed IEGs appeal, rejected Zurichs cross appeal relating to defence costs, and ordered Zurich to pay 278,451.60, representing 100% of both the compensation paid and defence costs incurred by IEG: [2013] EWCA Civ 39. The Trigger litigation The issue in the Trigger litigation was whether and how various differently worded employers liability insurance policies should respond to mesothelioma claims. Typical wordings in use at various relevant dates were set out in annex A to and summarised in paras 7 to 9 of my judgment in that case. Under some of the policy wordings there considered (including some early Excess policies in different form to the present), the insurer promised to indemnify the insured employer against liability if at any time during the period of insurance (or of any renewal) any employee should sustain personal injury by accident or disease or [any] bodily injury or disease, while engaged in the service of the employer or in other cases arising out of and in the course of [his] employment by the insured employer. Other policy wordings were in more developed form, promising for example indemnity in respect of legal liability for sums payable as compensation for bodily injury or disease suffered by any employee when such injury or disease arises out of and in the course of employment by the Insured and is sustained or contracted during the currency of this Policy. The issue in the Trigger litigation was whether these wordings responded by reference to the date of exposure to asbestos dust or to the date when the onset of mesothelioma or any other long term disease developed or manifested itself. In determining this issue, this court found assistance as to the scope, purpose and proper interpretation of each of the insurances in a study of its language, read in its entirety (paras 19 and 41). It relied on the wordings assumption that the course of employment and the sustaining of injury would be contemporaneous (para 20) and that there would be a close link between the risks attaching to the employment or work undertaken in the insurance period and the risks which the insurers, for a premium calculated by reference to the nature of such employment during such period, agreed to insure (paras 21 23). It also relied on the improbability that insurers would offer or sell cover in respect of risks attaching to ancient, as opposed to current, employment or activities (para 24) or on a basis that would leave it open to insurers to refuse further cover once it became apparent that such employment or activities were likely to produce claims (paras 24 25). In the upshot, all the insurance wordings considered in the Trigger litigation were held to operate on a similar basis. Whether the wording referred to a disease contracted or an injury or disease sustained, the reference was to be taken as being to the date when mesothelioma was caused or initiated by exposure, even though it only developed or manifested itself long afterwards (paras 49 51). In respect of the limited number of the insurances with which the court was concerned which post dated the Employers Liability (Compulsory Insurance) Act 1969, the court also regarded its conclusions on interpretation as the only conclusions consistent with the employers duty to carry insurance under that Act. The Midland policy wording in issue on this appeal is expressly on a causation basis, and the risks undertaken are closely tied to the period of insurance. A second, yet more fundamental, point arose during the course of the appeal in Trigger. If causation grounded liability under the insurance wordings, could causation be shown to exist, bearing in mind that the special rule established by Fairchild, Barker and Sienkiewicz derives from the impossibility of proving as a matter of probability that any particular exposure has led or contributed to the occurrence of mesothelioma in any particular case? The rival possibilities examined in Trigger were that (a) the special rule involves a legal inference or fiction that, despite the evidential impossibility, the particular exposure has as a matter of probability caused or contributed to the occurrence of the mesothelioma or (b) the special rule involves a weak or broad view of the causal requirements or link satisfied in the case of mesothelioma by proof of exposure to asbestos dust or, both these possibilities failing, (c) the employers liability under the special rule arises not for, or because he has in any sense caused, the mesothelioma, but on the contrary for, and because of, his creation of the risk of causing the disease. On this last basis no relevant causation would have existed sufficient to trigger the insurance wordings in Trigger, since they required causation of a disease, not causation of a risk. In Trigger, none of the members of the court accepted possibility (a): see eg paras 59 and 71 74 in my judgment and para 131 per Lord Phillips. But Lord Phillips went on, after analysing Barker, to accept possibility (c). Dissenting, he held that employers could not pass on to their insurers the liability which they had incurred under the special rule, and he refused to engage in any redefinition of that special rule to render insurers liable: paras 133 134. The majority on the other hand accepted the employers case that insurances underwritten on a causation basis must respond in circumstances where employers incur liability for mesothelioma under the special rule because they have exposed the victim to asbestos dust during the relevant insurance period. In my judgment, with which Lord Kerr, Lord Clarke and Lord Dyson agreed, this was explained by reference to possibility (b): the ordinary requirements of causation (proof on a balance of probability) were modified as between the victim and person responsible, so as to make the latter liable for the mesothelioma because of the risk of sustaining mesothelioma to which the victim had been exposed during the relevant period: see paras 66 and 73. Further, and importantly, the majority also held that a liability insurer covering the person responsible on a causation basis must accept the development of, and the increase of employers liability resulting from, the special rule within the limits of the relevant insurance and insurance period: see paras 66 (end), 69 70 and 73 74. If causation is given a weak or broad meaning as against the person tortiously responsible, the same weak or broad meaning should be treated as carrying through into a liability insurance covering an insured on a causation basis. However, Trigger was not directly concerned with, and did not examine, the situation or the consequences where a person responsible for exposing a mesothelioma victim to asbestos dust has an insurance covering only part of the period of that exposure. That is the situation which gives rise to the present appeal. If one puts on one side the fact that exposure continued for a further 21 years, Trigger is direct authority that the Midland policy must respond to liability for mesothelioma incurred by IEG under the special rule as a result of GGLCLs tortious exposure of Mr Carr throughout the six year period of the Midland insurances. The policy period is fundamental under any liability policy, as the reasoning in Trigger summarised in para 18 above itself indicates. But, under Trigger, the sufficient weak or broad cause which grounds liability for any subsequently incurred mesothelioma occurs within the policy period, and that is sufficient. Zurich has at all times accepted that, if Mr Carr was, as a result of being exposed to asbestos dust during the six years for which Midland insured GGLCL, entitled to the full compensation payment of 250,000 plus costs which he received from IEG, then the policy wording on its face requires Zurich to answer in full notwithstanding that he was also exposed to asbestos dust during a further 21 years: see its written case before this court on the present appeal, para 4.4. However, the policy and its wording only govern the parties relationship in and with respect to the policy periods and risks arising during such periods. The special rule recognised in Fairchild as modified by the 2006 Act has the unique effect of requiring Zurich to respond potentially under its policy wordings to liabilities incurred by GGLCL/IEG which are: (a) attributable to the mere risk that GGLCLs conduct during the Midland insurance period led or contributed to Mr Carr incurring mesothelioma, but also (b) equally easily, or proportionately much more easily, attributable to GGLCLs conduct wholly outside the scope and period of the Midland insurance. Zurichs case is that, since GGLCLs conduct within (b) was wholly independent of and outside the scope of the Midland insurance and Midland insurance period, there is no reason why it cannot be recognised as giving rise to obligations as between Zurich and IEG, no inconsistency with the Midland insurance in recognising that such obligations may result from such conduct, and every reason in justice why this should be recognised. Barker The first main question on this appeal is whether Barker remains good common law, not in the United Kingdom, where it has been superseded by the 2006 Act, but in Guernsey where no such statute exists. I do not understand there to be any issue that, if Barker remains good common law, then IEGs liability in respect of the six years of Midland cover was and is for a proportionate part (22.08%) of the full compensation which IEG in fact paid. If Mr Carr had only been able to show six years of exposure with GGLCL, but a further 21 years exposure elsewhere, he could not have claimed more than 22.08% of his total loss from IEG. Equally IEG cannot now claim from Zurich more than the same proportion (22.08%) of the whole compensation paid which it can properly attribute to the six years of the Midland insurance. This is the corollary of the fundamental principle of indemnity, which governs liability insurance. This principle was articulated long ago in Godin v London Assurance Co (1758) 1 Burr 489, a case in which the defendant insurers were contending that because there had been double insurance they ought only to have to pay half the loss, although neither insurer had as yet paid any sum. Lord Mansfield, in giving the judgment of the court upholding a verdict for the whole loss in these circumstances, observed (p 492): Before the introduction of wagering policies, it was, upon principles of convenience, very wisely established, that a man should not recover more than he had lost. Insurance was considered as an indemnity only, in case of a loss: and therefore the satisfaction ought not to exceed the loss. If the insured is to receive but one satisfaction, natural justice says that the several insurers shall all of them contribute pro rata, to satisfy that loss against which they have all insured. Where a man makes a double insurance of the same thing, in such a manner that he can clearly recover, against several insurers in distinct policies, a double satisfaction, the law certainly says that he ought not to recover doubly for the same loss, but be content with one single satisfaction for it. And if the whole should be recovered from one, he ought to stand in the place of the insured, to receive contribution from the other, who was equally liable to pay the whole. In IEGs submission, Barker is fatally undermined by the Compensation Act 2006 and/or the decision in Trigger. IEG points out that section 16(3) of the 2006 Act provides that Section 3 shall be treated as having always had effect, and suggests that the Act was in section 3 declaring what the common law has always been. I do not accept that. Section 16 is a section dealing with Commencement, and the 2006 Act was clearly passed to change a common law rule expounded in Barker. It is true that the 2006 Act leads to a result which the common law might itself have accepted as appropriate: Trigger, para 70. But the common law did not do so, and the reasons why it did not are in my view both coherent and understandable. They are set out extensively in Barker, and I need not repeat them here. What the House did in Barker was to treat proportionality as a concomitant of the exceptional liability which derives from the special rule in Fairchild and which the House was, on that basis, prepared in Barker to extend to situations beyond those which Fairchild had held covered by it. The United Kingdom Parliaments reaction was its right, but does not alter the common law position apart from statute, or have any necessary effect in jurisdictions where the common law position has not been statutorily modified. In Trigger the court looked closely at Barker, and saw itself as applying what Barker established: see paras 63 66 and 72 of my judgment. At para 66 I noted that the speeches of Lord Hoffmann, Baroness Hale and (possibly) Lord Walker in Barker all viewed an employers legal responsibility as based on a weak or broad view of the causal requirements or causal link appropriate in the particular context to ground liability for the mesothelioma. To those references can be added that Lord Scott at para 50 and Lord Walker at para 103 in Barker both expressly agreed with Lord Hoffmanns reasons for allowing the appeals on the issue of apportionment. Further, there was in Trigger no issue about or challenge to the correctness of Barker. In these circumstances, it would on the face of it be surprising to find that Trigger had consigned that decision to history. IEG submits that, under Trigger, an employer shown to have significantly exposed a mesothelioma victim to asbestos dust is liable for having caused (in a weak or broad sense) the mesothelioma, and that anyone who is liable for causing a disease must answer for the whole loss resulting from that disease. In the Court of Appeal, [2013] EWCA Civ 39, that submission was accepted by Toulson LJ at paras 30 31 and Aikens LJ at paras 53 55. No doubt the submission is (subject to conventional limitations like remoteness and mitigation) generally correct in a conventional case where causation must exist in its ordinary sense of conduct which on a balance of probability brought about or contributed to the disease. But causation in a weak or broad sense is unconventional. Barker, as analysed in Trigger, accepted causation in this weak or broad sense and nonetheless held an employers responsibility to be proportionate to that part for which that employer was responsible of the victims total exposure to asbestos dust. Trigger cannot therefore be said to affect or undermine the reasoning or decision in Barker. The argument that insists that a conventional approach to the measure of damages must apply in a context where liability is imposed on an unconventional basis was rejected by Baroness Hale in her judgment in Barker. The relevant passages are worth quoting at length: 121. mesothelioma is an indivisible injury. What makes it an indivisible injury, and thus different from asbestosis or industrial deafness or any of the other dose related cumulative diseases, is that it may be caused by a single fibre. This much, as I understand it, is known, although the mechanism whereby that fibre causes the transformation of a normal into a malignant cell is not known. 122. But it does not necessarily follow from the fact that the damage is a single indivisible injury that each of the persons who may have caused that injury should be liable to pay for all of its consequences. The common law rules that lead to liability in solidum for the whole damage have always been closely linked to the common law's approach to causation. There is no reason in principle why the former rules should not be modified as the latter approach is courageously developed to meet new situations. Where joint tortfeasors act in concert, each is liable for the whole because each has caused the whole. The owner of one of the two dogs which had worried the sheep was liable for the whole damage because each of the dogs did in law occasion the whole of the damage which was suffered by the sheep as a result of the action of the two dogs acting together: Arneil v Paterson [1931] AC 560, 563, per Viscount Hailsham. Where two people, acting independently, shoot simultaneously and kill another, each is still liable for the whole. This is because, according to Prosser & Keeton on Torts, 5th ed, p 345, there is no sensible basis for dividing up the single damage which they have combined to cause for death cannot be divided or apportioned except by an arbitrary rule. 123. But as our perceptions of causation have expanded, so too has our conception of whether there may exist a sensible basis for apportionment. In Bonnington Castings Ltd v Wardlaw [1956] AC 613, the issue was whether the employer was liable at all, given that some of the exposure to dust was in breach of duty and some was not; but it could be shown that the tortious exposure had materially contributed to the harm, even if it was not the only cause. In McGhee v National Coal Board [1973] 1 WLR 1, where again some of the exposure was in breach of duty and some was not, but this time it could not be shown that the tortious exposure had even materially contributed to the harm, the issue again was whether the employer was liable at all; it was held that a material increase to the risk of harm was the equivalent of a material contribution to causing the harm. In neither case was it argued that the employer should only be liable to the extent that his behaviour had been in breach of duty. Yet in the case of diseases which progress over time, such exercises have now become commonplace, following the decision of Mustill J in Thompson v Smiths Shiprepairers (North Shields) Ltd [1984] QB 405, whether as between successive employers or as between tortious and non tortious exposure by the same employer. 124. There is, therefore, a logical connection between the law's approach to causation and the law's approach to the extent of liability. At each point along the road in developing the concept of causation, there is a choice to be made as to whether a single tortfeasor or a joint or concurrent tortfeasor should be liable for the whole or only for part of the damage. This is a policy question. One element in making that choice is whether there exists a sensible basis for apportioning liability. Another element is whether this would strike the right balance of fairness between claimant and defendant. 125. In one sense, there always exists a sensible basis for apportioning liability where more than one person is involved. Liability could be divided equally between them. But that would be arbitrary unless each was equally responsible. Even if liability were equally divided, this could be unfair to the claimant if, as in the dog worrying and shooting examples, each defendant has in fact caused the whole of his damage. In the Bonnington Castings and McGhee situations, where one employer is responsible for all the potentially harmful exposure, there may exist a sensible basis for apportioning liability, but it may still be unfair to the claimant to do this, if the one employer has undoubtedly caused all his harm. 126. But in the Fairchild situation we have yet another development. For the first time in our legal history, persons are made liable for damage even though they may not have caused it at all, simply because they have materially contributed to the risk of causing that damage. Mr Stuart Smith does not quarrel with the principle in Fairchild. He simply argues that it does not follow from the imposition of liability in such a case that each should be liable for the whole. I agree with the majority of your Lordships that indeed it does not follow. There is in this situation no magic in the indivisibility of the harm. It is not being said that each has caused or materially contributed to the harm. It can only be said that each has materially contributed to the risk of harm. The harm may be indivisible but the material contribution to the risk can be divided. There exists a sensible basis for doing so. Is it fair to do so? 127. In common with the majority of your Lordships, I think that it is fair to do so. On the one hand, the defendants are, by definition, in breach of their duties towards the claimants or the deceased. But then so are many employers, occupiers or other defendants who nevertheless escape liability altogether because it cannot be shown that their breach of duty caused the harm suffered by the claimant. For as long as we have rules of causation, some negligent (or otherwise duty breaking) defendants will escape liability. The law of tort is not (generally) there to punish people for their behaviour. It is there to make them pay for the damage they have done. These Fairchild defendants may not have caused any harm at all. They are being made liable because it is thought fair that they should make at least some contribution to redressing the harm that may have flowed from their wrongdoing. It seems to me most fair that the contribution they should make is in proportion to the contribution they have made to the risk of that harm occurring. 128. This solution is all the more attractive as it also provides the solution to the problem posed by the Barker appeal. If the damage could have been suffered during a period of non tortious exposure, it is suggested that the tortious exposers should escape liability altogether. There is considerable logic in this. One way of explaining Fairchild is that all were in breach of duty and one of them must be guilty, so that it made sense that all should be liable. That rationale does not apply, or certainly not with the same force, if there are other, non tortious causers in the frame. But if the tortious exposers are only liable in proportion to their own contribution to the claimants overall exposure to the risk of harm, then the problem does not arise. The victim's own behaviour is only relevant if he fails to take reasonable care for his own safety during a period of tortious exposure by a defendant. This reasoning remains in my view convincing at common law. In the United Kingdom, Parliament has, as is its right, taken a different view of the equities as between a person responsible and a victim of mesothelioma. That in turn gives rise to further problems of equity in relation to other, indirectly affected persons under the second main question on this appeal. But for the reasons I have given, neither the 2006 Act nor Trigger is inconsistent with or undermines the decision in Barker. For completeness, I record that Mr Antonio Bueno QC representing IEG expressly disclaimed any intention to invite the court to overrule Barker on this appeal. That, he frankly said, would bring in other considerations, and he said that IEGs case was that it has already become history as a result of Trigger. However, Mr Patrick Limb QC, also representing IEG, did at times appear to be inviting the court to address and overrule Barker head on. In my view, that latter invitation is not open to IEG, and further Barker has not been overruled by Trigger, and remains as part of the common law of England, which we are to take to be the same as the common law of Guernsey. The all sums policy construction issue The written cases identify under this head a secondary issue, concerning the extent of Zurichs liability to indemnify IEG. It arises from observations made by Aikens LJ, with whose judgment Kay LJ agreed. After concluding in para 53 that the majority in Trigger had grounded liability on a weak or broad causal link within the policy period, he went on in para 54 to say: Once that causal requirement is fulfilled, then the employer will have proved that the mesothelioma (the disease) was caused during any period of insurance. It follows from the policy wording that the insurer is then liable to indemnify IEG for all sums for which the Insured shall be liable in respect of any claim for damages for such disease (my emphasis). In other words, Zurich will be liable to indemnify IEG for the whole of the damages paid out by IEG in respect of Mr Carrs claim for damages for contracting mesothelioma, not just a proportion worked out by reference to the period during which IEG was covered by policies for which Zurich is responsible. The reference to all sums comes from the primary insuring clause set out in para 13 above. As I understand Zurichs written case, raising the secondary issue on the basis of this paragraph, Zurich was concerned that Aikens LJ was or might be suggesting that, even if Barker stood and applied (so that IEGs liability towards Mr Carr would have been limited to a proportion of his total loss, had IEG only exposed him for six out of the total of 27 years), IEG, having actually exposed him for the total 27 years though only insured with Midland for six of such years, might under the all sums provision in the insurance be entitled to recover from Zurich in respect of Mr Carrs total loss attributable to the 27 years. Any such argument would be clearly contrary to the fundamental principle of indemnity mentioned in para 26 above. Further, as I understand it, no such argument is in fact advanced by IEG. On the other hand, IEG appears to have understood Zurich to contend that, even if Barker had become past history (so that IEG was liable in full to Mr Carr for the whole of his loss resulting from mesothelioma, whatever the period for which it had exposed him compared with other periods of exposure), Zurich should under the Midland policies only answer for a rateable proportion of such total loss, viz 22.08%. For reasons indicated in para 23 above, I do not understand Zurich to make any such case. Zurich accepts that, if Barker no longer represents the common law, and IEG became liable for Mr Carrs full loss simply because he was exposed to asbestos dust during the six year Midland insurance period, then Zurich must on the face of the Midland policy wordings answer under the insurance, even though he was also exposed during 21 other years. In these circumstances, I need say no more on the secondary issue. It follows that the appeal must succeed as regards the compensation and interest paid by IEG to Mr Carr, because Barker continues to represent the common law position which applies in Guernsey. The Court of Appeal was wrong to set aside Cooke Js judgment, which should be restored, on this aspect. Defence costs That leaves the defence costs totalling 13,151.60 which IEG incurred in defending Mr Carrs claim based on exposure to asbestos dust over the full 27 years of his employment with GGLCL. Zurich submits that these costs should be pro rated on the same 22.08% basis. An important parallel, though not in my view identical, issue would arise in any case where the Compensation Act 2006 applies, making a responsible person liable for the whole damage suffered by a mesothelioma victim, regardless of the length and volume of his other exposures to asbestos dust. As regards defence costs, IEG relies upon reasoning adopted by the Privy Council in New Zealand Forest Products Ltd v New Zealand Insurance Co Ltd [1997] 1 WLR 1237. There proceedings were instituted on the basis of five causes of action against a company and its director, whose costs were both covered by an insurance policy, and in the case of one of the causes of action against a third person not so covered. All the defendants were represented by the same lawyers. It was common ground that costs not relating in any way to the insured directors defence would not be covered, while costs exclusively related to the insured directors defence would be covered. The issue which arose was as to defence costs which related at one and the same time to the defence both of the claim against the insured director and of the claim against the uninsured third person. The courts below took the view that there should be an apportionment. The Privy Council reached a different view, as a matter, it said, of construction of the relevant insurance. This covered all loss which such officer has become legally obligated to pay on account of any claim made against him for a wrongful act. As this wording would cover the whole costs incurred in the defence where the insured officer was the sole defendant, the Board saw no reason why it should not cover them all, where some of them related also to the defence of an uninsured co defendant. There was no question of the costs relating to any period other than that insured, and, importantly, they arose on a conventional causative basis because of a claim against the director for a wrongful act. Two points are notable in relation to the defence costs which IEG seeks to recover from Zurich. First, there is nothing to suggest that these would have been any less had the claim against IEG been confined to the six year period covered by the Midland policies. Second, and more significantly, the defence costs which IEG incurred were incurred with the consent of the Company in defending any such claim for damages within the meaning of the second sentence of the main insuring clause set out in para 13 above. That is, they were incurred by IEG in defending a claim by a former employee for damages for injury or disease which he was caused to sustain while employed during the periods of insurance provided by Midland. The claim against IEG could, under the special rule in Fairchild, be pursued on the basis that GGLCL had done no more than expose Mr Carr to a risk of suffering mesothelioma. In the light of Trigger the first sentence of the main insuring clause set out in para 13 above covers liability arising on this basis. But IEGs liability for and right to recover defence costs does not arise under the special rule, or on the basis that Mr Carr was exposed to any risk. It is not recoverable under the first, but under the second sentence of the main insuring clause. Under the second sentence, it is recoverable on the conventional basis that IEG can prove that it incurred (as a matter of fact or probability) actual financial loss in the circumstances covered by that sentence. This distinction is important. Once it is shown that an insured has on a conventional basis incurred defence costs which are covered on the face of the policy wording, there is, as the New Zealand Forest case shows, no reason to construe the wording as requiring some diminution in the insureds recovery, merely because the defence costs so incurred also benefitted some other uninsured defendant. The special rule analysis However, liability arising under the special rule in Fairchild on the exceptional basis of a weak or broad causal link consisting of exposure to a risk is different. As the volume of case law indicates and not surprisingly, it has proved difficult to work through the implications of the special rule in Fairchild. But, having, for wholly understandable reasons, gone down the Fairchild route, the common law must, in my view, face up to the consequences, if necessary by further innovation. That is so, even if some of the problems arise from Parliaments intervention by the 2006 Act. As already observed, the common law might itself have taken the same approach as that Act, though it did not in fact do so. Had it done, it would certainly have had to work out the common law implications. Parliaments intervention does not release the courts from their role of working out the common law implications of a special rule which remains essentially common law based, although subject to the modification introduced by the 2006 Act. Trigger may be regarded as an instance of performance of this role. It is worth emphasising how novel the situation created by Fairchild and Trigger is in an insurance context. When the present liability insurances were placed, what Hobhouse LJ said about the fundamental nature of the insurance period in the context of a property reinsurance in Municipal Mutual Insurance Ltd v Sea Insurance Co Ltd [1998] Lloyd's Rep IR 421, 435 436 would have been just as true of them: The judge came to the surprising conclusion that each reinsurance contract covered liability in respect of physical loss or damage whether or not it occurred during the period covered by the reinsurance contract and he went on expressly to contemplate that the same liability for the same physical loss or damage might be covered under a number of separate contracts of reinsurance covering different periods. This is a startling result and I am aware of no justification for it. When the relevant cover is placed on a time basis, the stated period of time is fundamental and must be given effect to. It is for that period of risk that the premium payable is assessed. This is so whether the cover is defined as in the present case by reference to when the physical loss or damage occurred, or by reference to when a liability was incurred or a claim made. Contracts of insurance (including reinsurance) are or can be sophisticated instruments containing a wide variety of provisions, but the definition of the period of cover is basic and clear. In short, insurance would have been and was placed on the basis that a particular liability or loss would fall into one, not a series of separate periods. If an insured wanted complete cover, it would have to maintain it for all such periods. The relevant period would also be ascertained by objective criteria, which meant that insureds could not select it at will or to obtain the advantage of the cover most favourable from their viewpoint. Thus: (i) Under a liability insurance where the trigger is causation in its traditional sense based on probability, no problem exists about allocating tortious liability to one and only one policy period. (ii) Under a claims made policy, claims must be notified and will attach at latest when they arise, while specific clauses dealing with the notification of circumstances likely to give rise to a claim may attach a claim to an earlier policy than that during which it actually arises. (iii) An insured may, for one reason or another, have double insurance. In that context, it may elect which to invoke, but well established principles exist for the two insurers to share liability equally up to the common limit. (iv) An insured may also agree to carry an excess or franchise, in which case it will have to bear that amount before looking to its insurer, and will as a self insurer rank last in any recoveries made by way of subrogation from any third party: Lord Napier and Ettrick v Hunter [1993] AC 713. Against this background, the present appeal illustrates some of the problems, arising from the special principles recognised and applied in Fairchild and Trigger, at the level of relationships between persons responsible and their insurers: (a) An employer, manufacturer or other person may well have been responsible for exposing employees and others to asbestos dust over many years. (b) For many years, he may have decided not to insure, or been unable to obtain cover which he regarded as acceptable. (c) During some years or as from some date, he may have decided to take out insurance. Employers should have done so, once employers liability insurance became compulsory, that is in and after 1972 in England, Wales and Scotland, 1975 in Northern Ireland and 1993 in Guernsey. (d) Even when insurance was taken out, it may have been taken out on a claims made, rather than causation, basis; even after employers liability insurance was compulsorily required, it may have been taken out on this basis under what Trigger indicates to have been the misapprehension that this form of insurance would satisfy that requirement. (e) Where insurance was taken out: (i) the employer, manufacturer or other person may not have fully appreciated the long term nature of the risks covered and may have failed to keep records from which the insurance can now be traced; or (ii) the insurer may have become insolvent. Where a person responsible for exposing a victim of mesothelioma to asbestos dust over a period of years has had liability insurance with the same insurer over the whole period, no problem arises. But frequently this will not have been, or cannot be shown to have been, the case, and the potential anomalies then arise. On IEGs case, the special rule, as modified by the 2006 Act and explained in Trigger, allows a person responsible for exposure to select any year during which he can show that he carried liability insurance and to pass the whole of any liability for such exposure to the liability insurer on risk in that year, without regard to other periods of exposure. anomalies are self evident: If matters stop there, and the insurer ends up carrying the whole liability, the (a) It is contrary to principle for insurance to operate on a basis which allows an insured to select the period and policy to which a loss attaches. This is elementary. If insureds could select against insurers in this way, the risks undertaken by insurers would be entirely unpredictable. (b) It is anomalous for a liability insurance underwritten for a premium covering losses arising from risks created during its particular period to cover losses about which all that can be said is that they arise from risks extending over a much longer period, in respect of which no premium has, or could have, been assessed or received by the insurer. (c) An insured is able to ignore long periods in respect of which he himself has chosen not to insure, or has not kept any record of any insurance which he may have taken out, or has chosen to entrust his insurance to an insurer who has become insolvent. (d) An insured has no incentive to take out or maintain continuous insurance cover. On the contrary, it is sufficient to take out one years cover, or even to arrange to be held covered for only one day, during whatever happens subsequently to prove to have been the overall exposure period whether this is done at the very start of the overall exposure period, or later after many decades of exposure, perhaps due to a sudden appreciation of the virtues of insurance under the special rule. In each case the anomaly arises because, without more, the analysis identified in the last sentence of para 42 above fails to adjust to the unique situation which arises from the principles recognised in Fairchild and Trigger. There are various responses that the law might have taken to such anomalies. One is that which Lord Phillips took in Trigger, viz that the insurance only answered for liability proved as a matter of probability to have resulted from asbestos exposure in the insurance period. Lord Phillips approach can be viewed as entirely conventional, in the sense that it reflected the traditional view that, under a liability policy like the Midlands, the concept of causation looked to the proximate or effective cause, to be proved as a matter of probability. But it would have meant that no liability insurance cover existed in respect of mesothelioma. In the light of this drastic consequence, the majority of the court in Trigger preferred a second response. It equated the concept of causation in an insurance context with the weaker or broader meaning which the courts have, to the benefit of victims, given it in tort. This was a choice rationalised in terms of the principle that a facultative liability insurance normally responds to whatever may prove to be the liability incurred by the insured. In Trigger there was no consideration of a situation in which a relevant insurance covered only part of an overall period during which the insured employer had exposed the victim to asbestos dust. But in my view the reasoning in Trigger binds this court to hold that the mesothelioma is caused in the sense that it results from exposure which existed in each and every period of any overall period of exposure. The fact that a victim or an insured only relies on one period of exposure does not alter the legal position, that it can equally be said to have been caused in every other period of exposure. This is because, as a matter of law, exposure connotes causation, in both tort and tort liability insurance law. It is the anomalies resulting from that conclusion which the court must now resolve, accepting but building on its own prior jurisprudence. Lord Sumptions judgment argues for a third response. He agrees that the respondents case involves all the anomalies already identified. But he considers that they can and can only be met by interpreting the insurance policy wording in a way which none of the parties or interveners before the court has suggested. He regards it as consistent with the decision in Trigger to say that an insurer, who only covers part of the total period for which the insured exposed the victim, is only liable for a corresponding part of the insureds liability to the victim. In my view, this is inconsistent with Trigger. Once one accepts that causation equates with exposure, in tort and tort liability insurance law, there is no going back on this conclusion simply because there was exposure by the insured of the victim both within and outside the relevant insurance period. More specifically, Lord Sumption suggests that the insurer must still show that the occurrence fell within the chronological limits of the policy (para 156). But that raises the question: what is here meant by the occurrence for which the employer is liable? It cannot be the disease itself, which can and does occur decades later. If it is the incident which causes the disease, then, as Lord Sumption himself recognises (para 157), it is each and every, or any, negligent exposure to asbestos involving a contribution by the employer to the risk of the victim sustaining mesothelioma that constitutes causation for the purposes of a liability insurance like the present. Any such exposure can be relied on as causing the mesothelioma and making the employer fully liable for the victims loss, and any such exposure occurring during any policy period will on a like basis mean that the insurer incurs full liability. Lord Sumption seeks to avoid this conclusion, acknowledging that it makes some sense as between successive employers who are guilty of a continuous tort, but saying that the same logic cannot be applied as between successive insurers (para 157). But the primary question is not as between two insurers, it is as between the employer and any insurer against which he claims; and there is also nothing illogical about a conclusion that each of successive insurers is potentially liable in full, with rights of contribution inter se. Lord Sumption also advances a broader argument, that it is conceptually impossible for mesothelioma to be successively caused in every period of exposure, because Mesothelioma is caused only once, or, as he later puts it, that it is not conceptually possible for an insurer to be liable on the footing that the disease was actually caused in every year (para 158). But this moves the terminological goalposts, by reverting to traditional notions of causation those applicable outside the Fairchild enclave, where proof on the balance of probabilities is traditionally required. Within that enclave, the House accepted in Fairchild that it was necessary to adopt a weak notion of causation, in order to protect victims, and in Trigger the Supreme Court held that this weak notion of causation carries through into an insurance context. On this basis, loss is caused for the purposes of tort and liability insurance contracts like the present in any and every period when the victim was exposed to asbestos and so to the risk of mesothelioma. Lord Sumptions broader argument is therefore incorrect. Moreover, if it had any force, it is not obvious why it would not apply equally to tort and so preclude one negligent employer from seeking contribution from another yet that is expressly provided for by the 2006 Act. Lord Sumption states further that Trigger cannot be applied without modification when the question is how much of the loss is attributable to particular years, and continues by saying the the rational response of the law is to prorate the whole loss between every policy year during which the insured employer exposed the victim to asbestos (para 160). Lord Sumption correctly points out that it is only when one aggregates every successive period that the chances add up to 100% (para 158). But this means, logically, that, if (as Lord Sumption maintains) any insurance can only answer pro rata for exposure or risk occurring during the insurance policy period, the relevant pro rating must be by reference to the total exposure of the victim from all employers and sources. The total period of exposure by the particular employer is in this context irrelevant, since the insurance wording says nothing about it and the chances of sustaining mesothelioma do not correspond with it when there are other sources of exposure. For all these reasons, I cannot therefore accept Lord Sumptions approach. An insurer, whether for the whole or part of the period for which the insured employer has negligently exposed the victim to asbestos, is on the face of it liable for the victims full loss. However, I agree that the analysis cannot stop here. The court is faced with an unprecedented situation, arising from its own decisions affecting both tort and insurance law. A principled solution must be found, even if it involves striking new ground. The courts cannot simply step back from an issue which is of their own making, by which I do not mean to suggest that it was in any way wrong for the courts, from Fairchild onwards, to have been solicitous of the needs of both victims and insureds. But by introducing into tort and liability insurance law an entirely novel form of causation in Trigger, the courts have made it incumbent on themselves to reach a solution representing a fair balance of the interests of victims, insureds and insurers. In my view, the law has existing tools which can be adapted to meet this unique situation. The concepts of co insurance and self insurance are both at hand. Co insurance is relevant in so far as the insured has other insurance to which it could also have resorted on the basis that it had also exposed the victim during the period of that insurance. Self insurance is relevant, because an insured who has not (i) taken out or (ii) kept records of or (iii) been able to recover under such other insurance must be regarded as being its own insurer in respect of the period in question for which it has no cover. A sensible overall result is only achieved if an insurer held liable under a policy like the Midland policy is able to have recourse for an appropriate proportion of its liability to any co insurers and to the insured as a self insurer in respect of periods of exposure of the victim by the insured for which the insurer has not covered the insured. There are of course difficulties about drawing a direct analogy between the present situation and conventional situations in which the concepts of co insurance and self insurance have previously been deployed. But the court would be abrogating its role to achieve a just solution consistently with what any sensible commercial party would have contemplated if it does not adapt and develop conventional principles to meet an unconventional, indeed unique, challenge. I see no barrier at all to this in the fact that the parties did not directly contemplate or cater for it in the insurance policy between them. It is equally clear that they did not contemplate or cater for the principles imposed upon them by the decisions in Fairchild and Trigger. To carry the declaratory theory to the point of asserting the contrary would be absurd. To say that [judges] never change the law is a fiction and to base any practical decision upon such a fiction would indeed be abstract juridical correctitude, rather it is the case that a judicial decision can change the law retrospectively: Deutsche Morgan Grenfell Group plc v IRC [2006] UKHL 49, [2007] 1 AC 558, para 23, per Lord Hoffmann. Equally, the fact that the parties may not have contemplated or made specific provisions about co insurance and self insurance on the basis of those decisions is no obstacle to the court doing so. To say (as Lord Sumption does: para 185) that there has here been a contractual allocation of risks which precludes the court taking steps to avoid evident absurdity which no contracting party can sensibly have contemplated or intended appears to me unrealistic. There was a contractual allocation of risks on the basis and in respect of exposure by the insured during the policy period. But if there was further exposure by the insured, outside the policy period, there is no reason why the insurer should not have proportionate recourse against anyone who can be seen to carry the risks attaching to such further exposure. There is nothing inconsistent with the agreed insurance or its period in deriving from a consideration of circumstances outside that insurance and its period a right to contribution in respect of the loss incurred in the first instance by the insurer: see further paras 67 73 below. In summary, so long as the insured has insured itself for the whole period for which it exposes the victim, the insurer can ask for no more, and must, as Trigger decides, bear the whole of any liability which the insured incurs. The palliative in this latter situation is of course that an employer/insured will have a right to contribution under the Civil Liability (Contribution) Act 1978 against any other person who was, negligently or in breach of duty, responsible for exposing the victim to asbestos, and its insurer will, after meeting the insurance claim, be subrogated to this right to contribution against the other responsible source of exposure. The anomalies therefore only arise when the insured has exposed the victim for a longer period than that for which it is covered by the insurer to which it chooses to look for indemnity. The anomalies are, as stated, not capable of being addressed by any of the laws existing tools for dealing with more conventional problems. As observed in Trigger, paras 67 68, section 3(3) of the 2006 Act preserves the conventional tools, found in the Law Reform (Contributory Negligence) Act 1945 and the Civil Liability (Contribution) Act 1978, for dealing with the conventional problems of contributory fault (by a victim of mesothelioma) and concurrent liability in respect of the same damage (between different persons responsible for exposing a victim of mesothelioma to asbestos dust, whether over the same or different periods). Persons responsible for exposing victims to asbestos dust are thus appropriately protected. Their protection is carried one step further by section 3(7), which enables the Treasury to make regulations for the provision of compensation to a responsible person who is unable to obtain contribution under the 1978 Act, because an insurer of such person is or is likely to be unable to satisfy the claim for a contribution. By definition in section 3(10), the reference in section 3(7) to a responsible person also includes an insurer of such a person. That is the only respect in which the Act addresses the interests of an insurer, as a corollary of the rules relating to contribution between persons responsible. The Act is not concerned with, and does not address, the effects on insurers or as between persons responsible and insurers of the special rule as modified by section 3(1) and (2). It is for the courts to work out these effects at that level. Co insurance So far as appears, during the overall period of 27 years during which it exposed Mr Carr to asbestos dust, GGLCL only had insurance for two periods, six years with Midland and two years with Excess. Not surprisingly, no previous authority exists regarding the relationship between Midland and the Excess in the present context. Zurich could not have any sort of subrogation right against Excess, since, if Zurich is liable for IEGs full loss, IEG can have no further claim for indemnity against Excess. Further, no one would ordinarily regard insurances for different insurance periods as double insurance. The reason for taking out or renewing a fresh annual policy during a fresh year is, on the contrary, the common sense truism that, unless one does so, one will be uninsured. The concept of double insurance, as hitherto recognised in English law, was explained by Mr Gavin Kealey QC, sitting as a deputy judge of the Commercial Court, in National Farmers Union Mutual Insurance Society Ltd v HSBC Insurance (UK) Ltd [2010] EWHC 773 (Comm), [2010] 1 CLC 557, para 15: Double insurance arises where the same party is insured with two (or more) insurers in respect of the same interest on the same subject matter against the same risks. If a loss by a peril insured against occurs, the general rule is that, subject to any particular modifying terms and to the limits of indemnity provided under each insurance contract, the insured may recover for the whole of the loss from either insurer. Upon such indemnity being paid to the insured by either one of the two insurers, that insurer is, in general, entitled to recover a contribution from the other. To quote from Lord Woolf in Eagle Star Insurance Co Ltd v Provincial Insurance plc [1994] 1 AC 130, 138: As was pointed out by Lloyd LJ at the beginning of his judgment in the Legal and General case [Legal and General Assurance Society Ltd v Drake Insurance Co Ltd] [1992] QB 887, 891], in general the principles on which one insurer is entitled to recover from another in a case of double insurance have been settled since Lord Mansfield's day. As Kitto J stated in Albion Insurance Co Ltd v Government Insurance Office of New South Wales (1969) 121 CLR 342, 349 350, a principle applicable at law no less than in equity, is that persons who are under co ordinate liabilities to make good one loss (eg sureties liable to make good a failure to pay the one debt) must share the burden pro rata: the object being, as Hamilton J stated in American Surety Co of New York v Wrightson (1910) 103 LT 663, 667: to put people who have commonly guaranteed or commonly insured in the same position as if the principal creditor or the assured had pursued his remedies rateably among them instead of doing as he is entitled to do, exhausting them to suit himself against one or other of them. Previous first instance statements to like effect that double insurance requires the same insured to be covered in respect of the same property against the same risks can be found in Petrofina (UK) Ltd v Magnaload Ltd [1984] 1 QB 127, 140F G per Lloyd J, followed in Wimpey Construction UK Ltd v D V Poole [1984] 2 Lloyds Rep 499, 516 (Webster J). The insurances taken out with Midland and Excess would not satisfy this concept. In particular, they were not on the same interest or against the same risks. Nor does the special rule recognised in Fairchild as modified by the 2006 Act make them so. The Excess policies covered injury or disease caused by the risk of exposure occurring in 1979 and 1980, whereas the Midland policies covered injury or disease caused by the risk of exposure occurring in the years 1983 to 1988. If one accepts the definition accepted by Gavin Kealey QC, then Eady J was right in Phillips v Syndicate 992 Gunner [2003] EWHC 1084 (QB), [2004] Lloyds Rep IR 426, para 22, to reject the submission that two or more successive policies of insurance could be regarded as covering the same liability towards a victim of mesothelioma for the purposes of a condition in the relevant policy in that case addressing situations of double insurance. However, Australian appellate courts have been willing to contemplate a more relaxed view of double insurance, to address situations where the same liability is ultimately covered albeit by different routes and involving different insureds: AMP Workers Compensation Services (NSW) Ltd v QBE Insurance Ltd [2001] NSWCA 267, (2001) 53 NSWLR 35, Zurich Australian Insurance Ltd v GIO General Ltd [2011] NSWCA 47. They have in a series of cases also emphasised the root principles of equity and justice which lie behind the laws recognition of rights of contribution: see Albion Insurance Co Ltd v Government Insurance Office of New South Wales [1969] HCA 55, 121 CLR 342, esp per Kitto J. Kitto Js judgment has been cited with approval in Burke v LFOT Pty Ltd [2002] HCA 17, 187 ALR 612, Zurich Australian Insurance Ltd v GIO General Ltd [2011] NSWCA 47 and, in a brief extract, by Lloyd LJ in the Legal and General case: see para 57 above. As Burke v LFOT Pty Ltd shows, Australian courts have carried the doctrine of equitable contribution far enough for it to provide as a matter of common law a right of contribution in respect of any common obligation, with a breadth and flexibility similar to that statutorily available in England under, now, the Civil Liability (Contribution) Act 1978, and, previously (though only as between tortfeasors), the Law Reform (Married Women and Joint Tortfeasors) Act 1935. In Burke itself the claim for contribution was only refused because it was inequitable in the particular circumstances to award any contribution against a negligent solicitor in favour of LFOT which had engaged in misleading and deceptive conduct in breach of a statutory obligation. Contribution is, ultimately, a principle based on natural justice, as Lord Mansfield said in Godins case, cited in para 26 above. A similar justification was given by Lord Chief Baron Eyre in Dering v Earl of Winchelsea (1787) 1 Cox Eq 318, 321, for recognising a right of contribution between sureties who had each accepted distinct and separate obligations and were not therefore in any contractual relationship with each other: If we take a view of the cases both in law and equity, we shall find that contribution is bottomed and fixed on general principles of justice, and does not spring from contract; though contract may qualify it . [I]n equali jure the law requires equality; one shall not bear the burthen in ease of the rest, and the law is grounded in great equity. A similar approach is not out of place in a context where the law has developed new liabilities to redress perceived injustice. Consistently with this, Charles Mitchell, in The Law of Contribution and Reimbursement (2003) notes, para 4.14, that The categories of claimant by whom contribution can be claimed at common law or in equity are not closed Mitchell cites in this connection, inter alia, Burke v LFOT Pty Ltd. Meagher, Gummow and Lehane in Equity, Doctrines and Remedies (4th ed) (2002), para 10 020, also note the influence on the principles governing contribution of the equitable maxim that equality is equity and the doctrine of marshalling, whereby: as between several interested parties it should not rest with the creditor by his selection of remedies open to him to determine where ultimately the burden was to fall. The Legal and General case, referred to in the passage cited by Mr Gavin Kealey QC (see para 57 above), illustrates the latter principle. There the insureds choice to proceed against insurer A under one policy meant that no notice of claim was given to insurer B under the other policy within 14 days as required by its terms. It was held by the majority (Lloyd and Nourse LJJ) that the absence of any such notice did not defeat the claim for contribution based on double insurance. Again, the reasoning is founded on broad principles of equity: Since the assured could have gone against B, had he chosen to do so, the burden as between A and B should be shared equally. It would be inequitable for either of the insurers to receive the benefit of the premium without being liable for their share of the loss. (per Lloyd LJ, p 892C D) There being no contract between the two insurers, the right of contribution depends, and can only depend, on an equity which requires someone who has taken the benefit of a premium to share the burden of meeting the claim. Why should that equity be displaced simply because the assured has failed to give the notice which is necessary to make the other insurer liable to him? As between the two insurers the basis of the equity is unimpaired. He who has received a benefit ought to bear his due proportion of the burden. (per Nourse LJ, at p 898B D) In my view, the principles recognised and applied in Fairchild and Trigger do require a broad equitable approach to be taken to contribution, to meet the unique anomalies to which they give rise. I note that this solution is also advocated by Professors Merkin and Steele in their recent study on Insurance and the Law of Obligations (2013) (OUP), p 378. If a broad equitable approach is taken in the present unique circumstances, then it should no doubt also be possible in the present context to overcome the normal presumption with double insurance that loss should be shared equally. Contribution between insurers covering liability on the basis of exposure should take account of differing lengths of insured exposure. Conventional rules need to be adapted to meet unconventional problems arising from the principles recognised and applied in Fairchild and Trigger. An alternative possible avenue of recourse against a double insurer in respect of policy liabilities based on breach of an obligation assumed on or after 1 January 1979 is the Civil Liability (Contribution) Act 1978. The argument would be that both insurers are liable for the same damage within the meaning of section 1(1) of that Act. The possibility that the 1978 Act applies is dismissed in Colinvaux & Merkins Insurance Contract Law, para C 0643, while Charles Mitchell in The Law of Contribution and Reimbursement, (2003), paras 4.13 and 4.43 4.44, suggests that it turns on whether liability under an indemnity insurance is regarded as the right to be indemnified by a payment of money or is, under a view which the author suggests that the cases favour, regarded as arising from breach of an undertaking to prevent the insured risk from materialising. It is unnecessary to resolve this difference here. It suffices to say that, if insurance contract liabilities are viewed as sounding in damages, it appears somewhat surprising if the 1978 Act could operate as an alternative statutory remedy with different effect in a case of true double insurance in respect of post commencement liabilities. Self insurance The extension of currently recognised principles of double or co insurance would operate only to address a very limited part of the problem. The fundamental problem remains that Zurich is, as a result of insurance policies covering only six years of exposure, liable for consequences of an exposure lasting 27 years. There can be and is no proof or likelihood that the mesothelioma resulted from fibres ingested in the six, rather than the remaining 27, years. Even assuming that Zurich has a right of contribution against the Excess, this can only be in respect of two of those 27 years, so that the two insurers would, if matters stopped there, share the consequences of 27 years of exposure by GGLCL on the basis of only eight years of insurance in the proportions of (Zurich) and (Excess). The obvious counter balance in this situation is to treat the insured employer, GGLCL or now IEG, as a self insurer for the remainder of the 27 year period in respect of which it can show no insurance capable of affording contribution. Nothing obliged GGLCL to maintain its liability insurance with any particular insurer. But in so far as it chose not to take out any insurance or chose to insure with another insurer, that should in common sense be at its risk. It should not be able to avoid the consequences of that risk by electing to pursue Zurich. IEGs response to such an approach is in substance two faceted. It submits, first, that it finds no support in existing or conventional principles of contribution, and, second, that the recognition of a right of contribution would be inconsistent with the insurance contracts made with Midland. In my opinion, neither aspect of this response is valid. As to the first, if the common law always depended on a precedent, Fairchild, or perhaps the earlier Scots House of Lords authority of McGhee v National Coal Board 1973 SC (HL) 37, should never have been decided as it was; but in any event, as I shall indicate, the concept of contribution to counter balance a prima facie contractual right is not without precedent. The second part of IEGs response, the suggested inconsistency between any right of contribution and the insurance contracts which Midland issued for six years, is taken up by Lord Sumption, who rules out recoupment merely because it operates by reference to the [insurance] contract (Lord Sumption, paras 184 and 185). The answer to this in my view is that a mere need to refer to the insurance contracts is not fatal to a recoupment claim. It does not involve contradicting or acting inconsistently with such contracts. On the contrary, it is accepting their implications, and relying on matters independent of them. It is relying on GGLCLs decision not to insure with Midland for 21 years and its decision, so far as appears, to go without insurance for up to 19 of such years. These are matters that are not touched by, and are outside, the terms and scope of the Zurich and Excess policies. They ground an equity that IEG should contribute proportionately to a loss arising from risks of exposure continuing throughout the whole 27 years. Second, however, I do not accept that there is any absolute bright line principle, of the sort which IEG and Lord Sumption advocate, whereby equity must always refuse to recognise a right of contribution between parties to a contract which according to its terms involves a particular result. Neither jurisprudentially nor on authority is this so. There is a general rule to that effect, but it is subject to exceptions. The position is well put by Professor Andrew Burrows QC in The Law of Restitution (3rd ed) (2011), p 88 et seq: (i) The general rule Where the defendant is legally entitled to the enrichment in the sense that that enrichment is owed to it by the claimant under a valid legal obligation [FN15: This will most commonly be a contractual or statutory obligation. ] there can normally be no liability to make restitution despite there being an unjust factor. The reason for this is that the prima facie injustice established by the unjust factor is normally outweighed by the fact that the defendant is legally entitled to the enrichment. Overall, therefore, the enrichment is not unjust. (ii) Exceptions to the general rule Although the general rule is that the claimant will not be entitled to restitution where the defendant was legally entitled to the enrichment, there are some exceptions. The interplay between the general rule and the exceptions is an interesting and difficult one which, until recently, had been little explored. In essence it would appear that the exceptions operate where, contrary to the general position, there is no policy inconsistency in granting the claimant restitution of the enrichment even though the defendant is legally entitled to it. Put another way, the prima facie injustice constituted by there being an unjust factor is not outweighed by the defendant's legal entitlement to the enrichment. Professor Burrows then gives four examples of exceptions, concluding, at p 91: The recognition and application of exceptions requires a carefully considered approach to the policies involved. A blanket rule that legal entitlement to the enrichment bars restitution does not represent the present law and would be needlessly blunt and insufficiently nuanced. Two of Professor Burrows examples are Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 and Deutsche Morgan Grenfell Group plc v IRC [2006] UKHL 49, [2007] 1 AC 558. The other two examples are restitution in respect of contractual obligations accruing due prior to frustration or termination for breach and restitution in respect of services rendered under an unenforceable contract. In Roxborough contracts for sale of tobacco products had been made at prices which took account of a so called licence fee which the High Court of Australia had subsequently held to be an unlawful excise duty. The majority held that it was not possible to imply any term to cater for this unforeseen eventuality (paras 20 and 60), but that restitutionary relief could be granted in respect of the tax component of the price. Gleeson CJ, Gaudron J and Hayne J said that there was no conceptual objection to treating this as a severable part of the consideration which had failed, because it would not result in confusion between rights of compensation and restitution, or between enforcing a contract and claiming a right by reason of events which have occurred in relation to a contract. (para 21) Gummow J said (para 75) that the action to recover the moneys sought by the appellants after the failure of the purpose of funding Rothmans to renew its licence may be illustrative of the gap filling and auxiliary role of restitutionary remedies. These remedies do not let matters lie where they would fall if the carriage of risk between the parties were left entirely within the limits of their contract. Hence there is some force in the statement by Laycock [The Scope and Significance of Restitution (1989) 67 Texas Law Review 1277, 1278]: The rules of restitution developed much like the rules of equity. Restitution arose to avoid unjust results in specific cases as a series of innovations to fill gaps in the rest of the law. As Gummow J went on to point out, there is authority of Lord Mansfield in the same direction. Moses v Macferlan (1760) 2 Burr 1005, a corner stone of common law restitution, was itself a case where the plaintiff successfully reclaimed in the Kings Bench money which he had been held liable to pay under various bills by the Court of Conscience, which had refused or been unable to look at the parties wider relationship outside the bills. The plaintiff could not rely on any express or implied promise to repay. Lord Mansfield grounded the obligation simply on the equity of the plaintiffs case to recover back money, which ought not in justice to be kept (pp 1009 and 1012), and later described it as a liberal action in the nature of a bill in equity: Clarke v Shee (1774) 1 Cowp 197, 199. In Deutsche Morgan Grenfell the legislation governing advance corporation tax (ACT) contravened EU law in not allowing the claimant the option to avoid or defer ACT by making a group income election. Absent any actual election by Deutsche Morgan Grenfell (DMG), ACT was strictly due. But it was held recoverable. Professor Burrows states, at p 91: The best explanation for the departure from the general rule is that restitution did not here conflict with the statutory obligation because that statutory obligation was undermined by the legislature's failure, contrary to EU law, to provide a group income election for companies such as the claimants. As a matter of policy the injustice of the ultra vires exaction outweighed the point that, technically, the Revenue was legally entitled to the tax. Unsurprisingly, in view of the obvious equity of DMGs position, the judgments take this aspect very shortly. Lord Hoffmann treated the election provisions as purely machinery and the real mistake as being whether DMG was liable for ACT (para 32). But Lord Hope (para 62) and it seems Lord Walker (para 143) (and Lord Scott, dissenting, paras 81 82) agreed with the trial judge (Park J) that the case fell to be analysed on the basis that, in the absence of any actual election, the tax was due. On that basis Lord Hope and Lord Walker held it recoverable, because it became due as a result of DMGs mistaken belief that it could not claim group relief by making an election. Lord Brown expressed general agreement with Lord Walkers speech (para 161 162), but elsewhere also spoke of the ACT as not due (para 172). In the present case, applying the approach indicated by Professor Burrows, there is no policy inconsistency between recognising that the terms of the insurances underwritten by Midland make Zurich answerable in the first instance for IEGs liability towards Mr Carr and recognising an equity, based on consideration of the wider circumstances in particular GGLCL/IEGs exposure of Mr Carr for further periods when it was not insured by Midland requiring IEG itself to contribute towards Zurichs cost of meeting such liability. This conclusion is also not inconsistent with the well established principle of insurance law that an insured can recover under an insurance for a risk which is covered, even though another cause of the loss exists which is not covered, so long as that other cause is not positively excluded: see eg Wayne Tank and Pump Co Ltd v Employers Liability Assurance Corpn Ltd [1974] QB 57. Generally, insurance law identifies a single effective, dominant or proximate cause, though there can be rare exceptions where there are dual effective causes as Wayne Tank illustrates. But the principle addresses a situation where more than one cause operating during the policy period can be said to have caused the insured loss in a conventional sense, that is by bringing it about or contributing to it as a matter of probability. It is not directed to the present situation where liability is based on a causal link consisting only of the risk involved in exposure, where the insured loss arises from exposure both within and outside the insurance period, and where the exposure outside the insurance period increased the risk of the insured loss occurring proportionately. Nor is the analysis in the previous paragraphs inconsistent with the House of Lords decision in Simpson & Co v Thomson (1877) 3 App Cas 279. An insured vessel was run down and lost with all its cargo in a collision due to the negligence of another vessel owned by the same insured. The underwriters of the first vessel having paid claimed to rank pari passu with the lost cargo owners in the distribution of the limitation fund lodged in court by the owners in respect of the second vessel. Insurers under English law have no right in their own name to recoup insured losses from wrongdoers. They have to rely on rights of subrogation, using their insureds name. Since the common owner of the two vessels could not sue himself, the underwriters claim failed. The case does not however address situations of contribution. Where there is a right to contribution, an insurer can recoup his loss from a third party. Here, the question is whether a right of contribution should be recognised by Zurich against IEG on the basis that IEG should in justice pay its proportionate part of a liability arising from a risk which increased proportionately over the whole period of 27 years during which it exposed Mr Carr to asbestos dust. It is equally irrelevant that the law knows no such thing as a contract of self insurance. It is of course true that, just as an insured cannot sue himself, so an insured cannot in law insure with himself. But the concept of self insurance is not unhelpful in identifying an important truth. A person who does not insure at all is well understood to be undertaking a risk for his own account, for which he should answer accordingly. A person who after insuring for a period with insurer A then goes for a period to insurer B is understood to be looking in relation to the later period to insurer B alone. Even courts are entitled to deploy a helpful phrase to point to such truths. The United States courts did so in Insurance Company of North America v Forty Eight Insulations Inc 633 F 2d 1212 and Security Insurance Co of Hartford v Lumbermens Mutual Casualty Co (2003) 264 Conn 688, 826 A 2d 107, when they held that, as between an insured and its insurers, liability for defence costs should be pro rated across all periods of insurance and self insurance during which exposure had occurred. In Lumbermens the insurer was thus held liable pro rata by reference to the relationship between its insurance period, other periods of insurance with other insurers and periods of self insurance. The use of the concept in this jurisdiction is illustrated by Lord Napier and Ettrick v Hunter [1993] AC 713, 730E F, where Lord Templeman had no hesitation about describing a Lloyds name as his own insurer in respect of a 25,000 excess under the stop loss policy in issue. He concluded in its light that such a name was not entitled, as against his stop loss insurers, to retain the benefit of damages for negligent underwriting received from the Outhwaite syndicate. The fundamental principle in Castellain v Preston (1883) 11 QBD 380, that an insured was entitled to be fully indemnified, was not helpful in deciding whether a name who promised the stop loss insurers to bear the first 25,000 loss is entitled to be put in the same position as an insured person who makes no such promise: p 731B C. In the present case, an insured who insures for a limited period necessarily accepts that it is only liability incurred during that period for which he has cover. The unique feature of the present situation is that the whole substratum of the relevant insurance policies has changed fundamentally since they were underwritten, and the law has, for the first time ever, imposed liability on the basis of risk, rather than the probability, that negligence during the insurance period led or contributed to the illness complained of. The concomitant of insurance liability in this situation must be a recognition that the law can and should redress the unjust and wholly anomalous burden which would otherwise fall on any particular insurer with whom insurance was only taken out for part of the total period of exposure by the insured, by recognising an obligation on the part of the insured to contribute pro tanto to such liability as a self insurer. In my opinion, therefore, Zurich is entitled to look to IEG to make a contribution based on the proportionate part of the overall risk in respect of which it did not place insurance with Midland and in respect of which Zurich does not recover contribution from any other insurer. Any contribution which is credited by Excess to Zurich in excess of 2/27 of Zurichs liability to IEG should also give Excess a corresponding right to contribution from IEG. I believe that this leads in practice, at least in the case of a solvent insured, to substantially the same result as that at which Lord Sumption arrives, but by a different route, which in my opinion reflects the reasoning and result in Trigger. The difference between the two routes may however be important in the context of an insured who is not solvent. It is convenient to address an area about which Lord Sumption expresses conclusions at the outset of his judgment, and to which he reverts at paras 172 173. That is that the conclusions reached up to this point will not mesh with the FSCS schemes established under the Financial Services and Markets Act 2000 for insurer insolvency (see para 6 above) and more recently the Mesothelioma Act 2014 for cases where there is employer insolvency and no identifiable insurer. This point relates to statutory schemes separate from and in part post dating the development of the common law and statutory principles with which this appeal is concerned. No submissions have been addressed to the court on it. That itself also suggests that the insurance industry and their expert representatives before this court do not share Lord Sumptions concerns. One reason for this may also be that Lord Sumptions account of the position is incomplete. He states that The effect of the majoritys view is simply to transfer risk from the statutory compensation schemes which were created to assume that risk, to an arbitrarily selected solvent insurer who has not agreed to do so (para 112, last sentence). This analysis does not address the fact that, on his own case, the statutory compensation schemes do not cover all situations or losses. Take a case of two responsible employers, one of which [A] is solvent or has a solvent insurer for the whole period for which it exposed the victim, the other of which [B] is insolvent and without any identifiable insurer. The victim will, on Lord Sumptions case (para 160), recover 100% from employer A. Employer B will be liable to contribute to employer A (or its insurer, by right of subrogation), but will have no money and no insurer to enable it to do so. The 2014 Act scheme will not step into the gap to enable employer A or its insurer to recoup pro rata contribution, because of section 2(1)(d) or (e), and possibly also because of section 2(1)(c), of the Act. This is because the Act was passed to protect unpaid victims, not for insurers benefit. It was and is directed, as the notes to the relevant Bill state, to situations where by virtue of the passage of time no solvent employer remains to be sued, and the employee is often unable to trace any insurer who was providing EL insurance to the employer at the relevant time. Recovery from another insurer of another employer precludes use of the 2014 scheme: see The Diffuse Mesothelioma Payment Scheme 2014, by Judge Nicholas Wikeley, Emeritus Professor at Southampton University, (2014) 21 JSSL 65, 78. Any action for damages or receipt of any damages or of a specified payment (which, like the 2014 scheme itself see para 6 above might not cover the full loss) precludes use of the 2014 scheme. This makes sense, since the 2014 scheme assumes, in general, that any recovery by a mesothelioma victim will correspond, even if only approximately, with full recovery of the victims whole loss. This is unsurprising in the light of Fairchild, the 2006 Act and Trigger, all of which form part of the background to the Act. But it indicates that the 2014 Act, far from supporting, is inconsistent with the scheme which Lord Sumption advocates whereby an insurer may only be liable to indemnify on a pro rata basis. Finally, if Lord Sumption be right and he has identified significant potential anomalies on the approach which has been advocated by counsel representing insurers before us and which in my opinion should be adopted, the reality is that the Fairchild enclave has necessitated adjustment from time to time of the legal and regulatory framework by the courts, the legislature and regulatory authorities. As Wikeley notes, further attempts to engineer improvements to the underlying compensation arrangements [are] almost inevitable (p 82). I do not myself see such a process of adjustment as one from which courts should withdraw. Third Parties (Rights against Insurers) Act Since IEG is solvent and has met the whole of Mr Carrs loss, the present appeal concerns only the relationship between IEG and Zurich. In that context, the precise legal relationship between Zurichs right to look to IEG for contribution and IEGs policy claim against Zurich does not matter. In practice, even if Zurichs right to contribution does not give rise to a defence, a procedural order for a stay would ensure that the one claim could not be enforced without taking into account the other. But in cases where the person responsible is insolvent, and the use of the Third Parties (Rights against Insurers) Act 1930 (soon, it is to be hoped, to be replaced by the 2010 Act) is invoked, it may be important whether the right of contribution which Zurich enjoys constitutes a defence reducing the indemnity for which the insured can sue under that Act. Section 1 of the 1930 Act provides: (1) Where under any contract of insurance a person (hereinafter referred to as the insured) is insured against liabilities to third parties which he may incur, then (a) in the event of the insured becoming bankrupt or making a composition or arrangement with his creditors; or (b) in the case of the insured being a company, in the event of a winding up order or an administration order being made, or a resolution for a voluntary winding up being passed, with respect to the company, or of a receiver or manager of the companys business or undertaking being duly appointed, or of possession being taken, by or on behalf of the holders of any debentures secured by a floating charge, of any property comprised in or subject to the charge or of a voluntary arrangement proposed for the purposes of Part I of the Insolvency Act 1986 being approved under that Part; if, either before or after that event, any such liability as aforesaid is incurred by the insured, his rights against the insurer under the contract in respect of the liability shall, notwithstanding anything in any Act or rule of law to the contrary, be transferred to and vest in the third party to whom the liability was so incurred. (2) Where the estate of any person falls to be administered in accordance with an order under section 421 of the Insolvency Act 1986, then, if any debt provable in bankruptcy is owing by the deceased in respect of a liability against which he was insured under a contract of insurance as being a liability to a third party, the deceased debtors rights against the insurer under the contract in respect of that liability shall, notwithstanding anything in any such order, be transferred to and vest in the person to whom the debt is owing. (3) In so far as any contract of insurance made after the commencement of this Act in respect of any liability of the insured to third parties purports, whether directly or indirectly, to avoid the contract or to alter the rights of the parties thereunder upon the happening to the insured of any of the events specified in paragraph (a) or paragraph (b) of subsection (1) of this section or upon the estate of any person falling to be administered in accordance with an order under section 421 of the Insolvency Act 1986, the contract shall be of no effect. (4) Upon a transfer under subsection (1) or subsection (2) of this section, the insurer shall, subject to the provisions of section 3 of this Act, be under the same liability to the third party as he would have been under to the insured, but (a) if the liability of the insurer to the insured exceeds the liability of the insured to the third party, nothing in this Act shall affect the rights of the insured against the insurer in respect of the excess; and (b) if the liability of the insurer to the insured is less than the liability of the insured to the third party, nothing in this Act shall affect the rights of the third party against the insured in respect of the balance. When the 1930 Act applies, it therefore transfers to the mesothelioma victim the insureds rights under the insurance contract in respect of the insureds liability to the victim. The same is provided by the 2010 Act, not yet in force. Whether an insurers right to contribution against the insured constitutes a full or partial answer to a victims policy claim based on such a transfer is a question of great potential importance. It raises questions of some complexity, on which it is unnecessary to give a final answer on this appeal, but about which I wish to make some observations. One question is whether, apart from any statutory transfer under the 1930 or 2010 Act, the insurers right to contribution would be a defence at common law to a claim by the insured for indemnity under the insurance, as opposed to giving rise to procedural remedies such as a stay. A second is whether it makes any difference to the application of the relevant common law rules in this context that the claim is being brought under the 1930 or 2010 Act. A third is whether the terms of the Act positively exclude or restrict any such defence. The first and second aspects raise, as sub issues, the existence of any right of relief based on set off, circuity of action or other equitable basis. Zurich positively submitted that it would have no right of set off, legal or equitable. One objection to set off is that a right to contribution only arises upon payment by the person seeking contribution: see eg Andrews & Milletts Law of Guarantees (6th ed) (2011), para 12 019, citing Ex p Gifford (1802) 6 Ves Jr 805 and In re Snowdon (1881) 17 Ch D 44; and see Davies v Humphreys (1840) 6 M & W 153, Stirling v Burdett [1911] 2 KB 418 and In re Beaven [1913] 2 KB 595, 600. On the face of it, that presents a real obstacle to any suggestion by any insurer in Zurichs position of set off, whether legal or equitable, against IEGs claim for the full amount of its loss. There is however first instance authority endorsing the availability of a further remedy in cases where a person A (here, for example, Zurich), liable to make a payment to person B (here, the person suffering mesothelioma), has a potential right to receive contribution (or a full indemnity) from a third person C (here, IEG). In Wolmershausen v Gullick [1893] 2 Ch 514, Wright J made a prospective order in such a case directing that, upon person A paying person B, person C was to exonerate person A from liability beyond person As share. In Rowland v Gulfpac Ltd [1999] Lloyds Rep 86, 98, Rix J held that he had jurisdiction to grant a freezing order quia timet to support an indemnity claim by person A against person C, even though the common law claim for an indemnity was not complete. His decision was more recently followed by Burton J in Starlight Shipping Co v Allianz Marine & Aviation Versicherungs AG (The Alexandros T) [2011] EWHC 3381 (Comm), [2012] 1 Lloyds Rep 162, paras 37 38, where he said that the constitution of such a fund would ensure that person A was held harmless and not be required to use his own funds to discharge liabilities falling within the relevant contract of indemnity by person C. Accepting the fairness of the thinking behind this first instance authority without further examination, I doubt whether it could or should affect the application of the general principle mentioned in para 86 in the particular context of a claim by a victim under the 1930 or 2010 Act. Zurichs obligation under the insurance and that Act would be to indemnify the victim. Any consequential right to contribution from IEG would arise not under, but outside, the insurance contract in terms of section 1(1) of the 1930 Act. Considerations of justice and policy would also support the treatment of the insurance and the contribution positions as legally separate, when an opposite approach would be to the prejudice of the victim, in whose favour the insurance would otherwise operate and who is not concerned with the circumstances giving rise to any contribution claim. A second sub issue is that legal set off is in any event confined to debts due and payable and either liquidated or capable of ascertainment without valuation or estimation: Stein v Blake [1996] AC 243, 251 per Lord Hoffmann. On current authority, at Court of Appeal level, the right to recover under an insurance contract is classified not as a debt, but as a right in damages: see eg The Italia Express (No 2) [1992] 2 Lloyds Rep 281, 286, Sprung v Royal Insurance (UK) Ltd [1999] 1 Lloyds Rep IR 111. Further, a right to claim proportionate contribution would not normally satisfy the test of legal set off, although, on the agreed facts in this case, it might perhaps do so, since they lead to a definite percentage contribution of 22.08%. Regardless of the view taken on these two points, legal set off is procedural, not substantive. When one comes to the second aspect, the statutory transfer probably therefore precludes legal set off. In contrast, equitable set off, where available, can give rise to a substantive defence. The locus classicus is Hanak v Green [1958] 2 QB 9 and the later case law includes Federal Commerce and Navigation Co Ltd v Molena Alpha Inc (The Nanfri) [1978] 2 QB 927, and has, more recently, been analysed by Rix LJ in Geldof Metaalconstructie NV v Simon Carves Ltd [2010] EWCA Civ 667, [2010] 4 All ER 847. Rix J noted (para 26) that in The Nanfri the Court of Appeal had identified the need for the cross claim to arise out of the same transaction as the claim or be closely connected with it. He concluded (para 43(vi)) that the best restatement of the principle was that it applies where there were a cross claim so closely connected with [the claimants] demands that it would be manifestly unjust to allow him to enforce payment without taking into account the cross claim. Again, I consider that, in a context where any set off arises from circumstances outside the insurance policy and would be to the prejudice of a third party victim, the considerations of policy and justice behind the rules developed in Fairchild and Trigger would probably mean that it was just (rather than manifestly unjust) for Zurich to have to fulfil its insurance policy obligations, before asserting against IEG any contribution claim based on circumstances outside the scope of the insurance to the prejudice of that victim. Even in circumstances where liability insurance is not compulsory, it would be wrong to view liability insurance as if its only rationale was to benefit the insureds bottom line, rather than to give effect to legitimate expectations regarding the protection of employees and other third party victims. That rationale is reflected in the 1930 and 2010 Acts, and reinforced by the now compulsory nature of employers liability insurance. The court would also be entitled to take it into account, when considering for the purposes of equitable set off what is or is not manifestly unjust. As to circuity of action, this is an ill defined principle, recently confirmed though not elaborated in Farstad Supply A/S v Enviroco Ltd [2010] UKSC 18, [2010] Bus LR 1087, where previous authorities are identified. In the present context it could not, I think, be more than a remedy existing where there would be no point in a claim being permitted, because any amount awarded could be immediately recovered on another basis. On that basis, it could not add anything to the previous discussion. The third aspect identified in para 85 above would also be problematic, were it to be relevant. Where an insurer does have a set off (one which appears in each case to have been capable of operating in equity), there is conflicting authority as to whether such a set off is excluded by the 1930 Act. In Murray v Legal and General Assurance Society Ltd [1970] 2 QB 495, Cumming Bruce J held that a right to recover premiums did not arise in respect of the insureds liability to the third party, within section 1(2), and that insurers could not therefore set off unrecovered premiums. In Cox v Bankside Members Agency Ltd [1995] 2 Lloyds Rep 437, 451, Phillips J refused to follow Murray and held the third party claim to be subject to a set off arising from payment by insurers of defence costs falling within the insureds policy excess and recoverable either under an express policy term or in restitution. However, both these cases concerned cross claims which arose directly from and under the insurance policy. Here, any right of contribution is best analysed in my view as arising from circumstances outside the insurance policy, and on that basis as not capable of giving rise to a set off at all. As noted in para 86 above, no right of contribution normally arises until payment. Once the victim (person C) has established the liability of the insured (person B), person Bs rights to indemnity by the insurer (person A) under the contract in respect of that liability are transferred to person C. Neither Murray nor Cox concerned a defence to a claim under the insurance contract which was based on a cross claim arising from circumstances outside the insurance contract and which could only become due on person B being paid in full in respect of his liability to person C. There is thus, in my view, a strongly arguable case for treating the language of section 1(1) of the 1930 Act as entitling the third party to recover against the insurer in such a case, leaving the insurer to enforce any claim to contribution which it may have against anyone separately and in the ordinary course, subsequently. Conclusions For reasons given in paras 37 and 38 above, there are significant differences between the defence costs incurred by IEG and the hypothetical position regarding compensation in circumstances covered by the 2006 Act, which I have been discussing in paras 39 to 82. In particular, the right to defence costs exists under the insurances on a conventional causative basis, and the defence costs incurred were not increased by the fact that they related to a claim for an additional 21 years in addition to the six years insured by Midland. In contrast, in the hypothetical position, the insurer only incurs liability on the unconventional basis of a risk that the mesothelioma was due to exposure during the insurance period, when there was a proportionately greater risk that mesothelioma was due to exposure during other periods when the insured did not insure at all or chose to insure elsewhere. It may still be as a matter of fact that the likelihood of mesothelioma occurring (and so of any defence costs being incurred) would have been proportionately reduced, had there only been exposure during the six years of the Midland insurance. But the liability for defence costs incurred in defending a claim embracing a period longer than that insured arises directly from the policy wording, as it would always have been understood, and it has, at most, been only indirectly affected by the special rule of causation and statutory intervention which have impacted the rest of the main insuring clause. In these circumstances, the impetus to recognise a right to contribution as a matter of compelling justice and equity is self evidently diminished. I would therefore decline to recognise any such right to contribution in respect of defence costs, but I would accept that such a right exists regarding compensation in the hypothetical situation which would arise had the 2006 Act applied. On the agreed facts, the only tenable basis for apportioning responsibility and arriving at the appropriate contribution would be proportionately to the relevant periods of exposure insured and not insured with Midland. It follows from the above that the appeal should succeed on the first main point, as stated in para 35 above. It fails on the second main issue as regards defence costs. Had the 2006 Act been applicable, I would have recognised Zurich as having rights both to look to Excess for a pro rata share of liability and to require IEG to bear an appropriate contribution, as indicated in paras 39 to 82 above. As at present advised, and although IEG is solvent so that the present appeal is concerned only with the position between IEG and Zurich, I also consider that, in the case of a claim by a victim of mesothelioma against an insurer (such as Zurich) under the Third Party (Rights against Insurers) Act 1930, the insurer would be obliged to provide the full policy indemnity, without being able to set off against the victim any consequential right to contribution which it might thereafter have as against the insured (here IEG): see paras 83 to 93 above. LORD HODGE: (with whom Lord Mance, Lord Clarke and Lord Carnwath agree) The courts continue to grapple with the consequences of departing from the but for test of causation in order to provide a remedy to those who have contracted mesothelioma as a result of wrongful exposure to asbestos fibres. As the precise pathogenesis of that terrible disease is unknown, the House of Lords and the Supreme Court departed from established legal principle and extended the law of causation. As a result, an employer, which has wrongfully exposed its employee to significant quantities of asbestos fibres and thus materially increased the risk of his suffering mesothelioma, incurs liability in damages to the employee or his estate if the employee subsequently contracts the disease. The claimant does not have to prove on the balance of probabilities that the wrongful exposure caused or materially contributed to the development of the disease. This innovative rule of causation has, within its defined scope, which is not confined to mesothelioma, imposed liability not only on employers (Fairchild v Glenhaven Funeral Services Ltd [2003] 1 AC 32 and Barker v Corus UK Ltd [2006] 2 AC 572) but also on their liability insurers through the courts interpretation of liability insurance contracts (Durham v BAI (Run Off) Ltd [2012] 1 WLR 867 (the Trigger litigation)). Parliament has also intervened in section 3 of the Compensation Act 2006 by reversing the effect of Barker in relation to mesothelioma cases. This appeal concerns the liability of an insurer which has provided an employer with liability insurance cover for only part of the period of the employees employment, during which he was wrongfully exposed to significant quantities of asbestos fibres, and the employer was either uninsured for the rest of the period or was insured by an insurer who is now insolvent or who cannot now be traced. The principal issues are (i) whether the insurance policies respond to the full extent of an employers liability to the employee or only a proportionate part of that liability fixed by reference to the periods of cover for which premiums have been assessed and paid, and (ii) if the former, whether the insurer has a claim against insurers of the employer in respect of other periods of the employees exposure and against the employer itself for periods in which it was uninsured or in respect of which its insurer can no longer be identified or traced. This court is unanimously of the view that section 3 of the Compensation Act 2006 did not change the common law, which the House of Lords had laid down in Barker v Corus UK Ltd [2006] 2 AC 572, but overrode it only to the extent that the section provides. The court also holds, unanimously, that the appeal fails on the issue of defence costs. On those matters no more need be said. The division of opinion arises in relation to what Lord Mance describes as the second main question, namely the extent of the insurers liability when it has insured the employer for part only of the period of the employees exposure. It is a matter of agreement that liability insurance would have been placed on the basis that a particular loss would fall into one insurance period, for which the insurer had assessed the premiums and provided the cover. As Lord Mance has shown in para 43 of his judgment and Lord Sumption in para 155 of his, it would be seriously anomalous if the insurer, which provided cover for a small proportion of the period of the employees exposure, were to carry the whole of the employers liability without any recourse against others in respect of the other periods of exposure. The stark options to avoid the identified anomalies are: (i) to hold, as Lord Sumption propones, that the insurance contract is to be construed so that the insurers liability for the loss is limited to the proportion of the policy years in which it provided cover relative to the whole period during which the employer wrongfully exposed the employee to the asbestos fibres; or (ii) to adopt the approach, which Lord Mance proffers, that the insurer must meet the whole of the employers liability to the employee and that, having done so, the insurer has the right to seek proportionate contributions from other insurers, which gave liability cover to the employer in other periods, and also, in respect of any period in which there was no insurance company from which a contribution can be obtained, against the employer itself. Each approach is a possible way of avoiding unfairness to the insurer. Lord Mances is more radical. I have found this a difficult case, not least because I am generally averse to developing the common law other than by the application of general principles. I have shared the concerns which Lord Neuberger and Lord Reed have articulated. But we are where we are. The law has tampered with the but for test of causation at its peril: Sienkiewicz v Greif (UK) Ltd [2011] 2 AC 229, Lord Brown at para 186. The Fairchild enclave exists: the courts in Fairchild and Barker and the Trigger litigation, for obvious reasons of policy, have developed a special rule of causation to do justice to the victims of wrongful exposure to asbestos fibres who have contracted mesothelioma as a result. Having done so, the courts must address the consequences of that innovation. I am persuaded that this court should develop the law as Lord Mance has proposed for the following six reasons. The first three address the extent of the insurers liability to the employer. The next two relate to the rights of recourse of the insurer, once it has paid the employer or victim in implement of its obligations under its insurance policy. The final reason relates to Lord Mances proposal as a whole. First, in my view, the finding that the insurer, which has provided liability cover to an employer for only part of the period of the employees exposure, must meet the entirety of the employers liability for the whole period of exposure is consistent with the way the courts have developed the common law in the trilogy of cases. In particular, it is consistent with the position of the majority of this court in the Trigger litigation. In that case the majority imported into the insurance contract the weak or broad concept of causation, which the House of Lords had adopted in imposing tortious liability on the employer. To my mind this is clear from Lord Mances leading judgment in the Trigger litigation (in particular at paras 52 and 57, 64 68, and 72 74) and also in the concurring judgment of Lord Clarke of Stone cum Ebony (at paras 83 85). The creation of liability for mesothelioma by virtue of the exposure to the asbestos fibres, which materially increases the risk of that disease, means that the mesothelioma is caused in this broad sense in each and every period of such exposure, as Lord Mance argues in this appeal. As a result, the insurer, which provided liability insurance for a limited period, is exposed to the whole of the employees claim if there was wrongful exposure in that period. Secondly, while this imposes a heavy burden on the insurer which the employer selects to claim its indemnity, it is a result for which the appellants and interveners have argued in this appeal. It appears to be a result that the London insurance market is prepared to live with. It is striking that the insurance industry in this appeal has shown no enthusiasm for the elegant and less complex idea of construing the insurance contract to restrict the insurers liability to a proportionate part of the loss. Thirdly, it is consistent with the policy of the United Kingdom Parliament that the employee victim should be able to obtain damages for his loss in a straightforward way. This policy of protecting the employee victim is clear at a general level from the enactment of the Employers Liability (Compulsory Insurance) Act 1969. It is clear, more specifically, in Parliaments enactment of (i) section 3 of the Compensation Act 2006 to reverse the decision of the House of Lords in Barker and more recently (ii) the Mesothelioma Act 2014 to establish an insurance industry fund to deal with the contingency that a victim is unable to bring an action for damages against an employer or a relevant liability insurer. It is also consistent with the expansion of the Financial Services Compensation Scheme by the Compensation Act 2006 (Contribution for Mesothelioma Claims) Regulations 2006 (SI 2006/3259). Confining the insurers liability to a time related proportion of the employers liability would not be in line with this policy of the legislature and would probably engender further legislation. While Parliaments role of legislating in the public interest differs from the role of judges in developing the common law, it is legitimate for the courts to consider whether their initiatives are in harmony with legislative policy expressed in statutes: Johnson v Unisys Ltd [2003] 1 AC 518, para 37 per Lord Hoffmann. I turn to Lord Mances proposed innovations to address the serious anomalies, which he and Lord Sumption have identified, if the insurer in one insurance period were to bear 100% liability without any recourse against those responsible during other insurance periods. They are: (a) the broad equitable extension of the right of contribution between insurers and (b) a right of recoupment against the employer in respect of years in which it was not insured or can identify no insurer against which contribution can be claimed. Thus, fourthly, if, as I consider, it is correct that the majoritys decision in the Trigger litigation points towards the insurers 100% liability (para 104 above), the interpretation of the insurance contract as creating a pro rata liability is not an option and the anomalies must be addressed in some other way. Fifthly, I am not as concerned as Lord Neuberger and Lord Reed are about the danger of infecting other areas of the common law with uncertainty. The court is crafting a solution for the problems that stem from the alteration of the rules of causation and the solution applies only to cases to which the altered rules of causation apply. In other words the special rules apply only to cases within the Fairchild enclave. The House of Lords in Gregg v Scott [2005] 2 AC 176 has been careful not to allow the relaxation of the established rules of causation more widely by applying a weak rule of causation outside the Fairchild enclave. The courts will have to police the boundaries of the enclave. So long as (a) the rights of recourse against other insurers and the insured employer are recognised for what they are, namely as a means of avoiding anomalies as a result of the special rules of causation and (b) those special rules are confined to the circumstances which Fairchild addresses, there is no reason why the boundaries of the Fairchild enclave should not be preserved. I recognise that those boundaries are not coterminous with liability for mesothelioma and that the precise boundaries of the Fairchild principle, like those of the earlier case of McGhee v National Coal Board [1973] 1 WLR 1, may have to be worked out in other cases viz Novartis Grimsby Ltd v Cookson [2007] EWCA Civ 1261. But it is sufficient, in my view, that the insurers rights of recourse are available only within the Fairchild enclave. Finally, the practical solution which Lord Mance proffers appears to be consistent with the way in which the London insurance market has operated in handling mesothelioma claims. That may suggest that the solution will not give rise to major practical difficulties. This is not a view which I have come to without hesitation because I see the strength of the arguments (a) that the courts should develop the common law in a principled way, (b) that in the context of an insurance contract the correct tools to give effect to the parties intentions are construction of the contractual words or the recognition of an implied term, and (c) that the protection of the employee victims entitlement to recover damages is a matter for Parliament. In short, having dug a hole, the courts should not keep digging. But the majority judgment in the Trigger litigation, which is the first of the six reasons set out above, appears to preclude the construction of the insurance contract which the minority favour. That consideration and the other five reasons persuade me that Lord Mances approach is the best available means of avoiding the injustice which the insurer would otherwise suffer. LORD SUMPTION: (with whom Lord Neuberger and Lord Reed agree) I agree that this appeal should be allowed, but I regret that I cannot agree with the reasons given by the majority, which seem to me to be contrary to a number of basic principles of the law of contract and to be productive of uncertainty and injustice. Suppose that an insolvent employer had tortiously exposed his employee to asbestos for, say, 30 years before going out of business. The employer had failed to insure his liabilities at all for years one to 20. Insurer A insured his liability on an occurrence basis in year 21. Insurer B insured his liabilities under successive annual policies for years 22 to 30, but insurer B is insolvent. The majority would hold that, in a case governed by the 2006 Act, insurer A is liable for the entire loss incurred over the 30 years of exposure, although he was only on risk for one, but that he has an equitable right to recoup a proportionate part of that liability from the insolvent estate of insurer B in respect of the nine years when insurer B was on risk, and from the insolvent estate of the employer in respect of the 20 years when there was no insurance. The effect, and as I understand it the object, of this is to make insurer A, who is solvent, answerable, (i) in respect of periods when insurer A was not on risk but insurer B was; and (ii) for the failure of the employer to insure at all in the first 20 years. In my opinion, the correct result in this situation is that insurer A is liable for a proportionate part of the loss in respect of the one year out of 30 when he was on risk. The employee is entitled to recover insurer Bs proportion under the statutory compensation scheme established under section 213 of the Financial Services and Markets Act 2000 for cases of insurer insolvency. In respect of the 20 years when there was no insurance, he is entitled subject to the statutory conditions of eligibility to recover under the statutory compensation scheme established under the Mesothelioma Act 2014 for cases where there is no insurance. The effect of the majoritys view is simply to transfer risk from the statutory compensation schemes which were created to assume that risk, to an arbitrarily selected solvent insurer who has not agreed to do so. The liabilities of an insurer are wholly contractual. The answer to the questions now before the court necessarily depend on the construction of the contract and on nothing else. Under an annual policy of insurance written on an occurrence basis, the insurers liability is limited to occurrences caused during the contractual term. Where the relevant occurrence has been caused at an indeterminate time during the period of exposure, there are in my view only two possible meanings that can be given to the contract. One is that the insurer is not liable at all. That possibility was rejected by this court in Durham v BAI Runoff Ltd. (In re Employers Liability Policy Trigger Litigation [2011] 1 All ER 605.) The other is that each insurer must severally answer for a rateable part of the employers liability, corresponding to the proportion which his time on risk bears to the period of exposure. No insurer can be liable in respect of other periods when he was not on risk or there was no insurance in place at all. That appears to me to be the correct answer to the problem which has arisen on this appeal. The suggestion that an insurer who was on risk for only part of the period of exposure, however brief, can be liable as if he had been on risk for the entire period, is contrary to the express terms of the contract and to the nature of annual insurance. The suggestion that some doctrine of law can be devised which imposes on an insurer in one year the risk that insurers of other years may become insolvent or that in other years the employer may fail to insure at all, is both unprincipled and unjust. The suggestion that equity can partially adjust the result of this injustice by requiring the insured to repay to the insurer part of the insurance moneys which the latter was contractually obliged to pay him, is contrary to basic principles of law. It is the proper function of this court to review those principles. But the very immensity of this power requires it to act within a framework of legal principle. The court identifies general principles of law and applies them to the case in hand. If the facts of that case disclose some generally unsatisfactory feature of the law as hitherto understood, it may modify it. To devise a special rule for one industrial disease and impose it retrospectively on a policy that covers all industrial accidents and diseases, so as to alter what all members of this court acknowledge to be the basis of the parties agreement, seems to me to be an extremely undesirable course to adopt. It may fairly be said, and indeed is said by the majority, that this court had already, in Fairchild v Glenhaven Funeral Services Ltd [2003] 1 AC 32 created a special rule for mesothelioma which does not conform to the ordinary principles on which the common law acts. It has done this in the interests of avoiding a serious injustice. Therefore, the argument continues, it is incumbent upon us now to develop what is called the Fairchild enclave by devising ancillary rules which appear to do justice to cases within the enclave, even if they are also out of line with the ordinary principles of law. The difficulty about this approach is that a measure of legal coherence seems desirable even within the Fairchild enclave. The contractual analysis has the considerable advantage that it draws on a substantial body of existing legal principle, which can be expected to supply answers to unforeseen issues as they arise. The alternative is for the law to move from each one off expedient to the next. This can only generate knock on consequences which we are not in a position to predict or take into account. If there were no other way to achieve justice, these consequences should no doubt be borne. But it is quite unnecessary to do so in this case. In the first place, the incidents of liability in tort are the creation of rules of common law, whereas the extent of a contractual liability depends on the intentions of the parties. The scope for judicial inventiveness is therefore necessarily more limited in the latter context than in the former. Secondly, it goes without saying that insurers are as much entitled to justice as mesothelioma victims. Third, the protection of victims against the insolvency of some out of a number of employers liability insurers or the failure of an employer to insure at all in some out of a number of years of exposure, is properly a matter for statute. It has in fact been dealt with, to the extent that Parliament considers appropriate, by the creation of statutory compensation schemes. It is difficult in those circumstances to discern what social imperative can require us to depart from ordinary principles of law. Mesothelioma Between the end of the nineteenth century and the 1970s asbestos was commonly used for a wide variety of purposes, notably for sound and heat insulation in the building trades and in the manufacture of electrical and other appliances. It has been known for more than 80 years that exposure to high levels of asbestos is injurious to health, and in the United Kingdom regulations have sought to limit levels of exposure since 1931. Mesothelioma is a malignant tumour whose association with asbestos exposure was identified in the 1960s. It is usually caused by asbestos particles inhaled in the course of occupational exposure to the mineral, although occasionally by environmental asbestos. It is a breach of an employers duty to allow its employees to be exposed to significant levels of asbestos without taking reasonable steps to protect them from inhaling it. Mesothelioma has a number of distinctive characteristics. A single exposure to asbestos particles may be enough to cause the condition to develop but will not necessarily do so. The intensity of exposure depends, among other things, on the dose and fibre type. The greater the intensity and duration of exposure, the higher the risk that mesothelioma will develop. But once contracted the disease is not progressive with exposure: subsequent further exposure will not aggravate it. As Rix LJ put it in the Court of Appeal in the Trigger litigation [2011] 1 All ER 605, at para 51, summarising the findings of the trial judge: once the mesothelioma tumour is present and assured of growth (ie has passed the stage where a malignant mutation may die off), further asbestos exposure and indeed further asbestos fibres in the body can make no difference and are not causative. These features differentiate mesothelioma from other industrial diseases and from long term sources of damage such as the industrial pollution of land which are progressively aggravated by successive occurrences to a degree which is in principle capable of being measured or estimated. They present particular problems of attributing responsibility given that the disease is undetectable until shortly before death, and once initiated may be latent for many years (30 to 40 years is common) before the symptoms appear. If a person has been exposed to high levels of asbestos over a long period, it is impossible in the current state of medical science to determine at what stage he inhaled the fibres which ultimately led to his developing mesothelioma. This means that if he was exposed to asbestos by successive employers during that period, each period of employment will have materially increased the risk of his contracting the disease without necessarily causing it. Employers liability insurance has been compulsory in the United Kingdom since the Employers Liability (Compulsory Insurance) Act 1969, which came into force on 1 January 1972. Section 1(1) of that Act requires employers to be insured against liability for bodily injury or disease sustained by his employees, and arising out of and in the course of their employment in Great Britain in that business. It is normal for employers to be insured on an occurrence (as opposed to a claims made) basis under successive annual policies which may be underwritten by different insurers. Under most of the standard wordings in common use, an industrial disease will be treated as having occurred when it was caused or initiated, even though it only developed or manifested itself later. I shall return to this point when I come to deal more fully with the Trigger litigation. It follows from the characteristics of mesothelioma which I have described that three potential problems can affect the availability of insurance cover. The first is that where an employee was exposed to asbestos by different employers at different times, it will be impossible to determine which employers wrong caused the disease to develop and therefore which employers insurers should respond. The second is that even where only one employer was involved, that employer may have been insured for only part of the period of exposure, or may have been insured in different years by different insurers. It will then be impossible to determine whether at the time when the disease occurred the employer was insured or, if he was, under which policy and by which insurer. The third is that one or more of the insurers potentially liable may have become insolvent or have been wound up in the course of corporate restructuring or have ceased to carry on this class of business and simply disappeared. The present appeal is primarily concerned with the second of these problems, although it also has implications for the third. Since at least the 1990s the insurance industry in the United Kingdom has evolved voluntary procedures for dealing with these problems in the context of claims for mesothelioma. Since these procedures have had a significant influence on the positions taken by the parties to this appeal, and affect the commercial implications of the various possible outcomes, it is necessary to say something about them. The arrangements appear to have varied in detail, but since 2003 have been embodied in guidelines issued by the Association of British Insurers, a body predominantly comprising insurers but with some representation of non insurance interests. The 2003 Guidelines, which were issued in the aftermath of the decision in Fairchild, recommend a scheme of settlement which is described as equitable and pragmatic. Its essential features are: (i) that the victim is to be paid in full by the Lead Insurer; (ii) that where more than one employer is involved liability is notionally apportioned between them pro rata to their respective periods of culpable exposure, without regard to any difference in the intensity of exposure; (iii) that each employers proportion of the claim is then further apportioned between that employer and its insurer or insurers according to the proportion which their time on risk bears to the whole period of culpable exposure by that employer; and (iv) that periods when the employer was self insured, uninsured or unable to trace insurance are apportioned to the employer if it is solvent, and otherwise to the relevant employers insurers (irrespective of their solvency). The effect of point (iv) is that where the employer was insured but the insurer is insolvent, the insolvent insurers pro rata share is paid by the Financial Services Compensation Scheme established under section 213 of the Financial Services and Markets Act 2000, which is party to the scheme. According to Mr Allen, an experienced claims manager whose witness statement was put in by the Association of British Insurers, the main objectives of the industry scheme are to promote speed of settlement, to prevent the spiking of claims from an uninsured year into an insured one, or from a year with a higher deductible into another with a lower one, and to avoid time consuming and costly disputes about issues such as the dose, intensity or fibre type of a claimants exposure. His evidence is that it proved impossible in practice to persuade insurers to pay the employee up front and then sort out the distribution of the cost among other participants later. Insurers preferred to wait until the FSMA compensation scheme was committed. Subject to that, the industry scheme has been accepted by the United Kingdom industry and has not in practice been challenged by reinsurers, although they would be likely to do so if they thought that claims were being artificially spiked into a year when their reinsured was on risk. There is some dispute about how far the industry scheme has been accepted by insureds, as Mr Allen contends, but it is neither necessary nor possible to resolve that question. The facts International Energy Group Ltd (IEG), is the successor to the rights and liabilities of Guernsey Gas Light Company Ltd, which employed Mr Alan Carr between 1961 and 1988. Mr Carr claimed to have been negligently exposed by his employer to asbestos particles throughout that period, and to have contracted mesothelioma in consequence. The obligations of the employer to Mr Carr were governed by Guernsey law. It is agreed for the purpose of these proceedings that the common law of Guernsey is the same as the common law of England. The statute law is, however, different. One of the differences is that employers liability insurance was not compulsory in Guernsey until the Employers Liability (Compulsory Insurance) (Guernsey) Law 1993, which came into force on 1 March 1994. Nonetheless, Guernsey Gas was insured for at least part of the period during which it employed Mr Carr. It was insured between 31 December 1978 and 30 December 1980 by Excess Insurance Co Ltd, and between 31 December 1982 and 31 December 1988 by Midland Assurance Ltd. Accordingly Excess was on risk for two and Midland for six of the 27 years during which Guernsey Gas employed Mr Carr. For the remaining 19 years, the employer was either uninsured or else insured under a policy all trace of which has been lost so that it is for practical purposes unable to claim under it. IEG is, however, solvent and capable of meeting the claim from its own resources. Zurich Insurance plc, are a major insurer of employers liability in the British Isles who acquired Midland and succeeded to its liabilities. In September 2008, shortly before his death, Mr Carr began proceedings against the employer in the Royal Court in Guernsey in support of a claim for damages on the footing that it had exposed him to asbestos without adequate protection. The proceedings were settled in December 2008 for 250,000 in respect of damages and interest and 15,300 in respect of Mr Carrs costs. IEG also incurred defence costs of 13,151.60. The company settled these sums in full and claimed them from Zurich. Zurich offered to settle the companys claim in accordance with the industry guidelines. Since IEG was solvent, it offered a rateable proportion of the claim, reflecting the ratio of its time on risk to the total period of Mr Carrs employment by Guernsey Gas. IEG began the present proceedings against Zurich in support of their claim for the entire amount. It was agreed that the dispute should be resolved on the basis of agreed facts. These were, in summary, (i) that Mr Carr was exposed to asbestos with the same frequency and intensity throughout the 27 years of his employment by the employer, (ii) that that exposure materially increased the risk that he would contract mesothelioma, and (iii) that by reason of the exposure Guernsey Gas was in breach of its duty to him. Before examining the basis of IEGs claims and Zurichs response, it is necessary to deal with the complex legal background against which the rival contentions were advanced. The position as between employer and employee: Fairchild In Fairchild v Glenhaven Funeral Services Ltd [2003] 1 AC 32, the House of Lords held that where one of a number of successive employers must have caused the development of mesothelioma by tortiously exposing the employee to the same noxious agent, the ordinary rules for proving causation fell to be varied as a matter of policy so as to ensure that an irrefutable claim against at least one of an ascertained group of defendants should not fail for want of any scientific possibility of identifying him. The ordinary rule, as the House agreed in Fairchild, was that the employee must prove that the damage was caused by the particular defendant sought to be held liable. As Lord Bingham said of the ordinary rule, at para 9: The issue in these appeals does not concern the general validity and applicability of that requirement, which is not in question, but is whether in special circumstances such as those in these cases there should be any variation or relaxation of it. He regarded the issue before the House as an obvious and inescapable clash of policy considerations (at para 33). He continued: The crux of cases such as the present, if the appellants' argument is upheld, is that an employer may be held liable for damage he has not caused. The risk is the greater where all the employers potentially liable are not before the court. This is so on the facts of each of the three appeals before the House, and is always likely to be so given the long latency of this condition and the likelihood that some employers potentially liable will have gone out of business or disappeared during that period. It can properly be said to be unjust to impose liability on a party who has not been shown, even on a balance of probabilities, to have caused the damage complained of. On the other hand, there is a strong policy argument in favour of compensating those who have suffered grave harm, at the expense of their employers who owed them a duty to protect them against that very harm and failed to do so, when the harm can only have been caused by breach of that duty and when science does not permit the victim accurately to attribute, as between several employers, the precise responsibility for the harm he has suffered. I am of opinion that such injustice as may be involved in imposing liability on a duty breaking employer in these circumstances is heavily outweighed by the injustice of denying redress to a victim. Were the law otherwise, an employer exposing his employee to asbestos dust could obtain complete immunity against mesothelioma (but not asbestosis) claims by employing only those who had previously been exposed to excessive quantities of asbestos dust. Such a result would reflect no credit on the law. It seems to me, as it did to Lord Wilberforce in McGhee [1973] 1 WLR 1, 7 that: the employers should be liable for an injury squarely within the risk which they created and that they, not the pursuer, should suffer the consequence of the impossibility, foreseeably inherent in the nature of his injury, of segregating the precise consequence of their default. Lord Bingham concluded that all of the successive employers were liable. Lord Nicholls of Birkenhead, expressing the same view, put the matter as follows at paras 41 42: 41 The present appeals are another example of such circumstances, where good policy reasons exist for departing from the usual threshold but for test of causal connection. Inhalation of asbestos dust carries a risk of mesothelioma. That is one of the very risks from which an employer's duty of care is intended to protect employees. Tragically, each claimant acquired this fatal disease from wrongful exposure to asbestos dust in the course of his employment. A former employee's inability to identify which particular period of wrongful exposure brought about the onset of his disease ought not, in all justice, to preclude recovery of compensation. 42 So long as it was not insignificant, each employer's wrongful exposure of its employee to asbestos dust, and, hence, to the risk of contracting mesothelioma, should be regarded by the law as a sufficient degree of causal connection. This is sufficient to justify requiring the employer to assume responsibility for causing or materially contributing to the onset of the mesothelioma when, in the present state of medical knowledge, no more exact causal connection is ever capable of being established. Given the present state of medical science, this outcome may cast responsibility on a defendant whose exposure of a claimant to the risk of contracting the disease had in fact no causative effect. But the unattractiveness of casting the net of responsibility as widely as this is far outweighed by the unattractiveness of the alternative outcome. Lord Hoffmann, at para 63, said: which rule would be more in accordance with justice and the policy of common law and statute to protect employees against the risk of contracting asbestos related diseases? One which makes an employer in breach of his duty liable for the employee's injury because he created a significant risk to his health, despite the fact that the physical cause of the injury may have been created by someone else? Or a rule which means that unless he was subjected to risk by the breach of duty of a single employer, the employee can never have a remedy? My Lords, as between the employer in breach of duty and the employee who has lost his life in consequence of a period of exposure to risk to which that employer has contributed, I think it would be both inconsistent with the policy of the law imposing the duty and morally wrong for your Lordships to impose causal requirements which exclude liability. As Lord Hoffmann pointed out, more clearly perhaps than any other member of the committee, it was essential that each of the successive employers should have wrongfully exposed the employee to asbestos particles and thereby materially increased the risk of his contracting the disease. The same policy would not therefore necessarily have justified a finding that all manufacturers of a drug causing injuries to patients were fixed with liability, simply because it was impossible to prove which manufacturers product had been administered to the particular claimant. This was because the existence of the additional manufacturers did not materially increase the risk of injury: see para 74. Lord Rodger of Earlsferry made the same point, at para 170: part of the underlying rationale of the principle is that the defendant's wrongdoing has materially increased the risk that the claimant will suffer injury. It is therefore essential not just that the defendant's conduct created a material risk of injury to a class of persons but that it actually created a material risk of injury to the claimant himself. the claimant must prove that his injury was caused by the eventuation of the kind of risk created by the defendant's wrongdoing By contrast, the principle does not apply where the claimant has merely proved that his injury could have been caused by a number of different events, only one of which is the eventuation of the risk created by the defendant's wrongful act or omission. It should be observed that although the House was concerned with mesothelioma, it recognised that the legal issue was not necessarily peculiar to mesothelioma. It could arise in cases concerning other injuries or diseases or other sources of danger, provided that the damage was inflicted by the same destructive agent. The question, as they pointed out, had arisen in other jurisdictions whose law was reviewed by the House, in the context of groups of hunters, party goers, footpads and the like negligently causing injury, each member of which had materially increased the risk of the injury which occurred without its being possible to identify whose negligence had actually caused it: see Lord Bingham at paras 25 29, Lord Hoffmann at paras 73 74, and Lord Rodger at paras 158 160. In McGhee v National Coal Board [1973] 1 WLR 1, which was held to have been founded on the same principle as Fairchild, the problem had arisen from the impossibility of determining the precise causal mechanism by which the claimant employee had contracted dermatitis, when some hypotheses involved a breach of duty while others did not. More generally, as Lord Bingham observed at para 34, it would be unrealistic to suppose that the principle here affirmed will not over time be the subject of incremental and analogical development. The decision in Fairchild has not given entire satisfaction to all of its authors. Lord Hoffmann has described it as a revolutionary judgment. The ordinary function of the House of Lords in changing the common law is to modify some principle which had proved unsatisfactory. In Fairchild, the House did not modify or even criticise the general principle that the claimant had to demonstrate that the defendants negligence had on a balance of probabilities caused the injury. Instead, they created a special exception to it which could not be justified by reference to any general principle and depended on a distinction which had no rational factual or legal justification: Hoffmann, Constitutionalism and Private Law (Cambridge Freshfields Law Lecture, 28 January 2015). Be that as it may, the decision in Fairchild is the starting point for any analysis of the legal issues arising between successive employers, or between employers and their insurers. In Fairchild itself, the House of Lords left those issues unresolved. Subsequent decisions of the House of Lords and Supreme Court have cruelly exposed the problem of dealing with complex and interrelated issues piecemeal. In order to accommodate the implications of earlier decisions for issues which they did not directly address, it has more than once proved necessary to subject their reasoning to some reanalysis. Apportionment: Barker In Fairchild, the House of Lords held that each of the successive employers was liable, but expressly declined to decide how, if at all, the liability was to be apportioned between them: see Lord Bingham at para 34, Lord Hoffmann at para 74, and Lord Rodger at para 125. That question did, however, arise in Barker v Corus UK Ltd [2006] 2 AC 572. The facts of Barker were that each of the claimants had been exposed to asbestos particles by successive employers or else by employers in one period and the claimant himself in another. The House of Lords held that the Fairchild principle applied in these cases also. Against that background, the question which arose was stated by Lord Hoffmann, at para 25, as follows: whether under the Fairchild exception a defendant is liable, jointly and severally with any other defendants, for all the damage consequent upon the contraction of mesothelioma by the claimant or whether he is liable only for an aliquot share, apportioned according to the share of the risk created by his breach of duty. The ordinary rule in the law of tort is that, where a number of defendants separately contribute to the same indivisible damage, each of them is jointly and severally liable for the whole. For want of a better word, this can be called the Dingle principle after Dingle v Associated Newspapers Ltd [1961] 2 QB 162, in which it received its classic formulation at the hands of Devlin LJ at paras 188 189: Where injury has been done to the plaintiff and the injury is indivisible, any tortfeasor whose act has been a proximate cause of the injury must compensate for the whole of it. As between the plaintiff and the defendant it is immaterial that there are others whose acts also have been a cause of the injury and it does not matter whether those others have or have not a good defence. These factors would be relevant in a claim between tortfeasors for contribution, but the plaintiff is not concerned with that; he can obtain judgment for total compensation from anyone whose act has been a cause of his injury. If there are more than one of such persons, it is immaterial to the plaintiff whether they are joint tortfeasors or not. If four men, acting severally and not in concert, strike the plaintiff one after another and as a result of his injuries he suffers shock and is detained in hospital and loses a month's wages, each wrongdoer is liable to compensate for the whole loss of earnings. If there were four distinct physical injuries, each man would be liable only for the consequences peculiar to the injury he inflicted, but in the example I have given the loss of earnings is one injury caused in part by all four defendants. It is essential for this purpose that the loss should be one and indivisible; whether it is so or not is a matter of fact and not a matter of law. Contracting mesothelioma is indivisible damage. If it had been proved that all of the successors had contributed to causing the employees mesothelioma, they would have been jointly and severally liable for the whole damage on the Dingle principle. The question in Barker was whether the same principle applied when all that could be proved was that each employer had contributed to the risk without contributing to the disease. The trial judge and the Court of Appeal in Barker held that it did, and that each employer was jointly and severally liable. The House of Lords overruled them. It held by a majority (Lord Rodger dissenting) that liability was several, and fell to be apportioned according to the tortfeasors relative contribution to the risk, measured by the duration and intensity of the exposure for which he was responsible. The ratio of the decision may be taken from the speech of Lord Hoffmann, with whom Lord Scott of Foscote, Lord Walker of Gestingthorpe and Baroness Hale of Richmond agreed. Lord Hoffmann held that the Dingle principle could apply only if each employer had contributed to the employee contracting the disease or was deemed to have done so. But it could not be proved that they actually had done so, and Lord Hoffmann denied that Fairchild had introduced a rule that they were deemed to have done so by creating a material risk of contracting mesothelioma. That, he thought, had been the view of Lord Rodger and Lord Hutton in Fairchild. But he considered that the speeches of the majority were authority for the proposition that the creation of a material risk of mesothelioma was sufficient for liability: see paras 31 34. From this he concluded, at para 35: Consistency of approach would suggest that if the basis of liability is the wrongful creation of a risk or chance of causing the disease, the damage which the defendant should be regarded as having caused is the creation of such a risk or chance. If that is the right way to characterise the damage, then it does not matter that the disease as such would be indivisible damage. Chances are infinitely divisible and different people can be separately responsible to a greater or lesser degree for the chances of an event happening, in the way that a person who buys a whole book of tickets in a raffle has a separate and larger chance of winning the prize than a person who has bought a single ticket. He went on at para 43 to summarise his reasons for regarding the apportionment of liability according to the time and intensity of the wrongful exposure for which each successive employer was responsible as representing the fair outcome: In my opinion, the attribution of liability according to the relative degree of contribution to the chance of the disease being contracted would smooth the roughness of the justice which a rule of joint and several liability creates. The defendant was a wrongdoer, it is true, and should not be allowed to escape liability altogether, but he should not be liable for more than the damage which he caused and, since this is a case in which science can deal only in probabilities, the law should accept that position and attribute liability according to probabilities. The justification for the joint and several liability rule is that if you caused harm, there is no reason why your liability should be reduced because someone else also caused the same harm. But when liability is exceptionally imposed because you may have caused harm, the same considerations do not apply and fairness suggests that if more than one person may have been responsible, liability should be divided according to the probability that one or other caused the harm. And at para 48: Although the Fairchild exception treats the risk of contracting mesothelioma as the damage, it applies only when the disease has actually been contracted. Mr Stuart Smith, who appeared for Corus, was reluctant to characterise the claim as being for causing a risk of the disease because he did not want to suggest that someone could sue for being exposed to a risk which had not materialised. But in cases which fall within the Fairchild exception, that possibility is precluded by the terms of the exception. It applies only when the claimant has contracted the disease against which he should have been protected. And in cases outside the exception, as in Gregg v Scott [2005] 2 AC 176, a risk of damage or loss of a chance is not damage upon which an action can be founded. But when the damage is apportioned among the persons responsible for the exposures to asbestos which created the risk, it is known that those exposures were together sufficient to cause the disease. The damages which would have been awarded against a defendant who had actually caused the disease must be apportioned to the defendants according to their contributions to the risk. In the course of his analysis, at para 46, Lord Hoffmann referred to the implications of the alternative approach, which would have imposed joint and several liability: The effect of the Civil Liability (Contribution) Act 1978 is that if each defendant is treated as having caused the mesothelioma as an indivisible injury and pays the damages in full, he will be able to recover contribution to the extent that he has paid more than his fair share of the responsibility from such other tortfeasors as are traceable and solvent. But he will in effect be a guarantor of the liability of those who are not traceable or solvent and, as time passes, the number of these will grow larger. Experience in the United States, where, for reasons which I need not examine, the DES rule of several liability has not been applied to indivisible injuries caused by asbestos, suggests that liability will progressively be imposed upon parties who may have had a very small share in exposing the claimant to risk but still happen to be traceable and solvent or insured: see Jane Stapleton, Two causal fictions at the heart of US asbestos doctrine 122 LQR 189. That would, as I have said, not be unfair in cases in which they did actually cause the injury. It is however unfair in cases in which there is merely a relatively small chance that they did so. Lord Scott, at para 61, put the same points in this way: If the Fairchild principle were based upon the fiction that each Fairchild defendant had actually caused the eventual outcome, the analogy with tortfeasors each of whom had contributed to an indivisible outcome would be very close. But Fairchild liability is not based on that fiction. It is based on the fact that each negligent defendant has wrongfully subjected the victim to a period of exposure to an injurious agent and has thereby, during that period, subjected the victim to a material risk that he or she will contract the disease associated with that agent. Each successive period of exposure has subjected the victim to a further degree of risk. If, in the event, the victim does not contract the disease, no claim can be made for the trauma of being subjected to the risk: see Gregg v Scott [2005] 2 AC 176. But if the victim does contract the disease the risk has materialised. If the degree of risk associated with each period of exposure, whether under successive employers or during self employment or while engaged in domestic tasks, were expressed in percentage terms, the sum of the percentages, once the disease had been contracted, would total 100%. But the extent of the risk for which each negligent employer was responsible and on the basis of which that employer was to be held liable would be independent of the extent of the risk attributable to the periods of exposure for which others were responsible. The relationship between the various negligent employers seems to me much more akin to the relationship between tortfeasors each of whom has, independently of the others, caused an identifiable part of the damage of which the victim complains. The joint and several liability of tortfeasors is based upon a finding that the breach of duty of each has been a cause of the indivisible damage for which redress is sought. No such finding can be made in a Fairchild type of case and the logic of imposing joint and several liability on Fairchild defendants is, in my opinion, absent. Moreover, Fairchild constitutes an exception, perhaps an anomalous one, to the causation principles of tortious liability. It should not, therefore, be found to be surprising if consequential adjustments to other principles of tortious liability become necessary. Lord Walker, at para 113, drew attention to the fact that the Fairchild principle had involved a departure from ordinary rules of law, which called for the application of special principles of apportionment unique to the situation in which it applied: The solution to the problem is in my opinion more radical, in line with the radical departure which this House has already made in Fairchild. That case was decided by the majority, as I have already noted, not on the fictional basis that the defendants should be treated as having caused the claimant's (or deceased's) damage, but on the factual basis that they had wrongfully exposed him to the risk of damage. The damage was indivisible, but the risk was divisible a matter of statistics. In line with that new principle established or affirmed in Fairchild, and as a solution which does justice (so far as possible) both to the generality of claimants and to the generality of defendants, limited liability proportionate to risk is the better course for the law to take. Baroness Hale made a similar point in her own speech, at paras 122 and 126 127: But it does not necessarily follow from the fact that the damage is a single indivisible injury that each of the persons who may have caused that injury should be liable to pay for all of its consequences. The common law rules that lead to liability in solidum for the whole damage have always been closely linked to the common law's approach to causation. There is no reason in principle why the former rules should not be modified as the latter approach is courageously developed to meet new situations. But in the Fairchild situation we have yet another development. For the first time in our legal history, persons are made liable for damage even though they may not have caused it at all, simply because they have materially contributed to the risk of causing that damage. Mr Stuart Smith does not quarrel with the principle in Fairchild. He simply argues that it does not follow from the imposition of liability in such a case that each should be liable for the whole. I agree with the majority of your Lordships that indeed it does not follow. There is in this situation no magic in the indivisibility of the harm. It is not being said that each has caused or materially contributed to the harm. It can only be said that each has materially contributed to the risk of harm. The harm may be indivisible but the material contribution to the risk can be divided. There exists a sensible basis for doing so. Is it fair to do so? In common with the majority of your Lordships, I think that it is. The speeches of the majority in Barker are not easy to analyse, and perhaps for that reason the analysis of them by Lord Rodger in his dissenting speech has proved influential. He attributed to Lord Hoffman and those who agreed with him the opinion that the employer was liable for creating a risk of contracting mesothelioma, and not for the mesothelioma itself. I do not think that this is the correct analysis of the majoritys reasoning. In his essay in Perspectives in Causation, ed R Goldberg (2011), at p 8, Lord Hoffmann certainly adopted it. He suggested that the majority view in Barker had created a special cause of action for the causing of the risk. But his words in Barker itself were more circumspect. In the passage which I have cited from para 48 of his speech, he certainly suggested that the Fairchild exception treated the creation of the risk as the damage which gave rise to liability. But, like Lord Scott and Lord Walker, he emphasised that there was no cause of action for the risk in the absence of the disease. And Baroness Hale (at para 120), while agreeing with Lord Hoffmann, had no difficulty in agreeing with Lord Rodger that the damage which is the gist of these actions is the mesothelioma and its physical and financial consequences. It is not the risk of contracting mesothelioma. In my opinion, the natural reading of the speeches of the majority, read as a whole, is that the Fairchild exception is an exception to the ordinary rules of causation alone. It treats a material contribution to the risk as enough to discharge the burden of proving that the breach of duty has caused the disease. It followed that by reason of having contributed to the risk the employer was liable for the disease itself. Or, as Lord Walker put it at para 109, the Fairchild exception is A rule of law by which exposure to risk of injury is equated with legal responsibility for that injury. The real difference between Lord Rodger and the majority was that the majority thought that it was unknowable and irrelevant who had caused the disease to develop. They considered that each successive employer should be liable in proportion to the significance of its contribution to the risk because, exceptionally, what had made each of them liable for the disease was its contribution to the risk and not its contribution to the damage. Lord Rodger on the other hand thought that each successive employer was deemed to have contributed to the damage and that it was that contribution to the damage which was the source of the liability. He therefore thought that each of them incurred the joint and several liability which the Dingle principle imposed on those who severally contribute in different degrees to the same damage. Underlying his reasoning was an expressed reluctance to adopt an analysis of Fairchild which made the cases in which it applied into an enclave subject to rules quite different to those which applied generally in the law of personal injuries: see para 85. The majority on the other hand considered that Fairchild had already created the enclave and that the task in hand was to devise a basis of liability consistent with its peculiarities. Within three months of the decision in Barker, its effect was reversed by section 3 of the Compensation Act 2006. Section 3 applied in any case where a person (the victim) contracted mesothelioma as a result of exposure to asbestos, and another (the responsible person) was liable in tort for having wrongfully exposed him to asbestos, whether by reason of having materially increased a risk or for any other reason. Section 3(2) provided that the responsible person was liable irrespective of whether the victim was also exposed to asbestos on other occasions, either by other tortfeasors or in circumstances where there was no liability in tort. Not only was that person liable, but he was jointly and severally liable with any other responsible person. The result was to make each responsible person liable for the whole damage, without prejudice (see subsections (3) and (4)) to the right of contribution between them. Section 3 applied retrospectively: see section 16(3). The position as between the employer and his insurer: Trigger Mesothelioma, like other industrial diseases characterised by long periods of latent development, poses particular problems for insurers writing employers liability business on an occurrence basis. None of the cases which I have cited was concerned with the impact of the Fairchild exception on coverage under an employers liability insurance. That question arose in the Employers Liability Policy Trigger litigation, six cases heard together before the Supreme Court and reported under the title Durham v BAI (Run off) Ltd [2012] 1 WLR 867. A number of different policy forms were before the court. They all insured the employers liability for personal injury (including disease) contracted or sustained during the period of insurance, generally a year. There were two issues. The first was whether the trigger for the insurers liability was the exposure of the employee to asbestos (as the employers and the personal representatives of deceased employees contended), or only to the development or manifestation of mesothelioma (as the insurers contended). These alternatives were referred to as the causation basis and the manifestation basis respectively. It was clear that the policies did not respond if the manifestation basis was correct, for the disease developed or manifested itself long after the relevant policies had expired and generally after the victim had ceased to be employed. The second issue was raised in terms not by the parties but by Lord Phillips of Worth Matravers in the course of the hearing. It was whether, if the causation basis was correct, the triggering event could be shown in the current limited state of scientific knowledge to have occurred during the policy period. If not, it was suggested, the insurer could not be liable at all. The leading judgment was delivered by Lord Mance. The courts decision on the first issue is summarised at paras 49 51 of his judgment. It was held that the policies insured the damage attributable to the actual injury or disease, which was suffered when mesothelioma developed. But the triggering event which had to occur within the policy period was the event upon which mesothelioma was sustained (the term used in the Midland policies in the present appeal) or contracted (the term used in some other policies). In either case, that happened when it was caused or initiated, even though it only developed or manifested itself subsequently. The whole panel was agreed upon this. The second issue turned on the effect of Fairchild and Barker on the footing that causation or initiation of the disease was the relevant triggering event. This question divided the panel. Lord Phillips in his dissenting judgment held that the insurers could be found liable only if the effect of these decisions was that the employer was deemed to have caused the development of the disease by exposing the employee to asbestos particles. That analysis of Fairchild had, however, been rejected by the majority in Barker. The alternative in his view was to treat Fairchild as creating liability not for the disease but for the contribution to the risk of the disease. Since the contribution to the risk was not an insured peril, the insureds and their statutory assignees could succeed against the insurers only if they demonstrated that the disease had in fact been caused or initiated during the policy period, something which the current state of scientific knowledge made it impossible for them to do. This view was rejected by the majority. Again, the reasons may be taken from the judgment of Lord Mance. He agreed that the deemed causation theory had been rejected in Barker. He held that the employer was not liable for merely exposing the victim to the risk. He was liable for the disease. But he was liable for the disease, because his tortious exposure of the victim to the risk was in law enough to establish that he had caused it. The issue, as Lord Mance put it at para 66, concerned: the meanings we assign to the concept of causation, first in the context of considering employers liability to their employees and then in considering the scope of employers insurance cover with respect to such liability. He summarised the effect on the policy at paras 73 74 as follows: 73. In my view, these considerations justify a conclusion that, for the purposes of the insurances, liability for mesothelioma following upon exposure to asbestos created during an insurance period involves a sufficient weak or broad causal link for the disease to be regarded as caused within the insurance period. The risk is no more than an element or condition necessary to establish liability for the mesothelioma. The reality, reinforced by provisions in the 2006 Act, is that the employer is being held responsible for the mesothelioma. 74. For this purpose, the law accepts a weak or broad causal link. The link is to exposure which may but cannot be shown on the ordinary balance of probabilities to have played a role in the actual occurrence of the disease. But for the purposes of the policies the negligent exposure of an employee to asbestos can properly be described as having a sufficient causal link or being sufficiently causally connected with subsequently arising mesothelioma for the policies to respond. The concept of a disease being caused during the policy period must be interpreted sufficiently flexibly to embrace the role assigned to exposure by the rule in Fairchild and Barker. Viewing the point slightly more broadly, if (as I have concluded) the fundamental focus of the policies is on the employment relationship and activities during the insurance period and on liability arising out of and in course of them, then the liability for mesothelioma imposed by the rule in my opinion fulfils precisely the conditions under which these policies should and do respond. In substance, the result was that the same weak test of causation which applied as between the victim and the employer should be applied as between the employer and his liability insurer. The parties arguments This appeal is not concerned with multiple successive causes of exposure to asbestos, nor is it concerned with multiple successive employers. Guernsey Gas, for whose liabilities IEG is responsible, employed Mr Carr throughout the 27 year period when he was tortiously exposed to asbestos. IEGs case for recovering in full against the insurers who were on risk for six of those years is as follows. The decision of this court in the Trigger appeals established (i) that the policy responds if during the period of insurance something happened which caused the ultimate development of mesothelioma, and (ii) that that causal link is sufficiently demonstrated by proving that during the period of insurance the insured employer wrongfully exposed the employee to the risk of contracting mesothelioma. Therefore, it is said, just as an employer is liable if he employed the victim at any time when he was wrongfully exposed to the risk of contracting mesothelioma, so the employers liability insurer is liable if he was on risk at any time when such exposure occurs. If by statute the employer must bear the entire loss attributable to the disease by reason of having exposed the employee to asbestos particles at any time that is also the measure of his claim against the insurer. Zurich advances two alternative contentions in response to this. The first is that as between the victim and his employer Barker remains good law in all cases to which the Compensation Act 2006 does not apply. It therefore remains good law in Guernsey, where Mr Carr was employed. It follows that the liability of Guernsey Gas is apportionable over the period of exposure, and that the insurer is liable only for a proportionate part of the loss representing that part of the period of exposure during which he was on risk. If, contrary to this submission, Barker is no longer good law even in Guernsey, Zurich concedes that it is liable under the policy terms for the whole of Mr Carrs loss. On that footing, Zurichs second argument is that they have a right of equitable recoupment against the other insurers pro rata to their respective periods on risk, and against the employer for that proportion of the claim which reflects the time he was uninsured. So far as the compensation element of the claim is concerned, the second argument arises only if the first one fails. But as far as the claim for defence costs is concerned, the second argument arises anyway, because Zurich accepts that they were contractually liable for the whole of the defence costs. This is because the same defence costs would have been incurred whether the employer was liable for the whole loss or only a proportion of it. The decisions of Cooke J and the Court of Appeal Cooke J accepted Zurichs first argument. He held that the insurer was liable only for a rateable proportion reflecting time on risk. The alternative claim for recoupment therefore did not arise. But if it had arisen, Cooke J would have rejected it. The Court of Appeal reversed him on Zurichs primary case. They held that Barker was no longer good law after the Compensation Act, and therefore no part of the common law of Guernsey. It followed in their view that each successive insurer was liable for the entire loss. They considered that no allowance fell to be made for the substantial periods of exposure when it was not on risk, whether that was because other insurers were on risk or because the employer elected to bear the risk itself. Both Toulson LJ and Aikens LJ, who both delivered reasoned judgments, considered that the issue was concluded by Trigger, in particular the statement of principle in the judgment of Lord Mance at para 73. Both of them thought that once it was accepted that each insurers liability was triggered by any period of exposure during which it was on risk, it followed as a matter of course that each insurer was liable for the entire loss. Citing the decision of the United States Court of Appeals for the District of Columbia in Keene Corporation v Insurance Company of North America (1981) 667 F 2d 1034, Toulson LJ expressed at para 42 his agreement with the proposition that: once it is accepted that exposure during any policy period met the causal requirement for the employer's liability to the victim, for which the employer was potentially entitled to indemnity from the insurer under the terms of the relevant policies, to withhold part of that indemnity from the employer on account of its conduct in other years would be to deprive the employer of insurance coverage for which it paid. Aikens LJ agreed, adding at paras 53 54 what is perhaps implicit in Toulson LJs judgment and may stand as the essence of the courts reasoning: If an employer is liable to his employee for his employee's mesothelioma following upon a tortious exposure to asbestos created during an insurance period, then, for the purposes of the insuring clause in the employers liability policy, the disease is caused within the insurance period. This is because it is sufficient that there is what Lord Mance calls (following Hart & Honors use of the phrase) a weak or broad causal link, in this case between the exposure to the asbestos during the insurance period and the employee's eventual contraction of the mesothelioma. Once that causal requirement is fulfilled, then the employer will have proved that the mesothelioma (the disease) was caused during any period of insurance. It follows from the policy wording that the insurer is then liable to indemnify IEG for all sums for which the Insured shall be liable in respect of any claim for damages for . such disease (my emphasis). In other words, Zurich will be liable to indemnify IEG for the whole of the damages paid out by IEG in respect of Mr Carrs claim for damages for contracting mesothelioma, not just a proportion worked out by reference to the period during which IEG was covered by policies for which Zurich is responsible. Like Cooke J, the Court of Appeal rejected the recoupment argument. The decision of the Court of Appeal created consternation among the interests represented by the Association of British Insurers. This was mainly because the decision recognised a right in an insured employer to recover in full from any insurer on risk at any time during the period of tortious exposure. In practise this meant that employers could be expected to pick off the easiest target. This undermined the industry settlement scheme, which: (i) apportioned the liability by time on risk among all insurers on risk during the period of exposure; (ii) apportioned uninsured periods to the employer if he was solvent; and (iii) left the employer to claim against an insolvent insurer under the compensation scheme established under section 213 of the Financial Services and Markets Act 2000. These consequences of the decision would be aggravated if there was no right of contribution between insurers. The result, the Association of British Insurers submitted, would be to encourage insurers to be more vigorous in defending claims, to delay settlements and potentially to cause difficulties with reinsurers. In addition, the Court of Appeals reliance on the all sums wording of the insuring clause opened up the prospect that insurers might be held liable in full even in the case of divisible diseases where the contribution of the tort to the actual development of the disease was more readily assignable to distinct policy periods. The issues in the Supreme Court In this court, the parties arguments were the same as they were in the courts below. However, after the case had been argued for the first time before five justices, the court raised a number of further questions with the parties which expanded the scope of the argument. We directed that the case should be reargued before seven justices so that those questions could be considered. The matters raised by the court included the correctness of Zurichs concession that if their first argument failed they were contractually liable (subject to recoupment) for the whole loss. An alternative possibility was that the insurer was liable for a proportionate part of the loss as a matter of construction of the policy, whether Barker remained good law or not and even in England where the Compensation Act applied. Upon reargument, Zurich addressed the construction question but maintained its concession. It was supported in this line by the Association of British Insurers. Construction of the policy I turn first to the construction of the policy, partly because it is the natural starting point for any analysis of its effect, and partly because I do not accept the construction which the parties have adopted as their premise. The six annual policies written by Midland were issued between 1982 and 1988. At that time, Fairchild, the Compensation Act and their legal progeny lay well into the future. These developments have greatly increased the potential liability of employers to employees whom they have wrongfully exposed to asbestos but that, as everyone can agree, is an ordinary hazard of liability insurance. The policies respond to the liability incurred by the insured in the course of the employment of its employees as the law may from time to time determine it to be, whether or not that liability would have been anticipated at the time that the contract of insurance was made. That, however, is not the problem with which we are presently concerned. We are concerned with the construction of the policies themselves. They cannot be construed on the footing that the parties were contracting by reference to the extraordinary legal problems to which Fairchild and its progeny have given rise. In Philips Electronique Grand Public SA v British Sky Broadcasting Ltd [1995] EMLR 472, Sir Thomas Bingham MR observed at paras 481 482: The courts usual role in contractual interpretation is, by resolving ambiguities or reconciling apparent inconsistencies, to attribute the true meaning to the language in which the parties themselves have expressed their contract. The question of whether a term should be implied, and if so what, almost inevitably arises after a crisis has been reached in the performance of the contract. So the court comes to the task of implication with the benefit of hindsight, and it is tempting for the court then to fashion a term which will reflect the merits of the situation as they then appear. Tempting, but wrong. it is not enough to show that had the parties foreseen the eventuality which in fact occurred they would have wished to make provision for it, unless it can also be shown either that there was only one contractual solution or that one of several possible solutions would without doubt have been preferred. Each Midland policy recited that the insured had applied for insurance and had paid or agreed to pay the premium as consideration for such insurance during the period stated in the Schedule or for any subsequent period for which the Company shall have accepted the premium required for renewal of this policy. The insuring clause provided: If any person under a contract of service or apprenticeship with the Insured shall sustain any bodily injury or disease caused during any period of insurance and arising out of and in the course of his employment by the Insured in the business above mentioned, the Company will indemnify the Insured against all sums for which the Insured shall be liable in respect of any claim for damages for such injury or disease settled or defended with the consent of the Company. The Company will in addition pay claimants costs and expenses and be responsible for all costs and expenses incurred with the consent of the Company in defending any such claim for damages. The insuring clause makes explicit what would be implicit in any contract of liability insurance written on an occurrence basis for a limited period. The occurrence is not the mere exposure of the victim to asbestos. It is the sustaining of bodily injury or disease caused during any period of insurance. The indemnity extends to the insureds liability for damages for such injury or disease, ie injury or disease caused during the period of insurance. The insurance is expressed to apply only to liability in respect of any injury or disease caused in Great Britain, Northern Ireland, the Isle of Man and the Channel Islands, and to injury or disease sustained by employees temporarily employed elsewhere under a contract of service or apprenticeship entered into in one of those jurisdictions. A liability policy responds to the specified liabilities of the insured, but only subject to any overall limitations of the policy. One of these limitations is the period of insurance, which is a fundamental feature of any such policy. The whole of the insuring clause depends upon the assumption that it is possible to assign the time when an injury or disease was caused to a given period which either is or is not within the period of insurance. Either the damage will be divisible, in which case parts of it may have been caused in different periods and must be divided between those periods, or it will be indivisible, in which case it will have been caused in a single period. As the opening recital reminds us, the period of insurance is a critical element of the ex ante assessment of the risk on which the premium is based. Insurance for any further period is dependent on renewal and the payment of a further premium. It may also (although not in this policy) be critical to the application of a deductible or an aggregate annual limit or excess. In addition, the attribution of loss to particular years is likely to have a significant effect on an insurers reserving and his reinsurance. In the English case law the point has commonly been made in the context of reinsurance. In Municipal Mutual Insurance v Sea Insurance Co Ltd [1998] Lloyds Rep IR 421, a port authority was insured against liability for (among other things) damage to property in its custody. Damage was done to equipment stored with it by a succession of independent acts of vandalism over a period of 18 months. It was impossible to differentiate between one act of vandalism and another, and the port authority was held to be entitled to aggregate all of them and to make a single claim against its insurer for the whole. The insurer was reinsured under successive facultative annual reinsurances, on terms which were back to back with the direct insurances and contained a standard follow clause (to follow their settlements). This gave rise to difficulty when the claim was passed on as a single claim to the reinsurers, because the 18 month period when the damage was done extended over the periods covered by three successive annual reinsurance policies written by different insurers, each of which provided for a substantial excess. The insurers attempt to make a single aggregate claim on one reinsurance policy was rejected by the Court of Appeal. Hobhouse LJ, giving the only reasoned judgment, said at paras 435 436: it was incumbent upon the judge to recognise and give effect to the essentially annual character of each reinsurance contract. Applying the wording of the original policy to each reinsurance contract it is necessary to ask whether or not the relevant physical loss or damage arose during the relevant period of cover. The judge came to the surprising conclusion that each reinsurance contract covered liability in respect of physical loss or damage whether or not it occurred during the period covered by the reinsurance contract and he went on expressly to contemplate that the same liability for the same physical loss or damage might be covered under a number of separate contracts of reinsurance covering different periods. This is a startling result and I am aware of no justification for it. When the relevant cover is placed on a time basis, the stated period of time is fundamental and must be given effect to. It is for that period of risk that the premium payable is assessed. This is so whether the cover is defined as in the present case by reference to when the physical loss or damage occurred, or by reference to when a liability was incurred or a claim made. Contracts of insurance (including reinsurance) are or can be sophisticated instruments containing a wide variety of provisions, but the definition of the period of cover is basic and clear. It provides a temporal limit to the cover and does not provide cover outside that period; the insurer is not then on risk. It will be appreciated that the judge's suggestion that there could or should be contribution between those signing the different slips for the different years is likewise radically mistaken. In Wasa International Insurance Co Ltd v Lexington Insurance Co [2010] 1 AC 180, Lexington had insured an aluminium manufacturer for a single period of three years between 1977 and 1980 against property damage. The insured incurred large liabilities for environmental clean up costs. The clean up costs were necessitated by industrial pollution occurring since the early 1940s. It claimed indemnity for the entire loss from each successive insurer by whom they had been insured against property or liability risks between 1956 and 1985, including Lexington. The claim was heard in Pennsylvania under Pennsylvania law. The courts there held that each insurer was jointly and severally liable for all damage which was manifest during their period of insurance irrespective of when it occurred. This meant substantially all the pollution damage attributable to industrial operations not only during the period of insurance but over the previous three decades. Lexington settled with the aluminium company on that basis. The reinsurance was on the same terms as the original as to period and coverage. It also contained a follow the settlements clause. But it was governed by English law, under which liability would have been limited to damage caused during the period of insurance, whereas the Pennsylvania court applied its own law under which no such limit applied. The argument for Lexington was that the Pennsylvania courts had decided that the pollution damage occurring over the whole period was insured under the 1977 1980 policy and that the reinsurance, which was on the same terms save as to the proper law, must respond on a like basis. The House of Lords rejected this contention. They held that, notwithstanding the ordinary presumption that reinsurance was back to back with the underlying insurance, the reinsurers liability was limited to damage caused between 1977 and 1980. The leading speeches were delivered by Lord Mance and Lord Collins of Mapesbury. Lord Mance said, at paras 40 41: 40. Viewing the reinsurance through purely English law eyes, it cannot therefore be construed as a contract to indemnify Alcoa in respect of all contamination of Alcoa sites, whenever caused or occurring, provided that part of such contamination manifested itself or was in being during the reinsurance period. That would involve reinsurers in an unpredictable exposure, to which their own protections might not necessarily respond. It would mean that the same exposure would arise, even if they had granted the reinsurance for a shorter period than the three year period matching the original since the original itself would, even if in force for only one year, have had effectively the same exposure as that for which the Washington Supreme Court held it answerable. Under the approach taken by the Washington Supreme Court, reinsurers must have incurred liability (in practice probably up to the reinsurance limits), as soon as they wrote the reinsurance. The retention must likewise have been exhausted before the reinsurance period began, and cannot have fulfilled any object of introducing an element of discipline into insurers' handling of the insurance. These represent as fundamental and surprising changes in the ordinary understanding of reinsurance and of a reinsurance period as those to which Hobhouse LJ was referring in the Municipal Mutual case [1998] Lloyd's Rep IR 421. 41. The reference in the reinsurance slip to the retention as subject to excess of loss &/or treaty R/I is a reminder that an insurance and reinsurance such as the present are likely to be part of a larger programme of protections. Excess of loss reinsurance is underwritten on either a losses occurring or risks attaching basis: Balfour v Beaumont [1984] 1 Lloyd's Rep 272. In other words, it is fundamental that such a reinsurance will respond in the one case to losses occurring during the reinsurance period, in the other to losses occurring during the period of policies attaching during the reinsurance period. To treat excess of loss policies as covering losses through contamination occurring during any period, so long as some of the contamination occurred or existed during the reinsurance period, would be to change completely their nature and effect. Lord Collins said, at para 74: 74. In English law, where an insurance or reinsurance contract provides cover for loss or damage to property on an occurrence basis, the insurer (or reinsurer) is liable to indemnify the insured (or reinsured) in respect of loss and damage which occurs within the period of cover but will not be liable to indemnify the insured (or reinsured) in respect of loss and damage which occurs either before inception or after expiry of the risk. As Lord Campbell CJ said in Knight v Faith (1850) 15 QB 649, 667: the principle of insurance law [is] that the insurer is liable for a loss actually sustained from a peril insured against during the continuance of the risk. Lord Brown of Eaton under Heywood, concurring with Lord Collins, pointed out at para 15 that if Lexingtons argument were correct, the reinsurers would have incurred the same liability if they had been on risk for only three months instead of three years: Given the fundamental importance under English law of the temporal scope of a time policy, I find it impossible to construe the reinsurance contracts in the way contended for. Reinsurance is not an insurance on liability, but on the original risk. In Municipal Mutual the original risk was the insureds liability for property damage and in Wasa it was the property damage itself. But the principle stated in them is the same, and it is of general application, as Hobhouse LJ pointed out. The courts are bound to give effect to the contractual limitations on the insurers liability. In particular, they are bound to give effect to the chronological limits of the risks covered, and to those provisions of the contract that operate by reference to the insurance period. The question on this appeal is how the terms of a chronologically limited policy are to apply to the liability resulting from the decision in Fairchild and the Compensation Act 2006. The objection to construing the Midland policies in this case as covering the damage caused at any time during the 27 years in which Mr Carr was exposed to the risk of contracting mesothelioma is the same as the objection of the Court of Appeal in Municipal Mutual and the House of Lords in Wasa to the corresponding arguments in those cases. The consequences are both commercially absurd and entirely inconsistent with the nature of annual insurance. The longer an employee is exposed to asbestos, the greater the risk of his contracting mesothelioma at some stage in his life. The result of IEGs argument is that under the contract the financial consequences for the insurer of writing the contract for a single year are the same as the financial consequences of writing the risk for the full 30 years, although he only receives a single years premium in the former case and 30 years premium in the latter. Indeed, the consequences would be the same even if the insured had been held covered for a time on risk premium for just a week or two while an unsuccessful attempt was made to agree terms. This entirely severs the functional connection between premium and risk. The employer for his part would obtain cover in respect of those whom he employed and exposed to asbestos particles in the period of cover, notwithstanding that for the rest of their working lives he elected to insure with others, or indeed elected not to insure at all. On that footing, the insurer assumes a liability of indeterminate duration notwithstanding that he expressly limited his liability to a single year. The indeterminate duration of the liability would extend both backwards and forwards. Thus an insurer who wrote a policy for, say, the first year of compulsory insurance, 1972, for an employer who had exposed its employees to asbestos particles for the previous half century and continued to do so, would assume liability for the entire accumulated legacy of exposure in the case of all employees on its payroll at the inception of the policy however far back the exposure of those employees extended. An insurer who insured the employer for a single year but refused to renew because of unfavourable claims experience or an increase in the risk would nevertheless remain liable in respect of the exposure of existing employees for an indefinite period into the future without payment of any further premium. Moreover, the insurer of a single year would have to pick up the tab for every other insurer who was on risk over an indeterminate period, although he had assumed a liability which was not co ordinate with theirs because they covered distinct periods. It also would mean that where the terms of successive policies were different, for example as to the excess or the limit, the insured could select a policy and spike the whole of the loss into the period covered by it. In the course of his judgment in the Court of Appeal, Toulson LJ observed that awarding less than the whole loss against any one insurer would deprive the insured of the insured coverage for which it paid. This observation seems to me to be the reverse of the true position. An employer who has paid a single years premium has not paid for 27 years of cover, which is what the decision of the Court of Appeal gives him. I understand every member of this court to be agreed that these consequences are unacceptable. As Lord Mance points out at para 40 of his judgment, the insurance was placed on the basis that a particular liability or loss would fall into one, not a series of separate periods. If an insured wanted complete cover, it would have to maintain it for all such periods. At para 43, he draws attention to the consequences which I have summarised above, and describes them as contrary to principle and anomalous. He is, with respect, plainly right to do so. These consequences are not just remarkable in themselves, but are directly inconsistent with the language of the Midland policies and the fundamental characteristics of insurance. This is not because any of the elements of liability, such as causation or damage, is divisible by time. Plainly they are not. It is because once the insured has proved each of those elements, he must still show that the occurrence fell within the chronological limits of the policy. If a particular result is inconsistent with the nature of insurance, and with the basis on which annual insurance is placed, there must be the strongest possible presumption that it was not intended, in the absence of clear language showing that it was. To explain why IEGs submission is mistaken, it is first necessary to differentiate between the legal basis of an employers liability to his employee and the legal basis of the insurers liability to the employer. At common law, the Dingle principle is that if several people tortiously contribute by independent acts to the same damage, they are all jointly and severally liable for the whole of the resulting damage. In Barker, the Court of Appeal and Lord Rodger in his dissenting speech in the House of Lords likened this state of affairs to the situation where several employers successively exposed the same victim to the risk of contracting mesothelioma. The majority of the House rejected that analogy, but the effect of section 3 of the Compensation Act was to reinstate it. The result is that each employer is contributing to the risk all the time, and is therefore incurring liability all the time. This makes some sense as between successive employers who are guilty of a continuous tort. However, the same logic cannot be applied as between successive insurers. Insurers are not wrongdoers. They have not contributed to any tortiously inflicted damage. The principles on which they are liable to indemnify their insured are not affected by the Compensation Act. Their liability depends not on common law or statutory concepts of culpability but on the liability that they have agreed to assume by contract. Although they have contracted to indemnify the insured in respect of his liability, they have done so on terms which require the assignment of causation to a contractual period and limit their liability to that period. This raises a problem which is, essentially, not legal but factual. The Fairchild principle is the laws response to the factual certainty that the disease was caused during the period of exposure combined with a complete uncertainty about when. If the assignment of causation to a particular period of coverage is scientifically impossible, then one solution would be for the law to say that the insured has not proved his case, as Lord Phillips would have held in Trigger. The alternative, once that is rejected, is to devise a mode of assigning causation to a particular period of time which is the closest possible surrogate for the real thing. The majority in Trigger adopted the latter solution, holding that any period of tortious exposure to the risk of contracting mesothelioma was enough to establish that the employer had caused the disease if it subsequently developed. The employers liability insurer was liable on that basis. The fallacy of IEGs argument is that it assumes that because any period of tortious exposure to the risk of contracting mesothelioma is enough to establish causation of the disease, it must follow that the disease was successively caused in every period of exposure. But that is conceptually impossible. Mesothelioma is caused only once. Once the process by which it develops has been initiated, subsequent further exposure to asbestos will not aggravate the victims condition or increase the loss. Pursuing the example of an employee exposed to asbestos particles for 30 years, let us assume that a different insurer is on risk in each year of exposure. If IEG is right, each insurer is liable for the entire loss in respect of an employee exposed to asbestos in his year who subsequently contracts mesothelioma, subject only to the limitation that the insured cannot recover more than an indemnity. By the same token, if the same insurer was on risk throughout the period of exposure, that insurer would be liable for the entire loss in each year, subject to the same limitation. But this makes no sense. It is conceptually possible for an insurer to be liable on the footing that there is a chance that the disease was caused in any year and that that should be enough to establish the necessary causal link. It is not conceptually possible for an insurer to be liable on the footing that the disease was actually caused in every year. It is only when one aggregates every successive period that the chances add up to 100%. IEGs answer to this is that because for the purposes of the insuring clause Trigger equates exposure to the risk with causation of the disease, it follows from the fact that the risk operated continuously throughout the period of exposure that the disease was continuously caused throughout the period of exposure. Therefore, it is said, causation of the disease is at one and the same time (i) a single indivisible occurrence, resulting in the entire claim falling into a single policy year, and (ii) a continuing occurrence extending over every policy year and equally efficacious in causing the disease in each one. I would be reluctant to assume that any judicial decision was authority for a contradiction in terms, and I do not think that Trigger is authority for this one. The effect of Trigger is that the insurers liability is triggered in each insurance year during the period of exposure. This is not because the insurance is against the exposure to the risk, a proposition which the court was at pains to reject in Trigger, just as the House of Lords had previously rejected it in Barker. Nor is it because the disease was actually caused in each insurance year, which is logically impossible and in any event ex hypothesi unknowable. It is because exposure to the risk is the closest surrogate that can be devised for determining when the disease was caused. This is the meaning of the weak or broad causal link to which Lord Mance referred at para 74 of Trigger. The link is, as he put it, to exposure which may but cannot be shown on the ordinary balance of probabilities to have played a role in the actual occurrence of the disease. The theory that an insurer is liable in respect of any year of insurance when the employee was exposed to the risk of contracting mesothelioma is a perfectly satisfactory answer to the question whether the insurer is liable at all, which was the only relevant question at issue in the Trigger litigation. But it cannot be applied without modification when the question is how much of the loss is attributable to particular years. If, as Trigger teaches, the insurers liability is triggered in each policy year, the rational response of the law is not to assign the whole of that loss to a policy year of the insureds choice. That would be to assume that the whole loss was caused in that year, whereas the law proceeds from the premise that we cannot know that. The rational response is that the loss must be prorated between every policy year during which the insured employer exposed the victim to asbestos. In my opinion, once one rejects the conclusion that the insurer is not liable at all, proration on that basis is the only way of giving effect to the overriding requirement of each annual policy that the liability should be assigned to policy years. If exposure to the risk of contracting mesothelioma is equated with causation, the natural consequence is that the resultant liability falls to be apportioned to policy years according to the duration and intensity of the exposure. What is being prorated as between the insurer and the employer is the employer's liability, not the indivisible harm of the mesothelioma itself. The chances of contracting mesothelioma, as Lord Hoffmann observed in Barker, are infinitely divisible, even if mesothelioma itself is not. This conclusion does not, as it seems to me, require words to be read into the policy, any more than the weak or broad test of causation adopted in Trigger required words to be read into the policy. It simply involves, as Trigger involved, construing the words caused during any period of insurance in the light of the terms of the policy as a whole and applying them to an insured liability with the unusual legal incidents of an employers liability for mesothelioma. I can deal very shortly with the words all sums in the insuring clause, on which Aikens LJ relied to support his conclusion. The relevant phrase is not all sums but all sums for which the insured shall be liable in respect of any claim for damages for such injury or disease, ie for injury or disease caused during any period of insurance. The insurance does not cover all sums for which the insured may be liable, but only those which fall within the chronological limits of the risk which the insurer has assumed. I have concentrated on the case where there is a single culpable employer whose operations are the sole relevant source of exposure to asbestos particles, because those are the facts of the present case. But there is no particular difficulty in applying the same principle to cases where there are successive tortfeasors or successive sources of exposure. The liability of the employer to the victim is apportioned to the insurer according to the proportion which its period on risk bears to the whole period during which that employer has tortiously exposed the victim to asbestos. If the insured employer is jointly and severally liable to the victim under section 3 of the Compensation Act with earlier employers who exposed the same victim to asbestos, that liability will form part of the liability which falls to be prorated between his successive insurers or between them and himself in respect of periods of non insurance. If the insured employer is insured throughout the period during which he exposed the victim to asbestos, the insurers will be liable for their respective proportions of 100%. Likewise, if there is another source of exposure to asbestos (for example ambient environmental asbestos) which were to be held to reduce the insured employers liability, the liability passed on to his insurer will be correspondingly reduced, but if not, not. United States Authority This conclusion, which appears to me be a logical application of the insuring clause to the kind of liability which arises in this case, derives some support from the rich jurisprudence of the United States, where similar questions have frequently come before the courts in the context of asbestosis and environmental pollution claims. Insurance is governed by state law and there are, perhaps inevitably, significant differences of approach in different state jurisdictions. In the celebrated case of Keene Corporation v Insurance Company of North America (1981) 667 F 2d 1034 the United States Court of Appeals for the District of Columbia (applying the laws of Delaware, New York, Pennsylvania, Connecticut and Massachusetts) held that either exposure or manifestation of the disease would make the insurer liable, and that each insurer was jointly and severally liable for the whole loss. The courts decision on the latter point was endorsed by Toulson LJ in his judgment in the Court of Appeal in the present case: see para 42. It was based mainly on the reasonable expectations of policyholders, a consideration which, except as background to the construction of the policy, does not have the significant place in English insurance law as it has in many jurisdictions of the United States. So far as it was based on the language of the policy at all, the imposition of joint and several liability in Keene was based on the expression all sums which the insured shall become legally obligated to pay as damages because of bodily injury: see note 20 (emphasis added). I have given my reasons for regarding the corresponding words as inconclusive in the context of the Midland policies. So far as Keene is authority for a triple or continuous trigger in cases about insurers liability for latent industrial diseases, it has been widely followed in other jurisdictions of the United States. But so far as it imposes joint and several liability on successive insurers, it has not met with universal acceptance, and major insurance jurisdictions have rejected it. In Insurance Company of North America v Forty Eight Insulations Inc (1980) 633 F 2d 1212, the Sixth Circuit Court of Appeals applied the laws of Illinois and New Jersey to a dispute about the allocation of a loss among successive insurers and the insured itself (in respect of periods of self insurance). The court construed product liability policies in respect of bodily injury as covering latent diseases on an exposure basis. The insured conceded that the insurers liability fell to be prorated according to time on risk, leaving them with a rateable part representing the period of exposure when they were uninsured. The issue was, however, argued out on the question whether the same rule applied to defence costs, which the employer did not concede. By a majority, the court ordered the proration of the defence costs, observing at para 73: In an underlying asbestosis suit, the plaintiff must show that Forty Eight's products injured him in order to be able to maintain a cause of action against Forty Eight. Under Borel, Forty Eight would be jointly and severally liable along with the other asbestos manufacturers: 493 F 2d at 1094 96. However, in allocating the cost of indemnification under the exposure theory, only contract law is involved. Each insurer is liable for its pro rata share. The insurer's liability is not joint and several, it is individual and proportionate. Accordingly, where an insurer can show that no exposure to asbestos manufactured by its insured took place during certain years, then that insurer cannot be liable for those years. The reason is simple: no bodily injury resulting from Forty Eight's products, took place during the years in question. The same thing would be true if an insurer could show that a worker used an effective respirator during certain years. Again, no bodily injury would have taken place. In my view, this analysis of the reason why the compensation element of the claim falls to be prorated cannot be faulted, although for reasons which I shall explain I do not think that it can be applied to defence costs. In Owens Illinois Inc v United Insurance Company (1994) 138 NJ 437, another product liability insurance case, the Supreme Court of New Jersey reached a similar conclusion on the assumption that the insurers liability was continuously triggered throughout the period of exposure, but rejected the solution proposed in Keene that each insurer on risk during that period was liable for the entire loss. Instead, it proposed a complex system of proration. At p 468, the court observed: The occurrence clauses undoubtedly contemplated indemnity for provable damages incurred by the policyholder because of injury that occurred during the policy period. The continuous trigger theory coupled with joint and several liability is premised on a tenuous foundation: that at every point in the progression the provable damages due to injury in any one of the years from exposure to manifestation will be substantially the same (the collapsed accordion). As we have seen, our law has been developing in a different manner. The court found little assistance in the language of the contract, but concluded that for reasons essentially of policy and practical efficacy, proration was the appropriate solution. It was particularly concerned with the anomaly that the Keene solution placed an insured with insurance for a small part of the period of exposure in the same position as one with insurance for all of it. At p 473, the court said: the Keene rule of law reduces the incentive of the property owners to insure against future risks. Recall the circumstances in the final three years. Assuming the availability of insurance, a principle of law that would act as a disincentive to the building owners in the hypothetical might serve in the long run to reduce the available assets to manage the risk. O I's counsel counters that these are not correct assumptions about the way in which the real world responds. We cannot be sure that the policy will be effective. We believe, however, that the policy goal is sound. Finally, principles of simple justice cannot be entirely discounted. To rebut effectively the question posed in Forty Eight Insulations is difficult. Were we to adopt [the policyholder's] position on defence costs a manufacturer which had insurance coverage for only one year out of 20 would be entitled to a complete defence of all asbestos actions the same as a manufacturer which had coverage for 20 years out of 20. Neither logic nor precedent support such a result. And at p 479: Because multiple policies of insurance are triggered under the continuous trigger theory, it becomes necessary to determine the extent to which each triggered policy shall provide indemnity. Other insurance clauses in standard CGL policies were not intended to resolve that question. A fair method of allocation appears to be one that is related to both the time on the risk and the degree of risk assumed. When periods of no insurance reflect a decision by an actor to assume or retain a risk, as opposed to periods when coverage for a risk is not available, to expect the risk bearer to share in the allocation is reasonable. Estimating the degree of risk assumed is difficult but not impossible. Insurers whose policies are triggered by an injury during a policy period must respond to any claims presented to them and, if they deny full coverage, must initiate proceedings to determine the portion allocable for defence and indemnity costs. In Consolidated Edison Company of New York Inc v Allstate Insurance Company (2002) 98 NY 2d 208, a similar issue arose in relation to a claim under a policy for environmental pollution liability. The assured argued for joint and several liability on the part of all insurers during the period when the pollutants were being released into the ground, because of the difficulty of assigning the damage to any one period. Rejecting this argument, the New York State Court of Appeals said, at p 224: Con Edison wants to combine this uncertainty based approach, which implicates many successive policies, with an entitlement to choose a particular policy for indemnity. Yet collecting all the indemnity from a particular policy presupposes ability to pin an accident to a particular policy period (see Sybron Transition Corp, 258 F 3d at 601; Owens Illinois, 138 NJ at 465, 650 A 2d at 988 989). Although more than one policy may be implicated by a gradual harm (see eg McGroarty v Great Am Ins Co, 36 NY 2d 358, 365), joint and several allocation is not consistent with the language of the policies providing indemnification for all sums of liability that resulted from an accident or occurrence during the policy period (see Olin Corp, 221 F 3d 307, 323). Pro rata allocation under these facts, while not explicitly mandated by the policies, is consistent with the language of the policies. Most fundamentally, the policies provide indemnification for liability incurred as a result of an accident or occurrence during the policy period, not outside that period (see Forty Eight Insulations, 633 F 2d at 1224). Con Edison's singular focus on "all sums" would read this important qualification out of the policies. Proration of liability among the insurers acknowledges the fact that there is uncertainty as to what actually transpired during any particular policy period (see Sybron Transition Corp, 258 F 3d at 602). Recently, in State of California v Continental Insurance Company (2012) 55 Cal 4th 186, 198 (and note 4), the Supreme Court of California noted that proration had been adopted by at least 12 states (Colorado, Connecticut, Kansas, Kentucky, Louisiana, Massachusetts, Minnesota, New Hampshire, New Jersey, New York, Utah and Vermont), while Keene had been followed on this point in at least six states in addition to California itself (Delaware, Indiana, Ohio, Pennsylvania, Washington and Wisconsin), generally on account of the all sums language of the policy. Policy considerations Fairchild and Barker were both cases in which legally unconventional rules for establishing liability in tort were adopted for reasons of policy. In Trigger, there was clearly a significant policy element behind the majoritys adoption of a weak test of causation in the construction of the insuring clause, in place of the austere logic of Lord Phillips, who would have held that employers liable on the Fairchild basis were not insured at all. It is therefore natural to ask whether a similar approach may not justify a rule which would make each insurer liable in full irrespective of the period for which he was on risk, so as to ensure that whatever happens the employee is protected. This is essentially what the victim support groups submit. Judges are not always candid about the broader considerations which lead them to prefer one view of the law to another. But the desire to ensure an outcome which protects victims of occupational mesothelioma has had such a strong influence on recent case law, that its relevance to the present issues is a question that needs to be confronted. There are two reasons why the employee might be unable to recover damages for contracting mesothelioma resulting from his tortious exposure to asbestos. One is that his employer has insured with an insurer who subsequently becomes insolvent. The other is that his employer has in breach of his statutory obligation failed to insure at all. The employee has no reason to be concerned with either problem if his employer is solvent and able to meet his liabilities from his own resources. But both are a potential problem if, in addition, his employer is insolvent. It is clear that the main reason for holding an insurer who was on risk at any time during the period of exposure liable for the entire loss is that this obliges that insurer to bear the risk of the absence of effective insurance in other years in which it was not on risk. It is therefore necessary to ask what conceivable policy could justify that? The Fairchild principle is not addressed to the problems of insurer solvency or non insurance. It is addressed to the scientific impossibility of ascertaining when the insured occurrence happened. The Midland policies were written in a standard form which by its express terms applies only to injury or disease caused in Great Britain, Northern Ireland, the Isle of Man and the Channel Islands or to employees temporarily employed elsewhere under a contract entered into in one of those jurisdictions. It is therefore clear that it was designed to satisfy the employers statutory obligation to insure under the Employers Liability (Compulsory Insurance) Act 1969. It is self evident that that Act was intended to protect employees with claims against their employers rather than the employers themselves. We can deduce from this that the Act of 1969 should predispose a court to find that that coverage for occupational injury and disease has been provided, as indeed this court held that it was in Trigger. But there is nothing in the policy of the Act which is inconsistent with insurance being obtained through annual policies, as it normally has been throughout the history of this market. And nothing which assumes that coverage will be provided beyond the express chronological limits of the policy simply because there is no effective insurance in place beyond those limits. On the contrary, the Act envisages that there will be continuous cover with authorised insurers. Insurers have deep pockets, but that in itself cannot justify imposing on them a liability which they have not agreed. Nor is there any need to pick the pockets of the insurers in this way, since the employee is amply protected by various statutory schemes from the risk of being unable to recover. The Policyholders Protection Act 1975 introduced a statutory scheme of compensation for policyholders of insolvent insurers. It protected business policyholders in full in respect of risks subject to compulsory insurance. These arrangements have since been replaced by the wider terms of the Financial Services Compensation Scheme introduced by section 213 of the Financial Services and Markets Act 2000. The successive schemes have all been funded by statutory levies from the insurance industry. This legislation does not protect the employee in respect of loss attributable to a period for which there was no insurance in place. But such protection has now been conferred on eligible persons diagnosed on or after 25 July 2012 by the Mesothelioma Act 2014. The Act provides for a scheme to be established by secondary legislation under which the victim or his dependants will be entitled to specified payments from a statutory fund if they are unable to bring an action for damages in respect of the disease against any employer of the person or any insurer with whom such an employer maintained employers liability insurance (because they cannot be found or no longer exist or for any other reason): section 2(1)(d). Section 18(3) provides that for this purpose the scheme may specify circumstances in which a person is, or is not, to be treated as able to bring an action for the purposes of section 2(1)(d) . The scheme was established by the Diffuse Mesothelioma Payment Scheme Regulations 2014 (SI 2014/916). It provides for the payment of specified lump sums to victims or their dependents, the amount of which varies with the age of the victim upon diagnosis. The power conferred by section 18(3) has been exercised by extending eligibility to any case in which the employer falls within the 1930 Act (ie is insolvent) and no other employer or insurer can be found or exists against whom the person can maintain an action for damages: regulation 7(1)(b) (emphasis added). There are potential issues about the criteria of eligibility in section 2 of the Act, in a case where the employee is entitled to proportionate amounts in respect of different years and there is insurance for some of those years but not for others. Like the Financial Services and Markets Act scheme, the cost of the fund is met by a levy on the United Kingdom insurance industry. The combined effect of these schemes is that the employee is protected against the insolvency of an insurer or the absence of insurance, in any case where his employer is unable to meet his liabilities. As the rules governing the Financial Services and Markets Act scheme presently stand, if an insurer on risk in one year were required to pay the entire loss, thus discharging the liability of insolvent insurers on risk in other years, that insurer would to that extent be entitled to claim against the scheme: see Prudential Regulation Authority: Handbook, Compensation Rules, para 4.4.3. But if an insurer on risk in one year were required to make good the failure of the employer to insure at all in other years, that insurer would have no equivalent right to recover from the scheme created under the Mesothelioma Act 2014. Accordingly, the result of imposing on him a liability to pay the entire loss is to cast the entire burden of the insurance gap on him when the scheme of the Act of 2014 is to spread it across the insurance industry as a whole. Defence costs That leaves the question whether the right to prorate the insureds loss across the period of exposure applies also to defence costs. The insuring clause provides, immediately after the principal coverage provision: The Company will in addition be responsible for all costs and expenses incurred with the consent of the Company in defending any such claim for damages. The insurer is liable under this provision for costs and expenses incurred with its consent in defending any such claim for damages, ie a claim for damages for disease caused during any period of insurance. Similar language has been held in some of the jurisdictions of the United States which prorate the principal liability to require the proration of the defence costs as well: Insurance Company of North America v Forty Eight Insulations Inc (1980) 633 F 2d 1212. I have some sympathy with the instinct behind this view, but the difficulty about it is that the tests are not the same. The insurers liability for the compensation element of the claim falls to be prorated according to time on risk because on a proper analysis it relates only in part to the period for which the risk was insured. The insurers liability for the defence costs is different. Unless there was some severable part of the defence costs that can be specifically related to a period when the insurer was not on risk, the whole of the defence costs had to be incurred to meet that part of the claim which was insured. The fact that it was also required to meet the uninsured remainder of the claim is irrelevant. The most that the insurer can say in this situation is that in funding the defence of a claim so far as it related to an insured period, it incidentally conferred a benefit on those who were potentially liable for the same claim in respect of an uninsured period: ie other insurers and IEG in its capacity as self insurer. In New Zealand Forest Products Ltd v New Zealand Insurance Co Ltd [1997] 1 WLR 1237, the insured incurred costs in defending litigation in California against a number of parties only one of whom, a director, was insured against the relevant liability. The Privy Council held that the defence costs did not fall to be apportioned between the insured and uninsured defendants. So far as the defence costs were reasonably required to meet the defence of a party whose liability was insured, the insurer was bound to pay them. It did not matter that the expenditure also benefitted other parties whose liabilities were not insured. The principle is accepted by the insurers on this appeal, who concede that they are liable to pay the defence costs in full. That concession appears to me to be correct. It follows that as a matter of contract Zurich is contractually liable to meet the defence costs in full. The Guernsey angle In the Court of Appeal in the present case, Toulson LJ expressed the view that in the light of the subsequent developments in the law, Barker had become past history and was no longer good law even in cases (such as those arising in Guernsey) where the Compensation Act did not apply. I have arrived at the conclusion about the proration of contractual liability for compensation by reference to the terms and nature of the contract of insurance. The analysis would have been the same if Mr Carr had been employed in England. It is therefore strictly speaking unnecessary to address the question whether Toulson LJ was right about the current status of Barker. But in view of the fact that the point was fully argued, I will briefly summarise my reasons for thinking that he was wrong. The common law is not a series of ad hoc answers to particular cases, but a body of general principle by reference to which answers may be found. The Act of 2006 did not alter any principle of the common law. In the first place, it did not lay down the elements of liability. It assumed liability and regulated only the measure of recovery. Secondly, it applied only to mesothelioma cases, and then only to regulate the measure of liability in tort as between the tortfeasor and the victim. Thirdly, even in relation to mesothelioma, section 3(1) applied only where the responsible person incurred liability for materially increasing the risk. Liability is incurred on that basis only on the footing that the time at which the disease is caused is impossible to determine. As Lord Phillips pointed out in Sienkiewicz v Greif (UK) Ltd [2011] 2 AC 229, at para 70, the courts would be entitled to revert to the conventional approach of requiring proof of causation on the balance of probabilities if advances in medical science make this possible. In other words, the Act left the common law intact, but carved an exception out of it for mesothelioma. It follows that Fairchild as interpreted by Barker remains good law in those jurisdictions (such as Guernsey) where the Act does not apply, and remains good law as applied to those legal relationships (such as the contractual relationship between insurer and insured) to which it does not apply. In those cases to which Barker continues to apply, it stands as authority for the allocation of liabilities which at common law are several only. Equitable recoupment and redistribution This question arises only on the assumption that an insurer who is on risk for only part of the period of exposure is contractually liable to meet the whole of the compensation element of the employers claim or the whole of the defence costs. On that assumption, Zurichs argument is that insurers are entitled in equity (i) to redistribute the burden among other insurers who are liable in respect of the same amounts but in respect of different policy periods, and (ii) to recoup from the insured a pro rata part of the cost of meeting that liability in respect of periods when there was no insurance at all. As I have already explained, I consider that the assumption on which this argument arises, namely that an insurer on risk for only part of the period of exposure is contractually liable for the whole loss, is false. However, the question has a more general significance. If, as Zurich contend, there is a general right of contribution or recoupment (i) as between insurers and (ii) as between insurers and insureds in respect of periods of non insurance, that would provide an alternative way of rectifying the anomalies associated with holding the insurer liable for the entire loss, alternative that is to construing the policy as responding for only a pro rata part of the loss. As between insurers each of whom insured only part of the period of exposure but are liable (on this hypothesis) in full, I think it clear that there is a statutory right of contribution. Section 1(1) of the Civil Liability (Contribution) Act 1978 came into force on 1 January 1979, and applies to damage occurring after that date: see section 7(1). This has sometimes been questioned, for example by Friedmann, Double insurance and payment of anothers debt (1993) 109 LQR 51, 54. But I can see no principled reason for questioning it. Section 1(1) provides that a person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with him or otherwise). A contract of indemnity gives rise to an action for unliquidated damages, arising from the failure of the indemnifier to prevent the indemnified person from suffering damage, for example, in a liability policy by having to pay the third party claimant: Firma C Trade SA v Newcastle Protection and Indemnity Association [1991] 2 AC 1, 34 (Lord Goff of Chieveley). The class of persons liable in respect of any damage suffered by another may include those liable in contract, and there is no reason to limit it to those who have themselves caused the damage, as opposed to those who have assumed a contractual liability in respect of it. The question is therefore whether the damage for which successive insurers are liable is the same damage. As a matter of construction and on ordinary principles of insurance law, it is not. As I have said, successive insurers of liability on an occurrence basis do not insure the same liability. Each of them has contracted to indemnify the insured against an insured peril occurring in its own period on risk. In the case of an indivisible injury the liability of successive insurers is therefore alternative and not cumulative. However, on the footing that (contrary to my opinion) the law treats each insurer as liable for the whole loss in each period of insurance, then it must necessarily have been the same damage. Whether there would be a right of contribution in respect of liabilities arising before 1 January 1979 is a more difficult question. There has always been a right of contribution at common law in cases of double insurance. But double insurance normally requires that two or more insurers should be liable in respect of the same interest on the same subject matter against the same risks. On this ground, English law has hitherto declined to recognise that double insurance can exist as between insurers liable in respect of different periods even if the loss is the same: National Employers Mutual General Insurance Association Ltd v Haydon [1980] 2 Lloyds Rep 149; Phillips v Syndicate 992 Gunner [2004] Lloyds Rep IR 426. It would require some considerable development of traditional concepts of double insurance to accommodate a situation like the present one. In Australia, where there is no legislation corresponding to the 1978 Act, this development has occurred: see Albion Insurance Co Ltd v Government Insurance Office of New South Wales (1969) 121 CLR 342. Whether the law should develop in the same way in England is a question that I should prefer to leave to a case in which it is more central to the outcome and the arguments of the parties. The Act of 1978 will cover the great majority of cases that seem likely now to arise. What is in my view clear is that there cannot be an equitable right of recoupment as between the insurer and his insured in respect of periods when the latter was not insured. The reason is that unlike an insurers relationship with other insurers under a co ordinate liability for the same loss, his relationship with the insured is a contractual relationship. Its content has been determined by agreement, and a right of recoupment would be inconsistent with that agreement. If the insured is contractually entitled to the whole amount, there cannot be a parallel right of recoupment in equity on the footing that it is inequitable for the insured to have more than part of it. The basis of the suggested right of recoupment is that it is unjust for the insurer to have to bear the whole loss. But I do not understand by what standard it is said to be unjust when the parties have agreed that it should be so. It is no answer to this to say that the alleged right of recoupment arises outside the contract. Of course, a contractual right and an equitable right of recoupment are juridically different. But the question is not what is the juridical origin of the claim for recoupment, but whether it operates by reference to the contract. To that question, there is only one possible answer. The alleged right of recoupment arises only because the contract (on this hypothesis) provides for the insurer to pay the whole loss. It arises as a direct result of the payment of the contractual indemnity. Its purpose is to undo in part what the contract has done. Mr Edelman submitted that a right of recoupment would only reflect the contribution of the employer to the risk of years which the insurer did not insure. So it would. But that is because (on this hypothesis) the contract requires the insurer to pay in full notwithstanding the contribution of the employer to the risk in the years which were not insured. If that is the consequence of the parties agreement, I know of no legal doctrine which can do away with it. Equity does not mend mens bargains. It may intervene to avoid unconscionable bargains, or to give effect to the parties real intentions (for example when proprietary rights are conferred for a limited purpose such as security), or to provide remedies where those available at law are defective. But these are principled exceptions which depend on the unconscionability of allowing the law to take its course. There is nothing unconscionable about the performance of a contract of insurance according to its terms. In this respect, the principle on which equity acts is no different from that of the common law, even where the relevant common law claim is non contractual. Thus a contractual relationship may give rise to a parallel duty of care in tort, and the consequences of breach (for example as regards limitation or foreseeability) may be different. But any contractual provisions about the content of the duty must apply to both: Henderson v Merrett Syndicates Ltd [1995] 2 AC 145, 191, 193 194 (Lord Goff of Chieveley). And a claim for unjust enrichment, which is probably the closest analogue to the right of recoupment proposed in this case, will not be allowed where its effect is to alter the contractual allocation of risks: Pan Ocean Shipping Co Ltd v Creditcorp Ltd [1994] 1 WLR 161, 164 (Lord Goff). As Etherton LJ said in MacDonald Dickens & Macklin (a firm) v Costello [2012] QB 244, at para 23, in language which applies well beyond the domain of unjust enrichment with which he was concerned: The general rule should be to uphold contractual arrangements by which parties have defined and allocated and, to that extent, restricted their mutual obligations, and, in so doing, have similarly allocated and circumscribed the consequences of non performance. That general rule reflects a sound legal policy which acknowledges the parties' autonomy to configure the legal relations between them and provides certainty, and so limits disputes and litigation. Of course, this will not necessarily apply where the relevant contractual right is vitiated, for example by illegality, frustration or mistake, all of which give rise to well established grounds for restitution: see Lord Mances observations at paras 69 71. But this has no bearing on a case such as this is said to be, where a valid, lawful and effective contract requires the insurer to satisfy the whole liability notwithstanding that he accepted only a time limited part of it. It is I think beyond question that to require part of that amount to be repaid on the ground that its retention would be unjust is a reversal of the effect of the contract by operation of law, something which cannot be justified if the contract is valid, lawful and effective. Mr Edelman QC, who appeared for Zurich, submitted that in respect of periods when the employer was not insured, he could be regarded as self insured and his position as regards contribution assimilated to that of a true insurer. Even if this were correct, it would not displace contractual allocation of risk. But in my view it is not correct. The submission is founded mainly on the decision of the House of Lords in Lord Napier and Ettrick v Hunter [1993] AC 713, 730, which is said to be authority for the proposition that self insurance is a form of insurance. The House held that a Lloyds name was accountable to his subrogated stop loss insurer for recoveries which he had made from successful litigation against his managing agents. Under the terms of the stop loss policy, the name had agreed to bear the first 25,000 of loss. It was held that he was not entitled to apply the recoveries against the bottom 25,000 of loss, because recoveries are applied to insurers top down, starting with the insurer of the highest tranche of loss. Lord Templeman referred to the name (p 730E) as acting as his own insurer for the uninsured tranches. But this was a figure of speech. The point that he was making was that if the name had actually insured the bottom tranche of loss, the insurer of that tranche would have been entitled to nothing from the recoveries because the insurers of higher tranches would have exhausted them. The name, having agreed to bear the bottom tranche himself, could be no better off than an insurer of the bottom tranche if there had been one. Self insurance is non insurance. Even if for the purposes of subrogation the position of a person with an uninsured excess is similar to that of an insurer of that excess, it does not follow that it is similar for any other purpose, still less that such a person is himself an insurer. IEG cannot be regarded for the purposes of the Civil Liability (Contribution) Act 1978 as being liable to themselves in respect of the uninsured periods of exposure for the same damage for which their insurers are liable to them in other years. The real basis for the alleged right of recoupment is the intolerable consequences of holding an insurer liable for a loss sustained over many years irrespective of how long he was on risk. But the correct response to these consequences is for the courts to do what they normally do when one construction of a contract leads to absurd results. They reject it and prefer another which does not exhibit the same anomalies. The whole recoupment analysis is in my opinion a classic example of the problems associated with the adoption of special rules within the Fairchild enclave which differ from those that would follow from the application of ordinary principles of law. Third Parties (Rights Against Insurers) Acts 1930 and 2010 I do not propose to lengthen this judgment yet further by addressing the question whether, if there were a right of recoupment as between the insurer and the insured, it could be set off against the claim on the policy. If it could be set off, the employee of an insolvent employer, suing under the Acts of 1930 or 2010, would be no better off by having a contractual right to recover the entire loss under the policy. In my opinion, the question does not arise because he has no such contractual right. I will simply observe that this is another difficult question which arises only as a result of the discarding of orthodox principles of contractual interpretation in favour of special rules devised for special enclaves without regard to general principles. LORD NEUBERGER AND LORD REED: (agree with Lord Sumption) This appeal represents yet another demanding chapter in the difficult series of decisions of the House of Lords and Supreme Court in relation to an employers liability to a former employee, who was exposed to asbestos fibres during the course of his employment, and subsequently contracted mesothelioma, a disease which has been rightly described by other judges as hideous and dreadful. For ease of reference we will refer to such an employer and such a former employee as an employer and an employee respectively. The decisions start with Fairchild v Glenhaven Funeral Services Ltd [2003] 1 AC 32, which raised the question of an employers liability to an employee, who had also been exposed to asbestos dust when working for another employer. In that case, as explained by Lord Mance at paras 3 4 and Lord Sumption at paras 114 116 and 124 128 above, the House of Lords was faced with an unedifying choice between (i) applying well established rules of causation in tort and arriving at a thoroughly unpalatable decision, namely that neither employers negligence could be proved to have caused the disease, and (ii) extending the law of causation on an ad hoc basis, so that it was enough to prove that an employers negligence had materially increased the risk of contracting the disease, in order to achieve a tolerably fair outcome, namely that each employer was liable. The House elected for the latter course, and held that, in such a case, given that it was impossible to tell whether either employers breach of duty had caused the employee to contract the disease, each of the two employers should be held liable to the employee. To many people, that avowedly policy based decision, which is applicable to any disease which has the unusual features of mesothelioma (as described by Lord Sumption in paras 116 117) seemed, and still seems, not only humane, but obviously right. Indeed, there can be no doubt that it would have required an exceptionally hard headed (and, many people would say, hard hearted) approach to hold that neither employer was liable, which is what the application of established legal principle would have indicated. However, as subsequent decisions have shown, the effect of what was a well intentioned, and may seem a relatively small, departure from a basic common law principle by a court, however understandable, can lead to increasingly difficult legal problems a sort of juridical version of chaos theory. The problems stem from the fact that, unlike legislation, the common law cannot confine itself to a particular situation and deal with it in isolation from the remainder of the law; nor can it resolve problems on a purely pragmatic basis. It is a complex and extensive network of interconnected principles applicable to all situations falling within their scope. As Lord Nicholls of Birkenhead stated in Fairchild itself: To be acceptable the law must be coherent. It must be principled. The basis on which one case, or one type of case, is distinguished from another should be transparent and capable of identification. When a decision departs from principles normally applied, the basis for doing so must be rational and justifiable if the decision is to avoid the reproach that hard cases make bad law. (para 36). The creation of an ad hoc exception from established principles governing causation in order to provide a remedy to the victims of mesothelioma was, in the first place, likely to result in uncertainty as to the legal rationale of the exception (as distinct from the social policy of enabling victims of mesothelioma to obtain a remedy against negligent employers), and the consequent breadth of that exception. The rationale could not be merely the impossibility of establishing the cause of an injury, since such a wide exception to the general rule governing causation would destroy the rule (see, for example, the attempt to extend the exception to cases of medical negligence, narrowly defeated in Gregg v Scott [2005] 2 AC 176). As Lord Brown observed in Sienkiewicz v Greif (UK) Ltd [2011] 2 AC 229, para 186, the unfortunate fact is that the courts are faced with comparable rocks of uncertainty in a wide variety of other situations too, and that to circumvent these rocks on a routine basis would turn our law upside down and dramatically increase the scope for what hitherto have been rejected as purely speculative compensation claims. In the event, the rationale of the Fairchild exception continues to cause difficulty (as, for example, in Novartis Grimsby Ltd v Cookson [2007] EWCA Civ 1261). Secondly, the introduction of a novel test of causation in tort was bound, given the legal and commercial connections between different areas of the law, to give rise to a series of difficult questions and consequent uncertainty, as the ripples spread outwards. The first question which subsequently manifested itself was how the common law, having taken this step into the unknown, should allocate liability for damages as between two employers, each of whom had permitted an employee to be exposed to asbestos fibres. That question was addressed in Barker v Corus UK Ltd [2006] 2 AC 572, a decision analysed by Lord Sumption in paras 129 135. The pragmatic decision that each employer was responsible for a proportion of the damages but not for the whole created a further exception to established legal principles. Perhaps unsurprisingly, it was not unanimous, and, as Lord Sumption says, the reasoning is not easy to analyse. Indeed, it is not without interest that Lord Rodger disagreed with the majority as to the proper analysis of the reasoning in Fairchild. Parliament was unhappy with the decision in Barker, since it meant that, if an employer was insolvent, the employee might not recover that employers proportion of the damages. The decision was effectively reversed in short order by section 3 of the Compensation Act 2006. Unlike the two House of Lords decisions, section 3 of the 2006 Act was expressly limited to mesothelioma cases: a restriction which Parliament could impose, but the courts could not. The effect of section 3 is explained in para 136 by Lord Sumption. The next case to arrive at the Supreme Court in connection with employers liability to employees was Sienkiewicz v Greif (UK) Ltd [2011] 2 AC 229, a decision which has no direct part to play in the present appeal, although it involved a logical, if probably unanticipated, extension of what had by then been dubbed the Fairchild exception, in order to accommodate the existence of non tortious environmental exposure to asbestos. In his judgment, the decisions and reasoning in the judgments in Fairchild and in Barker were discussed by Lord Phillips, who described them in paras 45 and 52 as raising two conundrums in connection with causation, which needed to be solved. In the course of her concise judgment, Lady Hale in paras 167 168 referred to the decision in Fairchild as kick[ing] over the hornets nest. She added that she f[ound] it hard to believe that their Lordships there foresaw the logical consequence of abandoning the but for test. She also mentioned the possibility of overruling Fairchild, but said that Even if we thought it right to do this, Parliament would soon reverse us. On one view, that might have been regarded as the best of reasons for overruling Fairchild. Lord Brown in para 185 also expressed doubts whether those who decided Fairchild could have appreciated the full implications of their decision. Lord Mance put the same point at a rather higher level of principle in para 189, when he referred to the lesson of caution that the history may teach in relation to future invitations to depart from conventional principles of causation. At least to a reasonable degree of clarity, these three cases and the 2006 Act have established the extent of an employers liability for damages in relation to an employee who has been exposed to asbestos fibres in the course of his employment and has subsequently developed mesothelioma. Problems next arose in connection with the extent of the liability of insurers. The general position of insurers in law and in practice is summarised by Lord Sumption in paras 118 119. However, the way in which the law had developed in relation to mesothelioma claims by employees against employers raised problems of principle in relation to the liability of the employers insurers. Two such problems were decided by the Supreme Court in the so called Trigger litigation, Durham v BAI (Run off) Ltd [2012] 1 WLR 867, and they are explained by Lord Mance and Lord Sumption at paras 16 24 and 137 140 respectively. The conceptual difficulties thrown up by the decisions in Fairchild and in Barker were again demonstrated by the discussion in paras 63 66 of Lord Mances majority judgment in Trigger, and by the contrast between his reasoning and that of Lord Phillips, who dissented (and see per Lord Clarke in para 84). However, the position is still unclear in a case where an insurer insured an employer for only part of the period of a claimant employees employment, and the employer was either uninsured for the rest of the period, or was insured with an insurer who is now insolvent. It is that situation with which this appeal is concerned, and the problem is identified by Lord Mance in his paras 42 44 and by Lord Sumption in his paras 141 142. As Lord Mance goes on to explain in paras 44 46, three different approaches are suggested. The first is that adopted by the Court of Appeal; the second is that proposed by Lord Mance; the third is that proposed by Lord Sumption. We agree with Lord Mance and Lord Sumption that the Court of Appeals analysis cannot be supported. It seems to us that they were wrong to conclude that the common law, as laid down by the House of Lords in Barker, had been changed as a result of section 3 of the 2006 Act. The section changed the law in this country, because (save perhaps in extreme circumstances) Parliament can, by statute, override the common law as laid down by the courts. However, it is clear from the terms of section 3 that it was intended to deal with a specific and limited class of case, namely the liability to employees, who were exposed to asbestos fibres in the course of their employment and subsequently contracted mesothelioma. In those circumstances, it seems to us that section 3 cannot be said to have altered the common law: it simply superseded the common law in the circumstances in which it applies. That leaves the very difficult question as to which of the two approaches proffered by Lord Mance and Lord Sumption to prefer. The difficulty is compounded by the high quality and depth of reasoning in their two judgments. Further, it is interesting to note that each of these approaches has its adherents in other jurisdictions, as Lord Mance and Lord Sumption explain in paras 69 and 164 168 respectively. Lord Mances solution has a number of attractions. First, it is more in line with the Parliamentary approach as demonstrated by section 3 of the 2006 Act, because, unlike Lord Sumptions solution, it ensures that every employee whose employer was insured for any period of his employment, can look to any such insurer who is still solvent for full compensation. Secondly, unlike Lord Sumptions solution, it has been supported by one of the parties to this appeal: despite being raised by the court at a reconvened hearing, Lord Sumptions solution has not been adopted by either party. We suspect that these two points are not unconnected: the insurance market may fear that, if the court adopts the solution favoured by Lord Sumption, Parliament will intervene as it did following Barker. Indeed, such a concern may have been seen by some members of the court in Sienkiewicz as a reason for not reconsidering the decision in Fairchild. However, as a matter of principle, having rejected the contention that section 3 has changed the common law, it seems somewhat quaint (although, we accept, not logically inconsistent) to invoke section 3 as a reason for developing the common law in a certain way rather than another. Thirdly, Lord Mances solution represents a solution which is far closer to that which the London insurance market has worked out in practice. Fourthly, Lord Mances approach does not clash with any of the preceding decisions to which we have referred, while it is, we accept, arguable whether Lord Sumptions solution is consistent with the reasoning of this court in the Trigger litigation. Just as in Barker there was a division of opinion as to the reach of the reasoning in Fairchild so there is a difference in this case as to the reach of the reasoning in the Trigger litigation compare Lord Mance at paras 45 and 55 with Lord Sumption at paras 159 161. While, like so many points in this area, the issue is not easy, we agree with Lord Sumptions view. On the other hand, in favour of Lord Sumptions view, it seems to us rather remarkable for an insurance contract to be construed as rendering the insurer liable for the whole of an employees damages, where, for instance, the employee has been exposed to fibres for the whole of his 40 years of employment and the insurer in question has only provided cover for one of those years. (Or even for a temporary period of two weeks while the employer was considering whether to take out longer term cover.) As Lord Sumption explains, such an approach is inconsistent with the link between risk and premium which lies at the heart of a contract of insurance. Yet that is the basis of Lord Mances conclusion. Lord Sumptions solution, which involves a pro rata liability, produces no such anomalous result: in the example just given, the insurer would be liable for 1/40 of the employees damages. It is true that the apparently anomalous result in the example we have just mentioned is mitigated by Lord Mances view that the employer has to be treated as a self insurer for the 39 years of non insurance, so that the insurer can recover 39/40 of the damages it has to pay from the employer, provided the employer is solvent. While impressively reasoned in paras 56 78, Lord Mances view that an insurer could recover a contribution from the employer, his insured (but not set it off against his own liability to the employer under the insurance contract), seems to us to open up a dangerous seam of potential litigation, as an exception is made to another established principle, namely that the respective rights and liabilities of the parties to a contract are governed by their agreement. We appreciate that it can be emphasised that that aspect of Lord Mances analysis is strictly limited to cases within the Fairchild exception, or as Lord Hodge has put it, the analysis only applies within the Fairchild enclave. Enclaves are however notoriously difficult to police, and experience suggests that judicial attempts at restricting ratios may run into the same danger as when a court emphasises that a particular course is only to be taken in very exceptional circumstances. Once a principle is approved by a court (particularly, it may be said, this court), it is quite legitimate, indeed appropriate, for lawyers to invoke it and seek to apply it more generally, if it assists their clients case. And here, it may well be argued, this court is invoking a new and wide general equitable power, which is, to put it at its lowest, close to inconsistent with an express contractual term, in order to reconstitute a contractual relationship so as to achieve what it regards as a fair result in a purely commercial context. Lord Sumptions analysis, by contrast, turns simply on the interpretation of the relevant contract of insurance, and does not appear to us to have any unfortunate wider ramifications. Thus, Lord Sumptions analysis appears to us to do significantly less violence (and we think it probably does no violence) to established legal principles, whereas Lord Mances analysis accords more with current practice and what is likely to be the view of the legislature. We accept that the fact that we are in the Fairchild enclave is a reason for favouring what may be said to be the more practical solution. However, our preference is in favour of learning what Lord Mance in Sienkiewicz referred to as the lesson of caution that the history of the decisions of the House of Lords and Supreme Court to which we have referred may teach in relation to future invitations to depart from conventional principles, and agree with Lord Sumption. But we can readily appreciate why the majority of the court has formed the opposite conclusion. In conclusion, it seems to us that it is at least worth considering what lessons can be learnt from the history summarised in this judgment and more fully treated by Lord Mance and Lord Sumption. There is often much to be said for the courts developing the common law to achieve what appears to be a just result in a particular type of case, even though it involves departing from established common law principles. Indeed, it can be said with force that that precisely reflects the genius of the common law, namely its ability to develop and adapt with the benefit of experience. However, in some types of case, it is better for the courts to accept that common law principle precludes a fair result, and to say so, on the basis that it is then up to Parliament (often with the assistance of the Law Commission) to sort the law out. In particular, the courts need to recognise that, unlike Parliament, they cannot legislate in the public interest for special cases, and they risk sowing confusion in the common law if they attempt to do so. When the issue is potentially wide ranging with significant and unforeseeable (especially known unknown) implications, judges may be well advised to conclude that the legislature should be better able than the courts to deal with the matter in a comprehensive and coherent way. It can fairly be said that the problem for the courts in taking such a course is that the judges cannot be sure whether Parliament will act to remedy what the courts may regard as an injustice. The answer to that may be for the courts to make it clear that they are giving Parliament the opportunity to legislate, and, if it does not do so, the courts may then reconsider their reluctance to develop the common law. For the courts to develop the law on a case by case basis, pragmatically but without any clear basis in principle, as each decision leads to a new set of problems requiring resolution at the highest level, as has happened in relation to mesothelioma claims, is not satisfactory either in terms of legal certainty or in terms of public time and money. In the case of mesothelioma claims, there can be no real doubt but if Fairchild had been decided the other way, in accordance with normal common law principles, Parliament would have intervened very promptly. That may very well have been a better solution, but it can fairly be said that that observation is made with the wisdom of hindsight.
+Section 28 of the Housing Act 1988 (the 1988 Act) identifies a measure of damages payable by a landlord to a residential occupier of premises whom he has unlawfully evicted from them. Construction of the section is not straightforward. On 25 September 2012 His Honour Judge Blunsdon, sitting in the Lambeth County Court, determined a claim for damages brought by Mr Loveridge against the London Borough of Lambeth (Lambeth). Mr Loveridge had been a residential occupier of premises let to him by Lambeth. The judge found that it had unlawfully evicted him from them. By reference to the construction of it which he favoured, the judge awarded Mr Loveridge damages of 90,500 under section 28 as well as of 9,000 otherwise than under the section. Lambeth appealed to the Court of Appeal against the judges award of damages under section 28. On 10 May 2013, by a judgment delivered by Briggs LJ with which Arden LJ and Sir Stanley Burnton agreed, [2013] EWCA Civ 494, [2013] 1 WLR 3390, the court favoured a different construction of the section, which led it to order that Lambeths appeal be allowed, that the judges award under section 28 be set aside in its entirety but that the award of damages otherwise than under the section be increased to 16,400. Against these orders Mr Loveridge now appeals. In November 2002 Lambeth granted to Mr Loveridge a weekly tenancy of a flat at 19 Moresby Walk, London SW8. The tenancy was secure within the meaning of section 79 of the Housing Act 1985. The flat was on the ground floor and was self contained with one bedroom. It was one of two flats in a purpose built two storey building and at all material times the flat upstairs, namely 20 Moresby Walk, was also subject to a secure tenancy. On 9 July 2009 Mr Loveridge went to Ghana, from where he did not return until 5 December 2009. He was in breach of a term of the tenancy agreement which required him to notify Lambeth of any absence from the flat for more than eight weeks. But he continued to pay the rent. On 22 September 2009, believing that he had died, Lambeth effected forcible entry to the flat; took possession of it by changing the locks; and left a notice to quit, expressed to expire on 26 October 2009. At around that expiry date it also cleared out his belongings and disposed of them. Two days after his return to England, but when he was unable to prevent it, Lambeth let the flat to somebody else. The judge rejected Lambeths contention that prior to 22 September 2009 Mr Loveridge had ceased to occupy the flat as his principal home and that his tenancy had therefore ceased to be secure. It was on that basis that the judge held Lambeths eviction of him to have been unlawful. It was agreed that his damages in respect of its trespass to his goods amounted to 9000; and so it was in respect of their trespass that the judge added 9,000 to his award of 90,500. 3. The parties further agreed that, at common law, the damages for any unlawful eviction of Mr Loveridge from the flat during the subsistence of a secure tenancy amounted to 7,400. Mr Loveridge contended, however, that he was entitled to a higher sum by way of damages under sections 27 and 28 of the 1988 Act and he conceded that, if so, he was precluded by section 27(5) from also receiving damages at common law in respect of the eviction. 4. The main purpose behind the 1988 Act was set out in a White Paper, Cm 214, entitled Housing: The Governments Proposals and presented to Parliament in September 1987. That purpose, set out in Chapter 3, was to stimulate the availability of rented accommodation in the private sector by making lettings more attractive to private landlords. This was to be achieved by provisions which extended the ambit of two types of tenancy which had been introduced by sections 56 and 52 of the Housing Act 1980. The first was the assured tenancy in which, when letting certain types of property, the landlord had been entitled to extract a market rent rather than a lower, fair, rent, albeit that his entitlement to recover possession at the end of the term had been restricted. The second was the protected shorthold tenancy in which, albeit at risk of a reduction of the contractual rent to a fair rent, the landlord had been entitled to recover possession at the end of the term. The 1988 Act duly extended the circumstances in which an assured tenancy could be granted; and it amended the description of a protected shorthold tenancy to an assured shorthold tenancy and changed its nature so as to enable the landlord to charge a market, rather than a fair, rent as well as to remain unshackled by any significant security of tenure on the part of the tenant at the end of the contractual term. 5. But the government, when introducing the bill which became the 1988 Act, and Parliament, when enacting it, both realised that it created a danger. It was that some unscrupulous landlords, tempted by the prospect of entering into new tenancies on terms much more favourable to themselves (or of selling their properties with vacant possession in what in 1988 was a spiralling real property market), would seek to drive out such of their existing tenants as, under the Rent Act 1977, enjoyed protection in respect both of rent and of security of tenure. So, in the White Paper, the government wrote: 3.17 It is important that existing tenants whose Rent Act rights will be preserved should be protected against the minority of landlords who may be prepared to harass them in order to obtain vacant possession and to relet at higher rents. The Government therefore proposes to increase the existing statutory protection by creating a new offence where the landlord harasses the tenant . The Government also proposes to strengthen the civil law to enable tenants who have been evicted illegally or forced out by harassment to claim greater compensation. This would be an important additional deterrent to harassment. 6. The facility for the unlawfully evicted tenant to claim enlarged compensation was duly provided in sections 27 and 28 of the 1988 Act, which are in Chapter IV of Part 1 of it. The chapter is entitled Protection from Eviction. Section 27 is entitled Damages for unlawful eviction. Subsection (1) provides: 7. This section applies if, at any time after 9th June 1988, a landlord (in this section referred to as the landlord in default) unlawfully deprives the residential occupier of any premises of his occupation of the whole or part of the premises. 8. 9. Section 27(2) provides that the section also applies if, in summary, the residential occupier yields occupation as a result of acts of harassment on the part of a landlord who knew that they were likely to have that result. Section 27(3), (4) and (5) provides: (3) Subject to the following provisions of this section, where this section applies, the landlord in default shall, by virtue of this section, be liable to pay to the former residential occupier, in respect of his loss of the right to occupy the premises in question as his residence, damages assessed on the basis set out in section 28 below. (4) Any liability arising by virtue of subsection (3) above (a) shall be in the nature of a liability in tort; and (b) subject to subsection (5) below, shall be in addition to any liability arising apart from this section (whether in tort, contract or otherwise). (5) Nothing in this section affects the right of a residential occupier to enforce any liability which arises apart from this section in respect of his loss of the right to occupy premises as his residence; but damages shall not be awarded both in respect of such a liability and in respect of a liability arising by virtue of this section on account of the same loss. 10. Section 27(6) provides that the landlord is not liable to pay damages under subsection (3) if in certain circumstances the occupier is reinstated in the premises. 11. Section 27(7) gives the court power to reduce damages under subsection (3) if, in summary, the occupiers conduct prior to the eviction makes it reasonable to do so or if the landlord had offered to reinstate him. The trial judge declined Lambeths invitation to him to exercise this power. Although in a second ground of appeal Lambeth challenged his ruling in this respect, and although the Court of Appeal noted that in the light of its conclusion on the first ground the second ground did not need to be determined, Lambeth no longer pursues it even in the event that Mr Loveridges appeal to this court were to succeed. 12. Section 27(8) provides the landlord with a defence to liability for damages under subsection (3) if, in summary, he proves that, when he deprived the occupier of occupation, he believed, and had reasonable cause to believe, that the occupier had ceased to reside in them. Lambeth raised this defence before the trial judge but he rejected it and Lambeth did not appeal against his ruling in this respect. 13. Section 27(9) provides definitions which apply both to that section and, by virtue of section 28(4), also to section 28. Two of the definitions are material. (a) The first, at (a), is the definition of residential occupier, which is to have the meaning set out in section 1 of the Protection from Eviction Act 1977, namely a person occupying premises as a residence, whether (as in the case of Mr Loveridge) under a contract or by virtue of any enactment or rule of law giving him the right to remain there. (b) The second, at (b), is the definition of a residential occupiers right to occupy, which is to include any restriction on the right of another person to recover possession of the premises in question. 14. Section 28 is entitled The measure of damages. Its relevant provisions are as follows and, since the issue surrounding its construction primarily relates to the terms of subsections (1)(a) and (3)(a), I will set them in bold: (1) The basis for the assessment of damages referred to in section 27(3) above is the difference in value, determined as at the time immediately before the residential occupier ceased to occupy the premises in question as his residence, between (a) the value of the interest of the landlord in default determined on the assumption that the residential occupier continues to have the same right to occupy the premises as before that time; and (b) the value of that interest determined on the assumption that the residential occupier has ceased to have that right. In relation to any premises, any reference in this section to the interest of the landlord in default is a reference to his interest in the building in which the premises in question are comprised (whether or not that building contains any other premises) together with its curtilage. For the purposes of the valuations referred to in subsection (1) above, it shall be assumed (a) that the landlord in default is selling his interest on the open market to a willing buyer; (b) . (2) (3) Although section 27(3) describes the damages payable to the tenant under section 28 as being in respect of his loss of the right to occupy, it is clear that they are designed to yield to him not the amount of his loss but, exceptionally, the amount of the gain which the landlord would otherwise have achieved by reason of the eviction. 15. It is clear that the principal target of sections 27 and 28 of the 1988 Act was the unscrupulous private landlord saddled with a tenancy protected, in terms both of rent and of security, by the Rent Act 1977 and therefore created prior to 15 January 1989, after which, as a result of section 34 of the 1988 Act, such a tenancy could not generally be created. Local authority landlords rarely perpetrate unlawful evictions of their tenants. When they do so, it is usually, as here, as a result of honest misjudgement and scarcely ever (although it was found to have occurred in AA v London Borough of Southwark [2014] EWHC 500 (QB)) as a result of any deliberate intention to act unlawfully. A local authority will not be motivated to seek to deploy its housing stock for gain. Nevertheless the words of section 27 are wide enough to cover an unlawful eviction on the part of a local authority; and when, as in the case of tenancies from the Crown, Parliament wished to exclude the operation of section 27 (and thus of section 28), it expressly so provided: section 44(2)(a). So it is agreed that the sections apply to an unlawful eviction of a tenant by a local authority. 16. Section 28(1) of the 1988 Act requires the court to make two valuations, namely (a) and (b), as at the time immediately prior to the unlawful eviction. Both valuations are of the landlords interest, which, by virtue of subsection (2), means his interest in the building in which the demised premises are comprised even if it contains other premises. In the present case it was therefore agreed that the valuations were to relate to Lambeths interest in the whole two storey building at Moresby Walk, including the upstairs flat. 17. The two valuations are to be determined on different assumptions. Valuation (a) is to be based on the assumption that the tenant continues to have the same right to occupy the premises as he had prior to his eviction. Indeed, in the light of the definition in section 27(9)(b) of the Act, the assumption that he continues to have the same right to occupy includes an assumption that he continues to enjoy the benefit of the same restrictions on the landlords right to recover possession as he enjoyed prior to the eviction. Valuation (b), by contrast, is to be based on the assumption that the tenant ceased to have that right, including that he ceased to enjoy that benefit. 18. The valuation exercises mandated by section 28(1)(a) and (b) of the 1988 Act would have been straightforward but for the further assumption which is mandated by section 28(3)(a). This provides that, for the purposes of both valuations, it shall be assumed that the landlord is selling his interest on the open market to a willing buyer. The interface between section 28(3)(a) and section 28(1)(a) is at the heart of the appeal. 19. Of course the notion that Lambeth would put the building at 19 and 20 Moresby Walk on the open market for sale is fanciful in the extreme. It could not dispose of the building without the consent of the Secretary of State: section 32(2) of the Housing Act 1985, as inserted by section 6(2) of and Schedule 1 to the Housing and Planning Act 1986. And, in the event of its proposed disposal to a private sector landlord, Lambeth would be required to consult the tenants and the Secretary of State could not give his consent if a majority of them had objected to it: paragraphs 2, 3 and 5 of Schedule 3A to the 1985 Act. It is agreed, however, that these formidable obstacles to sale are irrelevant. For the mandatory assumption is that Lambeth is indeed selling its interest on the open market. As Lord Donaldson of Lymington, Master of the Rolls, said in Tagro v Cafane [1991] 1 WLR 378, 387: the whole concept of the landlord selling his interest on the open market to a willing buyer assumes that he can sell it on the open market to a willing buyer 20. 21. It is further agreed that the least absurd hypothesis would indeed be of a sale to an ordinary private landlord rather than, say, to another local authority or to a private registered provider of social housing. The ordinary private landlord would be interested in purchasing the building for a simple reason: that, in his hands, the two sets of premises there could both generate market rents. Upon sale to him the secure tenancies held by the two tenants immediately prior thereto would cease to exist because the landlord condition of a secure tenancy would no longer be satisfied: sections 79 and 80 of the Housing Act 1985. Instead section 1(1) of the 1988 Act would convert the tenancies to being assured and would therefore confer on the landlord the power to bring the rents up to market level pursuant to sections 13 and 14 of that Act. It now becomes possible to explain the dispute between the parties about the nature of the valuations mandated by section 28 of the 1988 Act. 22. Mr Jenner was the chartered surveyor and valuer whom both parties initially instructed to provide valuations. (a) In respect of valuation (a), his instructions, once refined, were to value the building as at 22 September 2009 on the assumption that both flats were subject to secure tenancies. By reference to a capitalisation of the rents payable under the tenancies, Mr Jenners valuation (a) was in the sum of 123,000. (b) In respect of valuation (b), his instructions were to value the building as at 22 September 2009 on the assumption that the owner had vacant possession of the downstairs flat but that the upstairs flat was subject to a secure tenancy. By reference to the market value of properties comparable to the downstairs flat and to a capitalisation of the rent payable for the upstairs flat, Mr Jenners valuation (b) was in the sum of 213,500. (c) So the difference between Mr Jenners valuations (a) and (b) was 90,500, being the sum which the trial judge awarded to Mr Loveridge by way of damages under section 28. 23. Mr Robson was the chartered surveyor and valuer whom, with the courts permission, Lambeth instructed to provide valuations notwithstanding its prior joint instruction of Mr Jenner. It asked him to provide them on three different assumptions, of which it is only to the third that I need to refer, namely a sale on 22 September 2009 to an ordinary private landlord. (a) (b) In respect of valuation (a), his instructions were therefore to value the building as at 22 September 2009 on the assumption that both flats had then become subject to assured tenancies. By reference to market comparables, Mr Robsons valuation (a) was in the sum of 304,000. In respect of valuation (b), his instructions were to value the building as at 22 September 2009 on the assumption that the owner had vacant possession of the downstairs flat but that the upstairs flat had then become subject to an assured tenancy. By reference to market comparables, Mr Robsons valuation (b) was again in the sum of 304,000. For his opinion, not challenged by Mr Jenner, was that in 2009 there was no difference between the value of 19 Moresby Walk if bought with vacant possession and if bought subject to an assured tenancy. (c) So the difference between Mr Robsons valuations (a) and (b) was nil, being the sum which the Court of Appeal considered to be Mr Loveridges entitlement under section 28. 24. The issue is, therefore, whether the valuations of both flats (for valuation (a)) and of the upstairs flat (for valuation (b)) should be conducted on the assumption that they are subject to secure tenancies or to assured tenancies. 25. Lambeths case is primarily constructed upon section 28(3)(a) of the 1988 Act, which requires the assumption of a sale by the landlord on the open market. It contends that a market valuation of property must take into account a change in the use which a purchaser might make of the property and for which he may therefore make allowance in his offer. In this respect it cites the judgment of the Judicial Committee of the Privy Council in Raja Vyricherla Narayana Gajapathiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302, in which it was held that the market value of land subject to compulsory purchase should include such extra value as might be paid for the facility to collect fresh water which was generated by a spring on the land but which was presently going to waste. Lord Romer, at p 313, described it as self evident that the land was to be valued by reference not merely to the use to which it was being put but to the uses to which it was reasonably capable of being put. 26. With respect, Lord Romers proposition remains self evident. But the exercise mandated by section 28 of the 1988 Act is more complicated than an identification of market value. The assumption of a sale on the open market is for the purposes of the valuations referred to in subsection (1), in which other assumptions are mandated, namely (a) that the tenant continues to have the same right to occupy the premises as he had immediately prior to the eviction and, alternatively, (b) that he has ceased to have that right. 27. What was the right which Mr Loveridge had to occupy the downstairs flat immediately prior to the eviction? It was the right of a secure tenant. Lambeth correctly argues that the consequence of a notional sale to a private landlord would be to convert the status of Mr Loveridges tenancy (and indeed that of the tenancy upstairs) from secured to assured. But in my view the notional exercise mandated by subsection 3(a) of section 28 does not extend to making the consequential adjustments to the nature of Mr Loveridges right (or indeed that of the tenant upstairs) consequent upon sale. For that is barred by the words of subsection 1(a). Within this highly artificial exercise, regard to the effect of one assumption is halted by the terms of another. 28. The decision of the Court of Appeal in Osei Bonsu v Wandsworth LBC [1999] 1 WLR 1011 relates to another rare example of an unlawful eviction of a secure tenant by a local authority. As here, it was as a result of the local authoritys honest misjudgement. Under section 28 of the 1988 Act the trial judge awarded the tenant damages of 30,000. The court upheld Wandsworths argument that the award should have been reduced by two thirds pursuant to section 27(7). But Wandsworth also sought to challenge the figure of 30,000, which, as it had earlier agreed, represented the difference between the value of the house subject to a secure tenancy and its value with vacant possession. The court held that it was too late for Wandsworth to resile from the agreement. But it noted both Wandsworths proposed contention, which, but for the lateness, it regarded as strong, and the tenants proposed rebuttal of it, which it regarded as weak. Wandsworths proposed contention was that the tenants secure tenancy was held only jointly with his estranged wife and that therefore Wandsworth, which was in the process of rehousing her, had only to persuade her to serve it with a valid notice to quit for the tenancy to come to an end. There was therefore a feature of his tenure prior to the eviction which was unrelated to the notional sale and yet which made it extremely fragile. The tenants proposed rebuttal was that the hypothesis was of a sale by Wandsworth and that no purchaser would be likely to enjoy the same power of persuasion over the wife as Wandsworth enjoyed. In a judgment with which the other members of the court agreed, Simon Brown LJ said at p 1022: The clear answer to this argument, I am satisfied, lies in [Wandsworths] submission that what is being valued is the interest of the landlord not the abstract interest of a notional willing buyer. Although the concept of a willing buyer helps to fix the respective valuations, one postulates the landlords continuing ownership in fact. Although it may take time to understand his last sentence, Simon Brown LJ there expressed the view, with which I respectfully agree, that the likely effect of a sale upon the subsistence or otherwise of the secure tenancy should not be brought into the valuation exercise mandated by section 28. Briggs LJ in his judgment under appeal. He said in para 28: Mr Loveridges rights of occupation had, from the very grant of his secure tenancy, been vulnerable to being downgraded on a sale by his local authority landlord to a private landlord. It was a vulnerability inherent in the nature of his rights. The Lord Justice rightly put aside the extreme unreality of any such proposed sale. But he endorsed a valuation under section 28(1)(a) which was based upon a notional downgrading of the right which Mr Loveridge had prior to the eviction, namely the right of a secure tenant, so as to become the right only of an assured tenant. In my view his endorsement was wrong: for, as His Honour Judge Blunsdon had concluded in a judgment of enviable clarity, section 28(1)(a) requires the basis of the valuation to be that Mr Loveridge continues following the eviction to have the same right to occupy as he had prior to the eviction. I therefore propose that the appeal should be allowed and the judges order restored. 30. Parliament might wish to revisit the application of section 27, and therefore of section 28, of the 1988 Act to unlawful evictions on the part of local authorities. No doubt all reasonable means of dissuading them from making unlawful evictions, whether by misjudgement or otherwise, should be in place. But the facts are that Lambeth did not realise a capital gain, and never aspired to realise a capital gain, as a result of its eviction of Mr Loveridge; and that its intention was always to re let the flat and that, once it did so, even its notional gain was eliminated. In such circumstances it seems wrong that, by reference to a calculation of its notional gain, the law should require payment to Mr Loveridge out of public funds in an amount which is 12 times greater than that of his loss. 29. Nobody could have put Lambeths argument more persuasively than did
+Is a person who has been extradited to this country for trial on a criminal charge, and who prior to his extradition was guilty of contempt of court by disobeying a court order, open to punishment for his contempt although it was not the basis of his extradition? The answer depends in part on the proper interpretation of the so called specialty or speciality provisions of the Extradition Act 2003 and partly on the law relating to contempt. The speciality principle (widely recognised in extradition law and extradition treaties) prohibits a person who has been extradited for a particular offence or offences from being dealt with by the requesting state for another offence or offences committed (or alleged to have been committed) before his extradition, subject to such exceptions as may be contained in the relevant statute or treaty. Mr OBrien appeals against a decision of the Criminal Division of the Court of Appeal (Gross LJ, Openshaw J and Judge Milford QC) [2012] 1 WLR 3170, upholding an order of the Common Serjeant (Judge Barker QC) committing him to prison for 15 months for contempt of court in disobeying a restraint order made against him under section 41 of the Proceeds of Crime Act 2002 (POCA). The appellant does not dispute that he was guilty of contempt, but he submits that his committal was unlawful by reason of the specialty provisions of Part 3 of the Extradition Act 2003. After committing the contempt the appellant fled to the USA, from where he was extradited to the UK for other reasons. It is submitted that it was not thereafter open to the English court to punish him for his earlier contempt, for which he had not been extradited. The Court of Appeal certified the following points of law of general public importance: i. Whether a contempt of court constituted by breach of a restraint order made under section 41 of the Proceeds of Crime Act 2002 constitutes a civil or criminal contempt. ii. If the answer to i) is a civil contempt, whether Section 151A of the Extradition Act 2003 and/or article 18 of the United Kingdom United States Extradition Treaty 2003 preclude/s a court from dealing with a person for such a contempt when that person has been extradited to the United Kingdom in respect of criminal offences but not the contempt in question. In 2009 the Appellant came under investigation on suspicion of involvement in a large scale scheme to defraud investors, commonly known as a boiler room fraud. On 24 September 2009 the Common Serjeant made a restraint order against him under section 41 of POCA. It required the appellant, among other things, to make disclosure of his assets, not to remove assets from England and Wales, and to repatriate within 21 days any moveable asset in which he had an interest outside England and Wales. The order was prefaced in the usual way with a penal notice, that is, a warning that if he disobeyed the order he may be held to be in contempt of court and imprisoned, fined or have his assets seized. In this respect the order followed the standard form of freezing order in civil proceedings (originally known as a Mareva order), on which the statutory criminal restraint order provisions were modelled. The appellant failed to comply with the restraint order and he fled the jurisdiction. On 18 December 2009 the Common Serjeant found that he was in contempt of court, issued a warrant for his arrest and adjourned the imposition of a penalty. Six months later the Appellant was traced to Chicago. The Serious Fraud Office (SFO) by now wanted his extradition in order to prosecute him on charges relating to the alleged fraud. They sought the assistance of the US authorities and a federal arrest warrant was issued against him. On 8 October 2010 he was arrested in Chicago and appeared before the local US District Court. He consented to his extradition in accordance with the UKs request but did not waive entitlement to the benefit of the specialty principle. The SFO was initially under the impression that as a matter of law the appellants contempt was criminal in nature. However, the United Kingdom United States Extradition Treaty 2003 limited extradition to offences punishable by imprisonment for 12 months or more, and in the USA the maximum sentence for the appellants contempt, if punishable as a misdemeanour, would have been six months imprisonment. In those circumstances the SFO was concerned that there might be complications if the appellant were returned to the UK under an extradition order for prosecution for the boiler room fraud but at the same time was subject to a bench warrant for the earlier contempt. This concern led the SFO to apply to the Common Serjeant to set aside the bench warrant, and on 30 November 2010 he did so. On 2 December 2010 the appellant was returned to the UK. He was arrested, charged with various offences of fraud and remanded in custody. On further consideration, the SFO came to the view that the appellants contempt was not a criminal offence and so was not affected by the specialty principle. It therefore applied to the Common Serjeant for the appellants committal. The appellant objected that the court had no jurisdiction to hear the application. In a judgment delivered on 1 April 2011 the Common Serjeant rejected the appellants objection. After reviewing the authorities he concluded that the contempt was not a criminal offence, but was a civil contempt, and that the specialty principle therefore did not afford the appellant any protection. The Court of Appeal upheld the Common Serjeants decision. For the avoidance of doubt, the question whether the appellants contempt constituted a civil or criminal contempt made no difference to the jurisdiction of the Criminal Division to hear his appeal, by virtue of section 13 of the Administration of Justice Act 1960 and section 53 of the Senior Courts Act 1981. Section 13 of the 1960 Act provides that an appeal shall lie from any order or decision of a court in the exercise of jurisdiction to punish for contempt of court (including criminal contempt), and that such an appeal from the Crown Court shall lie to the Court of Appeal. Section 53 of the 1981 Act provides that the Criminal Division of the Court of Appeal shall exercise the jurisdiction of the Court of Appeal under the former section in relation to appeals from orders and decisions of the Crown Court. Grounds of appeal Mr Alun Jones QC advanced two arguments on behalf of the appellant. His primary submission was that on the appellants extradition to the UK the Crown Court had no power to deal with him for his earlier contempt, no matter whether it constituted a civil or a criminal contempt. If he failed on that point, his second submission was that the appellants contempt should be classified as criminal. The first point depends on the proper construction of the Extradition Act. The second depends on the law of contempt. Extradition Act 2003 Part 1 of the Extradition Act deals with extradition from the UK to category 1 territories. Part 2 deals with extradition from the UK to category 2 territories. Part 3 deals with extradition to the UK from category 1 and 2 territories. The USA is a category 2 territory. The appellants argument is clear and simple. Part 3 should be regarded as a self contained code governing extradition to the UK. It comprises sections 142 155A (section 155A, as inserted by section 42 of, and paragraph 24 of Schedule 13 to, the Police and Justice Act 2006) but the important provisions for the purposes of the appellants argument are sections 148 and 151A (as inserted by section 76(3) of the Policing and Crime Act 2009). Section 148(1) provides: Conduct constitutes an extradition offence in relation to the United Kingdom if these conditions are satisfied (a) the conduct occurs in the United Kingdom; (b) the conduct is punishable under the law of the relevant part of the United Kingdom with imprisonment or another form of detention for a term of 12 months or a greater punishment. The appellants contempt occurred in the United Kingdom and was punishable under section 14(1) of the Contempt of Court Act 1981 with imprisonment for longer than 12 months. He submits that it was therefore an extradition offence within the definition of section 148. Section 151A provides: (1) This section applies if a person is extradited to the United Kingdom from a territory which is not (a) a category 1 territory, or (b) a territory falling within section 150(1)(b) [which does not include the USA]. (2) The person may be dealt with in the United Kingdom for an offence committed before the persons extradition only if (a) the offence is one falling within subsection (3), or (b) the condition in subsection (4) is satisfied. (3) The offences are (a) (b) (c) (a) (b) the offence in respect of which the person is extradited; an offence disclosed by the information provided to the territory in respect of that offence; an offence in respect of which consent to the person being dealt with is given on behalf of the territory. (4) The condition is that the person has returned to the territory from which the person was extradited, the person has been given an opportunity to leave the United Kingdom. (5) A person is dealt with in the United Kingdom for an offence if (a) (b) the person is tried there for it; the person is detained with a view to trial there for it. For reasons which I will explain, section 148 has no direct application to the extradition of a person to the United Kingdom from the United States. However, two matters are not in dispute. First, it is common ground that if the appellants contempt amounted to an offence within the meaning of section 151A, it was not open to a court in the United Kingdom to deal with him for that contempt. Secondly, although an offence (in section 151A) is wider than an extradition offence (in section 148) in that it is not limited to an extraditable offence, it is not suggested that the meaning of the word offence itself varies in different sections of the Act. If it means a criminal offence in one section it must mean a criminal offence in the other. For completeness it is right to record that the United Kingdom United States Extradition Treaty 2003 (Cm 7146) contains the following specialty clause in article 18(1): A person extradited under this Treaty may not be detained, tried, or punished in the Requesting State except for: (a) any offense for which extradition was granted, or a different denominated offense based on the same facts as the offense on which the extradition was granted, provided such offense is extraditable, or is a lesser included offense Article 2.1 provides: An offense shall be an extraditable offense if the conduct on which the offense is based is punishable under the laws in both States by deprivation of liberty for a period of one year or more or by a more severe penalty. Those provisions of the Treaty run in tandem with the Act but do not give rise to a separate argument. The argument clearly and forcefully presented by Mr Jones depends for its persuasiveness on reading section 148 in isolation. However, for a proper understanding of its purpose and construction it is necessary to see how the section fits into the structure of the Act. Parts 1, 2 and 3 of the Act each contains a definition of extradition offence, which have in common that they refer to conduct punishable with imprisonment or another form of detention for a term of 12 months or a greater punishment. In Part 1 the relevant sections are 64 and 65; in Part 2 the relevant sections are sections 137 and 138. The full definitions vary according to whether the extradition is outwards or inwards, the territories concerned, and whether the person subject to the proceedings has already been sentenced, but there is a common structure. The Extradition Act 2003 replaced the Extradition Act 1989. The need for new legislation arose from the Council Framework Decision of 13 June 2002 on the European arrest warrant and surrender procedures between member states (2002/584/JHA). Those states are designated as category 1 territories under the 2003 Act, and Part 1 of the Act implements the Framework Decision in relation to arrest warrants issued by them. The rationale of the Framework Decision is summarised in para (5) of the preamble: The objective set for the Union to become an area of freedom, security and justice leads to abolishing extradition between Member States and replacing it by a system of surrender between judicial authorities. Further, the introduction of a new simplified system of surrender of sentenced or suspected persons for the purposes of execution or prosecution of criminal sentences makes it possible to remove the complexity and potential for delay inherent in the present extradition procedures. Traditional co operation relations which have prevailed up till now between Member States should be replaced by a system of free movement of judicial decisions in criminal matters, covering both pre sentence and final decisions within an area of freedom, security and justice. [Emphasis added.] Article 1.1 provides: The European Arrest Warrant is a judicial decision issued by a Member State with a view to the arrest and surrender by another Member State of a requested person, for the purposes of conducting a criminal prosecution or executing a custodial sentence or detention order. [Emphasis added.] It follows that under the Framework Decision it is a prerequisite of a valid arrest warrant that the conduct of which the person is accused or has been convicted constitutes a criminal offence under the law of the requesting state. The process by which Part 1 of the 2003 Act gives effect to the Framework Decision is linear, by which I mean that it sets out a series of stages and what is required at each stage. Section 2 sets out the formal requirements of a European Arrest Warrant; it must specify the offence of which the person is accused or has been convicted. Section 3 authorises the arrest of the person who is the subject of a European Arrest Warrant. The arrested person must be brought before a judge within 48 hours (section 6). If the judge is satisfied that the person brought before him is the subject of the arrest warrant, he must fix a date for the extradition hearing and deal with various procedural matters (section 8). At the initial stage of the extradition hearing, section 10(2) requires the judge to decide whether the offence specified in the Part 1 warrant is an extradition offence. In order to decide that question the judge must apply either section 64 or section 65. Section 64 applies to a person who has not been sentenced, ie someone who has been accused but not tried or who has been convicted but not sentenced. Section 65 applies to a person who is alleged to be unlawfully at large after conviction and has been sentenced for the offence. The question whether the offence specified in the warrant is an extradition offence for the purposes of Part 1 depends on (a) the nature of the offence, in particular whether it is included in the European Framework list of extraditable offences or, if not, whether it would constitute an offence under the law of the United Kingdom if committed in the United Kingdom and (b) the length of the term of imprisonment to which the person either might be sentenced or has been sentenced. Thus section 64 provides (in relation to a person not sentenced for the specified offence): (2) The conduct constitutes an extradition offence in relation to the category 1 territory if these conditions are satisfied (a) the conduct occurs in the category 1 territory and no part of it occurs in the United Kingdom; (b) a certificate issued by the appropriate authority of the category 1 territory shows that the conduct falls within the European framework list; (c) the certificate shows the conduct is punishable under the law of the category 1 territory with imprisonment or another form of detention for a term of 3 years or a greater punishment. (3) The conduct also constitutes an extradition offence in relation to the category 1 territory if these conditions are satisfied (a) the conduct occurs in the category 1 territory; (b) the conduct would constitute an offence under the law of the relevant part of the United Kingdom if it occurred in that part of the United Kingdom; (c) the conduct is punishable under the law of the category 1 territory with imprisonment or another form of detention for a term of 12 months or a greater punishment (however it is described in that law). Section 65 contains analogous provisions in relation to sentenced offenders. Extradition to non EU Member States with which the UK has extradition arrangements (category 2 territories) is governed by Part 2 of the 2003 Act. The process begins with a request through diplomatic channels but the judicial process in the UK follows a similar pattern to that set out in Part 1. At an initial stage the judge has to decide under section 78(4) whether the offence specified in the request for extradition is an extradition offence. For that purpose the judge has to apply section 137 (in relation to a person who is accused of the offence or has been convicted but not sentenced) or section 138 (in relation to a person who has been sentenced for the offence). Those sections closely resemble sections 64 and 65 in Part 1. Thus section 137(2), which is the counterpart to section 64(2), provides: The conduct constitutes an extradition offence in relation to the category 2 territory if these conditions are satisfied (a) the conduct occurs in the category 2 territory; (b) the conduct would constitute an offence under the law of the relevant part of the United Kingdom punishable with imprisonment or another form of detention for a term of 12 months or a greater punishment if it occurred in that part of the United Kingdom; (c) the conduct is so punishable under the law of the category 2 territory (however it is described in that law). The function of the definition of extradition offence in sections 64 and 65 of Part 1 and sections 137 and 138 of Part 2 is to differentiate between an offence for which a person may be extradited and one for which he may not. To be an extradition offence, it must not only be a criminal offence but it must satisfy the prescribed criteria. That accords not only with the scope of extradition under the Framework Decision but also with the essential nature of extradition as historically it has always been understood in the United Kingdom. The Extradition Act 1870 (33 and 34 Vict, c 52) set out in the language of its preamble: the law relating to the surrender to foreign states of persons accused or convicted of the commission of certain crimes within the jurisdiction of such states, and to the trial of criminals surrendered by foreign states to this country. Such persons were referred to in the Act as fugitive criminals. The Extradition Act 1989 defined the term extradition crime as: Conduct in the territory of a foreign state.which, if it occurred in the United Kingdom, would constitute an offence punishable with imprisonment for a term of 12 months, or any greater punishment, and which, however described in the law of the foreign state, is so punishable under that law. The word offence in that definition clearly referred to a criminal offence because that was the word being defined. The effect of the definition was to narrow the class of crimes constituting extradition crimes to those of sufficient seriousness to warrant extradition. Similarly, section 2(1)(a) of the 1989 Act contained a definition of extradition crime in language which closely resembles section 137(2) of the 2003 Act. There is a difference in the introductory words in that section 2(1) of the 1989 Act began with the words Extradition crime means, whereas section 137(2) of the 2003 Act begins with the words the conduct constitutes an extradition offenceif, but I would reject the idea that the change of wording reflects a subtle intention to widen the concept of an extradition offence so as to include non criminal conduct. To change the law in that respect would have been a significant step which one would expect to have been highlighted at that time. Part 3, under which the present appeal arises, is the reciprocal of Parts 1 and 2 in that it is concerned with extradition from category 1 and category 2 territories to the UK. Extradition from a category 1 territory is a judicial process under the Framework Decision. Sections 142 to 149 implement that process. Under section 142 a judge may issue a part 3 warrant if satisfied among other things that there are reasonable grounds for believing that the person has committed an extradition offence or that the person is unlawfully at large having been convicted of an extradition offence. Section 148 applies in this context. Section 148 has no direct application in relation to the extradition of a person from a category 2 territory, as in the present case, because the UK judiciary is not involved in the process of obtaining the extradition of a person from a category 2 territory. The process of extradition from a category 2 territory is triggered not by a warrant issued by a UK judge but by a request from the Government to the foreign state. For that reason sections 142 149 have no counterpart in relation to extradition from category 2 territories. In any event, however, it is in my judgment clear for the reasons set out above that nothing can constitute an extradition offence (whether for the purposes of Part 1, Part 2 or Part 3) unless it is a criminal offence under the law of the relevant state. Not every alleged criminal offence will amount to an extradition offence, but it is a necessary pre condition of an extradition offence that the conduct or alleged conduct is proscribed by the criminal law of the relevant state. For those reasons I would reject Mr Joness principal argument. Civil or criminal contempt A restraint order under section 41 of POCA is an interim remedy. Its aim is to prevent the disposal of realisable assets during a criminal investigation or criminal proceedings. Under section 41(7) the court may make such order as it believes is appropriate for the purpose of insuring that the restraint order is effective. This may include, for example, an order requiring disclosure of assets by the person against whom the restraint order is made. A restraint order may also be reinforced by the appointment of a receiver under section 48 and the court may order any person who has possession of realisable property to which the restraint order applies to give possession of it to the receiver. POCA does not provide that it is an offence to disobey or obstruct a restraint order or a receivership order, but the Crown Court has an inherent power to treat such behaviour as contempt of court, for which it may impose punishment under section 45 of the Senior Courts Act 1981. Rule 59.6 of the Criminal Procedure Rules 2013 (SI 2013/1554) provides that an applicant who wants the Crown Court to exercise that power must comply with the rules set out in part 62 (Contempt of Court). There is a distinction long recognised in English law between civil contempt, ie conduct which is not in itself a crime but which is punishable by the court in order to ensure that its orders are observed, and criminal contempt. Among modern authorities, the distinction was explained in general terms in Home Office v Harman [1983] 1 AC 280 (in particular by Lord Scarman at p 310) and Attorney General v Times Newspapers Ltd [1992] 1 AC 191 (in particular by Lord Oliver at pp 217 218). Breach of an order made (or undertaking obtained) in the course of legal proceedings may result in punishment of the person against whom the order was made (or from whom the undertaking was obtained) as a form of contempt. As Lord Oliver observed in Attorney General v Times Newspapers Ltd, although the intention with which the person acted will be relevant to the question of penalty, the liability is strict in the sense that all that is required to be proved is the service of the order and the subsequent doing by the party bound of that which was prohibited (or failure to do that which was ordered). However, a contempt of that kind does not constitute a criminal offence. Although the penalty contains a punitive element, its primary purpose is to make the order of the court effective. A person who commits this type of contempt does not acquire a criminal record. A criminal contempt is conduct which goes beyond mere non compliance with a court order or undertaking and involves a serious interference with the administration of justice. Examples include physically interfering with the course of a trial, threatening witnesses or publishing material likely to prejudice a fair trial. The distinction is not unique to English law. A similar distinction is recognised in the U.S.A. In Turner v Rogers 564 US 1 (2011) the US Supreme Court had to decide whether the Due Process Clause of the US Constitution granted an indigent defendant a right to state appointed counsel in civil contempt proceedings which might lead to his imprisonment. Justice Breyer, at page 8, said that civil contempt differs from criminal contempt in that it seeks only to coerce the defendant to do what the court had ordered him previously to do. If a victim of the appellants fraud had obtained a freezing order against him similar to the restraint order made under section 41 of POCA, there is no doubt that the claimant would have been entitled to bring contempt proceedings against the appellant after his extradition to the United Kingdom. The case would be analogous to Pooley v Whetham (1880) LR 15 Ch D435. An order was made in litigation between Mr Pooley and a bank that Mr Pooley was to give up possession of certain property to a receiver and manager appointed by the court. Mr Pooley disobeyed the order and went to Paris, where he was arrested under a warrant issued under the Extradition Act 1870 for an alleged offence of fraud. After his return Mr Pooley was acquitted for the fraud for which he had been extradited to stand trial, but the bank sought to proceed against him for his earlier contempt. It was argued unsuccessfully on his behalf that the proceedings contravened section 19 of the 1870 Act, which provided that a person who was arrested under the Act should not be triable or tried for any offence committed prior to his arrest other than a crime for which the surrender was granted. The Court of Appeal held that the process instituted by the bank was not a proceeding for punishing a crime. It was a process for the purpose of enforcing civil rights. Mr Jones submitted that the position is different with a restraint order under section 41, because it is not an order obtained in order to protect an applicants civil rights but is an order obtained by the state in the course of a criminal investigation. The Common Serjeant and the Court of Appeal rejected this argument and I agree with them. It is necessary to look at the nature and purpose of the order. It is fallacious to argue that because the order was made by a criminal court, rather than a civil court, disobedience to the order amounts to a crime, whereas it would not have been a crime to disobey a similar order imposed by a civil court. The question whether a contempt is a criminal contempt does not depend on the nature of the court to which the contempt was displayed; it depends on nature of the conduct. To burst into a court room and disrupt a civil trial would be a criminal contempt just as much as if the court had been conducting a criminal trial. Conversely, disobedience to a procedural order of a court is not in itself a crime, just because the order was made in the course of criminal proceedings. To hold that a breach of a procedural order made in a criminal court is itself a crime would be to introduce an unjustified and anomalous extension of the criminal law. Civil contempt is not confined to contempt of a civil court. It simply denotes a contempt which is not itself a crime. Conclusion I would dismiss the appeal and would answer the questions certified by the (i) a contempt of court constituted by a breach of a restraint order made under section 41 of POCA is not itself a crime. (ii) section 151A of the Extradition Act 2003 and article 18 of the United Kingdom United States Extradition Treaty 2003 do not preclude a court from dealing with the person for such a contempt when that person has been extradited to the United Kingdom in respect of criminal offences. Court of Appeal as follows:
+The appellant was born in Rwanda. He came to the United Kingdom in August 2000 and sought refugee status because of what he claimed was a well founded fear of persecution if he returned to his native land. His claim was accepted on 26 October 2000 on the basis that he was a member of a particular social group (Hutu). He was recognised as a refugee pursuant to the 1951 Refugee Convention and granted indefinite leave to remain. Since he arrived in the United Kingdom DN has been convicted of a number of offences. He has also been cautioned twice. The most significant of his convictions occurred on 22 January 2007 when he pleaded guilty to assisting the unlawful entry of a non EEA national to the United Kingdom contrary to section 25 of the Immigration Act 1971. The circumstances leading to the conviction were these: DN and his sister had travelled to the Netherlands where they met a niece. DN returned to the UK with his niece who used his sisters travel documents in an attempt to obtain entry to this country. Although this was a serious offence, it was accepted by the trial judge that DN had had no financial motivation for the crime. At the same court before which he had pleaded guilty to the immigration offence, however, DN was convicted, again on his plea of guilty, of three offences of obtaining or attempting to obtain a pecuniary advantage by seeking or taking employment in anothers name. He was sentenced to 12 months imprisonment for the Immigration Act offence and two months consecutively for each of the three pecuniary advantage offences making a total sentence of 18 months imprisonment. On 2 July 2007 DN completed the custodial element of his sentence. On the same date the Home Secretary decided to deport him subject to a final decision on the issue of his refugee status. This was followed by a decision on 3 July that DN should be deported pursuant to article 33(2) of the Refugee Convention which allows the expulsion of refugees whom there are reasonable grounds for regarding as a danger to the security of the country. It was said that DN had been convicted of a particularly serious crime and that he constituted a danger to the community. The decision was based on section 72(4)(a) of the Nationality, Immigration and Asylum Act 2002. He was notified of the decision to deport him, and detained on foot of that decision on 2 July 2007, pursuant to paragraph 2(2) of Schedule 3 to the Immigration Act 1971, which provides that where notice has been given to a person of a decision to make a deportation order against him, he may be detained under the authority of the Secretary of State pending the making of the deportation order. Pursuant to powers conferred by section 72(4)(a) of the 2002 Act, the Home Secretary had made the Nationality, Immigration and Asylum Act 2002 (Specification of Particularly Serious Crimes) Order 2004. This specified several offences which were said to be particularly serious crimes. Assisting unlawful immigration to a member state contrary to section 25 of the 1971 Act was included among them. On that basis, the appellants conviction for the immigration offence was deemed to warrant his deportation. Section 72(4)(a) also provided that a person convicted of an offence specified in the 2004 Order was rebuttably presumed to have been guilty of a particularly serious crime and constituted a danger to the community. DN appealed the Home Secretarys decision. His appeal was heard by the Asylum and Immigration Tribunal (AIT) on 22 August 2007. On 29 August the tribunal dismissed the appeal. It found that the appellant constituted a danger to the community of the United Kingdom; that his attempt to circumvent the immigration law in itself amounted to a danger to the community; that he could now be expelled pursuant to article 33(2) of the Refugee Convention; and that he had failed to rebut the presumption created by the 2004 Order that a person convicted of an offence specified by the Order was deemed to have been convicted of a particularly serious crime and to constitute a danger to the community of the United Kingdom. DN sought reconsideration of the decision. On 18 September 2007 that was refused. An application for a statutory review by the High Court of the AITs decision under section 103A of the 2002 Act was dismissed on 7 December 2007. On 31 January 2008 the Secretary of State signed the deportation order and made an order for DNs detention pending deportation. That order was made pursuant to paragraph 2(3) of Schedule 3 to the 1971 Act which, although subsequently amended, at the time provided that Where a deportation order is in force against any person, he may be detained under the authority of the Secretary of State pending his removal or departure from the United Kingdom (and if already detained by virtue of sub paragraph (1) or (2) above when the order is made, shall continue to be detained unless he is released on bail or the Secretary of State directs otherwise). (Emphasis added) Before the deportation order was signed, no suggestion had been made on DNs behalf that the 2004 Order was unlawful. After it was made, however, solicitors, who had replaced those who originally acted for DN, wrote to the Secretary of State making that precise case. On that account the Secretary of State was invited to revoke the deportation order. It was also claimed that DNs detention since 2 July 2007 was unlawful. On 29 February 2008 the appellant was released on bail by order of an immigration judge. By that time, he had spent 242 days in immigration detention. The proceedings On 20 March 2008 DN sought judicial review. He claimed that the deportation order should be quashed and applied for a declaration that the 2004 Order was ultra vires the 2002 Act. He also claimed damages and declaratory relief in respect of what he said was his unlawful detention. In two other cases appeals were made from decisions of the AIT in which the vires of the 2004 Order was challenged. These materialised into the decision of the Court of Appeal in EN (Serbia) v Secretary of State for the Home Department; KC (South Africa) v Secretary of State for the Home Department [2010] QB 633. Although permission to apply for judicial review had initially been denied the appellant, this was granted by Charles J on 28 November 2008 but stayed pending the decision in EN. That decision was duly delivered on 26 June 2009 and the Court of Appeal held that the 2004 Order was ultra vires the enabling power and was therefore unlawful. On 15 March 2010 the Home Secretary wrote to DN informing him that article 33(2) of the Refugee Convention was no longer relied on as a basis for his deportation, but instead cited a material change of circumstances in Rwanda sufficient to trigger article 1(C)(5) of the Convention (the cessation clause) which, in material part, provides: This Convention shall cease to apply to any person falling under the terms of section A if: (5) He can no longer, because the circumstances in connection with which he has been recognised as a refugee have ceased to exist, continue to refuse to avail himself of the protection of the country of his nationality . On 15 and 16 May 2012, the Court of Appeal heard an appeal in the case of R (Draga) v Secretary of State for the Home Department. DNs application for judicial review was stayed pending the decision in Draga. Judgment was given on 21 June 2012 ([2012] EWCA Civ 842). At issue in that case was whether a distinction could be drawn between, on the one hand, a decision to make a deportation order and the making of the order, and, on the other, the decision to detain. It was argued that a flaw in the decision to make a deportation order/the making of the order did not impact upon the lawfulness of the decision to detain. That argument was, in essence, accepted by the Court of Appeal. Sullivan LJ (who delivered the leading judgment) considered the decision of this court in R (Lumba) v Secretary of State for the Home Department [2011] UKSC 12; [2012] 1 AC 245. At paras 65 and 66 of his judgment in that case, Lord Dyson had said: 65. All that a claimant has to prove in order to establish false imprisonment is that he was directly and intentionally imprisoned by the defendant, whereupon the burden shifts to the defendant to show that there was lawful justification for doing so. As Lord Bridge of Harwich said in R v Deputy Governor of Parkhurst Prison, Ex p Hague [1992] 1 AC 58, 162C D: The tort of false imprisonment has two ingredients: the fact of imprisonment and the absence of lawful authority to justify it. 66. The causation test shifts the focus of the tort on to the question of how the defendant would have acted on the hypothesis of a lawful self direction, rather than on the claimants right not in fact to be unlawfully detained. There is no warrant for this. A purported lawful authority to detain may be impugned either because the defendant acted in excess of jurisdiction (in the narrow sense of jurisdiction) or because such jurisdiction was wrongly exercised. Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147 established that both species of error render an executive act ultra vires, unlawful and a nullity. In the present context, there is in principle no difference between (i) a detention which is unlawful because there was no statutory power to detain and (ii) a detention which is unlawful because the decision to detain, although authorised by statute, was made in breach of a rule of public law. For example, if the decision to detain is unreasonable in the Wednesbury sense, it is unlawful and a nullity. The importance of Anisminic is that it established that there was a single category of errors of law, all of which rendered a decision ultra vires: see Boddington v British Transport Police [1999] 2 AC 143, 158D E. At para 88 of Lord Dysons judgment in Lumba a significant passage appears: To summarise, therefore, in cases such as these, all that the claimant has to do is to prove that he was detained. The Secretary of State must prove that the detention was justified in law. She cannot do this by showing that, although the decision to detain was tainted by public law error a decision to detain free from error could and would have been made. Having reflected on Lumba, Sullivan LJ said this at paras 57 and 58 of his judgment: 57. Applying the approach in Lord Dyson JSCs judgment in Lumba to the present case, both the deeming decision under section 3(5)(a) and the decision to make a deportation order under section 5(1), although authorised by statute, were made in breach of a rule of public law. The sole basis for both decisions was the unlawful 2004 Order. This error was sufficient to render those decisions unlawful, but did it bear upon, and was it relevant to, the decision to detain under paragraph 2(2) of Schedule 3? 58. I have not found this an easy question to answer. As a matter of first impression, the answer to the question is obvious: the unlawful decisions under sections 3(5)(a) and 5(1) did bear upon and were relevant to the decision to detain: without the prior decisions there could have been no decision to detain. But this approach does not pay sufficient regard to the statutory scheme as a whole. Making a deportation order is a two stage process. First the Secretary of State must serve notice of the decision to make a deportation order. The notice explains that there is a right of appeal under section 82(1) against the decision, and sets out of (sic) the grounds of appeal under section 84(1). Those grounds are not limited to the ground that removal in consequence of the decision would be unlawful under the Refugee Convention or the ECHR, they enable the person served with the notice to challenge the lawfulness of the notice on the basis of any breach of a rule of public law: that the decision is otherwise not in accordance with the law If there is an appeal the Secretary of State may not proceed to the second stage of the process the making of the deportation order until the appeal has been finally determined And at para 62 Sullivan LJ said: It would frustrate the operation of the statutory scheme if the Secretary of State was not able to rely upon the tribunals decision, dismissing an appeal, once time for applying for permission to appeal against the decision had expired, as a lawful basis for making a deportation order. On 27 November 2014 the High Court (Collins J) dismissed the appellants claim by consent, after both parties agreed that Draga was binding on him and that there was no need for a substantive hearing. The judge refused permission to appeal to the Court of Appeal. On 5 January 2015 DN applied to the Court of Appeal for permission to appeal and on 19 January 2016 Vos LJ granted the application. The appeal was heard on 18 January 2018 by the Court of Appeal (Arden, Longmore and Lewison LJJ). On 22 February 2018, the Court of Appeal dismissed the appeal, holding that it was not open to it to depart from the decision in Draga: [2019] QB 71. Although permission to appeal to this court was refused on the conventional basis that it is customarily a matter for the Supreme Court to decide whether permission should be given, Arden LJ observed (in para 42 of her judgment) that the issues in the case were worthy of further consideration. Longmore and Lewison LJJ agreed. Permission to appeal was granted by this court on 26 November 2018. Discussion The reference in para 57 of Sullivan LJs judgment in Draga to the question whether the unlawful decisions (founded on the ultra vires status of the 2004 Order) bore upon or were relevant to the decision to detain was prompted by a statement in para 68 of Lumba. There Lord Dyson had said that the breach of public law must bear on and be relevant to the decision to detain. But his observations there must be read in the light of his more important statements in paras 66 and 88 (cited above at paras 12 and 13). In the first of these passages Lord Dyson made it clear that there was no difference between a detention which is unlawful because there was no statutory power to detain and a detention which is unlawful because the decision to detain was made in breach of a rule of public law. Here, as in Lumba, there was no lawful statutory power to detain. The statutory power to which recourse had been had in deciding to make the deportation order, and in making it, was invalid. Detention in this instance was for the express purpose of facilitating the deportation. Without the existence of a deportation order, the occasion for (much less the validity of) detention would simply not arise. To divorce the detention from the deportation would be, in my view, artificial and unwarranted. The making of a deportation order is, as Sullivan LJ said, a two stage process, involving (a) notice of a decision to deport and (b) the making of the deportation order. Detention at both of these stages is entirely dependent on the decision to deport. Without that decision the question of detention could not arise, much less be legal. The detention was, therefore, inevitably, tainted (to borrow the expression from para 88 of Lord Dysons judgment) by public law error. The principle in Lumba applies with full force and effect to the circumstances of this case. In this connection reference to the recent decision of this court in R (Hemmati) v Secretary of State for the Home Department [2019] UKSC 56; [2019] 3 WLR 1156 is pertinent. In his judgment in that case Lord Kitchin discussed the Lumba decision extensively see, in particular, paras 49 and 50. I agree entirely with what Lord Kitchin had to say about the Lumba decision and R (Kambadzi) v Secretary of State for the Home Department [2011] UKSC 23; [2011] 1 WLR 1299. As Lord Carnwath has pointed out (in paras 37 et seq of his judgment) that principle can be displaced by a specific rule of law. For the reasons that he gives in para 38 there is no such specific rule in the present case. The existence of a right of appeal does not constitute such a rule. The respondent argued that the independent judicial decision made in statutory appeals (per section 82 of the 2002 Act) was a step removing the legal error in question. It had, the respondent said, the equivalent effect of a break in the chain of causation, so that the decision to detain became independent of the decision to deport. I do not accept that argument. The notice of a decision to deport/deportation order is a prerequisite to detention under paragraph 2(2)/2(3). The rubric chain of causation is inapposite in this context. Where the deportation order is invalid, the unlawfulness of a paragraph 2(2)/2(3) detention which is founded upon it is inevitable. This is not an instance of a series of successive steps, each having, potentially, an independent existence, capable of surviving a break in the chain. To the contrary, the lawfulness of the detention is always referable back to the legality of the decision to deport. If that is successfully challenged, the edifice on which the detention is founded crumbles. The need for finality in litigation likewise does not warrant displacement of the Lumba principle. As Lord Carnwath says (para 38 of his judgment), finality and legal certainty are desirable objectives. But they cannot extinguish a clear legal right. In this case DN was detained on foot of an intended, and then actual, deportation order which proved to be unlawful. His detention was uniquely linked to that deportation order. The unlawfulness of that detention is inescapable. The desiderata of finality and certainty cannot impinge on that inevitable result. I agree with what Lord Carnwath has had to say (in paras 39 and 40) about the judgment of Pill LJ in Draga which gave somewhat different reasons from those of Sullivan LJ in dismissing the appeal. For the reasons given by Lord Carnwath, I consider that Draga was wrongly decided. I also agree with his discussion about the status of Ullah (Ullah v Secretary of State for the Home Department [1995] Imm AR 166). Indeed, I would go further and express doubt as to whether that case was correctly decided. In Ullah notice of intention to make a deportation order was served on the claimant, who was then detained under the authority of the Secretary of State for 17 days before being released. His release was prompted by the Secretary of State having concluded that the decision to deport was not in accordance with the law. This was because full consideration had not been given to applications made by the claimant before the deportation notice was served. Both Kennedy LJ and Millett LJ considered that paragraph 2(2) of Schedule 3 to the 1971 Act supplied the answer to Mr Ullahs claim for damages for false imprisonment. At the material time, it provided: Where notice has been given to a person in accordance with regulations under section 18 of this Act of a decision to make a deportation order against him he may be detained under the authority of the Secretary of State pending the making of the deportation order. Kennedy LJ said that all that is required by paragraph 2(2) of Schedule 3 in order to make detention legitimate is the giving of a notice of intention to make a deportation order. Millett LJ similarly said that [w]here the requirements of that paragraph are satisfied, the detention is lawful and no claim for false imprisonment can be maintained. Ullah was considered by the Court of Appeal in D v Home Office [2006] 1 WLR 1003. At para 120, Brooke LJ (who delivered the lead judgment) said that the court should not regard itself bound to follow Ullah and in that paragraph articulated a number of compelling reasons why this should be so. At para 121 he said: we are at liberty, unconstrained by binding authority, to interpret Schedule 2 to the 1971 Act without any preconceived notions. If we do so, there is nothing there to suggest that Parliament intended to confer immunity from suit on immigration officers who asked themselves the wrong questions, so that their decision to deprive an immigrant of his liberty was a nullity and consequently unlawful. In that case it had been alleged that immigration officers had made decisions in a manner which fell outside the jurisdiction conferred on them by the 1971 Act. The Court of Appeal held that, in the event that this was established, their decisions would be ultra vires and unlawful; that there was nothing peculiar about a private individual bringing a private law claim for damages against an executive official who had unlawfully infringed that individuals private rights, and there was nothing in Schedule 2 to the 1971 Act to suggest that Parliament had intended to confer immunity from suit on immigration officers who asked themselves the wrong questions in such circumstances so that their decision to deprive an immigrant of his liberty was a nullity and consequently unlawful; and that, accordingly, immigration officers had no immunity from claims for damages for false imprisonment. As with immigration officers, so with those who caused the appellant to be detained without lawful authority. What Lord Dyson said in Lumba about there being no difference between a detention which is unlawful because there was no statutory power to detain and a detention which is unlawful because the decision to detain was made in breach of a rule of public law is pertinent here (see paras 12 and 13 above). If, and inasmuch as, Ullah suggests that paragraph 2(2) of Schedule 3 provides a stand alone authority for lawful detention, no matter what has gone before, and irrespective of the fact that the decision to deport lacks a legal basis, I consider that the decision was wrong and should now be recognised as such. The giving of notice of the decision to make a deportation order, the making of the deportation order, and the detention on foot of it are essential steps in the same transaction. The detention depends for its legality on the lawfulness of the deportation itself. Absent a lawful basis for the making of a deportation order, it is not possible to breathe legal life into the decision to detain. Conclusion I would allow the appeal and confirm that the appellant is entitled to pursue a claim for damages for false imprisonment. The prospects of success in that claim are not, of course, a matter for this court, particularly because lines of possible defence to the claimants case, not pursued (or, at least, not pursued with any vigour), might be canvassed on the hearing of the claim. Lord Carnwath has discussed (in paras 44 to 63) the questions of res judicata and issue estoppel. He has said that, despite the parties reluctance to espouse these as possible ripostes to the appellants claim, he regarded them as potentially providing a straightforward answer to the questions raised by this case. So it may be. But this is an area which is distinctly one which is not free from controversy and it seems to me that it is also one where much further diligent thought may be needed. In any event, as Lord Carnwath says, [s]ince the Secretary of State has not hitherto relied on the principle of res judicata or issue estoppel, it would clearly be unfair to DN for the court to introduce it at this stage as a possible reason for determining the appeal against him (para 65). For that reason, as well as what I consider to be the considerable debate that may have to be had concerning whether these issues are relevant to a case such as the appellants, I have concluded that it would be unwise to express even a tentative view as to their possible relevance. LORD CARNWATH: Introduction I agree generally with Lord Kerrs judgment allowing the appeal on the arguments as presented to us. However, since we are disagreeing with a carefully reasoned decision of the Court of Appeal of R (Draga) v Secretary of State for the Home Department, given on 21 June 2012 ([2012] EWCA Civ 842) which has stood for some years, it may be helpful to add my own thoughts. I also take the opportunity to raise a topic res judicata or issue estoppel which was not discussed in argument, but which to my mind could provide a complete answer in similar cases in the future. I gratefully adopt Lord Kerrs statement of the background law and facts. In Draga the court held that there was no right of action for damages. In the leading judgment (paras 58 62) Sullivan LJ distinguished Lumba. Although he thought it obvious, as a matter of first impression, that the unlawful decisions relating to deportation did bear on the decision to detain, in the words of Lord Dyson in that case, it was necessary to take account of the different statutory scheme governing detention pending deportation. That provided for a two stage process, for an opportunity (under section 84) to challenge the deportation decision on a wide range of grounds including any breach of a rule of public law, and precluding the making of the deportation order until the appeal had been finally determined. It had been accepted by counsel for Mr Draga that in most cases the mere fact that an appeal had been allowed under section 82(1) would not mean that the deportation decision was unlawful in a way relevant to the decision to detain. Sullivan LJ continued: 60. There will, however, be some cases where appeals are allowed by the tribunal on the basis that there was a breach of a rule of public law in the process of making the decision to make the order, where the nature of the breach will have been such as to render the detention unlawful It must, however, be acknowledged that it is difficult to identify any principled basis for distinguishing between those public law errors which will render the decision to detain unlawful and those which will not. Errors of law are many and various and, as Lord Dyson said in para 66 of Lumba: The importance of Anisminic is that it established that there was a single category of errors of law, all of which rendered a decision ultra vires 61. The statutory scheme does not provide any mechanism for challenging the lawfulness of the kind of decision that was in issue in Lumba: an (unlawful) decision to detain where there had been a (lawful) decision to make a deportation order/the making of a (lawful) deportation order. The lawfulness of such a decision can be challenged only by way of judicial review. In sharp contrast, Parliament has established a comprehensive statutory scheme for determining the lawfulness of a decision by the Secretary of State to make a deportation order. The Secretary of State may not make the order until an appeal against the decision to make it has been finally determined There was, he thought, a very strong case for treating the tribunals decision under section 82(1) (subject to appeal to the Court of Appeal) as determinative of the issues as between the parties, in order to ensure finality in litigation and legal certainty, and so as not to frustrate the operation of the statutory scheme (paras 61 and 62). Pill LJ agreed that the detention was lawful because it was pursuant to the apparently lawful 2004 Order made by the Secretary of State following the procedure specified in section 72 of the 2002 Act, including placing the Order before Parliament I do not consider that the analysis is invalidated because the same actor, the Secretary of State, made both the 2004 Order and the deportation order. In making both orders, the Secretary of State was acting under statutory powers but the power to make the 2004 Order was distinct from the power that then arose to make a deportation order in reliance on it. (paras 81 and 82) He distinguished R v Governor of Brockhill Prison, Ex p Evans (No 2) [2001] 2 AC 19, in which the prison governor had sought to justify detention by reference to views expressed by the Divisional Court subsequently held to be erroneous: That is distinguishable from a deportation order based on the apparently lawful 2004 Order, lawfully made and also, in this case, upheld by the decision of the tribunal promulgated on 15 February 2007. Lord Hope, at p 35A to C in Evans, distinguished the case from one where the governor was acting within the four corners of an order which had been made by the court. (para 83) Permission to appeal from the Court of Appeal in Draga was refused by this court. The arguments in the present appeal Mr Knafler QC for DN submits that this case falls clearly within the principle established in Lumba. Whichever of the tests enunciated in the various judgments applies, the illegality of the deportation order bore directly on the decision to detain and rendered it ultra vires so as to preclude the Secretary of State from relying on it as justification for the detention. He submits that Draga was wrongly decided. For this purpose he submits that a distinction must be drawn between different categories of error which found an appeal against a deportation order. Where the dispute is not simply about the merits of the decision, but, as here, goes to its legal validity, the decision of the tribunal cannot be relied on in subsequent proceedings. By way of illustration, he contrasts a case where the tribunal disagrees with the Secretary of State on the application of article 8 of the European Convention on Human Rights (ECHR) in a particular case, with one where the Secretary of State has simply ignored the Convention altogether. The latter error, unlike the former, would render the earlier decision ultra vires, and so of no effect in subsequent proceedings. On the other side Mr Tam QC for the Secretary of State submits that Draga was correctly decided. He accepts that, on a strict application of the ultra vires doctrine, any public law error underlying the decision to detain could be said to render it a nullity and in theory could give rise to a claim for damages. However, he argues against a strict doctrinal approach, relying (inter alia) on the caution expressed by Lord Walker of Gestingthorpe in Lumba about translating judicial review principles too readily to other forms of private law action, such as false imprisonment (Lumba, para 193; see also R (Privacy International) v Investigatory Powers Tribunal [2019] UKSC 22; [2019] 2 WLR 1219, paras 57 58). He submits that, taking any of the tests proposed in Lumba, the legal error must be one relating to the decision to detain itself. A decision made two or more steps back, in this case in the secondary legislation relating to the decision to deport, is too remote to satisfy the Lumba test. He suggests that this approach is consistent with the empirical approach taken by the courts to issues of invalidity, fashioning in each legal context a solution that is practical and pragmatic. Mr Tam further submits that the power to detain is dependent simply on the giving of the relevant notice as a matter of fact, regardless of any issue as to its legality (following Ullah v Secretary of State for the Home Department [1995] Imm AR 166). More generally he follows Sullivan LJs reliance on the specific statutory appeal process available in respect of the decision to deport, and on the importance of finality and legal certainty in this area of the law. Discussion I start from the position that the decision to detain in this case was directly dependent on the deportation decision. Without it there would have been no detention, nor any legal basis for detention. Even if the illegality was two steps back as Mr Tam submits, that step was the foundation of what followed. I agree therefore with Mr Knafler that DNs claim for damages comes clearly within the Lumba principle, unless excluded by some specific rule of law, statutory or otherwise. No such rule, in my view, emerges from the reasons of the Court of Appeal in Draga nor from the submissions for the Secretary of State before us. Sullivan LJ referred to the existence of a statutory right of appeal against deportation; the risk of frustrating that statutory scheme; the difficulty of distinguishing between different grounds of appeal; and, the need to ensure finality in litigation and legal certainty. I do not, with respect, see how the mere existence of a right of appeal can be read as taking away what would otherwise be a clear common law right, absent a specific statutory exclusion; nor why the existence of such a right can be said to frustrate or impede the working of the appeal process. Similarly, the wide scope of the statutory grounds of appeal under section 84, extending to issues of law as well as of policy or fact, does not, expressly or implicitly, detract from the clear conceptual distinction between the two in the context of a common law claim for false imprisonment. Similarly, finality in litigation and legal certainty are of course desirable objectives, but that in itself cannot convert them into legal rules in the context of a common law claim, except to the extent that they are reflected in recognised defences such as res judicata and issue estoppel (to which I will return below). In his concurring judgment in Draga Pill LJ made two additional points, not in terms adopted by Sullivan LJ nor by Mr Tam before us. With respect I find neither persuasive. First, his suggested grounds for distinguishing the Brockhill case are not supported by the full passage in the judgment of Lord Hope of Craighead to which he referred. Lord Hope said of the prison governor: His position would have been different if he had been able to show that he was acting throughout within the four corners of an order which had been made by the court for the applicants detention. The justification for the continued detention would then have been that he was doing what the court had ordered him to do. (R v Governor of Brockhill Prison, Ex p Evans (No 2) [2001] 2 AC 19, 35) Here there was no comparable order made by the court for the applicants detention, nor could the Secretary of State claim in that respect to be doing what any court or tribunal had ordered him to do. The decision of the tribunal, confirmed by the High Court, related only to deportation. Secondly, I note Pill LJs observation that Sullivan LJs analysis was not invalidated because the same actor (the Secretary of State) made both orders. This I take to be a reference to the so called Theory of the second actor, developed by Professor Forsyth among others to explain how an unlawful and void administrative act may none the less have legal effect: It is built on the perception that while unlawful administrative acts (the first acts) do not exist in law, they clearly exist in fact. Those unaware of their invalidity (the second actors) may take decisions and act on the assumption that these (first) acts are valid (Wade and Forsyth Administrative Law 11th ed, pp 251 252; see also footnote 145 for a list of judicial citations.) The best known example (though not at the time explained in those terms) is Percy v Hall [1997] QB 924, in which the Court of Appeal rejected a claim against police officers for wrongful arrest, where the byelaws on which they had relied were later found to have been invalid. Counsel for Mr Draga had sought to distinguish that case on the grounds that here there was only one decision maker throughout the process the Secretary of State (para 53). Whatever the precise scope of the second actor theory, that distinction seems to me in principle correct. Where the government, through the Secretary of State, was directly responsible for the order later found to be unlawful, it would be odd if it could rely on it to support the validity of later actions based on it. I note also that neither Lord Justice placed reliance on the decision of the Court of Appeal in Ullah. In my view they were right not to do so. Mr Tam mentions that case somewhat tentatively in support of his argument that it is enough that a notice of the decision to deport has been served in fact, regardless of its basis in law. In setting out the arguments before him (paras 44 45, 52) Sullivan LJ had referred in some detail to the reasoning of the Court of Appeal in Ullah as then relied on by counsel for the Secretary of State, but he noted also the reasons given by Brooke LJ in D v Home Office [2005] EWCA Civ 38; [2006] 1 WLR 1003, paras 120 121, for regarding the decision as no longer binding on the court in the light of subsequent case law, including the Brockhill case. I take, from the lack of any mention of Ullah in the discussion section of his judgment, that Sullivan LJ shared Brooke LJs view. If so, I would respectfully agree. More generally, Mr Tam relies on the case law as supporting what he calls an empirical approach, leading the court to fashion solutions that are practical and pragmatic, and he asks us to do the same. Whether or not that is a fair interpretation of the cases to which he refers, it is not in my view an acceptable approach in considering the available defences to a common law tort as well established and fundamental as that of false imprisonment. Indeed it contradicts the strict approach taken in that context by the House of Lords in the Brockhill case, where practicality and pragmatism might well have been thought to lend strong support to the prison governors position. Accordingly, on the arguments as presented to the court, I would hold that Draga was wrongly decided, and allow the present appeal. Finality, res judicata and issue estoppel During the course of argument I invited both parties to consider whether the Secretary of States position could have been supported by reference to the principle of res judicata or issue estoppel. Mr Tam did not take up the implicit invitation to adopt that as part of his case, but both parties produced helpful notes on the subject. The general theme of their submissions was that res judicata as such was of limited or at most doubtful application in the context of judicial review or public law. Since this aspect may arise in other similar cases which may come before the courts, I feel it desirable to explain why I find those doubts to be unjustified, and why, subject to further argument, I regard res judicata or issue estoppel as potentially providing a straightforward answer to the questions raised by this case. The authorities By way of introduction, I refer to the speech of Lord Bridge of Harwich, agreed by the other members of the House in Thrasyvoulou v Secretary of State for the Environment [1990] 2 AC 273. This was a planning case. In 1982 the owner had appealed under section 88 of the Town and Country Planning Act 1971 against enforcement notices issued by the local planning authority alleging a material change of use of certain properties to use as a hotel or to use as a hostel. On appeal the inspector quashed the notices, finding that the use was correctly characterised as hotel use, not as hostel use, and that the hotel use had been carried on since 1960. In 1985 the council issued further enforcement notices alleging a material change of use of the properties to use as hostels. It was common ground that there had been no change of use since 1982. The Court of Appeal held that in these circumstances an issue estoppel arose which prevented the council on the appeals against the 1985 notices from contending that the use of either property was as a hostel, so contradicting the finding made by the 1982 inspector. The authoritys appeal to the House of Lords was dismissed. The sole reasoned speech was given by Lord Bridge, agreed by his colleagues. He made clear that for these purposes there was no distinction between public and private law: It is well established that a statutory body cannot by contract fetter its own freedom to perform its statutory duties or exercise its statutory powers and by parity of reasoning it has been held that no such fetter can arise from an estoppel by representation But the rationale which underlies the doctrine of res judicata is so different from that which underlies the doctrine of estoppel by representation that I do not think these authorities have any relevance for present purposes. The doctrine of res judicata rests on the twin principles which cannot be better expressed than in terms of the two Latin maxims interest reipublicae ut sit finis litium and nemo debet bis vexari pro una et eadem causa. These principles are of such fundamental importance that they cannot be confined in their application to litigation in the private law field. They certainly have their place in criminal law. In principle they must apply equally to adjudications in the field of public law. In relation to adjudications subject to a comprehensive self contained statutory code, the presumption, in my opinion, must be that where the statute has created a specific jurisdiction for the determination of any issue which establishes the existence of a legal right, the principle of res judicata applies to give finality to that determination unless an intention to exclude that principle can properly be inferred as a matter of construction of the relevant statutory provisions. (p 289) He distinguished between issues of law or fact, such as, in that case, whether there had been a material change of use, and issues of planning judgement which would arise under other grounds of appeal, in respect of which members of the public would have the right to attend any public inquiry and to be heard as objectors against the grant of planning permission. It is clear from the passage quoted above that the case did not rest on any peculiarity of planning law, but was based on a principle of fundamental importance in both private and public law, unless excluded by the particular statutory scheme. Nor is there anything to suggest that the principle is one sided, in public law any more than in private law. It may be invoked by either party, public or private. Indeed the two Latin maxims quoted by Lord Bridge make clear that it is a principle of general public concern, quite apart from the particular interests of the parties, public or private. It is true that the passage refers to an issue which establishes the existence of a legal right, but that phrase is applicable, not only to the legal right of a private owner in respect of his property, but equally to the legal right of the authority to bring enforcement proceedings in the public interest. Later in the speech he explained the difference in this context between two categories estoppel per rem judicatam and issue estoppel by reference to the classic description of Diplock LJ in Thoday v Thoday [1964] P 181. Of the latter Diplock LJ said: The second species, which I will call issue estoppel, is an extension of the same rule of public policy. There are many causes of action which can only be established by proving that two or more different conditions are fulfilled. Such causes of action involve as many separate issues between the parties as there are conditions to be fulfilled by the plaintiff in order to establish his cause of action; and there may be cases where the fulfilment of an identical condition is a requirement common to two or more different causes of action. If in litigation upon one such cause of action any of such separate issues as to whether a particular condition has been fulfilled is determined by a court of competent jurisdiction, either upon evidence or upon admission by a party to the litigation, neither party can, in subsequent litigation between one another upon any cause of action which depends upon the fulfilment of the identical condition, assert that the condition was fulfilled if the court has in the first litigation determined that it was not, or deny that it was fulfilled if the court in the first litigation determined that it was. (p 198) A useful illustration of the strength of the principle in a quasi public context, again at the highest level, is Watt v Ahsan [2007] UKHL 51; [2008] AC 696. A Labour Party councillor, of Pakistani origin, had brought a claim against the Labour Party in the employment tribunal for unlawful discrimination on racial grounds (contrary to section 12 of the Race Relations Act 1976) in failing to select him as an election candidate. A preliminary issue as to whether the Labour Party was a qualifying body for the purposes of section 12 was determined by the tribunal in his favour, and an appeal to the Employment Appeal Tribunal was dismissed. Before the final determination of the claim on the merits, it was held by the Court of Appeal in unrelated proceedings that a political party was not acting as a qualifying body when selecting candidates for public office. However, the tribunal regarded itself as bound by its original decision, and upheld the claim. Its decision was upheld by the House of Lords (disagreeing with the majority of the Court of Appeal). In his dissenting judgment in the Court of Appeal ([2005] EWCA Civ 990; [2005] ICR 1817), Sedley LJ explained that public and private law march together on jurisdictional issues: In neither field may a jurisdictional challenge to the decision of an inferior court or tribunal act as proxy for an appeal. This is fundamental to the functioning of the legal system. (para 29) He added: 33. These interlocking principles of precedent, appeal and finality cannot coexist with a separate doctrine, founded on a catholic meaning of jurisdiction, which undercuts them. In agreement with the Employment Appeal Tribunal, I consider that the effect of [counsels] argument is to erect such a doctrine. It is, in effect, an argument that an error of law on the part of a tribunal, although standing uncorrected by any superior court, invalidates all its subsequent proceedings not simply by exposing them to a successful appeal but by allowing them and their outcome to be disregarded or collaterally challenged. Such a proposition is serious enough when applied to an excess of a tribunals constitutive jurisdiction, but there it is generally irresistible because the courts cannot ordinarily equip a nullity with the force of law. To apply it to an excess of a tribunals adjudicative jurisdiction, by contrast, would be to supplant the entire edifice of finality and appeal by (to use a deliberate oxymoron) a retroactive system of precedent. Agreeing with that approach, in the leading speech in the House of Lords, Lord Hoffmann said: 30. Although it is well established that the parties cannot by agreement or conduct confer upon a tribunal a jurisdiction which it does not otherwise have, the question in this case is whether an actual decision by a tribunal that it has jurisdiction can estop the parties per rem judicatam from asserting the contrary. Neither Buxton LJ nor Rimer J cited any authority which decides that it cannot. The law on this point is not at all trite. Although estoppel in pais and estoppel per rem judicatam share the word estoppel, they share very little else. The former is based upon a policy of giving a limited effect to non contractual representations and promises while the latter is based upon the altogether different policy of avoiding relitigation of the same issues. It is easy to see why parties should not be able to agree to confer upon a tribunal a jurisdiction which Parliament has not given it. And if they cannot do this by contract, it would be illogical if they could do it by non contractual representations or promises. But when the tribunal has decided that it does have jurisdiction, the question of whether this decision is binding at a later stage of the same litigation, or in subsequent litigation, involves, as Sedley LJ explained in his dissenting judgment, quite different issues about fairness and economy in the administration of justice. Issue estoppel arises when a court of competent 31. jurisdiction has determined some question of fact or law, either in the course of the same litigation (for example, as a preliminary point) or in other litigation which raises the same point between the same parties: see Thoday v Thoday [1964] P 181, 198. The question is therefore whether the appeal tribunal was a court of competent jurisdiction to determine whether the Labour Party was a qualifying body within the meaning of section 12. Having answered that question in the affirmative, he noted the possibility of departing from the rule in special circumstances, but held that such circumstances did not exist on the facts of that case: 34. It is true that the severity of this rule is tempered by a discretion to allow the issue to be reopened in subsequent proceedings when there are special circumstances in which it would cause injustice not to do so: see Arnold v National Westminster Bank plc [1991] 2 AC 93. As Lord Keith of Kinkel said, at p 109, the purpose of the estoppel is to work justice between the parties In the instant case he thought it would be unjust not to apply the rule, against the background that the claimant had been involved in a lengthy and expensive hearing, during which the merits had been fully examined, and that it would be quite unfair for him to have to start again in the County Court. Although that passage might suggest that the court has a broad discretion to disapply the principle in the interests of justice, reference to the Arnold case itself shows the limits of that approach. That case related to the construction of a lease providing for rent reviews at five yearly intervals, such reviews to be carried out by reference to a hypothetical lease for the residue of the term. In the context of the first rent review, an issue arose as to whether the hypothetical lease was to be construed as itself containing a rent review clause. Walton J held, on an appeal from an arbitrator, that it was not to be so construed, and refused a certificate (under the Arbitration Act 1979) allowing an appeal against his decision. In subsequent cases between other parties, it was held by the Court of Appeal that his decision on this point was wrong. Before the date of the second five year review the tenants sought a declaration as to the basis of review, relying on the later decisions. The landlord applied to strike out the claim as barred by issue estoppel. It was held by the House of Lords, agreeing with the lower courts, that the action was not barred. In the leading speech in Arnold, Lord Keith affirmed the general principles governing res judicata and issue estoppel. He emphasised that there was no logical difference between a point which was previously raised and decided and one which might have been but was not (p 108); nor should there be a different result according to whether he decided not to take the point, thinking it hopeless, or argue it faintly without any real hope of success (p 109). However, he recognised the existence of an exception for special circumstances as he defined them: In my opinion your Lordships should affirm it to be the law that there may be an exception to issue estoppel in the special circumstance that there has become available to a party further material relevant to the correct determination of a point involved in the earlier proceedings, whether or not that point was specifically raised and decided, being material which could not by reasonable diligence have been adduced in those proceedings. One of the purposes of estoppel being to work justice between the parties, it is open to courts to recognise that in special circumstances inflexible application of it may have the opposite result (p 109) He went on to consider the extent to which the special circumstance could involve a decision on a point of law, posing the question thus: If a judge has made a mistake, perhaps a very egregious mistake, as is said of Walton Js judgment here, and a later judgment of a higher court overrules his decision in another case, do considerations of justice require that the party who suffered from the mistake should be shut out, when the same issue arises in later proceedings with a different subject matter, from reopening that issue? (p 109) He concluded that justice required an exception to the rule, against the background of Walton Js erroneous decision and refusal of a certificate allowing an appeal: I consider that anyone not possessed of a strictly legalistic turn of mind would think it most unjust that a tenant should be faced with a succession of rent reviews over a period of over 20 years all proceeding upon a construction of his lease which is highly unfavourable to him and is generally regarded as erroneous (p 110) It is important to note that there was no suggestion that the decision on the first rent review could be reopened. The potential unfairness arose when the same issue arose in later proceedings with a different subject matter. In the context of a lease with 20 years to run it was unfair that all future reviews should be governed by the erroneous decision on the first review. Finally, for completeness I should refer to the most recent discussion of the topic in this court: Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46; [2014] AC 160. For present purposes, it is sufficient to cite Lord Sumptions summary of the effect of Arnold: 22. Arnold is accordingly authority for the following propositions. (1) Cause of action estoppel is absolute in relation to all points which had to be and were decided in order to establish the existence or non existence of a cause of action. (2) Cause of action estoppel also bars the raising in subsequent proceedings of points essential to the existence or non existence of a cause of action which were not decided because they were not raised in the earlier proceedings, if they could with reasonable diligence and should in all the circumstances have been raised. (3) Except in special circumstances where this would cause injustice, issue estoppel bars the raising in subsequent proceedings of points which (i) were not raised in the earlier proceedings or (ii) were raised but unsuccessfully. If the relevant point was not raised, the bar will usually be absolute if it could with reasonable diligence and should in all the circumstances have been raised. Issue estoppel in the present case Applying the thinking of those authorities to the present case, and subject to any argument in a future case, the answer seems to me relatively clear. DNs private law claim for damages depended on the fact of detention and the absence of lawful justification. The former is not in doubt. But its lawfulness depended on the lawfulness of the deportation decision at the time it was made. That issue was conclusively determined by the decision of the tribunal in August 2007 and the decision of the High Court rejecting the application for review. There is no unfairness in treating that decision as precluding a claim for damages based on the alleged illegality of the original deportation decision, given that DN had had the opportunity to challenge it by reference to the invalidity of the 2004 Order, and failed to take it. In that respect Arnold is arguably a stronger case for an exception, since the tenant had taken the relevant point, but was precluded by the statute from challenging Walton Js decision. On the other hand, as in that case, it would be unfair to treat the decision as binding as respects the future conduct of the Secretary of State, once it had been shown to be erroneous by the higher courts. It could not be relied on to justify DNs continuing detention following the decision in EN (Serbia). It matters not whether that is treated as an application of the Arnold special circumstances exception, or of the Secretary of States duty in public law to keep the proposed deportation and detention under continuing review in the light of changing circumstances. As it happens DN had by then been released in any event. The parties submissions on res judicata Mr Knafler relied on cases which say, as he puts it, that res judicata and issue estoppel, as those terms are understood in private law, either have no application in judicial review or do not apply in the ordinary way. They include at Court of Appeal level: R v Secretary of State for the Environment, Ex p Hackney London Borough Council [1984] 1 WLR 592, R (Munjaz) v Mersey Care NHS Trust [2003] EWCA Civ 1036; [2004] QB 395, Ocampo v Secretary of State for the Home Department [2006] EWCA Civ 1276. He submits that Thrasyvoulou should be seen as a particular decision in a particular context with a specific and self contained statutory code. Alternatively he argues that Lord Bridge had focused on the statutory construction of the particular statutory code there in issue. His words could not be applied to the special protection afforded to personal liberty, which could be diluted by only the plainest statutory language, citing Khawaja v Secretary of State for Home Department [1984] AC 74, 122F per Lord Bridge. He also referred to a case in which Thrasyvoulou was cited, but an exception made. This was another planning case, this time at High Court level: R (East Hertfordshire District Council) v First Secretary of State [2007] EWHC 834 (Admin). On appeal against an enforcement notice alleging erection of a building without complying with the approved plans, the inspector had felt bound to allow the appeal and quash the notice because of the inadequacy of the plans with which he had been supplied, but he purported to do so without prejudice to the service of a further enforcement notice by the council if they thought it expedient to do so. In response to a further enforcement notice, the owner pleaded issue estoppel. Sullivan J accepted that Lord Bridges statement of principle in Thrasyvoulou remained authoritative, and unaffected by Lord Hoffmanns comments on the limited role of estoppel in modern public law in R (Reprotech) v East Sussex County Council [2002] UKHL 8; [2003] 1 WLR 348. However he considered that the circumstances of the instant case were so unusual as to amount to special circumstances justifying a departure from the estoppel rule. Mr Tam also referred to the cases in which doubts have been expressed as to the relevance of these principles in judicial review, the reasons for which appeared to stem from a number of factors, mentioned by different courts at different times: i) A lack of formal pleadings in judicial review proceedings; ii) There being no lis between the named parties in the judicial review proceedings that is being determined; iii) The lack of finality in the determination of the judicial review proceedings, as in many cases the relief leaves the redetermination of the underlying dispute to the original decision maker; iv) The discretionary nature of judicial review relief; v) The fact that, in judicial review, there is always a third party who is not present: the wider public or public interest, which should not be prejudiced if the court on the first occasion does not have all of the relevant material and argument before it when deciding the first judicial review application; vi) The interaction between the acceptance and rejection of separate grounds in judicial review proceedings and the result of the application, with the consequent limitation on the ability of a successful party in judicial review to appeal in relation to grounds on which it was unsuccessful. Mr Tam observed that most of these considerations apply with limited force to an immigration appeal, which does generally decide the issues between two parties and in which an identifiable lis can be formulated. He suggested that the most relevant judicial finding in this context would be the finding that DN had been convicted of a particularly serious crime, and discusses what he sees as the potential analytical difficulties in seeking to prevent DN from reopening this issue in subsequent proceedings. It is not necessary, or indeed appropriate, in the context of the present appeal to reach a concluded view on these points. I would however make the following observations: i) None of the judgments referred to by Mr Knafler went further than to express doubts on the question. More importantly in none of them was reference made to Thrasyvoulou, or in particular to Lord Bridges emphasis on the fundamental importance of the principle in both public and private law. I note, for example, Hale LJs statement in Munjaz (para 79) that issue estoppel is a doctrine appropriate to proceedings in private law and contrasting judicial review where there is always a third party who is not present: the wider public or public interest . It is very unlikely that she would have spoken in these terms if Lord Bridges words had been drawn to her attention. ii) Wade and Forsyth Administrative Law 11th ed (2014), p 201, in a section headed Res Judicata, states that res judicata plays a restricted role in administrative law, since it must yield to two fundamental principles of public law: that jurisdiction cannot be exceeded; and that statutory powers and duties cannot be fettered. However, it is accepted that within those limits the principle can extend to a wide variety of statutory tribunals, of which examples are given, including Thrasyvoulou. In the present context those principles do not pose an impediment; the tribunal had full jurisdiction to determine the legality of the detention, and there is no fetter on the Secretary of States exercise of powers in the future. iii) In any event, it is misleading to consider cases on judicial review generally. Although the present proceedings were brought by judicial review, the issues are the same as would have arisen in an ordinary common law action for damages for false imprisonment. iv) Mr Knaflers suggestion as to the narrow scope of Thrasyvoulou is impossible to reconcile with the clarity and generality of Lord Bridges statement of the principle, with the support of the whole House. There is no reason why it should not apply in the present context where the statutory immigration appeal process is equally specialised and self contained. v) Lord Bridges words in Khawaja about the special protection for personal liberty were directed to imprisonment without trial. The issue here is not about DNs personal liberty, but about the ordinary disciplines applicable to a common law claim for damages. vi) As regards the East Hertfordshire case, while I agree with Sullivan J that nothing said in Reprotech detracts from the authority of Lord Bridges statement of principle, the decision turned on its very special facts and gives no further assistance in the present context. vii) I agree with Mr Tam that the considerations which have led to doubts about the application of the principle in judicial review generally do not apply with the same force in the present context. However he seems to miss the point as to its potential application in this case. The relevant issue is not the seriousness of the crime, but the lawfulness of the decision to deport DN, and hence his detention, at the relevant time. That is the issue on which there was a definitive and final ruling in 2007, and which arises directly in his claim for false imprisonment. Conclusion Since the Secretary of State has not hitherto relied on the principle of res judicata or issue estoppel, it would clearly be unfair to DN for the court to introduce it at this stage as a possible reason for determining the appeal against him, whatever the position may be in future cases. On the arguments as presented to us, for the reasons set out earlier in this judgment, I would allow the appeal.
+These appeals raise important and difficult issues in the field of equity and trust law. Both appeals raise issues about the so called rule in Hastings Bass. One appeal (Pitt) also raises issues as to the courts jurisdiction to set aside a voluntary disposition on the ground of mistake. It is now generally recognized that the label the rule in Hastings Bass is a misnomer. The decision of the Court of Appeal in In re Hastings Bass, decd [1975] Ch 25 can be seen, on analysis, to be concerned with a different category of the techniques by which trust law controls the exercise of fiduciary powers. That decision is concerned with the scope of the power itself, rather than with the nature of the decision making process which led to its being exercised in a particular way (see R C Nolan, Controlling Fiduciary Power [2009] CLJ 293, especially pp 294 295 and 306 309). The rule would be more aptly called the rule in Mettoy, from the decision of Warner J in Mettoy Pension Trustees Ltd v Evans [1990] 1 WLR 1587. But the misnomer is by now so familiar that it is best to continue to use it, inapposite though it is. As Mettoy illustrates, the rule is concerned with trustees who make decisions without having given proper consideration to relevant matters which they ought to have taken into consideration. It has also been applied to other fiduciaries (in Pitt Mrs Pitt was acting as a receiver appointed by the Court of Protection). Mettoy was concerned with the rules of an occupational pension scheme, as are some other cases on the rule. But since the turn of the century there have been several cases concerned with family trusts, and in particular with taxplanning arrangements involving trusts, where the arrangements have for one reason or another proved unexpectedly disadvantageous, and the court has been asked to restore the status quo ante under the Hastings Bass rule. Futter is such a case, as Norris J pointed out in blunt terms at the beginning of his judgment, [2010] EWHC 449 Ch, [2010] STC 982, para 2: This is another application by trustees who wish to assert that they have acted in an un trustee like fashion and so have failed properly to exercise a power vested in them. The trustees wish to take advantage of this failure to perform their duties in order to enable the beneficiaries to avoid paying the tax liability consequent upon the trustees decision. Put like that (and I am conscious that that is not the only way in which the situation may be described) the possibility is raised that the development of the rule may have been diverted from its true course. These appeals are the first cases on the Hastings Bass rule in which the Commissioners of HM Revenue and Customs (the Revenue, so as to include their predecessors, the Commissioners of Inland Revenue) have been joined as parties in the proceedings. It is the Revenue that has taken on the task of challenging, if not the existence, at least the limits of the Hastings Bass rule. It is no coincidence that the judgment of the Court of Appeal in these two appeals (which were heard together in that court also) is the first fully considered judgment above first instance level, and the first to come on further appeal to the Supreme Court (Mettoy was not cited to the Court of Appeal in Stannard v Fisons Pension Trust Ltd [1991] Pen LR 225, discussed in para 34 below). Rescission of a voluntary disposition on the ground of mistake is, by contrast, a topic on which there is a good deal of authority, including a decision of the House of Lords, Ogilvie v Allen (1899) 15 TLR 294. But some of the authorities are quite old, and others are debatable. There has been much discussion of the distinction drawn by Millett J in Gibbon v Mitchell [1990] 1 WLR 1304, 1309, between a relevant mistake having to be as to the effect of the transaction itself and not merely as to its consequences or the advantages to be gained by entering into it. So here too review by the Supreme Court is appropriate. This court has therefore had to consider a large volume of case law, culminating in the judgment of Lloyd LJ in the Court of Appeal in these appeals: [2011] EWCA Civ 197, [2012] Ch 132. That judgment, described by Longmore LJ, para 227, as remarkable, and by Mummery LJ, para 230, as a very fine comprehensive and clarifying judgment, runs to 226 paragraphs. I share their admiration, and I agree with Lloyd LJs main conclusions as to the scope of the Hastings Bass rule, and the outcome of the appeals on that issue. But I will say at once that I take a different view of the disposal of the appeal in Pitt on the mistake issue. Before any detailed consideration of the case law it may be helpful to identify, in general terms, some of the principal topics in the appeals. It has often been said (for instance, by Norris J in Futter, para 21) that the rule in Hastings Bass is not founded in the law of mistake, and in his judgment Lloyd LJ dealt with them as almost completely separate topics. They do cover different areas, in that the Hastings Bass rule is restricted to decisions by trustees and other fiduciaries, and does not necessarily require the decision maker to be under a positive misapprehension: mere absence of thought may be sufficient. The courts wider jurisdiction to rescind a transaction on the ground of mistake is not limited to transactions entered into by fiduciaries, and does generally require there to have been something that can be identified as an operative mistake. The significance of fault in the error or inadvertence is a further point of distinction. Nevertheless there is a degree of overlap between the two principles in their practical application. In some of the first instance cases on the Hastings Bass rule judges have drawn attention, with evident surprise, to the absence of any alternative claim for relief by way of rectification or rescission on the ground of mistake. In some of the cases (such as Abacus Trust Co (Isle of Man) v Barr [2003] EWHC 114 (Ch), [2003] Ch 409, the facts of which are summarized at paras 36 and 37 below) rescission on the ground of mistake would seem to have been the natural remedy for the trustees to seek. There must be some suspicion that reliance on the Hastings Bass rule has come to be seen as something of a soft option, or at any rate as a safer option, at a time when it was supposed, wrongly, that the application of the rule did not require the granting of a remedy which was discretionary in the sense that it might be withheld because some equitable defence was established. The way in which the law seemed to be developing, especially in cases concerned with unsuccessful tax planning arrangements, led one legal scholar (Professor Charles Mitchell, Reining in the rule in In Re Hastings Bass, (2006) 122 LQR 35, 41 42) to ask: Why should a beneficiary be placed in a stronger position than the outright legal owner of property if he wishes to unwind a transaction to which he has given his consent, but which turns out to have unforeseen tax disadvantages? Professor Mitchell went on to comment, presciently: The courts will have to look elsewhere for the means of reining in the rule in Re Hastings Bass, most probably to the equitable bars to unwinding a transaction that would come into play if it were decisively recognised that the rule renders transactions voidable rather than void. This court now has the opportunity of confirming the Court of Appeals recognition of that essential point. THE HASTINGS BASS RULE The three strands of the problem appeals as In the Court of Appeal [2012] Ch 132, para 227 Longmore LJ described the . examples of that comparatively rare instance of the law taking a seriously wrong turn, of that wrong turn being not infrequently acted on over a 20 year period but this court being able to reverse that error and put the law back on the right course. If the law did take a seriously wrong turning it was because a number of first instance judges were persuaded that three separate strands of legal doctrine, all largely associated with practice in the Chancery Division, should be spun or plaited together so as to produce a new rule. The first strand of legal doctrine starts with the entirely familiar proposition that trustees, in the exercise of their fiduciary discretions, are under constraints which do not apply to adult individuals disposing of their own property. I made some uncontroversial observations about this in Scott v National Trust for Places of Historic Interest or Natural Beauty [1998] 2 All ER 705, 717: Certain points are clear beyond argument. Trustees must act in good faith, responsibly and reasonably. They must inform themselves, before making a decision, of matters which are relevant to the decision. These matters may not be limited to simple matters of fact but will, on occasion (indeed, quite often) include taking advice from appropriate experts, whether the experts are lawyers, accountants, actuaries, surveyors, scientists or whomsoever. It is, however for advisers to advise and for trustees to decide: trustees may not (except in so far as they are authorised to do so) delegate the exercise of their discretions, even to experts. This sometimes creates real difficulties, especially when lay trustees have to digest and assess expert advice on a highly technical matter (to take merely one instance, the disposal of actuarial surplus in a superannuation fund). The same principles apply, at least in a modified manner, to other persons acting in a fiduciary capacity. There are superficial similarities between what the law requires of trustees in their decision making and what it requires of decision makers in the field of public law. This was noted by the Court of Appeal in its judgment, delivered by Chadwick LJ, in Edge v Pensions Ombudsman [2000] Ch 602, 628 629. It was also noted by Lord Woolf MR in Equitable Life Assurance Society v Hyman [2002] 1 AC 408, para 20. The analogy cannot however be pressed too far. Indeed it was expressly disapproved by the Court of Appeal in these appeals (Lloyd LJ at para 77 and Mummery LJ at para 235). In Abacus Trust Co (Isle of Man) v Barr [2003] Ch 409, para 29 Lightman J identified three important differences as the discretionary nature of relief on judicial review, a different approach to nullity, and strict time limits. The second strand is that a voluntary disposition (typically a gift, outright or in settlement) may be set aside on the ground of mistake. As already noted, this branch of equitable jurisdiction is distinct from the Hastings Bass rule, but similar issues arise as to the nature and gravity of the relevant error or inadvertence, and in practice they sometimes overlap. The mistake jurisdiction was considered as a separate issue in paras 164 to 220 of Lloyd LJs judgment. He identified the correct test as derived in part from the judgment of Lindley LJ in Ogilvie v Littleboy (1897) 13 TLR 399, 400 (approved by the House of Lords as Ogilvie v Allen (1899) 15 TLR 294), a case which emerged from the shadows to be cited to the court after a century of obscurity. He also considered recent decisions including Gibbon v Mitchell [1990] 1 WLR 1304 and In re Griffiths decd [2008] EWHC 118 (Ch), [2009] Ch 162. The third strand of legal doctrine, and the most abstruse one, is concerned with the partial validity of an instrument which cannot be entirely valid because it infringes some general rule of law. It is an issue which arises, often under the rubric of severance, in many different areas of law. One example is contract law, especially in the context of illegal restraints on trade (see the judgment of Jonathan Sumption QC in Marshall v NM Financial Management Ltd [1995] 1 WLR 1461, upheld by the Court of Appeal [1997] 1 WLR 1527). Another example is bye laws held to be partly ultra vires (see the speech of Lord Bridge in Director of Public Prosecutions v Hutchinson [1990] 2 AC 783). In the field of trust law the most common invalidating factor, until the Perpetuities and Accumulations Act 1964, was the unreformed rule against perpetuities, or remoteness of vesting. This applied relentlessly both to dispositions of property made by settlors or testators of property at their free disposal, and to dispositions made in the exercise of special (that is, restricted) powers of appointment over settled property. Special powers of appointment might be exercisable either by individual donees (for instance, by a parent with a life interest in favour of children with interests in expectancy) or by the trustees as a body. But in either case the power could be exercised only within the limits, and for the purposes, marked out by the donor of the power. And in either case the interests appointed had to conform to the rule against perpetuities as it applied to lives in being at the time of the creation of the power (that is, the date of the original settlement, or the date of the testators death). These matters were once familiar (indeed, elementary) to almost all chancery practitioners. Law and practice at the chancery bar have moved on. The rule against perpetuities has lost its terrors since the Perpetuities and Accumulations Act 1964 (which was almost completely non retrospective) gradually came to apply to more and more trusts, followed by the Perpetuities and Accumulations Act 2009. Family trusts are now a shrinking enclave designated as private client work, and pensions trusts, burdened by increasingly complex regulatory statutes, are another enclave reserved for pensions specialists. But in order to investigate the origins of the disputed rule in In re Hastings Bass it is necessary to revisit, without much nostalgia, this area of trust law as it was about 50 years ago. There was a body of fairly arid case law, now almost entirely obsolete, about the validity of interests in settled property which were ulterior to but not dependent on antecedent interests which infringed the rule against perpetuities. In re Hubbards Will Trusts [1963] Ch 275 and In re Bucktons Settlement Trusts [1964] Ch 497 are examples from just before the enactment of the reforming statute. In re Abrahams Will Trusts [1969] 1 Ch 463 and In re Hastings Bass, decd [1975] Ch 42, discussed below, can be seen as a final chapter in that case law. There is one further background matter to be noted. Under traditional family settlements, when the modern type of discretionary settlement was still fairly rare, the most common dispositive power exercisable by trustees was the power of advancement. This is a power to accelerate the interest of a beneficiary interested in capital, exercisable with the consent of any beneficiary with a prior interest (typically a parent with a prior life interest). Such powers were so much common form that section 32 of the Trustee Act 1925 provided a default power, which could be excluded or (as often happened) extended by the trust instrument. The power was typically exercisable by a payment or transfer to or for the advancement or benefit of the beneficiary. In In re Pilkingtons Will Trusts [1964] AC 612 the House of Lords, differing from the judge on one point and from the Court of Appeal on another, held that a power in those terms could (in principle, and apart from the rule against perpetuities) be exercised for the benefit of a minor beneficiary (the testators nephews daughter, who was only two years old when the proceedings started in 1959) by a transfer of up to half of her expectant share, with her fathers consent, to the trustees of a new settlement under which she would attain a vested interest in capital at 30. This would lawfully avoid estate duty on her fathers death if he lived for a further five years. But the House of Lords also held that the new settlement must, for the purposes of the rule against perpetuities, be treated as if it were an appointment made under a special power conferred by the testators will. The trusts of the new settlement did not meet that requirement as the child was not a life in being at the testators death in 1935. But valid trusts to much the same effect could have been achieved (and may eventually have been put in place) by referring to the alternative contingency of survival until 21 years after her fathers death, as he was alive in 1935. Vestey, Abrahams and Hastings Bass In the Court of Appeal Lloyd LJ correctly identified the decision of the Court of Appeal in In re Vesteys Settlement [1951] Ch 209 and that of Cross J in In re Abrahams Will Trusts [1969] 1 Ch 463 as the most important precursors to the decision of the Court of Appeal in In re Hastings Bass [1975] Ch 25. Lloyd LJ analysed these three cases very thoroughly at paras 33 to 67 of his judgment. Because his analysis is so full and accurate I can deal with the cases more briefly, especially as to the facts. It is worth noting that although all three cases had an important tax element, in each case the trustees misunderstanding was not about tax law. It was about the general law: in the first case about the effect of section 31 of the Trustee Act 1925, and in the other two about the effect of the rule against perpetuities. In Vestey the trustees of a large settlement made by Lord Vestey and his brother Sir Edmund Vestey exercised their discretion over the allocation of income with the apparent intention of income being accumulated during the minorities of a number of beneficiaries. They set out to do this by a sort of framework resolution that income should belong to the minor beneficiaries in specified shares, followed by further half yearly resolutions to the effect that income was not required for the beneficiaries maintenance, and should therefore be accumulated under section 31 of the Trustee Act 1925. The difficulty was that the language of section 31 did not really fit such a situation. At first instance Harman J held that the resolutions were ineffective. That result would have avoided surtax but left the income in limbo (Evershed MRs suggestion in the Court of Appeal that the income would have been held on a resulting trust for the settlors seems, with respect, very doubtful). But the minor beneficiaries appealed, and the Court of Appeal gave effect to the framework resolution, treating the references to accumulation under section 31 as peripheral. Evershed MR stated ([1951] Ch 209, 220 to 221): I do not think it can or ought to be said that if, as I hold, the trustees wrongly thought that section 31 would operate, then a result is produced substantially or essentially different from that which was intended. The result was that for the period covered by the trustees resolutions, the minor beneficiaries got their income, but the Revenue got their surtax on that income. Abrahams and Hastings Bass were both cases about plans to save estate duty by terminating a life interest and passing on settled property to the next generation. The plans (carried out in 1957 and 1958 respectively) were on the same general lines as that in Pilkington, the first instance decision in which ([1959] Ch 699, Danckwerts J) had provided an encouraging precedent (the Revenue were joined in the proceedings and given leave to appeal in 1960). The Revenue were also parties to the Abrahams and Hastings Bass cases, and in each case (ironically, in view of later developments, as Norris J pointed out) it was the Revenue which argued for the complete invalidation of the resettlement, partly through the direct operation of the rule against perpetuities, and partly (as an argument against severance) because the effect of the operation of the rule is wholly to alter the character of the settlement, as Cross J put it in Abrahams at p 485. Cross J rejected an argument approximating an advancement by way of resettlement to the exercise of a power of appointment. Although they were treated in the same way for perpetuity purposes, in his view the similarity ended there (p. 485 D E): The interests given to separate objects of an ordinary special power are separate interests, but all the interests created in Caroles fund were intended as part and parcel of a single benefit to her. Cross J held, therefore, that there was no valid exercise of the power of advancement. In Hastings Bass the Court of Appeal, in a single judgment delivered by Buckley LJ, took a different view of a similar duty saving transaction. The true ratio of the decision has been much debated, both in forensic argument and by legal scholars. It has been considered twice by Lloyd LJ, first in Sieff v Fox [2005] EWHC 1312 (Ch), [2005] 1 WLR 3811 paras 43 and 44 (his last first instance case before his promotion to the Court of Appeal) and again, at much greater length, in his judgment in this case (paras 46 to 67). It is perhaps simplest to start with what Hastings Bass did not decide. It was not about mistake. Although one case on mistake (Wollaston v King (1869) LR 8 Eq 165) was cited, it was not referred to in the judgment. It would not have been enough for the Revenue to establish that the exercise of the trustees power might have been voidable at the instance of a beneficiary. The Revenue could succeed only by establishing that there had been no valid advancement at all. Nor did the decision turn on any inquiry into what was actually in the minds of the trustees in exercising the power of advancement. There seems to have been no evidence of this, and in Buckley LJs discussion at pp 39 41 (extensively quoted by Lloyd LJ at paras 53 56) the recurrent theme is what the trustees, as reasonable trustees, should or would have considered or intended. The third negative point to make is that Hastings Bass did not overrule Abrahams. It was distinguished on the basis that in Abrahams the attenuated residue of the sub settlement not struck down by the rule against perpetuities may not have been for the benefit of the beneficiary in question. But Buckley LJ did differ from Cross Js view that the benefit conferred by an advance by way of resettlement was of a monolithic character, preferring the view that it was a bundle of benefits of different characters. If and so far as it is an issue of severability, it is obviously easier to sever part of a bundle than part of a monolith. Buckley LJs own statement of the principle of the decision in Hastings Bass seems to be the passage at p 41 which has often been cited in later cases: To sum up the preceding observations, in our judgment, where by the terms of a trust (as under section 32) a trustee is given a discretion as to some matter under which he acts in good faith, the court should not interfere with his action notwithstanding that it does not have the full effect which he intended, unless (1) what he has achieved is unauthorised by the power conferred upon him, or (2) it is clear that he would not have acted as he did (a) had he not taken into account considerations which he should not have taken into account, or (b) had he not failed to take into account considerations which he ought to have taken into account. Lloyd LJ did not accept that as the true ratio. He thought that the Court of Appeal had already decided the case on the ground that the advancement, so far as not struck down by the rule against perpetuities, must stand unless it could not, in that attenuated form, reasonably be regarded as beneficial to the advancee. That is an objective test which does not call for an inquiry into the actual states of mind of the trustees. Lloyd LJ expanded this line of thought in para 66: If the problem to be resolved is what is the effect on an operation such as an advancement of the failure of some of the intended provisions, because of external factors such as perpetuity, it is not useful to ask what the trustees would have thought and done if they had known about the problem. The answer to that question is almost certainly that they would have done something different, which would not have run into the perpetuity or other difficulty. It is for that reason that the test has to be objective, by reference to whether that which was done, with all its defects and consequent limitations, is capable of being regarded as beneficial to the intended object, or not. If it is so capable, then it satisfies the requirement of the power that it should be for that persons benefit. Otherwise it does not satisfy that requirement. In the latter case it would follow that it is outside the scope of the power, it is not an exercise of the power at all, and it cannot take effect under that power. On this analysis, limb (1) of Buckley LJs statement of principle covers the whole ground, and limb (2) adds nothing. I respectfully agree with Lloyd LJs criticism of the statement of principle. I think it is also open to criticism for the generality of its reference to unintended consequences (notwithstanding that it does not have the full effect which he intended). That is a far reaching extrapolation from one case about section 31 of the Trustee Act 1925 and two cases about the rule against perpetuities. It set ajar a door that was pushed wide open in Mettoy Pension Trustees Ltd v Evans [1990] 1 WLR 1587 and other later cases. Mettoy In Mettoy Warner J applied the supposed new principle in the context of an occupational pension scheme, and in circumstances where the trustees exercise of a discretionary power was within the scope of that power. There was no invalidating factor, such as the rule against perpetuities, applicable under the general law. In doing so Warner J dismissed two significant arguments for limiting the scope of the new principle. The employer, Mettoy Co Plc, and the trustees of its pension scheme had in 1983 executed a deed to replace a 1980 deed (and some supplementary deeds) which were ineffective because of an error about the trusteeship. The rules scheduled to the 1980 deed included rule 13, providing for the winding up of the scheme in certain circumstances, the priority of claims in the winding up and the disposal of any ultimate surplus. This rule differed from an earlier winding up rule in several respects. Most materially, the discretion to use any ultimate surplus in augmenting benefits was to be exercisable by the employer (instead of by the trustees, as provided by the earlier rule). Moreover, in 1983 Mettoys financial position was precarious (as a result of an ill advised diversification from die cast model vehicles into personal computers) so that winding up of the scheme was much more than a remote possibility. In the event the scheme had to be wound up in 1984. The trustees issued an originating summons raising a number of questions, the most important being (in effect) whether the 1983 deed was wholly invalid, or valid except for rule 13, or valid except that the power of augmentation remained exercisable by the trustees. These questions arose because the trustees had admittedly not considered, or been advised about, the significance of rule 13. In response to another question raised by the originating summons, Warner J held that the power of augmentation was, even when exercisable by the employer, a fiduciary power. On that basis it was not clear that the trustees, if they had fully considered the matter, would have objected to the change effected by rule 13 ([1990] 1WLR 1587, 1628A 1630A). But by then Warner J had upheld (in a passage from pp1621G to 1626A) the existence of a principle which may be labelled the rule in Hastings Bass. He took Buckley LJs statement of principle in that case (set out at para 24 above) and reformulated it in positive terms, and so far as relevant to the facts of the case, as follows (p 1621H): where a trustee acts under a discretion given to him by the terms of the trust, the court will interfere with his action if it is clear that he would not have acted as he did had he not failed to take into account considerations which he ought to have taken into account. Warner J rejected the submissions of Mr Edward Nugee QC, recorded at pp 1622G to 1623G, that the principle, although existent, was of very narrow scope, and that the cases of Vestey, Abrahams and Hastings Bass (together with Pilkington, where there was a proposal for a resettlement rather than a completed transaction): . were about the consequences of what [Mr Nugee] referred to as an excessive execution of a power, ie the purported exercise of a power in a way that the law rendered partially ineffective. Warner J dismissed this argument at p1624B C: If, as I believe, the reason for the application of the principle is the failure by the trustees to take into account considerations that they ought to have taken into account, it cannot matter whether that failure is due to their having overlooked (or to their legal advisers having overlooked) some relevant rule of law or limit on their discretion, or is due to some other cause. Warner J also dismissed what he called Mr Nugees all or nothing argument (pp 1624H 1625A). In some cases the court would have to declare void the whole of some purported exercise of discretion by trustees. But in other cases (for instance where the trustees would have decided, had they thought about it properly, to omit some particular provision from a deed) the appropriate course would be to declare that provision alone to be void. At p 1626D Warner J referred to the all important third question: what would the trustees have done if they had considered the matters that they failed to consider? His meticulous review of the oral and documentary evidence, including the cross examination of Mr Lillyman (who was at all material times closely involved as the employers company secretary and a director of the corporate trustee) shows that he was concerned to establish, so far as he could, what these particular trustees (and not some hypothetical reasonable trustees) would have done. His approach was subjective, not objective. I respectfully agree with Lloyd LJs view that the basis on which Mettoy was decided cannot be found in the reasoning which led to the decision in Hastings Bass. It can claim to be an application of Buckley LJs summary statement of principle, but only if that statement is taken out of context and in isolation from the earlier part of the judgment. If the principle applied by Warner J merits a name at all, it should be called the rule in Mettoy. But the rule as formulated by Warner J has given rise to many difficulties, both in principle and in practice. From Mettoy to Sieff Mettoy was not much considered by the court during the 1990s. It was cited but not referred to in the judgment of the Court of Appeal in Edge v Pensions Ombudsman [2000] Ch 602. That decision, on an appeal by the Pensions Ombudsman from the judgment of Sir Richard Scott V C [1998] Ch 512, was largely concerned with the jurisdiction of the Pensions Ombudsman under Part X of the Pension Schemes Act 1993. The general tenor of the Court of Appeals judgment is that neither the Ombudsman nor the court has power to intervene in decisions made by trustees unless they have acted in breach of duty. That can be seen as putting down a marker that Lloyd LJ has since recognised. In Stannard v Fisons Pension Trusts Ltd [1991] Pen LR 225, in which Hastings Bass but not Mettoy was cited, the Court of Appeal modified Buckley LJs formulation, without any full discussion of the point, by putting the test in terms of what the trustees might, rather than would, have done if fully informed. The facts were that trustees had taken a decision about transfer values on the basis of an out of date valuation of the pension fund. The Court of Appeals modification of the test seems questionable since the legal significance of the error must have depended on the scale of the change in market value rather than on the precise nature of the trustees hypothetical second thoughts. It was not until about the year 2000 that Hastings Bass and Mettoy began to be called in aid in cases where tax planning arrangements involving trusts had gone wrong. The first case seems to have been Green v Cobham, decided by Jonathan Parker J in January 2000 but reported at [2002] STC 820, followed by Abacus Trust Co (Isle of Man) v National Society for the Prevention of Cruelty to Children [2001] STC 1344 (Patten J) and Breadner v Granville Grossman [2001] Ch 523 (Park J). Breadner was an unsuccessful attempt to extend the principle so as to circumvent a missed time limit for the exercise of a power of appointment. Park J observed at para 61: There must surely be some limits. It cannot be right that whenever trustees do something which they later regret and think that they ought not to have done, they can say that they never did it in the first place. The most important decisions, prior to the present appeals, are the decisions of Lightman J in Abacus Trust Co (Isle of Man) v Barr [2003] Ch 409 and Lloyd LJ in Sieff v Fox [2005] 1 WLR 3811. In the former case Mr Barr had participated in a management buy out of an engineering company and in 1992 he had settled his shares in the buy out vehicle, held through an Isle of Man holding company, in a settlement of which Abacus Trust Co (Isle of Man) (Abacus) was trustee. Abacus was administered by the Isle of Man firm of Coopers & Lybrand (C&L (IoM)). C&L (IoM) had close links with the English firm of Coopers & Lybrand, which advised on the buy out. Mr Ward Thompson of the English firm was Mr Barrs main contact. Under the settlement Mr Barr had a life interest, but Abacus as trustee had an overriding power of appointment in favour of a wide class of beneficiaries. Very soon after the creation of the settlement Mr Barr told Mr Ward Thompson that he wished 40% of the trust fund to be appointed on discretionary trusts in favour of his sons and their families, to the exclusion of himself and any wife of his. Through some misunderstanding this was conveyed to C&L (IoM) as a wish for 60% of the fund to be appointed, and on 22 April 1992 an appointment in that form was made. The mistake was discovered in August 1992 but nothing was done to try to remedy it until 2002. In the meantime, in 1994 the buy out vehicle was floated on the London Stock Exchange and the holding company controlled by Abacus embarked on a programme of sales of its shares. The judgment of Lightman J is impressively brief and incisive. He pointed out that Abacus was not seeking either rectification or rescission for mistake, and added in relation to the Hastings Bass rule (para 13): But in considering the ambit of the rule it is necessary to bear in mind that it is only one of the protections afforded to beneficiaries in respect of the due administration of the trust by the trustees. It is also important to have in mind that equity does not afford a trustee or a beneficiary a free pass to rescind a decision which subsequently proves unpalatable or unfortunate and substitute another. Relief is only available if the necessary conditions for its grant are satisfied. He referred to the authorities already discussed and observed that he did not need to resolve the issue posed by Stannard, since (para 20) clearly the trustee would not have appointed 60% of the trust fund if it had known of the settlors true wishes. He then addressed four issues: (1) whether there had to be a fundamental mistake; (2) whether the rule applied if there was any relevant mistake or ignorance on the part of the trustee, regardless of how it arose (and in particular, regardless of any breach of duty on the part of the trustee); (3) following from the last point, whether the rule applied on the facts of the case before him; and (4) whether, if the rule applied, the appointment was void or voidable. On the first issue Lightman J decided, correctly in my view, that a fundamental mistake was not necessary. A fundamental, or at least serious mistake may be necessary for rescission on the ground of mistake (that is relevant to the second ground of appeal in Pitt), but for the rule which Abacus was invoking (para 21): the rule does not require that the relevant consideration unconsidered by the trustee should make a fundamental difference between the facts as perceived by the trustee and the facts as they should have been perceived. All that is required in this regard is that the unconsidered relevant considerations would or might have affected the trustees decision, and in a case such as the present that the trustee would or might have made a different appointment or no appointment at all. But as his decision on the second point shows, it must be sufficiently serious as to amount to a breach of duty. On the second issue, Lightman J held that a breach of duty on the part of the trustee is essential to the application of the rule (para 23): What has to be established is that the trustee in making his decision has, in the language of Warner J in Mettoy Pension Trustees Ltd v Evans [1990] 1 WLR 1587, 1625, failed to consider what he was under a duty to consider. If the trustee has in accordance with his duty identified the relevant considerations and used all proper care and diligence in obtaining the relevant information and advice relating to those considerations, the trustee can be in no breach of duty and its decision cannot be impugned merely because in fact that information turns out to be partial or incorrect. That is in my view a correct statement of the law, and an important step towards correcting the tendency of some of the earlier first instance decisions. If in exercising a fiduciary power trustees have been given, and have acted on, information or advice from an apparently trustworthy source, and what the trustees purport to do is within the scope of their power, the only direct remedy available (either to the trustees themselves, or to a disadvantaged beneficiary) must be based on mistake (there may be an indirect remedy in the form of a claim against one or more advisers for damages for breach of professional duties of care). This serves to emphasise that the so called rule in Hastings Bass was not in play in that case, or in Abrahams. In those two cases the trustees were not at fault in failing to foresee the House of Lords decision in Pilkington several years later. But they purported to exercise their power of advancement in a way that was beyond the scope of that power, since it was contrary to the general law (that is the rule against perpetuities as clarified in Pilkington). The issue (resolved differently in Abrahams and Hastings Bass) was whether the parts of the resettlement not void for perpetuity were sufficient to amount to a proper exercise of the power of advancement. In Mettoy and Barr, by contrast, it was never in doubt that the relevant deed fell within the scope of the trustees power. This point is clearly made in paras 92 and 93 of Lloyd LJs judgment in the Court of Appeal. On the third issue Lightman J held that Abacus was in breach of duty, mainly because it had to take responsibility for Mr Ward Thompson, who (para 27) has declined to give evidence and answer the case made or suggest a different scenario. This part of the judgment turns on the particular facts of the case, but they are typical of many such cases, and I shall return to them in discussing the difficulties that still beset this area of the law. On the fourth issue Lightman J held that in cases where the rule applies (as opposed to cases of equitable non est factum such as Turner v Turner [1984] Ch 100) it makes the trustees disposition voidable, not void. The Court of Appeal agreed with his analysis, and so do I. The rule, properly understood, depends on breach of duty in the performance of something that is within the scope of the trustees powers, not in the trustees doing something that they had no power to do at all. Beneficiaries may lose their right to complain of a breach of trust by complicity, by laches or acquiescence or in other ways. Lightman J adjourned the case, expressing the hope (para 34) that a compromise would be possible. The absence of any further reported decision suggests that his hope was realised. In Sieff v Fox [2005] 1 WLR 3811 Lloyd LJ (as he had become by the time he handed down his lengthy reserved judgment) fully considered all the authorities mentioned above, and other authorities on mistake. I can take his judgment fairly briefly because he had occasion to reconsider it, and on one important point to depart from it, in his judgment in the Court of Appeal in these appeals. The case related to valuable land and chattels comprised in the Bedford settled estates, and the facts as to the trusts, and their tax implications, are very complicated. It is sufficient to note two points. First, the critical appointment (made in 2001 by the trustees in favour of Lord Howland, and with a view to a resettlement by him) required the consent of Lord Howland himself. In deciding whether or not to give consent Lord Howland was not acting in a fiduciary capacity. His consent (given in ignorance of some of the implications, including adverse tax consequences) was challenged, successfully, on the ground of mistake (see paras 115 and 119 (vii) of the judgment of Lloyd LJ). In his discussion of mistake, Lloyd LJ relied (paras 98 to 101) on Ogilvie v Littleboy (1897) 13 TLR 399, upheld on appeal as Ogilvie v Allen (1899) 15 TLR 294. The trustees exercise of their power of appointment was challenged, also successfully, under the Hastings Bass rule (see para 114, and compare para 119 (vi)). The second point to note is that Lloyd LJ was inclined to differ from Lightman J as to the need for the vitiating element in a fiduciary decision to amount to a breach of trust. Lloyd LJ referred to the trustees in Abrahams not being at fault in failing to foresee that the first instance decision in Pilkington would be reversed on an appeal made out of time. But Abrahams was a case in which the purported exercise of the trustees power was outside its proper scope, because it infringed the rule against perpetuities. This is the point on which Lloyd LJ has modified the provisional view which he expressed in Sieff v Fox. Futter v Futter: The facts and the first instance decision The appeal in Futter is concerned with incorrect advice given by solicitors as to the effect of provisions, primarily in section 87 of the Taxation of Chargeable Gains Act 1992 (TCGA), charging capital gains tax in respect of gains realised by non resident trustees. There were two settlements, the No 3 settlement and the No 5 settlement, made by Mr Mark Futter in 1985. Initially both settlements had non resident trustees, but in 2004 Mr Futter and Mr Cutbill, both resident in the United Kingdom, were appointed as trustees of the two settlements. Mr Cutbill was a partner in the London solicitors which gave the tax advice. At that stage both settlements had stockpiled gains that is, gains realised while the trust was not resident, and not yet distributed to the beneficiaries or brought in to charge for capital gains tax purposes. On the advice of the solicitors, the new, resident trustees on 31 March 2008 distributed the whole capital of the No 3 settlement to Mr Futter, in exercise of a power of enlargement, and on 3 April 2008 distributed 36,000 from the No 5 settlement to Mr Futters three children in equal shares, in exercise of a power of advancement. Each of these transactions was squarely within the scope of the relevant power. Mr Futter and Mr Cutbill understood (correctly) that the stockpiled gains would in consequence be attributed to Mr Futter and his children as if they were gains realised by those beneficiaries themselves. They also believed (incorrectly) that these attributed gains would be absorbed by allowable losses which they had realised so that no eventual tax liability would arise. This overlooked the effect of section 2(4) of TCGA as amended (the relevant amendment, for those interested in the fine detail, was that made by Schedule 21, para 2 of the Finance Act 1998, and not the further amendment made by Schedule 2, para 24 of the Finance Act 2008, which applied only from 5 April 2008). The result was a large capital gains tax liability for Mr Futter and a modest one for his children. Mr Futter and Mr Cutbill applied, as trustees of the two settlements, to have the deed of enlargement and the deeds of advancement declared void. The first four defendants, the beneficiaries, did not appear. The fifth defendant, the Revenue, resisted the application. Norris J began his judgment in spirited fashion, as already noted (para 3 above). However he went on to state that it was not an occasion for a first instance judge to reconsider a developed rule. He took the judgment of Lloyd LJ in Sieff v Fox as the leading authority on the rule, as had Sir Andrew Park in Smithson v Hamilton [2008] 1 WLR 1453, para 52, and as had Mr Robert Englehart QC in Pitt v Holt [2010] 1 WLR 1199, para 18. The Revenues submissions were similar to those advanced in Pitt (para 57 below), apart from the receivership point. As it happens the first instance judgment in Pitt was given on the first day of the first instance hearing in Futter, so that there was no real opportunity for revision of the Revenues case. As recorded in the judgment of Norris J the Revenue had three main lines of argument. The first was that the decision of the trustees was not in any meaningful sense different from what they intended (apart from the tax consequences). This argument echoed the distinction drawn by Millett J in Gibbon v Mitchell [1990] 1 WLR 1304, 1309 1310, between effect and consequences. Norris J rejected this argument on the ground that mistake was a different ground for relief, and that under the Hastings Bass rule tax consequences are rightly regarded as something that trustees must take into account in exercising their discretions. The Revenues second line of argument focused on the significance of the trustees error. It was to some extent a variation on the first argument, and it was rejected on similar grounds. The Revenues third submission (not pressed) was that so far from considering capital gains tax, the trustees had it in the forefront of their minds: the problem was that the advice was wrong (para 28). But wrong advice on tax consequences could, the judge said, lead to a perfectly orthodox application of the rule. Norris J held that the deeds were void, not voidable. He referred briefly (para 32) to the judgment of Lightman J in Barr, but noted that his reasoning (based on the trustees being at fault) was not accepted by Lloyd LJ in Sieff v Fox. Nevertheless Norris J considered (para 33) that the rigours of the void analysis could be mitigated by the application of equitable principles. Pitt v Holt: The facts and the first instance decision The facts relevant to the Pitt appeal are set out at length in the judgment of Lloyd LJ at paras 147 to 159, to which reference may be made for further detail. The claim was made by the personal representatives of Mr Derek Pitt, who died in 2007 aged 74. In 1990 he had suffered very serious head injuries in a road traffic accident, resulting in his mental incapacity. His wife, Mrs Patricia Pitt, was appointed as his receiver under the Mental Health Act 1983, and on his death she became one of his personal representatives, and the only beneficiary interested in his estate. Mr Pitts claim for damages for his injuries was compromised by a structured settlement, approved by the court, in the sum of 1.2m. Mrs Pitts solicitors sought advice from Frenkel Topping, a firm of financial advisers said to have specialist experience of structured settlements. They advised that the damages should be settled in a discretionary settlement, and this was done, with the authority of the Court of Protection, in 1994. The trust was referred to as the Derek Pitt Special Needs Trust (the SNT). Frenkel Topping gave their advice in a written report to Mrs Pitt (as receiver) which was made available to the Official Solicitor, who represented her husband in the application to the Court of Protection. The report referred to various advantages which the SNT was expected to secure, and it mentioned income tax and capital gains tax in its illustrative forecasts. But the report made no reference whatsoever to inheritance tax. The SNT could have been established without any immediate inheritance tax liability if (i) it had been an interest in possession trust or (ii) it had been a discretionary trust complying with section 89 of the Inheritance Tax Act 1984. In order to comply with section 89 its terms should have provided that at least half of the settled property applied during Mr Pitts lifetime was applied for his benefit. But the SNT as drafted and executed contained no such restriction. The consequence was an immediate liability to inheritance tax of the order of 100,000, with the prospect of a further tax charge on the tenth anniversary in 2004. The deputy judge (Mr Robert Englehart QC) observed that by 2010 the total tax, together with interest and penalties (if exacted) must have amounted to between 200,000 and 300,000. Mrs Pitt and her advisers became aware of the inheritance tax liabilities in 2003. In 2006 Mr Pitt (by a litigation friend) and the trustees of the SNT commenced proceedings against Frenkel Topping claiming damages for professional negligence. Mr Pitt died in 2007. After taking further advice his personal representatives (who were also two of the trustees of the SNT) commenced proceedings seeking to have the SNT set aside either under the Hastings Bass rule, or on the ground of mistake. The first defendant was the remaining trustee of the SNT (who took no part in the proceedings) and the second defendant was the Revenue (which actively opposed the application). Evidence was given in writing and there was no cross examination. In his judgment the deputy judge discussed the principal authorities on the Hastings Bass rule and observed (para 22) that three matters were not in dispute. First, it was agreed that the rule could apply without the need to identify a breach of duty on the part of the trustees or their advisers (so following Sieff v Fox rather than Barr). Second, it was unnecessary on the facts of the case to decide whether the application of the rule rendered a transaction void or voidable. Third, the rule would apply only if it was established that Mrs Pitt, if properly advised, would not have set up the SNT (rather than merely might not have done so). The principal arguments for the Revenue were that the rule did not in any case apply to a receiver (as opposed to a formally constituted trustee); that the rule applied only to a limited class of cases where the immediate purpose of the act in question was not achieved; and that tax consequences were never a sufficient basis for the application of the rule. The deputy judge rejected these submissions, holding that a receiver, as a fiduciary, was in essentially the same position as a trustee, and that the weight of the first instance authorities supported a wider version of the rule. He set aside the SNT on that ground. He indicated that he was not satisfied that there was any real mistake, as opposed to a failure to think about tax at all. Even if there was a mistake of any sort, it was only a mistake as to the consequences of the transaction, rather than its effect. Lloyd LJs judgment on the Hastings Bass rule I have already indicated my general agreement with Lloyd LJs judgment on the Hastings Bass issue. Paragraphs 1 to 28 contain an introduction and a summary of the facts of the two appeals. Paragraphs 29 to 67 consider Vestey, Abrahams and Hastings Bass. They come to the conclusion, with which I fully agree, that Buckley LJs statement of the supposed rule (para 24 above) was wider than the true principle of the actual decision in Hastings Bass. Paragraphs 68 to 91 consider more recent authorities, including Mettoy and Barr. All this is in a sense preliminary. Lloyd LJs essential reasoning and conclusions are at paragraphs 92 to 131. He then applied what he saw as the correct principle to the facts of Futter (paras 132 to 145) and Pitt (paras 146 to 163). He then dealt with the issue of mistake, raised by the respondents notice in Pitt (paras 164 to 223). The outcome was that both appeals were allowed (paras 224 to 226). Longmore LJ and Mummery LJ both gave short concurring judgments expressing full agreement. Mummery LJ added a clear summary of five salient points (paras 233 to 238). In the core of his judgment Lloyd LJ correctly spelled out the very important distinction between an error by trustees in going beyond the scope of a power (for which I shall use the traditional term excessive execution) and an error in failing to give proper consideration to relevant matters in making a decision which is within the scope of the relevant power (which I shall term inadequate deliberation). Hastings Bass and Mettoy were, as he rightly observed, cases in quite different categories. The former was a case of excessive execution and the latter might have been, but in the end was not, a case of inadequate deliberation. Lloyd LJ therefore withdrew his doubts about the conclusions that Lightman J had reached in Barr. Lloyd LJ then addressed the difficult question of how a fraudulent appointment (that is, an appointment ostensibly within the scope of a power, but made for an improper purpose) is to be fitted into the classification. The exercise of an equitable power may be fraudulent in this sense whether or not the person exercising it is a fiduciary. A well known example of trustees exercising a power for an improper purpose is provided by In Re Pauling [1964] Ch 303, in which a power ostensibly exercisable for the benefit of young adult beneficiaries was used to distribute trust capital to be frittered away on their improvident parents living expenses. There is Court of Appeal authority that a fraudulent appointment is void rather than voidable: Cloutte v Storey [1911] 1 Ch 18. In that case the appointee under an improper appointment had charged his equitable interest as security for a loan (and in doing so made two false statutory declarations as to the genuineness of the appointment). It was held that the lender had no security, even though it had no notice of the equitable fraud. It is an authority which has bedevilled discussion of the true nature of the Hastings Bass rule. Lightman J found the judgment of Farwell LJ problematic (Barr, para 31) and Lloyd LJ shared his reservations (para 98). So do I. It is hard to know what to make of Farwell LJs observations [1911] 1 Ch 18, 31: If an appointment is void at law, no title at law can be founded on it; but this is not so in equity: the mere fact that the appointment is void does not prevent a Court of Equity from having regard to it: eg, an appointment under a limited power to a stranger is void, but equity may cause effect to be given to it by means of the doctrine of election. The decision in Cloutte v Storey may have to be revisited one day. For present purposes it is sufficient to note that a fraudulent appointment (that is, one shown to have been made for a positively improper purpose) may need a separate pigeon hole somewhere between the categories of excessive execution and inadequate deliberation. In paragraphs 102 to 118, Lloyd LJ considered the duties of trustees in exercising their discretion, and in particular the relevance of tax considerations. He referred to some well known authorities including In re Badens Deed Trusts [1971] AC 424. That case was directly concerned with the correct test for certainty of objects of a discretionary trust (or trust power) but the speech of Lord Wilberforce contains, at pp 448 457, a general discussion of fiduciary discretions which has been very influential in the development of the law. This includes a passage at pp 456 457 as to the Courts intervention if trustees fail to exercise a trust power (that is, a discretion which it is their duty to exercise in some way). After referring to Lord Upjohns opinion Lord Wilberforce said: I would venture to amplify this by saying that the court, if called upon to execute the trust power, will do so in the manner best calculated to give effect to the settlors or testators intentions. It may do so by appointing new trustees, or by authorising or directing representative persons of the classes of beneficiaries to prepare a scheme of distribution, or even, should the proper basis of distribution appear by itself directing the trustees so to distribute. Lloyd LJ did not refer to that particular passage, but Warner J had done so in Mettoy [1990] 1 WLR 1587, 1617 1618, since in that case a decision as to the exercise of the power to augment benefits would have to be taken by someone. The passage serves as a reminder that where trustees have been in breach of duty by exercising a discretion with inadequate deliberation, setting aside their decision may not be the only course open to the court. In discussing what trustees should take into account, Lloyd LJ observed that the older cases tended to focus, not on what should be taken into account, but on what should not be taken into account. He instanced two cases. One was Klug v Klug [1918] 2 Ch 67, where one of the trustees strongly disapproved of her daughters choice of husband, and for that reason refused to concur with the Public Trustee in exercising a power of advancement in her favour. The court overrode her objection because she had not considered whether or not it would be for her daughters welfare that the advance should be made. She had therefore made no proper exercise of her discretion. The other case was In re Lofthouse (An Infant) (1885) 29 Ch D 921, in which income of a fund was available for the maintenance of a five year old girl whose mother had died very shortly after her birth. Her father had remarried and had three children by his second marriage. Bacon V C and the trustees (of the will of the girls maternal grandmother) evidently took very different views of how the father would spend the income if it was all paid to him for his eldest childs maintenance. The case was resolved by agreement in the Court of Appeal. The old cases as to the maintenance of children are rather exceptional, especially where the position was complicated by the child in question being a ward of court, as in In re Hodges (1878) 7 Ch D 754. Some judicial pronouncements in these cases should not be taken out of context. At para 115 Lloyd LJ reaffirmed the view that he had expressed in Sieff v Fox, para 86, that fiscal consequences may be relevant considerations which the trustees ought to take into account. I agree. In the private client world trusts are mostly established by and for wealthy families for whom taxes (whether on capital, capital gains or income) are a constant preoccupation. It might be said, especially by those who still regard family trusts as potentially beneficial to society as a whole, that the greater danger is not of trustees thinking too little about tax, but of tax and tax avoidance driving out consideration of other relevant matters. That is particularly true of offshore trusts. They are usually run by corporate trustees whose officers and staff (especially if they change with any frequency) may know relatively little about the settlor, and even less about the settlors family. The settlors wishes are always a material consideration in the exercise of fiduciary discretions. But if they were to displace all independent judgment on the part of the trustees themselves (or in the case of a corporate trustee, by its responsible officers and staff) the decision making process would be open to serious question. The Barr case (2003) Ch 409 illustrates the potential difficulties of unquestioning acceptance of the settlors supposed wishes. It is interesting, in this context, to compare the facts of some of the offshore cases with those of Turner v Turner [1984] Ch 100. That was a case in which a farmer made a discretionary settlement which he did not understand, and appointed as trustees family friends who never realised that they had any responsibility at all except to do as the settlor asked. They thought that it would be intruding into the settlors affairs if they were to read the documents that they were asked to sign (see at pp 106 108). Anyone familiar with the duties of trustees may find this hard to contemplate (as Mervyn Davies J did, at p 109). But it may be that some offshore trustees come close to seeing their essential duty as unquestioning obedience to the settlors wishes. The Barr case also illustrates another practical difficulty in the application of the Hastings Bass rule as it has developed. Lightman J was in my view right to decide that when the vitiating error is inadequate deliberation on relevant matters (rather than mistake) the inadequacy must be sufficiently serious as to amount to a breach of duty; and Lloyd LJ was right to change the contrary view which he had expressed in Sieff v Fox. It would set the bar too high (or too low, depending on the spectators point of view) to apply the Hastings Bass rule whenever trustees fall short of the highest standards of mature deliberation and judgment. Where, as in Barr, the trustee is a body corporate acting as a sort of in house facility provided by a firm of professional advisers, it may be hard to decide whether the separate juristic personality of the trustee insulates it from responsibility for the errors of individual professionals within the firm. A rather similar problem arose on the facts of Futter. It is a striking feature of the development of the Hastings Bass rule that it has led to trustees asserting and relying on their own failings, or those of their advisers, in seeking the assistance of the court. This was pointed out in no uncertain terms by Norris J in his first instance judgment in Futter, quoted in para 3 above. There may be cases in which there is for practical purposes no other suitable person to bring the matter before the court, but I agree with Lloyd LJs observation (para 130) that in general it would be inappropriate for trustees to take the initiative in commencing proceedings of this nature. They should not regard them as uncontroversial proceedings in which they can confidently expect to recover their costs out of the trust fund. Lloyd LJ stated the correct principle, as he saw it, at para 127: It seems to me that the principled and correct approach to these cases is, first, that the trustees act is not void, but that it may be voidable. It will be voidable if, and only if, it can be shown to have been done in breach of fiduciary duty on the part of the trustees. If it is voidable, then it may be capable of being set aside at the suit of a beneficiary, but this would be subject to equitable defences and to the courts discretion. The trustees duty to take relevant matters into account is a fiduciary duty, so an act done as a result of a breach of that duty is voidable. Fiscal considerations will often be among the relevant matters which ought to be taken into account. However, if the trustees seek advice (in general or in specific terms) from apparently competent advisers as to the implications of the course they are taking, and follow the advice so obtained, then, in the absence of any other basis for a challenge, I would hold that the trustees are not in breach of their fiduciary duty for failure to have regard to relevant matters if the failure occurs because it turns out that the advice given to them was materially wrong. Accordingly, in such a case I would not regard the trustees act, done in reliance on that advice, as being vitiated by the error and therefore voidable. The requirement for breach of duty In this court Mr Robert Ham QC undertook the main burden of the argument for the appellants on the Hastings Bass rule. Mr Christopher Nugee QC adopted Mr Hams submissions, and added some of his own, but concentrated his argument on the issue of mistake. Mr Hams submissions centred on whether the courts jurisdiction under the Hastings Bass rule is exercisable only if there is a breach of fiduciary duty on the part of the trustees (or other relevant fiduciary). He argued that this is a novel requirement which leads to arbitrary and unfair distinctions, especially in cases where incorrect advice on tax has been given by professional advisers who may or may not themselves be trustees. Mr Ham also had subsidiary but important arguments about the attribution to trustees of fault on the part of their advisers, and about the identification of relevant considerations for the purposes of the rule. Mr Ham contended that the supposed need for establishing a breach of fiduciary duty, before the Hastings Bass rule can come into play, was a novel requirement introduced in 2003 by Lightman J in his judgment in Barr. Reference to paras 16 to 20 of his judgment shows that Lightman J was relying on a number of earlier authorities, including the decision of the Court of Appeal in Edge [2000] Ch 602, 627 628, and the decision of Warner J in Mettoy [1990] 1 WLR 1587, 1625: In a case such as this, where it is claimed that the rule in Hastings Bass applies, three questions arise: (1) What were the trustees under a duty to consider? (2) Did they fail to consider it? (3) If so, what would they have done if they had considered it? In my view Lightman J was right to hold that for the rule to apply the inadequate deliberation on the part of the trustees must be sufficiently serious as to amount to a breach of fiduciary duty. Breach of duty is essential (in the full sense of that word) because it is only a breach of duty on the part of the trustees that entitles the court to intervene (apart from the special case of powers of maintenance of minor beneficiaries, where the court was in the past more interventionist: see para 64 above). It is not enough to show that the trustees deliberations have fallen short of the highest possible standards, or that the court would, on a surrender of discretion by the trustees, have acted in a different way. Apart from exceptional circumstances (such as an impasse reached by honest and reasonable trustees) only breach of fiduciary duty justifies judicial intervention. Mr Ham relied heavily on the decision of the Court of Appeal in Kerr v British Leyland (Staff) Trustees Ltd (1986) [2001] WTLR 1071. In that case Mr Kerr, a member of the British Leyland staff pension scheme, suffered from angina and claimed a disability benefit payable on permanent disability (defined as so that no further employment of any kind is possible). The scheme had a group policy with Legal & General, which obtained separate medical advice and indicated that it would reject the claim. The corporate trustee of the pension scheme decided to follow Legal & General in rejecting the claim. Mr Kerr took proceedings challenging the trustees decision, and was successful at first instance. The Court of Appeal dismissed the corporate trustees appeal. In doing so Fox LJ (with whom Mustill LJ and Caulfield J agreed) made plain that the corporate trustees board was not at fault. There had been a failure of communication. As to the judges declaration that Mr Kerr was entitled to a pension, Fox LJ stated (p 1080): I do not think he was entitled to do that. The decision whether to accept the claim is one for the trustee and not for the court. It seems to me that, in the present case, the decision of the trustee was simply ineffective since the board did not carry out their duty to give a properly informed consideration to the claim. That however does not entitle the Court to substitute its own view of the claim for that of the trustee. I would, therefore, discharge the order of the judge and substitute an order that the decision of the trustees on 28 June 1978 to reject Mr Kerrs claim was of no effect and that the trustee should reconsider the claim. The Kerr case is of interest since (though not reported for 15 years) it is an early example, antedating Mettoy, of the application of something like the Hastings Bass rule. But I think it is important to note that under the British Leyland scheme the corporate trustee did not have any real discretion about disability benefit. It had to exercise a judgment on an issue of fact (permanent disability from any employment). That is an issue on which the court would be much more ready to intervene if the trustee had failed to grasp the real facts. It is an intermediate situation which is arguably closer to a mistaken judgment on an issue of fact than to the defective exercise of a discretion. Kerr may be compared with Mihlenstedt v Barclays Bank International Ltd [1989] IRLR 522. That was a comparable case except that there was a preliminary issue of construction as to whether the relevant rule (which began Early retirement due to ill health will be permitted only when . ) imported a wider discretion. The Court of Appeal decided that the language of the rule was that of obligation and entitlement, and that the judge had erred in supposing that there was a wider discretion. But on the facts the majority of the Court of Appeal held that the trustee had not formed its opinion on an erroneous basis. Mr Hams fallback position was that if a breach of duty was an essential requirement, there could be a breach without fault on the part of any individual trustee being established. This general argument was developed in several different directions. I would identify these (though there was some overlap) as (1) strict liability (2) agency (3) resulting absurdity and (4) a special meaning of relevant. These points are considered below, in turn. Mr Nugee, in supporting Mr Hams position, attached most weight to the argument on strict liability. It is undoubtedly correct that trustees may be liable for breach of trust even though they have acted in accordance with skilled professional advice. Such advice cannot protect trustees from potential liability for a loss to the trust fund resulting from a decision that is, judged objectively, beyond the trustees powers and detrimental to the trust (though professional advice may lead to their obtaining relief under section 61 of the Trustee Act 1925). An example mentioned in argument is Dunn v Flood (1885) 28 Ch D 586, in which trustees had sold by auction 73 plots of freehold land at Reading, subject to special conditions which the court held to be severely depreciatory (as Fry LJ put it at p594, eminently calculated to frighten away purchasers). The Court of Appeal, upholding North J, refused to force a doubtful title on a reluctant purchaser. The fact that the trustees had consulted respectable solicitors was no excuse. It was not a reasonable exercise of discretion (Baggallay LJ and Bowen LJ at p592; Fry LJ at pp593 594). But the trustees breach of duty was not in the manner of their decision making (as to which we know nothing other than that they consulted respectable solicitors) but the loss to the trust property that their unreasonable decision appeared to have caused. Further examples are provided by the decision of the Court of Appeal in Perrins v Bellamy [1899] 1 Ch 797 and that of the Privy Council, on appeal from the Supreme Court of Victoria, in National Trustees Co of Australasia Ltd v General Finance Co of Australasia Ltd [1905] AC 373. These cases, discussed by Lloyd LJ at para 124 of his judgment, were both examples of action taken by trustees on professional advice which was unequivocally incorrect: one a sale of leaseholds when the trustees had no power of sale; the other a distribution (resulting from some extraordinary slip by solicitors of high standing) of a deceased beneficiarys vested share to persons who were not entitled to it under the intestacy law of Victoria in force at the beneficiarys death. As Lloyd LJ observed, the issue in these cases: is altogether different, as it seems to me, from the question whether, if trustees take advice properly, and act on that advice in a matter which is within their powers, the fact that the advice has misled them as to the true position in a relevant respect means that they acted in breach of fiduciary duty. I respectfully agree. Trustees may be liable, even if they have obtained apparently competent professional advice, if they act outside the scope of their powers (excessive execution), or contrary to the general law (for example, in the Australian case, the law regulating entitlement on intestacy). That can be seen as a form of strict liability in that it is imposed regardless of personal fault. Trustees may also be in breach of duty in failing to give proper consideration to the exercise of their discretionary powers, and a failure to take professional advice may amount to, or contribute to, a flawed decision making process. But it would be contrary to principle and authority to impose a form of strict liability on trustees who conscientiously obtain and follow, in making a decision which is within the scope of their powers, apparently competent professional advice which turns out to be wrong. Such a result cannot be achieved by the route of attributing any fault on the part of professional advisers to the trustees as their supposed principals. Solicitors can and do act as agents in some clearly defined functions, usually of a ministerial nature, such as the receipt and transmission of clients funds, and the giving and taking of undertakings on behalf of clients. But they do not and may not act as agents in the exercise of fiduciary discretions. As I said in Scott [1998] 2 All ER 705, 717: It is however for advisers to advise and for trustees to decide: trustees may not (except insofar as they are authorised to do so) delegate the exercise of their discretions, even to experts. Mr Ham relied on some observations of Warner J in Mettoy [1990] 1 WLR 1587, 1625 1626: But the question is not in my view to what extent trustees may in practice have to rely on professional advice. The duty to take into account all material considerations is that of the trustees. The extent of that duty is not affected by the amount or quality of the professional advice they may seek or obtain. In In Re Hastings Bass [1975] Ch 25 it was not relevant to what extent the trustees themselves were able to form an opinion on the effect of the rule against perpetuities. This passage was noted by Lloyd LJ in his discussion of the cases (para 71) but receives only a passing mention in para 124, the part of his judgment which discusses the significance of professional advice. I have difficulty with these observations of Warner J. They occur in the part of his judgment dealing with the first of the three questions that he had posed (para 72 above) and probably they must be read in that context. Moreover the last sentence at p1626 A B suggests that Warner J was not clearly distinguishing the category of excessive execution in Hastings Bass itself from the category of inadequate deliberation relevant to the issue before him. If his remarks cannot be limited to their context then I would say that Warner J was wrong in disregarding the amount or quality of professional advice obtained by trustees, when the question relates to a decision within the scope of the trustees powers. Mr Ham submitted that a refusal to attribute to trustees fault on the part of their advisers or agents leads to counter intuitive and arbitrary distinctions. He instanced an error in a letter setting out the settlors wishes (a variation of the facts in Barr). On that particular example, such an error might be a sufficient ground for a voluntary disposition to be set aside on the ground of mistake, regardless of where responsibility for the error lay. But I would accept that there have been, and no doubt will be in the future, cases in which small variations in the facts lead to surprisingly different outcomes. That is inevitable in an area where the law has to balance the need to protect beneficiaries against aberrant conduct by trustees (the policy behind the Hastings Bass rule) with the competing interests of legal certainty, and of not imposing too stringent a test in judging trustees decision making. There is indeed a striking contrast between the courts conclusions as to the position of Mr Ward Thompson in Barr and that of Mr Cutbill in Futter. Mr Ward Thompsons position was considered in detail by Lightman J [2003] Ch 409, para 27: He was the one point of contact between on the one side the settlor and on the other side C & L, C & L Isle of Man, the trustee and the protector. For all practical purposes he was the emanation and only representative of C & L, C & L Isle of Man, the trustee and the protector in all their dealings with the settlor. C & L was through itself and its associated firm, C & L Isle of Man and its vehicles, the trustee and the protector, providing the settlor with a total corporate and trust holding service. As is common ground the solicitors who drafted the appointment were acting on behalf of the trustee: Mr Ward Thompson in giving instructions for its preparation in the circumstances can only have done so acting as agent for the trustee. These findings (based, it appears, on witness statements not tested by cross examination) show that it was an unusual situation in which Mr Ward Thompson had an exceptionally important role. The judges conclusion was reinforced by another passage in para 27: I should add that my view is reinforced by the consideration that any ambiguity in the structure and arrangements ought to be resolved in favour of the settlor: (1) the C & L side were responsible for the structure and arrangements; (2) Mr Ward Thompson has declined to assist the court; and (3) the trustee perhaps surprisingly failed to seek from the settlor an expression of his wishes in documentary form or provide him with a copy of the proposed appointment before it was executed. In short, on the material before me, on the third issue I am satisfied that the trustee failed in its fiduciary duty to ascertain the true wishes of the settlor to which the appointment was intended to give effect and accordingly the rule is brought into play. Cases of this sort will call for detailed fact finding by the judge, and sometimes no doubt for cross examination. Barr may be contrasted with Abacus Trust Company (Isle of Man) Ltd v NSPCC [2001] STC 1344, in which an artificial tax avoidance scheme failed because a deed of appointment was executed on 3 April 1998, contrary to the clear advice of leading counsel that it should not be executed until after the end of the 1997 98 financial year. On Wednesday, 1 April 1998 the appointment was faxed to the corporate trustee in the Isle of Man by an English solicitor with the suggestion that it should be executed on Friday (naturally taken as 3 April). But a director of the corporate trustee had attended the consultation with leading counsel, and had received a note of it, which he did not refer to when he received the fax. Patten J applied the Hastings Bass rule without finding it necessary to reach any clear conclusion about breach of duty, which was not then recognised as an essential requirement. In Futter Mr Cutbill, a partner in a London firm of solicitors, was involved both as a trustee and as a solicitor advising the trustees. The facts as to his involvement were found at first instance by Norris J [2010] STC 982. It so happened, as already mentioned, that the judgment of Mr Engelhart QC in Pitt was given on 18 January 2010, the first day of the hearing in Futter. In Pitt it had been common ground ([2010] 1 WLR 1199, para 22) that there was no need to identify a breach of duty by the trustees. It is not clear from Norris Js judgment whether the same incorrect concession was made and accepted before him. But Norris J seems to have accepted Sieff v Fox as the leading authority from which to obtain guidance, and Barr received only a passing mention (on the void or voidable? issue) in his judgment. Norris J did not therefore make any clear finding about breach of fiduciary duty. He simply recorded and accepted Mr Cutbills written evidence, which included the statement that [Mr Futter] and I failed to pay any regard to the provisions of section 2(4) [TCGA] at the time, and therefore failed to consider the full tax implications. The Court of Appeal was therefore in as good a position as Norris J to make a finding about breach of duty on the part of the trustees. This Court has before it all the written evidence and exhibits that were before the judge, and in the absence of concurrent findings below it is also in a position to make findings, if necessary, on that issue. I will return to it below when dealing with the disposal of the Futter appeal. Finally, on this part of the case, there is the submission that the trustees duty to take account of relevant considerations is to be interpreted as a duty to act on advice only if it is correct in effect, a duty to come to the right conclusion in every case. I have left this submission until the end because it is to my mind truly a last ditch argument. It involves taking the principle of strict liability for ultra vires acts (paras 81 to 84 above) out of context and applying it in a different area, so as to require trustees to show infallibility of judgment. Such a requirement is quite unrealistic. It would tip the balance much too far in making beneficiaries a special favoured class, at the expense of both legal certainty and fairness. It is contrary to the well known saying of Lord Truro LC in In re Beloved Wilkess Charity (1851) 3 Mac & G 440, 448: . that in such cases as I have mentioned it is to the discretion of the trustees that the execution of the trust is confided, that discretion being exercised with an entire absence of indirect motive, with honesty of intention, and with a fair consideration of the subject. The duty of supervision on the part of this court will thus be confined to the question of the honesty, integrity, and fairness with which the deliberation has been conducted, and will not be extended to the accuracy of the conclusion arrived at, except in particular cases. The trustees duty does not extend to being right (the accuracy of the conclusion arrived at) on every occasion. The particular cases that the Lord Chancellor had in mind may have included cases concerned with the maintenance of minor beneficiaries. They may also have included cases (such as Kerr v British Leyland (Staff) Trustees Ltd) in which the trustees have to make a particular factual judgment, rather than exercise a wide discretion. As a first footnote on the topic of fault, I would mention that in para 128 of his judgment, Lloyd LJ observed that a claim by beneficiaries against trustees may often be precluded by an exoneration clause in the trust instrument. Mr Philip Jones QC (for the Revenue) disputed this, pointing out that even if a trustee is exonerated from liability to pay equitable compensation, he is still liable to injunctive relief to prevent a threatened breach of trust, and personal and proprietary remedies may be available against persons who receive assets distributed in breach of trust. Moreover an exoneration clause does not protect a trustee against removal from office by order of the court. The Futter No 3 and No 5 settlements contain exoneration clauses in conventional terms, stating that in the professed execution of the trusts and powers hereof no trustee shall be liable for a breach of trust arising from a mistake or omission made by him in good faith. I would not treat that clause as ousting the application of the Hastings Bass rule, if it were otherwise applicable. As a second footnote, there was some discussion in the course of argument as to the significance, in situations of this sort, of a possible claim for damages against professional advisers for financial loss caused by incorrect advice (or incorrect implementation of instructions). Mr Nugee referred to Walker v Geo H Medlicott & Son [1999] 1 WLR 727, in which a strong Court of Appeal dismissed on two grounds a claim for damages for professional negligence in preparing a will. The second ground was that the aggrieved claimants proper course was to mitigate his damage by seeking rectification of the will. That decision may reflect the courts view of the particular facts of the case, and the feeling that if the drafting of the will had gone wrong other beneficiaries under it should not obtain adventitious benefits. In principle the possibility that trustees may have a claim for damages should have no effect on the operation of the Hastings Bass rule. In practice it will be rare for trustees to have so strong a claim that they can be confident of obtaining a full indemnity for their beneficiaries loss and their own costs. In the Pitt case this court was told that the claim against Frenkel Topping has been settled. Had it gone to trial the claim, even if successful in establishing duty and breach, might have faced difficulties over causation, since Mrs Pitt executed the SNT under the authority of an order of the Court of Protection, which had considered its terms. That courts apparent lack of awareness of the importance of section 89 of the Inheritance Act 1984 is one of the most remarkable features of the whole sorry story. Would or Might? In his statement of the correct principle (para 127 of the judgment, set out in para 70 above) Lloyd LJ did not provide an answer to the would or might? debate. That was not, I think, an oversight. The Hastings Bass rule is centred on the failure of trustees to perform their decision making function. It is that which founds the courts jurisdiction to intervene if it thinks fit to do so. Whether the court will intervene is another matter. Buckley LJs statement of principle in Hastings Bass (para 24 above) cannot be regarded as clear and definitive guidance, since Buckley LJ was considering a different matter the validity of a severed part of a disposition, the other part of which was void for perpetuity. In Mettoy itself the trustees had wholly failed to consider (or even to be aware of) an important change in the new rules (affecting the destination of surplus in a winding up of the scheme), at a time when winding up was a real possibility. But Warner J (applying Buckley LJs would not formulation) declined to set aside the adoption of the new rules, because the power over surplus remained a fiduciary power. It has been suggested (partly in order to accommodate the decision of the Court of Appeal in Stannard, para 34 above) that would not is the appropriate test for family trusts, but that a different might not test (stricter from the point of view of the trustees, less demanding for the beneficiaries) is appropriate for pensions trusts, since members of a pension scheme are not volunteers, but have contractual rights. That is an ingenious suggestion, and in practice the court may sometimes think it right to proceed in that way. But as a matter of principle there must be a high degree of flexibility in the range of the courts possible responses. It is common ground that relief can be granted on terms. In some cases the court may wish to know what further disposition the trustees would be minded to make, if relief is granted, and to require an undertaking to that effect (see In re Badens Deed Trusts [1971] AC 424, referred to in para 63 above). To lay down a rigid rule of either would not or might not would inhibit the court in seeking the best practical solution in the application of the Hastings Bass rule in a variety of different factual situations. Void or Voidable? Counsel on both sides readily admitted that they had hesitated over this point, but in the end they were all in agreement that Lloyd LJ was right in holding (para 99) that, if an exercise by trustees of a discretionary power is within the terms of the power, but the trustees have in some way breached their duties in respect of that exercise, then (unless it is a case of a fraud on the power) the trustees act is not void but it may be voidable at the instance of a beneficiary who is adversely affected. In my judgment that is plainly right, and in the absence of further argument on the point it is unnecessary to add much to it. The issue has been clouded, in the past, by the difficult case of Cloutte v Storey, a case on appointments that are fraudulent in the equitable sense, that is made for a positively improper purpose. Here we are concerned not with equitable fraud, nor with dispositions which exceed the scope of the power, or infringe the general law (such as the rule against perpetuity). We are in an area in which the court has an equitable jurisdiction of a discretionary nature, although the discretion is not at large, but must be exercised in accordance with well settled principles. The working out of these principles will raise problems which must be dealt with on a case by case basis. The mistake claim in Pitt involves a problem of that sort. But it is unnecessary and inappropriate to prolong what is already a very long judgment by further discussion of problems that are not now before this court. Disposal of the Hastings Bass issues In Futter the essential issue was whether the trustees of the No 3 and No 5 settlements, in deciding to take the steps which they took in March and April 2008, failed in their duty to take relevant considerations into account. Capital gains tax was a relevant consideration. Indeed, it is fairly plain that it was the paramount consideration, and the trustees thought about it a great deal. But the tax advice which they received and acted on was wrong, because an amendment to section 2(4) of TCGA had been overlooked. As Lloyd LJ put it succinctly (para 138): They did not overlook the need to think about CGT. They were given advice on the right point. The problem was that the advice was wrong. The only complication was that Mr Cutbill (the solicitor trustee) was a member of both teams: the solicitors giving the erroneous advice, and the trustees receiving and acting on it. I agree with the Court of Appeal that it would be artificial to distinguish between the two trustees, who acted together in making and effectuating their decisions. I would if necessary go further and hold that the documentary evidence indicates that most if not all of the technical tax advice given by his firm came not from Mr Cutbill but from the assistant solicitor who was working with him, from January 2008, in a review of a number of different Futter family settlements. Until 27 March 2008 it was supposed, wrongly, that the No 3 settlements stockpiled gains were relatively small, and the fact that they amounted to about 188,000 led to a last minute change of plan. On 28 March 2008 there was a telephone conversation between the assistant solicitor and Mr Bunce, Mr Futters accountant, at which, without reference to Mr Cutbill, she definitely confirmed that Mr Futters personal losses could be set off against the section 87 gains. Mr Cutbill seems to have been, very properly, reluctant to put the blame on a junior member of his firm, and of course his firm must take legal responsibility for any actionable mistake by any of its fee earners. But the documents in exhibit CDC 1 to Mr Cutbills witness statement tend to confirm that he should not, as a trustee of the No 3 and No 5 settlements, be treated as having been personally in breach of fiduciary duty. In Pitt the position was even clearer. As her husbands receiver under the Mental Health Act 1983 Mrs Pitt was in a fiduciary position but there is no suggestion that she had any professional qualifications. She devoted herself, alternating with a carer, to looking after her disabled husband. As anyone in that position would, she took professional advice from solicitors and specialist consultants. After hearing from her legal advisers and the Official Solicitor the Court of Protection made an order on 1 September 1994 authorising (not directing) her to execute the SNT and she acted on that authority on 1 November 1994 (the date in para 161 of Lloyd LJs judgment seems to be an error; compare para 151). She had taken supposedly expert advice and followed it. There is no reason to hold that she personally failed in the exercise of her fiduciary duty. Unfortunately the advice was unsound. as it turns on the Hastings Bass rule. I would therefore dismiss the appeal in Futter, and the appeal in Pitt so far RESCISSION ON THE GROUND OF MISTAKE Mrs Ogilvies litigation In this part of his judgment Lloyd LJ began with the litigation conducted by Mrs Ogilvie at the end of the 19th century. Mrs Ogilvie was a very rich widow who had in 1887 executed two deeds settling large funds for charitable purposes. She was described by Byrne J (in the transcript included in the appendix printed for the eventual appeal to the House of Lords, pp 862 863) as undoubtedly a good woman of business, shrewd, clever and intelligent, having been accustomed to assist her husband in business matters. She had a proper sense of the responsibilities of great wealth, she was charitable and munificent. She had strong views on certain subjects, was impatient of any attempt to thwart or control her, and though perhaps at times inclined to be somewhat changeable, she was firm and decided as to her course of action when she had made up her mind and laid down what she terms her law in respect to any matter. Seven years later she brought an action to have the deeds set aside. She relied on grounds summarized by Byrne J (p 862) as follows: (1) That she had not preserved to her the absolute power of disposing of the capital, including the land, as she thought fit during her life, and that notwithstanding express instructions to the contrary. (2) That she had not a similar absolute power in respect to income. (3) That she is liable to interference by the Charity Commissioners and by her own Trustees, and to be called upon by them to account for her administration of the income and that notwithstanding express instructions to the contrary. (4) That she has not the power to apply moneys originally dedicated to London institutions to Suffolk institutions. (5) That she was not fully and properly advised and that she did not fairly understand the nature and effect of the documents she executed. These grounds were fully explored in the pleadings, in interrogatories, and in cross examination at the nine day trial. Originally there was an alternative claim for rectification but her counsel did not rely on that claim, although it seems (pp 903 905) that the Attorney General (who appeared in person at every stage of the proceedings) made an open offer for the case to be disposed of uncontentiously on that basis. Byrne J gave a judgment, over 50 pages long in the transcript, in which he said (p 901), The case is entirely wanting in any of those elements of fraud, undue influence, concealments of facts from the donor, want of separate and independent advice, surprise or pressure, which, or some of which, are commonly to be met with in cases of attempts to set aside or rectify voluntary instruments. The judge rejected almost entirely the criticisms that Mrs Ogilvie directed towards her legal advisers: The utmost that could be suggested against Mr Smith is that he misunderstood his instructions, or that he was guilty of error of judgment in not having with more insistence determined to see his client personally, and against Mr Smith, Mr Harding, Mr Sutherland, and their counsel, that possibly they allowed their natural and perfectly unselfish wish to see the charitable scheme carried through to permit them to neglect informing the plaintiff of every trouble and difficulty of detail which arose in the matter. (Mr Smith was the London solicitor of Mrs Ogilvie, who lived in Suffolk; Mr Harding was a respected member of the Society of Friends, who gave her advice; and Mr Sutherland was her late husbands confidential clerk.) Her action was dismissed. She appealed to the Court of Appeal, where in view of the trial judges clear findings the argument seems to have been more closely focused as mistake. Giving the judgment of the Court of Appeal Lindley LJ said (Ogilvie v Littleboy (1897) 13 TLR 399, 400): Gifts cannot be revoked, nor can deeds of gift be set aside, simply because the donors wish that they had not made them and would like to have back the property given. Where there is no fraud, no undue influence, no fiduciary relation between donor and donee, no mistake induced by those who derive any benefit by it, a gift, whether by mere delivery or by deed, is binding on the donor . In the absence of all circumstances of suspicion a donor can only obtain back property which he has given away by showing that he was under some mistake of so serious a character as to render it unjust on the part of the donee to retain the property given to him. Mrs Ogilvies grounds of complaint seem to have been revised a little. The alleged mistakes as to the application of capital or income for non charitable purposes, and as to the jurisdiction of the Charity Commissioners, could not be sustained on the judges findings. As to the fourth ground (relating to sales of land) the Court of Appeal held that the mistake, such as it was, cannot be regarded as so material as to affect the validity of the deeds. The fifth ground had been reformulated as a failure by her advisers to warn her that members of the Society of Friends might be unwilling to become trustees. As to this Lindley LJ observed (p 401): But, assuming the danger to be real, assuming that it was an error of judgment not to call the plaintiffs attention to it, is such an omission enough to entitle her to have the deeds set aside? We are not aware of any legal principle which goes this length or anything like it. The complaint is not that her intentions have not been carried out; it is that a possible danger known to her advisers was not pointed out to her. So the appeal was dismissed, as was a further appeal to the House of Lords (Ogilvie v Allen (1899) 15 TLR 294). Lord Halsbury LC said (p 295): The appellant, a lady, was desirous of establishing certain charities, and she now contends that, though she did intend to devote her money to charity, certain specific intentions as to management, control, independence of control, and the like were such essential and important considerations to her mind that in these respects she was misled, and now seeks to get rid of the effect of her deeds upon that allegation. Such questions, doubtless, may arise under circumstances where misunderstanding on both sides may render it unjust to the giver that the gift should be retained. It appears to me that there are no such circumstances here. I entirely concur with the judgment delivered by the present Master of the Rolls . So did Lord Macnaghten, who said that Lindley LJs judgment deals with the case so fully and so satisfactorily that there is nothing more to be added. Lord Morris concurred. Lloyd LJ reviewed and discussed other 19th century and modern authorities, including the first instance decisions in Gibbon v Mitchell [1990] 1 WLR 1304 and In re Griffiths, decd [2009] Ch 162. He questioned the result in the latter case. The framework of his conclusion (paras 210 and 211) was that for the exercise of the equitable jurisdiction to set aside a voluntary disposition there must be (1) a mistake, which is (2) of the relevant type and (3) sufficiently serious to satisfy the Ogilvie v Littleboy test. That is a convenient framework against which to consider the authorities, although there is obviously some overlap between the three heads. In general a mistake as to the essential nature of a transaction is likely to be more serious than a mistake as to its consequences. What is a mistake? For present purposes a mistake must be distinguished from mere ignorance or inadvertence, and also from what scholars in the field of unjust enrichment refer to as misprediction (see Seah, Mispredictions, Mistakes and the Law of Unjust Enrichment [2007] RLR 93; the expression may have first received judicial currency in Dextra Bank & Trust Co Ltd v Bank of Jamaica [2002] 1 All ER (Comm) 193). These distinctions are reasonably clear in a general sort of way, but they tend to get blurred when it comes to facts of particular cases. The editors of Goff and Jones, The Law of Unjust Enrichment, 8th ed. (2011) para 9 11 comment that the distinction between mistake and misprediction can lead to some uncomfortably fine distinctions, and the same is true of the distinction between mistake and ignorance. Forgetfulness, inadvertence or ignorance is not, as such, a mistake, but it can lead to a false belief or assumption which the law will recognise as a mistake. The Court of Appeal of Victoria has held that mistake certainly comprehends a mistaken belief arising from inadvertence to or ignorance of a specific fact or legal requirement: Ormiston JA in Hookway v Racing Victoria Ltd [2005] VSCA 310, (2005) 13 VR 444, 450. That case was on the borderline between voluntary disposition and contract. It concerned prize money for a horse race which was paid to the wrong owner because the official in charge of prize money was ignorant of a recent change in the rules of racing (permitting an appeal against disqualification after a drugs test). He made a mistake as to the real winner. The best known English authority on this point is Lady Hood of Avalon v Mackinnon [1909] 1 Ch 476. Under a settlement Lord and Lady Hood had a joint power of appointment, and later Lady Hood as the survivor had a sole power of appointment, in favour of the children and remoter issue of their marriage. They had two daughters. In 1888 half the trust fund had been appointed (subject to the prior life interests of Lord and Lady Hood) to their elder daughter on her marriage, and had been resettled by her. In 1902 and 1904, after Lord Hoods death, Lady Hood appointed a total of 8,600 to her younger daughter. Then, wishing to achieve equality, as she thought, between her daughters, and entirely forgetting the 1888 appointment, she appointed a further 8,600 to her elder daughter (so inevitably producing inequality, unless the appointment were set aside). The elder daughter did not oppose Lady Hoods action for rescission of the last appointment, but the trustees of the resettlement (which contained an after acquired property covenant) did oppose it. Eve J granted relief, stating (pp 483 484): Having regard to the facts which I have stated, I must assume that Lady Hood, intending only to bring about equality between her daughters, was labouring under a mistake when she thought that equality would be brought about by the execution of the deed appointing 8,600 to her elder daughter. It was obviously a mistake, because the effect of the execution of that deed was to bring about that which Lady Hood never intended and never contemplated. In his judgment Eve J referred at length to the decision of the Court of Appeal in Barrow v Isaacs & Son [1891] 1 QB 417. In that case the Court of Appeal declined to grant relief, on the ground of mistake, from forfeiture of a lease for breach of a covenant against underletting. The solicitors acting for a respectable tenant had overlooked the covenant and the premises had been sublet to a respectable sub tenant. Both Lord Esher MR and Kay LJ commented that there was no legal definition of mistake. Lord Esher MR said (at pp 420 421) that the head tenant had had a mere passive state of mind: I should say that mere forgetfulness is not mistake at all in ordinary language. I cannot find any decision in Courts of Equity which has ever stated that mere forgetfulness is mistake against which equity would relieve. But Kay LJ (with whom Lopes LJ agreed) seems to have taken the view that there was a mistake which equity had power to relieve, although in the circumstances of the case the court declined to grant relief. The power to relieve would, it seems, have been based on the conscious belief or tacit assumption that the underletting was lawful. The fullest academic treatment of this topic is in Goff & Jones at paras 9 32 to 9 42. The editors distinguish between incorrect conscious beliefs, incorrect tacit assumptions, and true cases of mere causative ignorance (causative in the sense that but for his ignorance the person in question would not have acted as he did). The deputy judges first instance decision in Pitt [2010] 1 WLR 1190, para 50 is suggested as an example of mere causative ignorance: If someone does not apply his mind to a point at all, it is difficult to say that there has been some real mistake about it. The Court of Appeal adopted a different view of the facts, treating the case (para 216) as one of an incorrect conscious belief on the part of Mrs Pitt that the SNT had no adverse tax consequences. The editors of Goff & Jones are, on balance, in favour of treating mere causative ignorance as sufficient. They comment (at para 9 41, in answering a floodgates objection): . denying relief for mere causative ignorance produces a boundary line which may be difficult to draw in practice, and which is susceptible to judicial manipulation, according to whether it is felt that relief should be afforded with the courts finding or declining to find incorrect conscious beliefs or tacit assumptions according to the courts perception of the merits of the claim. It may indeed be difficult to draw the line between mere causative ignorance and a mistaken conscious belief or a mistaken tacit assumption. I would hold that mere ignorance, even if causative, is insufficient, but that the court, in carrying out its task of finding the facts, should not shrink from drawing the inference of conscious belief or tacit assumption when there is evidence to support such an inference. I shall return (paras 127 and 128 below) to the suggestion that this may involve judicial manipulation. A misprediction relates to some possible future event, whereas a legally significant mistake normally relates to some past or present matter of fact or law. But here too the distinction may not be clear on the facts of a particular case. The issue which divided the House of Lords in Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 was whether (as Lord Hoffmann put it at p398) the correct view was that, a person who pays in accordance with what was then a settled view of the law has not made a mistake and that his state of mind could be better described as a failure to predict the outcome of some future event (sc a decision of this House) than a mistake about the existing state of the law. There is another interesting discussion of this point in the judgments given in the Court of Appeal in Brennan v Bolt Burdon [2005] QB 303. A problem about the boundary between mistake and misprediction arose in In re Griffiths, decd [2009] Ch 162, a decision of Lewison J. Like Sieff v Fox and some other cases on the Hastings Bass rule, it was a case in which the Revenue was invited to intervene but declined to do so, despite the large sum of inheritance tax at stake. The case was therefore heard without adversarial argument as to the law or the facts. Lloyd LJ commented (para 198) that he did not criticise the judge, given the limited argument before him, but that he did question his conclusion. I agree with both limbs of that comment. It is important to note the sequence of events in In re Griffiths. Mr Griffiths had a valuable holding in Iota, a property company (whose shares did not attract business assets relief). He was aged 73 when, in January 2003, he and his wife took advice about tax planning. They received a lengthy report setting out various options. Most involved making potentially exempt transfers, which progressively reduce inheritance tax on qualifying gifts if the donor survives for three years, and avoid tax entirely if the donor survives for seven years after making the gift. The report recommended that seven year term insurance cover should be obtained. Mr Griffiths decided to take various steps, the most important of which was a settlement of Iota shares worth over 2.6m. This was effected by a two stage process which was completed in February 2004. He decided not to obtain term insurance. Unfortunately he was diagnosed with lung cancer in October 2004, and died in April 2005. Had he done nothing, the Iota shares would have formed part of his residuary estate, in which his wife took a life interest, and no inheritance tax would have been payable on his death. In those circumstances his executor commenced proceedings asking that the dispositions should be set aside on the ground of mistake ([2009] Ch 162, para 6): The relevant mistake on which they rely is that Mr Griffiths mistakenly believed, at the time of the transfers, that there was a real chance that he would survive for seven years, whereas in fact at that time his state of health was such that he had no real chance of surviving that long. The medical evidence (in the form of letters from his general practitioner, from a consultant oncologist and from a consultant rheumatologist) was inconclusive, but the GP expressed the view that it was extremely unlikely that the cancer was present in April 2003. On this evidence the judge found that in April 2003 Mr Griffiths had a life expectancy of between seven and nine years. He went on to observe (para 18): It is unfortunate that in a case involving 1m worth of tax a proper medical report was not placed before the court and that the claimants are compelled to rely on a single sentence in a letter from [the oncologist]. Although I have hesitated about this finding, I am prepared to find, by a narrow margin that he was suffering from lung cancer on 3 February 2004; and that following the onset of lung cancer at that time his life expectancy did not exceed three years in February 2004. Had the facts been contested, I might not have felt able to make this finding. On the rather uncertain foundation of that finding the judge decided that the assignment of 3 February 2004 should be set aside (para 30): By that time Mr Griffiths was suffering from lung cancer about which he was unaware. He did therefore make a mistake about his state of health. Had he known in February 2004 that he was suffering from lung cancer he would also have known that his chance of surviving for three years, let alone for seven years, was remote. In those circumstances I am persuaded that he would not have acted as he did by transferring his reversionary interest in the shares to trustees. The judge did not say whether this was (in the Goff & Jones formulation) an incorrect conscious belief or an incorrect tacit assumption. The editors of that work (para 9 36) treat it as a tacit assumption but it seems close to the residual category of mere causative ignorance. Had the judge not made his hairs breadth finding about the presence of cancer in February 2004 it would have been a case of misprediction, not essentially different from a failure to predict a fatal road accident. Lloyd LJ observed (para 198) that it was strongly arguable that, having declined to follow the financial consultants recommendation of term insurance, Mr Griffiths was taking the risk of deterioration of his health and failure to survive the statutory period. What type of mistake? Some uncontroversial points can be noted briefly. It does not matter if the mistake is due to carelessness on the part of the person making the voluntary disposition, unless the circumstances are such as to show that he deliberately ran the risk, or must be taken to have run the risk, of being wrong. (There is an illuminating discussion of this point in Lord Hoffmanns speech in Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners [2007] 1 AC 558, paras 24 30). Nor need the mistake be known to (still less induced by) the person or persons taking a benefit under the disposition. The fact that a unilateral mistake is sufficient (without the additional ingredient of misrepresentation or fraud) to make a gift voidable has been attributed to gifts being outside the laws special concern for the sanctity of contracts (OSullivan, Elliott and Zakrzewski, The Law of Rescission (2007) para 29.22): It is apparent from the foregoing survey that vitiated consent permits the rescission of gifts when unaccompanied by the additional factors that must be present in order to render a contract voidable. The reason is that the laws interest in protecting bargains, and in the security of contracts, is not engaged in the case of a gift, even if made by deed. Conversely, the fact that a purely unilateral mistake may be sufficient to found relief is arguably a good reason for the court to apply a more stringent test as to the seriousness of the mistake before granting relief. The Revenues printed case (paras 70 to 74) seeks to play down the distinction between mistake in the law of contract and its role in equitable rescission of voluntary dispositions. It seeks to build boldly on the decision of the Court of Appeal in Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd (The Great Peace) [2002] EWCA Civ 1407, [2003] QB 679, which did not follow (and has effectively overruled) Solle v Butcher [1950] 1 KB 671. The argument is that logic requires that a deed which transfers property for no consideration can be set aside only for a mistake of a fundamental nature that would render a contract void. Mr Jones did not cite any authority for this heterodox submission, and there is high authority (starting with Ogilvie v Allen) against it. Equity will grant specific performance of a covenant only if it is supported by valuable consideration. This includes the marriage consideration, but only if the covenant is being enforced by or on behalf of a person or persons within the scope of the marriage consideration. The traditional rules of equity were considered and explained by the Court of Appeal in Attorney General v Jacobs [1895] 2 KB 341, an account duty case, and In re Cooks Settlement Trusts [1965] Ch 902, a decision of Buckley J, illustrates their application within living memory. They are necessary to the understanding of cases like Ellis v Ellis (1909) 26 TLR 166, where the after acquired property covenant in Mrs Elliss marriage settlement was enforceable in equity, because there were children of the marriage. But the notion that any voluntary disposition should be accorded the same protection as a commercial bargain, simply because it is made under seal, is insupportable. Leaving aside for the present the degree of seriousness of the mistake, there is also controversy about its nature (or characteristics), especially as to the distinction between effect and consequences drawn by Millett J in Gibbon v Mitchell [1990] 1 WLR 1304. In that case two funds (Mays fund and Henrys fund) were settled in 1946 by Mr Henry Gibbons parents on the occasion of the marriage of his sister May. The funds were settled on May and Henry respectively for life, on the statutory protective trusts in section 33 of the Trustee Act 1925 (with a modification in the case of Henrys fund), but with power for May to surrender her protected life interest so as to accelerate the interests of her children once they had attained vested interests. For some unknown reason there was no corresponding power in respect of Henrys fund. The consequence was that a purported surrender by Mr Gibbon would cause a forfeiture of his fixed interest and bring into operation a discretionary trust affecting income during the rest of his life. In 1987 Mr Gibbon was a prosperous farmer aged 69, with two adult children. He wished to take steps to save inheritance tax and was advised by his accountants and solicitors to surrender his life interest, and at the same time release two powers of appointment, so as to accelerate his childrens interests. This advice was expressed in terms of enabling Henrys fund to pass immediately to the two children. His professional advisers failed to recognise, until after the deed of surrender had been executed, that the protective trusts provided a trap. Mr Gibbon applied to the court to have the deed of surrender set aside on the ground of mistake, and also for relief under the Variation of Trusts Act 1958. Millett J set the surrender aside, and varied the trust by lifting the protective trusts. In his judgment he referred to several of the older authorities, in most of which solicitors had misunderstood or gone beyond their instructions: Meadows v Meadows (1853) 16 Beav 401, Walker v Armstrong (1856) 8 De G M & G 531, Ellis v Ellis (1909) 26 TLR 166 and In re Waltons Settlement [1922] 2 Ch 509. Ogilvie v Littleboy was not cited. Millett J set out the principle which he drew from them at p1309: In my judgment, these cases show that, wherever there is a voluntary transaction by which one party intends to confer a bounty on another, the deed will be set aside if the court is satisfied that the disponor did not intend the transaction to have the effect which it did. It will be set aside for mistake whether the mistake is a mistake of law or a fact, so long as the mistake is as to the effect of the transaction itself and not merely as to its consequences or the advantages to be gained by entering into it. It will be observed that this formulation does not include the Ogilvie v Littleboy requirement of seriousness, except so far as it might be argued that any mistake as to the effect of a disposition is likely to be relatively serious. Millett Js judgment has been very influential. It is a mark of the high respect in which he is held that an extempore first instance judgment, not (so far as appears from the judgment) based on much adversarial argument, is cited as one of the key authorities in most of the standard works on equity and trusts, including Snell, 32nd ed. (2010) 11 008, 22 052; Lewin, 18th ed. (2008) 4 58, 29 231; Underhill and Hayton, 18th ed. (2010) 15 28 to 15 34; and Thomas and Hudson, 2nd ed. (2010) 20.37. But the source from which Millett Js statement of principle is derived is far from clear and it has been the subject of some criticism, both from legal scholars and in more recent decisions of the court. It is generally agreed that effect must mean legal effect (in the sense of the legal character or nature of a transaction). In Dent v Dent [1996] 1 WLR 683, 693 the deputy judge (David Young QC) understood it as the purpose or object of a transaction. Several other first instance judges have commented that the distinction between effect and consequences is not always clear, including Davis J in Anker Petersen v Christensen [2002] WTLR 313, 330. Lawrence Collins J went further in AMP (UK) plc v Barker [2001] WTLR 1237, para 70, saying of the distinction: If anything, it is simply a formula designed to ensure that the policy involved in equitable relief is effectuated to keep it within reasonable bounds and to ensure that it is not used simply when parties are mistaken about the commercial effects of their transactions or have second thoughts about them. On that view it comes close to Lindley LJs more general requirement for the mistake to be serious. In Wolff v Wolff [2004] STC 1633, Mann J considered (para 23) that the test was not a limiting factor, and (para 26) noted that Lawrence Collins J had referred to commercial consequences, not legal consequences. Lloyd LJ has now reviewed Gibbon v Mitchell twice, first in Sieff v Fox and then in Pitt v Holt. In Sieff v Fox, Ogilvie v Littleboy was brought to light after a long period of obscurity (though it is mentioned in Peter Birks Introduction to the Law of Restitution, first published in 1985). Lloyd LJ noted (para 106) that a test based on the legal effect of a transaction could not cover the tax consequences of a transaction, but that Lindley LJs more general test in Ogilvie v Littleboy might do so. He expressed no final view because of the special circumstances of the case before him ([2005] 1 WLR 3811, para 116). In Pitt v Holt Lloyd LJ went further. He expressed the view (para 208) that some recent cases about offshore trusts did not accord with English law: Clarkson v Barclays Private Bank and Trust (Isle of Man) Ltd [2007] WTLR 1703; In re Betsam Trust [2009] WTLR 1489; and In re A Trust [2009] JLR 447. He accepted the distinction made by Millett J in Gibbon v Mitchell but extended it (para 210) by formulating it as a requirement . that, for the equitable jurisdiction to set aside a voluntary disposition for mistake to be invoked, there must be a mistake on the part of the donor either as to the legal effect of the disposition or as to an existing fact which is basic to the transaction. This extension seems to have been primarily to accommodate cases such as Lady Hood of Avalon, where there was (para 206) a fundamental error of fact, in relation to a point which lay at the heart of the transaction. He also seems to have had in mind the New Zealand case of University of Canterbury v Attorney General [1995] 1 NZLR 78, which is discussed at para 199 of his judgment. The special feature of that case was that the University had to some extent encouraged, or at least failed to correct, the donors error; it wished to return the gift but the Attorney General, representing the public interest in charity, opposed that course. In addition, the mistake must, Lloyd LJ said, meet the Ogilvie v Littleboy test of sufficient gravity. This approach has been criticised by the editors of Goff & Jones, paras 9 101 to 9 106. I do not agree with all these criticisms of what the editors refer to as the Court of Appeals stricter, hybrid approach. But I can see no reason why a mistake of law which is basic to the transaction (but is not a mistake as to the transactions legal character or nature) should not also be included, even though such cases would probably be rare. If the Gibbon v Mitchell test is further widened in that way it is questionable whether it adds anything significant to the Ogilvie v Littleboy test. I would provisionally conclude that the true requirement is simply for there to be a causative mistake of sufficient gravity; and, as additional guidance to judges in finding and evaluating the facts of any particular case, that the test will normally be satisfied only when there is a mistake either as to the legal character or nature of a transaction, or as to some matter of fact or law which is basic to the transaction. To confirm the Gibbon v Mitchell test as formulated by Millett J would in my view leave the law in an uncertain state, as the first instance decisions mentioned in para 119 above tend to demonstrate. It would also be contrary to the general disinclination of equity to insist on rigid classifications expressed in abstract terms. Equity, unlike many continental systems, has not adopted Roman laws classification of mistakes: error in negotio (the nature of the intended transaction), error in corpore (the subject matter of the transaction), error in persona (the identity of the other party to the transaction) and error in substantia (the quality of the subject matter). The Gibbon v Mitchell test, at any rate if applied narrowly, would cover only the first of these categories. But in some situations errors in other categories may be just as basic and just as serious in their consequences. The conscience test Lindley LJs test in Ogilvie v Littleboy, quoted at para 101 above, requires the gravity of the causative mistake to be assessed in terms of injustice or, to use equitys cumbersome but familiar term, unconscionableness. Similarly Millett J said in Gibbon v Mitchell [1990] 1 WLR 1304, 1310: Equity acts on the conscience. The parties [in] whose interest it would be to oppose the setting aside of the deed are the unborn future children of Mr Gibbon and the objects of discretionary trusts to arise on forfeiture, that is to say his grandchildren, nephews and nieces. They are all volunteers. In my judgment they could not conscionably insist upon their legal rights under the deed once they had become aware of the circumstances in which they had acquired them. The evaluation of what is or would be unconscionable must be objective. Millett J identified precisely the class of beneficiaries in whose interest it would be for the forfeiture to stand (apart from tax considerations which made it disadvantageous for the whole family), but he did not do so in order to embark on the impossible task of establishing the state of the consciences of minor and unborn beneficiaries. Nor (apart from a defence of change of position) would the relative prosperity of the donor and the donees be relevant, except so far as it was part of the mistake (as in Lord Scotts example in Deutsche Morgan Grenfell Group Plc v Inland Revenue Courts [2007] 1 AC 558, para 87: A gift of 1,000 by A to B where B is believed to be impecunious but is in fact a person of substantial wealth). The gravity of the mistake must be assessed by a close examination of the facts, whether or not they are tested by cross examination, including the circumstances of the mistake and its consequences for the person who made the vitiated disposition. Other findings of fact may also have to be made in relation to change of position or other matters relevant to the exercise of the courts discretion. Justice Paul Finn wrote in a paper, Equitable Doctrine and Discretion in Remedies published in Restitution: Past, Present and Future (1998): The courts quite consciously now are propounding what are acceptable standards of conduct to be exhibited in our relationships and dealings with others . A clear consequence of this emphasis on standards (and not on rules) is a far more instance specific evaluation of conduct. The injustice (or unfairness or unconscionableness) of leaving a mistaken disposition uncorrected must be evaluated objectively, but with an intense focus (in Lord Steyns well known phrase in In re S (A Child) [2005] 1 AC 593, para 17) on the facts of the particular case. That is why it is impossible, in my view, to give more than the most tentative answer to the problems posed by Professor Andrew Burrows in his Restatement of the English Law of Unjust Enrichment (2013) p 66: we simply do not know enough about the facts. I add a postscript as to the criticism made by the editors of Goff & Jones (para 9 41), already quoted at para 108 above, of a boundary line which may be difficult to draw in practice, and which is susceptible to judicial manipulation, according to whether it is felt that relief should be afforded with the courts finding or declining to find incorrect conscious beliefs or tacit assumptions according to the courts perception of the merits of the claim. There is some force in this, although the term manipulation is a bit harsh. The fact that a unilateral mistake is sufficient means that the court may have to make findings as to the state of mind, at some time in the past, of a claimant with a lively personal interest in establishing that there was a serious causative mistake. This will often be a difficult task. But as a criticism of the Court of Appeal in Pitt I would reject it. The case was heard on affidavit evidence, without cross examination, and the Court of Appeal was in as good a position as the deputy judge to draw inferences and make findings of fact. More generally, the apparent suggestion that the court ought not to form a view about the merits of a claim seems to me to go wide of the mark. In a passage in Gillett v Holt [2001] Ch 210, 225, since approved by the House of Lords (see especially the speech of Lord Neuberger, with which the rest of the House agreed, in Fisher v Brooker [2009] 1 WLR 1764, para 63) I said in discussing proprietary estoppel that although its elements (assurance, reliance and detriment) may have to be considered separately they cannot be treated as watertight compartments: . the fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the elements of the doctrine. In the end the court must look at the matter in the round. In my opinion the same is true of the equitable doctrine of mistake. The court cannot decide the issue of what is unconscionable by an elaborate set of rules. It must consider in the round the existence of a distinct mistake (as compared with total ignorance or disappointed expectations), its degree of centrality to the transaction in question and the seriousness of its consequences, and make an evaluative judgment whether it would be unconscionable, or unjust, to leave the mistake uncorrected. The court may and must form a judgment about the justice of the case. Mistakes about tax In this court Mr Jones applied for and obtained permission to raise two points which had not been raised below. The first (to be found in paras 80 to 95 of the Revenues case) was that a mistake which relates exclusively to tax cannot in any circumstances be relieved. This submission, for which no direct authority was cited, was said to be based on Parliaments general intention, in enacting tax statutes, that tax should be paid on some transaction of a specified type, whether or not the taxpayer is aware of the tax liability. Mistake of law is not a defence, Mr Jones submitted, to tax lawfully due and payable. In my opinion that submission begs the question, since if a transaction is set aside the Court is in effect deciding that a transaction of the specified description is not to be treated as having occurred. In the case of inheritance tax, this is expressly provided by section 150 of the Inheritance Tax Act 1984. That section is expressed in general terms as applying where a transfer has by virtue of any enactment or rule of law been set aside as voidable or otherwise defeasible, and the effect is that tax which would not have been paid or payable if the relevant transfer had been void ab initio is to be repaid, or cease to be payable. There is no exception in section 150 for avoidance on the ground of a mistake about tax. More generally, Mr Joness submission that tax is somehow in a different category is at odds with the approach of the House of Lords in Deutsche Morgan Grenfell [2007] 1 AC 558: see the speech of Lord Hope at para 44 and my own observations at paras 133 and 140. So far as Mr Jones cites any authority for his submission, he has referred, but only as an aside, to the decision of the Court of Appeal in Racal Group Services Ltd v Ashmore [1995] STC 1151. That was a claim to rectification. Rectification is a closely guarded remedy, strictly limited to some clearly established disparity between the words of a legal document, and the intentions of the parties to it. It is not concerned with consequences. So far as anything in Racal is relevant to the different equitable remedy of rescission on the ground of mistake, it is relevant, not to establishing the existence of a mistake, but to the courts discretion to withhold relief in cases where it would be inappropriate for the court to grant it. That is Mr Joness second new point and it is considered below. I would therefore reject the first new point as much too wide, and unsupported by principle or authority. But it is still necessary to consider whether there are some types of mistake about tax which should not attract relief. Tax mitigation or tax avoidance was the motive behind almost all of the Hastings Bass cases that were concerned with family trusts (as opposed to pensions trusts). In Gibbon v Mitchell there was a mistake as to the legal effect of the transaction, which was to plunge the family into the trap of forfeiture under the protective trusts, rather than to achieve the immediate acceleration of the adult childrens interests. But the seriousness of the consequences of the mistake was greatly enhanced by the inheritance tax implications. On the test proposed above, consequences (including tax consequences) are relevant to the gravity of a mistake, whether or not they are (in Lloyd LJs phrase) basic to the transaction. In Pitt the special tax advantage available under section 89 of the Inheritance Tax Act 1984 was a valuable one, and its loss was certainly a serious matter for Mrs Pitt, both as her husbands receiver and on her own account as his wife and carer and as the eventual beneficiary of his estate. Lloyd LJ accepted that (para 215). He was also prepared to accept (para 216) that Mrs Pitt had an incorrect conscious belief, or made an incorrect tacit assumption, that the proposed SNT (which had been the subject of advice from two professional firms, and approved by the Court of Protection) had no adverse tax effects. It was on the issue of mistake as to effect or as to consequence? (para 217) that Lloyd LJ felt obliged to withhold relief. He saw the tax liability, even though it was immediate and backed by a statutory charge (imposed by section 237 of the Inheritance Tax Act 1984) on the property of the SNT, as no more than a consequence (para 218): The legal effect [of the disposition] was the creation of the Special Needs Trust, on its particular terms, and the fact that the lump sum and the annuity were settled upon those terms. An irony of the situation is that if the SNT had been framed so as to comply with section 89 (requiring at least half of the property applied during Mr Pitts lifetime to be applied for his benefit) it would most probably have made no difference to the distribution of capital or income during his lifetime (as the deputy judge noted in para 13 of his judgment, in dismissing a Revenue argument that Mrs Pitt might have decided not to take advantage of section 89). It has not been suggested that the primary purpose of the SNT was other than Mr Pitts welfare and benefit, and the maintenance of his wife as his carer. The SNT could have complied with section 89 without any artificiality or abuse of the statutory relief. It was precisely the sort of trust to which Parliament intended to grant relief by section 89. In Futter this court declined to permit the appellants to raise for the first time the issue of mistake, primarily because there was no sufficient evidential basis for considering that issue for the first time on a second appeal. Gibbon v Mitchell received a passing mention in the judgment of Norris J [2010] STC 982, para 20, but only for the purpose of rejecting the Revenues argument that the distinction between effect and consequences was relevant to the Hastings Bass rule. Had mistake been raised in Futter there would have been an issue of some importance as to whether the Court should assist in extricating claimants from a tax avoidance scheme which had gone wrong. The scheme adopted by Mr Futter was by no means at the extreme of artificiality (compare for instance, that in Abacus Trust Co (Isle of Man) v NSPCC [2001] STC 1344) but it was hardly an exercise in good citizenship. In some cases of artificial tax avoidance the court might think it right to refuse relief, either on the ground that such claimants, acting on supposedly expert advice, must be taken to have accepted the risk that the scheme would prove ineffective, or on the ground that discretionary relief should be refused on grounds of public policy. Since the seminal decision of the House of Lords in WT Ramsay Ltd v IRC [1982] AC 300 there has been an increasingly strong and general recognition that artificial tax avoidance is a social evil which puts an unfair burden on the shoulders of those who do not adopt such measures. But it is unnecessary to consider that further on these appeals. Equity does not act in vain Mr Joness second new point was that Mrs Pitt should be refused relief because the granting of relief would serve no practical purpose, other than saving inheritance tax. He cited Sir Nicolas Browne Wilkinson V C in the Spycatcher case, Attorney General v Guardian Newspapers Ltd [1987] 1 WLR 1248, 1270: It is an old maxim that equity does not act in vain. To my mind that is good law and the court should not make orders which would be ineffective to achieve what they set out to do. In the event the House of Lords took a different view, by a bare majority, as to whether the continuation of the interlocutory injunctions would serve any useful purpose. The maxim exists, but as Mason CJ and McHugh J said in Corin v Patton (1990) 169 CLR 540, 557, Like other maxims of equity, it is not a specific rule or principle of law. It is a summary statement of a broad theme which underlies equitable concepts and principles. The fund subject to the SNT had many calls on its resources, with heavy professional costs and expenses as well as making provision for the welfare and care of Mr Pitt and the maintenance of his wife. On his death on 25 September 2007 there was only 6,259 in the trust (the deputy judge added, para 15, that that was on Mrs Pitts case but he had earlier stated, para 4, that the material facts were not in dispute at all). On Mr Pitts death this sum, subject to any outstanding liabilities, vested in his personal representatives under Clause 3 of the SNT. Any remaining value in the fund was therefore in the same beneficial ownership as if the SNT had been set aside by the court. On 22 November 2011, after this court had granted permission for Mrs Pitt to appeal from the Court of Appeals decision, her solicitors wrote to the Solicitors Office of the Revenue drawing attention to a submission in the Revenues skeleton argument before the Court of Appeal, para 105: But, in any event, the settlement should not be set aside after this period of time, especially when the Court does not know what proprietary claim would vest in the estate against third parties. Apparently with a view to avoiding any doubt on this point, Mrs Pitts solicitors set out the factual position as it was at that time and stated in the last paragraph of their letter: Please note that Mrs Pitt and Mr Shores [her co executor] have irrevocably instructed us to indicate, that if the Supreme Court orders that Mr Pitts settlement is set aside, no further claim (to monies or other relief), will be made by them in their capacity as Mr Pitts personal representatives, or by Mrs Pitt in her capacity as sole beneficiary of his estate, whether against the trustees (from time to time) of Mr Pitts settlement or the recipients of distributions or other payments from the trustees. Our clients will be satisfied with the effect of section 150 IHTA 1984 (consequent on the order setting aside Mr Pitts settlement). In these circumstances Mr Jones has submitted that it would be pointless, and so contrary to equitys practical approach, to grant relief that would achieve nothing, apart from a tax advantage to Mrs Pitt. He has relied on the approval by Peter Gibson LJ (with whom Sir Iain Glidewell and Kennedy LJ agreed) in Racal Group Services Ltd v Ashmore [1995] STC 1151, 1157 of what Vinelott J had said below [1994] STC 416, 425: In my judgment the principle established by these cases is that the court will make an order for the rectification of a document if satisfied that it does not give effect to the true agreement or arrangement between the parties, or to the true intention of a grantor or covenantor and if satisfied that there is an issue, capable of being contested, between the parties or between a covenantor or a grantor and the person he intended to benefit, it being irrelevant first that rectification of the document is sought or consented to by them all, and second that rectification is desired because it has beneficial fiscal consequences. On the other hand, the court will not order rectification of a document as between the parties or as between a grantor or covenantor and an intended beneficiary, if their rights will be unaffected and if the only effect of the order will be to secure a fiscal benefit. But Peter Gibson LJ went on to differ from Vinelott J in applying this principle. He held that there was an issue capable of being contested. The appeal was dismissed on another ground, that is because of the inadequacy of the evidence to satisfy the high standard of proof required for rectification. What the Court of Appeal decided in Racal was that it is sufficient, even for the closely guarded remedy of rectification, that there is a genuine issue capable of being contested, even if the parties decide that they will not in fact contest it. The test for rescission on the ground of mistake cannot be stricter than that. Until the solicitors letter of 22 November 2011 there was at least a possibility of third party claims arising, and the Revenue placed reliance on that as a reason for refusing relief. But for the letter, the Court might, if minded to grant relief, have required an undertaking to the same effect as the one that Mrs Pitt and Mr Shores have volunteered. Moreover the Revenues argument ignores the fact that unless and until the SNT is set aside, there are potentially contestable issues between the Revenue and any persons who, not being purchasers for value without notice, have received distributions from the SNT. The statutory charge under section 257 of the Inheritance Tax Act 1984 would prima facie give the Revenue a proprietary claim against such third parties. For these reasons I would reject the Revenues second new point also. The mistake claim in Pitt v Holt ground of mistake is that set out in para 126 above, and it is satisfied in Pitt v Holt. There would have been nothing artificial or abusive about Mrs Pitt establishing the SNT so as to obtain protection under section 89 of the Inheritance Tax Act 1984. There was a considerable delay in the commencement of the proceedings, but the Revenue do not rely on the delay. They do rely on rescission being pointless and therefore inappropriate, but I would reject that submission for the reasons set out above. The deputy judge found ([2010] 1 WLR 1199, para 15) that the setting aside of the settlement would have no effect on any third party (plainly he was not here treating the Revenue as a third party). I would discharge the orders below and set aside the SNT on the ground of mistake. In my opinion the test for setting aside a voluntary disposition on the
+On 29 November 2010 the Immigration Rules were amended so as to require a foreign spouse or partner of a British citizen or a person settled in this country to pass a test of competence in the English language before coming to live here (the Rule). Clearly, for a variety of reasons, some people would find this much harder to do than others. These included many people from India, Pakistan, and Bangladesh, three of the four countries from which the greatest numbers of foreign spouses and partners are drawn (the fourth is the USA). Hence the proposed Rule caused particular concern among those communities in this country where marriage to partners from those countries is most common. They saw it as a discriminatory measure which aimed to limit spousal migration from those and similar countries. These proceedings were launched in November 2010, before the Rule came into force, in order to challenge the validity of the rule itself. The appellants argue that the Rule is an unjustifiable interference with the right to respect for private and family life, protected by article 8 of the European Convention on Human Rights (ECHR); or that it is unjustifiably discriminatory in securing the enjoyment of that right, contrary to article 14 of the ECHR; or that it is irrational and therefore unlawful on common law principles. They have set themselves a difficult task. It may well be possible to show that the application of the Rule in an individual case is incompatible with the Convention rights of a British partner, as happened in the case of a different marriage rule in R (Aguilar Quila) v Secretary of State for the Home Department (AIRE Centre intervening) [2011] UKSC 45, [2012] 1 AC 621. It is much harder to show that the Rule itself is inevitably unlawful, whether under the Human Rights Act 1998 or at common law, although this was possible in the case of yet another marriage rule, in R (Baiai) v Secretary of State for the Home Department (Joint Council for the Welfare of Immigrants intervening) (Nos 1 and 2) [2008] UKHL 53, [2009] AC 287. It is not surprising, therefore, that Beatson J concluded that the fact that it might be possible to argue that the operation of the Rule was a disproportionate infringement of an individuals article 8 rights did not render the Rule itself disproportionate: [2011] EWHC 3370 (Admin), [2012] 2 All ER 653 (sub nom R (Chapti) v Secretary of State for the Home Department (Liberty intervening)), para 115. By a majority, the Court of Appeal reached the same conclusion: [2013] EWCA Civ 322, [2014] 1 WLR 208. A further difficulty is that things have not stood still since the proceedings were launched in November 2010, since Beatson J reached his decision in December 2011, and since the Court of Appeal reached their decision in April 2013. The Rule itself has stayed much the same, but it has been restated in a new Appendix FM to the Immigration Rules which seeks to deal compendiously with family relationships. More importantly, the guidance to those operating it on the ground has developed as time has gone on. And perhaps most important of all, the facts relating to the accessibility of the required tests were difficult to ascertain and are also subject to change. The discussion of the evidence and arguments, on the one hand by Dr Helena Wray and her colleagues for the appellants, and on the other hand by Mrs Helen Sayeed for the Secretary of State, has to be applied to the situation as it now is rather than as it was in 2011. The development of the Rule The Rule may be set against a background of immigration controls which have traditionally differentiated between so called primary migration, of breadwinners coming here for economic reasons, and secondary migration, of spouses, partners and other family members coming to join the breadwinners here. All are expected not to place an undue burden upon the state and its resources. Controls relating to the former look to the work or business from which the migrant intends to support himself; controls relating to the latter look to whether the family has the resources to support itself. A second background feature is that control over the entry of nationals from the European Economic Area and their families is governed by European Union law. The Rule is not concerned with them, even though English will not be the first language for the great majority. Spouses, partners and intending partners are first given limited leave to enter for a probationary period. Until 2012, this was two years, but it has now been raised to at least the five years which is required of other migrants. At the end of this period, they can apply for indefinite leave to remain (ILR). In 2005, applicants for British citizenship were for the first time required to demonstrate sufficient knowledge of the English language and about life in the United Kingdom (KOLL). In 2007, this post entry requirement was extended to applicants for ILR, including spouses and partners. This can be satisfied by taking the Life in the UK test (LUK), which requires a considerable level of competence in the English language. An alternative for non native English speakers was to take a course in English for Speakers of Other Languages (ESOL), taught with specified citizenship materials. Since October 2013, however, all applicants for ILR have been required to meet the same specific English language requirement and pass the LUK test. Such data as we have suggest that the number of spouses and partners failing the settlement test was never high and declined sharply after the first year of its introduction (Equality Impact Assessment, 2010). This is based on the numbers who had to apply for further limited leave to remain because they had failed the test, which are very small when compared with the numbers granted ILR after entering through the family route. The data indicated that a higher proportion of spouses or partners took the ESOL rather than the LUK route to satisfying the requirement. The Secretary of State suggests that this could mean that even after two years in the UK they had not acquired sufficient English to enable them to pass the LUK test. However, migrants coming from non English speaking countries are advised to take an ESOL course before attempting a settlement test. So this figure could simply reflect the fact that a higher proportion of spouses and partners come from non English speaking countries. Having taken an ESOL course with the required citizenship materials, there would be no point in their taking the LUK test instead. In 2007, the Government first floated the idea of requiring a pre entry test for foreign spouses and partners, in Securing the UK Border: Our vision and strategy for the future (March 2007). In the chapter on Wider, tougher checks abroad, under the heading Targeting areas of abuse, this made suggestions about Marriage to partners from overseas protection for the vulnerable and the skills to integrate (para 3.22). Alongside suggestions aimed at deterring or preventing forced marriages was a proposal to examine the case for introducing a new requirement to pass some form of English test before arrival. This was soon followed by a consultation paper, Marriage Visas: Pre Entry English Requirement for Spouses (December, 2007), published alongside a separate consultation paper, Marriage to Partners from Overseas, which dealt with proposals to combat forced marriages (the subject of this courts decision in Aguilar Quila). The key objectives of introducing a pre entry English requirement for spouses were said to be (para 1.11): To assist the spouses integration into British society at an early stage; To improve employment chances for those who have access to the labour market; To raise awareness of the importance of language and to prepare for the tests they will need to pass for settlement. In July 2008, the Government published Marriage Visas: The Way Forward, which dealt with the mainly negative response to both consultation papers. Opponents cited the difficulties of accessing English language lessons overseas, the interference with the right to respect for family life and individual human rights, and the view that English was best learned in the United Kingdom (paras 2.14 2.16). Nevertheless, the Government had decided upon the medium term goal of introducing an English test for spouses before they arrived here. The three stated objectives remained the same (paras 1.4, 2.2); although respondents who favoured the proposal also suggested that it would reduce the cost of translation services in the UK and bring potential benefits to spouses of improved employment opportunities, freeing them from being tied to home and family (para 2.17). But the Government decided that it would move towards this goal over a period of time (para 2.3): This is simply because there is not currently sufficient access to English language classes overseas, especially in rural areas, and to introduce the requirement in a dogmatic way immediately would simply keep British citizens apart from their loved ones, breaking up families. In the meantime, as part of the visa application process, foreign spouses would be required to enter into an agreement to learn English, showing before arrival how they planned to so do and after arrival how they were doing so. A year later, however, it was decided to implement the new policy in the summer of 2011. An Equality Impact Assessment, published in July 2009, explained that the cross Whitehall group working on the policy felt that announcing an implementation date would generate a supply of sufficient English tuition to meet demand, but it would take between 18 to 24 months to develop sufficient capacity (p 12). An Impact Assessment (of the proposed pre entry language requirements for economic as well as spousal migrants), also published in July 2009, explained that it had been decided that spouses would only have to demonstrate that they could speak (not necessarily read or write) English to level A1 of the Common European Framework of Reference for Languages (the CEFR). This was considered to require 40 to 50 hours tuition for most learners. Level A1 requires that the user: Can understand and use familiar everyday expressions and very basic phrases aimed at the satisfaction of needs of a concrete type. Can introduce him/herself and others and can ask and answer questions about personal details such as where he/she lives, people he/she knows and things he/she has. Can interact in a simply way provided the other person talks slowly and clearly and is prepared to help. After the coalition Government took office in May 2010, however, the timetable was advanced. On 9 June, the Home Secretary announced that the pre entry test requirement would come into effect in the autumn: this will help promote the economic well being of the UK, for example by encouraging integration and protecting public services. It will also assist in removing cultural barriers, broaden opportunities for migrants and help to ensure that they are equipped to play a full part in British life. On 26 July, the Minister of State for Immigration announced that the requirement would come into effect on 29 November. He confirmed that spouses and partners would have to show English language ability in speaking and listening at level A1 of the CEFR, by passing an acceptable test with an approved test provider. The Rule applies to non European spouses, civil partners, unmarried opposite and same sex partners, fianc(e)s and proposed civil partners (collectively spouses and partners) wishing to live here with a British citizen or a non European national settled in the UK. This was originally done by amendment to paragraphs 281, 284, 290, 293, 295A and 295D of the Immigration Rules: Statement of Changes to Immigration Rules, 1 October 2010 (Cm 7944). In 2011 the Rule was extended to spouses and partners of refugees and people granted humanitarian protection in the UK, covered by paras 319L and 319O: 16 March 2011 (HC 863). However, applications for leave to enter or remain made on or after 9 July 2012 are now governed by Appendix FM to the Immigration Rules. Since 1 December 2013, the English language requirement has also been imposed upon specified partners of members of the Armed Forces, under the Appendix Armed Forces. It is therefore convenient to recite the Rule as contained in Appendix FM rather than the earlier version considered in the courts below. Appendix FM provides that applicants for entry clearance or limited leave to remain as a partner must satisfy the English language requirement as follows (paras E ECP 4.1 and E LTRP 4.1): The applicant must provide specified evidence that they (a) are a national of a majority English speaking country listed in paragraph GEN 1.6; (b) have passed an English language test in speaking and listening at a minimum of level A1 of the Common European Framework of Reference for Languages with a provider approved by the Secretary of State; (c) have an academic qualification recognised by UK NARIC [the National Recognition Information Centre] to be equivalent to the standard of a Bachelors or Masters degree or PhD in the UK, which was taught in English; or (d) are exempt from the English language requirement under para E ECP 4.2. The majority English speaking countries listed in paragraph GEN 1.6 are Antigua and Barbuda; Australia; the Bahamas; Barbados; Belize; Canada; Dominica; Grenada; Guyana; Jamaica; New Zealand; St Kitts and Nevis; St Lucia; St Vincent and the Grenadines; Trinidad and Tobago; and the United States of America. The exemptions in paras E ECP 4.2 and E LTRP 4.2 apply if at the date of application (a) the applicant is aged 65 or over; (b) the applicant has a disability (physical or mental condition) which prevents the applicant from meeting the requirement; or (c) there are exceptional circumstances which prevent the applicant from being able to meet the requirement prior [to entry to the UK]. The words in square brackets in (c) do not apply, for obvious reasons, to partners who are applying for limited leave to remain here as a partner. These requirements are in essence the same as those imposed by the amendment to para 281 (for spouses) and the other relevant paragraphs of the Rules, save that these made an exception where there are exceptional compassionate circumstances that would prevent the applicant from meeting the requirement (para 281(1)(a)(ii)(c)). Compassionate has now been dropped. The courts below did not consider the guidance given to entry clearance staff as to how the Rule should be operated. The internal guidance on the English language requirement (SET 17 updated 15 February 2011) stated as follows (para SET 17.9): Discretion should be exercised only in cases where there are the most exceptional, compelling and compassionate circumstances specifically relating to the ability of the applicant to meet the language requirement, circumstances should be assessed on a case by case basis. The expectation is that use of the exceptional compassionate circumstances exemption will be rare. Financial reasons will not be acceptable. (emphasis supplied) However, at that stage, if the applicant partner was a long term resident of a country with no test centre, he or she was automatically exempted under this criterion. This exemption was withdrawn as from 24 July 2014. The current guidance on the consideration of exceptional circumstances, in the Immigration Directorate Instruction, English Language Requirement Family Members under Part 8, Appendix FM and Appendix Armed Forces, April 2015, para 7.1, contains the following passages: Each application for an exemption on the basis of exceptional circumstances will be considered on its merits on a case by case basis. Evidence of the nature and impact of the exceptional circumstances must be clearly provided, eg of previous efforts to access learning materials or to travel overseas to take an approved test and the obstacles to doing so. This must include evidence provided by an independent source (eg an appropriately qualified medical practitioner) or capable of being verified by the decision maker. Examples of situations in which, subject to the necessary supporting evidence, the decision maker might conclude that there were exceptional circumstances, might include where the applicant Is a long term resident of a country in international or internal armed conflict, or where there is or has been a humanitarian disaster, including in light of the infrastructure affected. Has been hospitalised for several months immediately prior to the date of application. Is the full time carer of a disabled child also applying to come to the UK. Is a long term resident of a country with no approved A1 test provision and it is not practicable or reasonable for the applicant to travel to another country to take a test Lack of or limited literacy or education will not be accepted as exceptional circumstances. (emphasis supplied) Further guidance is given on countries with no approved A1 test provision in para 7.2: From 24 July 2014, applicants who are resident in a country with no approved A1 English language test are expected to travel to another country to take such a test. Only where they can demonstrate in their visa application that it is not practicable or reasonable for them to do so will they be exempt from the requirement prior to entry to the UK. Reasons why it is not practicable or reasonable for an applicant to take an approved A1 test in another country will normally require more than inconvenience or reluctance to travel overseas. Subject to supporting evidence, such reasons might exist where for example: Exit visa requirements or restrictions make it very difficult for the applicant to travel overseas. The applicant faces insuperable problems in meeting immigration requirements to visit a country with an approved test centre. The applicant faces unreasonable additional travel or accommodation costs to visit a country with an approved test centre. Some applicants as a partner . already incur travel and accommodation costs to attend an approved test centre in their own country or to give their biometrics at a Visa Application Centre. In addition, all applicants for a settlement visa as a partner are required to meet a financial requirement and it is reasonable to expect that they (or their sponsor ) will generally be able to afford incurred in making reasonable costs application. Other exceptional circumstances prevent the applicant taking an approved A1 test in another country. For completeness, it is necessary also to note the circumstances in which entry clearance may be given even though the application does not meet the requirements of the Immigration Rules. The Immigration Directorate Instruction Family Migration, Appendix FM section 1.0a, Family Life (as a Partner or Parent): 5 year Routes (August 2015) deals with Exceptional Circumstances or Compassionate Factors in section 14. Entry clearance officers must in every case go on to consider whether there may be either exceptional circumstances which would make the refusal of entry clearance a breach of article 8 because [it] would result in unjustifiably harsh consequences for the applicant or their family or compassionate factors that is compelling compassionate reasons which might mean that refusal would result in unjustifiably harsh consequences even if it did not constitute a breach of article 8. Entry clearance officers cannot themselves grant entry clearance outside the Rules, but if they consider the case might meet the very high threshold they must refer it to the Referred Casework Unit in London. The threshold is very high because the Home Office considers that the appropriate balance between individual rights and the public interest has been clearly spelled out in the Rules (now underpinned by section 19 of the Immigration Act 2014). Under the heading How to consider exceptional circumstances, the Instructions state: Exceptional does not mean unusual or unique. Whilst all cases are to some extent unique, those unique factors do not generally render them exceptional. For example, a case is not exceptional just because the criteria set out in the Immigration Rules have been missed by a small margin. Instead exceptional means circumstances in which refusal would result in unjustifiably harsh consequences for the individual or their family such that refusal would not be proportionate under article 8. The fact that refusal may, for example, result in the continued separation of family members does not of itself constitute exceptional circumstances where the family have chosen to separate themselves. Cases that raise exceptional circumstances to warrant a grant of entry clearance outside the Rules are likely to be rare. In determining whether there are exceptional circumstances, the decision maker must consider all relevant factors raised by the applicant and weigh them against the public interest under article 8. Examples of relevant factors include: The best interests of any child in the UK affected by the decision. The nature of the family relationships involved, such as the length of the applicants marriage and how frequently they have contact with their children if they do not live with them . The likely impact on the applicant, their partner and/or child if the application is refused. Whether there are any factors which might increase the public interest in refusal, for example, the fact that they do not speak English (emphasis supplied) Cumulative factors should be considered. Cumulative factors weighing in favour of the applicant should be balanced against cumulative factors weighing in the public interest in deciding whether refusal would be unjustifiably harsh for the applicant or their family. The tests The research conducted on behalf of the appellants in 2011 showed that it was then by no means easy to find out which tests were offered and in which places. One problem was that tests at the very basic A1 level, and limited to speaking and listening, were not always available, whereas there might be tests at a higher level or including reading and writing skills. All the websites giving the relevant information were in English. These may, of course, have been teething troubles, given that the proceedings were launched before the Rule had come into force. The most recent information from the Secretary of State was that, as from 6 April 2015, the approved A1 test for partners overseas will be the International English Language Testing System (IELTS) Skills for Life test offered by the IELTS consortium (the University of Cambridge English Language Assessment, the British Council and IDP Education Ltd). The British Council website provides some useful information. It explains that the IELTS Life Skills test is a new test for people who need to prove their speaking and listening skills at A1 or B1 level on the CEFR. A secure English language test (SELT) can be taken at around 100 test centres around the world. There is a link to the United Kingdom Visa Information website which gives their locations. The test involves a face to face conversation lasting 16 to 18 minutes with the examiner and another candidate. It cannot be taken on line or over the telephone. There are now listening test samples on the IELTS website. These cases This case has proceeded on the basis of assumed facts (the Secretary of State not being in a position to agree them all) in order to test the lawfulness or otherwise of the pre entry language requirement, as set out in the Rules and Guidance quoted above. There are two appellants, both women who are British citizens married to foreigners. Their husbands have not applied for entry clearance because they believe themselves unable to satisfy the pre entry language requirement and accordingly the not inconsiderable fee for making an application would be wasted. Saiqa Bibi is a British Citizen who was born in Coventry and lives with her family in the West Midlands. In April 2009, she married Mohammed Jehangir, a citizen of Pakistan. They have one child, a son born in 2010, who lives with his mother. The couple keep in touch with one another by telephone and occasional visits to Pakistan. They would like to live here together as a family. Mr Jehangir was educated to matriculation level in Pakistan but in Urdu. He neither speaks nor writes any English. There is no English tuition of the level required available locally to where he lives and to obtain it he would have to make a round trip of some four hours, to Mirpur or Islamabad. This is not practicable on a daily basis, so he would have to relocate for several months to Rawalpindi, which is not affordable. Mrs Saffana Ali is also a British citizen. She spent approximately two and a half years, from 2006 to 2008, visiting the Yemen, where she met and formed a relationship with her husband Mr Ali. When she returned to this country in 2008 they kept in touch over the telephone and decided to get married. She returned to the Yemen in May 2010 and they married there in July 2010. Mr Ali does not speak any English. He has not had any formal education and is illiterate and unfamiliar with the Roman alphabet. There is no test centre in the Yemen. Because her husband is unable to come and live with her here, Mrs Ali has remained with him in the Yemen, but she would like them to be able to live together here, where she has lived since a child and has family and friends. Article 8 Everyone has the right to respect for his private and family life, his home and his correspondence: article 8(1), ECHR. In Abdulaziz, Cabales and Balkandali v United Kingdom (1985) 7 EHRR 471, the European Court of Human Rights observed that Whatever else the word family may mean, it must at any rate include the relationship that arises from a lawful and genuine marriage even if a family life has not yet been fully established. Not only that, family life, in the case of a married couple, normally comprises cohabitation. The latter proposition is reinforced by the existence of article 12, for it is scarcely conceivable that the right to found a family should not encompass the right to live together (para 62). Hence, as this court held in Aguilar Quila, married couples have a right to live together. However, in Abdulaziz, the European Court also held that article 8 did not impose a general obligation on the part of a Contracting State to respect the choice by married couples of the country of their matrimonial residence and to accept the non national spouses for settlement in that country (para 68). That statement was repeated by the Grand Chamber in the most recent case of Jeunesse v The Netherlands (2015) 60 EHRR 789 (para 107), which draws together the applicable principles. The jurisprudence of the court draws a distinction between cases where migrants who have been lawfully settled in a country for a long time face deportation or expulsion and cases where an alien is seeking admission to a host country. The former entails the possible breach of the negative obligation in article 8(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 . The latter entails the possible failure of the state to comply with a positive obligation to permit the enjoyment of family life in that country. It concerns not only family life but also immigration (paras 104, 105). Nevertheless, although the criteria developed in the first context cannot be transposed automatically into the second, the applicable principles are, nonetheless, similar. In both contexts regard must be had to the fair balance that has to be struck between the competing interests of the individual and of the community as a whole; and in both contexts the state enjoys a certain margin of appreciation (para 106). In cases involving family life and immigration, factors to be taken into account are the extent to which family life would effectively be ruptured, the extent of the ties in the Contracting State, whether there are insurmountable obstacles in the way of the family living in the country of origin of the alien concerned and whether there are factors of immigration control (for example, a history of breaches of immigration law) or considerations of public order weighing in favour of exclusion (para 107). If family life was created when the people involved were aware that the persistence of family life within the host state would be precarious, it is likely only to be in exceptional circumstances that the removal of the non national family member will constitute a violation of article 8 (para 108). However, where children are involved, their best interests must be taken into account: Whilst alone they cannot be decisive, such interests certainly must be afforded significant weight (para 109). In Jeunesse, the Grand Chamber found that, although the applicant had married and had three children while her immigration status in the Netherlands was precarious, there were exceptional circumstances such that a fair balance had not been struck between the competing interests involved: the husband and three children were all citizens of the Netherlands with the right to enjoy family life there; the applicant had lost her Dutch nationality when Suriname became independent and not through her own choice; she had been living in the Netherlands for 16 years and had no criminal record; although there were no insurmountable obstacles to the whole family settling in Suriname, they would experience a degree of hardship if forced to do so; and the Dutch authorities had paid insufficient attention to the problems the children would face in either having their whole lives disrupted by a move to Suriname or being separated from their primary carer. In the circumstances, it was questionable whether general immigration policy considerations of themselves can be regarded as sufficient justification for refusing the applicant residence in the Netherlands (para 121). Although Strasbourg analyses these cases in terms of a fair balance, in this country we have, at least since the decisions in Huang v Secretary of State for the Home Department [2007] UKHL 11, [2007] 2 AC 167 and Aguilar Quila, spelled out the principles in conventional proportionality terms. As Lord Wilson put it in Aguilar Quila, para 45, following Lord Bingham in Huang, para 19, four questions generally arise: (a) is the legislative objective sufficiently important to justify limiting a fundamental right?; (b) are the measures which have been designed to meet it rationally connected to it?; (c) are they no more than are necessary to accomplish it?; and (d) do they strike a fair balance between the rights of the individual and the interests of the community? (a) Legitimate aim It is important to appreciate that, although the context of this case is immigration, the Government has never suggested that the aim of the Rule is to limit immigration by spouses and other partners of people settled here. It does not operate, and is not intended to operate, as a cap on the number of partners admitted. It has long been taken for granted that the wives of British citizens have the right to join their husbands here traditionally, wives were expected to assume their husbands nationality and domicile on marriage, and indeed there may still be countries in the world where women lose their nationality of origin on marrying a foreigner. British immigration law originally reflected this right, but was obliged, following the Abdulaziz case, to afford it also to the husbands of British citizen wives. The same right was later extended to unmarried couples who had been living together in a relationship akin to marriage for some time and then to civil partners and same sex couples living together in a relationship akin to civil partnership. All of this reflects the importance attached to family relationships in modern international human rights law. The Universal Declaration of Human Rights of 1948 proclaimed that The family is the natural and fundamental group unit of society and is entitled to protection by society and the state (article 16.3). The International Covenant on Civil and Political Rights of 1966 translated this into a binding obligation in exactly the same words (article 23). Both of these documents proclaimed that the rights they provided must be respected without discrimination on grounds such as race and sex (article 2 in each case). The Human Rights Committee, in General Comment No 19 (1990), explained that different States might have different concepts of the family, but whatever their concept, it must be afforded the protection required. The International Covenant on Economic and Social Rights goes even further, in providing that The widest possible protection and assistance should be accorded to the family, which is the natural and fundamental group unit of society (article 10.1). Appendix FM to the Immigration Rules does impose some limits on the right of partners to come here. For example, they must fulfil certain suitability requirements, mainly relating to the lack of criminal convictions; the couple must both be at least 18 and their relationship must be genuine and subsisting; and they must be able to support and house themselves from their own resources. In general, these are aimed at the protection of society from harmful behaviour, the prevention of abuse, and the protection of public funds. It is accepted that partners who come here will make use of those public services, such as education and the National Health Service, which are available to all. So what, then, are the aims of the English language requirement? As originally stated, they were three: (i) to assist the partners integration into British society at an early stage; (ii) to improve their employment chances, given that they have access to the labour market as soon as they arrive; (iii) to raise awareness of the importance of language and to prepare for the tests they will need to pass for settlement. Following the consultation, three further aims emerged: (iv) to save translation costs; (v) to benefit any children the couple might have; and (vi) to reduce the vulnerability of newly arrived spouses, especially women. In article 8 terms, these probably fall under the rubric of the interests of the economic well being of the country or, just conceivably, the protection of the rights and freedoms of others. Some may think, however, that they are not as important as the prevention of disorder or crime, which is the main aim of the suitability requirements, or the protection of the public purse, which is the main aim of the financial requirements. The appellants have filed extensive evidence in support of their arguments in response to the rather less extensive evidence filed on behalf of the government. Some of that evidence and argument is summarised and commented upon below. As to (ii), it is true that partners are permitted to join the labour market as soon as they arrive, and if they choose to do so, basic English language skills will no doubt help them to get a job outside their own community. It may well be that most husbands coming to join their wives here do intend to join the labour market, but the same may not be true of most wives. There is evidence that language skills are associated with higher earnings (but this may not be the only reason for persistent wage differentials between different cultural groups). But, valid though the aim is for those who do intend immediately to join the labour market, partners are not required or even expected to do so that is not the reason why they are admitted. As to (iii), the basic pre entry level might be some help in preparing for the settlement test, but in the opinion of Dr Geoffrey Jordan, the language expert who contributed to Dr Wrays report for the appellants, the pre entry test is of almost no value in getting the learner off to a flying start. It will pale into insignificance compared with the opportunities of learning the language over the (now) five years that the partner will have to be here before taking the settlement test. The need to pass the test before being allowed to stay here indefinitely should be sufficient incentive even for those who, perhaps for cultural reasons, might otherwise not be inclined or encouraged to do so. Of course, this would not be an incentive for those who are prepared to remain here without ILR and rely on their article 8 rights to resist removal. As to (iv), this was not among the original aims, and no one has been able to put any sort of financial value upon it. There are, as Mrs Helen Sayeed, for the Government, says, plenty of data suggesting there is significant reliance on translation support services (WS No 2, para 10). However, given the substantial burden of translation caused by the people who are already here, no one has shown what, if any, extra burden is occasioned by allowing partners to come here without any pre entry language requirement or how much help that requirement is in reducing the need for translation when communication really matters. As to (v), there is some evidence that children whose first language is not English do less well at school, but a pre entry language requirement will not ensure that English is spoken at home. Children already here have ample opportunities for learning the language outside the home; children coming here with the foreign partner (which, as Mrs Sayeed says, is less likely because many of those seeking marriage visas are newly married) will have similar opportunities; children are usually much quicker at picking up another language than are adults and are often a valuable source of learning for their parents, rather than the other way around. More important, for children such as Saiqa Bibis son, the choice is not between having a parent here with or without basic English language skills but between having a parent here and not having a parent here at all; separation is likely to be far more damaging to the child than living with a parent who has yet to acquire any English. As to (vi), the Government does not assert that this is a key rationale, although if it has any impact it would likely be a positive one given the migrants better position to seek help/advice (Helen Sayeed, WS 2, para 16). Pragna Patel, of Southall Black Sisters, the best known organisation working with migrant women suffering domestic abuse, does not see a pre entry test as being of significant benefit to them: language is the least of the problems they face in obtaining access to advice and services. Nevertheless, it is likely that even basic language skills will be of some benefit to vulnerable women who come here as spouses. All the stated aims are, in reality, aspects of the first, which is to assist the partners integration into British society at an early stage. This is undoubtedly an important aim. In 2006, the Secretary of State for Communities and Local Government established an independent Commission on Integration and Cohesion. Their Report, Our Shared Future, was published in 2007. According to the Commission, cohesion is principally the process that must happen in all communities to ensure different groups of people get on well together; while integration is principally the process that ensures new residents and existing residents adapt to one another (para 3.2). Research done for the Commission by Ipsos MORI, Public Attitudes towards Cohesion and Integration, 15 June 2007, found that interaction with people from different backgrounds was seen as fundamental to fostering a better sense of community and cohesion. Inability to speak English was seen as the biggest barrier to being English. The Commission saw a shared language as being fundamental to integration and cohesion for settled communities, new communities, and future generations of migrants (para 5.35). Improving the availability of ESOL classes and reducing the amount of automatic translation of official information into other languages were among their key recommendations. It is not difficult to see the benefits to integration of even a basic level of English language skills. It must be beneficial for a newly arrived partner to be able to go into a shop and buy groceries and other necessities, to say hello to the neighbours, to navigate public transport, to inter act at a simple level with bureaucrats and health care professionals. Integration is a two way process. It must be beneficial for others to see that the people living in our midst and intending to stay here are able and willing to join in and play a part in everyday social interactions, rather than keeping themselves separate and apart. All of this is, to use the term used by Maurice Kay LJ, benign. The question for us, however, is how important a pre entry test is in achieving these benign aims. What value does it add to the post entry settlement test? There has been some suggestion that foreign spouses were not achieving the same standard as other applicants for ILR. This was because more of them were choosing the ESOL route than the LUK route to demonstrate the required knowledge of language and life in the UK. But, as already explained, taking an ESOL course is recommended for those whose first language is not English. Given that most foreign partners come from countries where the first language is not English, it is scarcely surprising that they should take such a course and, having taken it, choose this route to qualify. Now that all candidates are to be expected to take the same tests, no doubt most will still take an ESOL course in order to gain the required skills. More importantly, the expert evidence filed on behalf of the appellants suggests that the very basic level of language required by the pre entry tests will not be of much help to them. The best and quickest way to learn the language is by practice and immersion while here rather than in a foreign classroom. As the appellants language expert, Dr Geoffrey Jordan, put it Learning a second language is not like learning Geography or Law: it is more akin to learning to swim, drive or use a computer. To be a competent user of English as a second language requires that declarative knowledge (I know about this) becomes procedural knowledge (I can do this), and it is thus, essentially, a question of practice. It is also worth bearing in mind, as Dr Katherine Charsley explained in her evidence for the appellants, that there are several dimensions to integration economic, social, cultural and civic and that there are many processes of integration as well as language. It is also a two way process. She suggests that migrant side attempts to integrate may mean little or even have negative effects if the response of the host population is not inclusive. Further, she cites the Commissions suggestion that perceptions of inequality may undermine integration. Measures that are perceived as discriminatory and exclusionary are likely to be counter productive to integration by producing ill feeling, and undermining equality of opportunity and participation. The evidence therefore leads to the conclusion that the Rule does have a legitimate aim (or a series of aims all linked to the promotion of integration and with it the larger aim of community cohesion) and that the aim is sufficiently important to justify interfering with the fundamental right to respect for the family life of British citizens or persons settled here who wish to be joined here by partners from overseas. Nevertheless, the aim is not as important as the other aims to which the pre entry qualifications of foreign partners are addressed and the aim of a pre entry language requirement is not as important as the aim of ensuring that all migrants learn English once they are here. (b) A rational connection In this case it is not difficult to see a rational connection between the measure and the aim it seeks to achieve. I would not base this, as Beatson J did, on the suggestion that spouses and other partners are a key target group whose language skills after entry are not as good as those of other migrants. That is debateable. But a pre entry language requirement is also imposed upon economic migrants. While it may be doubted that requiring a very basic level of spoken English before entry makes a great contribution to the overall aim of promoting integration, it cannot be said that it makes no contribution towards it at all. (c) A less intrusive means Sir David Keene dissented in the Court of Appeal. He concluded that the pre entry test had not been shown by any substantial empirical evidence to be no more than is necessary to achieve the legitimate aim (para 59). The post entry test was achieving its object. The numbers of spousal migrants who had to seek further limited leave to remain because they had failed the test fell from 3,245 in 2007 (when it was first introduced), to 995 in 2008, to 470 in 2009. This was in any event a tiny proportion of the spousal migrants who achieved settlement in 2009. Of course, it is possible that some spousal migrants, having been granted entry clearance or leave to remain, never apply for ILR and so manage to avoid having to show that they know anything about the life and language of the UK. It is not currently possible to know how many people with expired visas have left the country and accordingly how many have not. It is known that there is a large number of over stayers but it seems inherently unlikely that many of these are spousal migrants. In the opinion of Dr Helena Wray, they have a regular path to settlement; they live amongst the settled community, often working or bringing up a family, so that it would be hard for them to go to ground; and they have the possibility of further limited leave to remain while taking or retaking the test. Thus the aim of integration through shared language skills is principally achieved through the post entry ILR language requirement, which involves virtually no interference with the right to respect for family life. Nevertheless, the longer a spousal migrant is here without acquiring the required language skills, the harder it will be to oblige them to leave. There is therefore some benefit to integration and cohesion in requiring a very basic level of language at the outset. In reality, this point merely serves to reinforce the point made earlier, that the aim of the pre entry test is benign but comparatively modest. The real question is whether a fair balance has been struck. (d) A fair balance? We do not have reliable figures on the impact which the pre entry requirement has had on the numbers of applications by partners for entry clearance. Indeed, this is one of the complaints made by the appellants the figures are in the hands of the Secretary of State and she should have been making a systematic study of the effect of the new Rule. The global figures do suggest that there was an upsurge in applications in 2010 before the Rule came into force and a dramatic falling off in 2011. Numbers were up in 2012 but had still not recovered to their 2009 level. The refusal rate was also far higher in the first half of 2012 than it had been in 2009 (the second half of 2012 will also have been affected by the increase in the household income requirements). The lack of systematic information makes it difficult to work out the extent of the interference with the article 8 right at a global level, although it seems clear that there has been some effect. However, it is not so difficult to work out the extent of the interference at an individual level. There will be some applicant partners who already have some command of English; there will be others who can arrange access to appropriate tuition without much difficulty; and among these there will be some who will not find it difficult to attend a test centre. For them the language requirement will not present such an obstacle that it can be termed an unjustified interference with their partners article 8 rights. There will, however, be many applicants who do not already have some command of the English language. Many of these will find it hard to arrange access to appropriate tuition. Dr Jordans evidence is that success in learning English as a second language in a foreign country is affected by factors such as age, education, economic and social position, cultural values, motivation, and quality of instruction. He points out that most people living in under developed countries are at a severe disadvantage due to their lack of contact with English, their low educational level and lack of study skills, their lack of intrinsic motivation, their lack of economic resources, their sometimes very different cultural values and their inability to avail themselves of any worthwhile English language instruction. In his opinion, the grammar based methods of teaching English which are still prevalent in many parts of the world, including the Indian sub continent, are not well suited to acquiring the oral communication skills required by the test. It was the lack of suitable tuition which led the Government originally to delay the introduction of the new requirement (see para 8 above). But the Government has since taken the view that their only responsibility is for the test. But the accessibility of such tuition is relevant to the question of fair balance. For example, people living in remote rural areas may experience serious difficulties in gaining access to suitable tuition, which may only be obtainable at unreasonable cost. There may also be some for whom getting to a test centre for the required 16 to 18 minutes face to face conversation will be impossible or prohibitively expensive. The interference with the article 8 rights of the British partners of the people who face these obstacles is substantial. They are faced with indefinite separation, either from their chosen partner in life, or from their own country, their family, friends and employment here. It is worth recalling that the interference in Aguilar Quila, which was termed colossal, was merely temporary, whereas the interference here may be permanent. The problem lies not so much in the Rule itself, but in the present Guidance, which offers little hope, either through the exceptional circumstances exception to the English language requirement (see paras 17, 18 above), or through the even fainter possibility of entry clearance outside the Rules (see para 20 above). Only a tiny number achieve leave to enter through these routes. This is not surprising given the way in which the Guidance is drafted. The impracticability of acquiring the necessary tuition and practice or of accessing a test centre is not enough. Financial impediments are not enough. Furthermore, all applications for an exception to be made will be considered on a case by case basis. This means that the considerable expense of making an application has to be risked, even though, on the current Guidance, the chances of success are remote. It is not enough to say (see para 7.2 of the Guidance at para 18 above) that partners are expected to be self sufficient without recourse to public funds when they come to this country and can therefore be expected to find the resources to meet this requirement. It is one thing to expect that people coming here will not be dependent upon public funds for their support. It is quite another thing to make it a condition of coming here that the applicant or sponsor expend what for him or her may be unaffordable sums in achieving and demonstrating a very basic level of English. Given the comparatively modest benefits of the pre entry requirement, when set against the very substantial practical problems which some will face in meeting it, the only conclusion is that there are likely to be a significant number of cases in which the present practice does not strike a fair balance as required by article 8. This does not mean that the Rule itself has to be struck down. There will be some cases in which the interference is not too great. The appropriate solution would be to recast the Guidance, to cater for those cases where it is simply impracticable for a person to learn English, or to take the test, in the country of origin, whether because the facilities are non existent or inaccessible because of the distance and expense involved. The guidance should be sufficiently precise, so that anyone for whom it is genuinely impracticable to meet the requirement can predictably be granted an exemption. As was originally proposed, those granted an exemption could be required to undertake, as a condition of entry, to demonstrate the required language skills within a comparatively short period after entry to the UK. Article 14 The appellants also complain that the requirement discriminates against some people in the enjoyment of their article 8 rights on grounds of nationality and may also be discriminatory on grounds of race or ethnicity. On its face, it is directly discriminatory on grounds of nationality. Nationals of the listed countries (see para 13 above) are exempt. I would not, therefore, agree with Beatson J that it is not directly discriminatory because nationals of Anglo phone countries are not similarly situated to nationals of other countries. I agree with Ms Karon Monaghan QC, for Liberty, that it is not possible to use the protected characteristic as a basis for holding that their situations are relevantly different. They are all in the same situation of wanting to come to this country to join their partners who are settled here. However, direct discrimination, even on grounds of nationality, is capable of justification under article 14. In the context of immigration, nationality is not a particularly suspect classification. The appellants complain that the exemptions are irrational. Canadians, for example, are exempt, even though there are many Franco phone Canadians for whom English is not the first language and some for whom it is not even a second language. Nigerians, on the other hand, are not exempt even though English is the medium of instruction in all Nigerian secondary and most Nigerian primary schools. The Anglo phone Caribbean countries are exempt, even though their success rate in the LUK test for ILR is only average. However, in the context of a language requirement, being a national of an Anglo phone country is a reasonable proxy for a sufficient familiarity with the English language to be able to begin to integrate with the local community immediately on arrival. This is a context in which a bright line rule makes sense. If the discrimination were not held justifiable, it would not follow that the English language requirement should be abolished. As with any discriminatory rule of this sort, the choice of cure can either be to level up or to level down. The Government could choose either to abolish the requirement altogether or to apply it to everyone, including partners from the exempt countries. The discrimination argument therefore adds nothing to the article 8 argument, which for the reasons already explained, may lead to the conclusion that Convention rights have been violated in a significant number of cases. Conclusion I would not strike down the Rule or declare it invalid. It will not be an unjustified interference with article 8 rights in all cases. It is capable of being operated in a manner which is compatible with the convention rights. Hence the appellants must be denied the remedy they seek. However, the operation of the Rule, in the light of the present Guidance, is likely to be incompatible with the convention rights of a significant number of sponsors. There may well be some benefit, therefore, both to individuals and to those administering the Rule, in declaring that its application will be incompatible with the Convention rights of a UK citizen or person settled here, in cases where it is impracticable without incurring unreasonable expense for his or her partner to gain access to the necessary tuition or to take the test. But this was not the remedy sought by the appellants and we have received no submissions on it. I would therefore invite such submissions before finally deciding the outcome of this appeal. LORD HODGE: (with whom Lord Hughes agrees) I agree with Lady Hale (a) that there is no basis for striking down rule E ECP 4.1 in Appendix FM to the Immigration Rules and (b) that the guidance, because of the narrowness of the exceptional circumstances for which it allows, may result in a significant number of cases in which peoples article 8 rights will be breached. To avoid that unfortunate outcome, the Government may need to take further steps toward providing opportunities for spouses and partners to meet the requirement or may need to amend its guidance. But I am not persuaded that the court should issue the declaration that she proposes and the range of her criticism of the guidance exceeds my concerns. I therefore set out my views briefly. In para 33 of her judgment Lady Hale summarises the six reasons which the Government have advanced for the introduction of a pre entry English language requirement. They are: (i) to assist the partners integration into United Kingdom society at an early stage; (ii) to improve their employment chances as they have access to the labour market as soon as they arrive; (iii) to raise awareness of the importance of language and to prepare for the tests they will need to pass for settlement in this country; (iv) to save translation costs; (v) to benefit any children the couple may have; and (vi) to reduce the vulnerability of newly arrived spouses, especially women. The appellants led evidence which sought to call into question the extent to which the proposed English language test could achieve those benign aims. Because the IELTS English language test is at a basic A1 level, the appellants argued with some force that its contribution to several of the listed aims may be modest. That may well be so. But like the majority of the Court of Appeal (Maurice Kay LJ (at para 30) and Toulson LJ (at para 52)) I consider that this courts role does not extend to overruling the predictive judgment of the executive branch of government on an issue of social policy at a stage when empirical evidence of the consequences of the policy is unobtainable. In my view the law gives the executive branch a wide margin of appreciation in its assessment of the consequences of its social policy in this sphere. In each of the appeals a female UK citizen has gone overseas and found a spouse from within a community with which she has a connection. Often it may be a male UK citizen who seeks to find a spouse or partner from within his community overseas, and in such cases the sixth purpose listed above may be an important good: the benefit which flows from language competence is not only improved access to advice in event of mistreatment but, more generally, the ability to lead ones life with a degree of independence and autonomy. In any event, it appears to me that the core aim of the policy is the first listed purpose, namely to assist the early integration of the incoming partner into UK society. Aims (ii) (employment), (iii) (raising awareness of integration) and (vi) (reducing vulnerability) are closely connected with this core aim. Together, they are not to be undervalued. It is in the general interest of all in this country that those who join its community become real participants in it, and are seen to do so. I would also not underestimate the value of establishing a minimum language familiarity before entry, since that will help to instil the need for integration. The monitoring of language proficiency subsequently can be difficult; it may be scarcely practicable, as well as harsh, to contemplate removal in the event of failure to achieve it, particularly once a family of children is established. But the debate about the efficacy of the policy to achieve those other aims is water swirling around the rock of the policy of promoting integration and thereby social cohesion within our society. The pre entry test is the first stage of the process of integration. Further, as Lady Hale has shown (para 26), the Strasbourg court has in several cases pointed out that there is no general obligation on a state to facilitate or allow a couple who are married to live within it. This court has made similar observations: ZH (Tanzania) v Secretary of State for the Home Department [2011] 2 AC 166, para 19 per Lady Hale; R (Aguilar Quila) v Secretary of State for the Home Department (AIRE Centre intervening) [2012] 1 AC 621, para 42 per Lord Wilson. Mixed nationality couples have no right to set up home in whichever country they choose. International instruments which seek to protect family life need to be read against that background. Nonetheless, the article 12 ECHR right to marry is a strong right (R (Baiai) v Home Secretary [2009] 1 AC 287, para 13 per Lord Bingham), and article 8 ECHR confers a right to respect for the resulting family, which is the fundamental social unit. That protection involves, as Lord Wilson stated in Aguilar Quila (above) at para 42, a fact specific investigation whether the states obstruction of a married couples choice to reside in it is justified under para 2 of article 8. It may well be that, as Lady Hale says (para 34 above), the principal article 8(2) purpose which is relevant is the interests of the economic well being of the country. But the value of social and cultural cohesion, and the reduction of isolation and mistrust, bear also on the rights and freedoms of others already living here. Of the four questions which Lord Wilson posed in Aguilar Quila at para 45, which Lady Hale sets out at para 29 of her judgment, I agree with her conclusions (a) that the legislative objective of integration and social cohesion is sufficiently important to justify limiting a fundamental right, (b) that the measures are rationally connected to that objective and (c) that they are no more than are necessary to accomplish it. The problem which the operation of the policy faces is the fourth question do [the measures] strike a fair balance between the rights of the individual and the interests of the community?. For the reasons which I discuss below, I think that there may be a number of cases in which the operation of the Rule in terms of the current guidance will not strike a fair balance. But there may also be many cases in which it will. The court would not entitled to strike down the Rule unless satisfied that it was incapable of being operated in a proportionate way and so was inherently unjustified in all or nearly all cases: R (MM (Lebanon)) v Secretary of State for the Home Department [2015] 1 WLR 1073, paras 133 and 134 per Aikens LJ. As a result, the appellants fail to show that the rule itself is an unjustifiable interference with article 8 rights. The principal problem which the operation of the rule is likely to confront relates to the availability and accessibility of English language tuition and testing overseas. Beatson J focussed on this matter in the seventh question which he posed for himself in para 81 of his judgment in this case in which he asked: What teaching and testing facilities are available in the countries from which there are significant numbers of applicants, how accessible are those facilities (in terms of geography and cost), and are such tests as are available appropriate for the standard required? In his discussion of the answer to this question (at paras 104 to 109 of his judgment) he recognised that the operation of the policy might give rise to questions of disproportionate interference in individual cases, depending on (a) whether the Home Secretary granted further exemptions to countries where there was no test centre and (b) how her officials dealt with particular cases. At paras 17 to 20 of her judgment Lady Hale sets out the current guidance given to officials on how they should consider exceptional circumstances under E ECP 4.2(c) in Appendix FM of the Immigration Rules. From the emphasis which she has supplied to certain passages in that guidance, it is clear that she takes issue with (a) the exclusion from exceptional circumstances of the lack of or limited literacy or education, and (b) the assertion that it is reasonable to expect the applicants or their sponsor to be able to afford reasonable costs incurred in making their application. I would not impugn either of those requirements in themselves. It is not, at least yet, demonstrated that limited literacy or education makes it unreasonable to expect an applicant to learn rudimentary English, or that the methods of teaching are not adjusted to such limitations, although it is likely to be true that classroom or traditionally grammatical methods are not. To my mind the principal problem which the evidence adduced by the appellants suggests is that within certain states, with which many UK citizens have a close connection, there are areas, including rural areas, from which it may not be reasonably practicable for the incoming spouse or partner to obtain the needed tuition without incurring inordinate cost, for example by having to travel long distances repeatedly or to reside for a prolonged period in an urban centre in order to complete the relevant language course. Dr Geoffrey Jordan suggested in Dr Helena Wrays second report that preparation for the A1 test could involve 90 hours of tuition (para 40). In principle, it is not unreasonable to expect some level of expenditure by the spouse/partner who aspires to live in this country or by the presently resident sponsoring party; the potential financial benefits of life in the UK are significant. But in a particular case the potential cost may be shown to be inordinate, undermining the fair balance which article 8 requires. Dr Jordan also stated that some testing centres offered the A1 speaking and listening test but required English reading skills in order to take it and others offered the test only when it was combined with tests involving reading skills. If that is still the case and it creates a significantly higher hurdle than the A1 test which the UK Government requires, that also might affect the fair balance in an individual case. It is impossible at the moment to predict what level of provision of testing centres will be made, or what identification of sources of tuition. Travel to a major city is likely to be an inevitable part of obtaining entry clearance or of eventual travel to the UK in any event. But the central issue is the accessibility of both tuition providers and approved testing centres which offer the stipulated test without additional language requirements. This will no doubt call for examination on the facts of specific cases. In my view in order to ensure a fair balance the Government should consider amending the guidance to allow officials to consider whether it is reasonably practicable for the incoming spouse to obtain the needed tuition and sit the test without incurring inordinate costs. I agree with Lady Hales approach to the article 14 case in para 58 of her judgment and I agree with the Court of Appeal (para 47) and Beatson J (para 145) that the common law challenge fails. I have concerns about making any declaration of incompatibility as (i) circumstances on the ground in the countries in which incoming spouses or partners reside are likely to be changing over time, (ii) I see little benefit in a generally worded declaration which gives no guidance on what makes it unreasonable to expect the incoming partner to comply with the Rule, and (iii) I am not persuaded that it is appropriate to extend declarations of incompatibility to circumstances outside the scope of section 4 of the Human Rights Act 1998. But I am content with Lady Hales proposal that we should invite submissions from the parties before reaching a concluded view on this suggestion and making our final determination. LORD NEUBERGER: I have had the benefit of reading in draft the judgments of Lady Hale and Lord Hodge. I agree that these two appeals should be dismissed because rule E ECP 4.1 in Appendix FM to the Immigration Rules (the Rule), set out in paras 12 13 above, is lawful. However, I also agree with them that the guidance (the Guidance) contained in para SET 17.9 (updated 15 February 2011) as expanded in the Immigration Directorate Instruction, set out in paras 16 20 above, seems to be bound to result in article 8 rights being infringed on a number of occasions. The Rule imposes what may be called a pre entry English requirement for spousal migrants ie it requires a foreign spouse or partner of a British citizen or person settled in the United Kingdom to produce a test certificate of knowledge of the English language to a prescribed standard prior to entering the United Kingdom, as Maurice Kay LJ described it below [2014] 1 WLR 208, para 1. As he went on to explain, [p]reviously such persons were only required to demonstrate such knowledge two years after entering the United Kingdom, and only then could they obtain indefinite leave to remain (ILR). In these proceedings, the appellants contend that the Rule infringes article 8 and that it therefore should be struck down. There is no doubt that it interferes with article 8 rights, and it therefore has to satisfy the familiar four tests, or Requirements, which are set out by Lady Hale in para 29 above namely, legitimate aim, rational connection, less intrusive means and proportionality. The aims of, or reasons for, the Rule are set out in summary form by Lady Hale at para 33 and by Lord Hodge at para 62. Opinions may no doubt differ as to the relative or absolute importance of each of these six aims, although I agree with Lady Hale and Lord Hodge in thinking that the first, assisting integration into British society at an early stage, is plainly the most important. However, improving employment prospects, benefitting children, and reducing vulnerability (especially of women) all seem to me to be very worthwhile aims, one or more of which could, in some individual cases, turn out to be more significant than the first aim. Accordingly, there can be no doubt but that these aims are plainly legitimate; indeed, they are the sort of aims which one would expect a government to have. The first Requirement, however, is not merely that the aims are legitimate, but that they justify interfering with, or limiting, a Convention right. In this case, the Rule interferes with the article 8 rights of men and women in this country whose partners abroad may be impeded in their attempts to join them in the United Kingdom. Although article 8.1 is very wide in its reach, article 8.2 of course makes it clear that it is not an absolute right, and it does not impose a duty on a state to facilitate, or even to allow, a married couple to live together. The limits on article 8.1 rights in this connection were helpfully summarised by Lady Hale in ZH (Tanzania) v Secretary of State for the Home Department [2011] 2 AC 166, para 19. Particularly bearing that factor in mind, it seems to me that, at any rate if taken at face value, the six aims represent a set of reasons which easily serve to enable the Rule to satisfy the first Requirement, as they are sufficiently important to justify the interference with article 8 rights in question. However, the evidence adduced on behalf of the appellants may be said to call into question whether the first Requirement is satisfied. I shall consider that evidence when dealing with the fourth Requirement, proportionality. However, for the purposes of the first Requirement, I am very dubious whether the evidence can, even on a quick reading, assist the appellants. The evidence does not suggest that implementation of the Rule will achieve its purpose in only a negligible number of cases; indeed, it would be surprising if any expert was prepared to say that in the light of the available information. Once it is accepted, as I think it must be, that the Rule is likely to achieve its purpose in a significant number of cases, I believe it must follow that the first Requirement is satisfied. As to the second Requirement, it is not in my judgment realistically possible to argue against the proposition that there is a rational connection between the six aims and the Rule. So far as the third Requirement is concerned, it was contended by the appellants that the Rule had not been shown to be the least intrusive way of achieving the six aims, or, to put it another way, it had not been established as being no more than necessary to achieve the six aims. In this connection, it is worth bearing in mind that the approach of a court to the third Requirement should not be absolutist. Indeed, it has been authoritatively said that the question it involves may be better framed as was the limitation of the protected right one that it was reasonable for the legislature to impose to achieve the legitimate aim, bearing in mind any alternative methods of achieving that aim per Lord Reed in Bank Mellat v HM Treasury (No 2) [2014] 1 AC 700, 791, para 75, citing Dickson CJ in R v Edwards Books and Art Ltd [1986] 2 SCR 713, 781 782. The appellants case, which was accepted by Sir David Keene in his dissenting judgment in the Court of Appeal, [2014] 1 WLR 208, paras 55 59, was based on the pre existing system. He considered that the evidence showed that that system, which involved relatively little interference with article 8 rights, was working satisfactorily, and therefore there was no need for the far more intrusive Rule. The figures provided by the Home Department, which Sir David cited in support of this view, showed that the numbers of spouses who failed the English test under the pre existing system were 3,245 in 2007, 995 in 2008, and 470 in 2009. I am not convinced that these figures assist the contention that the third Requirement is not satisfied. However, at least in relation to this appeal, that is an arid point which it is unnecessary to decide, because they clearly are relevant to the fourth Requirement (which Sir David also relied on in paras 55 59 of his judgment). At any rate, subject to that concern, it appears to me that the third Requirement is clearly satisfied. If there is to be a Regulation ensuring that would be spousal migrants (applicants) attain a specified level of English before coming to the UK, no less an intrusive alternative to the Rule has been suggested. That then leaves the final Requirement, proportionality. In addition to the evidence of figures provided by the Home Department and summarised at the end of para 86 above, the appellants rely on other evidence to which I have already alluded. As Lady Hale explains in paras 43, 44 and 47 of her judgment, the appellants have collated detailed expert assessments, including facts and opinions, from Dr Jordan, Dr Wray and Dr Charsley. In their view, there is real reason to doubt the likely efficacy of the Rule in achieving each of the six aims. They also explain that there will be a number of cases where application of the Rule in accordance with the Guidance is very likely to render it impossibly hard, in practical terms, for a person to attain the necessary proficiency in English or to take the test to prove that he or she has done so. This evidence does give rise to some concern, but I do not consider that it justifies the conclusion that the Rule infringes article 8. So far as the numbers of spousal migrants who fail the post entry test are concerned, it is fair to say that the figures set out at the end of para 86 are relatively small. However, those figures do not take into account the possibility that, once in the UK, some spousal migrants may never apply for ILR, and therefore have not been taken into account. Further, the Home Departments 2009 Equality Impact Assessment identified foreign spouses as the largest group who do not pass the English test after two years. It is therefore apparent that a significant proportion of spousal migrants who entered the UK each year did not learn English to the requisite standard during the two years following their arrival, but it is not possible to identify the precise proportion. That means that, each year, there was a significant, but unspecified, number of spousal migrants who (i) remained in the UK not speaking English, (ii) were deported after having lived here for more than two years, or (iii) learned English later. Both the available evidence and common sense lend support for the notion that category (ii) and, albeit more speculatively, category (iii), includes many fewer people than category (i). Even spousal migrants who, under the pre existing system, learned English after arriving were, at least on the Departments not unreasonable assessment, in a weaker position than they would be under the Rule, because the effect of the Rule is that spousal migrants learn English before arriving here and are therefore able to hit the ground running. As for the experts, they were not saying that the implementation of the Rule could do nothing to achieve the stated aims: they are sceptical whether it will do so to any significant extent, and they are concerned that it may, in some respects, be counter productive. They also consider that there will be many people for whom the possibility of learning English, or taking the relevant test, in their home country would be impossible or near impossible. The likelihood of, and the extent to which, the six aims will be achieved by implementing the Rule is, in the end, a matter of judgment, on which it is virtually inevitable that reasonable people who have carefully considered the matter, whether or not with any particular expertise, will differ. Similarly, it is very hard to assess how many people would be put in difficulties by having to comply with the Rule, and how great or insurmountable those difficulties might be. There is no reliable, objective, quantitative evidence available on any of those issues. Accordingly, it is unsurprising, that the appellants are able to rely on opinion evidence, which is based on experience and judgment. Given that it is not inherently improbable and that it comes from properly qualified and experienced experts, this evidence is worthy of respect. However, any court should be very slow indeed before relying on such evidence as the sole or main justification for invalidating government policy, particularly when the policy concerns a sensitive social issue, and the main aim of the policy is fairly described as benign, as Lady Hale says in para 41 above. As to the concerns about hardship or impossibility, when considering individual cases a great deal may depend on how the Rule is operated. However, the instant claims have been launched and argued on the basis of challenging the Rule in limine, and not how it is operated, let alone how it would have been applied in these two cases. It is true that it appears quite possible that the effect of implementing the Rule may not be particularly substantial. However, the court should accord to the executive a wide measure of discretion when deciding on the likely value of a policy such as that embodied in the Rule. Furthermore, the Home Department carried out two substantial Impact Assessments and two substantial Equality Impact Assessments before deciding to introduce the Rule, albeit that those assessments were not directed to the issue raised in these two cases, namely the impact on article 8 rights of people in this country. As Toulson LJ said in para 51 in the Court of Appeal, there is an inevitable degree of crystal ball gazing, when it comes to an experimental scheme such as that embodied in the Rule. In such a case, one must be wary of complaining about the lack of a quantitative or precise assessment of the extent of the likely benefits, and it is fair to add that no such complaint has been advanced. Where, as here, such an assessment is not a practical possibility, to insist on one would have two possible consequences, each of which would be unfortunate. First, it could lead to the abandonment of experimental policies, however well thought out they may be and however successfully they may have turned out. Alternatively, it could encourage artificial or bogus cost benefit and other quantitative analyses, which are already by no means unknown, and which devalue properly based quantitative analyses. I also agree that the challenge to the Rule based on article 14 also fails for the I agree therefore that (a) the Rule has a legitimate purpose, namely the six aims referred to above, which is sufficiently important to justify interfering with the lives of persons in the UK who wish to be united here with partners who are currently abroad, (b) there is plainly a rational connection between the Rule and its aims, (c) the provisions of the Rule are no more than is necessary to accomplish its aims, and (d) bearing in mind the wide measure of discretion which should be accorded to the executive in a case such as this and the research that was done in anticipation, the Rule strikes a fair balance between the rights of individuals and the interests of the community. reasons given by Lady Hale. Accordingly, for the reasons more fully given by Lady Hale and Lord Hodge (whose judgments have nuanced differences in their approaches, but whose essential reasoning appears to be the same), and in agreement with the conclusion reached by Maurice Kay and Toulson LJJ, I would dismiss these appeals. However, I have concerns about the Guidance. It does appear virtually certain that there will be a significant number of cases where application of the Guidance will lead to infringement of article 8 rights. By way of example, it may be impossible, in any practical sense, for a potential applicant to obtain access to a tuition and/or to a test centre. In particular, it appears that, in some countries, a person in a remote rural home either would have to travel repeatedly to and from a tuition centre many hundreds of miles away, or would have to find the money to rent a place to live near the tuition centre. Depending on the circumstances of the potential applicant, this may well render reliance on the Rule disproportionate. And, as Lady Hale points out, reliance on the absolute exclusion in the Guidance of [l]ack of or limited literacy or education from the category of exceptional circumstances, and the broad statement that it is reasonable to expect that [applicants] (or their sponsor ) will generally be able to afford reasonable costs incurred in making their application could easily lead to inappropriate outcomes in individual cases. Accordingly, I share Lady Hales concerns expressed in para 53, and it is also right to say that I also agree with what Lord Hodge says in para 73. In those circumstances, I see considerable attraction in granting declaratory relief to reflect the concerns we have about the application of the Guidance. This is an important and sensitive topic, and it could be unfortunate if there was no formal record of this courts concern about the application of the Guidance. That is particularly true given the public expenditure which has been devoted to these proceedings, coupled with the fact that a declaration may avoid the expenditure of further costs on subsequent proceedings involving a challenge to the Guidance. And a formal declaration now would avoid any further delay involved in establishing the correct approach to be adopted to applicants. However, it would be wrong to contemplate making, or even to speculate about the possible terms of, a declaration without first giving the parties the opportunity of making written submissions on the appropriateness of such a course and the terms of any potential declaration. While I am sympathetic to the notion of granting a declaration, it is only fair to add that it would be an unusual course to take (given that it has only been the Rule which was under attack in these proceedings), and to acknowledge that the Secretary of State may well persuade us that, if it was drafted so as to reflect our views at this stage, any declaration would be too unspecific to be helpful or would be otherwise inappropriate.
+The interim injunction the subject of this application has attracted much attention. Whatever the decision of the Supreme Court, it will probably give rise to further, entirely legitimate, debate on the value of such injunctions in the internet age. But the majority of this Court has concluded that, in the light of legal principles that were effectively uncontroversial and for reasons more particularly summarised in paras 44 to 45 below, the application for permission to appeal should be granted and the interim injunction continued until trial or further order. The ground on which the Court acts is to preserve the privacy interests of the appellant, his partner and their young children in England and Wales, pending a trial. Without the injunction, there will be further unrestricted and extensive coverage in hard copy as well as other media in England and Wales, and the purpose of any trial will be largely undermined. On the basis of the case law, the fact that there has been significant internet and social media coverage (and limited hard copy publication outside the jurisdiction) which already invades the privacy of the appellant and his family is not decisive. News Group Newspapers Ltds (NGNs) purpose in applying to set aside the interim injunction is to add extensively and in a qualitatively different medium to such invasions, without, on present evidence, having any arguably legitimate basis for this and at the risk only of having to pay damages after a trial. Some may still question whether the case merits the weight of legal attention which it has received. But the law is there to protect the legitimate interests of those whose conduct may appear unappealing, as well as of children with no responsibility for such conduct. The Supreme Court must in any event apply the law as it has been laid down by Parliament, paying due regard to the case law which Parliament has required it to take account. The Court must do so in the present case in relation to what, on present evidence, appears to be a clearly unjustified proposed further invasion of the relevant privacy interests one which is unsupported by any countervailing public interest in a legal sense, however absorbing it might be to members of the public interested in stories about others private sexual encounters. At trial, it will be open to the respondents to seek to show some genuine public interest in publication. But none has been shown to date, and, pending trial, the point of any trial should not be prejudged or rendered irrelevant by unrestricted disclosure. The Court is well aware of the lesson which King Canute gave his courtiers. Unlike Canute, the courts can take steps to enforce its injunction pending trial. As to the Mail Onlines portrayal of the law as an ass, if that is the price of applying the law, it is one which must be paid. Nor is the law one sided; on setting aside John Wilkes outlawry for publishing The North Briton, Lord Mansfield said that the law must be applied even if the heavens fell: R v Wilkes (1768) 4 Burr 2527, 98 ER 327 (347). It is unlikely that the heavens will fall at our decision. It will simply give the appellant, his partner and their young children a measure of temporary protection against further and repeated invasions of privacy pending a full trial which will not have been rendered substantially irrelevant by disclosure of relatively ancient sexual history. The facts We can for the most part take the facts from Jackson LJs judgment in the Court of Appeal. PJS, the claimant (now the appellant) is in the entertainment business and is married to YMA, a well known individual in the same business. They have young children. In 2007 or 2008, the claimant met AB and, starting in 2009, they had occasional sexual encounters. AB had a partner, CD. By text message on 15 December 2011, the claimant asked if CD was up for a three way, to which AB replied that CD was. The three then had a three way sexual encounter, after which the sexual relationship between PJS and AB came to an end, though they remained friends for some time. By or in early January 2016, AB and CD approached the editor of the Sun on Sunday, and told him about their earlier sexual encounters with PJS. The editor notified PJS that he proposed to publish the story. PJSs case is that publication would breach confidence and invade privacy. He brought the present proceedings accordingly, and applied for an interim injunction to restrain the proposed publication. Cranston J refused an interim injunction on 15 January, but the Court of Appeal (Jackson and King LJJ) on 22 January 2016 allowed an appeal and restrained publication of the relevant names and of details of their relationship: [2016] EWCA Civ 100. The Court provided the parties with its full judgment, but published only a redacted version omitting the names and details. The injunction was effective for eleven weeks, but AB took steps to get the story published in the United States. In consequence a magazine there published an account of PJSs sexual activities on 6 April 2016, naming those involved. But, as a result of representations by the appellants solicitors, it restricted publication to hardcopy editions only, and geo blocked online publication so as to restrict this to the United States. The evidence is that, apart from the one further state publication, the story was not taken up in America. Some other similar articles followed in Canada and in a Scottish newspaper. But, whatever the source, details started to appear on numerous websites, one of which contained equivalent detail to that which had appeared in the American magazine, as well as in social media hashtags. Various English and Welsh newspapers have in these circumstances published vigorous complaints about their own inability to publish material which was available on the internet. The Times on 8 April 2016 reported that the injunction was being flouted on social media after the well known man was named in the US and that the Society of Editors had condemned such injunctions as bringing the whole system into disrepute. The Sun on 10 April 2016 called on our loyal readers to help end the farce that means we cant tell you the full story of the celebrity fathers threesome by writing to their MPs to get them to voice the public outcry in parliament and bring an end to this injustice. It set out a suggested form of letter. It appears that an MP was by 11 April 2016 proposing to name the appellant in Parliament, something that intervention by the Speaker may have prevented. The Mail Online on 14 April 2016 reported that it had held a survey which found that 20 percent of the public already know who he is while others said they know how to find out. The online tool Google Trends shows a massive increase in the number of internet searches relating to the appellant and YMA by their true names. The Court of Appeal noted that the appellants solicitors have been assiduous in monitoring the internet and taking steps, wherever possible, to secure removal of offending information from URLs and web pages, but concluded that this was a hopeless task: the same information continued to reappear in new places, and tweets and other forms of social networking also ensured its free circulation. On the other hand, the evidence of the appellants solicitor, Mr Tait, is that social media are responding to objections of invasion of privacy, that a material number of links has been removed, disabled or become inactive and that Mr Tait is confident that, with the continuation of the injunction, this process will continue and it will become increasingly difficult to identify the appellant online. In the light of the Court of Appeals assessment and its own review of the material available, the Supreme Court must however assume that a significant body of internet material identifying those involved by name and reproducing details from the original American publication about their alleged activities still exists and will continue to do so for the foreseeable future. On 12 April 2016 NGN applied to the Court of Appeal to set aside the interim injunction granted on 22 January 2016, on the grounds that the protected information was now in the public domain, and that the injunction therefore served no useful purpose and was an unjustified interference with NGNs own rights under article 10 of the European Convention on Human Rights (ECHR). By a judgment published in slightly redacted terms on 18 April 2016, the Court of Appeal (Jackson, King and Simon LJJ) discharged the injunction: [2016] EWCA Civ 393. On 21 April 2016 the Supreme Court heard the appellants application for permission to appeal together with submissions relevant to the appeal, if permission was granted, and continued the interim injunction pending the delivery of the present judgment. The statutory provisions The appeal falls to be determined by reference to the Human Rights Act 1998 (HRA) and the ECHR rights scheduled to it. Those rights include articles 8 and 10, reading: Article 8 Right to respect for private and family life. 1. Everyone has the right to respect for his private and family life, his home and his correspondence. 2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others. Article 10 Freedom of expression. 1. Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. This article shall not prevent States from requiring the licensing of broadcasting, television or cinema enterprises. 2. The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary. HRA Section 12 provides: Freedom of expression. (1) This section applies if a court is considering whether to grant any relief which, if granted, might affect the exercise of the Convention right to freedom of expression. (2) If the person against whom the application for relief is made (the respondent) is neither present nor represented, no such relief is to be granted unless the court is satisfied a. that the applicant has taken all practicable steps to notify the respondent; or b. that there are compelling reasons why the respondent should not be notified. (3) No such relief is to be granted so as to restrain publication before trial unless the court is satisfied that the applicant is likely to establish that publication should not be allowed. (4) The court must have particular regard to the importance of the Convention right to freedom of expression and, where the proceedings relate to material which the respondent claims, or which appears to the court, to be journalistic, literary or artistic material (or to conduct connected with such material), to a. the extent to which i. the material has, or is about to, become available to the public; or ii. it is, or would be, in the public interest for the material to be published; b. any relevant privacy code. Cranston Js decision When refusing an injunction on 15 January 2016, Cranston J: accepted that the appellant had a reasonable expectation that his sexual (i) activities would remain private, (ii) added that he was especially troubled by the childrens privacy interests under ECHR article 8, though these could not operate as a trump card, (iii) rejected the respondents suggestion that the proposed publication went to any relevant matter of public debate, (iv) identified the appellant and his partner as portraying an image to the world of a committed relationship, accepted that commitment may not entail monogamy, but concluded that there was a public interest in correcting the image by disclosing that the appellant had engaged in the sort of casual sexual relationships demonstrated by the evidence, and (v) on that basis, and noting that the threshold test for granting an interim injunction was in this context higher than the generally applicable test in American Cyanamid Co v Ethicon Ltd [1975] AC 396, refused an injunction. The Court of Appeal judgment of 22 January 2016 The Court of Appeal in its judgment of 22 January 2016 held that there were two significant shortcomings in the judges approach, which enabled (or required) it to re open the matter: (i) although the judge had correctly identified the childrens article 8 privacy rights, he had not explained how he had taken them into account; (ii) once it was accepted that commitment may not entail monogamy, there was no false image to require correction by disclosure of the appellants occasional sexual encounters with others. In this connection, the Court of Appeal concluded positively that on the evidence before it the image presented by the appellant and his partner had been one of commitment not monogamy. The Court of Appeal went on to identify the well established principle that kiss and tell stories which do no more than satisfy readers curiosity about the private lives of other persons, however well known to the public, do not serve any legally recognised public interest: see eg Couderc and Hachette Filipacchi Associs v France (Application No 41454/07), paras 100 101 and Axel Springer AG v Germany (Application No 39954/08), para 91. The Supreme Court will revert to this principle in paras 22 25 below. There was a respondents notice alleging additional grounds for upholding the judges decision. In this connection, the Court of Appeal agreed with the judge that the proposed publication did not go to any matter of public debate: para 12(iii) above. Referring to Hutcheson v News Group Newspapers Ltd [2011] EWCA Civ 808, which itself refers back to Terry v Persons Unknown [2010] EWHC 119 (QB), the Court accepted that the respondents were entitled to publish articles critical of people in the public eye, even though there was nothing illegal about their conduct. But it noted that the appellant had an expectation that his sexual encounters would remain private, that the proposed story would, if published, be devastating for him and that on any proper balancing his article 8 right to privacy must prevail over the respondents article 10 right to publish an account of the adultery. It added that the position of the children was also a factor to consider: the proposed article would generate a media storm and much public interest in the appellants family, including increased press attention to the children, meaning that the children would in due course learn about the relevant matters from school friends and the internet. On the evidence before the Court, the appellant was likely to establish at trial that publication should not be allowed, and had therefore satisfied the test in section 12(3) of the Human Rights Act 1998. The appeal was therefore allowed and an injunction granted. The Court of Appeal judgment of 18 April 2016 Jackson LJ, with which King and Simon LJJ agreed: In its judgment of 18 April 2016, the Court of Appeal in a judgment given by (i) accepted that claims based on confidentiality were to be distinguished from claims based on privacy, in that, while claims for confidentiality generally fail once information has passed into the public domain, the law extends greater protection to privacy rights than rights in relation to confidential material (paras 35 36); (ii) concluded that a claim for misuse of private information can and often will survive when information is in the public domain, continuing (para 39): It depends on how widely known the relevant facts are. In many situations the claim for misuse of private information survives, but is diminished because that which the defendant publishes is already known to many readers. The publication is an invasion of privacy and hurtful for the claimant, but is not as egregious as it would otherwise be. That does not deprive the claimant of his claim for damages, but it weakens his claim for an injunction. This is for two reasons. First, the article 8 claim carries less weight, when the court carries out the balancing exercise of article 8 rights as against article 10 rights. Secondly, injunctions are a discretionary remedy. The fact that material is generally known is relevant to the exercise of the courts discretion. (iii) added that: 40. In this regard it is important to note that HRA section 12 does not affect the existence of the claimants article 8 claim nor does it provide any defence to the tort of misusing private information. The effect of section 12 is twofold. First, it enhances the weight which article 10 rights carry in the balancing exercise. Secondly, it raises the hurdle which the claimant must overcome in order to obtain an interim injunction. 41. Although it will be a matter for the trial judge at the end of the day, I adhere to the view I expressed in January, namely that the story which NGN proposes to publish is likely to be a breach of the claimants article 8 rights. What has changed is the weight which the claimants article 8 rights carry, when balanced against NGNs article 10 rights. Also the fact that material is widely known must be relevant to the courts discretion. (iv) accepted that the court should not set aside an injunction merely because it has met with widespread disobedience or defiance (para 42), but noted that this was not a case of disobedience by the media, and that the difficulty about any submission of defiance was that the Internet and social networking have a life of their own; furthermore, that an English court has little control over what foreign newspapers and magazines may publish (para 44); and that it does appear that those who want to find out the individuals identities have already done so (para 45). In these circumstances, the Court concluded, in Jackson LJs words, that 47. In the situation which now prevails, I still think that the claimant is likely to establish a breach of ECHR article 8. But, notwithstanding the limited public interest in the proposed story, I do not think that the claimant is likely to obtain a permanent injunction. I reach this conclusion for seven reasons: i) Knowledge of the relevant matters is now so widespread that confidentiality has probably been lost. ii) Much of the harm which the injunction was intended to prevent has already occurred. The relatives, friends and business contacts of PJS and YMA all know perfectly well what it is alleged that PJS has been doing. The wall to wall excoriation which the claimant fears (CTB at 24) has been taking place for the last two weeks in the English press. There have been numerous headlines such as celebrity love cheat and Gag celeb couple alleged to have had a threesome. Many readers know to whom that refers. iii) The material which NGN wishes to publish is still private, in the sense that it concerns intimate sexual matters. I reject Mr Millars submission that PJSs article 8 rights are no longer engaged at all. First, there are still many people, like Mr Brownes hypothetical purchaser of the Financial Times, who do not know about PJSs sex life. Secondly, NGNs planned publication in England will be a further unwelcome intrusion into the private lives of PJS and his family. On the other hand, it will not be a shock revelation, as publication in January would have been. The intrusion into the private lives of PJS and his family will be an increase of what they are suffering already. If the interim injunction stands, newspaper articles will continue to appear re cycling the contents of the redacted judgment and calling upon PJS to identify himself. Websites discussing the story will continue to pop up. As one is taken down, another will appear. This process will continue up to the trial date. iv) v) As stated in para 59 of the previous redacted judgment (para 61 of the full judgment), NGN is entitled to publish articles criticising people in the public eye. Therefore it has an article 10 right to publish an account of PJSs conduct. That article 10 right has to be balanced against PJSs article 8 right for his sexual liaisons to remain a private matter. The need to balance article 8 rights against article 10 rights means that there is a limit to how far the courts can protect individuals against the consequences of their own actions. vi) As a result of recent events, the weight attaching to the claimants article 8 right to privacy has reduced. It cannot now be said that when the day of trial comes, PJSs article 8 right is likely to prevail over NGNs article 10 right to freedom of expression, such as to warrant the imposition of a permanent injunction. vii) Finally, the court should not make orders which are ineffective. It is in my view inappropriate (some may use a stronger term) for the court to ban people from saying that which is common knowledge. This must be relevant to the exercise of the court's discretion. Injunctions are a discretionary remedy. 48. I turn next to the position of YMA and the children. As explained in para 39 of my previous judgment, the interests of other family members, in particular children, are a significant consideration, but they cannot be a trump card. Paragraph 61 of the redacted judgment (para 63 of the full judgment) referred to the likelihood that, in the absence of an injunction, the children would in the future learn about these matters from school friends or the Internet. That is now a less material consideration. In my view, whether or not the court grants an injunction, it is inevitable that the two children will in due course learn about these matters. Analysis of the Court of Appeals judgment of 18 April 2016 (i) HRA section 12 There is, as all members of the Supreme Court conclude, a clear error of law in the Court of Appeals reasoning in relation to section 12. For reasons given in para 20 below, it consists in the self direction that section 12 enhances the weight which article 10 rights carry in the balancing exercise (para 40). The Court of Appeals further self direction, that section 12 raises the hurdle which the claimant must overcome in order to obtain an interim injunction is unexceptionable, in so far as section 12 replaces the general American Cyanamid test, focused on the balance of convenience, with a test of whether the appellant is likely to establish that publication should not be allowed at trial. The position was stated more particularly by Lord Nicholls said in Cream Holdings Ltd v Banerjee [2004] UKHL 44; [2005] 1 AC 253, para 22, in a speech with which the other members of the House agreed: Section 12(3) makes the likelihood of success at trial an essential element in the courts consideration of whether to make an interim order. There can be no single, rigid standard governing all applications for interim restraint orders. Rather, on its proper construction the effect of section 12(3) is that the court is not to make an interim restraint order unless satisfied the applicants prospects of success at the trial are sufficiently favourable to justify such an order being made in the particular circumstances of the case. As to what degree of likelihood makes the prospects of success sufficiently favourable, the general approach should be that courts will be exceedingly slow to make interim restraint orders where the applicant has not satisfied the court he will probably (more likely than not) succeed at the trial. In general, that should be the threshold an applicant must cross before the court embarks on exercising its discretion, duly taking into account the relevant jurisprudence on article 10 and any countervailing Convention rights. But there will be cases where it is necessary for a court to depart from this general approach and a lesser degree of likelihood will suffice as a prerequisite. Circumstances where this may be so include those mentioned above: where the potential adverse consequences of disclosure are particularly grave, or where a short lived injunction is needed to enable the court to hear and give proper consideration to an application for interim relief pending the trial or any relevant appeal. The Court of Appeals initial self direction is however contrary to considerable authority, including authority at the highest level, which establishes that, even at the interlocutory stage, (i) neither article has preference over the other, (ii) where their values are in conflict, what is necessary is an intense focus on the comparative importance of the rights being claimed in the individual case, (iii) the justifications for interfering with or restricting each right must be taken into account and (iv) the proportionality test must be applied: see eg In re S (A Child) (Identification: Restrictions on Publication) [2004] UKHL 47; [2005] 1 AC 593, para 17, per Lord Steyn, with whom all other members of the House agreed; McKennitt v Ash [2006] EWCA Civ 1714; [2008] QB 73, para 47, per Buxton LJ, with whom the other members of the Court agreed; and Mosley v News Group Newspapers Ltd [2008] EWHC 687 (QB), para 28, per Eady J, describing this as a very well established methodology. The exercise of balancing article 8 and article 10 rights has been described as analogous to the exercise of a discretion: AAA v Associated Newspapers Ltd [2013] EWCA Civ 554, para 8). While that is at best only an analogy, the exercise is certainly one which, if undertaken on a correct basis, will not readily attract appellate intervention. The Court of Appeals error in its initial self direction is, however, one of potential significance, since it necessarily affects the balance. By itself it would require the Supreme Court to re exercise the discretion which the Court of Appeal exercised in setting aside the injunction which it had previously granted. But there are further aspects of the Court of Appeals treatment of the issues which together lead to the same conclusion. (ii) The reference to a limited public interest The Court of Appeal in my opinion also erred in the reference it made, at three points in its judgment (paras 13, 30 and 47), to there being in the circumstances even a limited public interest in the proposed story and in its introduction of that supposed interest into a balancing exercise (para 47(v)). In identifying this interest, the Court of Appeal relied upon a point made by an earlier Court of Appeal in Hutcheson (and before that by Eady J in Terry), namely that the media are entitled to criticise the conduct of individuals even where is nothing illegal about it. That is obviously so. But criticism of conduct cannot be a pretext for invasion of privacy by disclosure of alleged sexual infidelity which is of no real public interest in a legal sense. It is beside the point that the appellant and his partner are in other contexts subjects of public and media attention factors without which the issue would hardly arise or come to court. It remains beside the point, however much their private sexual conduct might interest the public and help sell newspapers or copy. The matter is well put by Anthony Lester (Lord Lester of Herne Hill) in a recent book, Five Ideas to fight for (Oneworld, 2016), p 152: News is a business and not only a profession. Commercial pressures push papers to publish salacious gossip and invasive stories. It is essential to ensure that those pressures do not drive newspapers to violate proper standards of journalism. That criticism of supposed infidelity cannot be the guise under which the media can disclose kiss and tell stories of no public interest in a legal sense is confirmed by a series of European Court of Human Rights (ECtHR) judgments. Thus, in Armonien v Lithuania [2009] EMLR 7, para 39, the Court emphasised the duty of the press to impart information and ideas on matters of public interest, but noted that a fundamental distinction needs to be made between reporting facts even if controversial capable of contributing to a debate in a democratic society and making tawdry allegations about an individuals private life; In Mosley v United Kingdom [2012] EMLR 1, para 114, the Court reiterated that there is a distinction to be drawn between reporting facts even if controversial capable of contributing to a debate of general public interest in a democratic society, and making tawdry allegations about an individuals private life (see Armonien, para 39). In respect of the former, the pre eminent role of the press in a democracy and its duty to act as a public watchdog are important considerations in favour of a narrow construction of any limitations on freedom of expression. However, different considerations apply to press reports concentrating on sensational and, at times, lurid news, intended to titillate and entertain, which are aimed at satisfying the curiosity of a particular readership regarding aspects of a persons strictly private life (Von Hannover v Germany (2005) 40 EHRR 1, para 65; Hachette Filipacchi Associs (ICI PARIS) v France, no 12268/03, para 40; and MGN Ltd v United Kingdom (2001) 53 EHRR 5, para 143). Such reporting does not attract the robust protection of article 10 afforded to the press. As a consequence, in such cases, freedom of expression requires a more narrow interpretation (see Socit Prisma Presse v France (dec), nos 66910/01 and 71612/01, 1 July 2003; Von Hannover, cited above, para 66; Leempoel & SA E Cin Revue v Belgium, no 64772/01, para 77, 9 November 2006; Hachette Filipacchi Associs (ICI PARIS), cited above, para 40; and MGN Ltd, cited above, para 143. Most recently, in Couderc and Hachette Filipacchi Associs v France (Application No 40454/07), paras 100 101, the Court said: 100. The Court has also emphasised on numerous occasions that, although the public has a right to be informed, and this is an essential right in a democratic society which, in certain special circumstances, can even extend to aspects of the private life of public figures, articles aimed solely at satisfying the curiosity of a particular readership regarding the details of a persons private life, however well known that person might be, cannot be deemed to contribute to any debate of general interest to society (see Von Hannover, cited above, para 65; MGN Ltd v United Kingdom, no 39401/04, para 143, 18 January 2011; and Alkaya v Turkey, no. 42811/06, para 35, 9 October 2012). 101. Thus, an article about the alleged extra marital relationships of high profile public figures who were senior State officials contributed only to the propagation of rumours, serving merely to satisfy the curiosity of a certain readership (see Standard Verlags GmbH v Austria (No 2), no 21277/05, para 52, 4 June 2009). Equally, the publication of photographs showing scenes from the daily life of a princess who exercised no official functions was aimed merely at satisfying the curiosity of a particular readership (see Von Hannover, cited above, para 65, with further references). The Court reiterates in this connection that the public interest cannot be reduced to the publics thirst for information about the private life of others, or to the readers wish for sensationalism or even voyeurism. In these circumstances, it may be that the mere reporting of sexual encounters of someone like the appellant, however well known to the public, with a view to criticising them does not even fall within the concept of freedom of expression under article 10 at all. But, accepting that article 10 is not only engaged but capable in principle of protecting any form of expression, these cases clearly demonstrate that this type of expression is at the bottom end of the spectrum of importance (compared, for example, with freedom of political speech or a case of conduct bearing on the performance of a public office). For present purposes, any public interest in publishing such criticism must, in the absence of any other, legally recognised, public interest, be effectively disregarded in any balancing exercise and is incapable by itself of outweighing such article 8 privacy rights as the appellant enjoys. (iii) The distinction between rights of confidence and privacy rights Mr Desmond Browne QC for the appellant submits the Court of Appeal also erred by too close an assimilation of a claim based on the tort of invasion of privacy with breach of confidence. Jackson LJ recognised, correctly, that the former attracts greater protection than the latter (para 36 of his judgment: see para 17(i) above). But he went on in para 39 to suggest that, whether a claim for misuse of private information will survive when information is in the public domain depends on how widely known the relevant facts are. That suggests a quantitative test, measuring what has already been disclosed with what is yet undisclosed. That is a test which is not only appropriate but potentially decisive in the context of an application based on confidentiality, as witnessed famously by Sunday Times v United Kingdom (No 2) (Spycatcher No 2) (1991) 14 EHRR 229, paras 54 55. There, the loss of secrecy by 30 July 1987 was central to the European Court of Human Rights conclusion that injunctions could after that date no longer be justified either as necessary to ensure a fair trial or to protect national security. The promotion of the efficiency and reputation of the Security Service constituted insufficient justification. However, different considerations apply to the present privacy claim. First, as Mr Browne submits, a quantitative approach overlooks the invasiveness and distress involved, even in repetition of private material. Second, open hard copy exposure, as well no doubt as further internet exposure, is likely to add significantly to the overall intrusiveness and distress involved. I return to the second point in paras 34 37 below. As to the first point, there is substantial recent authority recognising that even the repetition of known facts about an individual may amount to unjustified interference with the private lives not only of that person but also of those who are involved with him: JIH v News Group Newspapers Ltd [2010] EWHC 2818 (QB), para 59, per Tugendhat J. The Court of Appeal referred (in para 25) to the submission which Mr Browne made before it to like effect, and to the supporting authority which he cited, but did not, Mr Browne submits, give effect to it in its decision. The point made in JIH is worth elaborating for its resonance on this appeal. It can be traced back to Attorney General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109, 260F, where Lord Keith gave examples of circumstances in which a person could be entitled to restrain disclosure of private information, which had received widespread publication abroad. It was taken up by Eady J in McKennitt v Ash [2006] EMLR 178, para 81, by Tugendhat J in Green Corns Ltd v Claverley Group Ltd [2005] EMLR 748, paras 78 79, where he said that the question was not whether information was generally accessible, but rather whether an injunction would serve a useful purpose and by Briggs J in Rocknroll v News Group Newspapers Ltd [2013] EWHC 24 (Ch), paras 22 26, where he also said that HRA section 12(4)(a)(i) in his judgment creates no separate or different test , at least where there is no suggestion that the material is about to become available to the public. Eady J and Tugendhat J have since further elaborated the significance of the principle in successive judgments in CTB v News Group Newspapers Ltd [2011] EWHC 1326 (QB) and 1334 (QB). In CTB, as in the present case, an interim injunction had been granted to restrain disclosure of information about an alleged sexual relationship. In CTB the claimant was a well known footballer who was married and had a family. In the five or so weeks after the injunction was granted, substantial information, from sources which could not be attributed to the defendant, became available on Twitter and the internet generally identifying or pointing towards the footballer. The defendants argued in effect that privacy injunctions (and no doubt other forms of injunction also) had ceased to serve any useful purpose in an age when information could be put out on various networks within or outside this jurisdiction by persons other than the immediate defendant. More specifically, the defendants in CTB also placed reliance on Eady Js refusal of an injunction to Mr Max Mosley in Mosley v News Group Newspapers Ltd [2008] EWHC 687 (QB). Eady J had there said that: The court should guard against slipping into playing the role of King Canute. Even though an order may be desirable for the protection of privacy, and may be made in accordance with the principles currently being applied by the courts, there may come a point where it would simply serve no useful purpose and would merely be characterised, in the traditional terminology, as a brutum fulmen. It is inappropriate for the court to make vain gestures. In CTB Eady J explained why this statement did not cover the circumstances in CTB: 18. The circumstances here are rather different. In Mosley, I took the view that there was no point in granting an injunction because, even before the application was made, several hundred thousand people had seen the intimate video footage which NGN had put on line conduct that was recently characterised by the ECtHR as a flagrant and unjustified intrusion: Mosley v UK (Application No 48009/08), 10 May 2011 at 104. In a real sense, therefore, it could be said that there was nothing left for the court to protect by an injunction. 19. Here, the Internet allegations prayed in aid by Mr Spearman took place after the order was made. Different policy considerations come into play when the court is invited to abandon the protection it has given a litigant on the basis of widespread attempts to render it ineffective. Furthermore, unlike the Mosley case, there is no doubt other information that Ms Thomas could yet publish, quite apart from this claimants identity, which is not yet in the public domain. The injunction thus continues to serve a useful purpose, from the claimants point of view, for that reason alone, since she is amenable to the jurisdiction of the court. Otherwise, he would not seek to maintain it. 20. Mr Spearmans application is therefore quite narrow. He seeks only to vary the injunction so as to permit the claimant to be identified. In the circumstances, Eady J held that even identification should not be permitted. It will be apparent that the circumstances in CTB bore some relevant similarities to those of the present case. In particular, reliance was placed on internet disclosures subsequent to the original injunction in support of an application to set aside the injunction on the basis that it served no further useful protective purpose. This situation was distinguished in principle from that where an injunction is granted after substantial internet disclosure. The substantial internet disclosure which had occurred after the injunction was not regarded as justifying the lifting of the injunction. The injunction, enforceable against the defendant, was seen as continuing to serve a useful purpose. As to the general suggestion that injunctions really have no sensible place in an internet age, Eady J said: 23. It is important always to remember that the modern law of privacy is not concerned solely with information or secrets: it is also concerned importantly with intrusion. [That] also largely explains why it is the case that the truth or falsity of the allegations in question can often be irrelevant: see eg McKennitt v Ash [2008] QB 73 at 80 and 87. 24. It is fairly obvious that wall to wall excoriation in national newspapers, whether tabloid or broadsheet, is likely to be significantly more intrusive and distressing for those concerned than the availability of information on the Internet or in foreign journals to those, however many, who take the trouble to look it up. Moreover, with each exposure of personal information or allegations, whether by way of visual images or verbally, there is a new intrusion and occasion for distress or embarrassment. Mr Tomlinson argues accordingly that the dam has not burst. For so long as the court is in a position to prevent some of that intrusion and distress, depending upon the individual circumstances, it may be appropriate to maintain that degree of protection. The analogy with King Canute to some extent, therefore, breaks down. 25 It may be thought that the wish of NGN to publish more about this story, with a view to selling newspapers and perhaps achieving other commercial advantages, demonstrates that coverage has not yet reached saturation point. Had it done so, the story would no longer retain any interest. This factor tends, therefore, to confirm my impression that the court's attempts to protect the claimant and his family have not yet become wholly futile. 26. In these circumstances, it seems to me that the right question for me to ask, in the light of JIH v News Group Newspapers Ltd [2011] 2 All ER 324 and In re Guardian News and Media Ltd [2010] UKSC 1, is whether there is a solid reason why the claimants identity should be generally revealed in the national media, such as to outweigh the legitimate interests of himself and his family in maintaining anonymity. The answer is as yet in the negative. They would be engulfed in a cruel and destructive media frenzy. Sadly, that may become unavoidable in the society in which we now live but, for the moment, in so far as I am being asked to sanction it, I decline to do so. On the other side, , it has not been suggested that there is any legitimate public interest in publishing the story. The analysis in these passages is both relevant and indeed largely transposable to the circumstances of the present appeal. The same theme was developed by Tugendhat J in the second CTB judgment, which followed the naming in Parliament by an MP of the footballer: Tugendhat J said: It is obvious that if the purpose of this injunction were 3. to preserve a secret, it would have failed in its purpose. But in so far as its purpose is to prevent intrusion or harassment, it has not failed. The fact that tens of thousands of people have named the claimant on the internet confirms that the claimant and his family need protection from intrusion into their private and family life. The fact that a question has been asked in Parliament seems to me to increase, and not to diminish the strength of his case that he and his family need that protection. The order has not protected the claimant and his family from taunting on the internet. It is still effective to protect them from taunting and other intrusion and harassment in the print media. Tugendhat Js reasoning in JIH and Eady Js reasoning in CTB were cited with approval by MacDonald J in H v A (No 2) [2015] EWHC 2630 (Fam), para 47. In so far as it is likely that the respondents in the present case would wish to accompany any stories with pictures of the relevant individuals, it is also consistent with the Leveson Inquiry Reports conclusion (para 3.4) that: There is a qualitative difference between photographs being available online and being displayed, or blazoned, on the front page of a newspaper such as the Sun. The fact of publication in a mass circulation newspaper multiplies and magnifies the intrusion, not simply because more people will be viewing the images, but also because more people will be talking about them. Thus, the fact of publication inflates the apparent newsworthiness of the photographs by placing them more firmly within the public domain and at the top of the news agenda. It is right that the Supreme Court should on the present application express its own view on the correctness of the approach taken in the authorities discussed in the preceding paragraphs (paras 26 32). In my opinion, the approach is sound in general principle. Every case must be considered on its particular facts. But the starting point is that (i) there is not, without more, any public interest in a legal sense in the disclosure or publication of purely private sexual encounters, even though they involve adultery or more than one person at the same time, (ii) any such disclosure or publication will on the face of it constitute the tort of invasion of privacy, (iii) repetition of such a disclosure or publication on further occasions is capable of constituting a further tort of invasion of privacy, even in relation to persons to whom disclosure or publication was previously made especially if it occurs in a different medium (see paras 34 37 below). However, whether an interim injunction should be granted to restrain an anticipated tortious invasion of privacy raises different considerations from those involved in the simple question whether disclosure or publication would constitute a tortious act. The courts have to apply HRA section 12, and, before restraining publication prior to trial, have in particular to be satisfied that the applicant is likely to establish that publication should not be allowed. They have, under section 12(4), to have particular regard to the importance of the article 10 right to freedom of expression, although, as already explained (paras 19 20 above), that right has no necessary claim to priority over the need to have due regard to any article 8 privacy right which the applicant for an injunction enjoys. Where, as here, the proceedings relate to journalistic material (or conduct connected to such material) the courts must also have particular regard under section 12(4)(a) to two specific factors which point potentially in different directions: (i) (ii) the extent to which the material has, or is about to, become available to the public and the extent to which it is, or would be, in the public interest for the material to be published. Under section 12(4)(b), the courts must also have particular regard to any relevant privacy code. As to the factor identified in section 12(4)(a)(ii), for reasons already given (paras 21 24 above), the present appeal must be approached, on the evidence presently available, on the basis that there is and would be effectively no public interest in a legal sense in further disclosure or publication. As to the factor in section 12(4)(a)(i), the requirement to have particular regard to the extent to which journalistic material (or conduct connected with such material) has, or is about to, become available to the public does not preclude a court, when deciding whether to grant or lift injunctive relief, from having regard to both the nature of the journalistic material involved and the medium in a) which it is, or is to be, expressed, and b) the extent to which it is already available in that medium and the extent to which steps are being or can be taken to remove or limit access to any other publication in that or any other medium. In short, the question whether material has, or is about to, become available to the public should be considered with reference to, inter alia, the medium and form in relation to which injunctive relief is sought. In the light of the above, I consider that the Court of Appeal focused too narrowly on the disclosures already made on the internet, and did not give due weight to the qualitative difference in intrusiveness and distress likely to be involved in what is now proposed by way of unrestricted publication by the English media in hard copy as well as on their own internet sites. There is little doubt that there would be a media storm. It would involve not merely disclosure of names and generalised description of the nature of the sexual activities involved, but the most intimate details. This would be likely to add greatly and on a potentially enduring basis to the intrusiveness and distress felt by the appellant, his partner and, by way of increased media attention now and/or in the future, their children. The Court of Appeal did not do justice to this qualitative difference either when it said that the wall to wall excoriation which the claimant fears has already been taking place for the last two weeks in the English press, as a result of numerous headlines such as celebrity love cheat and Gag couple alleged to have had a threesome (para 47(ii), or when it went on to refer to the likely impact of the proposed publication as a further unwelcome intrusion, increasing what is being suffered already, not a shock revelation, as publication in January would have been (para 47(iii)). As to section 12(4)(b), this is of particular relevance in relation to the appellants and his partners children. The respondents subscribe to the Independent Press Standards Organisation (IPSO), whose Editors Code of Practice of January 2016 provides that Everyone is entitled to respect for his or her private and family life and that editors will be expected to justify intrusions into any individuals private life without consent (clause 3(i) and (ii)). The Code notes that there can be exceptions in the public interest, emphasising however that editors must demonstrate an exceptional public interest to over ride the normally paramount interests of [children under 16]). The last point echoes the thinking in article 3(1) of the United Nations Convention on the Rights of the Child (providing that In all actions concerning children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration) which has in turn informed the ECtHRs and United Kingdom courts understanding of ECHR article 8: see eg ZH (Tanzania) v Secretary of State for the Home Department [2011] 2 AC 166, H v Lord Advocate 2012 SC (UKSC) 308, H (H) v Deputy Prosecutor of the Italian Republic (Genoa) [2013] 1 AC 338 and Zoumbas v Secretary of State for the Home Department [2013] 1 WLR 3690. Mr Browne submits that the interests of the appellants children were not given the primacy or importance which they deserved. The Court of Appeal in granting injunctive relief in January 2016 identified as relevant consequences of the proposed article both that the children would become the subject of increased press attention, with all that that entails and that, even if they do not suffer harassment in the short term, they are [ie if the proposed article is published] bound to learn about these matters from school friends and the internet in due course. The Court of Appeal in deciding to discharge the injunction in April 2016 addressed only the latter consequence, saying that it was now a less material consideration as whether or not the court grants an injunction, it is inevitable that the two children will in due course learn about these matters. The Court of Appeal did not expressly advert to the short term risks involved in media attention and communication of the information to young children, and still less did it advert to the qualitative difference between, on the one hand, unrestricted exposure in the hard copy media as well as on internet sites and, on the other hand, internet exposure which the appellant and those advising him have made and intend to continue to make every effort to restrict, so far as lies within their power. I prefer simply to agree with what Lady Hale says in this area in the open part of her judgment, without finding it necessary to refer to or rely on what is said in the redacted part. (iv) An effective remedy Mr Browne makes a fourth criticism of the Court of Appeals approach to the exercise of its discretion. The Court, having concluded that the appellant was likely at trial to establish that publication was a tortious invasion of privacy, nonetheless left the appellant to a claim for damages. It is therefore a criticism of the Court of Appeals exercise of the discretion which, as Lord Nicholls recognised in Cream Holdings, exists under HRA section 12 once a court has decided that a proposed publication is likely to be tortious and goes on to consider whether the applicant is also likely to establish at trial that publication should not be allowed. By exercising its discretion so as to discharge the injunction, Mr Browne submits, the Court of Appeal failed to ensure that the appellants privacy rights were practical and effective: Von Hannover v Germany, para 40, Armonien v Lithuania, para 38. The submission must, however, be approached with caution at a European level, because in Mosley v United Kingdom [2012] 2012] EMLR 1, para 120, the ECtHR (when considering whether the Convention required the media, before publishing potentially private material, to inform the subject of such material) observed that in its examination to date of the measures in place at domestic level to protect article 8 rights in the context of freedom of expression, it has implicitly accepted that ex post facto damages provide an adequate remedy for violations of article 8 rights arising from the publication by a newspaper of private information. The ECtHR went on to explain Armonien v Lithuania as a case where damages had not provided an adequate remedy, because of the derisory sum that had been awarded. On the other hand, in Mosley v United Kingdom the ECtHR was primarily engaged in delimiting the scope of ECHR rights, particularly with regard to pre notification, at a European level. It was not excluding the possibility of or justification for a prior restraint on publication in appropriate cases at a domestic level. Indeed, it upheld such a prior restraint in Editions Plon v France (2006) 42 EHRR 36. Further, it said this in Mosley (para 117): 117. Finally, the Court has emphasised that while article 10 does not prohibit the imposition of prior restraints on publication, the dangers inherent in prior restraints are such that they call for the most careful scrutiny on the part of the Court. This is especially so as far as the press is concerned, for news is a perishable commodity and to delay its publication, even for a short period, may well deprive it of all its value and interest (see Observer and Guardian v United Kingdom (26 November 1991, (1992) 14 EHRR 153, para 60). The Court would, however, observe that prior restraints may be more readily justified in cases which demonstrate no pressing need for immediate publication and in which there is no obvious contribution to a debate of general public interest. In the present case, it can be said that there is no urgency about any publication, as well as no evident contribution to any debate of general public interest. At a domestic level, the Court of Appeal has itself also recognised that the refusal of an interlocutory injunction can operate as a strong potential disincentive to respect for aspects of private life and that, depending on the circumstances, it may only be by the grant of such an injunction that privacy rights can be satisfactorily protected: Douglas v Hello! Ltd (No 3) [2006] QB 125, paras 257 and 259; and that such an injunction may be the only remedy which is of any value: A v B plc [2003] QB 195, para 11. Damage done by publication of a defamatory statement can be redressed by a public finding at trial that the allegation was false, but an invasion of privacy cannot be cured in a similar way, and for that reason there may never be a trial, whatever damages might be recoverable. These points are also recognised in the academic writing: see eg Freedom of Speech (OUP, 2006), by Professor Eric Barendt, p 137 and Privacy and Press Freedom (Blackstone 1995), by Professor Raymond Wacks, p 156. Mr Browne further notes, with reference to the first instance decision of Mosley v News Group Newspapers [2008] EMLR 20, that it has been held at first instance that exemplary or punitive damages are not recoverable at common law for misuse of private information. On the other hand, the contrary remains open to argument at higher levels, and whether an account of profits might be claimed is likewise open. (In future, there may be a statutory possibility of obtaining an award of exemplary damages against a publisher not a member of an approved regulator; that is under sections 34 36 of the Crime and Courts Act 2013, if a court were to be satisfied that the respondents conduct has shown a deliberate or reckless disregard of an outrageous nature for the claimants rights, that the conduct is such that the court should punish the defendant for it and that other remedies would not be adequate to punish that conduct. But no approved regulator at present exists, so that the section has no application to the present case.) In any event, whether or not substantial or even exemplary damages could be recovered in the present case is not decisive of the question whether an interim injunction should be granted. Once again, it is necessary to consider the particular facts. Here, it is highly likely, having regard to the nature of the material sought to be published and the identity and financial circumstances of the appellant, that the appellants real concern is indeed with the invasion of privacy that would be involved in further disclosure and publication in the English media, and that any award of damages, however assessed, would be an inadequate remedy. Conclusions The circumstances of this case present the Supreme Court with a difficult choice. As in the Court of Appeal, so before the Supreme Court the case falls to be approached on the basis that the appellant is likely at trial to establish that the proposed disclosure and publication is likely to involve further tortious invasion of privacy rights of the appellant and his partner as well as of their children, who have of course no conceivable involvement in the conduct in question. The invasion would, on present evidence, be clear, serious and injurious. On the other hand, those interested in a prurient story can, if they try, probably read about the identities of those involved and in some cases about the detail of the conduct, according to where they may find it on the internet. The Court will be criticised for giving undue protection to a tawdry story by continuing the injunction to trial. There is undoubtedly also some risk of further internet, social media or other activity aimed at making the Courts injunction seem vain, whether or not encouraged in any way by any persons prevented from publishing themselves. On the other hand, the legal position, which the Court is obliged to respect, is clear. There is on present evidence no public interest in any legal sense in the story, however much the respondents may hope that one may emerge on further investigation and/or in evidence at trial, and it would involve significant additional intrusion into the privacy of the appellant, his partner and their children. At the end of the day, the only consideration militating in favour of discharging the injunction is the incongruity of the parallel and in probability significantly uncontrollable world of the internet and social media, which may make further inroads into the protection intended by the injunction. Against that, however, the media storm which discharge of the injunction would unleash would add a different and in some respects more enduring dimension to the existing invasions of privacy being perpetrated on the internet. At the risk of appearing irredentist, the Supreme Court has come to the conclusion that, on a trial in the light of the present evidence, a permanent injunction would be likely to be granted in the interests of the appellant, his partner and especially their children. The appeal should therefore be allowed, and the Court will order the continuation of the interim injunction to trial or further order accordingly. LORD NEUBERGER: (with whom Lady Hale, Lord Mance and Lord Reed agree) The issue which we have to decide is whether to uphold or reverse the decision of the Court of Appeal to lift an interlocutory injunction which it had previously granted at the suit of PJS, who is married to YMA, and they have two young children. That interlocutory injunction restrained NGN until trial or further order from publishing a story about a sexual relationship between PJS and AB and another, a story which had been communicated to News Group Newspapers Ltd, NGN, by AB. I agree that we should reverse the decision and continue, or re impose, the interlocutory injunction, for the reasons given in the judgment of Lord Mance, and I also agree with Lady Hale. Because we are reversing the Court of Appeal and are not unanimous in doing so, I add a few words of my own. The history in summary After NGN had obtained the story from AB, they very properly informed PJS of their intention to publish it in the Sun on Sunday newspaper. PJSs case was and remains that this would be unlawful as it would violate his legal rights as it would be an unlawful misuse of his private information. Accordingly, he immediately issued proceedings against NGN seeking a permanent injunction to prevent such publication. Because a permanent injunction can only be granted after a trial, NGN would have been able to publish the story in the meantime. Accordingly, PJS also immediately applied for a temporary, or interlocutory, injunction to restrain NGN from publishing the story until the trial. NGN resisted both the proceedings and the grant of the interlocutory injunction on the ground that the public interest in freedom of expression and in the story being published outweighed any privacy rights enjoyed by PJS. Cranston J decided that NGN were right and refused PJS an interlocutory injunction (but granted one very temporarily to enable PJS to appeal). PJS appealed to the Court of Appeal which on 22 January 2016, granted an interlocutory injunction for reasons given by Jackson LJ. In summary, he considered that PJS had a legally recognised expectation of privacy, that there was no public interest in the story being published, that PJS therefore had a strong case that publication of the story would infringe his legal rights, that such publication would be devastating for PJS, that there would be increased press attention paid to his children, and that when this action comes to trial, [PJS] is likely to establish that publication should not be allowed [2016] EWCA Civ 100. Thereafter, the story was published in a newspaper in the United States, in Canada and in Scotland, and it has been available to the public in England and Wales to the extent described by Lord Mance in paras 6 8 above. As a result, NGN applied to the Court of Appeal to lift the interlocutory injunction on the ground that the dissemination of the story since January 2016 meant that the information was now out in the public domain to such an extent that a permanent injunction would not be granted at trial, so that the interlocutory injunction should therefore be discharged. On 18 April 2016, the Court of Appeal, for reasons given by Jackson LJ, accepted that argument and discharged the interlocutory injunction [2016] EWCA Civ 393. The Court of Appeal nonetheless stayed the discharge of the injunction for two days to enable PJS to apply to this Court. We decided to hear PJSs application for permission to appeal to this Court together with the arguments which the parties wished to raise on any appeal, and to continue the stay until we had determined the application and any appeal. Can this Court consider whether to continue the interlocutory injunction? On the face of it, a decision whether or not to discharge an interlocutory injunction is a matter for the court which determines that issue. However, an appellate court can interfere with such a decision if the determining court proceeds on an erroneous basis. In this case, there are three possible reasons why this Court is, as a matter of law, entitled to reconsider the issue raised on this appeal for ourselves. First, although he gave an impressive and careful judgment, Jackson LJ misdirected himself in an important respect when reaching the decision to discharge the interlocutory injunction which had been previously granted. Having rightly said that it was necessary to balance PJSs right to respect for his private and family life against NGNs right to freedom of his expression, he said that section 12 of the Human Rights Act enhances the weight to be given to the latter factor. However, that is not right. As Lord Steyn made clear in In re S (A Child) [2005] 1 AC 593, para 17, each right has equal potential force in principle, and the question is which way the balance falls in the light of the specific facts and considerations in a particular case. This was an error which entitles, indeed obliges, us to reconsider the question of discharging the interlocutory injunction. Secondly, there is an argument that it was wrong to proceed on the basis that the story had what Jackson LJ described as limited, as opposed to no, public interest. Of course, there is always a public interest in anyone particularly, some may think, the media having the right to say what they want. As Jackson LJ rightly said in his first judgment in this case at para 55, [freedom of expression is an important right for its own sake; and that is recognised by section 12(4) of the Human Rights Act 1998, which provides that [t]he court must have particular regard to the importance of the Convention right to freedom of expression. However, following section 12(4)(a)(ii) of the 1998 Act, it appears to me that it was the public interest (as opposed to the interests of some members of the public) in the story being published which Jackson LJ was describing. In his earlier judgment in which he decided to grant the injunction, Jackson LJ decided that there was no public interest in the story being published (see [2016] EWCA Civ 100, para 53), and, as that finding has unsurprisingly not been appealed, it must be accepted, at least until trial. Having said that, I very much doubt that this factor would have been enough to persuade me that we could reconsider the question of continuing the interlocutory injunction, but, in the light of what I say in para 51 above and para 53 below, that is an academic point. Thirdly, it appears to me that the Court of Appeal overlooked, or at any rate gave insufficient weight to, the intrusive and distressing effect on PJS and his family of newspaper coverage of the story, to some extent conflating that question with confidentiality. I will say more about that aspect in the next section of this judgment. The continuation of the interlocutory injunction It is therefore for this Court to decide whether or not to re impose the interlocutory injunction, it appears to me that the central issue in that connection is whether the trial judge would be likely to grant a permanent injunction when this case comes to trial. Section 12(3) of the 1998 Act precludes the grant of an interlocutory injunction unless a permanent injunction is likely to be granted at trial; on the other side of things, it is hard to see why, in this case at least, an interlocutory injunction should not be granted (and, a fortiori, continued) if a permanent injunction is likely to be granted. In this context, the proper approach to likelihood is as set out by Lord Nicholls in Cream Holdings Ltd v Banerjee [2005] 1 AC 253, para 22, which is set out by Lord Mance in para 19 above. In January 2016, the Court of Appeal thought it was likely that, at the end of the trial of this action, a judge would grant a permanent injunction restraining NGN from publishing the story. Accordingly, the question to be resolved is whether, despite the publicity which has already been given to the story, as described by Lord Mance in paras 6, 7 and 8 of his judgment, that is still the likely outcome at trial. On that centrally relevant issue, it must be remembered that this is an application to discharge an interlocutory judgment before the trial of the action concerned. NGNs case must therefore be that the interlocutory injunction should be revoked because of some significant change of circumstances since it was granted in January 2016 Thevarajah v Riordan [2016] 1 WLR 76 para 18 citing Buckley LJ in Chanel Ltd v F W Woolworth & Co Ltd [1985] 1 WLR 485, 492 493. Accordingly, with the exception of the effects of the subsequent publicity referred to in para 55 above, the conclusions reached in the first judgment of the Court of Appeal must be assumed to be correct; in particular, it must be assumed that there is no public interest in publication of the story, and that, were it not for the publicity which has occurred since January 2016, it is likely that a permanent injunction would be granted. If PJSs case was simply based on confidentiality (or secrecy), then, while I would not characterise his claim for a permanent injunction as hopeless, it would have substantial difficulties. The publication of the story in newspapers in the United States, Canada, and even in Scotland would not, I think, be sufficient of itself to undermine the claim for a permanent injunction on the ground of privacy. However, the consequential publication of the story on websites, in tweets and other forms of social network, coupled with consequential oral communications, has clearly resulted in many people in England and Wales knowing at least some details of the story, including the identity of PJS, and many others knowing how to get access to the story. There are claims that between 20% and 25% of the population know who PJS is, which, it is fair to say, suggests that at least 75% of the population do not know the identity of PJS, and presumably more than 75% do not know much if anything about the details of the story. However, there comes a point where it is simply unrealistic for a court to stop a story being published in a national newspaper on the ground of confidentiality, and, on the current state of the evidence, I would, I think, accept that, if one was solely concerned with confidentiality, that point had indeed been passed in this case. However, claims based on respect for privacy and family life do not depend on confidentiality (or secrecy) alone. As Tugendhat J said in Goodwin v News Group Newspapers Ltd [2011] EMLR 502, para 85, [t]he right to respect for private life embraces more than one concept. He went on to cite with approval a passage written by Dr Moreham in Law of Privacy and the Media (2nd ed (2011), edited by Warby, Moreham and Christie), in which she summarised the two core components of the rights to privacy as unwanted access to private information and unwanted access to [or intrusion into] ones personal space what Tugendhat J characterised as confidentiality and intrusion. Tugendhat J then went on to identify a number of cases where intrusion had been relied on by judges to justify the grant of an injunction despite a significant loss of confidentiality, namely Blair v Associated Newspapers Ltd (10 March 2000, Morland J), West v BBC (10 June 2002, Ouseley J), McKennitt v Ash [2006] EMLR 178, para 81 (Eady J), X & Y v Persons Unknown [2007] EMLR 290, para 64 (Eady J), JIH v News Group Newspapers Ltd [2011] EMLR 177, paras 58 59 (Tugendhat J), TSE v News Group Newspapers Ltd [2011] EWHC 1308 (QB), paras 29 30 (Tugendhat J) and CTB v News Group Newspapers Ltd [2011] EWHC 1326 (QB), para 23 (Eady J), to which can be added CTB v News Group Newspapers Ltd [2011] EWHC 1334 (QB), para 3 (Tugendhat J), Rocknroll v News Group Newspapers Ltd [2013] EWHC 24 (Ch), para 25 (Briggs J), and H v A (No 2) [2015] EWHC 2630 (Fam), paras 66 69 (MacDonald J). Perusal of those decisions establishes that there is a clear, principled and consistent approach at first instance when it comes to balancing the medias freedom of expression and an individuals rights in respect of confidentiality and intrusion. There has been not even a hint of disapproval of that approach by the Court of Appeal (although it considered appeals in McKennitt [2008] QB 73 and JIH [2011] 1 WLR 1645). Indeed, unsurprisingly, there has been no argument that we should take the opportunity to overrule or depart from them. Accordingly, it seems to me that it is appropriate for this Court to adhere to the approach in those cases. Not only do they demonstrate a clear and consistent approach, but they are decisions of judges who are highly respected, and, at least in the main, highly experienced in the field of media law and practice; and they were mostly decided at a time when access to the internet was easily available to the great majority of people in the United Kingdom. The significance of intrusion, as opposed to confidentiality, in these decisions was well explained in the judgment of Eady J in CTB [2011] EWHC 1326 (QB), where he refused an application by a newspaper to vary an interlocutory injunction because of what he referred to as widespread coverage on the Internet. At para 24 he said that [i]t is fairly obvious that wall to wall excoriation in national newspapers is likely to be significantly more intrusive and distressing for those concerned than the availability of information on the Internet or in foreign journals to those, however many, who take the trouble to look it up. As he went on to say in the next paragraph of his judgment, in a case such as this, [f]or so long as the court is in a position to prevent some of that intrusion and distress, depending upon the individual circumstances, it may be appropriate to maintain that degree of protection. The same approach was taken by Tugendhat J in a later judgment in the same case, CTB [2011] EWHC 1334 (QB), when refusing a further application to lift the interlocutory injunction after the applicants name had been mentioned in the House of Commons. At para 3, having accepted that it was obvious that if the purpose of this injunction were to preserve a secret, it would have failed in its purpose, he said that in so far as its purpose is to prevent intrusion or harassment, it has not failed. Indeed, he regarded the fact that tens of thousands of people have named the claimant on the internet as confirming, rather than undermining, the argument that the claimant and his family need protection from intrusion into their private and family life. It also seems to me that if there was no injunction in this case, there would be greater intrusion on the lives of PJS and YMA through the internet. There may well be room for different views as to whether the lifting of the injunction would lead to an increase or a decrease in tweets and other electronic communications relating to the story. However, if the identity of PJS and the story could be communicated within England and Wales, then it would be likely that anyone in this jurisdiction who was searching for PJS (or indeed YMA) through a search engine, for reasons wholly unconnected with the story, would find prominent links to that story. But if search engines serving England and Wales are geo blocked from mentioning PJS, or indeed YMA, in connection with the story, as they should be so long as an injunction is in place, this would not happen. It might be said that PJS and YMA could ask the search engine operators to remove any links to the story pursuant to the decision of the Court of Justice in Google Spain SL v Agencia Espaola de Proteccin de Datos (Case C 131/12) [2014] QB 1022, but it seems unlikely that the reasoning in that case could apply to a story which has only recently become public and is being currently covered in the newspapers. In the instant case, Jackson LJ said in his first judgment, when granting the interlocutory injunction, that [t]he proposed article would generate a media storm and much public interest in [PJSs] family. There would be increased press interest in [his] and YMAs family life. The children would become the subject of increased press attention, with all that that entails. There is no reason to think that that would be significantly different now, despite the internet coverage of the story and indeed it may be that the press interest and attention identified by Jackson LJ in that passage would be increased as a result of the internet coverage. In my view, the case for lifting the interlocutory injunction imposed in January 2016 has not been made out. The publication of the story and the identification of PJS in the electronic media since January 2016 has undoubtedly severely undermined (and probably, but not necessarily, demolished) PJSs claim for an injunction in so far as he relies on confidentiality. However, I am unconvinced, on the basis of the evidence and arguments we have heard, that it has substantially reduced the strength of his claim in so far as it rests on intrusion. Bearing in mind those factors and the lack of public interest in the story being published, as well as the factors mentioned by Lord Mance and Lady Hale, I consider that the interlocutory injunction should be continued until trial (or further order in the meantime). One argument for discharging the injunction which I have not so far mentioned is that it may be arguable that things have got to the stage where it would be less damaging to PJS for the story to be published in the Sun on Sunday and other newspapers and got out of the way in one go, with all the intrusion that that would entail, as opposed to the potential drip feeding of the story on the internet coupled with oblique references in the print media, often coupled with indignation at being unable to report the story. It is very hard indeed to assess the strength of that argument at least on the basis of the evidence which we were taken to. Further, it is a point which was scarcely, if at all, relied on by NGN, and it is a point on which the view and experience of PJS and his family should, I would have thought, carry some weight. Accordingly, I am not persuaded that it should carry the day for NGN at least at this stage. Concluding remarks I would therefore grant PJS permission to appeal to this Court, set aside the decision of the Court of Appeal given on 18 April 2016, and continue the injunction granted on 22 January 2016, until trial or further order in the meantime. In summary terms this is because it seems likely that PJS will establish at trial that (i) publication of the story in the Sun on Sunday would be an unlawful breach of his rights, and (ii) he should be entitled to an injunction to restrain it, because of the consequential intrusion into his and his familys private lives. It is one thing for what should be private information to be unlawfully disseminated; it is quite another for that information to be recorded in eye catching headlines and sensational terms in a national newspaper, or to be freely available on search engines in this jurisdiction to anyone searching for PJS or YMA, or indeed AB, by name in a different connection. If, as seems to me likely on the present state of the evidence and the current state of the law, PJS will succeed in obtaining such an injunction at trial, then it follows that he ought to be granted an injunction to restrain publication of the story in the meantime. I referred in para 66 above to the indignation of the newspapers. It is easy to understand, and indeed to sympathise with, the concern of NGN and other newspapers at being excluded from reporting in this jurisdiction a story which is available, at least in part, to people in this country via electronic media. I appreciate that it is scant consolation, but the fact is that this situation arises from the perception that a story in a newspaper has greater influence, credibility and reach, as well greater potential for intrusion, than the same story on the internet. I also accept that, as many commentators have said, that the internet and other electronic developments are likely to change our perceptions of privacy as well as other matters and may already be doing so. The courts must of course be ready to consider changing their approach when it is clear that that approach has become unrealistic in practical terms or out of touch with the standards of contemporary society. However, we should not change our approach before it is reasonably clear that things have relevantly changed in a significant and long term way. In that connection, while internet access became freely available in this country only relatively recently, almost all the cases listed at the end of para 59 above were decided since that happened, and many of those cases were decided after blogging and tweeting had become common. It is therefore quite understandable that Mr Millar QC, for NGN did not suggest that the law as laid down in those cases was wrong or outdated; and, currently at least, I am unpersuaded that they do not represent the law. In the light of the facts as they currently appear and the law as it has now been developed, it appears to me that the interlocutory injunction sought by PJS should be granted. The courts exist to protect legal rights, even when their protection is difficult or unpopular in some quarters. And if Parliament takes the view that the courts have not adapted the law to fit current realities, then, of course, it can change the law, for instance by amending section 12 of the 1998 Act. LADY HALE: (with whom Lord Neuberger, Lord Mance and Lord Reed agree) I agree that this appeal should be allowed and the interim injunction restored for the reasons given by Lord Mance. I wish only to add a few words about the interests of the two children whom PJS has with YMA. It is simply not good enough to dismiss the interests of any children who are likely to be affected by the publication of private information about their parents with the bland statement that these cannot be a trump card. Of course they cannot always rule the day. But they deserve closer attention than they have so far received in this case, for two main reasons. First, not only are the childrens interests likely to be affected by a breach of the privacy interests of their parents, but the children have independent privacy interests of their own. They also have a right to respect for their family life with their parents. Secondly, by section 12(4)(b), any court considering whether to grant either an interim or a permanent injunction has to have particular regard to any relevant privacy code. It is not disputed that the IPSO Code, which came into force in January, is a relevant Code for this purpose. This, as Lord Mance has explained, provides that editors must demonstrate an exceptional public interest to over ride the normally paramount interests of [children under 16]. This means that, at trial, the court will have to consider carefully the nature and extent of the likely harm to the childrens interests which will result in the short, medium and longer terms from the publication of this information about one of their parents. At present, there is no evidence about this. It is possible that, at trial, the evidence will not support any risk of harm to the childrens interests from publication of the story in the English print and broadcasting media. It is possible that the evidence will indicate that the children can be protected from any such risk, by a combination of the efforts of their parents, teachers and others who look after them and some voluntary restraint on the part of the media. On the other hand, it is also possible that the evidence will support a risk of harm to the childrens interests from the invasion of their own and their parents privacy, a risk from which it will be extremely difficult to protect them. There is all the difference in the world between the sort of wall to wall publicity and intrusion which is likely to meet the lifting of this injunction and their learning this information in due course, which the Court of Appeal thought inevitable. For one thing, the least harmful way for these children to learn of these events is from their parents. Their parents have the resources to take wise professional advice about how to reveal and explain matters to their children in an age appropriate way and at the age appropriate time. No doubt their parents are already giving careful thought to whether this might be the best way of protecting their children, especially from the spike of interest which is bound to result from this judgment let alone from any future judgment. The particular features which are relevant to the balancing exercise in this case are contained in three short paragraphs in the unredacted version of this judgment. These unfortunately have to be redacted because it would be comparatively easy to surmise the identity of the children and their parents from them. There are particular reasons why care should be taken about how, when and why these children should learn the truth. [redacted] [redacted] [redacted] In the leading case of In re S (A Child) (Identification: Restrictions on Publication) [2005] 1 AC 593, very careful consideration was given, at first instance, in the Court of Appeal and in the House of Lords, to balancing the public interest in publishing the name of a woman accused of murdering her child against the welfare interests of her surviving child who was living with his father. The public interest, in the legal sense, of publication was very strong. There was expert evidence of the welfare interests of the surviving child. It could not be more different from this case. As Lord Mance has demonstrated, there is no public interest in the legal sense in the publication of this information. There is no expert evidence of the interests of these children. These are all matters which should be properly argued at trial, not pre empted by premature disclosure. LORD TOULSON: (dissenting) I respectfully disagree with the judgment of the majority. Despite the arguments persuasively advanced by Mr Desmond Browne QC on behalf of PJS, I have concluded on reflection that the injunction originally granted by the Court of Appeal on 22 January 2016 should not be reinstated. That injunction provided that NGN (as I will refer to the respondent) should not publish any information which might lead to PJSs identification, or any of the information referred to in a confidential schedule to the order, until trial of the action or further order. To Lord Mances full summary of the facts I would add only that there have been numerous twitter hashtags of a fairly obvious kind leading to material identifying PJS in connection with the injunction. I agree with Lord Mance that it was incorrect for the Court of Appeal to say, as it did, that section 12 of the Human Rights Act (HRA) enhances the weight which article 10 rights carry in the balancing exercise with the article 8 rights of PJS. In its judgment dated 22 January 2016 the Court of Appeal set out correctly the interplay between articles 8 and 10 (at para 30 and following), and I doubt whether the court really intended to adopt a different approach in April, but that is not a sufficient basis to re interpret, or overlook as immaterial, what it said on the later occasion. In consequence, this court must review for itself the question whether the January injunction should be set aside because of a change of circumstances. Although it does not affect the need for this court to form its own judgment whether the January injunction should be set aside, I would not subscribe to Lord Mances other three criticisms of the Court of Appeal; that it wrongly referred to limited public interest; that it applied a quantitive test to the level of disclosure which there had been, thereby overlooking the invasiveness and distress which the proposed publication would entail; and that its decision involved a failure to ensure that PJSs privacy rights were practical and effective. As to public interest, the Court of Appeal referred to what it had said on that subject in its earlier judgment without repeating it. In its earlier judgment the court made it clear that it thought very little of the public interest argument, for reasons which it fully explained. The seven reasons which the court gave in the judgment under review, at para 47, for setting aside the injunction were in no way affected by the NGNs suggested public interest in the publication; they were all to do with the consequences of what had become public. As to applying a purely quantitive test, section 12(4) of the HRA required the court to have regard to the extent to which the information embargoed from publication by the injunction was available to the public; the court also considered expressly the impact on PJS and the children of further disclosure in the light of events which had happened. The final criticism, relating to a practical and effective remedy, requires fuller discussion. It is not disputed that this court must approach the question whether the injunction should remain in place on the basis that, on the present information, PJS is likely to succeed at the trial in his claim that publication of his identity, and the other information in the confidential schedule to the injunction, would be a breach of his article 8 rights. The Court of Appeal so found in its January judgment, and it adhered to that view in the judgment under review (para 41). Mr Gavin Millar QC did not try to persuade the court otherwise, although he made it clear that the Sun intends to maintain its public interest defence at the trial. For present purposes, the court must proceed on the basis that there is no public interest in the publication of the material, however interesting it might be to some members of the public. The fact that there is a public appetite, which the proposed publication would feed, for information about the sex lives of celebrities does not mean that its disclosure would be in the public interest. Celebrities are entitled to the same respect for their private lives as anyone else, unless disclosure would genuinely support the function of the press as a public watchdog. All this is well established. The provision in section 12(3) of the HRA that there should be no pre trial restraint on publication unless the court is satisfied that the applicant is likely to establish that publication should not be allowed requires more than that the applicant is likely to establish that publication would be in breach of his rights. It is generally necessary to persuade the court that he is likely to obtain a final injunction at the trial. The Court of Appeal rightly identified this as the crucial question (para 46). On that issue I have reached the same conclusion as the Court of Appeal for essentially the same reasons. Mr Browne concentrated his argument on the impact on PJS and his spouse becoming the subjects of a media storm, together with the consequences for their children. The Court of Appeal rightly recognised that the information which the NGN wants to publish is still private in the sense that it concerns intimate sexual matters, which attract the protection of article 8, although much of the confidentiality has been lost. In the world in which PJS lives, knowledge of the story must be commonplace and it is apparent from the evidence that the circle of those who know is much wider. The story in its essential details has been published in a major Scottish newspaper, it has been widely accessible on websites and twitter, and anyone who seriously wanted to know PJSs identity will have had ways of finding it. Confidentiality in a meaningful sense can survive a certain amount of leakage, and every case must be decided on its own facts, but in this case I have reached a clear view that the storys confidentiality has become so porous that the idea of it still remaining secret in a meaningful sense is illusory. Once it has become readily available to anyone who wants to know it, it has lost the essence of confidentiality. The court must live in the world as it is and not as it would like it to be. I would echo Jackson LJs words that [i]t is in my view inappropriate (some may use a stronger term) to ban people from saying that which is common knowledge. In my judgment that is good sense and good law. Mr Browne submitted that even if the story has become widely known, an injunction is still appropriate to protect PJS from the impact of its being reported in the media in a lurid fashion. The Court of Appeal weighed the media storm argument both in its January judgment and in its recent judgment. In the later judgment it saw less force in the point than in January. It said that the process of excoriation which PJS fears has already been occurring and will inevitably continue. It did not go as far as to accept the NGNs argument that PJSs article 8 rights had ceased to be engaged at all, because it recognised that the proposed publication would be a further intrusion, but the critical factor in the courts decision whether to continue the injunction, as I read its judgment, was what it saw as the unreality of trying to put a lid on the story. It is well recognised that repeated publication of private (and especially intimate) photos may properly be prevented by injunction, because the original publication does not necessarily reduce the intrusion caused by re publication. In Douglas v Hello! Ltd (No 3) [2006] QB 125, para 105, the Court of Appeal explained that insofar as a photograph does more than convey information, and intrudes on privacy by enabling the viewer to focus on intimate personal detail, there will be a fresh intrusion of privacy when each additional viewer sees the photograph, or even when one who has seen a previous publication of the photograph is confronted by a fresh publication of it. The court gave the example of a photograph taken with a telescopic lens of a film star lying naked by a swimming pool. In the present case what is sought to be restrained is the publication of facts of which there has already been widespread disclosure. Once facts are widely known, the legal landscape changes. In my view the court needs to be very cautious about granting an injunction preventing publication of what is widely known, if it is not to lose public respect for the law by giving the appearance of being out of touch with reality. Lord Mance says at para 33 that the requirement under section 12(4)(a)(i) of the HRA for the court to pay particular regard to the extent to which the material has, or is about to, become available to the public must be considered with reference to the form in relation to which injunctive relief is to be sought. As I read the words of the Act, they require the court to take into account how generally available the information has become from whatever source, be it broadcast journalism, print journalism, the internet or social media. The evident underlying purpose of the subsection is to discourage the granting of an injunction to prevent publication of information which is already widely known. If the information is in wide, general circulation from whatever source or combination of sources, I do not see that it should make a significant difference whether the medium of the intended publication is the internet, print journalism or broadcast journalism. The world of public information is interactive and indivisible. I do not underestimate the acute unpleasantness for PJS of the story being splashed, but I doubt very much in the long run whether it will be more enduring than the unpleasantness of what has been happening and will inevitably continue to happen. The story is not going to go away, injunction or no injunction. It is a fact of life that stories about celebrities sometimes acquire their own momentum. In relation to the children, the Court of Appeal took account of their position both in its January judgment and in its recent judgment. They are very young and there are various steps which their parents can take to shield them from the immediate publicity. As the Court of Appeal said, it is inevitable in the longer term that the children will learn about these matters and their parents have no doubt already considered how they propose to handle it. The case of Editions Plon v France, to which Lord Mance has referred, arose from the publication shortly after the death of President Mitterand of a book by his doctor entitled Le Grand Secret. The French court granted an application by the late presidents widow and children for an interlocutory injunction to stop its distribution. The doctor was subsequently prosecuted, fined and given a suspended prison sentence. Final judgment in the civil proceedings was given nine months after the presidents death. Substantial damages were awarded to his widow and children and the injunction was made permanent. The Strasbourg court held that the temporary injunction had been legitimate, because the publication had occurred so soon after the presidents death when his family were grieving. It did not consider that the permanent injunction satisfied the requirement of serving a pressing social need, particularly having regard to the other remedies which had been ordered and to the fact that the story was widely available on the internet. I recognise that the facts were very different from those of the present case, and that the content of the book raised matters of undoubted public interest, but the case nevertheless shows that the court took a significantly different approach to a permanent ban on the publication of information which was widely available on the internet from its approach to a temporary ban for a specific and limited purpose. Lord Mance has said that the effect of lifting the injunction will be largely to undermine the purpose of any trial, which will be rendered irrelevant. I would make two observations. First, while adequacy of damages as a remedy is a reason to refuse an injunction, you cannot turn the argument on its head and say that inadequacy of damages is a positive reason to grant an otherwise inappropriate injunction. Secondly, I do not agree that the trial will be rendered irrelevant. As to damages, I would not regard Eady Js decision in Mosley v News Group Newspapers Ltd [2008] EWHC 1777 (QB), [2008] EMLR 20, that exemplary damages cannot be awarded in an appropriate case for breach of privacy, as the final word on the subject. Proportionality is essential, but I would not rule out the possibility of the courts considering such an award to be necessary and proportionate in order to deter flagrant breaches of privacy and provide adequate protection for the person concerned. I would dismiss the appeal.
+Each of the appellants has been convicted on indictment of a serious criminal offence. Each has had an appeal against conviction dismissed by the Court of Appeal. Each appeals on the ground that he did not receive a fair trial, contrary to article 6 of the European Convention on Human Rights (article 6) (The Convention). The appeal of each is based on the fact that there was placed before the jury the statement of a witness who was not called to give evidence. In each case the witness was the victim of the alleged offence. Mr Horncastle and Mr Blackmore were convicted of causing grievous bodily harm, with intent, to Mr Peter Rice. Mr Rice made a witness statement to the police about what had happened to him. He died before the trial of causes not attributable to the injuries that had been inflicted upon him. His statement was read at the trial. Although there was other evidence that supported it, the Court of Appeal concluded that the statement was to a decisive degree the basis upon which the appellants were convicted. Mr Marquis and Mr Graham were convicted of kidnapping a young woman called Hannah Miles. She made a witness statement to the police in which she described what happened to her. The day before the appellants trial she ran away because she was too frightened to give evidence. Her statement was read to the jury. A considerable body of oral evidence was also given at the trial. The Court of Appeal held that the appellants convictions did not rest on the evidence of Miss Miles to a decisive extent. The appellants challenge that finding. Mr Rices witness statement was admitted pursuant to section 116(1) and (2)(a) of the Criminal Justice Act 2003 (the CJA 2003), which makes admissible, subject to conditions, the statement of a witness who cannot give evidence because he has died. Miss Miles witness statement was admitted pursuant to section 116(1) and (2)(e) of the CJA 2003, which makes admissible, subject to conditions, the statement of a witness who is unavailable to give evidence because of fear. The principal issue raised by these appeals is whether a conviction based solely or to a decisive extent on the statement of a witness whom the defendant has had no chance of cross examining necessarily infringes the defendants right to a fair trial under articles 6(1) and 6(3)(d) which provide: (1) In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. (3) Everyone charged with a criminal offence has the following minimum rights: . to examine or have examined witnesses (d) against him and to obtain the attendance and examination of witnesses on his behalf under the same conditions as witnesses against him. The appellants submit that an affirmative answer must be given to this principal issue. In each case it is submitted that the trial judge should have refused to admit the statement on the ground that it was a decisive element in the case against the appellants. This the judge could have done, either by reading down the relevant provisions of the 2003 Act so as to preclude the admission of hearsay evidence in such circumstances or by excluding it under section 78 of the Police and Criminal Evidence Act 1984 (PACE). In so submitting the appellants rely on a line of Strasbourg cases, culminating in the decision of the Fourth Section of the European Court of Human Rights (the Chamber), delivered on 20 January 2009, in the cases of Al Khawaja and Tahery v United Kingdom (2009) 49 EHRR 1. In each of those applications statements had been admitted in evidence at a criminal trial of a witness who was not called to give evidence. The Strasbourg Court held that, in each case, the statement was the sole or, at least, the decisive basis for the applicants conviction. The Court reviewed its own jurisprudence and concluded that this established that the rights of each applicant under articles 6(1) and 6(3)(d) had not been respected. The Court took as its starting point the following statement in Luc v Italy (2001) 36 EHRR 807 at paragraph 40: where a conviction is based solely or to a decisive degree on depositions that have been made by a person whom the accused has had no opportunity to examine or to have examined, whether during the investigation or at the trial, the rights of the defence are restricted to an extent that is incompatible with the guarantees provided by article 6. I shall call the test of fairness that this statement appears to require the sole or decisive rule. The Court of Appeal did not accept that the decision in Al Khawaja was determinative of the results of these appeals. It held that, in the circumstances of each of the appeals, the appellants had received a fair trial and dismissed the appeals. The approach to this appeal Article 43(1) of the Convention provides that within a period of three months from the date of judgment of the Chamber any party may, in an exceptional case, request that the case be referred to the Grand Chamber. Article 43(2) provides that a Panel of 5 judges of the Grand Chamber shall accept the request if the case raises a serious question affecting the interpretation or application of the Convention or its Protocols, or a serious issue of general importance. On 16 April 2009 the United Kingdom requested that the decision of the Chamber in Al Khawaja be referred to the Grand Chamber. On 5 June 2009 the Panel of the Grand Chamber adjourned consideration of that request pending our judgment in the present case. Mr Tim Owen QC, for Mr Horncastle and Mr Blackmore, submitted that we should treat the judgment of the Chamber in Al Khawaja as determinative of the success of these appeals. He submitted that this was the appropriate response to the requirement of section 2(1) of the Human Rights Act 1998 that requires a court to take into account any judgment of the European Court of Human Rights in determining any question to which such judgment is relevant. He submitted that the decision of the House of Lords in Secretary of State for the Home Department v AF (No 3) [2009] UKHL 28; [2009] 3 WLR 74 exemplified the correct approach to a decision of the European Court. In that case the Committee held itself bound to apply a clear statement of principle by the Grand Chamber in respect of the precise issue that was before the Committee. Mr Owen submitted that we should adopt precisely the same approach to the decision of the Chamber in Al Khawaja. I do not accept that submission. The requirement to take into account the Strasbourg jurisprudence will normally result in this Court applying principles that are clearly established by the Strasbourg Court. There will, however, be rare occasions where this court has concerns as to whether a decision of the Strasbourg Court sufficiently appreciates or accommodates particular aspects of our domestic process. In such circumstances it is open to this court to decline to follow the Strasbourg decision, giving reasons for adopting this course. This is likely to give the Strasbourg Court the opportunity to reconsider the particular aspect of the decision that is in issue, so that there takes place what may prove to be a valuable dialogue between this court and the Strasbourg Court. This is such a case. The decision of the Court of Appeal In recognition of the importance of these appeals for English criminal procedure the Criminal Division of the Court of Appeal sat five strong in a composition that included the Vice President and other senior judges with extensive experience of the criminal process. The court was thus particularly well qualified to consider the questions at the heart of these appeals. These questions are: (i) whether the regime enacted by Parliament in relation to the admission of the evidence of an absent witness at a criminal trial will result in an unfair trial and, if not, (2) whether the Strasbourg jurisprudence none the less requires the court to apply that regime in a manner contrary to the intention of Parliament. The Court of Appeal carried out an extensive survey of both domestic and Strasbourg jurisprudence. They concluded that the statutory regime produced a fair trial and that the Strasbourg jurisprudence did not require the court to apply that regime in a manner contrary to Parliaments intention. I endorse those conclusions and almost all the reasoning that led to them. I commend the Court of Appeals judgment and shall, in places, borrow from it. This judgment should be read as complementary to that of the Court of Appeal, not as a substitute for it. A summary of my conclusions The following are the conclusions that I have reached for reasons that I shall develop: (1) Long before 1953 when the Convention came into force the common law had, by the hearsay rule, addressed that aspect of a fair trial that article 6(3)(d) was designed to ensure. (2) Parliament has since enacted exceptions to the hearsay rule that are required in the interests of justice. Those exceptions are not subject to the sole or decisive rule. The regime enacted by Parliament contains safeguards that render the sole or decisive rule unnecessary. The continental procedure had not addressed that aspect of a fair trial (3) that article 6(3)(d) was designed to ensure. The Strasbourg Court has recognised that exceptions to article 6(3)(d) (4) are required in the interests of justice. The manner in which the Strasbourg Court has approved those (5) exceptions has resulted in a jurisprudence that lacks clarity. The sole or decisive rule has been introduced into the Strasbourg (6) jurisprudence without discussion of the principle underlying it or full consideration of whether there was justification for imposing the rule as an overriding principle applicable equally to the continental and common law jurisdictions. (7) Although English law does not include the sole or decisive rule it would, in almost all cases, have reached the same result in those cases where the Strasbourg Court has invoked the rule. (8) The sole or decisive rule would create severe practical difficulties if applied to English criminal procedure. Al Khawaja does not establish that it is necessary to apply the sole or (9) decisive rule in this jurisdiction. The common law approach to a fair trial The United Kingdom was the first country to ratify the Convention in 1951 and the Convention came into force in 1953. Since then the Strasbourg Court has repeatedly had to grapple in judgments relating to article 6 with the requirements of a fair trial. During the same period England and Wales and the Commonwealth countries that apply the common law have been involved in the same exercise, largely by means of legislation, as have the civil law jurisdictions which, in 1953, had a very different approach to the criminal process. The English criminal process is adversarial. Its focal point is the trial, which is the judicial part of the process. The investigation into a crime is carried out by the executive, in the form of the police. The police under the supervision of the independent Crown Prosecution Service, which is responsible for ensuring the fairness, impartiality and integrity of the process, charge the defendant with the offence, prepare the case against him and seek to prove it at the trial. Rules have been laid down to protect the defendant against unfair treatment during the investigation and preparation for trial. These include the caution and the right of silence, the entitlement to legal representation, rules governing questioning by the police, an embargo on questioning a defendant after he has been charged and an entitlement to know the case against him. Two underlying themes have marked the common law approach to a fair criminal trial. The first has been that the determination of guilt or innocence should be entrusted to a lay tribunal the jury in the case of the more serious offences and the magistrates in most cases of less serious offences. The second has been a reluctance to trust the lay tribunal to attach the appropriate weight to the evidence placed before them. These themes have been reflected in the rules governing the trial process. There are two principal objectives of a fair criminal trial. The first is that a defendant who is innocent should be acquitted. The second is that a defendant who is guilty should be convicted. The first objective is in the interests of the individual; the second is in the interests of the victim in particular and society in general. The two objectives are sometimes in tension and, where they are, the first carries more weight than the second. English law has different kinds of rules that are designed to ensure a fair trial. Some relate to the procedure itself, such as the right of the defendant to be informed of the case against him, to be given any information available to the prosecution that is relevant to that case, to have legal assistance, to decline to answer questions, to be exempt from further questioning once charged with a crime, to be tried in public at a single continuous trial at which all the evidence has to be adduced, to be present at that trial to confront and cross examine the witnesses who are called to give evidence, and to be informed of the identity of those witnesses. Other rules relate to the evidence that can be placed before the tribunal, be it magistrates or a jury, which is to rule on the defendants guilt. These are rules of admissibility. Jury trials are presided over by a judge who acts as gatekeeper as to what is and what is not permitted to be placed before the jury as evidence. This is an important safeguard for the defendant. The basic principle is that only the best evidence is placed before the jury, that is, the evidence that is most likely to be reliable. In 1953 this principle rendered inadmissible almost all hearsay evidence. Hearsay evidence is any statement of fact other than one made, of his own knowledge, by a witness in the course of oral testimony. Hearsay evidence was inadmissible even if it was a past statement made by someone who was called to give oral evidence and who could be cross examined about it. Furthermore, hearsay evidence was inadmissible, whether it assisted the prosecution or the defence. There were two principal reasons for excluding hearsay evidence. The first was that it was potentially unreliable. It might even be fabricated by the witness giving evidence of what he alleged he had been told by another. Quite apart from this, the weight to be given to such evidence was less easy to appraise than that of evidence delivered by a witness face to face with the defendant and subject to testing by cross examination. The admissibility of some categories of evidence was excluded because, although the evidence was probative, it was thought that the jury could not be trusted not to give the evidence more weight than it deserved. Its probative value was outweighed by its potentially prejudicial effect. Such evidence included evidence of a defendants previous bad character or criminal record and psychiatric evidence that suggested that the defendant might have a propensity to commit an offence of the type charged. Rules governing the admissibility of evidence are important aspects of both criminal and civil procedure. They have generated lengthy text books on the law of evidence. [I am not aware that the civil law systems have a comparable body of jurisprudence]. A third category of rules related to the reasoning permissible in arriving at a conclusion of guilt. Of these the most fundamental were, and are, first that a defendant is deemed to be innocent until proved to be guilty. The jury cannot convict simply upon suspicion of guilt. More fundamentally, a jury cannot convict even if they consider it more likely than not that the defendant is guilty. They can only convict if they are sure, or satisfied beyond reasonable doubt that the defendant is guilty. But there were many more directions that a judge was required to give to a jury in relation to the process of reasoning that was permitted, or not permitted, in reaching their verdict. These sometimes required the jury to disregard evidence that was probative of guilt in order to guard against the risk that the jury would attach too much weight to such evidence. Thus the trial judge had to tell the jury that no adverse inference could be drawn from the fact that a defendant had elected not to go into the witness box and, in the exceptional case where the jury learnt that a defendant was a man of bad character, they had to be instructed that this made it no more likely that he was guilty of the crime charged. There were some circumstances in which common law or statute required the jury to be told either that they could not convict on the evidence of one witness alone unless this was corroborated, or that it would be dangerous for them to do so. This again reflected the perceived danger that a jury would give too much weight to certain categories of evidence. While some of these rules were designed to guard against the risk of an innocent man being convicted, others also met the requirement of fairness that called for equality of arms in a procedure that was adversarial. Exceptions to the rules Over the past half century it was recognised that the application, without exception, of some of these rules placed an obstacle in arriving at the truth that could not be justified. Witness statements were prepared close to the time of the crime that contained detail that the witness might not remember when called to give evidence months later. In such cases the hearsay rule might be evaded by permitting the witness to refresh his memory from the statement. Sometimes the rule operated in a way that was prejudicial to the defendant. Thus the fact that another man had confessed to the crime of which the defendant was charged was inadmissible. In other circumstances the rule excluded evidence that was plainly more reliable than the oral testimony of the witness. While the best evidence rule might justify the hearsay rule in relation to a witness who was available to give evidence, if, for some reason such as death or illness, the witness was not able to give oral evidence, a statement made by that witness might be the best evidence available of what had occurred. Sometimes the application of the rules resulted in the acquittal of defendants who were manifestly guilty see Myers v Director of Public Prosecutions [1965] AC 1001. Over the years a host of exceptions were created by the judges or by statute to these rules, and particularly to the hearsay rule, aimed at addressing these problems. In relation to civil proceedings the hearsay rule was effectively abolished by the Civil Evidence Act 1968. In relation to the criminal law, less far reaching changes were made by the Criminal Evidence Act 1965 and the Police and Criminal Evidence Act 1984. But these also included the very important general safeguard in section 78(1) of the latter statute, which remains in force. This provides: In any proceedings the court may refuse to allow evidence on which the prosecution proposes to rely to be given if it appears to the court that, having regard to all the circumstances, including the circumstances in which the evidence was obtained, the admission of the evidence would have such an adverse effect on the fairness of the proceedings that the court ought not to admit it. More significant changes were made to the hearsay rule in criminal proceedings by the Criminal Justice Act 1988, but these have been replaced by provisions of the CJA 2003. These provisions largely implemented the recommendations of the Report of the Law Commission dated 4 April 1997 (Law Com No 245) on Evidence in Criminal Proceedings: Hearsay and Related Topics. In 1995 the Law Commission had published a Consultation Paper on these topics, in response to a recommendation as to the need for reform made by a Royal Commission on Criminal Justice in 1993. As the Court of Appeal observed at paragraph 10, the consultation embraced judges, practitioners, academic lawyers and other experts and the code enacted pursuant to the Report was: informed by experience accumulated over generations and represents the product of concentrated consideration by experts of how the balance should be struck between the many competing interests affected. It also represents democratically enacted legislation substantially endorsing the conclusions of the expert consideration. The relevant provisions of the CJA 2003 have been summarised by the Court of Appeal at paragraphs 11 to 16 and I shall adopt that summary, subject to a small addition. Hearsay is not made generally admissible by this statutory code. The scheme of the code is as follows: It preserves certain specified common law categories of admissible (i) evidence (ss.114(1)(b) and 118). (ii) It makes specific provision for a limited number of categories of hearsay where there is special reason to make it admissible (ss.114(1)(a) and (c), 116 117, 119 120 and 127 129). It provides for a limited residual power to admit hearsay if the interests of (iii) justice require it (s.114(1)(d) and 114(2)). (iv) It establishes special stipulations to which hearsay evidence is subject (ss.121 126). Among the provisions of Part 11, Chapter 2 of the CJA 2003 in the second group are the following: (i) by s.116(1) and (2)(a) the statement of a witness who is unavailable because he is dead is, subject to conditions, made admissible; similar provisions apply to a witness who is medically unfit, absent overseas and cannot be brought to the UK, or cannot despite all practicable efforts be found; by s.116(1) and (2)(e) the statement of a witness who is unavailable (ii) because he does not give evidence through fear is, subject to conditions, made admissible; (iii) by s.116(3) fear is to be widely construed and (for example) includes fear of the death or injury of another person or of financial loss. (This is the addition I have made to the Court of Appeals summary); (iv) by s.117 the contents of business records maintained by those who can be expected to have had personal knowledge of the matters recorded are, subject to conditions, made admissible. In relation to a witness who is unavailable because he is dead (or unavailable for medical reasons or because he is abroad or missing), the conditions for admissibility are as follows: the evidence must be such as would be admissible if the witness were (i) present to give it orally (s.116(1)(a)); and the witness must be identified to the satisfaction of the court (s.116(1)(b)). (ii) Those same conditions apply also to the case of a witness who does not give evidence through fear. In that case an important additional condition must be satisfied. The court must be persuaded to admit the evidence and it must do so only when satisfied that it ought to be admitted in the interests of justice. In deciding whether or not this is so, the court must have regard to all relevant circumstances, but in particular to: (a) the contents of the statement; (b) any risk that its admission or exclusion will result in unfairness to any party to the proceedings (and in particular to how difficult it will be to challenge the statement in the absence of the maker); (c) the possibility of alternative special measures for the protection of the witness, such as screens or video transmitted evidence. The statements of witnesses who are dead, ill, missing, or absent through fear are examples of hearsay made admissible because the evidence is otherwise unavailable. Other categories of hearsay are made admissible because, in the ordinary way, they are likely to be reliable. Business records are made admissible (by s.117 or, where a machine is involved, s.129) because, in the ordinary way, they are compiled by persons who are disinterested and, in the ordinary course of events, such statements are likely to be accurate; they are therefore admissible as evidence because prima facie they are reliable. So, to be admissible, it must be demonstrated that they are the product of information gathered by someone with personal knowledge of the matters recorded, and that anyone through whose hands they have passed has acted in the course of trade, business, profession or office (s.117(2)), and the court is not to admit them if there is doubt about their reliability (ss.117(6) and (7) and 129(1)). If the record was compiled for the purpose of the criminal proceedings, rather than simply in the usual course of business, there is an additional requirement that the source of the information be absent or will have no recollection of the material (s.117(5)): that is designed to ensure that if he can attend to give first hand evidence he does so. S.127 (preparatory work done by the assistants to experts) is a further example of hearsay evidence which is prima facie reliable and which is admissible for either party; its admission is hedged with a similar safeguard providing for non admission if the interests of justice point against it. S.128 (confessions by co accused) is another example of hearsay made admissible (at the suit of the defendant) in the interests of fairness to the accused and because a confession is prima facie, in the absence of reason to the contrary, likely to be true; the CJA 2003 preserves a balance between the competing interests of co accused by providing for exclusion unless it be shown that the confession was not obtained by oppression or anything else likely to render it unreliable. It follows that both in the case of unavailable witnesses, and in the case of apparently reliable hearsay, the CJA 2003 contains a crafted code intended to ensure that evidence is admitted only when it is fair that it should be. The CJA 2003 goes on, in the fourth group of its provisions, to lay down special stipulations applicable to all hearsay, designed to further the same end. They are as follows: (i) S.124 makes special provision for the admissibility of any material which it is contended challenges the credibility of an absent witness. The opposing party is enabled to put in evidence anything which he could have put in if the witness had been present, but he may also put in material which, if the witness had been present, could only have been asked of him in cross examination in circumstances where his answers would have been final; this puts the challenger to that extent in a better position than if the witness is present, and is designed to help to counterbalance the absence of cross examination of the witness in person. In most cases also, in addition to the statutory rules, a defendant who is faced with hearsay evidence will be entitled to ask the court to call upon the Crown to investigate the credibility of any absent witness and to disclose anything capable of challenging it. That exercise will ordinarily require the Crown to go considerably beyond what would otherwise be the duty simply to disclose what is already in its possession and capable of undermining its case; it will require active investigation of the bona fides, associates and credibility of the witness, so as to provide the defendant with, in addition to anything he already knows, everything capable of being found which can be used to test the reliability of the absentee. (ii) By s.125 the judge is required to stop any case depending wholly or partly on hearsay evidence if that evidence is unconvincing to the point where conviction would, in the judges opinion, be unsafe; this is an important exception to the usual rule of the law of England and Wales that the assessment of the weight of evidence is exclusively for the jury (see R v Galbraith (1981) 1 WLR 1039). (iii) S.126 preserves the general power of the judge (which existed at common law and is enshrined in s.78 of the Police and Criminal Evidence Act 1984) to exclude any evidence relied upon by the Crown (but not by a defendant) if its admission would have such an adverse effect on the fairness of the trial that it ought not to be admitted; the section adds a further obligation upon the judge to exclude hearsay evidence if its admission would generate satellite disputes which would cause an undue waste of time such as to outweigh the case for admitting it. It is significant, as the Court of Appeal has pointed out, that the Law Commission gave special consideration to whether there should be a requirement that hearsay should not be capable of proving an essential element of an offence unless supported by other evidence. The Commission was persuaded by the responses to consultation that this would not be desirable. It would require a complex direction to the jury of a type that had proved unsatisfactory in relation to other circumstances where the jury used to be directed to look for corroboration of evidence. The Commission concluded that the danger of a defendant being unfairly convicted on the basis of hearsay evidence alone would be met by the safeguards that it proposed, in particular that which was subsequently adopted as section 125 of the CJA 2003. The principal safeguards designed to protect a defendant against unfair prejudice as a result of the admission of hearsay evidence, seen in the context of the more general safeguards that apply to every jury trial, can be summarised as follows: i) The trial judge acts as gatekeeper and has a duty to prevent the jury from receiving evidence that will have such an adverse effect on the fairness of the proceedings that it should not be received. ii) Hearsay evidence is only admissible in strictly defined circumstances. In essence the judge has to be satisfied beyond reasonable doubt that the prosecution is not able to adduce the evidence by calling the witness. iii) Once the prosecution case is closed, the judge must withdraw the case from the jury if it is based wholly or partly on hearsay evidence and that evidence is so unconvincing that, considering its importance, the defendants conviction would be unsafe. iv) The judge has to direct the jury on the dangers of relying on hearsay evidence. The jury has to be satisfied of the defendants guilt beyond reasonable v) doubt. vi) The defendant can apply for permission to appeal against his conviction, which will be granted where reasonable grounds for appeal are demonstrated. A failure to comply with the safeguards outlined above, and in particular the admission of hearsay evidence contrary to the rules on its admissibility, will constitute such grounds. Where the Court of Appeal finds that there has been such a failure, the appeal will be allowed unless the court is satisfied that, despite the shortcoming, the conviction is safe. As the Court of Appeal observed at paragraphs 77 78, the CJA 2003 has now been in force for a number of years and it is clear that the admissibility of hearsay evidence is being cautiously approached by the courts see the passages quoted from R v Y [2008] 1 WLR 1683. Sir Robin Auld in his Review of the Criminal Courts of England and Wales (2001) into the workings of the criminal courts expressed the view, supported by a body of academic opinion, that the recommendations of the Law Commission did not go far enough. He recommended at paragraph 104 that hearsay should be generally admissible, subject to an obligation to adduce the best evidence, rather than generally inadmissible subject to specified exceptions as proposed by the Law Commission. But in the event (as indicated in para 29 above), it was upon the Law Commissions recommendations that the 2003 Act was essentially based. Hearsay exceptions in other Commonwealth Jurisdictions Other established common law jurisdictions, namely Canada, Australia and New Zealand have, by both common law and statutory development, recognised hearsay evidence as potentially admissible, under defined conditions, in circumstances where it is not possible to call the witness to give evidence, even where the evidence is critical to the prosecution case. An analysis of the position in those jurisdictions, prepared by Lord Mance, is annexed to this judgment as Annexe 1. This demonstrates that, under the common law and statutory exceptions to the hearsay rule recognised in those jurisdictions there is no rigid rule excluding evidence if it is or would be either the sole or decisive evidence, however those words may be understood or applied. Instead, the common law and legislature in these countries have, on a principled basis, carefully developed and defined conditions under which hearsay evidence may be admitted, in the interests of justice and on a basis ensuring that defendants receive a fair trial. Under the common law system of jury trial, the conditions relating to the admissibility of evidence combine, to this end, with the trial judges role as gatekeeper in applying them and his general residual discretion to exclude prejudicial or unfair evidence from going before the jury. Hearsay in the United States The position in the United States differs markedly from that in this jurisdiction and in the Commonwealth jurisdictions to which I have referred. In the United States, the Sixth Amendment to the Constitution provides that: In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favour, and to have the Assistance of Counsel for his defence. The right under the Sixth Amendment to be confronted with the witnesses against him has recently been interpreted in an absolute sense by the majority of the Supreme Court in Crawford v Washington 124 S.Ct. 1354 (2004), reversing its previous decision in Ohio v Roberts 448 U.S. 56; 100 S.Ct 2531 (1980), and in Melendez Diaz v Massachusetts 25 June 2009. The majority in the Supreme Court in reaching these decisions took an originalist approach to the Constitution, relying on its view of the common law position in the late 17th century. The result of these United States decisions is to exclude any testimonial evidence whatever in respect of which there has been or can be no cross examination. Testimonial evidence is not precisely defined in these authorities, but includes police interrogations or prior testimony at a preliminary hearing or former trial (Crawford p.1374) and, in the light of Melendez Diaz, certificates of state laboratory analysts stating that material seized by police and alleged by the prosecution to be connected to a defendant was a prohibited drug. Business records or statements in furtherance of a conspiracy were, in contrast, identified in Crawford at p.1367 as by their naturenot testimonial. Crawford also recognised one possible exception to the principle requiring confrontation in respect of testimonial evidence, that is dying declarations (footnote 6, p.1367). Article 6(3)(d) has not been interpreted by the Strasbourg Court in the same way that the US Supreme Court has now interpreted the Sixth Amendment. The Strasbourg Court has accepted that there are circumstances that justify the admission of statements of witnesses who have not been subject to confrontation with the defendant. The possibility remains, however, that by propounding the sole or decisive test the Strasbourg Court has condemned as rendering a trial unfair the admission of hearsay evidence in circumstances where the legislature and courts of this jurisdiction and of other important Commonwealth jurisdictions (Canada, Australia and New Zealand) have determined that the evidence can fairly be received. This is a startling proposition and one that calls for careful analysis of the Strasbourg jurisprudence. Special measures and anonymity I referred earlier to the recognition at common law of the defendants right to know the identity of the witnesses to be called by the prosecution. This, coupled with the right of a defendant to know the case to be advanced against him, ensured that he could make proper preparations to examine the witnesses called at his trial. The right to know the witnesses identities was thus an important element in the right of confrontation. Where a witness is not prepared through fear to be seen to give evidence against a defendant there are two ways in which his evidence may none the less be placed before the court. If he has previously made a witness statement that statement can be read as evidence. Alternatively he may be persuaded to give evidence anonymously if special measures are taken to ensure that he cannot be recognised by the defendant. Similar issues can arise in respect of each method of adducing evidence and the Strasbourg jurisprudence sometimes does not draw a distinction between the two. In Al Khawaja 49 EHRR 1 the Court held that the sole or decisive rule applied equally in the case of each. Mr Perry QC for the Crown urged that we should not consider anonymous witnesses but should confine ourselves to the circumstances of these appeals which concern the reading of statements of absent witnesses. This was the course followed by the Court of Appeal, who suggested that the Strasbourg jurisdiction dealing with anonymous witnesses did not necessarily apply to absent witnesses. There is a difference of principle between a witness who cannot be called to give evidence because, for instance, he is dead or untraceable, and a witness who is able and available to give evidence but not willing to do so. It might be argued that, where a witness is in a position to give evidence, fairness demands that his evidence should not be used if he is not prepared to face the defendant in court without anonymity. But, as I shall show, both the Strasbourg Court and the United Kingdom Parliament and, indeed, the Ministers of the Council of Europe have recognised that in some circumstances it is permissible to allow witnesses to give their evidence anonymously. So far as a sole or decisive rule is concerned, I am not persuaded that there is a difference in principle between its existence in relation to absent witnesses and its existence in relation to anonymous witnesses. Each situation results in a potential disadvantage for the defendant. The extent of that disadvantage will depend on the facts of the particular case. I cannot see why a sole or decisive test should apply in the case of anonymous evidence but not in the case of a witness statement. The critical question is whether, in either case, the demands of a fair trial require that a sole or decisive test should apply regardless of the particular circumstances and, in particular, regardless of the cogency of the evidence. Accordingly, I propose to set out the approach of English law to anonymity. Some witnesses in criminal proceedings are intimidated by giving evidence or by the prospect of so doing. This is especially true of children and those who are mentally or physically disabled, but it can also be the case of victims who fear being confronted by the defendant, particularly in cases of sexual offences. Section 16 of the Youth Justice and Criminal Evidence Act 1999 makes those who are under 17 or incapacitated eligible for special measures when giving evidence. Section 17 does the same in the case of any witness if the court is satisfied that the quality of his or her evidence is likely to be diminished by fear or distress when testifying. Special measures include giving evidence screened from the defendant or by video link. Over the last 20 years judges purported to exercise a common law power to permit witnesses to give evidence anonymously, sometimes resorting to special measures in order to conceal their identities, where this was considered necessary in the interests of justice. In some cases permission was given because of the desirability of not disclosing the identity of undercover police agents; in others because of fear on the part of the witness of retaliation by or on behalf of defendants. In R v Davis [2008] UKHL 36; [2008] AC 1128 this practice was challenged before the House of Lords. The appellant had been convicted of murdering two men by shooting them at a party. He was identified as the murderer by three witnesses who had been permitted to give evidence anonymously, from behind screens, because they had refused, out of fear, to testify should their identities be disclosed. It was submitted on behalf of the appellant that this procedure was contrary both to the common law right of a defendant to be confronted by his accusers and to article 6(3)(d) of the Convention. Both limbs of this argument were accepted unanimously by the House. Lord Bingham of Cornhill at paragraph 5 of his opinion set out the history of the long established principle of the English common law that, subject to certain exceptions and statutory qualifications, the defendant in a criminal trial should be confronted by his accusers in order that he may cross examine them and challenge their evidence. He observed at paragraph 20 that the statutory exceptions to calling a witness in the CJA 2003 did not permit the adducing of a statement by any witness whose name and identity was not disclosed to the defendant and that the safeguards provided by that Act would be denied to a defendant who did not know the identity of the witness. Their Lordships held that it was not open to a judge to depart from the common law rule by allowing a witness to remain anonymous. While there might well be a need for such a measure in order to combat the intimidation of witnesses, it was for Parliament not the courts to change the law. In the course of his concurring judgment Lord Mance carried out an analysis of the relevant Strasbourg case law. At paragraph 25 Lord Bingham adopted this analysis and summarised its effect as follows: It is that no conviction should be based solely or to a decisive extent upon the statements or testimony of anonymous witnesses. The reason is that such a conviction results from a trial which cannot be regarded as fair. This is the view traditionally taken by the common law of England. In fact, as I shall show, Lord Bingham slightly overstated Lord Mances conclusion. As a result of this decision Parliament amended the common law. The Criminal Evidence (Witness Anonymity) Act 2008 gave the court the power to make a witness anonymity order in the circumstances and subject to the conditions prescribed by the Act. Such an order enables a witness to give evidence subject to special measures designed to protect the identity of the witness being known. Section 4 sets out the conditions for making such an order: (1) This section applies where an application is made for a witness anonymity order to be made in relation to a witness in criminal proceedings. (2) The court may make such an order only if it is satisfied that Conditions A to C below are met. (3) Condition A is that the measures to be specified in the order are necessary (a) in order to protect the safety of the witness or another person or to prevent any serious damage to property, or (b) in order to prevent real harm to the public interest (whether affecting the carrying on of any activities in the public interest or the safety of a person involved in carrying on such activities, or otherwise). (4) Condition B is that, having regard to all the circumstances, the taking of those measures would be consistent with the defendant receiving a fair trial. (5) Condition C is that it is necessary to make the order in the interests of justice by reason of the fact that it appears to the court that (a) it is important that the witness should testify, and (b) the witness would not testify if the order were not made. (6) In determining whether the measures to be specified in the order are necessary for the purpose mentioned in subsection (3)(a), the court must have regard (in particular) to any reasonable fear on the part of the witness (a) that the witness or another person would suffer death or injury, or (b) that there would be serious damage to property, if the witness were to be identified. Section 5 sets out the matters to be taken into consideration when deciding whether the considerations in section 4 are satisfied: (1) When deciding whether Conditions A to C in section 4 are met in the case of an application for a witness anonymity order, the court must have regard to (a) the considerations mentioned in subsection (2) below, and (b) such other matters as the court considers relevant. (2) The considerations are (a) the general right of a defendant in criminal proceedings to know the identity of a witness in the proceedings; (b) the extent to which the credibility of the witness concerned would be a relevant factor when the weight of his or her evidence comes to be assessed; (c) whether evidence given by the witness might be the sole or decisive evidence implicating the defendant; (d) whether the witnesss evidence could be properly tested (whether on grounds of credibility or otherwise) without his or her identity being disclosed; (e) whether there is any reason to believe that the witness (i) has a tendency to be dishonest, or (ii) has any motive to be dishonest in the circumstances of the case, having regard (in particular) to any previous convictions of the witness and to any relationship between the witness and the defendant or any associates of the defendant; (f) whether it would be reasonably practicable to protect the witnesss identity by any means other than by making a witness anonymity order specifying the measures that are under consideration by the court. Thus Parliament has decreed that the question of whether evidence is or is likely to be sole or decisive is relevant to the question of whether the court should permit it to be given anonymously but there is no mandatory rule prohibiting the admission of such evidence. Criminal procedure in the civil law jurisdictions paragraphs 10 and 11 Lord Rodger stated: In R(D) v Camberwell Green Youth Court [2005] UKHL 4; [2005] 1 WLR 393 at the introduction of article 6(3)(d) will not have added anything of significance to any requirements of English law for witnesses to give their evidence in the presence of the accused. An examination of the case law of the European Court of Human Rights tends to confirm that much of the impact of article 6(3)(d) has been on the procedures of continental systems which previously allowed an accused person to be convicted on the basis of evidence from witnesses whom he had not had an opportunity to challenge. We have not been referred to the travaux preparatoires to the Convention or to the reason why paragraph (3)(d) was included in article 6. The continental systems to which Lord Rodger referred are best exemplified by the French Criminal Procedure, upon which many others were based. This, together with other continental systems has undergone marked changes over the last fifty years, and is still facing proposed radical change. The marked difference between that system and the English system in 1953 was the importance of the inquisitorial phase of the French process, which, in the case of a serious offence, was the second of the three stages of the procedure. The first stage was a police investigation, under the supervision of the public prosecutor (ministre public), that ascertained that a crime had been committed and identified a suspect. The second stage was a judicial inquiry aimed at ascertaining the facts and determining whether there was a case against the suspect fit for trial (the instruction). This stage was inquisitorial, classically conducted by a juge dinstruction, an examining judge. The third stage was the trial itself. The instruction was conducted in private episodically, often over many months, during which time the suspect might be held in detention. It included repeated interrogations of the suspect, who seldom exercised his right to remain silent. It included examination of witnesses in the absence of the suspect and his lawyer, unless the examining judge chose to arrange a confrontation with the suspect. Interrogations or examinations were not recorded verbatim, but in the form of a summary of the evidence given, dictated by the examining judge and recorded by a greffier. In this way a dossier was built up. This dossier formed the basis of the conduct of the trial by the judge presiding. The reports of the Strasbourg cases show that evidence given during the instruction by witnesses whom the defendant had had no chance to question was frequently used at the trial. There was no bar to the reception of hearsay evidence nor rules of admissibility designed to prevent the tribunal at the trial from receiving evidence on the ground that its prejudicial effect outweighed its probative value. Generally speaking the instruction was the most significant stage of the criminal process all the more so because the guilty plea procedure was unknown. In this jurisdiction a defendant may decide to plead guilty at any stage between being charged and the trial. If he takes this course there will be no trial. Well over 80% of criminal prosecutions are resolved by a plea of guilty. If a trial takes place, this is because the defendant contests his guilt. Under the civil law system there is no such procedure. Guilt must always be proved at the trial. But if the defendant has confessed his guilt in one of the earlier stages of the procedure and does not retract that confession at his trial, the trial will be very much a formality. In this jurisdiction there is no judicial investigation, in the course of which a confrontation can take place between witnesses and the suspect. The investigation into a crime is carried out by the police, who do not act as judicial officers, although they act under the supervision of the independent Crown Prosecution Service (para 16 above). If the police obtain sufficient evidence to justify a prosecution, the defendant must then be charged. Thereafter he is immune from further questioning unless and until he chooses to give evidence at his trial. The Strasbourg jurisprudence prior to Al Khawaja The wording of article 6(3)(d) suggests that it required a procedure similar to that which followed from the application in this jurisdiction of the hearsay rule. It appears to require the witness to give his or her evidence live at the trial and thus to be subject to examination by or on behalf of the defendant. Some of the early jurisprudence supports this approach. Thus the Court held that the paragraph (3)(d) rights applied at the trial and not when a witness was being questioned by the police X v Germany (1979) 17 DR 231 or by the investigating judge Ferrari Bravo v Italy (1984) 37 DR 15. But, just as in this jurisdiction it was found that, in some circumstances, justice required exceptions to the hearsay rule, the Strasbourg Court came to accept that some exceptions had to be made to the strict application of article 6(3)(d). The Strasbourg jurisprudence deals with the two situations that raise similar issues of principle: the admission of evidence of a witness who is anonymous and the admission of evidence in the form of a statement made by a witness who is not called to testify. The Strasbourg jurisprudence in relation to article 6, and article 6(3)(d) in particular, has received detailed consideration by courts in this country on a number of occasions prior to this case. The conclusions reached, prior to the decision of the Strasbourg Court in Al Khawaja, were summarised by Lord Bingham in Grant v The Queen [2006] UKPC 2; [2007] 1 AC 1 at paragraph 17 (Strasbourg references omitted): The Strasbourg court has time and again insisted that the admissibility of evidence is governed by national law and that its sole concern is to assess the overall fairness of the criminal proceedings in question . The Strasbourg court has been astute to avoid treating the specific rights set out in article 6 as laying down rules from which no derogation or deviation is possible in any circumstances. What matters is the fairness of the proceedings as a whole. the Strasbourg court has recognised the need for a fair balance between the general interest of the community and the personal rights of the individual, and has described the search for that balance as inherent in the whole ConventionThus the rights of the individual must be safeguarded, but the interests of the community and the victims of crime must also be respected. An example, not based on the present facts, illustrates the point. In Jamaica, as in England and Wales, as already noted, the statement of a witness may be adduced in evidence if he is shown to have absented himself through fear of the consequences to him if he gives evidence. In the case of a prosecution witness, such fear is likely to have been induced by or on behalf of a defendant wishing to prevent adverse evidence being given. As observed by Potter LJ in R v M (KJ) [2003] 2 Cr App R 322, para 59, echoed by Waller LJ in R v Sellick [2005] I WLR 3257, paras 36, 52 53, it would be intolerable if a defendant shown to have acted in such a way could rely on his human rights under article 6 (or section 20) to prevent the admission of hearsay evidence. Where a witness is unavailable to give evidence in person because he is dead, or too ill to attend, or abroad, or cannot be traced, the argument for admitting hearsay evidence is less irresistible, but there may still be a compelling argument for admitting it, provided always that its admission does not place the defendant at an unfair disadvantage. While, therefore, the Strasbourg jurisprudence very strongly favours the calling of live witnesses, available for cross examination by the defence, the focus of its inquiry in any given case is not on whether there has been a deviation from the strict letter of article 6(3) but on whether any deviation there may have been has operated unfairly to the defendant in the context of the proceedings as a whole. This calls for consideration of the extent to which the legitimate interests of the defendant have been safeguarded. This is, I believe, a fair and accurate summary of a difficult area of Strasbourg jurisprudence. Article 6(3)(d) is concerned with the fairness of the trial procedure. It recognises that a fair procedure should entitle the defendant to have examined the witnesses against him and to obtain the attendance and examination of witnesses on his behalf. What the article does not deal with is the procedure that is appropriate where it is simply not possible to comply with article 6(3)(d); where, for instance, after making a statement, the witness for the prosecution or defence has died. Fairness does not require that in such circumstances the evidence of the witness should not be admitted at the trial. On the contrary it may well require that it should be admitted. The Strasbourg Court has recognised this. As the Court of Appeal in the present case pointed out in paragraph 37 of its judgment examples of the admission of statements in such circumstances include death: Ferrantelli and Santangelo v Italy (1996) 23 EHRR 288; illness: Trivedi v United Kingdom (1997) 89 A DR 136 and impossibility of tracing the witness: Artner v Austria (Application No 13161/87), 25 June 1992. Thus where a statement has been read of an absent witness, or evidence has been given anonymously, the Strasbourg Court first considers whether there was justification for this course. When considering justification the Strasbourg Court properly has regard to the human rights of witnesses and victims. In Doorson v The Netherlands (1996) 22 EHRR 330 the Court observed: It is true that article 6 does not explicitly require the interests of witnesses in general, and those of victims called upon to testify in particular, to be taken into consideration. However, their life, liberty or security of person may be at stake, as may interests coming generally within the ambit of article 8 of the Convention. Such interests of witnesses and victims are in principle protected by other, substantive provisions of the Convention, which imply that Contracting States should organise their criminal proceedings in such a way that those interests are not unjustifiably imperilled. Against this background, principles of fair trial also require that in appropriate cases the interests of the defence are balanced against those of witnesses or victims called upon to testify. One situation where Strasbourg has recognised that there is justification for not calling a witness to give evidence at the trial, or for permitting the witness to give that evidence anonymously, is where the witness is so frightened of the personal consequences if he gives evidence under his own name that he is not prepared to do so. If the defendant is responsible for the fear, then fairness demands that he should not profit from its consequences. Even if he is not, the reality may be that the prosecution are simply not in a position to prevail on the witness to give evidence. In such circumstances, having due regard for the human rights of the witness or the victim, as well as those of the defendant, fairness may well justify reading the statement of the witness or permitting him to testify anonymously. Claims of justification on such grounds have to be rigorously examined see Doorson v The Netherlands (1996) 22 EHRR 330 at paragraph 71, Kok v The Netherlands (Application No 43149/98), Reports of Judgments and Decisions 2000 VI, p 597; Visser v The Netherlands (Application No 26668/95), 14 February 2002 at paragraph 47; Krasniki v Czech Republic (Application No 51277/99), 28 February 2006 at paragraphs 80 81; Luc v Italy (2001) 36 EHRR 807 at paragraph 40: As the Court has stated on a number of occasions, it may prove necessary in certain circumstances to refer to depositions made during the investigative stage (in particular, where a witness refuses to repeat his deposition in public owing to fears for his safety, a not infrequent occurrence in trials concerning Mafia type organisations). Where the court has found justification for the admission of a statement from a witness not called, or for a witness giving evidence anonymously, the Court has been concerned with whether the process as a whole has been such as to involve the danger of a miscarriage of justice. The exercise has been similar to that conducted by the English Court of Appeal when considering whether, notwithstanding the breach of a rule relating to admissibility, the conviction is safe. There is, of course, an overlap between considering whether procedure has been fair and whether a verdict is safe, and it is sometimes difficult to distinguish between the two questions. Doorson v The Netherlands is a particularly informative example of the approach of the Strasbourg Court to a situation where there was justification both for admitting the statement of a witness who was not called to give evidence and for hearing the evidence of two anonymous witnesses whose evidence was not given in the presence of the defendant. The applicant was convicted of drug trafficking. The justification for admitting the statement of the witness who was not called was that he had absconded and it was thus impossible to call him to give evidence. The justification for permitting the two witnesses to give evidence anonymously and without the defendant being present was that it was reasonable for them to fear reprisals from the applicant if he discovered that they had given evidence against him, albeit that there was no evidence that they had ever been threatened by the applicant. Both the opinion of the Commission and the judgment of the Court suggest that the primary concern of each when considering whether the admission of the evidence had rendered the trial unfair was whether the evidence was reliable. So far as the witness who had absconded was concerned, the Commission held that it could not be regarded as unfair if the courts took into account the statement that he had made to the police (paragraph 78). The Court held that it had been permissible for the court to have regard to the statement especially since it could consider that statement to be corroborated by other evidence before it (paragraph 80). So far as the anonymous witnesses were concerned, the Court of Appeal had ordered them to be examined by an investigating judge in the presence of the defendants counsel, though not of the defendant. She knew the identity of the witnesses. She reported that she had the impression that both witnesses knew whom they were talking about and that her impression had been that the witnesses themselves believed their statements to be true (paragraph 32). The Court concluded that: in the circumstances the counterbalancing procedure followed by the judicial authorities in obtaining the evidence of witnesses Y15 and Y16 must be considered sufficient to have enabled the defence to challenge the evidence of the anonymous witnesses and attempt to cast doubt on the reliability of their statements, which it did in open court by, amongst other things, drawing attention to the fact that both were drug addicts. Although, as I have shown, the Strasbourg Court has accepted that in exceptional cases failure to comply with the strict requirements of article 6(3)(d) will not invalidate the fairness of the trial, the Court has not acknowledged this in terms. The Court might have said, in terms, that paragraph (3)(d) has no application where it is impossible to call a witness at the trial, but it did not. The Court might have said, in terms, that in exceptional circumstances a failure to comply with paragraph (3)(d) will not render the trial unfair, but it did not. Rather the Court has used language that has tended to obscure the fact that it is, in reality and in special circumstances, countenancing a failure to comply with the requirements of paragraph (3)(d). I shall take Kostovski v The Netherlands (1989) 12 EHRR 434 as an example of the language used. The phraseology is almost standard form in cases dealing with article 6(3)(d). The recital of the relevant legal principles begins with this statement: It has to be recalled at the outset that the admissibility of evidence is primarily a matter for regulation by national law. Again, as a general rule it is for the national courts to assess the evidence before them. In the light of these principles the Court sees its task in the present case as being not to express a view as to whether the statements in question were correctly admitted and assessed but rather to ascertain whether the proceedings considered as a whole, including the way in which evidence was taken, were fair. This being the basic issue, and also because the guarantees in article 6(3) are specific aspects of the right to a fair trial set forth in paragraph (1), the Court will consider the applicants complaints from the angle of paragraphs (3)(d) and (1) taken together. This passage indicates that the fairness of a trial has to be assessed on a case by case basis, viewing each trial as a whole, and that an inability on the part of a defendant to cross examine the maker of a statement that is admitted in evidence will not necessarily render the trial unfair. The Court in Kostovski went on to say this: In principle, all the evidence must be produced in the presence of the accused at a public hearing with a view to adversarial argument. This does not mean, however, that in order to be used as evidence statements of witnesses should always be made at a public hearing in court: to use as evidence such statements obtained at the pre trial stage is not in itself inconsistent with paragraphs (3)(d) and (1) of article 6, provided the rights of the defence have been respected. As a rule, these rights require that an accused should be given an adequate and proper opportunity to challenge and question a witness against him, either at the time the witness was making his statement or at some later stage of the proceedings. There are two points to make in respect of this passage. The first is that the phrases in principle and as a rule reflect the fact that the Strasbourg Court has recognised that the requirements of article 6(3)(d) are not absolute or inflexible. The second point is that the proposition that an accused should be given an adequate and proper opportunity to challenge and question a witness against him, either at the time the witness was making his statement or at some later stage of the proceedings (emphasis mine) reflects Strasbourg jurisprudence which appears to dilute the protection that article 6(3)(d) would otherwise supply. One of the objects of the right of a defendant to cross examine witnesses is to give the trial court the chance of observing their demeanour under questioning and thus forming its own impression of their reliability see Kostovski at paragraph 43. The aim is adversarial argument at a public hearing see Kostovski at paragraph 41. These objects will not be achieved by granting the defendant or his lawyers an opportunity to confront or question witnesses in the course of the inquisitorial investigation by the investigating judge. The words that I have emphasised, repeated again and again in the Strasbourg jurisprudence, appear to suggest that a right to challenge a witness at the investigatory stage of the criminal process will be enough to satisfy article 6(3)(d). This exemplifies the danger that repeated repetition of a principle may lead to its being applied automatically without consideration of whether, having regard to the particular facts of the case, its application is appropriate. The true position is, I suggest, that where possible the defendant should be entitled to examine witnesses at the trial but that, where this proves impossible, the fact that the defendant had a right to challenge the witness at the investigatory stage is a relevant factor when considering whether it is fair to rely on the witness deposition as evidence at the trial see, for instance, Luc v Italy (2001) 36 EHRR 807. The sole or decisive rule The sole or decisive rule entered the Strasbourg jurisprudence in Doorson v The Netherlands where, having found justification for admitting the statement of an absent witness and for the anonymity of two witnesses, the Court added: Finally, it should be recalled that, even when counterbalancing procedures are found to compensate sufficiently the handicaps under which the defence labours, a conviction should not be based either solely or to a decisive extent on anonymous statements. The seeds of the sole or decisive rule would seem to be found in a series of earlier cases, details of which are set out in Annexe 2 to this judgment. In most of these cases there had been a failure to comply with the requirements of article 6(3)(d) for which there was no justification. The Court none the less considered it relevant to consider the impact of the evidence in question on the applicants conviction when deciding whether this had rendered the trial unfair in violation of article 6(1). The inference was that if the evidence had not had a significant effect on the outcome of the trial, there would be no violation of article 6(1). The sole or decisive test propounded in Doorson went a significant step further. It stated that, even where there was justification for not calling a witness, basing a conviction solely or decisively on the evidence of that witness would be unfair. In 1997 the Committee of Ministers of the Council of Europe published Recommendation No R (97) 13 concerning Intimidation of Witnesses and the Rights of the Defence. This included measures to be taken in relation to organised crime. The measures dealt with different methods of protecting witnesses from the risk of reprisals, or accommodating their fear of such reprisals. These included admitting evidence of pre trial statements made before a judicial authority and preserving the anonymity of witnesses. In relation to anonymity, the Ministers recommended When anonymity has been granted the conviction shall not be based solely or to a decisive extent on the evidence of such persons. The recommendation would seem to have been derived from the Strasbourg jurisprudence, for the preamble to the Recommendation recites: Bearing in mind the provisions of the European Convention on Human Rights and the case law of its organs, which recognise the rights of the defence to examine the witness and to challenge his/her testimony but do not provide for a face to face confrontation between the witness and the alleged offender; In his review of the Strasbourg jurisprudence in Grant v The Queen Lord Bingham did not address the question of whether the admission of hearsay evidence was subject to the sole or decisive test. That question was considered by the Court of Appeal in R v Sellick [2005] EWCA Crim 651; [2005] 1 WLR 3257. In that case the trial judge had permitted the statements of witnesses to be read pursuant to sections 23 and 26 of the 1988 Act on the ground that they had not given evidence through fear. Waller LJ reviewed the Strasbourg authorities and summarised the position as follows: 50. What appears from the above authorities are the following propositions. (i) The admissibility of evidence is primarily for the national law. (ii) Evidence must normally be produced at a public hearing and as a general rule article 6(1) and (3)(d) of the Convention require a defendant to be given a proper and adequate opportunity to challenge and question witnesses. (iii) It is not necessarily incompatible with article 6(1) and (3)(d) of the Convention for depositions to be read and that can be so even if there has been no opportunity to question the witness at any stage of the proceedings. Article 6(3)(d) is simply an illustration of matters to be taken into account in considering whether a fair trial has been held. The reasons for the court holding it necessary that statements should be read and the procedures to counterbalance any handicap to the defence will all be relevant to the issue, whether, where statements have been read, the trial was fair. (iv) The quality of the evidence and its inherent reliability, plus the degree of caution exercised in relation to reliance on it, will also be relevant to the question whether the trial was fair. 51. The question is whether there is a fifth proposition to the effect that where the circumstances would otherwise justify the reading of the statement where the defendant has had no opportunity to question the witness at any stage of the trial process, the statement must not be allowed to be read if it is the sole or decisive evidence against the defendant. Certainly at first sight para 40 of Luc v Italy 36 EHRR 807 seems to suggest that in whatever circumstances and whatever counterbalancing factors are present if statements are read then there will be a breach of article 6 of the Convention, if the statements are the sole or decisive evidence. Furthermore there is some support for that position in the previous authorities. But neither Luc v Italy nor any of the other authorities were concerned with a case where a witness, whose identity was well known to a defendant, was being kept away by fear, although we must accept that the reference to Mafia type organisations and the trials thereof in para 40 of Luc v Italy shows that the court had extreme circumstances in mind. 52. The question we have posed to ourselves is as follows. If the European court were faced with the case of an identified witness, well known to a defendant, who was the sole witness of a murder, where the national court could be sure that that witness had been kept away by the defendant, or by persons acting for him, is it conceivable that it would hold that there were no counterbalancing measures the court could take which would allow that statement to be read. If care had been taken to see that the quality of the evidence was compelling, if firm steps were taken to draw the jurys attention to aspects of that witnesss credibility and if a clear direction was given to the jury to exercise caution, we cannot think that the European court would nevertheless hold that a defendants article 6 rights had been infringed. In such a case, as it seems to us, it is the defendant who has denied himself the opportunity of examining the witnesses, so that he could not complain of an infringement of article 6(3)(d), and the precautions would ensure compliance and fairness in compliance with article 6(1). We for our part see no difficulty in such a clear case. 53. More difficulty arises in cases where it is not quite so clear cut, but the court believes, to a high degree of probability, that identified witnesses are being intimidated for and on behalf of the defence, and where the court is sure to the criminal standard of proof that witnesses cannot be traced and brought before the court (Butterfield Js state of mind on Lee in the instant case). In our view, having regard to the rights of victims, their families, the safety of the public in general, it still cannot be right for there to be some absolute rule that, where compelling evidence is the sole or decisive evidence, an admission in evidence of a statement must then automatically lead to a defendants article 6 rights being infringed. That would lead to a situation in which the more successful the intimidation of the witnesses, the stronger the argument becomes that the statements cannot be read. If the decisive witnesses can be got at the case must collapse. The more subtle and less easily established intimidation provides defendants with the opportunity of excluding the most material evidence against them. Such an absolute rule cannot have been intended by the European court in Strasbourg. In R v Davis Lord Mance analysed the Strasbourg jurisprudence in relation to anonymous witnesses and summarised his conclusions as follows: 89. In his submissions for the Crown Mr Perry suggested that any requirement that anonymous evidence should not be the sole or decisive basis for conviction derived from the authorities on pretrial statements by (identified) witnesses who were not called for cross examination at trial. That submission derives possible support from the citation in Kok, Visser and Krasniki of authorities which deal with that subject matter, rather than with anonymous witnesses. But it does not mean that a similar principle is inappropriate in relation to anonymous witnesses who are available for such cross examination as is possible at trial. Whatever its origin, the requirement has been deployed without drawing this distinction, which is probably less real in those civil law countries with procedures involving use of an investigating magistrate than it is in the United Kingdom. Further, in Krasniki the requirement was applied to one anonymous witness who was called at trial. It is considerably less certain, for the reasons I have mentioned in paras 84 86 above, that there is an absolute requirement that anonymous testimony should not be the sole or decisive evidence, or whether the extent to which such testimony is decisive may be no more than a very important factor to balance in the scales. I doubt whether the Strasbourg court has said the last word about this. The Court in Doorson v The Netherlands gave no explanation for the sole or decisive rule. It was not a rule that was relevant on the facts of that case, so an English jurist might suggest that it was mere obiter dicta which need not be afforded much weight. But the rule was propounded repeatedly in subsequent cases, and it is necessary to consider these in order to attempt to deduce the principle underlying the rule. I have set out a brief analysis of a number of the decisions in an attempt to identify the governing principle. This forms Annexe 3 to this judgment. It is clear from these cases that a failure to comply with article 6(3)(d), even if there is no justification for this, does not automatically result in a violation of article 6(1). It is necessary to consider whether the failure has affected the result. If it has not, no question of a violation of article 6(1) arises see X v United Kingdom (1992) 15 EHRR CD 113; Craxi v Italy (Application No 34896197), 5 December 2002. Where there has been a failure to comply with article 6(3)(d) for which there is no justification, the Court has found a violation of article 6(1) where the evidence may have contributed to the applicants conviction Ldi v Switzerland (1992) 15 EHRR 173; Taxquet v Belgium (Application No 926105), 13 January 2009. In the majority of cases there has been a failure to comply with article 6(3)(d) which has not been justified and the evidence in question has been the sole or decisive basis of the applicants conviction. A violation of article 6(1) has naturally been found in such cases. Where there is justification for a failure to comply with the requirements of article 6(3)(d) because, for instance, it is impossible in fact or law to procure the presence of the witness for cross examination, the Court has been concerned with the reliability of the evidence in question. In two cases which preceded Doorson, no violation of article 6(1) was found where the evidence in question was the principal evidence, but where it was supported by other evidence: Asch v Austria (Application No 12398/86), 29 April 1991 and Artner v Austria (Application No 13161/87), 25 June 1992. Ferrantelli and Santangelo v Italy 23 EHRR 288 was a case decided soon after Doorson. The sole or decisive test was not mentioned. The applicants were convicted of being party to the murder of two police officers committed by V. The principal evidence against them consisted of statements made by V. There was no confrontation between V and the applicants. V committed suicide before the trial. In these circumstances there was justification for reading his statements. The Court found that the applicants had had a fair trial and that there had been no violation of articles 6(1) and article 6(3)(d). In so finding it had regard to the fact that the trial court had conducted detailed analysis of the statements and found them to be corroborated. In Doorson itself, which was primarily an anonymity case, the Court found that it had been acceptable to have regard to a statement of a witness whose attendance could not be procured especially since it could consider that statement to be corroborated by other evidence before it. No explanation was given in Doorson in respect of the principle underlying the sole or decisive test first propounded by the Court in that case, and, so far as I am aware, the Strasbourg Court has not subsequently explained why a conviction based in part on the evidence of a witness who was not called, or who was anonymous, need not offend article 6(1) and (3)(d), while, on the contrary, if the evidence is sole or decisive the article will be violated. I have concluded, however, that the Strasbourg Court has drawn the distinction on the premise that a conviction based solely or decisively upon the evidence of a witness whose identity has not been disclosed, or who has not been subjected to cross examination, or both, will not be safe. I have reached this conclusion for a number of reasons. First because there is nothing intrinsically objectionable or unfair in having regard to the statement of a witness where it is simply not possible to call that witness to give the evidence in question. Secondly because of the general emphasis that the Strasbourg Court understandably places on the reliability of evidence. Thirdly because the approach evidenced by the passage quoted from Kok in Annexe 3 seems to treat reliability as being the relevant factor and finally because I have not been able to identify any convincing alternative rationale for the sole or decisive test. Practicality One of the reasons why the Court of Appeal was not prepared to accept that the sole or decisive rule applied to English criminal law was the fact that the application of that rule would give rise to severe practical difficulties under our system. Two questions arise in relation to practicability. (1) How easy is it for the trial court itself to apply the sole or decisive test? (2) How easy is it for an appeal court, or for the Strasbourg Court, to determine whether the test has been properly applied? The Strasbourg Court has repeatedly emphasised that it is not its task to rule on admissibility but to consider whether the trial as a whole has been fair. When considering articles 6(1) and 6(3)(d) Strasbourg is concerned not with whether a statement ought to have been admitted in evidence by the trial court but with the use the trial court has made of the evidence. The sole or decisive test permits a court to take the evidence into account but not to base a conviction solely or decisively upon it. In a dissenting opinion in Van Mechelen v The Netherlands (1997) 25 EHRR 647 Judge van Dijk expressed the view that the sole or decisive test is difficult to apply, because if the testimony of anonymous witnesses is used by the court as part of the evidence, that will always be because the court considers it a decisive part of that evidence. This comment raises the question of what is meant by decisive. Under English procedure no evidence should be admitted unless it is potentially probative. In theory any item of probative evidence may make all the difference between conviction and acquittal. It may be the vital piece of evidence which tilts the scales enough to satisfy the tribunal beyond reasonable doubt that the defendant is guilty. Is such a piece of evidence to be treated as decisive? In Al Khawaja at paragraph 39 the Court relied, as indicating that a statement was decisive, on the statement of the Court of Appeal in Tahery that it was both important and probative of a major issue in the case. Had it not been admitted the prospect of a conviction would have receded and that of an acquittal advanced. Whatever be the precise definition of decisive, the duty not to treat a particular piece of evidence as decisive is hard enough for a professional judge to discharge. In theory he can direct himself that he must not convict if the relevant statement is decisive, and state in a reasoned judgment that he has complied with that direction. In practice such a course will often not be easy. As for the Court of Appeal or the Strasbourg Court, it will often be impossible to decide whether a particular statement was the sole or decisive basis of a conviction. In the case of a jury trial, a direction to the jury that they can have regard to a witness statement as supporting evidence but not as decisive evidence would involve them in mental gymnastics that few would be equipped to perform. If the sole or decisive test is to be applied in the context of a jury trial, the only practical way to apply it will be a rule of admissibility. The judge will have to rule inadmissible any witness statement capable of proving decisive. This will be no easy task see the judgment of the Court of Appeal at paragraphs 68 to 70. If decisive means capable of making the difference between a finding of guilt and innocence, then all hearsay evidence will have to be excluded. In Trechsels lengthy analysis of this area of the law in Human Rights in Criminal Proceedings the author advances precisely this proposition at p 298. Discussion The sole or decisive test produces a paradox. It permits the court to have regard to evidence if the support that it gives to the prosecution case is peripheral, but not where it is decisive. The more cogent the evidence the less it can be relied upon. There will be many cases where the statement of a witness who cannot be called to testify will not be safe or satisfactory as the basis for a conviction. There will, however, be some cases where the evidence in question is demonstrably reliable. The Court of Appeal has given a number of examples. I will just give one, which is a variant of one of theirs. A visitor to London witnesses a hit and run road accident in which a cyclist is killed. He memorises the number of the car, and makes a statement to the police in which he includes not merely the number, but the make and colour of the car and the fact that the driver was a man with a beard. He then returns to his own country, where he is himself killed in a road accident. The police find that the car with the registration number that he provided is the make and colour that he reported and that it is owned by a man with a beard. The owner declines to answer questions as to his whereabouts at the time of the accident. It seems hard to justify a rule that would preclude the conviction of the owner of the car on the basis of the statement of the deceased witness, yet that is the effect of the sole or decisive test. As I have suggested earlier, the justification for the sole or decisive test would appear to be that the risk of an unsafe conviction based solely or decisively on anonymous or hearsay evidence is so great that such a conviction can never be permitted. Parliament has concluded that there are alternative ways of protecting against that risk that are less draconian, as set out in the 1988 and 2003 Acts (and now, with regard to anonymous witnesses, the 2008 Act). When the Strasbourg decisions are analysed it is apparent that these alternative safeguards would have precluded convictions in most of the cases where a violation of article 6(1) and (3)(d) was found. In particular the legislation does not permit the admission of the statement of a witness who is neither present nor identified. Where the witness is unavailable but identified, or present but anonymous, the respective Acts provide the safeguards to which I have referred earlier against the risk that the use of the witness evidence will render the verdict unsafe and the trial unfair. Lord Judge has subjected many of the Strasbourg decisions to which I have referred, together with a number of others, to a detailed analysis. He has, for the most part chosen cases in which the Strasbourg Court held that article 6(1) taken together with article 6(3)(d) had been violated. Under our domestic principles of admissibility in almost all of these cases the relevant evidence would have been ruled inadmissible and the defendant would not have been convicted. The cases suggest that in general our rules of admissibility provide the defendant with at least equal protection to that provided under the continental system. Lord Judges analysis is annexed to this judgment as Annexe 4. Before Al Khawaja, while the Strasbourg Court had repeatedly recited the sole or decisive test, there had, as the Court of Appeal observed, been no case where that test had been applied so as to produce a finding of a violation of article 6(1) and (3)(d) in a case where there had been justification for not calling a witness and where the evidence was demonstrably reliable. Nor had the sole or decisive rule ever been applied or cited in an application in relation to the criminal process in this jurisdiction. Thus no consideration had been given as to whether it was necessary or appropriate to apply that rule having regard to the safeguards inherent in our system. It is time to turn to consider Al Khawaja. Al Khawaja In Al Khawaja 49 EHRR 1 the Court heard two applications together. Mr Al Khawaja had been convicted on two counts of indecent assault on female patients. The first had made a statement to the police providing details of the assault, but subsequently committed suicide for reasons unconnected to the assault. Her statement was admitted under the 1988 Act. Mr Tahery was convicted of wounding with intent. An Iranian had been stabbed in the back in a brawl. Another Iranian made a statement to the police saying that he had seen Mr Tahery inflict the wound. He subsequently refused to give evidence because of fear. The judge gave permission for his statement to be read pursuant to section 116(2)(e) of the 2003 Act. Appeals by each applicant were dismissed by the Court of Appeal. Each applicant complained to the Strasbourg Court that his rights under article 6(3)(d) had been violated. out general principles applicable to both cases. This section began: In the section of its judgment dealing with the merits the Court began by setting Article 6(3)(d) is an aspect of the right to fair trial guaranteed by article 6(1), which, in principle, requires that all evidence must be produced in the presence of the accused in a public hearing with a view to adversarial argument (Krasniki v Czech Republic (Application No 51277/99), 28 February 2006, para 75). As with the other elements of article 6(3), it is one of the minimum rights which must be accorded to anyone who is charged with a criminal offence. As minimum rights, the provisions of article 6(3) constitute express guarantees and cannot be read, as it was by the Court of Appeal in Sellick (see para [25] above), as illustrations of matters to be taken into account when considering whether a fair trial has been held (see Barber v Spain (1987) 9 EHRR CD101, paras 67 and 68; Kostovski v The Netherlands, (1989) 12 EHRR 434, para 39). I find it impossible to reconcile this paragraph with statements of principle that the Strasbourg Court has regularly made in respect of the interrelationship between articles 6(1) and 6(3)(d), as quoted from Kostovski at paragraph 75 (above). These statements indicate that the fairness of a trial has to be assessed on a case by case basis, viewing each trial as a whole, and that an inability on the part of a defendant to examine the maker of a statement that is admitted in evidence will not necessarily render the trial unfair. The statement of principle in the opening passage in Kostovski is notably absent from the judgment in Al Khawaja. That which replaces it is at odds with the approach in the individual Strasbourg cases to which I have referred. The Court went on to add: Equally, even where those minimum rights have been respected, the general right to a fair trial guaranteed by article 6(1) requires that the Court ascertain whether the proceedings as a whole were fair. This proposition is unexceptionable. What is puzzling is that the Court should cite Unterpertinger v Austria in support of it, for that was a case where the Court found that both articles 6(1) and 6(3)(d) had not been satisfied. said: I now come to the crucial passages in Al Khawajia. At paragraph 36 the Court Whatever the reason for the defendants inability to examine a witness, whether absence, anonymity or both, the starting point for the Courts assessment of whether there is a breach of article 6(1) and (3)(d) is set out in Luc at para 40: If the defendant has been given an adequate and proper opportunity to challenge the depositions either when made or at a later stage, their admission in evidence will not in itself contravene article 6(1) and (3(d). The corollary of that, however, is that where a conviction is based solely or to a decisive degree on depositions that have been made by a person whom the accused has had no opportunity to examine or to have examined, whether during the investigation or at the trial, the rights of the defence are restricted to an extent that is incompatible with the guarantees provided by article 6 [references omitted]. The first point to be made about this citation from Luc is that neither of the propositions that it contains is axiomatic. For reasons that I have already given, an opportunity to challenge a deposition when made, whether the opportunity is taken or not, will not necessarily render it fair at the trial simply to read the deposition if the maker can be called to give evidence. The second proposition incorporates the sole or decisive test. That test is not the corollary of the first proposition. It is not to be found in article 6(3)(d). It has, as I have shown, been developed in the jurisprudence of the Strasbourg Court. In both Al Khawaja and Tahery the statements admitted in evidence were central to the prosecution case but were, in each case, supported by other evidence. The Court of Appeal had held, in each case, that there was no reason to doubt the safety of the conviction. In Al Khawaja, the Court of Appeal, citing Sellick, had held that the Strasbourg case law did not require the conclusion that, in the circumstances of that case, the trial would be unfair. The Strasbourg Courts response appears in paragraph 37 of its judgment: The Court notes that in the present cases the Government relying on the Court of Appeals judgment in Sellick (see paragraph 25 above), argue that this Courts statement in Luc and in other similar cases is not to be read as laying down an absolute rule, prohibiting the use of statements if they are the sole or decisive evidence, whatever counterbalancing factors might be present. However, the Court observes that the Court of Appeal in Sellick was concerned with identified witnesses and the trial judge allowed their statements to be read to the jury because he was satisfied that they were being kept from giving evidence through fear induced by the defendants. That is not the case in either of the present applications and, in the absence of such special circumstances, the Court doubts whether any counterbalancing factors would be sufficient to justify the introduction in evidence of an untested statement which was the sole or decisive basis for the conviction of an applicant. While it is true that the Court has often examined whether the procedures followed in the domestic courts were such as to counterbalance the difficulties caused to the defence, this has been principally in cases of anonymous witnesses whose evidence has not been regarded as decisive and who have been subjected to an examination in some form or other. There are two points to be made about this passage. The first is that the Court appears to have accepted that the sole or decisive rule does not apply so as to preclude the reliance on the statement of a witness who refuses to testify because of fear induced by the defendant. The second is that the Court did not completely close the door to the possibility of counterbalancing factors being sufficient to justify the introduction of a statement as sole or decisive evidence in other circumstances. The Court made it quite plain, however, that compliance with the statutory regime under which the statements in the two appeals had been admitted carried limited weight paragraph 40. The Court must surely have been correct to recognise that the sole or decisive rule does not apply where a defendant has induced such fear in a witness that the witness refuses to testify. A defendant can never be heard to complain of the absence of a witness if he has been responsible for that absence. It is, however, notoriously difficult for a court to be certain that a defendant has threatened a witness, for if the threat is effective the witness is likely to be too frightened to testify to it. The Strasbourg Court has recognised that anonymity can be justified where a witness is too frightened to be identified, even where the defendant has not himself induced the fear Doorson, Kok and Visser. There are strong reasons of policy why the evidence of such a witness should be received, subject to adequate safeguards, and this is recognised by section 116 of the 2003 Act. The sole or decisive rule was first propounded in Doorson as an obiter observation, without explanation or qualification. It has since frequently been repeated, usually in circumstances where there has been justification for finding breaches of article 6(1) and (3)(d) without reliance on the test. If applied rigorously it will in some cases result in the acquittal, or failure to prosecute, defendants where there is cogent evidence of their guilt. This will be to the detriment of their victims and will result in defendants being left free to add to the number of those victims. The Court of Appeal in this case, comprising five senior judges with great experience of the criminal jurisdiction, referred to the manner in which the 2003 Act is working in practice and concluded that provided its provisions are observed there will be no breach of article 6 and, in particular, article 6(3)(d), if a conviction is based solely or decisively on hearsay evidence paragraph 81. The court thus differed from the doubt expressed in Al Khawaja as to whether there could be any counterbalancing factors sufficient to justify the introduction of an untested statement which was the sole or decisive basis for a conviction. I concur in these conclusions reached by the Court of Appeal and the reasons for those conclusions so clearly and compellingly expressed. The jurisprudence of the Strasbourg Court in relation to article 6(3)(d) has developed largely in cases relating to civil law rather than common law jurisdictions and this is particularly true of the sole or decisive rule. In the course of the hearing in Al Khawaja, Sir Nicolas Bratza observed that both parties had accepted the sole or decisive test which appears in Luc and other cases as an accurate summary of the Courts case law. He asked whether there was any authority of the Court which gave any scope for counterbalancing factors in a sole or decisive case. Mr Perry for the Government conceded that he was not aware of any direct authority on the point. The Court then applied the sole or decisive rule in reliance on the pre existing case law. But as I have shown that case law appears to have developed without full consideration of the safeguards against an unfair trial that exist under the common law procedure. Nor, I suspect, can the Strasbourg Court have given detailed consideration to the English law of admissibility of evidence, and the changes made to that law, after consideration by the Law Commission, intended to ensure that English law complies with the requirements of article 6(1) and (3)(d). In these circumstances I have decided that it would not be right for this court to hold that the sole or decisive test should have been applied rather than the provisions of the 2003 Act, interpreted in accordance with their natural meaning. I believe that those provisions strike the right balance between the imperative that a trial must be fair and the interests of victims in particular and society in general that a criminal should not be immune from conviction where a witness, who has given critical evidence in a statement that can be shown to be reliable, dies or cannot be called to give evidence for some other reason. In so concluding I have taken careful account of the Strasbourg jurisprudence. I hope that in due course the Strasbourg Court may also take account of the reasons that have led me not to apply the sole or decisive test in this case. The individual appeals Although the principal ground of appeal was that the sole or decisive rule had not been applied, counsel for the appellants in each appeal also argued that, quite apart from this rule, the relevant statements should not have been admitted. In the case of Horncastle and Blackmore the argument was that the deceased victims statement was inherently unreliable. In the case of Marquis and Graham it was argued that the fear that had led to Miss Miles running away because she was too frightened to give evidence had been induced, not by the defendants, but by alarmist warnings given by the police and that, in these circumstances, it was unjust to put her statement in evidence. These points received careful consideration by the Court of Appeal. I have found no basis for differing from the courts conclusion that they were without merit. Accordingly I propose simply to rely upon the reasoning of the Court of Appeal in dismissing these grounds of appeal. For the reasons that I have given I would dismiss these appeals. ANNEXE 1 (Prepared by Lord Mance see paragraph 41). 1. In Canada, the Supreme Court addressed the question of the admission of hearsay evidence on three occasions, in R v Khan [1990] 2 SCR 531; R v Smith [1992] 2 SCR 915 and R v Rockey [1996] 3 SCR 829. It noted that the purpose and reason of the Hearsay rule is the key to the exceptions to it, drawing in this connection on the well known American text, Wigmore on Evidence (2nd ed. 1923). Wigmore went on to point out that the theory of the hearsay rule was that the many possible sources of inaccuracy and untrustworthiness which may lie underneath the bare untested assertion of a witness can best be brought to light and exposed, if they exist, by the test of cross examination, but that, in circumstances in which a statement is free from this risk or in which cross examination is impossible, it may be possible under certain conditions to contemplate its use without cross examination. The Supreme Court of Canada in R v Smith, at p 930, referred to the approach 2. along these lines first adopted in R v Khan as the triumph of a principled analysis over a set of ossified judicially created categories. It held that, in addition to the basic requirement of relevance, hearsay evidence might be admitted if there was sufficient necessity and its reliability could be sufficiently verified by the judge before it was put before the jury. In R v Khan evidence was thus admitted of an infant complainants description to her mother shortly after the event of a sexual assault upon her, in circumstances where the infant was not permitted to testify at trial. In R v Smith these tests were satisfied in relation to the contents of two of the 3. critical three telephone calls made by the deceased to her mother shortly before death. However, in relation to the third call, although there was no problem about satisfying the test of necessity in view of her death, a careful review by the Court of the circumstances surrounding the call gave rise to apprehensions about its reliability, and a possibility that what had been said might have been mistaken or intended to deceive the mother. The contents of this call could not therefore safely be admitted in the absence of cross examination. The conviction was set aside and a fresh trial ordered. R v Rockey was another case, like R v Khan, where the accused was charged with sexual assault on an infant (aged two and a half), who had made a number of statements about the incident. The Court was, after examination of the circumstances, satisfied that the requirements of both necessity and reliability were met. It found, with regard to necessity, that the infant though by now aged five, could not have given evidence in any meaningful sense, and would anyway have been traumatised by doing so. Reliability was not an issue on the appeal. If (which the Court did not decide) there was any error in the judges directions to the jury, it was immaterial. It is right to add that, in this case (in contrast to R v Khan and R v Smith), there was also strong surrounding evidence inculpating the accused. 4. In Australia in the case of Bannon v The Queen (1995) 185 CLR 1, the High Court of Australia noted the Canadian decisions. Brennan CJ at p 12 expressed the view (obiter) that the approach they took should not be adopted in Australia. The other judges, Deane J at pp 12 13, Dawson, Toohey and Gummow JJ at pp 24 25 and 28 and McHugh J at pp 40 41 said that it was unnecessary to decide whether it should be adopted, although McHugh J also went further and said that Adoption of the Canadian principle would undoubtedly have beneficial effects on the law of evidence. The case was actually decided on the basis that the evidence in question could not on any view be regarded as reliable and was rightly excluded from being put before the jury. 5. As McHugh J also noted, the federal Australian Parliament had enacted the Evidence Act 1995, and New South Wales had adopted comparable legislation. The federal Evidence Act 1995 contains a careful set of provisions regulating the admission of hearsay evidence. The starting point under s.59(1) is that hearsay evidence is generally excluded: 59(1). Evidence of a previous representation made by a person is not admissible to prove the existence of a fact that it can reasonably be supposed that the person intended to assert by the representation. (2) Such a fact is in this Part referred to as an asserted fact. There follow a number of specific exceptions, including: 65 Exception: criminal proceedings if maker not available (1) This section applies in a criminal proceeding if a person who made a previous representation is not available to give evidence about an asserted fact. (2) The hearsay rule does not apply to evidence of a previous representation that is given by a person who saw, heard or otherwise perceived the representation being made, if the representation: (a) was made under a duty to make that representation or to make representations of that kind; or (b) was made when or shortly after the asserted fact occurred and in circumstances that made it unlikely that the representation is a fabrication; or (c) was made in circumstances that make it highly probably that the representation is reliable; or (d) was: (i) against the interests of the person who made it at the time it was made; and (ii) made in circumstances that make it likely that the representation is reliable. 66 Exception: criminal proceedings if maker available (1) This section applies in a criminal proceeding if a person who made a previous representation is available to give evidence about an asserted fact. (2) If that person has been or is to be called to give evidence, the hearsay rule does not apply to evidence of the representation that is given by: (a) that person; or (b) a person who saw, heard or otherwise perceived the representation being made; if, when the representation was made, the occurrence of the asserted fact was fresh in the memory of the person who made the representation. The scheme of the Australian statute is both nuanced and circumscribed, with a view to ensuring the overall fairness of the proceedings. The admissibility of hearsay evidence has also been addressed in New Zealand. In 6. 1980 the legislature enacted the Evidence Amendment Act (No.2) 1980. S.3 enabled the admission of out of court statements made by a maker with personal knowledge of the contents who is unavailable to give evidence, provided that the statement was not made in contemplation of criminal proceedings (and would not otherwise be inadmissible therein). S.18 gave the trial judge a discretion to exclude any such statement from the jury, and s.19 enabled an appellate court to exercise an independent discretion on any appeal to it on the issue of admissibility. The operation of these statutory provisions was considered by the Court of Appeal in R v Hovell [1987] 1 NZLR 610. In that case, an 82 year old woman gave to a detective shortly after the event a detailed written account of indecencies perpetrated on her by a disguised intruder whom she was unable to describe in any detail. There was medical and scientific evidence corroborating recent sexual activity. The next year, before the defendants arrest, she died. Her statement was admitted in evidence. On appeal, it was submitted that it should have been excluded under s.18, in that it would be contrary to the interests of justice not to exclude a statement dealing with facts of such central importance to the case (p.612). The Court of Appeal dismissed the appeal, holding that there was no basis for limiting the admission of such statements to less serious cases or to peripheral evidence, that the Act had its own safeguards for an accused, that it could not seriously be suggested that the complainants account was a fabrication, or that a woman of that age in those circumstances would complain of rape and the other sexual indignities if she had in fact consented, that the trial judge had rightly concluded that the identity of the assailant was the only issue for the jury and that the trial would be fought around the alibi claimed by the accused. The appeal was thus dismissed. 7. R v Baker [1989] 1 NZLR 738 concerned the common law principle whereby evidence of out of court statements may be admitted to show the makers state of mind, where this is a relevant issue. The defendant was accused of having raped and then shot his estranged wife before attempting to commit suicide. His explanation was that she had invited him around to shoot stray cats, and that, after inviting him to consensual sex, she had then taken his gun and shot first him, then herself. To rebut this account, the prosecution wished to adduce evidence from several witnesses of statements made by the deceased in the previous month and as late as the afternoon before her death as to her extreme fear of the accused which made it implausible to suggest that she would have invited him round to shoot stray cats or invited him to have sex. The trial judge refused to admit the statements, and the prosecution appealed. Giving the main judgment in the Court of Appeal allowing the appeal, Cooke P said (at p.741) that At least in a case such as the present it may be more helpful to go straight to basics and ask whether in the particular circumstances it is reasonably safe and of sufficient relevance to admit the evidence notwithstanding the dangers against which the hearsay rule guards. 8. R v Baker and the later case of R v Bain [1996] 1 NZLR 129 were considered in R v Manase [2001] 2 NZLR 197, as were also the Canadian and Australian cases to which I have already referred. This was another case of an infant (aged three and a half) who was the alleged victim of sexual violation by rape and otherwise. She had made statements to her mother and a receptionist, which she could not now remember having made, as well as making certain drawings in the receptionists presence. The trial judge had admitted evidence from the mother and receptionist about these statements and drawings. The Court of Appeal, reviewing the Canadian authorities, concluded that they had in practice diluted too far the concept of necessity (p.202). It noted certain recognised categories of exception to the hearsay rule, such as dying declarations and statements made as part of the res gestae. In other cases, the Court said, it was necessary to develop criteria for identifying when the rule might be displaced. I note, in parenthesis, that this is also the approach adopted by the federal Australian Evidence Act 1995 (above). The criteria which the Court developed involved three distinct requirements: 9. under the three distinct headings of relevance (although, as the Court noted, this is an affirmation and a reminder of the overriding criterion for the admissibility of all and any evidence), inability (which the Court indicated should be approached strictly) and reliability. In relation to this last criterion, the Court said: 30. The hearsay evidence must have sufficient apparent reliability, either inherent or circumstantial, or both, to justify its admission in spite of the dangers against which the hearsay rule is designed to guard. We use the expression apparent reliability to signify that the judge is the gatekeeper and decides whether to admit the evidence or not. If the evidence is admitted, the jury or judge, as trier of fact, must decide how reliable the evidence is and therefore what weight should be placed on it. If a sufficient threshold level of apparent reliability is not reached, the hearsay evidence should not be admitted. The inability of a primary witness to give evidence is not good reason to admit unreliable hearsay evidence. 31. As a final check, as with all evidence admitted before a jury, the Court must consider whether hearsay evidence which otherwise might qualify for admission should nevertheless be excluded because its probative value is outweighed by its illegitimate prejudicial effect. Reviewing the facts of R v Manase, the Court of Appeal concluded that there was a lack of sufficient apparent reliability in the primary utterances and drawings to qualify them for admission as hearsay. The appeal was therefore allowed. ANNEXE 2 (See paragraph 77) 1. In Unterpertinger v Austria (1986) 13 EHRR 175 at paragraph 33 the Court held that there had been a breach of article 6(1), taken together with the principles inherent in paragraph (3)(d) where the conviction was based mainly on statements of two witnesses that had been read. The witnesses had exercised a legal right, as members of the applicants family, to refuse to testify against him. 2. In Bricmont v Belgium (1989) 12 EHRR 217 at paragraph 82 the Court held that it was necessary to determine to what extent convictions had been based on accusations made by a witness whom the applicant had been unable to cross examine, where the Court had not found justification for this. 3. In Kostovski v The Netherlands (1989) 12 EHRR 434 in finding a violation of article 6 the Court remarked at paragraph 44 that the Government accepted that the applicants conviction was based to a decisive extent on the anonymous statements. The Court did not find justification for the procedures adopted, albeit that it recognised that the growth in organised crime doubtless demands the introduction of appropriate measures paragraph 44. 4. In Windisch v Austria (1990) 13 EHRR 281 the Court held that there had been a violation of paragraph (3)(d) taken together with paragraph (1) of article 6 where the court had relied to a large extent on identification evidence in the form of statements to the police of two anonymous witnesses. They had been promised anonymity by the police because of fear of reprisals. 5. In Delta v France (1990 16 EHRR 574 at paragraph 37 the Court found that there had been a breach of paragraph (3)(d) taken together with paragraph (1) of article 6 where statements of two witnesses had been taken into accountdecisivelyas the file contained no other evidence. There was no justification for the failure to procure the attendance of the witnesses. 6. In X v United Kingdom (1992) 15 EHRR CD 113 the Commission found that a complaint under article 6(1) and (3)(d) was manifestly ill founded where it related to evidence given by anonymous witnesses where far from being the only item of evidence on which the trial court based its decision to convict, the evidence in question did not implicate the applicant at all. The identity of the witnesses had been concealed because of fear of reprisals. In Ldi v Switzerland (1992) 15 EHRR 173 the Court found a violation of 7. paragraph (3)(d) in conjunction with paragraph (1) of article 6. The applicant had been convicted of drug trafficking. The evidence admitted at the trial had included reports made by an anonymous undercover police agent. While the Court found that there was justification for anonymity it ruled that this need not have precluded a procedure that permitted the witness to be questioned. The Swiss Government had argued that there had been no breach of article 6(1) and (3)(d) because the conviction had not been based to a decisive extent on the agents evidence. The Court observed at paragraph 47 that, while the Swiss courts did not reach their decisions solely on the basis of the agents statements, these played a part in establishing the facts which led to the conviction. 8. In Sadi v France (1993) 17 EHRR 251 the Court found that there had been a violation of article 6(1) and (3)(d). The applicant was convicted of drug dealing on the sole evidence of statements made to the police by three of his customers, who were identified. The Court did not find that there was any justification for failing to call them. ANNEXE 3 (See paragraph 80) 1. In Van Mechelen v The Netherlands (1997) 25 EHRR 647 the applicants had been convicted of attempted manslaughter and murder, where the only evidence of positive identification was supplied by anonymous police officers whose evidence was not taken in the presence of the applicants or their counsel. The Court did not find that the procedure adopted was justified but, having cited the sole or decisive test as set out in Doorson, added at paragraph 63 that the conviction of the defendants was based to a decisive extent on the evidence of the police officers. 2. In Craxi v Italy (Application No 34896/97), 5 December 2002 the applicant was convicted solely on the basis of statements of co defendants who exercised their rights not to give evidence. The Court held that there had been a violation of article 6(1) and (3)(d). Statements of one witness were read on the ground that he was untraceable. The Court held that these statements had not contributed to the applicants conviction, so there was no need to consider his complaint that their admission had violated article 6(3)(d). 3. In Kok v The Netherlands (Application No 43149/98), Reports of Judgments and Decisions 2000 VI, p 597 the Court found the applicants complaint of a violation of article 6(1) and (3)(d) to be manifestly ill founded. The evidence placed before the court included a statement made by an informer. His identity was not disclosed in order to protect him from reprisals and the Strasbourg Court held that there was justification for this. In applying the sole or decisive test, the Court said this: The Court therefore concludes that in the present case the applicants conviction was not based exclusively or to a decisive extent on the evidence of the anonymous witness. In the Courts view, in assessing whether the procedures involved in the questioning of the anonymous witness were sufficient to counterbalance the difficulties caused to the defence due weight must be given to the above conclusion that the anonymous testimony was not in any respect decisive for the conviction of the applicant. The defence was thus handicapped to a much lesser degree. In Luc v Italy 36 EHRR 807 the applicant had been convicted on the sole basis of 4. a statement of a co accused, who had exercised his right not to give oral evidence and whom neither the applicant nor his counsel had had the right to question. The Court held that there had been a violation of articles 6(1) and 6(3)(d). 5. In PS v Germany (2001) 36 EHRR 1139 the applicant had been convicted of sexual assault on an 8 year old girl on the basis of statements that she had made which were the only direct evidence of his guilt, so that the conviction was based on the statements to a decisive extent. She was not called to give evidence and the Court found that there were shortcomings in the procedure that had been used. The Court held that there had been a violation of paragraph (3)(d) taken in conjunction with paragraph (1) of article 6. 6. In Visser v The Netherlands (Application No 26668/95), 14 February 2002 the applicants conviction had been based to a decisive extent on the statement of an anonymous witness who was not called to give evidence. The Court held that justification for this had not been demonstrated and that there had been a violation of articles 6(1) and 6(3)(d). The court recited the sole or decisive test. It also recited the passage from Kok, which I have quoted above. 7. In Birutis and others v Lithuania (Application Nos 47698/99 and 48115/99), 28 March 2002 the applicants had been convicted of taking part in a prison riot. A number of anonymous statements were admitted in evidence. The Court held that there was justification for the anonymity, but found a failure to take steps that were available to check the reliability of the statements. The Court found that one of the applicants had been convicted solely on the basis of such statement evidence, but that in the case of the other two such evidence had not been sole or decisive, but that the anonymous statements were among the grounds upon which their convictions were based paragraph 32. A violation of article 6(1) and (3)(d) was found in the case of each applicant. In Krasniki v Czech Republic (Application No 51277/99), 28 February 2006 the 8. applicant was convicted of drug offences on the basis of the statement of an anonymous witness. The Court found a violation of article 6(1) and (3)(d) taken together. The Court was not satisfied that the anonymity was justified and also held that the applicant had been convicted solely or at least to a decisive extent on the anonymous evidence. Once again the Court recited the passage that I have cited from Kok: paragraph 79. 9. In Taxquet v Belgium (Application No 926/05), 13 January 2009 the applicant had been convicted of murder and attempted murder at a trial where the statement of an anonymous witness had been admitted. The Court was not satisfied that anonymity was justified. The Court was unable to determine whether the conviction was based on objective evidence, or solely on the information supplied by the anonymous witness, orsolely on the statement by one of the co defendants accusing him. The Court found a violation of articles 6(1) and 6(3)(d). ANNEXE 4 (Prepared by Lord Judge see paragraph 93) 1. In this annexe references to the Domestic Position refer to the position in England and Wales. With one or two exceptions, this document only addresses cases cited to the House in which the ECtHR found the European Convention on Human Rights (the Convention) to have been violated. In relation to the non violation cases, the purpose behind their inclusion is that they illustrate that the absence of a violation of article 6 entitlements may nevertheless produce a conviction which would be regarded domestically as unsafe. 2 6 10 14 17 21 26 31 41 46 55 60 65 70 76 82 86 91 Contents Reference (1986) 13 EHRR 175 (1989) 12 EHRR 217 (1989) 12 EHRR 434 (1990) 13 EHRR 281 (1990) 16 EHRR 574 (1992) 15 EHRR173 (1993) 17 EHRR 251 (1996) 22 EHRR 330 (1996) 23 EHRR 288 (1997) 25 EHRR 647 (1999) (Application No 37019/97) (2001) 36 EHRR 807 (2001) 36 EHRR 1139 (2002) (Application No 26668/95) (2002) (Application Nos 47698/99 and 48115/99) (2003) 36 EHRR 431 (2006) (Application No 51277/99) (2009) (Application No 926/05) Category of Witness Paragraph Absent, identified Absent, identified Absent, anonymous Absent, anonymous Absent, identified Absent, anonymous Absent, identified Combination Absent, identified Anonymous present Absent identified Absent identified Absent Identified Anonymous, present in part Anonymous, absent Absent, identified Anonymous, absent, present Absent, anonymous Case Unterpertinger v Austria Bricmont v Belgium Kostovski v The Netherlands Windisch v Austria Delta v France Ldi v Switzerland Sadi v France Doorson v The Netherlands Ferrantelli and Santangelo v Italy Van Mechelen and others v The Netherlands AM v Italy Luc v Italy PS v Germany Visser v The Netherlands Birutis and others v Lithuania Sadak and others v Turkey Krasniki v Czech Republic Taxquet v Belgium Unterpertinger v Austria (1986) 13 EHRR 175 2. This case involves known, absent witnesses; the applicant was convicted of causing actual bodily harm to his step daughter on 14 August 1979 and grievous bodily harm (a fractured thumb) on 9 September 1979. During the first incident the applicant himself received injuries. The police were informed by a neighbour. His wife was questioned as a suspect, and his step daughter as a person involved. They made statements about the incident. Shortly afterwards the second incident occurred. The applicants wife received treatment for her injuries. The injury and incident were reported to the police by the hospital. In due course statements from the applicant and his wife were supplied by the hospital to the police. A judicial investigation into both incidents took place. During the investigation the wife gave an account of both incidents. She was later acquitted of criminal involvement in the first incident. When the wife and step daughter were informed by the trial court of their right to refuse to testify against the applicant, they did so. This meant that their oral testimony was not available at trial, and indeed the interview conducted with the wife during the judicial investigation was also excluded. The prosecution adduced the earlier statements to the police by the wife and step daughter. Evidence which was said to undermine their credibility was not admitted, although the statements in relation to the first incident had been obtained when they were questioned as a suspect and a person involved respectively. 3. Following a finding by the Commission that there was no violation, the ECtHR held that the applicants rights under articles 6(1) and 6(3)(d) were breached. The applicant was convicted on the basis of testimony in respect of which his defence rights were appreciably restricted (para 33). Domestic Position 4. would be quashed. 5. The oral testimony of both the wife and the step daughter is admissible. Both were available to give evidence, and they should have been called. Neither fell within the admissibility provisions in section 116. Any attempt to use the section 114(1)(d) route would have failed the interests of justice test. The statements before the trial court from the wife were incomplete, because her account to the investigating judge was not available. Yet every pre trial statement of any witness should be available for cross examination purposes. In any event, however, the applicant was prevented from challenging the credibility of the witnesses, or calling evidence to undermine it. No measures whatever were available or could be or were taken to protect the applicants position. A conviction on the basis of the evidence admitted in this case would be unsafe: in reality there would have been no trial. Bricmont v Belgium (1989) 12 EHRR 217 This trial would simply not proceed on this basis, and if it did, any conviction The ECtHR held that in relation to the charges which had not been subject to the 6. This conviction involved a known absent witness, the Prince of Belgium. He could not be summoned as a witness in the absence of a specific Royal decree. The trial court found that there was a clear and inexplicable want of diligence in seeking the truth (para 28) and noted that the persons best placed to provide information had been neither summoned nor examined as witnesses (para 28(a)). The applicant was acquitted of criminal charges brought against him on the basis of financial mismanagement. 7. The acquittal was appealed by the prosecution. The Court considered regrettable that evidence had been taken from the Prince in an unusual manner nevertheless, by allowing the prosecution to use the written statement of the alleged victim of the fraud without producing him for cross examination because he was old and ill, the applicant was convicted. 8. confrontation, there had been a violation of article 6(1) and (3)(d) taken together. Domestic Position 9. Ignoring the complicating factor that in Belgium the victims status as a member of the Royal Family gave him special privileges in the proceedings, which would not have been the case here, the admission of his untested evidence would have been highly unusual. The prosecution would have had to persuade the court that his written statement should be admitted under section 116(2)(b). In practical reality such an application would have been very surprising, and if made, would have failed the interests of justice test. There was no sufficient explanation for the inability of the witness to give oral testimony, and the trial court itself had serious reservations about the reliability of the evidence adduced from the complainant. If the Court of Appeal concluded that there had been a want of diligence in seeking the truth which was inexplicable or that the judge misdirected himself in relation to the interests of justice any conviction would be quashed as unsafe. Kostovski v The Netherlands 12 EHRR 434 10. This case concerned absent, anonymous witnesses. The applicant was convicted by the District Court, and, later, the Amsterdam Court of Appeal of conducting an armed robbery. The applicants conviction was based to a decisive extent on the statements of anonymous witnesses. Anonymous statements were made to the police and examining magistrates. The examining magistrate invited questions for him to put to the witness; of the 14 questions submitted by the applicants lawyers, only 2 were answered, on the basis that the remaining 12 may have breached the anonymity of the witness. The witnesses were not examined at trial. The witnesses identities were not known either to the examining magistrates or to the trial courts. The magistrates testified that, on the basis of their assessments, the anonymous witnesses were not unreliable and completely reliable. 11. The ECtHR held there had been a violation of articles 6(1) and 6(3)(d) taken together. At paragraphs 41 and 42, the Court noted that the use of statements acquired at the pre trial investigative stage was not in itself inconsistent with paragraphs (3)(d) and (1) of article 6 providing the defence had the opportunity to challenge and question a witness, but that, on this occasion, the nature and scope of the questions it could put [via the examining magistrates earlier in the proceedings] was considerably restricted by reason of the decision that the anonymity of the authors of the statements should be preserved. It is significant that the Court ascribed the problems associated with anonymous witnesses to the decision to render the witnesses anonymous; this suggests that the process by which the court arrived at the decision to grant anonymity was flawed, rather than the fact of anonymity per se. 12. The Court recognised the policy in favour of the use of anonymous evidence (para 44) but held that the general problems of anonymity were compounded by the absence of the anonymous witnesses at trial, and the subsequent admission of their evidence as hearsay see para 43. However, in concluding that paragraphs (1) and (3)(d) of article 6 of the Convention had been breached, it is significant that the Court noted that the right to a fair administration of justice. cannot be sacrificed to expediency(emphasis added); by contrast, the relevant considerations for the granting of anonymity, in section 5 of the 2008 Act, would not, on any reading, permit the granting of an order for reasons of expediency. Domestic Position 13. This case would not come to trial. If it did, it would be stopped. This evidence was anonymous hearsay. The relaxation of some of the rules against the use of anonymous witnesses under the Criminal Evidence (Witness Anonymity) Act 2008 does not extend to witnesses who are not only anonymous but also absent. In R v Mayers [2008] EWCA Crim 2989; [2009] 1 Cr App R 403, para 113, the Court of Appeal (Criminal Division) addressed an application by the Crown that a written statement by an anonymous absent witness should be admitted in evidence and read to the jury, and summarised the principle: we are being invited to re write the [Criminal Evidence (Witness Anonymity) Act 2008] by extending anonymous witness orders to permit anonymous hearsay evidence to be read to the jury. We cannot do so. Neither the common law, nor the [Criminal Justice Act 2003], nor the 2008 Act, permits it. In short, such evidence is inadmissible. Windisch v Austria (1990) 13 EHRR 281 14. The applicant was convicted of burglary on the basis of the anonymous, absent, testimony of two witnesses who had seen him in the vicinity of the area of the burglary, although they did not witness the crime itself. The witnesses were assured of anonymity by the police at the investigative stage, and their identity was kept from the Regional Court and the Supreme Court. On appeal, the Supreme Court refused the applicants request to have the witnesses summoned, on the basis that he had not established how the witnesses would be identified sufficiently to allow the summonses to be served. 15. The ECtHR noted, at para 31, that although the anonymous absent witnesses had not witnessed the crime itself, their testimony became the central issue during the investigation and at the hearing, and that the trial court relied, to a large extent on their testimony. Earlier in the judgment, at para 28, the Court stated that being unaware of their identity, the defence was confronted with an almost insurmountable handicap: it was deprived of the necessary information permitting it to test the witnesses reliability or cast doubt on their credibility. As such, the evidence involved such limitations on the rights of the defence that there had been a violation of para (3)(d), taken together with para (1), of article 6. Domestic Position 16. See paragraph 13 (above): the evidence would not be admissible. Delta v France (1990) 16 EHRR 574 17. This matter concerned an absent, identified witness. The applicant was convicted at the Paris Criminal Court, and, subsequently, at the Paris Court of Appeal and the Court of Cassation of the robbery of jewellery from two identified teenage girls. Upon being searched following his arrest, nothing incriminating was found on the applicant. The victims were the only witnesses, and, having provided statements to the police, failed to respond to court summons to attend as witnesses at the applicants trial. No reasons were given for their failure to do so. At the trial of first instance, the trainee barristers representing the applicant made no submissions in relation to the absent witnesses. 18. In upholding the conviction, the Paris Court of Appeal held that the absent witnesses statements satisf[ied] the Court that the defendant was guilty of the offences charged and [made] the requested examination of the witnesses unnecessary (para 20). The Court of Cassation refused to intervene in the appeal courts final assessment of all the evidence adduced and dismissed the appeal. 19. The ECtHR noted, at para 37, that neither the applicant nor his counsel ever had an adequate opportunity to examine witnesses whose evidence was taken into account decisively at first instance and on appeal, as the file contained no other evidence. They were therefore unable to test the witnesses reliability or cast doubt on their credibility The Court concluded that there had been a breach of article 6(3)(d) taken together with para (1). Domestic Position 20. The absence of the crucial witnesses for the prosecution was unexplained and unjustified. No attempt was made to trace them or compel their attendance, or to justify the reading of their statements. No countervailing measures to protect the interests of the defendant were or could be taken. An application for this evidence to be read would have failed the interests of justice test. Therefore if the case had proceeded to trial it would have been stopped, but if that safeguard had failed, and the case had resulted in a conviction, the conviction would have been quashed. Ldi v Switzerland (1992) 15 EHRR 173 21. This case concerned an anonymous, absent witness. The applicant was convicted of drug trafficking offences on the basis of the evidence of an absent and unidentified undercover police officer, operating with requisite official authorisation. The undercover officer initiated a series of meetings with the applicant in which, the officer testified, the applicant offered to sell large quantities of cocaine. The applicant was convicted by the District Court and, subsequently, by the Bern Court of Appeal and the Federal Court. In order to preserve his anonymity, the undercover officer was not called at trial; the court considered that telephone intercept records and the reports of the undercover agent were sufficient to establish the applicants criminality. 22. The Commission stated (at para 87) that the applicant did not have the opportunity to challenge and question the undercover officer, and noted that, while the applicant was convicted partly on the basis of his own admissions, those admissions were made when the applicant was confronted with intercept evidence by the undercover officer which he was unable to challenge in the trial proceedings. The Commission concluded that there was a breach of article 6(3)(d) taken together with article 6(1). 23. The ECtHR noted the operational requirement of law enforcement agencies to undertake intrusive and covert surveillance, but found that it would have been possible to preserve the anonymity of the undercover officer while simultaneously affording the applicant the opportunity to question him, or cast doubt on his credibility (para 49). This failure constituted a breach of article 6. Domestic Position 24. See paragraph 13 (above): the evidence would not be admissible. 25. In this particular case it is possible to go a little further: there was no reason to conceal the appearance of the undercover police officer from the applicant who had met him under his assumed identity on a number of occasions. So a witness anonymity order to preserve the true identity of the officer would nevertheless not prevent him from testifying in court, and therefore cross examined and challenged on the applicants behalf. It has already been recognised that: In relation to police officers the normal problem is not quite the same as that envisaged by orders for witness anonymity which were considered at the trial of Davis. These witnesses may well be known to the defendant by a false identity, or are using a false identity. Knowledge of their true identities can rarely be of any importance to the defendant, who can advance whatever criticisms of the evidence, or indeed the conduct of the officers, while they continue to be known by their false identities (R v Mayers [2009] 1 Cr App R 403, para 31). Effectively, the approach domestically and in Strasbourg would have been identical. It is unnecessary to address the admissibility of the telephone tap evidence: it is, to put it no higher, extremely unlikely that this evidence would have been admissible. Sadi v France (1993) 17 EHRR 251 26. This case involved identified, absent witnesses. The applicant was convicted in the Nice Criminal Court and, later, the Court of Appeal and Court of Cassation of the involuntary homicide of a fellow drug user, who died following the administration of drugs provided by the applicant. During the judicial investigation for that and other drugs related charges, the applicant was remanded in custody; one of the reasons for the detention at the time was the need to arrange witness confrontations. During his detention, the applicant was identified through a two way mirror by suspects detained by the police on other charges relating to drugs (see para 10) as the person responsible for providing them and the deceased with drugs. At trial and before the Court of Appeal, the applicant was convicted on the basis of statements made by these witnesses, who were absent from the trial. There was no positive attempt to conceal their identity nor to discuss the possibility of using other special measures, and on appeal no specific request was made for a confrontation. Nevertheless, stress was laid on Sadis behalf on the inadequacy of the investigation and the absence of any confrontation between him and his accusers. The Court of Cassation refused to interfere with the verdicts below. 27. The Commission noted (at para 44), that the applicant had been accused by his habitual [drug] clients and by the very persons who carried out some of his deliveries. It also noted that the applicant was found guilty on the sole basis of the statements of his accusers, and continued, the applicant should have been given the opportunity of being confronted with his accusers and thus enabled to put his own questions and comments about their statements. It concluded that there had been a violation of article 6. 28. Before the ECtHR, France argued that oral testimony was not required because (i) the file against the applicant was complete and confrontations would have served little purpose; and (ii) of the general difficulty of obtaining testimony from drug addicts, who may be fearful of reprisals arising from their cooperation with the authorities, made organising confrontations a sensitive matter. However no specific assertion was advanced that any of the witnesses was in fear of the applicant, or indeed his colleagues. 29. The ECtHR found (at para 44) that the convicting courts referred to no evidence other than the statements obtained prior to trial after the two way mirror identification. It also noted that the convicting courts themselves highlighted the relationship the witnesses bore to the applicant, namely that they were some of his regular customers and were those responsible for delivering consignments of drugs to other users. The failure to enable the applicant to examine the witnesses either at the investigative stage or at trial constituted a breach of article 6(1) and (3)(d). Domestic Position 30. This evidence would not be admitted. There was no good reason why the key witnesses could not be called and cross examined. Many witnesses in this class of case are reluctant to give evidence, but that does not constitute a sufficient basis for allowing hearsay evidence and disabling the defendant from challenging the evidence. In these cases witnesses are expected to give evidence: witness reluctance does not provide a sufficient basis for their absence, and in any event many of the concerns expressed by witnesses can be addressed by special measures. The crucial point is that the evidence of these witnesses was in issue, they were closely involved in the same drugs related question, and the circumstances in which their purported identifications took place required close examination. No countervailing measures offering appropriate protection to the applicants interests were available. The interests of justice required their oral testimony or the exclusion of their evidence. Doorson v The Netherlands (1996) 22 EHRR 330 31. This case concerned a combination of absent, identified, and anonymous witnesses. The applicant was convicted before the Amsterdam Regional Court and, later, by the Court of Appeal and the Supreme Court of drug trafficking. The applicant was identified from a photograph as a drug dealer by a number of witnesses who were known to be drug users. 32. Six of the witnesses who identified the applicant remained anonymous; the identity of a further two was disclosed. At first instance trial, the defence applied unsuccessfully for the court to summon the anonymous witnesses. Of the two identified witnesses, only one appeared at trial, initially testifying that he did not recognise the applicant. The witness subsequently purported to recognise the applicant when presented with the photograph from which he originally recognised him, though later admitted that he could not be sure, and that the reason he identified him to the police was in order to be reunited with his confiscated drugs. The evidence of a second absent but identified witness was read. The defence also questioned the failure of the prosecution to disclose details arising from identification of the applicant from photographs. The applicant was convicted. 33. The Court of Appeal requested the investigatory judge (who had been a member of the court in an earlier constitution of the Regional Court) to re examine the need for the witnesses continued anonymity and to question them on the applicants behalf. Two of the six anonymous witnesses attended the hearing before the investigatory judge. Their anonymity was upheld. They were questioned extensively by the judge and the applicants lawyer. They re identified the applicant from photographs put to them. In view of this questioning, and the fact it was not possible to secure the attendance of the remaining witnesses, the investigatory judge and Court of Appeal refused the applicants request to re summon all anonymous witnesses. The Court of Appeal and, later, the Supreme Court, upheld the conviction. 34. The Commission found by a majority there had been no breach of the Convention. 35. In summary, the conviction was based on (a) the oral evidence of one prosecution witness who deposed at trial, and retracted his statement to the police: (b) two anonymous witnesses who deposed orally and whom the defence could cross examine: (c) one witness who made a statement to the police and then disappeared. 36. The ECtHR found there was no breach of article 6(1) and (3)(d). In relation to anonymous witnesses, it articulated the following doctrine, at para 76, it should be recalled that, even when counterbalancing procedures are found to compensate sufficiently the handicaps under which the defence labours, a conviction should not be based either solely or to a decisive extent on anonymous statements 37. The Court continued that evidence obtained from witnesses, at para 76, under conditions in which the rights of the defence cannot be secured to the extent normally required by the Convention should be treated with extreme care. The Court is satisfied that this was done in the criminal proceedings leading to the applicants conviction, as is reflected in the express declaration of the Court of Appeal that it had treated [the anonymous testimony] with the necessary caution and circumspection. The Court held that the testimony from the absent but identified witness caused the applicant no unfairness because it was impossible to trace the witness, and the evidence was corroborated by other evidence before the court (para 80). In conclusion, therefore, the Court considered, None of the alleged shortcomings considered on their own lead the Court to conclude that the applicant did not receive a fair trial. Moreover, it cannot find, even if the alleged shortcomings are considered together, that the proceedings as a whole were unfair. Domestic Position 38. See paragraph 13: the anonymous witnesses did not give oral testimony at trial. Their evidence would not be admissible. The evidence of the witness who retracted his statement would have been judged by the jury. Given that the statement he made incriminating the applicant was rejected, the reliability of his allegations against the applicant would have been in serious doubt. 39. In relation to the identified witness who disappeared his written statement might have been admitted under section 116(2)(d) of the 2003 Act if the court had been satisfied all reasonably practicable steps had been taken to find him. However given that the witness was a known drug user, and the allegation against the applicant was drug trafficking, the absence of any opportunity for the defence to challenge the evidence would probably have led the court to exclude it. 40. A conviction would be most unlikely: and the case would probably be stopped. Ferrantelli and Santangelo v Italy (1996) 23 EHRR 288 41. This matter involved an absent, identified witness. The applicants, who were aged 17 and 18 at the time of the offence, were convicted of the murder of two police officers following statements provided to the police by a co accused. The co accused died before trial and before the applicants had the opportunity to examine him. During police questioning, the applicants admitted involvement in the attacks, but gave conflicting accounts and later claimed ill treatment. Three trials took place. The applicants were convicted 16 years following their initial arrest. 42. The Commission upheld the applicants complaints that there was excessive delay, in breach of article 6(1), and that the reliance on the statements of the deceased co accused was objectionable. The Commission held that the admission of the deceaseds statements was not per se objectionable, but that, at para 51, given the confession evidence taken with the evidence of the deceased co accused constituted the fundamental grounds for their conviction, there was a breach of article 6(1) of the Convention. 43. The ECtHR held that the delay amounted to a breach of article 6, in relation to the length of the proceedings, but that the reliance on the statement of the deceased co accused was compatible with the right to a fair trial contained in paragraphs (1) and (3)(d) of article 6. The reasoning for the latter conclusion appears to be because the Government could not be held responsible for the deceaseds death, and the fact that his evidence was corroborated by the applicants admissions to the police, other circumstantial evidence, and the lack of an alibi for either of them (see para 52). Domestic Position 44. Although this is a non violation case, it is worth noting that domestically, a trial taking place 16 years after the initial arrest of the defendants would almost certainly lead to an abuse of process argument, reinforced by the fact of prejudice to the defendants from their inability to cross examine a co accused whose statements to the police were relied on in support of the allegation against them. 45. For the same reason, given the absence of any opportunity for the defendants to test the accounts of the deceased co accused, although section 116(2)(a) provides that the statement of an identified, absent witness may be admitted as hearsay evidence where the witness is dead, admission in these circumstances would be likely to fail the interests of justice test under the 2003 Act and the fairness test under section 78(1) of the 1984 Act. In practice therefore the outcome of this case would have coincided with the decision of the Commission rather than the ECtHR itself. Van Mechelen and others v The Netherlands (1997) 25 EHRR 647 46. This case involved anonymous absent witnesses. The applicants were convicted of armed robbery and attempted murder on the basis of anonymous statements from police officers. The police officers were questioned by the investigatory judge in the shielded presence of the applicants and their lawyers who could hear but not see them. The officers did not testify at trial. 47. The Commission held by a majority that there had been no violation of article 6(1) and (3)(d), noting, at para 77, that article 6 does not grant the accused an unlimited right to secure the appearance of witnesses in court and, at para 79, that the applicants were suspected of having committed serious offences of violence. 48. Although anonymous testimony was received by an investigatory judge, it had been possible to challenge that evidence, (para 82) the Commission concluded that the applicants convictions did not solely rest on the statements by these unidentified witnesses, and continued to outline corroborative evidence, including tapped telephone conversations (para 84). 49. The ECtHR noted that special considerations apply where witnesses seeking anonymity were members of the police force of the State. The Court stated at para 60 that it had not been explained to the Courts satisfaction why it was necessary to resort to what it termed such extreme limitations and why less far reaching measures were not considered. The Court implied that it was not opposed to anonymous police testimony per se but that under the circumstances of the case, it had not been persuaded it was necessary; in the absence of further information, the Court cannot find that the operational needs of the police provide sufficient justification [for anonymity]. 50. The alleged threat of reprisals arising from testimony had not been assessed properly; anonymity was granted simply on the basis of the seriousness of the crime committed (para 61). Accordingly, the Court found that the convictions of the applicants were based to a decisive extent on anonymous statements and concluded that the proceedings taken as a whole were not fair (paragraphs 63 and 65), and there was a breach of article 6(1) taken together with article 6(3)(d). Domestic Position 51. Before considering whether it would be legally possible to apply for mass police anonymity, it is useful to consider whether such an application would actually be made, and whether those responsible for the application would deem such an application to be reasonable. In August 2008, the Director of Public Prosecutions issued Guidance on Witness Anonymity1 which states, under the section titled Considering whether to make an application, 1 http://www.cps.gov.uk/publications/directors_guidance/witness_anonymity.html#_08 Prosecutors must also be able to show that any fear expressed by the witness that they, or any other person, would suffer death or injury, or that there would be serious damage to property, if they were identified to the defendant, is reasonable (emphasis added). In this case it is open to very serious question whether an application for police anonymity would be made at all. 52. The Criminal Evidence (Witness Anonymity) Act 2008 contains no specific statutory provision relating to the anonymity of police officers: see para 25 (above) for further comment. 53. In the result, the conditions which would permit consideration to be given to the making of witness anonymity orders in this case were not established. Even on the basis that the justification for anonymity could be justified, the witnesses would nevertheless have been required to give oral testimony at trial, probably with the protection of special measures for them, which kept open the possibility of cross examination and challenge on behalf of the defendant. Incidentally, the views of the investigating judge about the credibility of the witnesses would be irrelevant and inadmissible: all decisions on credibility are the exclusive function of the jury on the basis of the evidence before them. 54. In reality, from the point of view of a trial before the jury, the way in which the evidence in the present case was actually presented that is, critical evidence from anonymous witnesses who were not present at trial would, even if permitted, have resulted in the quashing of any conviction. In effect, see paragraph 13: the evidence would not be admissible. AM v Italy (Application No 37019/97), 14 December 1999 55. The applicant was convicted of sexually assaulting G during a school trip G made to Italy. On his return to the United States G provided a detailed account of what took place to a US police officer. His father confirmed in interview that the child had made the complaint. Gs mother and Gs psychotherapist provided written statements confirming that G had recited to them the allegations against the applicant. The record of the account given by G and the other statements were used in evidence against the applicant. This case involved absent but identified witnesses. The international rogatory letter issued by the authorities in Italy explicitly asked the authorities in the USA to arrange for the witnesses to be questioned without a defence lawyer being present. 56. The ECtHR concluded, at para 26, in convicting the applicant the domestic courts relied solely on the statements made in the United States before trial and the applicant was at no stage in the proceedings confronted with his accusers 57. There was a breach of article 6(1) taken together with article 6(3). Domestic Position 58. Section 116(2)(c) of the CJA 2003 permits the admission of hearsay evidence where the relevant person is outside the United Kingdom and it is not reasonably practicable to secure his attendance. Before evidence can be introduced in this way it is necessary to show (a) that all reasonable steps have been taken to secure the presence of the witness; and (b) why those steps have failed. Moreover, assuming that this hurdle is cleared, it would then be necessary for the prosecution to show why other methods by which the evidence could be given, such as by means of a live link, would be impracticable. 59. Assuming that none of these steps to enable the jury to see the witness, or to enable the witness to be confronted by the defence could be taken, the starting point is that the statements of the father, mother and psychotherapist all constitute multiple hearsay obtained in circumstances where the investigating authorities expressly sought to arrange for the absence of a defence lawyer. In the circumstances of this case, that would have been likely to produce a decision under section 78 of the Police and Criminal Evidence Act 1984 excluding the evidence. But, if such an order were not made on the basis that the defendants lawyer did not press sufficiently for the opportunity to be present, the admission of the evidence would have been questioned as a step inconsistent with the interests of justice and section 78 would also have been engaged in the context of the adverse effect on the fairness of proceedings resulting from the admission of this evidence. The reality is that (a) the defendant could not defend himself against the allegations and (b) the jury would have no basis for making any assessment about the credibility and reliability of the makers of the statement. If the judge admitted the evidence he would have had to give the jury such clear directions about the dangers of convicting on the basis of such remote and untested evidence, that either (a) an acquittal would have been inevitable or (b) the Court of Appeal would quash the conviction on the basis, first, that the evidence should never have been admitted and, second, because the consequent conviction was unsafe. Luc v Italy (2001) 36 EHRR 807 60. This case involved an absent, but identified, witness. The applicant was convicted of drugs offences by the Locri Criminal Court and, later, the Court of Appeal and the Court of Cassation. An acquaintance of the applicant from the drugs world, N, made statements to the police, whilst detained as a suspect himself, which implicated the applicant. Italian law deemed N to be a person accused in connected proceedings against the applicant and, accordingly, N was permitted to refuse to testify. Further domestic provisions, triggered by Ns testimonial immunity, allowed the prosecution to read Ns statement to the Court. 61. Before the ECtHR the Italian Government argued that the domestic provisions highlighted the tension between the right of a co accused to remain silent, the right of the accused to question a witness against him, and the right of the judicial authority not to be deprived of evidence obtained during the investigation. In its summary of the facts, the ECtHR, at para 14, stated as a result [of the testimonial immunity provisions], the accused was deprived of any opportunity of examining [N] or of having him examined. It was irrelevant that the statements had been made by a co accused rather than a 62. witness; this illustrates the principle, found in many judgments relating to article 6(3)(d), that the term witness has an autonomous meaning within the Convention system. N, a co accused, was therefore a witness for these purposes. Accordingly, the Court was not satisfied that the applicant was given an adequate and proper opportunity to contest the statements on which his conviction was based and there had been a breach of article 6(1) and (3)(d). Domestic Position 63. Although described as a co accused, it appears from the judgment that the witness was an accused in a related but separate case. That said, he was entitled to and would have been warned that he was not obliged to give evidence which might incriminate him in any offence. Assuming that he elected not to give evidence, any oral statement he made during the police investigation would not have been admissible. An application could have been made for any written statement, taken in proper form, to be read to the jury. The evidence would not have been admissible under section 116, but the prosecution might have argued for its admissibility under section 114(1)(d). 64. In exercising his discretion whether to admit the evidence, the judge would have been alert to the dangers of admitting a statement made by a suspect who had exercised his right not to incriminate himself, and thus avoiding any challenge or cross examination. That consideration would then bear on issues of the potential unreliability of the maker of the statement, and the difficulties faced by the defendant, unable to meet the allegation head on, and the prejudice which would be likely to be occasioned to him. All these would provide overwhelming reasons against permitting the statement of the witness to be read. If nevertheless admitted, the judge would have been required to give the clearest possible warnings against the jury relying on this evidence, but if the jury had convicted, the Court of Appeal could almost certainly question whether (a) the decision to admit the evidence was correct: (b) whether the warnings to the jury were in sufficiently clear terms: and (c) whether the conviction was nevertheless a safe one. In short, a conviction might in theory have been open: in reality there would have been none, and the prosecution would almost certainly have failed to persuade the court to admit the evidence in the first place, and any conviction would be regarded as unsafe. PS v Germany (2001) 36 EHRR 1139 65. This case involved an absent, identified witness. The applicant was convicted of a sexual offence against an 8 year old girl, section The applicant was her private music teacher. Her father reported to the police that the applicant had abused her during a music lesson. S and her mother were questioned at the police station. S confirmed her fathers allegation. Her mother stated that S had been very disturbed after her music lesson and that she had later confided in her mother, presumably that she had been assaulted. At trial a request on the applicants behalf for a psychological expert opinion regarding the credibility of Ss complaints was rejected. The court believed that it was not reasonable to hear the evidence from the complainant herself, on the basis that her recollection had been repressed and if she were reminded of it, or required to remember it, her personal development would be seriously impaired. 66. The Regional Court dismissed an appeal against conviction. The applicants guilt was established on the basis of the statements made by the complainants mother and the police officer as well as a psychological expert opinion on Ss credibility which was prepared for the appeal process. There was medical evidence before the Regional Court confirming the likely deterioration of Ss health if she gave evidence of the assault. 67. Following the alleged sexual assault, S and her mother were questioned at a police station. The parents of S provided statements to the police as to her condition and state immediately following the assault, but did not allow her to testify at trial on account of the distress that it would cause her to recount the events in court. The trial court refused the applicants request to appoint an expert to determine the credibility of Ss statements, holding that its own professional experience in evaluating statements made by children was sufficient. The trial court also noted that if S were to be examined as a witness, rather than contributing to a further clarification of the facts, it would, by contrast, seriously impair her personal development. 68. The ECtHR concluded that a conviction based on this evidence involved such limitations on the rights of the defence that the trial was unfair. No counterbalancing measures could be taken to address the limitations on the rights of the defence, and the decision of the District Court to refuse to hear the oral testimony of the child or to appoint the expert requested by the defence were rather vague and speculative. There was, accordingly, a violation of article 6(1) and (3)(d). Domestic Position 69. This conviction of a sexual offence against a child was based on the hearsay evidence of her mother, a police officer, and a psychological expert, who all reported what the child had said. There was no evidence to suggest that the child could not have been called, subject to special protective measures, as a prosecution witness. Therefore, apart from the mothers evidence of her daughters condition on her return home after the music lesson, none of the material on which this conviction was based would be admitted. The childs accounts to the police and her mother and the expert were hearsay. The evidence of the expert about the childs credibility would also have been inadmissible; in effect such evidence would usurp the responsibility of the jury. Visser v The Netherlands (Application No 26668/95), 14 February 2002 70. This case involved a conviction for kidnapping, based to a decisive extent on the evidence of an anonymous witness who was not called to give evidence on the basis of his/her fear of reprisals from the applicants co accused. Six years after the offence was committed, as the case progressed through the system, the anonymous witness was questioned before an investigatory judge, and his counsel was given a limited opportunity to provide questions for the judge to put to the witness. 71. The ECtHR found, para 47, that the investigatory judge did not show how he assessed the reasonableness of the personal fear of the witness either as this had existed when the witness was heard by police or when s/he was heard by the investigating judge nearly six years later. Moreover an examination into the seriousness and well foundedness of the reasons for the anonymity of the witness when it decided to use the statement before the investigating judge in evidence was not carried out. 72. The ECtHR did not appear to object to the use of anonymous witnesses per se; rather it was the case that, at para 48, In these circumstances the Court is not satisfied that the interest of the witness in remaining anonymous could justify limiting the rights of the defence to the extent that they were limited (emphasis added). In short, for this evidence to be admitted the judge would have had to make a Domestic Position 73. See paragraph 13: the evidence of any absent anonymous witness would not be admissible. The evidence of a witness who gives oral testimony at trial may be given anonymously. Before such evidence can be admitted at all, a robust analysis of the need for his or her anonymity is required by the Criminal Evidence (Witness Anonymity) Act 2008. The prosecutor must, unless the court directs otherwise, inform the court of the identity of the witness (section 3(2)). The court must be satisfied that the measures proposed are necessary: that if adopted they would be consistent with the defendant receiving a fair trial: and that without an anonymity order, the witness would not testify (section 4). The court must examine the credibility of the witness, and whether and if so how it could be properly tested without disclosure of his or her identity (section 5). Thereafter, even with the use of special measures, such as screening, the defence would be enabled to challenge the evidence. 74. reasoned finding that the necessary conditions were satisfied. 75. It is highly unlikely that a domestic court would find that the necessary conditions were satisfied, but in any event in accordance with the reasoning of the ECtHR, if a proper examination of the facts or a reasoned decision about whether to admit this evidence were lacking, the conviction would be unsafe. Birutis and others v Lithuania (Application Nos 47698/99 and 48115/99), 28 March 2002 76. This case involves the use of anonymous, absent witnesses resulting in the conviction of three applicants, A, B, and C, for taking part in a prison riot. The evidence against A and B included testimony given by other co accused, circumstantial evidence, in addition to the statements of a variety of anonymous witnesses, believed to be fellow inmates at the prison. The Regional Court referred to the statements of 17 and 19 anonymous witnesses when convicting A and B respectively. When convicting C, the Regional Court referred solely to the statements by six anonymous witnesses recorded by the prosecution during the pre trial investigation. 77. The ECtHR noted that anonymous evidence may be appropriate in some cases, especially in the instant cases, where prisoners may fear testifying against fellow detainees. However, it noted, at para 30, that this circumstance, as such, could not justify any choice of means by the authorities in handling the anonymous evidence. At para 31 the ECtHR noted that applicant C was convicted solely on the basis of anonymous evidence; although he had been permitted to question three other witnesses in open court during the trial, the domestic courts did not base his conviction on any evidence given by those witnesses. 78. The Court noted that the convictions of applicants A and B were not based solely, or to a decisive extent, on the anonymous evidence but that because there were a high number of anonymous statements, the trial court effectively demonstrated that the statements in question were among the grounds upon which the first and second applicants conviction was based (para 32). As such, the Court looked for counterbalancing measures to offset the handicap suffered by the defence; it did not find adequate measures. 79. The Court noted at paragraphs 33 and 34 that A and B had alleged that there were inconsistencies in the anonymous statements. There was a basis to suspect the authorities had collaborated with the makers of the statements to implicate the applicants; this was evidenced by the fact that the witnesses who did testify at trial sought to retract their original statements implicating the applicants, claiming they had been made under pressure from the prison authorities. In fact, the trial courts held that their original testimony was more reliable, and discarded the revised testimony. Despite these genuine concerns as to the credibility of the anonymous witnesses, A and B were not permitted to question them. The domestic courts did not avail themselves of their statutory power to question the witnesses. In addition, there was no scrutiny by the courts of the decision to grant anonymity. As such, the handicaps on the first and second applicants defence rights were not counterbalanced by the procedures followed by the domestic judicial authorities There was a breach of article 6. Domestic Position 80. The prosecution case against some defendants depended exclusively on anonymous hearsay evidence, and against others, largely of anonymous hearsay, that is anonymous absent witnesses. See paragraph 13: the evidence would not be admissible. 81. Assuming that any individual witness were available to be called at trial, an application for his anonymity would have required the process identified in paragraph 73 (above) to be engaged. It was essential that the defendant should have the opportunity of challenging this evidence, not least because, by definition, they would almost certainly (as prisoners, unless individuals of good previous character on remand) have had previous criminal convictions, which the defendant might have wished to explore before the jury. Assuming that this case had proceeded before the jury on the basis of the process before the regional court in Lithuania, even if the judge had admitted any of this evidence, he would have been required to give the jury a most solemn warning about the dangers of relying on evidence which the defendant could not test, and assuming that the jury disregarded his warnings, the overwhelming likelihood is that without any further evidence (and as far as we can see there was none which the jury could have relied on) the convictions would be unsafe. Sadak and others v Turkey (2003) 36 EHRR 431 82. The applicants were former Turkish parliamentarians convicted of membership of an armed gang, on account of their involvement in the Peoples Democratic Party, which the domestic courts held to be separatist activity linked to a paramilitary campaign for the creation of a separate Kurdish state (para 17). Legal argument took place as to the classification of their offences under terrorism or treason provisions; different charges were brought in the course of the proceedings. The applicants were acquitted of treason charges, which attracted the death penalty. 83. At trial, the prosecution had refused to call some witnesses on account of their fear of sectarian violence; others were not requested by the applicants at trial. The case therefore involved known, absent witnesses. Argument before the ECtHR addressed, inter alia, whether the absence of those witnesses breached article 6(3)(d). 84. The ECtHR noted that in some circumstances, the judicial authorities may find it necessary to use statements obtained at the preparatory investigation stageprovided the accused has had an adequate and sufficient opportunity to challenge the statements at the time they were made or at a later date However, the Court stated that the domestic court gave a determining weight to certain statements made by witnesses which the applicants were not able to examine or challenge. Domestic Position 85. Assuming that it was established that the witnesses were fearful of giving evidence within the context of section 116(2)(e) of the 2003 Act, the additional admissibility criteria in section 116(4) would have to be addressed. The application to adduce this evidence would fail, first, because there had been no adequate investigation into the reasons why the witnesses attendance at court to give oral testimony, if necessary using special measures available for fearful witnesses, was justified, and, second, because the admission of this evidence, given the difficulty faced by the defendant seeking to challenge it, would be likely to produce an unfair trial. Krasniki v Czech Republic (Application No 51277/99), 28 February 2006 86. This case concerns anonymous witnesses, one present and one absent from trial. The applicant was convicted of drugs offences. During the pre trial judicial investigation, two anonymous witnesses, both of whom were drug users, were questioned. The applicants lawyer was permitted to ask questions relating to, amongst other matters, why the witnesses sought anonymity. In reply they stated they were in fear of reprisals for speaking to the authorities, and one of them owed money for drugs. One of the anonymous witnesses testified at trial, but, because the other could not be located, her testimony was read to the court. The testimony alleged that drugs had been purchased from the applicant. 87. Before the ECtHR, the applicant argued that the need for anonymity had not been tested properly and the authorities should have made greater efforts to assess the witnesses fear of reprisals. The applicant also challenged the prosecutions failure to disclose the criminal record of one of the anonymous witnesses who was, it emerged, being held in the same prison as the applicant. He also highlighted discrepancies between some aspects of the testimony of the witnesses that should have led to the prosecution assessing the witnesses credibility in further depth. 88. The Court held that there had been a breach of article 6(1) and (3)(d), and noted, at para 81, that the authorities had attempted to approach the anonymous testimony with some caution, but that it was not clear how the investigating officer and the trial judge assessed the reasonableness of the personal fear of the witnesses in relation to the applicant. The conclusion at para 83 was that, the Court is not satisfied that the interest of the witnesses in remaining anonymous could justify limiting the rights of the applicant to such an extent Domestic Position 89. See paragraph 13: the evidence of an anonymous absent witness would not be admissible. 90. In any event, so far as the witness who gave oral evidence, but anonymously, no proper foundation for his anonymity was established. The strict conditions in the 2008 Act were not met: his evidence, too, would therefore not have been admitted. Taxquet v Belgium (Application No 926/05), 13 January 2009 91. This case concerns an absent, anonymous witness. The applicant was convicted of being a principal party to the 1991 murder and attempted murder of a Belgian government minister and his partner respectively. An anonymous informant, whose identity was known only to the police, provided detailed information implicating several of the 8 people who would be the co defendants in the case. Only one aspect of the information implicated the applicant. 92. At trial before the Assize Court, the applicant unsuccessfully applied for an investigating judge to question the original anonymous witness. In refusing the request, the Assize Court held that the information had no probative value as such. In the present case it simply constituted information capable of giving fresh impetus or a new slant to the investigation and leading to the independent gathering of lawful evidence. The Assize Court also stated that the court was unaware of the identity of the witness in any event and regardless of the grounds [for maintaining anonymity] relied upon by the investigating authorities it does not appear useful for establishing the truth and would delay the proceedings needlessly (para 12). 93. Before the Chamber, the applicant complained that his article 6 rights had been breached in relation to: (i) the inadequate reasoning given by the jury; and (ii) the reliance on anonymous witnesses. It appears that this is the first reported instance at Strasbourg of the sole or decisive test being linked to the extent to which the jury are obliged to give reasons for their conclusions. In holding that the applicants article 6 rights were breached, the Chamber appears to have considered the issues being interrelated. It may be helpful to quote the summary of the applicants position in full, taken from para 55, testimony The applicant contended that the question of the anonymous witness took on particular significance in his case as it was linked to the preceding complaint concerning the lack of reasoning in the Assize Courts judgment. In order to be able to find that a witness statement had played a decisive role in a persons conviction, it was necessary to know the reasons for the decision, but in the present case none had been given. If the reasoning had been known, it might have been possible to identify the information received anonymously as having been a decisive factor, or the sole factor, in establishing his guilt. 94. The ECtHR did not rule out the use of anonymous statements per se, rather, it stipulated the process by which the informants anonymity should be granted. No such process was followed in the instant case. At para 64 the Court stated, anonymous statements should be examined by a judge who knows of the identity of the witness, has verified the reasons for granting anonymity and is able to express an opinion on the witnesss credibility in order to establish whether there is any animosity between the witness and the accused. (Emphasis added). In relation to whether the evidence of the anonymous informant was sole or 95. decisive, the Court stated that the Government had not produced anything to show that the finding of the applicants guilt was based on other real evidence, on inferences drawn from the examination of other witnesses or on other undisputed facts (para 66). It concluded that the applicants misgivings in relation to the use of the anonymous witness were justified, and accordingly, there was a violation of article 6(1) and (3)(d) of the Convention. Domestic Position 96. See paragraph 13: the statement of an absent anonymous witness would not be admissible. Even if present, anonymity is only permitted under strict conditions and subject to countervailing safeguards for the defendant. In any event, on the basis of this evidence, this case would not have proceeded to trial. Any conviction would have been unsafe. LORD BROWN add a few paragraphs of my own. I am in full agreement with the judgment of Lord Phillips. I wish, however, to These appeals are of the utmost importance. If the Strasbourg case law does indeed establish an inflexible, unqualified principle that any conviction based solely or decisively on evidence adduced from an absent or anonymous witness is necessarily to be condemned as unfair and set aside as contrary to articles 6(1) and 6(3)(d) of the Convention, then the whole domestic scheme for ensuring fair trials the scheme now enshrined (as to hearsay evidence) in the Criminal Justice Act 2003 and (as to anonymous evidence) in the Criminal Evidence (Witness Anonymity) Act 2008 cannot stand and many guilty defendants will have to go free. It is difficult to suppose that the Strasbourg Court has in fact laid down so absolute a principle as this and, indeed, one exception to it, at least, appears to be acknowledged: the fairness of admitting hearsay evidence from a witness absent as a result of the defendants own intimidation. But if this is recognised (and, as others have pointed out, this exception itself involves difficulties of proof) why not recognise other exceptions too provided only and always that the procedures honour the ultimate imperative of a fair trial? That, after all, is the overarching principle for which the great bulk of Strasbourg jurisprudence on article 6 stands. Given, moreover, the recognition of even one exception, what justification can there be for an otherwise absolute principle? It cannot then be said to be mandated simply by the language of article 6(3)(d). Nor, indeed, do I understand the Strasbourg Court ever to have suggested this. Nor can Strasbourg readily be supposed to have intended the sort of practical problems and anomalies identified by the Court of Appeal (paragraphs 61 63 and 68 71) that must inevitably flow from any absolute principle of the kind here contended for. Obviously, the more crucial the evidence is to the proof of guilt, the more scrupulous must the Court be to ensure that it can be fairly adduced and is likely to be reliable. In this connection there can be no harm in using the concept of sole or decisive so long as it is used broadly as it is in the 2008 Act with regard to anonymous witnesses and, indeed, in the control order context where it relates rather to the allegations made against the suspect than the evidence adduced in support. Understood and applied inflexibly, however, the concept would involve insoluble problems of detailed interpretation and application. The better view may therefore be that no such absolute principle emerges from the Strasbourg Courts judgment in Al Khawaja and Tahery v United Kingdom (2009) 49 EHRR 1. In this event the stuffing falls out of these appeals and they must fail: the domestic legislation on hearsay evidence was faithfully followed in the courts below; there was nothing unfair about admitting the relevant statements and the convictions can be seen to be perfectly safe. I recognise, however, the distinct possibility that the Strasbourg Court in Al Khawaja really did intend to lay down an absolute principle along the lines here contended for and it may be, indeed, that the outcome of that very case itself tends to support such a view. In this event the question then arises: what should this Court do? Should we accept and apply this absolute principle with the inevitable result that these appeals must be allowed or should we instead decline to follow the Strasbourg decision in Al Khawaja and in effect join with the United Kingdom Government in inviting the Grand Chamber to overrule it (the Grand Chamber panel having adjourned the UKs request for such a reference until the pronouncement of our decision on these appeals)? I have not the least doubt that the latter course is to be preferred. This case seems to me a very far cry from Secretary of State for the Home Department v AF (No 3) [2009] 3 WLR 74 where the House of Lords was faced with a definitive judgment of the Grand Chamber in A v United Kingdom (2009) 49 EHRR 625 on the very point at issue and where each member of the Committee felt no alternative but to apply it. Lord Rodger put it most succinctly (at para 98): Argentoratum locutum, iudicium finitum Strasbourg has spoken, the case is closed. Moreover not merely was the Strasbourg ruling in A clear and authoritative but, whatever view individual members of the Committee may have taken about it (and it is evident that, whilst many agreed with it, others did not), it expressed an entirely coherent view. The contrasts with the present situation are striking. In the first place, we are faced here not with a Grand Chamber decision but rather with the possible need for one. Moreover, not merely is the Courts ruling in Al Khawaja not as authoritative as a Grand Chamber decision, but it is altogether less clear than was the decision in A. Indeed, as I have already suggested, it is far from certain that Al Khawaja stands for any absolute principle of the sort here contended for. I would reject the appellants argument that not merely is the Courts judgment in Al Khawaja clear but, unlike the position in A, it is supported by a whole stream of consistent earlier Strasbourg case law and consequently more, rather than less, authoritative than the ruling in A. For the reasons fully elaborated by the Court of Appeal and now by Lord Phillips, I cannot accept that the earlier cases support, still less compel, an absolute principle such as Al Khawaja is now said to stand for. Accordingly, in agreement both with Lord Phillips and with the judgment of the Court of Appeal, I too would dismiss these appeals and express the hope that the Grand Chamber will clarify the law upon hearsay evidence and recognise that our domestic legislation is compatible with article 6.
+This is a case about the rights of unmarried fathers to take part in childrens hearings under Part II of the Children (Scotland) Act 1995. It raises two distinct issues. The first concerns the kind of order made in the sheriff court which would be competent to give a father the right to take part in the childrens hearing. The second concerns the compatibility of the present scheme with the rights of the father (and indeed the child) under the European Convention on Human Rights. As the reader will discern, Lord Hope has taken the primary responsibility for dealing with the first issue in paras 2 31, and Lady Hale has taken primary responsibility for the second in paras 32 69. But this is a judgment of the court with which all members agree. The facts The appellant K is an unmarried father. He is the father of a child, L, who was born on 6 May 2002. The childs mother is JR, with whom K formed a relationship in about April 2000. They cohabited, together with Ks daughter and JRs son from previous relationships, and then with their own child L. They registered her birth together on 14 May 2002. Their relationship broke down in either 2003 or 2004, although there were short periods of separation before then. K continued to have contact with L after the separation. She had a medical condition which necessitated overnight stays in hospital, and he continued to be involved with her hospital appointments until at least September 2003. One might have hoped that it would have been possible for K to maintain contact with her thereafter without recourse to the court. But this proved not to be so. In about May 2004 he raised proceedings in the sheriff court at Glasgow under section 11 of the Children (Scotland) Act 1995 (the 1995 Act) seeking full parental responsibilities and parental rights in relation to L and a contact order. The sheriff made an interim contact order on 11 May 2004. Residential contact took place every weekend in terms of that order until December 2005. JR then alleged that L had been sexually abused by K, and Ls contact with K was stopped. The allegation was investigated by the police, who concluded that there was insufficient evidence to support it. But it continued to cast a shadow over Ks attempts to resume contact. K returned to the sheriff court on 21 March 2006 when he asked the sheriff to ordain JR to appear to explain her failure to obtemper the interim contact order. The sheriff declined to do so, and on 5 May 2006 he suspended interim contact and ordered a report from a local solicitor. By then steps had been taken by the local authoritys social work services department to refer Ls case to the Principal Reporter under chapter 3 of Part II of the 1995 Act, on the ground that she was in need of compulsory measures of supervision. The referral was made on 9 March 2006. It was stated that the department were concerned both about Ls welfare, given the level of conflict which had arisen between her parents which might have caused significant trauma to L, and about the fact that JR had made serious allegations about her ex partner K and continued to do so without appearing to be willing to address these issues by engaging with social work services. On 28 June 2006 a childrens hearing was held, which was attended by L and JR. K had been notified and was in the building, but he was not allowed to attend the hearing or to participate in the discussion. This was because he was not regarded as a relevant person within the meaning of section 93(2)(b) of the 1995 Act: see also section 45(8) as to the right of a relevant person to attend all stages of the hearing. It was also noted that there was high level of conflict between him and JR. No decisions were taken and the panel continued the hearing to a later date. A further childrens hearing was held on 20 July 2006. K was again notified, but he did not attend. It can be assumed that he would not have been allowed to attend or participate in this discussion, for the reasons that were given on 28 June 2006. The grounds for referral were read out to JR by the chairman, as required by section 65(4) of the 1995 Act. They included an allegation in terms of section 52(2)(d) of the 1995 Act that L was a child in respect of whom an offence of the kind mentioned in Schedule 1(2) to the Criminal Procedure (Scotland) Act 1995 had been committed by a person who had parental responsibilities in relation to her. This was because JR had stated to a general practitioner at Shettleston Health Centre that L had told her that K had stuck his finger in her and that L had had a vaginal discharge. JR accepted the majority of the statements of facts but denied the grounds for the referral. Because she did not accept the grounds and also because L was too young to understand them, the Principal Reporter was directed to apply to the sheriff for a finding as to whether the grounds for referral were established: see section 65(7) and (9) of the 1995 Act. The matter came before the sheriff on 11 August 2006. The hearing was attended by a solicitor for the Principal Reporter and a solicitor for the curator ad litem to L. K was not entitled to be there as he was not a relevant person within the meaning of section 93(2)(b), and he did not attend. The sheriff was told that the grounds of referral and the facts contained therein, which had been amended following objections by JR, had been accepted by the relevant parties. So he deemed them to be established under section 68(8) and remitted the case as amended to the childrens hearing for consideration and determination under section 68(10) of the 1995 Act. Section 93(2)(b) of the 1995 Act, as amended, provides that, unless the context otherwise requires, the expression relevant person in relation to a child means: (a) any parent enjoying parental responsibilities or parental rights under Part I of this Act; (b) any person in whom parental responsibilities or rights are vested by, under or by virtue of this Act; and (ba) any person in whom parental responsibilities or parental rights are vested by, under or by virtue of a permanence order (as defined in section 80(2) of the Adoption and Children (Scotland) Act 2007 (asp 4); and (c) any person who appears to be a person who ordinarily (and other than by reason only of his employment) has charge of, or control over, the child. This brief narrative is sufficient to identify the issue that lies at the heart of the appeal which has brought the matter before the Supreme Court. Decisions of a childrens hearing or a sheriff under Part II of the 1995 Act are not appealable to this court. Section 51(1) provides that a child or a relevant person may appeal to the sheriff against a decision of a childrens hearing, and section 51(11) provides that an appeal shall lie by way of stated case either on a point of law or in respect of any irregularity in the conduct of the case from any decision of the sheriff to the sheriff principal or to the Court of Session and, with the leave of the sheriff principal, from any decision of the sheriff principal to the Court of Session. It also provides that the decision of the Court of Session in the matter shall be final. But the issue has come before this court by a different route, to which the provisions about appeals under section 40(1) of the Court of Session Act 1988 apply. These proceedings On 4 October 2006 a childrens hearing took place which K was permitted to attend, but not as a relevant person. He told the hearing that he wished to continue to have contact with L, which he had been permitted to do by the sheriff on 18 August 2006 at a contact centre each Saturday. The sheriff had also appointed a curator ad litem to L on 18 August 2006 and assigned 27 October 2006 as a child welfare hearing so that he could give more detailed consideration to the case. At a resumed hearing on 19 October 2006, which K also attended, the childrens hearing felt that it was appropriate to leave contact where it was in terms of the courts order. But it decided to place L on a supervision requirement. On 27 October 2006 the sheriff conducted the child welfare hearing for which the diet had been assigned on 18 August 2006. The hearing was attended by K and JR and their solicitors and by the curator ad litem but not, of course, by the Principal Reporter. Having heard submissions from all parties, the sheriff (Sheriff Totten) pronounced the following interlocutor: The sheriff, having heard the curator ad litem and agents for both parties, grants pursuers motion, no 7/2, in part, conjoined by the curator ad litem despite defenders opposition, and in terms thereof; grants the pursuer parental rights and responsibilities to the extent that he becomes a relevant person in the childrens referral relating to the child [L], born 6 May 2002; continues interim contact previously granted; assigns 9 January 2007 at 11 am as a child welfare hearing to monitor contact. This interlocutor survived unchallenged by the Principal Reporter until March 2009. K was permitted to attend a series of childrens hearings and to participate in the discussion on the assumption that he was a relevant person in terms of the interlocutor. It was not until over two years later that the Principal Reporter questioned its competency. This came about in the following way. It will be recalled that the childrens hearing had originally been content to allow contact between father and child to continue in terms of the sheriffs interlocutor of 18 August 2006. However, on 13 August 2007, the hearing imposed a condition of no contact between them. Initially this was intended as a temporary measure while the social work department assessed the situation in the light of the allegations which had been made as long ago as December 2005. But matters dragged on for more than a year without any progress being made. Eventually, on 19 January 2009 a childrens hearing took place at which K asked the hearing to remove the condition of no contact, arguing that there was no substance in the allegations that had been made against him and that he had a right to see his daughter. The childrens hearing decided to continue the supervision order and directed that K was not to have contact with L. K appealed against this decision to the sheriff under section 51(1) of the 1995 Act. He averred that he was a relevant person for the purposes of those proceedings in terms of section 93(2)(b). The Principal Reporter did not at first challenge this averment. But in her amended answers she averred that K did not fall into any of the categories listed in section 93(2)(b). Faced with the fact that K had obtained an interlocutor from the sheriff which appeared to be inconsistent with that averment, she presented a petition to the Court of Session in March 2009 for suspension of the interlocutor of 27 October 2006 on the ground that it was incompetent. On 27 March 2009 the Lord Ordinary, Lady Stacey, suspended the sheriffs interlocutor of 27 October 2006 ad interim. K then lodged answers to the Principal Reporters petition in which, after averring that the interlocutor was competently made, he averred that it was not competent for the petitioner to seek suspension of it, as she had invited K to the childrens hearings and had involved him in proceedings adverse to him which she was now seeking to prevent him from appealing and had delayed challenging it for several years. He then averred that, esto the interlocutor was incompetent and/or ambiguous as averred by the petitioner, it together with the provisions of the 1995 Act should be read and given effect in a way that was compatible with his rights under articles 6 and 8 of the Convention, read individually and when taken together with article 14. On 14 May 2009 Lady Stacey gave leave to reclaim against her interlocutor of 27 March 2009. The case called before the First Division (the Lord President (Hamilton), Lady Paton and Lord Carloway) for a hearing on the summar roll on 17 and 18 November 2009. On 21 January 2010 the First Division refused Ks reclaiming motion and his application for a declaration that section 93(2)(b) of the 1995 Act was incompatible with Ks rights under articles 6, 8 and 14 of the European Convention on Human Rights. It granted decree for suspension of the interlocutor of 27 October 2006 in terms of the prayer of the petition. The opinion of the court was delivered by Lord Carloway. It is against that interlocutor that K now appeals to this court. The issues The parties are agreed that the issues arising in this appeal are as follows: (i) whether K was entitled to participate in childrens hearings by virtue of the interlocutor of 27 October 2006, or whether that order was incompetently pronounced and was therefore appropriately suspended by the Court of Session; (ii) whether the operation of section 93(2)(b) of the 1995 Act in defining persons entitled to participate in a childrens hearing is such as to be incompatible with Ks rights under articles 6, 8 or 14 of the Convention; and (iii) if so, whether such incompatibility can be addressed by reading down section 93(2)(b) of the 1995 Act under section 3 of the Human Rights Act 1998 or whether there ought to be a declaration of incompatibility. Underlying these three questions there is a fundamental issue about fairness. It is most clearly demonstrated by what happened on 20 July 2006 when, in Ks absence, the childrens hearing considered whether the grounds of referral were accepted and by what happened on 11 August 2006 when, again in Ks absence, the sheriff held that the grounds of referral were established. Those grounds were based in part on allegations about Ks conduct which, if found to be established, were bound to affect the way Ls case was dealt with from then on, especially with regard to issues about whether there should be contact between her and K. Yet K was given no opportunity to be heard so that he could refute the allegations. This strikes us as quite contrary to one of fundamental rules of natural justice, the right to be heard. The fundamental issue of fairness is also demonstrated by the decision of the childrens hearing to deny all contact between father and child. That requirement effectively superseded any order for contact which had been made by the sheriff court. Yet if the Principal Reporter is correct, the father had no right to appear in the childrens hearing to contest the requirement or to appeal against it to the sheriff court, unless and until he got an appropriate order in separate proceedings before the sheriff court. That too strikes us as quite contrary to one of the fundamental rules of natural justice. A childs mother has parental responsibilities and parental rights in relation to her child, whether or not she is or has been married to the childs father: section 3(1)(a) of the 1995 Act. As such, she will always be a relevant person within the meaning of section 93(2)(b)(a) (unless and until she is deprived of all the parental responsibilities and parental rights by order of a court). By section 23 of the Family Law (Scotland) Act 2006 it was provided that section 3(1) of the 1995 Act be amended to the effect that unmarried fathers who are registered as the childs father under section 18 of the Registration of Births, Deaths and Marriages (Scotland) Act 1965 or the equivalent enactments in England and Wales or Northern Ireland were automatically to have parental responsibilities and parental rights in relation to the child. So they too will always be a relevant person within the meaning of section 93(2)(b)(a). But by section 23(4) of the 2006 Act it was provided that the amendment to section 3(1) of the 1995 Act was not to confer parental responsibilities or parental rights on a man who was registered as the childs father jointly with the mother before the coming into force of the amendment. K was registered as Ls father on 14 May 2002, shortly after she was born. But, as the amendment is not retrospective, it does not apply to him. An unmarried father can acquire parental responsibilities and parental rights by agreement with the childs mother under section 4 of the 1995 Act. In Ks case, once his relationship with JR had broken down, this was unlikely to be possible. The only way he could acquire them was by applying to the court for a grant of those rights under section 11 of the 1995 Act, which is what he did in May 2004, as we pointed out in para 2. The right to be heard is not, of course, an absolute right that must be made available in all circumstances. In Russell v Duke of Norfolk [1949] 1 All ER 109, 118 Tucker LJ said: There are, in my view, no words which are of universal application to every kind of inquiry and every kind of domestic tribunal. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject matter that is being dealt with, and so forth. These observations were approved in Ceylon University v Fernando [1960] 1 WLR 223 and in In re K (Infants) [1965] AC 201. The point was made in the latter case that the requirement had to yield to the paramount consideration, which was the welfare of the children. No doubt there will be circumstances where a childrens hearing may think it necessary, in the interests of the child, to exclude a relevant person from the hearing under section 46 of the 1995 Act: see further in para 46 below. In this case however, where the issue is whether allegations which profoundly affect the relationship between parent and child have been established, the inequality of treatment between the mother and unmarried fathers who were registered after 4 May 2006 on the one hand and unmarried fathers in Ks position on the other is striking. The question whether the amendment should apply to fathers who had already registered was considered by the Scottish Executive prior to its enactment. It preferred to give the benefit of it only to unmarried fathers who registered the birth after the legislation came into force, on the ground that the law should be clear, precise and predictable: see Parents and Children (Scottish Executive, 2000), paras 2.16 2.18. The majority of those who responded to the consultation shared this view: Family Matters, Improving Family Life in Scotland (Scottish Executive, 2004), p 15. It is understandable that the Scottish Parliament would not wish retrospectively to confer all the parental responsibilities and parental rights upon all registered unmarried fathers irrespective of their actual relationship with the child. But in the present context it is very hard to see how the difference in treatment under Part II of the 1995 Act can be justified. Issue (i): the sheriff's interlocutor The operative part of the interlocutor of 27 October 2006 falls into three parts: (i) the granting to K of parental rights and responsibilities to the extent that he becomes a relevant person in the childrens referral relating to the child [L]; (ii) the continuation of the interim contact previously granted; and (iii) the assigning of a further diet as a child welfare hearing to monitor contact. It is the first part only that is said by the Principal Reporter to be incompetent. The First Divisions discussion of this issue begins by making the point, with which no one would disagree, that interlocutors should be unambiguous and that they must mean what they say: para 58. It is then said that there is no principle of reading interlocutors down in a way which would make them compatible with Convention rights. It is true that the direction in section 3 of the Human Rights Act 1998 deals only with the way primary and subordinate legislation should be read and given effect. But a court is a public authority, and if an interlocutor is capable of being read and given effect in a way which is compatible with Convention rights that way of construing it is to be preferred to one that does not do so. As the discussion proceeds, however, this apparently rather uncompromising approach gives way to a recognition that if the problem was just a lack of specification that might not, in itself, render the interlocutor incompetent: para 60. The question to which the discussion then turns is whether it was open to the sheriff to make an order under section 11(1) of the 1995 Act which did no more than grant to the father a right to be heard at a childrens hearing: para 65. It is pointed out that such a right is not a defined responsibility or right in terms of the statute. Reference is made to the reasoning of Sheriff Principal Dunlop QC in T v A 2001 SCLR 647, 2001 GWD 15 567 in which he said that the court should not grant an order under section 11 simply because the father would thereby become entitled to appear at a childrens hearing, and to observations to the same effect by Sheriff BA Kerr QC in Greenhorn v Hamilton, unreported, 2 March 1999. This part of the discussion concludes at the end of para 66 with these words: The scheme of the Act is that a father must first persuade the court on the merits, applying the overarching principles, of imposing upon him the defined parental responsibilities, or one or more of them. Success in such an application will make the father a relevant person. We see no reason to disagree with this observation, although we would include the possibility of the father being given the parental rights, or one or more of them, as well: see section 11(2)(b). The point that the sheriff would have misdirected himself if he thought that it was open to him simply to grant a right to be heard at a childrens hearing was not, in the end, the reason why the First Division held that the interlocutor was incompetent. There are indications in paras 68 70 that it might have considered altering the interlocutor by suspending it in part or substituting different words, had it not been for the fact that a proof had been set down in the sheriff court to take place in less than two months time. The basis of the decision that the interlocutor is incompetent is to be found in para 67, where it is said that, when he restricted himself to the limited question of whether the fathers presence would be of assistance to the hearing in determining the appropriate order to make in the interests of the childs welfare, the sheriff did not address the three overarching principles: see section 11(7) of the 1995 Act. This point is summarised at the end of para 67 in these words: In failing to form a view, by applying the overarching principles, the sheriff erred in law. He acted otherwise than within the powers conferred by the Act (section 11(7)) and thus in an incompetent manner. If there had been some evidence to show that the sheriff failed to address his mind to the overarching principles, there would have been something to be said for the view that he had misdirected himself in law. This would have provided a ground for the parties to appeal, but of course the Principal Reporter was not a party to the proceedings in the sheriff court. Her only method of challenge was by the proceedings which are now before us, but she did not bring these timeously. Instead, K attended childrens hearings and was involved in the discussion on the basis of the interlocutor in the reporters presence without objection for more than two years. In McDougall v Galt (1863) 1 M 1012, 1014 Lord Ardmillan said that if there is any point settled in the courts practice, it is that when a judgment has been implemented it cannot be reviewed by suspension: see also Mackay, Practice of the Court of Session (1877 1879), vol ii, p 483; Maclaren, Court of Session Practice (1916), p 153. We very much doubt whether suspension was an appropriate remedy in the events that happened in this case. But, as this point was not developed in argument and there are more fundamental objections to the First Divisions decision, we shall not say any more about it. First there are the questions that have been raised about the terms of the interlocutor and whether it was one which the sheriff had power to grant under section 11(1) of the 1995 Act. The critical phrase in the interlocutor is that part of it which is introduced by the words to the extent that: viz: grants the pursuer parental rights and responsibilities to the extent that he becomes a relevant person in the childrens referral relating to [L]. Section 11(1) provides that an order may be made under that subsection in relation to parental responsibilities and parental rights. Section 11(2) provides that the court may make such order under subsection (1) as it thinks fit and that, without prejudice to the generality of that subsection, it may in particular make any of the orders that it then lists. These include: (b) an order (i) imposing upon a person (provided he is at least sixteen years of age or is a parent of the child) such responsibilities; and (ii) giving that person such rights; An order giving a person the right to participate in a childrens referral is not one of those listed in section 11(2). It is not all that difficult, however, to understand what the sheriff was seeking to achieve. One of the parental responsibilities listed in section 1(1) of the 1995 Act is the responsibility to safeguard and promote the childs health, development and welfare. Among the parental rights that are listed in section 2(1) to enable the parent to fulfil his parental responsibilities is the right if the child is not living with him, to maintain personal relations and direct contact with the child on a regular basis. The effect of the referral was to subject the exercise of parental responsibilities and parental rights to the control and supervision of the childrens hearing: see sections 69 and 70 of the 1995 Act. But the participation of those listed in section 93(2)(b) as relevant persons is an essential part of the exercise. That is why such a person has the right, and indeed the duty unless the hearing are satisfied that it would be unreasonable to require his attendance, to attend. K was a person with whom L was to continue to have interim contact, as the sheriff ordered in part (ii) of his interlocutor (see para 19, above). The effect of the referral was that continuation of this contact was subject to the views of the childrens hearing. K needed to be given the parental right to maintain personal relations with L so that he could participate in the discussions which were to take place there. He also needed to be made subject to the parental responsibility to safeguard and promote Ls health, development and welfare so that the hearing could be confident that he would contribute to a discussion of those aspects of Ls well being responsibly. The problem therefore lies in the wording of the interlocutor rather than what, on a sensible reading of it, the sheriff was seeking to achieve. Miss Wise, very helpfully, provided some suggestions as to how the interlocutor might be re worded so as to bring it within the scope of section 11(1). The first of these suggestions was as follows: makes an order ad interim in terms of section 11(2)(b) of the Children (Scotland) Act 1995 imposing upon the pursuer the parental responsibility in respect of the child, X, to safeguard and promote the said childs health, development and welfare but restricts the exercise of said parental responsibility to participation in proceedings before the childrens hearing in respect of said child. Another suggestion would have imposed upon the pursuer the parental responsibilities and given him the parental rights too, but would have limited their exercise in the same way. The point that these suggestions illustrate is that the defect in the sheriffs interlocutor is one of specification, not one of substance. He did not refer to section 1(1) or 2(1) or to section 11(2), and he did not spell out in terms those parental rights and parental responsibilities that were relevant in Ks case. Nor did he refer in terms to participation in the childrens hearing as setting the limits within which the parental responsibilities and parental rights could be exercised. It would have been better if he had. But it would be going too far to hold that his interlocutor was incompetent because he did not do so. His wording appears not to have given rise to any misunderstanding or difficulty until the Principal Reporter sought to challenge the interlocutor in these proceedings. It is true, as the First Division said in para 58 of its opinion, that interlocutors should be unambiguous and not capable of alternative constructions. But it has not been suggested that this interlocutor, less than perfect though it may be, suffers from an ambiguity which rendered its application in Ks case uncertain or impracticable. We would therefore reject this ground, which was the one relied on by the Principal Reporter, for holding that the interlocutor of 27 October 2006 was incompetent. What basis is there, then, for the conclusion that the sheriff did not address his mind to the overarching principles when he pronounced his interlocutor? There is nothing in the wording of the interlocutor itself which suggests this. If anything, the second and third parts of it (see para 19, above) suggest the contrary. He decided to continue the interim contact previously granted and to assign a further diet as a child welfare hearing to monitor contact. The first of these orders was an order of the kind contemplated by section 11(2)(d) of the 1995 Act. So when the sheriff was considering whether or not to make it under section 11(1), he was required by section 11(7) to have regard to the overarching principles. The same applied to his decision to appoint a hearing to monitor contact, as this was to assist him in deciding whether or not to make any further orders about contact. The fact that he made these further orders, to the competency of which no objection has been taken, indicates that the sheriff had the overarching principles in mind during the hearing on 27 October 2006. This would not be at all surprising, as Sheriff Totten had been designated for dealing with cases of this kind and was well equipped for doing so by training and experience. Counsel for the curator ad litem, Miss Clark, informed the court that the sheriff was invited at the hearing to address the section 11(7) principles when he was considering whether to make any order under section 11(1) of the 1995 Act. He was asked to consider the childs best interests as paramount and to consider whether it would better that an order be made than that no order be made. She submitted that it was to be inferred that the sheriff, who had heard these submissions, determined that it was in Ls best interests that K should participate in the decision making process and, applying the section 11(7) principles, that it was better for the child that an order be made. Miss Wise QC for the Principal Reporter said that she did not support the reasoning in para 67 of the First Divisions judgment. Her point was that the right which the sheriff appeared to have granted was one which he had no power to grant under section 11(1). It was the nature of the order he made that she objected to, not any defect in the process of reasoning that led up to it. We do not think that there was a sound basis for the First Divisions view that the sheriff failed to apply the overarching principles. All the indications are to the contrary. If suspension was an appropriate remedy, which we doubt, we think that there were no grounds for suspending this interlocutor because this very experienced sheriff did not apply his mind to the overarching principles. It would require clear evidence to justify the conclusion that he failed to address his mind to them. Evidence of that kind is completely lacking. Indeed, such evidence as there is suggests that he had these principles in mind throughout the hearing. In any event, failure to apply the correct principles when making an order, while it may well be a ground of appeal, would not normally render the order incompetent. We would therefore reject this ground also for holding that the interlocutor was incompetent. Issue (ii): articles 6, 8 and 14 of the Convention In his answers to the petition K raised this issue on an esto basis only. It was put forward as an alternative argument, which would require to be addressed only if the court were to hold that the interlocutor of 27 October 2006 was incompetent. The First Division had to deal with the issue as it held that the interlocutor was incompetent. It held that there was no incompatibility with Ks Convention rights: paras 78 81. As we disagree with its finding that the interlocutor was incompetent, it follows that the contingency to which Ks averments were addressed has not arisen. But as a public authority the court has its own duty to act compatibly with the Convention rights. If we take the view that these have been infringed in the case before us, that duty requires us to say so. The issue also raises a point of general public importance which is particularly relevant at the present time. The Scottish Parliament is currently examining the Childrens Hearings (Scotland) Bill, which deals with the standing of unmarried fathers in clauses 80(3) and 185(1). The Parliament is obliged to legislate compatibly with the Convention rights. Unless an unmarried father in Ks position can qualify as a relevant person he is at a severe disadvantage from the outset because he has no right to be heard either by the childrens hearing, or by the sheriff on a referral, if allegations are made against him. It was said that he could apply to the sheriff for an order under section 11(1) so that this obstacle could be overcome very quickly. However, both the appellant and his daughters curator ad litem argue that obtaining an appropriate order from the sheriff court will not always be enough to comply with the Convention rights of either father or child and, indeed, it was not enough in this case. Childrens hearings often have to act in an emergency. Vital decisions may be made which will determine how the child lives for the foreseeable future. It is in the interests of the child as well as the father that he should not be absent at this crucial stage. As this case clearly demonstrates, the grounds for referral may be found to be established, with or without a contest, without any involvement from one of the people most closely affected. Unpicking these actions and returning to the status quo ante may be well nigh impossible. Furthermore, beginning formal proceedings in the sheriff court may be beyond the means and the resources of the father. In todays climate, legal aid cannot be guaranteed. Speedy decisions also cannot be guaranteed, especially if the claim is contested. As Lord Rodger vividly put it during the hearing, the train may have left the station while the father is still waiting at the barrier. Requiring this initial filter is said to breach the Convention rights of both father and child under article 8; of the father under article 14 taken with article 8; and of the father under article 6. Article 8 The relevant portions of article 8 read 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 . for the protection of health or morals, or for the protection of the rights and freedoms of others. First, therefore, it must be established that father and child have a family life together. The Strasbourg Court has consistently expressed the view that the natural connection between mother and child at birth amounts to family life, which subsequent events could only break in exceptional circumstances: see Berrehab v The Netherlands (1988) 11 EHRR 322; Gl v Switzerland (1996) 22 EHRR 93. Fathers will normally have family life with their children if they are married to or living with the mother and child: see, for example, Johnston v Ireland (1986) 9 EHRR 203, para 55; Keegan v Ireland (1994) 18 EHRR 342, para 44. But cohabitation is not essential; it will depend upon the relationship established and the degree of commitment shown. The principles were summed up like this in Lebbink v The Netherlands (2004) 40 EHRR 417, at para 35: 35. The Court recalls that the notion of family life . is not confined to marriage based relationships and may encompass other de facto family ties where the parties are living together out of wedlock. A child born out of such a relationship is ipso iure part of that family unit from the moment and by the very fact of its birth. Thus there exists between the child and the parents a relationship amounting to family life [referring to Keegan v Ireland (1994) 18 EHRR 342, para 44; Elsholz v Germany [GC] (2000) 34 EHRR 1412, para 43; and Yousef v The Netherlands (2003) 36 EHRR 345, para 51]. 36. Although, as a rule, cohabitation may be a requirement for such a relationship, exceptionally other factors may also serve to demonstrate that a relationship has sufficient constancy to create de facto family ties [referring to Kroon v TheNetherlands (1995) 19 EHRR 263, para 30]. The existence or non existence of family life for the purposes of article 8 is essentially a question of fact depending upon the real existence in practice of close personal ties [referring to K and T v Finland (2000) 31 EHRR 484, para 150]. Where it concerns a potential relationship which could develop between a child born out of wedlock and its natural father, relevant factors include the nature of the relationship between the natural parents and the demonstrable interest in and commitment by the father to the child both before and after its birth [referring to Nylund v Finland , (Application No 27110/95), (unreported) decision of 29 December 1999] [emphasis supplied]. However, mere biology is not enough: The court does not agree with the applicant that a mere biological kinship, without any further legal or factual elements indicating the existence of a close personal relationship, should be regarded as sufficient to attract the protection of article 8. 37. Nevertheless, in that case, although the parents had never lived together and the father had not sought to recognise the child, there had been a real relationship between the parents, the father had been present at the childs birth, had visited regularly, even changed her nappy a few times and babysat once or twice, and was in touch with the mother about the childs impaired hearing. This was enough to establish family life between father and child and the Dutch courts should have entertained his application for contact. Family members other than biological parents may also enjoy family life with a child. This dates back at least as far as the seminal case of Marckz v Belgium (1979) 2 EHRR 330, at para 45, where the Court stated its opinion that family life within the meaning of article 8, includes at least the ties between near relatives, for instance, those between grandparents and grandchildren, since such relatives may play a considerable part in family life (see also, for example, Bronda v Italy (1998) 33 EHRR 81, para 50; GHB v United Kingdom [2000] EHRLR 545; L v Finland (2000) 31 EHRR 737, para 101). In X, Y and Z v United Kingdom (1997) 24 EHRR 143, the Court recognised that a female to male transsexual, his partner and their child conceived by donor insemination were a family. And in Jucius and Juciuvien v Lithuania (2008) 49 EHRR 70, the Court held that there was family life between a maternal uncle and aunt and two orphaned children who had lived with them for three years. But, of course, whether family life has been established will depend upon the facts of each case. Furthermore, it may be harder to establish an interference with these wider family ties and such interferences may be easier to justify than interferences with the core family unit. In this case, it is not in dispute that this father did enjoy family life with his child. He (and his daughter from a previous relationship) were living with her mother when she was born. The parents registered the birth together. They had lived as one household after the childs birth. The father was heavily involved with her medical treatment in hospital. It is not entirely clear when he separated from the mother but he had regular contact with his daughter after that. In May 2004 he applied to the sheriff court for parental responsibilities and parental rights and a contact order. An interim order for weekly overnight stays was made and contact took place in accordance with that order until December 2005. The father has been pursuing contact and a parental relationship with his daughter ever since. Next, it must be shown that a public authority has interfered with the right to respect for this family life. This too is not in dispute. Any court order which regulates or restricts the mutual enjoyment of each others company which constitutes a fundamental element of family life will amount to an interference: see, for example, Johansen v Norway (1996) 23 EHRR 33, para 52; L v Finland, above, para 101. The decision of a childrens hearing to impose a supervision requirement empowering a public authority to intervene in the childs life will constitute an interference with the family life of the child and the parent with whom she lives and is likely also to interfere with the family life of the child and her other parent. Manifestly an order that they were not to have contact with one another did so. But it goes further than this, because there are positive procedural obligations inherent in the right to respect for family life. Parents must be enabled to play a proper part in the decision making process before the authorities interfere in their family life with their children. This has been established time and time again in the Strasbourg jurisprudence, dating back to W v United Kingdom (1987) 10 EHRR 29, at para 64: 64. In the Courts view, what therefore has to be determined is whether, having regard to the particular circumstances of the case and notably the serious nature of the decisions to be taken, the parents have been involved in the decision making process, seen as a whole, to a degree sufficient to provide them with the requisite protection of their interests. If they have not, there will have been a failure to respect their family life and the interference resulting from the decision will not be capable of being regarded as necessary within the meaning of article 8. That case was concerned with the local authoritys decision making processes, at a time when the English courts had no jurisdiction to make orders relating to contact between parents and their children in care. But the same obviously applies to judicial decisions such as those made by a childrens hearing. In a whole series of cases involving unmarried fathers claims for contact the Strasbourg Court has examined whether the procedural steps taken by the national court were enough to safeguard his interests. Thus in Elsholz v Germany (2000) 34 EHRR 1412, at para 52, the Court, sitting as a Grand Chamber, repeated the principle derived from W v United Kingdom and concluded, at para 53, that the refusal of the district court to order an independent psychological assessment of the child and the absence of an oral hearing before the regional court revealed an insufficient involvement of the applicant in the decision making process and thus that his rights under article 8 had been violated. Two further points are apparent from the Strasbourg jurisprudence, exemplified by Elsholz, at para 49. Thus, while the Court is prepared to allow the authorities a wide margin of appreciation in decisions about residence and taking a child into care, a stricter scrutiny is called for in respect of any further limitations, such as restrictions placed by those authorities on parental rights of access, and of any legal safeguards designed to secure an effective protection of the right of parents and children to respect for their family life. This reflects Strasbourgs understanding that it is one thing for parents to have to live separately from their children after all, it is an inevitable result of parental separation that they cannot be together all the time but another thing to restrict or bring to an end the contact between them. It also reflects Strasbourgs pre occupation with ensuring that there are sufficient procedural safeguards where fundamental rights are in issue. In case after case, including for example, McMichael v United Kingdom (1995) 20 EHRR 205, and Jucius and Juciuvien v Lithuania, above, the court has found violations of article 8, not because of the substance of the decision taken by the national authorities but because the family were not sufficiently involved in the decision making process. The point of those procedural safeguards is to ensure that the interference is necessary in a democratic society; in other words, that it can be justified as a proportionate response to a legitimate aim; or, as the Court normally puts it when considering the substance of the interference, that the reasons for the interference are relevant and sufficient: see, for example, K and T v Finland (2000) 31 EHRR 484, at para 135. Next, therefore, it must be asked whether the interference in the procedural rights of father and child is necessary in a democratic society. The justifications for interfering with family life need to be kept separate from the justifications for excluding the father from the decision making process at a crucial stage. Such justification as there is will fall within the overall aim of protecting health or morals and the rights and freedoms of others, in this case, the interests of the child concerned. But the child as well as her father has an interest in the full participation of her father in important decisions about her future. The childrens hearing has to have the best and most accurate information that it can in order to make the best decisions about the child. Everyone is deprived of that information if findings of fact are made by agreement without the participation of the very person whose conduct is in question. If decisions are then made on an inaccurate factual basis the child is doubly let down. Not only is the everyday course of her life altered but she may be led to believe bad things about an important person in her life. No child should be brought up to believe that she has been abused if in fact she has not, any more than any child should be persuaded by the adult world that she has not been abused when in fact she has. So what are the reasons given for excluding a father from the childrens hearings process unless and until he secures a parental responsibilities and parental rights order from the sheriff court? The only justification advanced is that these are meant to be informal round table discussions with only the people present who can make a meaningful contribution to the debate. It is important to restrict the numbers involved to those whose participation is indeed necessary. But it is difficult to see how excluding a father such as this can possibly be proportionate to that aim. The 2006 Act (see para 16 above) provides that all fathers registered since 4 May 2006 are entitled to be present irrespective of the strength of their family life with the child, of whether the decisions of the childrens hearing are likely to interfere with that family life, and of whether they have a relevant contribution to make to the issues in debate. Again, it is difficult to see why the exclusion of fathers registered before that date can possibly be justified. But registration is not always a reliable guide to whether or not the father has established family life with the child. For one thing, it depends upon the co operation of the mother. Furthermore, when the alleged grounds for referring the child for compulsory measures of intervention consist almost entirely of allegations against the father, it cannot possibly be legitimate to exclude him for the purpose of restricting the numbers. He has to be there so that the grounds for interfering in the childs life, let alone in his, can be properly established. If they are established, he has to be there so that sensible and proportionate measures can be taken to protect the child. Of course, the child herself has both the right and the duty to attend the hearing: 1995 Act, section 45(1). The hearing may release the child from that obligation if satisfied that it would be detrimental to the interests of the child for her to be present, but the child still has the right to be there if she wishes: 1995 Act, section 45(2); and see Childrens Hearings (Scotland) Rules 1996, rule 6. In some cases, it could be suggested that the presence of the father would be detrimental to the child. But the same is true of any relevant person who has a right to be present. The Act provides that the hearing may exclude a relevant person, and/or his representative, but only for so long as it is necessary in the interests of the child where they are satisfied that they must do so in order to obtain the views of the child or that the presence of the person in question is causing or likely to cause significant distress to the child: see 1995 Act, section 46(1). It has not been suggested that the risk of silencing or causing distress to the child is a good reason for excluding a father such as this. However, some importance was attached to the fact that the attendance of a relevant person is not only a right but also an obligation, backed up by a modest criminal sanction for failure to attend: see 1995 Act, section 45(8) and (9). It was suggested that it would be wrong to impose such an obligation upon unmarried fathers who might have had nothing at all to do with the child. But the obligation only exists unless the hearing are satisfied that it would be unreasonable to require his attendance or that his attendance is unnecessary for the proper consideration of the case: see section 45(8)(b). In those circumstances, he, like the child, must be informed of the hearing and of his right to attend it but that he is not obliged to do so: see 1996 Rules, rule 7(2). None of these very sensible provisions, therefore, can be any obstacle to the involvement of a parent who wishes to be there. In conclusion, therefore, a parent (or other person) whose family life with the child is at risk in the proceedings must be afforded a proper opportunity to take part in the decision making process. As currently constituted the childrens hearing system violated the article 8 rights of this father (and indeed of his child) and risks violating the rights of others in the same situation. Article 14 Article 14 prohibits discrimination in the enjoyment of the Convention rights on any ground such as, inter alia, birth or other status. It is not necessary to show that one of the Convention rights has been violated as long as the facts fall within the ambit of one of those rights. In this case, it is not in dispute that the facts fall within the ambit of article 8. As there has been a violation of the rights of both father and child under article 8, it is not strictly necessary to consider article 14. However, the matter was fully canvassed before us and it may be helpful to offer some observations upon it and in particular upon the case of McMichael v United Kingdom, on which so much weight was placed by the respondent and the Lord Advocate. As the Grand Chamber observed in Sommerfeld v Germany (2003) 38 EHRR 756, para 92, it is well established that a difference in treatment is discriminatory for the purposes of article 14 if it has no objective and reasonable justification, that is if it does not pursue a legitimate aim or if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be realised. The Grand Chamber continued, at para 93: The court has already held that very weighty reasons need to be put forward before a difference in treatment on the ground of birth out of or within wedlock can be regarded as compatible with the Convention (see Mazurek v France, 1 February 2000, at para 49; and Camp v The Netherlands (2000) 34 EHRR 1446, at paras 37 38). The same is true for a difference in the treatment of the father of a child born of a relationship where the parties were living together out of wedlock as compared with the father of a child born of a marriage based relationship. See also Sahin v Germany [2003] 2 FLR 671, paras 93 and 94. However, the Court has consistently held that the wide variations in the circumstances of unmarried parents may justify an initial attribution of parental authority to the mother alone: see, for example, Zaunegger v Germany (2009) 50 EHRR 952, at paras 55 56. But when it comes to later disputes between the parents about residence or contact, the Court has also held that differences in treatment between married and unmarried fathers cannot be justified. This has been applied to matters of substance, such as requiring the mothers consent to joint custody (as in Zaunegger v Germany) or placing a heavier burden on a father seeking access (as in Sahin v Germany). Where matters of procedure are concerned, the court has not drawn any distinction between the procedural protection which must be afforded to married and unmarried fathers against interference with their family lives with their children (as in Elsholz v Germany, Sahin v Germany; Sommerfeld v Germany). It is significant that in the case of McMichael v United Kingdom (1995) 20 EHRR 205, which concerned unmarried parents in the childrens hearing system, the article 8 rights of each parent were held to have been violated by their inability to have sight of important documents before the childrens hearing: see para 92. The fathers complaint of a breach of article 14 was rejected. But it is clear that the main focus of that complaint was against his status as a natural father in Scots law and it is only that complaint which the Court addressed in holding that the initial allocation of parental authority was justified by the aim of distinguishing meritorious from unmeritorious unmarried fathers: see para 98. Although the father also complained that he had no legal rights to participate in the care proceedings (see para 94), the court did not address this; this is scarcely surprising as the father had in fact participated throughout the proceedings as representative of the mother. The issue which we now face is the discrimination between married and unmarried fathers, and indeed between mothers and unmarried fathers, in their rights to participate in the childrens hearing when the parents are in conflict. The series of German cases, upholding the right of any father who enjoys family life with his child to participate in important decisions about that childs future, is therefore much more in point than McMichael. We would not, therefore, be disposed to find that the automatic imposition of a burdensome procedural hurdle before some unmarried fathers can become involved in vital decisions about their childrens lives could be justified under article 14. The case law suggests the opposite: that the initial allocation of parental rights and responsibilities to mothers alone can be justified because of the wide variations in the actual relationships between unmarried fathers and their children; but that if an unmarried father has in fact established family life with his child, it is no more justifiable to interfere in that relationship without proper procedural safeguards than it is justifiable to interfere in the relationship between a married father and his child. If this analysis be correct, a complaint under article 14 would succeed if a complaint under article 8 would succeed and would fail if a complaint under article 8 would fail. It would be different, of course, if an unmarried father had been unable to establish family life with his child. Then it would be necessary to examine whether the obstacles which either the law or the mother had put in the way of his doing so were unjustifiably discriminatory. Elsewhere in the United Kingdom, it has not been thought either necessary or justifiable to place any obstacles in the way of an unmarried father who wishes to bring or participate in legal proceedings about his child. But that is not this case and we need not consider it further. Article 6 The relevant portion of article 6(1) reads as follows: In the determination of his civil rights and obligations . , everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. Is the childrens hearing the determination of the fathers civil rights and obligations? On the one hand, it may be said that he has no parental rights unless and until a court gives him some. However, it can scarcely be said that a person who does not currently have a civil right, but who is able to go to court to acquire one, is not entitled to a fair hearing of that claim under article 6(1). The courts decision will determine whether or not he has that right. That must apply to the determination of a claim under section 11 of the 1995 Act. But does it also apply to the determination of a childrens hearing which might for the time being override that claim? If it did, all would depend upon who amongst the people not currently holding any of the parental rights or parental responsibilities, or the benefit of a court order relating to the child, was entitled to bring a claim for an order under section 11 of the 1995 Act. The court has power to make such orders in the relevant circumstances: see section 11(1). The relevant circumstances are either (a) that an application has been made by someone who is entitled to do so or (b) that the court thinks that it should make an order of its own motion. Those entitled to apply are (ii) someone who currently has parental responsibilities or parental rights in relation to the child; (iii) someone who has had parental responsibilities or parental rights but no longer does so; and (i) anyone else who claims an interest. It would be absurd to suggest that the childrens hearing is the determination of the civil rights of any person who might at some future date claim an interest in the child for the purpose of making an application under section 11. The childrens hearing is not standing in the way of their making a claim to the sheriff court. If the circumstances are right, and the over arching principles permit, the sheriff court can make an order which would entitle that person to take part in the childrens hearing. It is different, however, if a person has established family life with the child with which the decision of the childrens hearing may interfere. As Lord Nicholls of Birkenhead pointed out in In re S (Minors) (Care Order: Implementation of Care Plan) [2002] UKHL 10, [2002] 2 AC 291, at para 71, all the Convention rights are now civil rights in United Kingdom law as a result of the Human Rights Act 1998. The position now is therefore different from that in McMichael. Thus the question of whether the childrens hearing is the determination of a civil right brings us back to the question of whether the decision may interfere with established family life between a person and the child. Once again, therefore, if this analysis be correct, article 6 adds nothing to the established position under article 8. It is fair to say that Mrs Janys Scott QC, on behalf of the father, did not put article 6 at the forefront of her argument. Miss Clark, for the childs curator ad litem, concentrated solely on article 8. Issue (iii): how can the incompatibility be cured? If it be right that the present position violates the article 8 rights of some unmarried fathers and indeed of some other people and their children, how can it be cured? None of the parties before this court, and in particular the Lord Advocate whose principal interest this was, wished us to make a declaration of incompatibility if this could be avoided. Under section 3(1) of the Human Rights Act 1998, all legislation must be read and given effect in a way which is compatible with the Convention rights. As Lord Steyn said in Ghaidan v Godin Mendoza [2004] UKHL 30, [2004] 2 AC 557, para 50, interpretation under section 3(1) is the primary remedy and resort to making a declaration of incompatibility must always be an exceptional course. The question is whether we can be confident that the words that are needed are consistent with what the legislation was seeking to achieve. There is, of course, an important distinction between interpretation and amendment. As Lord Rodger explained in Ghaidan v Godin Mendoza, at para 121: If the court implies words that are consistent with the scheme of the legislation but necessary to make it compatible with Convention rights, it is simply performing the duty which Parliament has imposed on it and on others. It is reading the legislation in a way that draws out the full implications of its terms and of the Convention rights. And, by its very nature, an implication will go with the grain of the legislation. By contrast, using a Convention right to read in words that are inconsistent with the scheme of the legislation or with its essential principles as disclosed by its provisions does not involve any form of interpretation, by implication or otherwise. It falls on the wrong side of the boundary between interpretation and amendment of the statute. The provision in question is the definition of a relevant person contained in section 93(2)(b). It is worth setting out once more the four different kinds of person listed: (a) any parent enjoying parental responsibilities or parental rights under Part I of this Act; (b) any person in whom parental responsibilities or rights are vested by, under or by virtue of this Act; and (ba) any person in whom parental responsibilities or parental rights are vested by, under or by virtue of a permanence order (as defined in section 80(2) of the Adoption and Children (Scotland) Act 2007 (asp 4); and (c) any person who appears to be a person who ordinarily (and other than by reason only of his employment) has charge of, or control over, the child. It will be seen, therefore, that (a) includes all mothers unless and until they are deprived of all parental rights and responsibilities by order of a court; all fathers who are married to the childs mother at conception or subsequently, again unless and until deprived of all parental rights and responsibilities by order of a court; all fathers who have been put in the same position as a married father by an agreement with the mother or (which amounts to much the same thing) by having been registered as the father of the child after 4 May 2006; and any other father for so long as he has been given any of the parental responsibilities or parental rights by order of a court (it is not suggested that paragraph (a) requires such a father to have been given all the parental responsibilities and parental rights). As a result of the decision of the Extra Division in Authority Reporter v S [2010] CSIH 45, 2010 SLT 765, it also includes any parent enjoying a right of contact in terms of a contact order under Part I of this Act. Paragraphs (b) and (ba) are clearly concerned with persons other than parents in whom parental responsibilities or parental rights are vested. This would include, for example, guardians appointed by the parents to act after their death: see 1995 Act, section 7; it would also include people enjoying any of the parental responsibilities or parental rights under a court order. Paragraph (c) is different from the other two paragraphs in that it does not depend upon readily ascertainable matters of public record but upon a qualitative judgment. It recognises that there are people who should be involved in a childrens hearing even though they do not have the benefit of registered parenthood or a court order. It would clearly include an unmarried father while he was living with the mother and the child. But in the course of the hearing before us it was acknowledged that it might also include an unmarried father who was sharing care with the mother indeed, it might well include a father such as this one with whom the child was staying overnight once a week. That was a significant concession. The reading down which would be necessary to render section 93(2)(b) compatible with the Convention rights depends upon the right with which it would otherwise be incompatible. Thus, if the present position violated the article 14 rights of all unmarried fathers, the obvious solution would be to delete the words enjoying parental responsibilities or parental rights under Part I of this Act from section 93(2)(b)(a). This is the solution preferred by Mrs Scott on behalf of the father. It could, however, be seen as going against the grain of the Act by breaking the link between automatic participation and parental responsibilities. In particular, as Miss Wise pointed out, it would include parents who had been deliberately deprived of all parental responsibilities and parental rights by order of a court. In any event it would go further than is necessary to cure the incompatibility which we have identified, which is the failure to respect the procedural rights of fathers who have established family life with their children. If the present position were held to violate the right to a fair hearing, under article 6 of the Convention, of those who currently enjoy neither parental rights and parental responsibilities nor family life with the child, then considerable violence would have to be done to the language of section 93(2)(b) in order to put it right. Fortunately, that is not the basis upon which we have held there to be a violation. Mrs Scotts second solution was to insert the words or appears to be a parent who has a de facto family tie with the child into section 93(2)(b)(c). This comes much closer to addressing the incompatibility which this court has found. However, it may not go far enough. Persons other than parents may have article 8 procedural rights which require to be protected. This is not as dramatic an extension as it may seem. It is not every aspect of family life which attracts its procedural protection. The family succession rights which were in issue in Marckz v Belgium (1979) 2 EHRR 330, or more recently in Pla v Andorra (2004) 42 EHRR 522, are not affected by the childrens hearing. The uncle and aunt in Jucius and Juciuvien v Finland (2008) 49 EHRR 70 would be covered by the existing wording of section 93(2)(a)(c), as it appears would be the grandparents in Bronda v Italy (1998) 33 EHRR 81. If all that may be at risk is informal contact with the wider family, then the participation of each parent and the child will in most cases afford adequate procedural protection for any article 8 rights which the child and other family members may have. But there are cases in which the childs hope of reintegration in her natural family depends upon maintaining the close relationship established with a grandparent or other family member. There would then be a procedural obligation to involve that relative in the decision making process. The potential for violation could therefore be cured by inserting the words or who appears to have established family life with the child with which the decision of a childrens hearing may interfere. This goes very much with, rather than against, the grain of the legislation. The aim of the hearing is to enlist the family in trying to find solutions to the problems facing the child. This is simply widening the range of such people who have an established relationship with the child and thus something important to contribute to the hearing. Mostly, these will be unmarried fathers, but occasionally it might include others. It will, of course, involve the Reporter initially and then the childrens hearing in making a judgment. But section 93(2)(b)(c) already does this. The discussion during the course of the hearing before this court as to whether a father who shared care with the mother might already be covered by this paragraph was ample demonstration of this. The case law on whether unmarried fathers have established family life with their children is sufficiently clear and constant for Reporters to develop a checklist or rules of thumb to guide them. At the very least, it is likely that all unmarried fathers who were living with the mother when the child was born; or who were registered as the childs father; or who are having contact with the child whether by court order or arrangements with the mother will have established family life with the child. In a borderline case, it would be safer to include him and let others argue than to leave him out. The fact that the Extra Division in Authority Reporter v S [2010] CSIH 45, 2010 SLT 765, with the support of all the parties, felt able to read words into section 93(2)(b)(a) fortifies us in the belief that it is open to us to adopt this course in order to cure the incompatibility which we have found. It does not depart from a fundamental feature of the Act and is well within the overall purpose to which the definition in section 93(2)(b) is directed. Conclusion We would therefore allow the appeal. We would recall the First Divisions interlocutor, sustain Ks first, second and sixth pleas in law and dismiss the petition. We would also declare that section 93(2)(b)(c) of the Children (Scotland) Act 1995 should be read so as to include the words or who appears to have established family life with the child with which the decision of a childrens hearing may interfere. We would also make a finding that K is a relevant person within the meaning of section 93(2)(b)(c) of the 1995 Act as so read.
+In this country, we are wary of giving too much power to the police. We believe that we should be free to be out and about in public without being subjected to compulsory powers of the police, at least unless and until they have reasonable grounds to suspect that we are up to no good. We have so far resisted suggestions that we should all have to carry identity cards that the police can demand to see whenever they want. We have unhappy memories of police powers to stop and search suspected persons even with reasonable grounds. We are even more suspicious of police powers to stop and search without having reasonable grounds to suspect that we are committing or going to commit a crime. Nevertheless, there are a few instances in which our Parliament has decided that such suspicionless stop and search powers are necessary for the protection of the public from terrorism or serious crime. The court can examine whether such a law is itself compatible with the rights set out in Schedule 1 to the Human Rights Act 1998. However, if it finds that it is not, the most the court can do is to make a declaration of incompatibility under section 4 of the Human Rights Act, leaving it to Parliament to decide what, if anything, to do about it. This is the primary remedy sought by Mr Southey QC on behalf of the claimant in this case. But, under section 6 of the Human Rights Act, even a compatible law has to be operated compatibly with the Convention rights in any individual case. There are many laws which are capable of being operated both compatibly and incompatibly, depending upon the facts of the particular case. The compatibility of the law itself has therefore to be judged in conjunction with the duty of the police to operate it in a compatible manner. The law in question is contained in section 60 of the Criminal Justice and Public Order Act 1994. It is now common ground that the power of suspicionless stop and search which it contains is an interference with the right to respect for private life, protected by article 8 of the European Convention on Human Rights, although perhaps not at the gravest end of such interferences. It is also common ground that the power pursues one of the legitimate aims which is capable of justifying such interferences under article 8(2), namely the prevention of disorder or crime. The argument is about whether it is in accordance with the law as is also required by article 8(2). In one sense, of course it is, because it is contained in an Act of the United Kingdom Parliament. But the Convention concept of legality entails more than mere compliance with the domestic law. It requires that the law be compatible with the rule of law. This means that it must be sufficiently accessible and foreseeable for the individual to regulate his conduct accordingly. More importantly in this case, there must be sufficient safeguards against the risk that it will be used in an arbitrary or discriminatory manner. As Lord Kerr put it in Beghal v Director of Public Prosecutions (Secretary of State for the Home Department and others intervening) [2015] UKSC 49; [2015] 3 WLR 344, at para 93, The opportunity to exercise a coercive power in an arbitrary or discriminatory fashion is antithetical to its legality in this sense. Section 60 offensive weapons in a particular locality at a particular time. It provides: (l) If a police officer of or above the rank of inspector reasonably believes Section 60 is directed towards the risk of violence involving knives and other that incidents involving serious violence may (a) take place in any locality in his police area, and that it is expedient to give an authorisation under this section to prevent their occurrence, (aa) that (i) an incident involving serious violence has taken place in England and Wales in his police area; (ii) a dangerous instrument or offensive weapon used in the incident is being carried in any locality in his police area by a person; and it is expedient to give an authorisation (iii) under this section to find the instrument or weapon; or (b) that persons are carrying dangerous instruments or offensive weapons in any locality in his police area without good reason, he may give an authorisation that the powers conferred by this section are to be exercisable at any place within that locality for a specified period not exceeding 24 hours. (3) If it appears to an officer of or above the rank of superintendent that it is expedient to do so, having regard to offences which have, or are reasonably suspected to have, been committed in connection with any activity falling within the authorisation, he may direct that the authorisation shall continue in being for a further 24 hours. (3A) If an inspector gives an authorisation under subsection (1) he must, as soon as it is practicable to do so, cause an officer of or above the rank of superintendent to be informed. (4) This section confers on any constable in uniform power to stop any pedestrian and search him or anything (a) carried by him for offensive weapons or dangerous instruments; (b) to stop any vehicle and search the vehicle, its driver and any passenger for offensive weapons or dangerous instruments. (5) A constable may, in the exercise of the powers conferred by subsection (4) above, stop any person or vehicle and make any search he thinks fit whether or not he has any grounds for suspecting that the person or vehicle is carrying weapons or articles of that kind. Dangerous instruments are defined in section 60(11) as instruments which have a blade or are sharply pointed. Offensive weapons have the same meaning as in section 1(9) of the Police and Criminal Evidence Act 1984 (PACE), that is, any article (a) made or adapted for use for causing injury to persons; or (b) intended by the person having it with him for such use by him or by some other person. If an incident of serious violence has already taken place (as contemplated by section 60(1)(aa)), it includes any article used in the incident to cause or threaten injury to any person or otherwise to intimidate . Thus it will be seen that the individual police officers powers in section 60(4) and (5) depend upon a general authorisation (a) given by an officer of the rank of inspector or above, (b) for a period of up to 24 hours, although renewable for one further period of 24 hours, (c) within a particular locality, and (d) where the senior police officer reasonably believes that one or more of the three grounds set out in section 60(1) exists. Section 60(5) makes it clear that the individual police officer operating under such an authorisation does not have to have any grounds for suspecting that the person or vehicle stopped and searched is carrying offensive weapons or dangerous instruments. But section 60(4) makes it clear that his or her purpose must be to search for such things. The exercise of the powers set out in section 60 is subject to a number of safeguards and restrictions, including those contained in section 2 of PACE and in the Code of Practice for the exercise of such powers, issued under section 66 of that Act. In the Metropolitan Police area, it is also subject to the Metropolitan Police Services published Standard Operating Procedures, both on the general Principles for Stop and Search and on Section 60 of the Criminal Justice and Public Order Act 1994 in particular. It is well established that failure to comply with published policy will render the exercise of compulsory powers which interfere with individual freedom unlawful: R (Lumba) v Secretary of State for the Home Department [2011] UKSC 12; [2012] 1 AC 245. It is also likely to expose the individual officer to disciplinary action. It will therefore be necessary to return to these additional constraints in some detail later. The facts The events which gave rise to these proceedings took place on 9 September 2010. There was then a significant problem of gang related violence in the London Borough of Haringey, resulting from tensions between two rival gangs, and the risk that gangs from outside the borough would come to their aid. Between 1 and 9 September there were many police intelligence reports relating to violent crime and the use of firearms, knives and other offensive weapons. There was an attempted murder and a stabbing on 4 September and another stabbing on 5 September. On 8 September there were intelligence reports about the use or storage or movement of firearms. These indicated a risk of further violence on the afternoon, evening and night of 9 September. In the morning of 9 September, Superintendent Barclay, Superintendent (Operations) in the Borough of Haringey, formed the belief (under section 60(1)(a)) that further incidents of serious violence were likely to take place that day and also (under section 60(1)(aa)) that people would be travelling to Haringey in possession of weapons that had been used in the incidents which had already taken place. Accordingly at 11.20 am he completed Form 5096, which constituted the authorisation. This authorised searches between 1.00 pm on 9 September 2010 and 6.00 am on 10 September in the whole Borough of Haringey apart from the wards of Fortis Green, Highgate, Bounds Green, Alexandra, Muswell Hill and Woodside. Under Grounds he checked the boxes corresponding to section 60(1)(a) and (aa). Under Additional notes was stated There are increasing tensions at present between gangs in this borough and boroughs beyond those neighbouring ours. A section 60 in the terms requested would support the aims of the tasked resources [to tackle Most Serious Violence, Serious Youth Violence and Knife Enabled Crime] and be a visible presence to deter the commission of offences in this borough. There followed details of the numerous intelligence reports, many to do with rivalry between the Wood Green Mob and the Grey Gang, which had led to this belief. The form concluded that In respect of the Human Rights Act 1998 Authorisation is Proportionate, Legal, Accountable and Necessary, in order to protect members of the public from being involved/surrounded by serious unlawful violence between opposing gang members. There is a history of violence between rival gangs on the borough which has previously resulted in serious assaults and criminal damage. Officers on duty were notified of the authorisation either in their daily briefing packs or over their radios. At the time of these events, Mrs Roberts was 37 years old, and working as a support worker providing in class support for young people with disabilities and learning difficulties. She had no convictions or cautions for criminal offences. She is of African Caribbean heritage. On 9 September 2010, shortly after 1.00 pm, she was travelling on the No 149 bus in Tottenham. She had not paid her fare. A ticket inspector read her Oyster card and found that, not only had it not been validated for that journey, but also that it did not have enough funds on it to pay the fare. When questioned, Mrs Roberts gave a false name and address and also falsely stated that she did not have any identification with her. The police were called and Police Constable Jacqui Reid attended. Mrs Roberts again denied having any identification with her. She appeared nervous and was keeping a tight hold upon her bag. PC Reid considered that she was holding her bag in a suspicious manner and might have an offensive weapon inside it. It was not uncommon for women of a similar age to carry weapons for other people. Earlier that day PC Reid had been involved in the search of such a woman who had been found to be in possession of a firearm and an offensive weapon and arrested. PC Reid explained her powers under section 60 of the 1994 Act and that she would search Mrs Roberts bag. Mrs Roberts said that she would prefer to be searched in a police station. PC Reid said that this was unnecessary and she would do it there and then. As she went to take Mrs Roberts bag, Mrs Roberts kept tight hold of it and began to walk away. She was restrained and handcuffed but continued to walk away. Eventually the police succeeded in restraining her. PC Reid searched her bag and Mrs Roberts gave her correct name and address. Inside the bag were bank cards in Mrs Roberts name and in two other names. She was arrested on suspicion of handling stolen goods, but no further action on that matter was taken once it was confirmed that the cards were indeed her own, in her maiden name, and her sons. PC Reid completed Form 5090, which recorded when and where the search had taken place, and gave the following reasons: Area is a hot spot for gang violence and people in possession of knives. Subject kept holding tightly onto her bag and appeared nervous and as if trying to conceal something she didnt want police to find. Mrs Roberts was handed a copy of this form after she was arrested and interviewed at the police station for the offence of obstructing the search. She was later cautioned for that offence but the caution was quashed by consent following the institution of these proceedings. Mrs Roberts explains that she did not want to be searched on the street because she was concerned that some of the young people with whom she worked might see it. But it is now conceded that PC Reid acted in accordance with section 60 of the 1994 Act, and indeed that the interference with Mrs Roberts article 8 rights was proportionate to the legitimate aim of the prevention of crime. Mrs Roberts brought judicial review proceedings alleging breaches of article 5 and of article 8 and of article 14. Both the Divisional Court ([2012] EWHC 1977 (Admin)) and the Court of Appeal ([2014] EWCA Civ 69; [2014] 1 WLR 3299) held that there was no deprivation of liberty within the meaning of article 5 (and there is no appeal against that). Both courts rejected the claim that the section 60 power was used in a manner which discriminated on grounds of race, contrary to article 14 (and there is no appeal against that). Both courts held that there was an interference with the right to respect for Mrs Roberts private life in article 8, but that it was in accordance with the law. That is the issue in this appeal. The case law As it is admitted that the interference with Mrs Roberts rights was, in the circumstances, proportionate to the legitimate aim of preventing crime, her claim can only succeed if the power under which it was done is in itself incompatible with the Convention rights because it does not have the character of law as required by the Convention. As Lord Reed explained in R (T) v Chief Constable of Greater Manchester Police [2014] UKSC 35; [2015] AC 49, at para 114, for the interference to be in accordance with the law, there must be safeguards which have the effect of enabling the proportionality of the interference to be adequately examined. Whether the interference in a given case was in fact proportionate is a separate question. The T case, as Lord Hughes explained in Beghal, at para 31, was concerned with a rigid rule which did not have the flexibility to ensure that interferences with article 8 rights were proportionate. In Beghal, as in this case, on the other hand, the court was concerned with the reverse situation, where safeguards may be required to guard against a broad discretion being used in an arbitrary, and thus disproportionate manner. This is the first case in which the power in section 60 has come before this court or before the European Court of Human Rights in Strasbourg. But two other powers of stop and search have come before this court or its predecessor, the appellate committee of the House of Lords, and one of those cases has gone to the Strasbourg court. We will deal with these, and another relevant Strasbourg decision, in chronological order. R (Gillan) v Commissioner of Police of the Metropolis [2006] UKHL 12; [2006] 2 AC 307, concerned the powers in sections 44 to 46 of the Terrorism Act 2000. Section 44(4) empowered a police officer of at least the rank of assistant chief constable to grant an authorisation for a renewable period of up to 28 days covering a specified area or place, which could be the whole of a police area. The practice was to grant successive 28 days authorisations covering the whole Metropolitan Police area. Under section 46(3) to (7), authorisations were subject to confirmation by the Home Secretary within 48 hours, failing which they ceased to have effect. But such confirmation had never been refused. Under section 44(3), authorisations can be given only if the person giving it considers it expedient for the prevention of acts of terrorism, a very broad ground. Terrorism is widely defined in section 1 of the 2000 Act. Under section 44(1) and (2) an authorisation allowed any uniformed police officer to stop a vehicle in the area and search it, the driver and any passenger, and to stop a pedestrian in the area and search the pedestrian and anything carried by him. Under section 45(1), the power could be exercised only for the purpose of searching for articles of a kind which could be used in connection with terrorism, but whether or not the constable has grounds for suspecting the presence of articles of that kind. Under section 45(4), he could detain the person or vehicle for such time as is reasonably required to permit the search to be carried out at or near the place where the person or vehicle is stopped. Two people, a student and a journalist, who had been stopped and searched on their way to a demonstration, complained of breaches of several Convention rights, including article 8. rights in question, Lord Bingham said this, at para 34: In considering the Convention requirement of legality common to all the The lawfulness requirement in the Convention addresses supremely important features of the rule of law. The exercise of power by public officials, as it affects members of the public, must be governed by clear and publicly accessible rules of law. The public must not be vulnerable to interference by public officials acting on any personal whim, caprice, malice, predilection or purpose other than that for which the power was conferred. This is what, in this context, is meant by arbitrariness, which is the antithesis of legality. This is the test which any interference with or derogation from a Convention right must meet if a violation is to be avoided. He went on to hold, at para 35, that the power in question did meet these requirements. That the constable need have no suspicion cannot, realistically, be interpreted as a warrant to stop and search people who are obviously not terrorist suspects, which would be futile and time wasting. It is to ensure that a constable is not deterred from stopping and searching a person whom he does suspect as a potential terrorist by the fear that he could not show reasonable grounds for his suspicion. He had earlier, at para 14, when rejecting the argument that expedient must be read down to necessary identified 11 constraints on the abuse of the power. The other members of the committee agreed with him on this point, while adding observations of their own, in particular that race or ethnicity could never be the sole ground for choosing a person to stop and search. In Gillan v United Kingdom (2010) 50 EHRR 1105, the Strasbourg court took a different view. The authorisation could be given for reasons of expediency rather than necessity. Once given, it was renewable indefinitely. The temporal and geographical restrictions were no real check. Above all, the court was concerned at the breadth of the discretion given to the individual police officer, the lack of any need to show reasonable suspicion, or even subjectively to suspect anything about the person stopped and searched, and the risks of discriminatory use and of misuse against demonstrators and protesters in breach of article 10 or 11 of the Convention. In particular, in the absence of any obligation on the part of the officer to show a reasonable suspicion, it is likely to be difficult if not impossible to prove that the power was improperly exercised (para 86). Hence the applicants article 8 rights had been violated. Despite this, it cannot be concluded from Gillan that the Strasbourg court would regard every suspicionless power to stop and search as failing the Convention requirement of lawfulness. In Colon v The Netherlands (2012) 55 EHRR SE45, it declared inadmissible a complaint about a Dutch power which in some respects was more comparable to the power at issue in this case than was the power in Gillan. Acting under the Municipalities Act, with the authority of a byelaw passed by the local council, the Burgomaster of Amsterdam designated most of the old centre of Amsterdam as a security risk area for a period of six months and again for a further period of 12 months. Under the Arms and Ammunition Act, this enabled a public prosecutor to order that, for a randomly selected period of 12 hours, any person within the designated area might be searched for the presence of weapons. The prosecutor had to give reasons for the order by reference to recent reports. The applicant refused to submit to a search when stopped and was arrested and prosecuted for failing to obey a lawful order. The applicants complaint that this interference with his article 8 rights was not in accordance with the law was limited to the ineffectiveness of the judicial remedies available, in particular that no prior judicial authorisation for the order was necessary (para 74). The court pointed out that the Burgomasters designation had to be based on a byelaw adopted by an elected representative body, which also had powers to investigate the Burgomasters use of the power. There was also an objection and appeal mechanism. The criminal courts could then examine the lawfulness of the use made of it. Hence the power was in accordance with the law (paras 75 79). The court went on to find that the interference was necessary in a democratic society. The legal framework involved both the Burgomaster and the prosecutor, hence no single executive officer could alone order a preventive search operation. These preventive searches were having their intended effect of helping to reduce violent crime in Amsterdam. These reasons were sufficient to justify the unpleasantness and inconvenience to the applicant. Mr Southey suggests that the reference, in the Dutch governments observations, to the individual police officers being given no latitude in deciding when to exercise their powers (para 68) must mean that they had to stop everyone in the designated area during the 12 hours in question and that therefore there was no risk of arbitrary decision making. That cannot be right. Old Amsterdam is a sizeable area frequented by many people both for business and for pleasure purposes. His better point is that the applicant limited his complaint to the lack of prior judicial sanction. The fact remains that the Strasbourg court held that particular suspicionless stop and search power compatible with article 8. More recently, in Beghal, the Supreme Court has considered a rather different power, under Schedule 7 to the Terrorism Act 2000. This allows a police or immigration officer to question a person at a port or in the border area whom he believes to be entering or leaving the United Kingdom or travelling by air within it. It also applies to a person on board a ship or aircraft which has arrived anywhere in the United Kingdom. The object of the questioning is to determine whether the person appears to be a terrorist within the meaning of that part of the Act. But the officer does not have to have grounds for suspecting that he does. This core power is supplemented by additional powers to stop, search and detain the person for a short time, and to require the production of documents. The claimant was stopped and questioned for an hour and three quarters on returning to this country from a visit to her husband in France where he was in custody in relation to terrorist offences. She was prosecuted for refusing to answer some of the questions. By a majority, Lord Kerr dissenting, the Supreme Court declined to hold that the prosecution was an unjustified interference with her Convention rights. Lord Hughes (with whom Lord Hodge agreed) pointed out that there is a distinction between port controls and street searches. The former are a lesser intrusion than the latter. We expect people to be searched at airports, for the safety of all. He listed, at para 43, a number of effective safeguards which he considered sufficient to meet the requirement of legality: They include: (i) the restriction to those passing into and out of the country; (ii) the restriction to the statutory purpose; (iii) the restriction to specially trained and accredited police officers; (iv) the restrictions on the duration of questioning; (v) the restrictions on the type of search; (vi) the requirement to give explanatory notice to those questioned ; (vii) the requirement to permit consultation with a solicitor and the notification of a third party; (viii) the requirement for records to be kept; (ix) the availability of judicial review if bad faith or collateral purpose is alleged, and also via the principle of legitimate expectation where a breach of the code of practice or of the several restrictions listed above is in issue; Lord Neuberger and Lord Dyson agreed, adding that in considering whether the legality principle was satisfied, one must look not only at the provisions of the statute or other relevant instrument which gives rise to the system in question but also at how that system actually works in practice (para 86). The differences from the system in Gillan showed that these powers were more foreseeable and less arbitrary (para 87). They could only be exercised (i) at ports and airports; (ii) against those passing through the UKs borders; (iii) for a limited purpose (para 88). Unlike the powers in Gillan, they were not extraordinary; they were used against a tiny proportion of passengers; and they yielded useful results. Nor could they be used against demonstrators and protesters (para 89). They also pointed out that it was important to the effectiveness of these powers that they be exercised randomly and therefore unpredictably. If this were not permissible the valuable power would either have to be abandoned or exercised in a far more invasive and extensive way, by questioning everyone passing through ports and airports (para 91). Mr Southey points out that there are other ways of securing the benefit of random and thus unpredictable searches than leaving the choice of whom to search to individual police officers. He himself has experienced a system in Mexico where passengers were randomly given a red or a green light: those given a red light were searched, those given a green light were not. It is, however, rather hard to see how this would work with searches conducted on the street or even on the No 149 bus. The other constraints In addition to the limited scope of the power in section 60 itself, it is necessary to take into account the other constraints upon the exercise of these powers. Those constraints arise both from the legal protection of the citizen from the misuse of police powers, and from the mechanisms designed to ensure that the police are accountable for their actions. In relation to legal protection, we have mentioned section 6 of the Human Rights Act, to which it will be necessary to return. In the event of a breach of that section, the victim of the unlawful act is entitled to seek a judicial remedy under section 8, which might in an appropriate case include an award of damages (as, for example, in H v Commissioner of Police of the Metropolis (Liberty and another intervening) [2013] EWCA Civ 69; [2013] 1 WLR 3021). But the legal protection of the citizen pre dates the Human Rights Act. In relation to searches, the starting point is the common law, under which it is contrary to constitutional principle and illegal to search someone to establish whether there are grounds for an arrest (Jackson v Stevenson (1897) 2 Adam 255). Powers of stop and search therefore require Parliamentary authority. The 1994 Act is one of a number of statutes which provide such authority. Like other aspects of the relationship between the citizen and the police, however, the exercise of the powers conferred by the 1994 Act is subject to detailed statutory regulation by PACE. Where there is a failure to comply with PACE, rendering the search unlawful, the victim can in principle bring an action for damages against the chief constable (or, in the case of the Metropolitan Police, the Commissioner), who is vicariously liable for the unlawful acts committed by his or her officers (as, for example, in OLoughlin v Chief Constable of Essex [1998] 1 WLR 374 and Abraham v Commissioner of Police of the Metropolis [2001] 1 WLR 1257). Legal remedies before the courts are not, however, the only mechanism for protecting citizens against the misuse of police powers and ensuring the accountability of police officers. At a national level, a variety of powers are possessed by the Home Secretary, including the power to issue Codes of Practice under section 66 of PACE, and the power to appoint Her Majestys Inspectors of Constabulary and to direct them to carry out inspections and report to her, under section 54 of the Police Act 1996. A wide range of policing matters, including operational decisions by chief constables, are also examined in Parliament by the Home Affairs Select Committee. At a local level, police and crime commissioners, directly elected by the communities they serve and subject to scrutiny by local police and crime panels, are responsible for holding the chief constable of their area to account for the way in which he or she, and the people under his or her direction and control, exercise their functions: Police Reform and Social Responsibility Act 2011, section 1(7). In relation to the Metropolitan Police, the equivalent function is performed by the Mayors Office for Policing and Crime, an office occupied by the Mayor of London: section 3(7) of the 2011 Act. At the time of the events with which this appeal is concerned, a broadly similar function was performed by police authorities established under the Police and Magistrates Courts Act 1994, and, in relation to the Metropolitan Police, by the Metropolitan Police Authority established under the Greater London Authority Act 1999. In individual cases, complaints about the misuse of police powers can be made to the chief constable (or, in the case of the Metropolitan Police, to the Commissioner), to the police and crime commissioner (or, in the case of the Metropolitan Police, to the Mayors Office for Policing and Crime), or to the Independent Police Complaints Commission, an independent body established under the Police Reform Act 2002. Provision is made under that Act for the determination of complaints and for a system of appeals. That general explanation forms the background to the constraints and safeguards applying specifically to the powers with which this appeal is concerned. First there are the requirements of sections 2 and 3 of PACE, which apply to most stop and search powers, including those under section 60 of the 1994 Act. Under section 2, before the officer begins the search, he must take reasonable steps to tell the person being searched his name, the station to which he is attached, the object of the search and the grounds for making it, and that the person can only be detained for the time reasonably required to carry out the search. Breach of section 2 would render the search unlawful (Osman v Director of Public Prosecutions (1999) 163 JP 725). Section 3 requires the officer to make a record in writing unless this is not practicable, either as part of the custody record if the person is arrested and taken to a police station or on the spot or as soon as practicable after the search if he is not. The person searched is entitled to a copy of the record if he asks for one within three months. This was the Form 5090 handed over to Mrs Roberts after her arrest (see para 12 above). Next there are the statutory Codes of Practice, issued under section 66 of PACE. Code A relates to the exercise by police officers of statutory powers of stop and search. This governs both the authorisation and the search itself. It is not practicable to cite all the relevant paragraphs of the 2009 version in force at the time of this encounter. But the flavour may be gleaned from para 1.1: Powers to stop and search must be used fairly, responsibly, with respect for people being searched and without unlawful discrimination. The Race Relations (Amendment) Act 2000 makes it unlawful for police officers to discriminate on the grounds of race, colour, ethnic origin, nationality or national origins when using their powers. Mr Southey complains that this does not in terms tell police officers that they must not select people on grounds of race or ethnicity alone. But that is what discrimination means. If anything, this paragraph is clearer than the one in the current (2015) version, which has been updated to refer to all the characteristics now protected by the Equality Act 2010, without listing them. The current Code does contain a helpful paragraph, para 2.14A, which was not present in the earlier version: The selection of persons and vehicles under section 60 to be stopped and, if appropriate, searched should reflect an objective assessment of the nature of the incident or weapon in question and the individuals and vehicles thought likely to be associated with that incident or those weapons. The powers must not be used to stop and search persons and vehicles for reasons unconnected with the purpose of the authorisation. When selecting persons and vehicles to be stopped in response to a specific threat or incident, officers must take care not to discriminate unlawfully against anyone on the grounds of any of the protected characteristics set out in the Equality Act 2010 (see para 1.1). Nevertheless, the earlier Code explains and stresses the importance of explaining and recording the reasons for the stop (paras 3.8 3.11 and section 4). Supervising officers must monitor the use of stop and search powers and should consider in particular whether there is any evidence that they are being exercised on the basis of stereotyped images or inappropriate generalisations (para 5.1). They must keep comprehensive statistical records so as to identify disproportionate use either by particular officers or against particular sections of the community (para 5.3). As to the authorisation, both the period of time and the geographical area defined in the authorisation must be the minimum necessary to achieve the legislative aim (para 2.13 and Notes for Guidance, para 13). Thus the authorisation in this case was for less than the maximum 24 hours permitted and the area, although substantial, excluded quite large areas of the borough of Haringey. The Notes for Guidance, at para 10, stress that: The powers under section 60 are separate from and additional to the normal stop and search powers which require reasonable grounds to suspect an individual of carrying an offensive weapon (or other article). Their overall purpose is to prevent serious violence and the widespread carrying of weapons which might lead to persons being seriously injured by disarming potential offenders in circumstances where other powers would not be sufficient. They should not therefore be used to replace or circumvent the normal powers for dealing with routine crime problems. Paragraph 11 points out that authorisations require a reasonable belief that must have an objective basis, of which examples are given. Then there are the applicable policies and instructions of the police force in question, in this case, the Metropolitan Police. The Metropolitan Police Standard Operating Procedures are published on their website. These largely repeat the requirements of the legislation and the Code, but with some additional features. They are designed to be relatively simple to use and easy to remember. The Principles for Stops and Searches, current at the time, contains a section on the Race Relations (Amendment) Act 2000, which extended the duties in the Race Relations Act 1976 to public authorities including the police. This reminds officers of their general duty to have due regard to eliminating unlawful discrimination. More to the point, it states that Officers must be aware that to go beyond their powers and search somebody solely on grounds of race, colour, or otherwise treat someone unfavourably on such grounds is unlawful and the individual officer, in addition to the Commissioner, may face legal or disciplinary proceedings. The Principles also contain a section on Human Rights, instructing officers to apply the PLAN B checklist to all their decision making. Their actions must be Proportionate, have a Legal power or purpose, Accountable (through record keeping and scrutiny), Necessary in the circumstances and use the Best information available. The specific Standard Operating Procedures on Section 60 Criminal Justice and Public Order Act, current at the time, instructed senior officers giving the authorisation that these must be justified on the basis that the exercise of the power is, in all circumstances a proportionate and necessary response for achieving the purpose for which Parliament provided the power. It reminds officers that they must have a reasonable belief in the grounds and that there must be an objective basis in intelligence or relevant information. It suggests that the use of section 60 should be considered where there has been a significant increase in knife point robberies in a limited area and also, for example, for gang related violence or disorder, football related violence and events such as demonstrations and music concerts that typically include a large scale gathering of people which, combined with other factors, indicate a likelihood of violence or the commission of offences. It stresses the importance of engagement with local community groups and of feedback. Briefings should be the rule, if practicable. For individual officers carrying out the stop and search, it provides guidance on filling out Form 5090 and about the encounter. The mnemonic GOWISELY (Grounds, Object, Warrant, Station, Entitlement to a copy, Legal power, and tell the person You are being detained) applies, with some additional guidance. These instructions are regularly reviewed. Since the encounter in question they have been updated to take account of the Best Use of Stop and Search Scheme (BUSS), issued by the Home Secretary and College of Policing in April 2014 following reports prepared by Her Majestys Inspectors of Constabulary, under the direction of the Home Secretary, on the use of stop and search powers. Announcing this to Parliament, the Home Secretary explained that she had long been concerned about the use of stop and search by the police. Although an important police power, when misused it could be counter productive. It was an enormous waste of police time. And when innocent people were stopped and searched for no good reason it was hugely damaging to the relationship between the police and the public. Nevertheless, adopting the scheme was not compulsory. Police forces in this country are not subject to direction from the government. They are operationally independent. But in fact all of them have adopted it, including the Metropolitan Police. BUSS covers all kinds of stop and search powers, but in relation to section 60 it specifically provides: (i) that Forces in the scheme will raise the level of authorisation to Assistant Chief Constable (or the equivalent in the Metropolitan Police and City of London Police); (ii) that authorisations must only be given when the officer believes it necessary, rather than merely expedient, for any of the statutory purposes; (iii) that in relation to future serious violence, the officer must reasonably believe that it will, rather than may, take place; (iv) that authorisations should be for no more than 15 hours in the first instance; and (v) that Forces must communicate with the public in the area in advance where practicable and afterwards. Mr Southey argues that these improvements show that section 60 as enacted does not contain sufficient safeguards. On behalf of the Secretary of State, Lord Keen QC argues that BUSS is irrelevant. The Home Secretarys determination to seek improvements in the operation of all stop and search powers in order to promote better community relations does not prove that the previous use of the power was not in accordance with the law. However, it is worth bearing in mind that there has been a very significant reduction in the use of these powers in recent years. Discussion Any random suspicionless power of stop and search carries with it the risk that it will be used in an arbitrary or discriminatory manner in individual cases. There are, however, great benefits to the public in such a power, as was pointed out both by Lord Neuberger and Lord Dyson in Beghal and by Moses LJ in this case. It is the randomness and therefore the unpredictability of the search which has the deterrent effect and also increases the chance that weapons will be detected. The purpose of this is to reduce the risk of serious violence where knives and other offensive weapons are used, especially that associated with gangs and large crowds. It must be borne in mind that many of these gangs are largely composed of young people from black and minority ethnic groups. While there is a concern that members of these groups should not be disproportionately targeted, it is members of these groups who will benefit most from the reduction in violence, serious injury and death that may result from the use of such powers. Put bluntly, it is mostly young black lives that will be saved if there is less gang violence in London and some other cities. It cannot be too often stressed that, whatever the scope of the power in question, it must be operated in a lawful manner. It is not enough simply to look at the content of the power. It has to be read in conjunction with section 6(1) of the Human Rights Act 1998, which makes it unlawful for a police officer to act in a manner which is incompatible with the Convention rights of any individual. It has also to be read in conjunction with the Equality Act 2010, which makes it unlawful for a police officer to discriminate on racial grounds in the exercise of his powers. It might be thought that these two additional legal restraints were sufficient safeguard in themselves. The result of breaching either will be legal liability and probably disciplinary sanctions as well. It is said that, without the need to have reasonable grounds for suspecting the person or vehicle stopped to be carrying a weapon, it is hard to judge the proportionality of the stop. However, that is to leave out of account all the other features, contained in a mixture of the Act itself, PACE and the Force Standard Operating Procedures, which guard against the risk that the officer will not, in fact, have good reasons for the decision. The result of breaching these will in many cases be to render the stop and search itself unlawful and to expose the officers concerned to disciplinary action. First, as to the authorisation itself: (i) the officer has reasonably to believe that the grounds for making an authorisation exist; (ii) those grounds are much more tightly framed than the grounds in Gillan; (iii) the officers belief clearly has to be based on evidence; (iv) he has to record in writing, not only what his grounds are, but the evidence on which his belief is based; (v) he has expressly to consider whether the action is necessary and proportionate to the danger contemplated; (vi) that is why, in reality, he has to believe that an authorisation is necessary rather than merely expedient; (vii) the authorisation can only be for a very limited period of time; (viii) it can only be renewed once for a limited period of time; rolling renewals are not possible; (ix) it can only cover a limited geographical area; (x) it is subject to review. Second, as to the operation itself: (i) there should be prior briefing if possible and certainly de briefing afterwards; (ii) there should be prior community engagement if possible and certainly afterwards; (iii) where the authorisation is given by an officer below the rank of superintendent, it is subject to review by a superintendent; (iv) after the authorisation is over, the operation should be evaluated, in terms of whether its objectives were met, numbers of searches, number of arrests, number of weapons seized, disproportionality etc, and community confidence and reassurance. Third, as to the actual encounter on the street: (i) the officer must be in uniform and identify himself by name and police station to the person stopped; (ii) the officer must explain the power under which he is acting, the object of the search and why he is doing it; (iii) the officer must record this in writing; (iv) the person searched is entitled to a copy of the form; (v) the purpose is limited to searching for offensive weapons or dangerous implements. All of these requirements, in particular to give reasons both for the authorisation and for the stop, should make it possible to judge whether the action was necessary in a democratic society for the prevention of disorder or crime. No system of safeguards in the world can guarantee that no one will ever act unlawfully or contrary to orders. If they do so act, the individual will have a remedy. The law itself is not to blame for individual shortcomings which it does its best to prevent. It is not incompatible with the Convention rights. It would not, therefore, be right to make a declaration of incompatibility in this case. Neither would it be appropriate to make a declaration that the Guidance current at the time, or now, was inadequate or that this particular search was not in accordance with the law. We would dismiss this appeal.
+During the period with which this case is concerned, the claimants (whom we shall refer to as Littlewoods) carried on catalogue sales businesses: that is to say, they distributed catalogues to customers and sold them goods shown in the catalogues. In order to carry on their businesses, they employed agents, who received a commission in return for their services. They could elect to be paid the commission either in cash or in kind. Commission was paid in cash at the rate of 10% of the sales achieved by the agent. Commission paid in kind took the form of goods supplied by Littlewoods, equal in price to 12.5% of the sales achieved by the agent. As suppliers of goods, Littlewoods were obliged to account to HMRC for the VAT due in respect of their chargeable supplies. Between 1973 and 2004, they accounted for VAT on the supplies which they made to their agents, as commission paid in kind, on the basis that the taxable amount of those supplies was reduced by the enhancement in the commission, that is to say by 2.5%. On a correct understanding of VAT law, the taxable amount of the supplies was actually reduced by the entire 12.5% which constituted the agents commission. Consequently, Littlewoods accounted for and paid more VAT to HMRC than was due. Between 2002 and 2004 Littlewoods submitted claims to HMRC for the repayment of overpaid VAT in accordance with section 80 of the Value Added Tax Act 1994 (the 1994 Act). In 2004, HMRC conceded that VAT had been overpaid, and since then it has been paid on the correct basis. Between 2005 and 2008, HMRC repaid 205m in accordance with section 80. In accordance with section 78 of the 1994 Act, HMRC also paid interest on the amount repaid. The interest was calculated on a simple basis, as section 78 required, and totalled 268m. In these proceedings, commenced in 2007, Littlewoods seek additional interest, calculated on a compound basis, on the ground that such interest is due under the common law. The additional interest totals 1.25 billion. The amount involved is so enormous because, under the law of limitation applicable to common law claims, the ordinary limitation period of six years does not begin to run, where an action is for relief from the consequences of a mistake, until the claimant has discovered the mistake or could with reasonable diligence have discovered it: Limitation Act 1980, section 32(1)(c). Littlewoods maintain that the period over which the interest has to be compounded, on that basis, is over 40 years. A further 5,000 claims for compound interest in connection with VAT or other taxes are stayed pending the resolution of these claims. The total amount involved in relation to VAT claims is estimated by HMRC at 17 billion. The basis of the claims The claims for compound interest are made on two bases. First, it is argued that HMRC are under a liability to make restitution on the basis that they were unjustly enriched by payments made under a mistake of law, applying the principle established in Kleinwort Benson Ltd v Lincoln County Council [1999] 2 AC 349 and Deutsche Morgan Grenfell Group plc v Inland Revenue Comrs [2006] UKHL 49; [2007] 1 AC 558. Although the payments have been reimbursed in accordance with section 80, it is argued that compound interest remains due at common law as restitution of the use value of the money mistakenly paid, applying the principle established in Sempra Metals Ltd v Inland Revenue Comrs [2007] UKHL 34; [2008] AC 561. Secondly, it is argued that HMRC are in any event liable to make restitution on the basis that they were unjustly enriched by payments of undue tax, applying the principle established in Woolwich Equitable Building Society v Inland Revenue Comrs [1993] AC 70, as explained in Test Claimants in the FII Group Litigation v Revenue and Customs Comrs [2012] UKSC 19; [2012] 2 AC 337. On that basis also, it is argued that compound interest remains due under the principle established in Sempra Metals. Woolwich type claims are only advanced, however, in respect of compound interest on overpayments made within the six years preceding issuance of the claim forms, in view of the limitation period applicable to such claims, and are therefore much more limited than the mistake based claims. Littlewoods contend that these common law claims are not excluded by sections 78 and 80 of the 1994 Act, as a matter of statutory construction. They also contend that, in any event, they have a right under EU law to compound interest on tax levied contrary to EU law. On that basis, they contend that, even if their claims to compound interest would otherwise be excluded by the provisions of the 1994 Act, the statute must be disapplied, or interpreted in such a way as to permit the claims to be made. The history of the proceedings A trial on liability was held before Vos J. In his judgment, he held that, as a matter of statutory construction, the claims were excluded by sections 78 and 80 of the 1994 Act: [2010] EWHC 1071 (Ch); [2010] STC 2072. He also held that the question whether the exclusion of the claims by those provisions was contrary to EU law should be referred to the Court of Justice of the EU. In a subsequent judgment, he determined the questions to be referred, and made the order for reference: [2010] EWHC 2771 (Ch); [2011] STC 171. At the same time, he made a declaration that the claims were, as a matter of English law and without reference to EU law, excluded by sections 78 and 80 of the 1994 Act. The questions referred were the following: Question 1: Where a taxable person has overpaid VAT which was collected by the member state contrary to the requirements of EU VAT legislation, does the remedy provided by a member state accord with EU law if that remedy provides only for (a) reimbursement of the principal sums overpaid, and (b) simple interest on those sums in accordance with national legislation, such as section 78 of the Value Added Tax Act 1994? Question 2: If not, does EU law require that the remedy provided by a member state should provide for (a) reimbursement of the principal sums overpaid, and (b) payment of compound interest as the measure of the use value of the sums overpaid in the hands of the member state and/or the loss of the use value of the money in the hands of the taxpayer? Question 3: If the answer to both questions one and two is in the negative, what must the remedy that EU law requires the member state to provide include, in addition to reimbursement of the principal sums overpaid, in respect of the use value of the overpayment and/or interest? Question 4: If the answer to question 1 is in the negative, does the EU law principle of effectiveness require a member state to disapply national law restrictions (such as sections 78 and 80 of the Value Added Tax Act 1994) on any domestic claims or remedies that would otherwise be available to the taxable person to vindicate the EU law right established in the Court of Justices answer to the first three questions, or can the principle of effectiveness be satisfied if the national court disapplies such restrictions only in respect of one of these domestic claims or remedies? What other principles should guide the national court in giving effect to this EU law right so as to accord with the EU law principle of effectiveness? The Court of Justice (Grand Chamber) (CJEU or the court) examined the questions together, and reformulated them as asking in essence, whether, in a situation such as that at issue in the cases in the main proceedings, in which an amount of VAT overpaid by reason of non compliance with EU law has been repaid to the taxpayer concerned, it is in accordance with EU law for national law to provide for the payment of only simple interest on that sum, or whether EU law requires national law to provide for payment of compound interest as a counterpart for the value of the use of the overpaid sums and/or the loss of the value of the use of the latter or for another method of reparation which, in that latter case, the court is asked to specify: (Case C 591/10) [2012] STC 1714, para 22. The court answered the question as follows at para 35: European Union law must be interpreted as requiring that a taxable person who has overpaid value added tax which was collected by the member state contrary to the requirements of European Union legislation on value added tax has a right to reimbursement of the tax collected in breach of European Union law and to the payment of interest on the amount of the latter. It is for national law to determine, in compliance with the principles of effectiveness and equivalence, whether the principal sum must bear simple interest, compound interest or another type of interest. The High Court proceedings then resumed before Henderson J, who heard a trial of all outstanding issues. In his judgment, he held that Littlewoods claims succeeded in full: [2014] EWHC 868 (Ch); [2014] STC 1761. In particular, he held that only an award of compound interest would satisfy Littlewoods rights under EU law, that the exclusion of the claims by sections 78 and 80 of the 1994 Act was therefore incompatible with EU law, and that those provisions had to be disapplied so as to allow Littlewoods to pursue their claims. Both parties appealed. The Court of Appeal (Arden, Patten and Floyd LJJ) upheld Henderson Js conclusions on all issues, and dismissed both sides appeals: [2015] EWCA Civ 515; [2016] Ch 373. Both parties now appeal to this court. The first issue is raised by Littlewoods cross appeal, and is whether Vos J and the Court of Appeal were correct in holding that Littlewoods claims are excluded by sections 78 and 80 of the 1994 Act, as a matter of English law and without reference to EU law. If not, then it follows that Littlewoods are free to bring any common law claims available to them without statutory impediment, and do not need to rely on EU law in order to overcome a statutory bar. The remainder of the issues are raised by HMRCs appeal. The second issue is whether, if Littlewoods claims are excluded by sections 78 and 80 of the 1994 Act, that exclusion is contrary to EU law. A number of further issues are raised in the appeal, but they only arise for decision if Littlewoods succeed on either of the first two issues. In other words, if Littlewoods fail on the first and second issues, then it follows that their claims are excluded by statutory provisions which are not incompatible with EU law, and that their claims must therefore be rejected. The first issue In considering the effect of sections 78 and 80 of the 1994 Act, it may be helpful to begin with section 80. This was first enacted as section 24 of the Finance Act 1989 and brought into force on 1 January 1990. Since its consolidation in the 1994 Act it has undergone amendment on a number of occasions. The version in force at the time when Littlewoods commenced the present proceedings is, so far as relevant, in the terms set out below. Later amendments are not relevant for present purposes: 80. Credit for, or repayment of, overstated or overpaid VAT. (1) Where a person (a) has accounted to the Commissioners for VAT for a prescribed accounting period (whenever ended), and in doing so, has brought into account as output (b) tax an amount that was not output tax due, the Commissioners shall be liable to credit the person with that amount. (1A) Where the Commissioners (a) have assessed a person to VAT for a prescribed accounting period (whenever ended), and (b) tax an amount that was not output tax due, in doing so, have brought into account as output they shall be liable to credit the person with that amount. (1B) Where a person has for a prescribed accounting period (whenever ended) paid to the Commissioners an amount by way of VAT that was not VAT due to them, otherwise than as a result of (a) brought into account as output tax, or (b) 26 not being brought into account, an amount of input tax allowable under section an amount that was not output tax due being the Commissioners shall be liable to repay to that person the amount so paid. (2) The Commissioners shall only be liable to credit or repay an amount under this section on a claim being made for the purpose. (2A) Where (a) as a result of a claim under this section by virtue of subsection (1) or (1A) above an amount falls to be credited to a person, and (b) after setting any sums against it under or by virtue of this Act, some or all of that amount remains to his credit, the Commissioners shall be liable to pay (or repay) to him so much of that amount as so remains. (3) It shall be a defence, in relation to a claim under this section by virtue of subsection (1) or (1A) above, that the crediting of an amount would unjustly enrich the claimant . (4) The Commissioners shall not be liable on a claim under this section (a) (1) or (1A) above, or (b) (1B) above, to repay an amount to a person under subsection to credit an amount to a person under subsection if the claim is made more than three years after the relevant date [ie the end of the prescribed accounting period] . (6) A claim under this section shall be made in such form and manner and shall be supported by such documentary evidence as the Commissioners prescribe by regulations; and regulations under this subsection may make different provision for different cases. (7) Except as provided by this section, the Commissioners shall not be liable to credit or repay any amount accounted for or paid to them by way of VAT that was not VAT due to them. In view of the three year limitation period laid down by section 80(4), it is necessary to explain how Littlewoods were able to make claims between 2002 and 2004 for the recovery of overpaid tax going back to 1973. As originally enacted, section 80 provided for a limitation period of six years unless the undue tax had been paid by reason of a mistake, in which event a claim could be made at any time within six years from the date on which the claimant discovered the mistake or could with reasonable diligence have discovered it. That limitation period was reduced to one of three years, as in the version of section 80(4) set out above, by an amendment enacted by section 47 of the Finance Act 1997. The amendment was brought into force with retrospective effect from the first announcement of the change on 18 July 1996. The retrospective introduction of the reduced limitation period, without any transitional arrangements for cases where a right to recovery of overpaid tax already existed, was held by the CJEU to be incompatible with EU law: Marks & Spencer plc v Customs and Excise Comrs (Case C 62/00) [2003] QB 866. The House of Lords subsequently decided that the reduced limitation period had to be disapplied in respect of rights which had accrued before it was brought into force: Fleming (trading as Bodycraft) v Revenue and Customs Comrs [2008] UKHL 2; [2008] 1 WLR 195. It is on that basis that HMRC have repaid Littlewoods the overpaid tax back to 1973. The position was addressed legislatively in section 121 of the Finance Act 2008, which excluded the application of section 80(4) of the 1994 Act to claims in respect of amounts brought into account or paid before 4 December 1996, provided the claim was made before 1 April 2009. For present purposes, the most material provisions of section 80 are subsections (3), (4) and (7). Section 80(3) provides HMRC with a statutory defence to a claim under section 80 where reimbursing the taxpayer who made the overpayment would unjustly enrich him. The possibility of unjust enrichment (in a non technical sense) arises because the taxpayer often passes on to his customers the burden of the output tax for which he accounts to HMRC. Section 80A (as inserted by section 46(2) of the Finance Act 1997), and the Value Added Tax Regulations 1995 (SI 1995/2518), as amended, create a scheme under which the defence is disapplied where reimbursement arrangements are made with the purpose of ensuring that the payment to the taxpayer is used to reimburse the customers who have borne the economic burden of the tax. Section 80(4) lays down a limitation period for claims under the section which, following the amendment effected by the Finance Act 1997, is shorter than the period of six years, capable of extension where a mistake has been made, which would apply to a common law claim in unjust enrichment under the Limitation Act 1980. A statutory claim by the taxpayer must therefore be brought within a shorter and more certain period of time. The evident aim is to protect public finances against the risk of a liability to repay tax emerging more than three years after the tax was received. That is consistent with the background to the amendment: as Lord Walker of Gestingthorpe explained in the Fleming case at para 36, it was prompted by developments in the case law of the CJEU which exposed HMRC to the risk of claims for repayment of large amounts of output tax, some of it going back for many years. As this court put it in Investment Trust Companies v Revenue and Customs Comrs [2017] UKSC 29; [2017] 2 WLR 1200, para 88, the limitation period is designed to avoid the disruption of public finances. In section 80, Parliament has thus created a specific remedy for taxpayers who have overpaid VAT, but has done so subject to limitations, including those set out in subsections (3) and (4). Those limitations would have no equivalent in a common law claim, and would therefore be defeated if it were possible for the taxpayer, or his customers, to bring such a claim. Parliament cannot have intended the special regime in section 80 to be capable of circumvention in that way. That is reflected in section 80(7), which provides that HMRC shall not be liable to repay an amount paid to them by way of VAT on the ground that it was not due, except as provided by this section. In the light of section 80(3) and (4), this court concluded in Investment Trust Companies that section 80(7) should be construed as excluding non statutory claims by customers, as well as taxpayers (as was conceded), which might otherwise lie against HMRC in circumstances falling within the scope of section 80. As the court stated: Parliament cannot sensibly be taken to have intended, when it created this scheme for the reimbursement of suppliers (with provision for them in turn to reimburse their customers), subject to strict time limits, that it should exist concurrently with non statutory liabilities towards suppliers and their customers which were potentially wider in scope and were subject to a longer and less certain limitation period. Such an intention would be inconsistent with the rationale of the statutory scheme. (para 84) Littlewoods take no issue with that conclusion. They made their claims for the repayment of the tax under section 80, and they accept that no other route to the recovery of the tax was open to them. But, they argue, section 80 does not deal with the question of interest, and has no bearing on their present claims. Interest is addressed in the statutory scheme by section 78, and that section, they argue, provides a statutory right to interest which is of a residual character, and leaves common law claims unaffected. Section 78 of the 1994 Act was originally enacted as section 38A of the Value Added Tax Act 1983, inserted by section 17 of the Finance Act 1991, which received the Royal Assent on 25 July 1991. It was then consolidated in the 1994 Act together with an amendment (immaterial for present purposes) which had been made in 1992. Like section 80, it has undergone frequent amendment. In the version in force when Littlewoods commenced the present proceedings, it provides, so far as material: 78. Interest in certain cases of official error. (1) Where, due to an error on the part of the Commissioners, a person has accounted to them for an amount by way of (a) output tax which was not output tax due from him and, as a result, they are liable under section 80(2A) to pay (or repay) an amount to him, or (b) failed to claim credit under section 25 for an amount for which he was entitled so to claim credit and which they are in consequence liable to pay to him, or (otherwise than in a case falling within paragraph (c) (a) or (b) above) paid to them by way of VAT an amount that was not VAT due and which they are in consequence liable to repay to him, or (d) due to him from them in connection with VAT, suffered delay in receiving payment of an amount then, if and to the extent that they would not be liable to do so apart from this section, they shall pay interest to him on that amount for the applicable period, but subject to the following provisions of this section . (3) applicable under section 197 of the Finance Act 1996 . (10) The Commissioners shall only be liable to pay interest under this section on a claim made in writing for that purpose. Interest under this section shall be payable at the rate (11) A claim under this section shall not be made more than three years after the end of the applicable period to which it relates [ie the period ending when the Commissioners authorise payment of the amount on which the interest is payable]. (emphasis added) As originally enacted, section 78(11) provided for a limitation period of six years running from the date on which the claimant discovered HMRCs error or could with reasonable diligence have discovered it. Like the corresponding provision in section 80, it was amended by the Finance Act 1997 so as to impose a three year period, with retrospective effect, and with no transitional provisions. In view of the incompatibility of that situation with EU law, HMRC have paid Littlewoods interest under section 78, back to 1973, on the amount repaid to them under section 80. Littlewoods cross appeal centres on the words in section 78(1) which we have italicised (if and to the extent that they would not be liable to do so apart from this section). They argue that those words should be given their ordinary meaning. So construed, section 78 yields to any other liability to pay interest. The purpose of the legislation, so they argue, is to create a liability to pay interest where none would otherwise exist. However, following the decision of the House of Lords in Sempra Metals, where HMRC have had the use of money as a result of the payment of tax which was not due, it is possible for the taxpayer to bring a claim for compound interest on the money in question under the common law, on the ground of unjust enrichment. Since a liability to meet such a claim is one which exists apart from section 78, it is not excluded by section 78. This argument has been consistently rejected by the courts, but for a variety of different reasons. In F J Chalke Ltd v Revenue and Customs Comrs [2009] EWHC 952 (Ch); [2009] STC 2027, Henderson J focused on the fact that section 80(7) excludes any common law liability to repay the overpaid VAT, and inferred that it must also exclude any common law liability to pay interest: the exclusion in section 80(7) of any liability to repay overpaid VAT save as provided for by section 80 necessarily prevents the recovery of any interest on the overpaid VAT, except where section 78 or some other statutory provision provides an entitlement to such interest (para 74). The difficulty with that reasoning, as the Court of Appeal pointed out in the present case (paras 37 42), is that it was held in Sempra Metals that a restitutionary claim in respect of the use value of money is distinct from a restitutionary claim in respect of the money itself: the right to recover interest was described as a free standing cause of action. On that basis, it would appear, at least on a strict reading, that even if the cause of action for repayment of the overpaid tax is swept away by section 80(7), that may not exclude a cause of action in respect of the use value of the money. In the present case, Vos J considered that sections 78 and 80 had to be regarded as creating an integrated regime for repayments of overstated and overpaid VAT, which should be read as a whole. Paragraphs (a) and (c) of section 78(1) applied specifically to cases where repayments were due under section 80. If, however, the critical words in section 78(1) covered common law restitution claims, then the right to interest under section 78 would be disapplied in every case where repayments were due under section 80. In those circumstances, to construe the critical words as including common law restitutionary claims would make a nonsense of the provision (para 60). The Court of Appeal focused on the fact that the critical words in section 78(1) concern liabilities to pay interest. In their view, it was a strained use of language to describe a liability to make restitution for the time value of money as a liability to pay interest, even if the relief was calculated by reference to interest rates (para 45). There are two difficulties with this reasoning. The first is that it is difficult to see any substantial distinction between a liability to pay for the time value of money and a liability to pay interest: interest is a measure of the time value (or use value) of money. The second is that, if Littlewoods claim does not concern a liability to pay interest, it is difficult to see how it can be affected by section 78, which is solely concerned with interest. Despite the attractive way in which Littlewoods argument was presented, we agree with the courts below that it should be rejected. It is notable in the first place that the scheme established by section 78 applies in circumstances falling within paragraphs (a) to (d) of subsection (1). Although section 78(1) is not confined to circumstances in which a repayment is due under section 80, such circumstances fall within its scope. The present case falls under paragraph (a), which applies expressly where a person has accounted to HMRC for output tax which was not due, and, as a result, they are liable under section 80(2A) to pay (or repay) an amount to him. HMRC are only liable to pay interest on the repayment under section 78, however, if the circumstances leading to the repayment are due to an error on the part of the Commissioners. That limitation strongly suggests that section 78 is intended to be exclusive of any common law right to interest on the repayment. What would be the point of limiting interest under section 78 to cases of official error, if interest was generally available at common law regardless of whether any official error had been made? Secondly, section 78(3) specifies the rate of interest payable by reference to section 197 of the Finance Act 1996, which in turn enables the rate to be set by regulations. Rates have been set by statutory instrument for the whole lifetime of VAT back to 1 April 1973. The interest is calculated on a simple rather than a compounded basis. The provision again suggests that section 78 is intended to be exclusive of any common law right to interest, which might be calculated at other rates and on a different basis. Thirdly, section 78(11) lays down a limitation period for claims under the section which is shorter than the period of six years, with the potential for an extension in the event of mistake, which would apply to a common law claim in unjust enrichment under the Limitation Act 1980. Like the corresponding provision in section 80, that shortened limitation period must be intended to protect public finances from disruption. In section 78, Parliament has thus created a specific right to interest for taxpayers who have overpaid VAT, but has done so subject to limitations, including those set out in subsections (1), (3) and (11). Those limitations are a special feature of the statutory regime and would have no equivalent in a common law claim. They would therefore be defeated if it were possible for the taxpayer to bring a common law claim. Parliament cannot have intended the special regime in section 78 to be capable of circumvention in that way. Unlike section 80, however, section 78 contains no provision expressly excluding alternative remedies. That does not prevent the exclusion of alternative remedies by implication. As Littlewoods point out, however, the critical words in subsection (1) acknowledge that there are other rights to interest which must be given priority. Read literally, those words would apply to common law rights to interest; but that reading, as we have explained, would render the limitations in subsections (1), (3) and (11) effectively pointless. How, then, are those words to be construed in the context of the provision as a whole? Lord Bingham of Cornhill stated, in relation to statutory interpretation: The basic task of the court is to ascertain and give effect to the true meaning of what Parliament has said in the enactment to be construed. But that is not to say that attention should be confined and a literal interpretation given to the particular provisions which give rise to difficulty. In R (Quintavalle) v Secretary of State for Health [2003] 2 AC 687, para 8, In that regard, his Lordship cited the speech of Lord Wilberforce in Royal College of Nursing of the United Kingdom v Department of Health and Social Security [1981] AC 800, 822: In interpreting an Act of Parliament it is proper, and indeed necessary, to have regard to the state of affairs existing, and known by Parliament to be existing, at the time. It is a fair presumption that Parliaments policy or intention is directed to that state of affairs. At the time of when section 78 was enacted, interest was available under the VAT legislation only in limited circumstances, discussed below. Interest was also available under statute on a sum for which judgment was given in proceedings for the recovery of a debt or damages: Senior Courts Act 1981, section 35A (as inserted by section 15 of the Administration of Justice Act 1982). Under the common law, on the other hand, the general rule was that the court had no power, in the absence of agreement, to award interest as damages for the late payment of a debt: London, Chatham and Dover Railway Co v South Eastern Railway Co [1893] AC 429. An exception to that general rule existed where loss due to late payment constituted special damage within the contemplation of the parties, under the second limb of Hadley v Baxendale (1854) 9 Exch 341: President of India v La Pintada Cia Navigacion SA [1985] AC 104. So far as restitutionary claims were concerned, it had been held that in an action for money had and received only the net sum could be recovered: Johnson v The King [1904] AC 817, applying London, Chatham and Dover Railway Co v South Eastern Railway Co. Against that background, the statutory scheme established by section 78 was more generous than the common law, as then understood. In this context, the aspect of the decision in Sempra Metals which is important is that it was accepted for the first time that a claim would lie at common law for the use value of money by which the defendant was unjustly enriched, even if the money itself had been repaid, and that the enrichment could normally be calculated by compounding interest over the period of the enrichment. That decision was not contemplated by Parliament when it enacted sections 78 and 80, many years earlier. If a claim based on the principle established by that decision were held to be available to Littlewoods, on the basis that it fell within the critical words in section 78(1) (if and to the extent that they would not be liable to do so apart from this section), then it would equally be available in any other case where an amount was paid under section 80. As counsel for Littlewoods accepted in argument, section 78 would effectively become a dead letter. It follows that the literal reading fatally compromises the statutory scheme created by Parliament. It cannot therefore be the construction of the critical words which Parliament intended. Is it possible to construe the critical words more narrowly than their literal sense? What source or sources of a liability to pay interest can Parliament have contemplated, which were to take priority over the liability created by section 78? Given the background which we have explained, such sources can only have been statutory. One such source is the power to award interest following a decision on an appeal, originally enacted in section 40(4) of the Finance Act 1972 and now contained in section 85A of the 1994 Act (as inserted by paragraph 223 of Schedule 1 to the Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (SI 2009/56)). Another is the power to award interest where an appeal is settled, originally enacted in section 25 of the Finance Act 1985, and now contained in section 85 of the 1994 Act. A third example is the power to award interest on an amount for which judgment is given, under section 35A of the Senior Courts Act 1981. The effect of the critical words in section 78(1) is to give priority to provisions such as these, and to prevent double recovery by the taxpayer. The reservation in section 78(1) (if and to the extent that they would not be liable to do so apart from this section) must therefore be interpreted as referring only to statutory liabilities. It is not a literal construction, but a departure from a literal construction is justified where it is necessary to enable the provision to have the effect which Parliament must have intended. Summary on issue 1 Since the scheme created by section 78 is inconsistent with the availability of concurrent common law claims to interest, it must therefore be interpreted as impliedly excluding such claims. The reservation set out in section 78(1) must therefore be construed as referring only to statutory liabilities to pay interest. So construed, section 78 impliedly excludes the claims made by Littlewoods, as a matter of English law, and without reference to EU law. The second issue On this second issue HMRC challenge the interpretation which Henderson J and the Court of Appeal have placed on the judgment of the CJEU, to which we have referred in para 12 above. The question for this court is the proper interpretation of that judgment. As we shall seek to demonstrate, the central question is whether the CJEU has ruled that HMRC must reimburse in full the use value of the money which over an exceptionally long period of time Littlewoods has paid by mistake. In order to answer that question, it is necessary to set out the central paragraphs of the CJEUs judgment which support the ruling in that judgment (para 35), which we have quoted in para 12 above. In para 24 of its judgment the CJEU recorded its settled case law that the right to a refund of charges levied in a member state in breach of rules of EU law is a consequence and complement of the rights conferred on individuals by provisions of EU law as interpreted by the Court. In that regard, the CJEU referred to Amministrazione delle Finanze dello Stato v SpA San Giorgio (Case 199/82) [1983] ECR 3595, para 12 and Metallgesellschaft Ltd v Inland Revenue Comrs (Joined Cases C 397/98 and C 410/98) [2001] Ch 620; [2001] ECR I 1727, para 84. It continued: The member state is therefore in principle required to repay charges levied in breach of Community law [Socit Comateb v Directeur Gnral des Douanes et Droits Indirects (Joined Cases C 192/95 to C 218/95) [1997] ECR I 165, para 20; Metallgesellschaft, para 84; Webers Wine World Handels GmbH v Abgabenberufungskommission Wien (Case C 147/01) [2003] ECR I 11365, para 93; Test Claimants in the FII Group Litigation (Case C 446/04) [2006] ECR I 11753, para 202)]. 25. The Court has also held that, where a member state has levied charges in breach of the rules of Community law, individuals are entitled to reimbursement not only of the tax unduly levied but also of the amounts paid to that state or retained by it which relate directly to that tax. That also includes losses constituted by the unavailability of sums of money as a result of a tax being levied prematurely (Metallgesellschaft, paras 87 to 89, and Test Claimants in the FII Group Litigation, para 205). 26. It follows from that case law that the principle of the obligation of member states to repay with interest amounts of tax levied in breach of EU law follows from that law. 27. In the absence of EU legislation, it is for the internal legal order of each member state to lay down the conditions in which such interest must be paid, particularly the rate of that interest and its method of calculation (simple or compound interest). Those conditions must comply with the principles of equivalence and effectiveness; that is to say that they must not be less favourable than those concerning similar claims based on provisions of national law or arranged in such a way as to make the exercise of rights conferred by the EU legal order practically impossible (see, to that effect, [San Giorgio, para 12; Webers Wine World, para 103; and MyTravel plc v Commissioners of Customs and Excise (Case C 291/03) [2005] ECR I 8477, para 17]). 28. Thus, according to consistent case law, the principle of effectiveness prohibits a member state from rendering the exercise of rights conferred by the EU legal order impossible in practice or excessively difficult [(R (Wells) v Secretary of State for Transport, Local Government and the Regions (Case C 201/02) [2004] ECR I 723, para 67, and i 21 Germany GmbH v Federal Republic of Germany (Joined Cases C 392/04 and C 422/04) [2006] ECR I 8559, para 57)]. 29. In this case that principle requires that the national rules referring in particular to the calculation of interest which may be due should not lead to depriving the taxpayer of an adequate indemnity for the loss occasioned through the undue payment of VAT. 30. It is for the referring court to determine whether that is so in the case at issue in the main proceedings, having regard to all the circumstances of the case. In that regard it should be noted that it is apparent from the order for reference that, under the provisions of section 78 of the VATA 1994, the Commissioners paid Littlewoods interest on the VAT levied in breach of EU law. Pursuant to those provisions, Littlewoods received payment of simple interest, in accordance with the said provisions, in an amount of GBP 268,159,135, corresponding to interest due over about 30 years, which amount exceeds by more than 23% that of the principal sum, which amounts to GBP 204,774,763. The CJEU then addressed what was required in order to comply with the principle of equivalence; but no question concerning that principle arises in this case. Before both Henderson J and the Court of Appeal Littlewoods succeeded in their assertion that EU law, as laid down in this judgment of the CJEU, gave them a right to a full reimbursement of their loss caused by their mistaken payment of VAT. At the trial before Henderson J, Littlewoods led evidence from Professor John Kay that reimbursement of the use value of money over long periods of time required the payment of compound interest and that the simple interest, which HMRC had paid, reimbursed only about 24% of Littlewoods loss, which amounted to approximately 1.2 billion. Littlewoods argued that simple interest therefore did not give an adequate indemnity or reimbursement of Littlewoods loss as EU law required. In order to understand the debate in this appeal and the reasons for our conclusions, it is useful to summarise the relevant parts of Henderson Js impressive judgment. Henderson J upheld Littlewoods submission essentially because he interpreted the reference to an adequate indemnity in para 29 of the CJEUs judgment as a right to reimbursement of the losses representing the time value of unlawfully levied tax which the member state retained. Those losses resulted from the unavailability to the taxpaying company of the sums of money which it had erroneously paid as tax. The CJEU had held in para 25 that those losses fell within the sums retained by the state which relate directly to that tax. The right to interest to make good those losses had been recognised as a right conferred by EU law (para 260). He found support for that interpretation of the CJEU judgment in two later judgments of the CJEU. In the first, British Sugar plc v Rural Payments Agency (Case C147/10) heard with Zuckerfabrik Jlich AG v Hauptzollamt Aache (Case C 133/10) and Socit Tereos v Directeur gnral des douanes et droits indirects (Case C 234/10) EU:C:2012:591, the Fourth Chamber of the CJEU held that interest was payable by the national body, the Rural Payments Agency, on invalidly levied sugar levies even if it could not recover interest on those levies from the EU institution, to which it had paid them, and it had not been enriched by the receipt of the levies. This, Henderson J held, emphasised the potency of the right to interest in EU law, which the CJEU appeared to regard as conceptually indistinguishable from the right to repayment of the unlawfully levied tax (para 263). The second case, Irimie v Administratia Finantelor Publice Sibiu (Case C 565/11) [2013] STC 1321, concerned a rule of Romanian law which provided that interest on unlawfully levied tax, which had to be repaid, ran only from the date of the claim for repayment and not from the date when the tax had been paid. The CJEU held (paras 26 28) that the temporal limitation on the accrual of interest did not meet the requirements of the courts ruling in Littlewoods that the calculation of interest should not lead to depriving the taxpayer of adequate compensation for the loss sustained through the undue payment of tax. Henderson J expressed the view that the case advanced by Littlewoods in their detailed written observations to the CJEU assisted in interpreting the judgment of the court. Littlewoods had argued not that EU law always required the payment of compound interest on overpaid tax but that interest reflecting the use value of the money received should always be paid in order to satisfy the principle of effectiveness (para 273). Littlewoods had founded on the decision of the CJEU in Marshall v Southampton and South West Hampshire Health Authority (Teaching) (No 2) (Case C 271/91) [1994] QB 126; [1993] ECR I 4367. That case concerned the measure of compensation in a successful claim for sex discrimination arising from the health authoritys provision of an earlier compulsory retirement age for women compared with that for men in the same employment. The health authority paid her the maximum sum of 6,250 which was then permitted as compensation under the Sex Discrimination Act 1975 and the House of Lords referred to the CJEU the question whether it was essential to the due implementation of article 6 of Council Directive 76/207/EEC (the Equal Treatment Directive) that her compensation should not be less than the loss she had sustained and that it should include an award of interest. The CJEU held (paras 22 26) that the object of article 6 of the Equal Treatment Directive was to arrive at real equality of opportunity; when financial compensation was the measure adopted to achieve that objective, it must be adequate, in that it must enable the loss and damage actually sustained as a result of the discriminatory dismissal to be made good in full in accordance with applicable national rules. In relation to the award of interest, the CJEU held (para 31) that full compensation could not leave out of account factors, such as the effluxion of time, which reduce its value; an award of interest in accordance with applicable national rules was therefore an essential component of compensation for the purpose of restoring real equality of treatment. Henderson J considered that the references in that case to adequate compensation, with the connotation of full compensation, involved similar language to the phrase an adequate indemnity in para 29 of the CJEUs judgment in this case (para 279). Henderson J interpreted the CJEUs judgment in the present case as having held that the right to interest on unduly levied tax is a right conferred by EU law which ranked equally with the right to repayment of the unlawful tax itself. That was the substance of the EU right which the CJEU established in para 26 of its judgment (para 287). The principle of effectiveness, which sets minimum standards for the enforcement and protection of EU rights in national law, was a secondary or adjectival principle, which did not define the substance of those rights and could not whittle down those rights (para 286). He looked at English dictionary definitions of adequate and indemnity (para 292) in support of his conclusions, and faced up to the puzzling questions (a) why the CJEU had not given clearer guidance that compound interest was required and (b) why the CJEU in the final sentence of para 30 had referred to the sums which HMRC had paid (para 296). He accepted that he did not have a satisfactory answer to the latter question (para 299). He stated his conclusion on this matter in these terms (para 302): In sum, my overall conclusion on the difficult question of the meaning of the adequate indemnity test in para 29 of the [CJEUs] judgment is that it requires payment of an amount of interest which is broadly commensurate with the loss suffered by the taxpayer of the use value of the tax which he has overpaid, running from the date of payment until the date of repayment. On that basis, the simple interest which HMRC had paid could not have provided Littlewoods with an adequate indemnity for their loss (para 310). The Court of Appeal, like the judge, considered that it was logically necessary to identify the content of the right to interest, which the CJEU had recognised in this case, before answering the question whether the UKs rules in section 78 of VATA gave effect to the right in accordance with the principle of effectiveness. The Court focussed on para 25 of the CJEUs judgment, treating the word reimbursement as very important (para 94). That right to reimbursement included losses constituted by the unavailability of money (para 96). This approach was supported by the CJEUs judgment in Irimie (above). Para 27 of the CJEUs judgment, on which HMRC had relied in their submissions, did not modify the content of that right. The Court of Appeal therefore rejected HMRCs submission that an adequate indemnity in para 29 of the CJEUs judgment only required that a member state provide for interest in some recognisable form and stated that the test was that the taxpayer was entitled to reimbursement of the losses constituted by the unavailability of sums of money as a result of a tax being levied (para 107). We have reached a different but nonetheless clear view as to the meaning of the CJEUs judgment in this case. In our view the phrase an adequate indemnity in para 29 of the judgment, when construed in the context of the wider judgment, and in particular the paragraphs which we have quoted in para 43 above, bears a broader meaning than that which Henderson J and the Court of Appeal favoured, and suggests that the CJEU has given member state courts a discretion to provide reasonable redress in the form of interest in addition to the mandatory repayment of any wrongly levied tax, interest and penalties. We have three reasons for this view. First, the structure of the CJEUs judgment itself and its choice of words support this conclusion. Secondly, the practice of member states in awarding interest on wrongly levied tax provides the context of the CJEUs judgment and suggests that the court was not being as radical as the courts below have held. Thirdly, prior and subsequent case law of the CJEU is consistent with this interpretation. We examine each in turn. First, the structure of the relevant passage in the CJEUs judgment can be analysed in three parts. The first part is paras 24 to 26 in which the CJEU sets out the prior case law which established the right to a refund of charges levied by a member state in breach of EU law, and the extension of that right by Metallgesellschaft (above) and Test Claimants in the FII Group Litigation v Inland Revenue Comrs (Case C 446/04) (Note) [2012] 2 AC 436 to include other amounts retained by the member state, including compensation for the unavailability of sums of money paid as tax. We discuss those cases when we set out the third reason below. The conclusion which the CJEU reaches from the case law set out in paras 24 and 25 is stated in para 26 and merits repetition: It follows from that case law that the principle of the obligation of member states to repay with interest amounts of tax levied in breach of EU law follows from that law. There is therefore a general entitlement to interest on tax levied in breach of EU law. In the courts below, emphasis was placed on the CJEUs use of the word reimbursement in para 25 when it speaks of the reimbursement of losses constituted by the unavailability of money. We do not attach such significance to a single word, considered in isolation. It is necessary to consider para 25 in the context of the judgment as a whole. In our view, consistently with the conclusion expressed in para 26, reimbursement of loss means no more than recompense or compensation, which is achieved through the payment of some form of interest. In relation to the principal sums, whether of tax, interest or penalties levied by the member state, the compensation would be full compensation in order to achieve restitution of those principal sums. But interest is a means of compensating a person for being kept out of his money. The measure of such compensation is not as straightforward as the calculation of the principal sums which must be repaid. The Court does not specify the level of the compensation for the unavailability of money which that interest is to provide. Instead, the CJEU confirms in this first part that there is an EU principle that a member state must repay with interest charges which it has levied in breach of EU law. It is in the second part that the CJEU lays down what EU law requires member states to provide by way of interest. In the second part, which is paras 27 to 29, the CJEU restates the principle that it is for the internal order of each member state to lay down the conditions in which such interest must be paid. The member state is given a discretion both as to the interest rate and also as to the method of calculation, in particular whether it is simple or compound interest. That discretion is qualified by the established EU law principles of equivalence and effectiveness. The former principle, which in this context requires that the interest to be awarded must not be less favourable than that which would be paid on similar claims for the repayment of unduly levied tax under domestic law, is not in issue. The latter principle, the principle of effectiveness, is in issue as it gives the context of the phrase an adequate indemnity in para 29. We discuss the principle further when we set out the third reason below. Paragraph 29 of the judgment describes what the principle of effectiveness requires. It is that the national rules on the calculation of interest should not deprive the taxpayer of an adequate indemnity for the loss occasioned through the undue payment of the tax. The phrase, an adequate indemnity has a less definitive meaning than full reimbursement. The French text of the judgment speaks of une indemnisation adquate and the German text refers to eine angemessene Entschdigung. In both languages, as in English, the words chosen can support a range of meanings, including the meaning of adequate compensation or reasonable redress, which are not tied into the idea of full compensation for the time value of money. In using the principle of effectiveness to require the existence of an adequate indemnity but not expressing a definitive view on the adequacy of simple interest, the CJEU was less categorical than Advocate General Trstenjak, who opined (paras 33 and 34) that the payment of simple interest clearly complied with that principle and that that principle would be breached only if the interest rate were so low as to deprive the claim of substance. In support of that view she recited (para 37) the amounts of principal and interest which HMRC had paid and recorded that the latter exceeded the former by over 25%. But it would be wrong to overstate the extent of the CJEUs departure from the Advocate Generals approach. In what we see as the third part of the relevant passage in its judgment (para 30) the CJEU, after stating that it was for the referring court to decide whether the national rules for the calculation of interest would deprive the taxpayer of an adequate indemnity, recorded what HMRC had already paid and repeated the comparison which the Advocate General had made between the amount of principal and the amount of interest on that principal. What the CJEU said in para 30 suggests that the payment of a substantial amount of interest in a claim for repayment, which, unusually, stretches back over decades, can constitute reasonable redress. This is consistent with the application of the principle of effectiveness, namely that the rules do not render practically impossible or excessively difficult the exercise of rights conferred by EU law: having recognised a right to interest (para 26), the CJEU points out in para 30 that the taxpayer has already received interest amounting to more than 125% of the principal sum. This approach is also readily understandable in a context in which the CJEU, in the interests of legal certainty, has upheld the validity of national limitation periods of relatively short duration which restrict the ability of taxpayers to recover unduly paid tax: for example Rewe Zentralfinanz eG v Landwirtschaftskammer fr das Saarland (Case C 33/76) [1976] ECR 1989, para 5; Palmisani v Instituto Nazionale della Previdenze Sociale (INPS) (Case C 261/95) [1997] ECR I 4025, para 28; Fantask A/S v Industriministeriet (Erhvervsministeriet) (Case C 188/95) [1997] ECR I 6783, paras 48 52. This case law suggests that there is no general principle of EU law that there must be full reimbursement of the use value of money. If, as Henderson J and the Court of Appeal have held, the CJEU, in the paras leading up to para 26, had established a principle that the interest awarded should achieve a full or almost full reimbursement of loss, there is no satisfactory explanation for what the CJEU then said in para 30. As we have said, Henderson J recognised this difficulty and described it as a puzzling question to which he had no satisfactory answer (paras 296 and 299). He accepted that the CJEU sometimes makes an observation about the facts which gives a strong indication of what it thinks the answer probably should be, while leaving it to the referring court to provide the answer. But, as he interpreted the words an adequate indemnity as requiring an amount of interest broadly commensurate with the loss suffered by the taxpayer of the use value of the tax, he found it incredible that the CJEU would have thought that simple interest over 30 years could achieve that result. Differing as we do from Henderson J and the Court of Appeal in our interpretation of the CJEUs judgment, we have no difficulty in seeing para 30 as fitting into the structure of that judgment: having set out a criterion of reasonable redress which was to cover the aggregate of principal and interest, the CJEU in quoting the figures, which had persuaded the Advocate General to assert that simple interest sufficed, has given a strong indication of its view, when handling the matter back to the referring court to apply a broad judgment. In summary, we interpret the CJEUs judgment as (i) requiring the repayment of tax with interest, without specifying the form of that interest (ii) stating that the principle of effectiveness requires that the calculation of that interest, together with the repayment of the principal sum, should amount to reasonable redress for the taxpayers loss, and (iii) suggesting that the referring court might consider that interest which is over 125% of the amount of the principal sum might be such reasonable redress. Turning to the wider context of member state practice, the United Kingdom Government in its written observations to the CJEU examined the legislation in 13 other member states (Belgium, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Luxembourg, the Netherlands, Poland, Spain, and Sweden). In all but one (Sweden) simple interest is payable both on the recovery by taxpayers of taxes which were unduly paid and on the recovery by the tax authorities of taxes paid late. Thus, there was and is a widespread practice within the member states of the EU which is the same as that in the United Kingdom. In this context, if the CJEU were seeking to outlaw this practice, we would have expected clear words to that effect. They are absent. Thirdly, we see no inconsistency between our interpretation of the CJEUs judgment in this case and its prior and subsequent case law. The obligation in principle on a member state to repay charges levied in breach of EU law, which is enshrined in cases such as San Giorgio and Socit Comateb v Directeur Gnral des Douanes et Droits Indirects (Joined Cases C 192/95 to C 218/95) [1997] ECR I 165, was initially accompanied by rulings that, in the absence of EU rules governing the matter, the payment of interest on such sums was an ancillary problem to be settled in national law, whether it concerned the date from which interest was payable, the rate of interest or the method of calculation: for example Socit Roquette Frres v Commission of the European Communities (Case 26/74) [1976] ECR 677, paras 11 13; Express Dairy Foods Ltd v Intervention Board for Agricultural Produce (Case 130/79) [1980] ECR 1887, paras 16 and 17; and Ansaldo Energia SpA v Amminstrazione delle Finanze dello Stato (Joined Cases C 279/96, C 280/96 and C 281/96) [1998] ECR I 5025, paras 27, 28 and 30. More recently, in Metallgesellschaft (above) the CJEU recognised that there was a right in EU law to obtain interest accrued on the advance payment of tax in breach of EU law for the period between the illegal advance payment and the date on which the tax became payable under EU law. In that case, because the purported but illegal liability to pay advance corporation tax had later been replaced by a valid obligation to pay corporation tax, the taxpayer had no claim for the tax itself and claimed merely for interest on the premature payment of the tax. The CJEU reiterated its case law that it was for the national courts to settle ancillary questions such as the payment of interest (para 86) but nonetheless recognised as part of EU law a claim for interest, holding (para 87): where the breach of Community law arises, not from the payment of the tax itself but from its being levied prematurely, the award of interest represents the reimbursement of that which was improperly paid and would appear to be essential in restoring the equal treatment guaranteed by article 52 of the Treaty. In support of this view the CJEU referred (para 94) to Marshall (above) which we discuss further in para 65 below. approach, holding in para 205 that In Test Claimants in the FII Litigation (above) the CJEU confirmed this where a member state has levied charges in breach of the rules of Community law, individuals are entitled to reimbursement not only of the tax unduly levied but also of the amounts paid to that state or retained by it which relate directly to that tax. As the court held in paras 87 and 88 of Metallgesellschaft, that also includes losses constituted by the unavailability of sums of money as a result of a tax being levied prematurely. While the CJEU spoke in this passage about the reimbursement of losses constituted by the unavailability of sums of money which gave rise to an entitlement to claim interest, it made no statement as to the rate or method of calculation of that interest, by which the use value of money might be compensated. It is unsurprising, therefore, that the CJEU in para 26 of its judgment in the present case deduced from the case law a general principle that the repayment of tax levied in breach of EU law had also to provide for the payment of interest, without specifying further the content of that right to interest. The CJEU in the present case did not refer in its judgment to Marshall (above). But that case was cited to the court in argument and, as we have said, featured in the reasoning of the court in Metallgesellschaft. We have discussed the case of Marshall in para 47 above. In our view, the case is clearly to be distinguished from the present case because it was concerned with ascertaining the principal sum which should be paid to the claimant to remove the discriminatory treatment which she had suffered and to achieve equality of opportunity. The use by the CJEU in that case of the phrase adequate to describe the making good in full of the loss sustained as a result of her dismissal makes good sense in that context. But there are three reasons why we do not infer that the CJEU in the present case intended the phrase an adequate indemnity to have the same meaning in the context of interest. First, in Marshall the CJEU applied the principle of effectiveness in a contextual manner; as in the earlier case of von Colson v Land Nordrhein Westfalen (Case 14/83) [1984] ECR 1891, the court had regard to the purpose of the Equal Treatment Directive in giving content to the principle in relation to the principal sum to be paid as compensation. Secondly, the court in Marshall addressed the claim for interest separately (para 31), holding that full compensation included taking account of the effluxion of time which might diminish the value of the award and that therefore an award of interest in accordance with the applicable national rules was an essential component of the compensation. Taking into account the diminution in value of a sum of money through the passage of time is not the same as compensation in full for the use value of money. Thirdly, as Henderson J recognised (para 282), the CJEU may have adopted the phrase an adequate indemnity from para 32 of the written observations submitted by the European Commission in support of the sufficiency of simple interest in which it spoke of such interest providing adequate restitution or compensation. The Advocate General summarised the Commissions position by referring to this paragraph in her opinion (para 11). Marshall therefore is of no assistance. Turning to the subsequent case law, we encounter the CJEU formulating the law in substantially the same way as it did in this case. Thus, in Zuckerfabrick Jlich AG v Hauptzollamt Aachen, British Sugar plc v Rural Payments Agency and Socit Tereos v Directeur gnral des douanes et droits indirects (Joined Cases C 113/10, C 147/10 and C 234/10) EU:C:2012:591; [2012] All ER (D) 174 the CJEU in paras 65 and 66 repeated the reasoning in paras 25 and 26 in the judgment in this case and concluded (para 69) that individuals who were entitled to reimbursement of sums paid as production levies under invalid EU legislation were also entitled to interest on those sums. The member state was obliged to pay interest even though it could not recover the corresponding interest from the EU institution to which it had paid the invalid levies. But the CJEU did not rule on the method of calculating that interest. In Irimie (above) the CJEU ruled that a system, which limited the interest accruing on tax unduly levied to that which accrued from the day following the claim for repayment, deprived the taxpayer of adequate compensation for her loss contrary to the principle of effectiveness (paras 26 27) and was therefore in breach of EU law (para 29). It held (para 28): That loss depends, inter alia, on the duration of the unavailability of the sum unduly levied in breach of European Union law and thus occurs, in principle, during the period between the date of the undue payment of the tax at issue and the date of repayment thereof. In formulating its reasoning, the CJEU (at paras 20 23) again followed the pattern in its judgment in this case in paras 24 27. In summary, the CJEU confirmed that the right to repayment of unduly levied tax was accompanied by a right to interest on that tax from the date of payment until the date of repayment but it did not suggest that EU law required either the rate or the method of calculation of the interest payable to achieve full reimbursement of the use value of money during that period. In Wortmann KG Internationale Schuhproduktionen v Hauptzollamt Bielefeld (Case C 365/15) EU:C:2017:19; [2017] All ER (D) 55 the CJEU was concerned with a claim for the repayment of import duties after EU legislation imposing an antidumping duty was annulled. The court addressed the question whether the relevant EU legislation establishing the Community Customs Code must be interpreted as meaning that national law, having regard to the principle of effectiveness, must provide for the payment of interest on the reimbursed import duties from the date of payment until their repayment, even in cases where no claim for reimbursement had been made in the national court. Advocate General Campos Snchez Bordona, in proposing that the CJEU give a positive answer to the question, relied on the courts ruling in Irimie which, he suggested (paras 69 70), was based on reasoning that the taxpayer was not to be deprived of compensation commensurate with the loss suffered. But the CJEU in its judgment did not adopt any such principle but merely repeated its case law that parties who had paid taxes levied by a member state pursuant to an EU regulation which had been declared invalid or annulled by the CJEU had the right in principle to obtain not only the repayment of the amounts levied but also interest on those amounts (paras 37 38). Again, no ruling or comment was made as to the scope of a member states discretion in fixing the rate or the method of calculation of interest. We are satisfied therefore that there is nothing in the prior or subsequent case law of the CJEU which militates against our interpretation of its judgment in this case. Consistently with the views expressed by the European Commission and the member state governments which submitted arguments to the court in this case, the CJEU (para 34) has not required the payment of more than simple interest if the national legal order treats that as reasonable redress for the unavailability of the money and no issue of equivalence arises. The CJEUs reliance on the principles of effectiveness and equivalence is wholly consistent with its jurisprudence that the questions of the rate and method of calculation of interest are matters for the internal legal order of a member state. Summary on issue 2 In our view, there is no requirement in the CJEUs jurisprudence that the value which the member state, by the award of interest, places on the use of money should make good in full the loss which a taxpayer has suffered by being kept out of his money. We are satisfied that Henderson J and the Court of Appeal erred in reading too much into the phrase an adequate indemnity and failed to give sufficient weight to its context in the relevant passage of the CJEUs judgment, including para 30 which they could not satisfactorily explain. We are satisfied that the judgment of the Grand Chamber of the CJEU in this case, which addresses directly the issue which will determine this case, is clear when read as a whole. The Grand Chamber has specifically addressed the issue of whether simple or compound interest is required, in a reference made in these very proceedings. It has given such guidance as it considered appropriate. It has ruled that it is for national law to determine, in compliance with the principles of effectiveness and equivalence, whether the principal sum must bear simple interest, compound interest or another type of interest. Here, national law provides for simple interest. No issue of equivalence arises. So far as effectiveness is concerned, the Grand Chamber has held that it is for the national court to determine whether the national rules would deprive the taxpayer of an adequate indemnity for the loss caused by the undue payment of VAT. In that regard, it has said that it should be noted that the interest already paid exceeds the principal amount due by more than 23%. It is now the duty of this court to apply that guidance. There is no basis for a further reference to the CJEU. Consistently with a widespread practice among member states of the EU, the United Kingdom has treated the award of simple interest as an appropriate remedy for being held out of money over time whether the claimant is HMRC, when a taxpayer fails to pay his tax in a timely manner, or the claimant is the taxpayer, when tax has been unduly levied. Littlewoods have already recovered overpaid tax, and interest on that amount, going back several decades. The size of that recovery reflects a combination of circumstances which could not have occurred in most of the other EU member states: the retroactive nature of a major development of the common law by the courts, so as to allow for the first time the recovery of money paid under a mistake in law, and the inability of the legislature to respond to that development, under EU law, by retroactively altering the law of limitation so as to protect public finances. The resultant payment of interest cannot realistically be regarded as having deprived Littlewoods of an adequate indemnity, in the sense in which that expression should be interpreted. Conclusion We would dismiss Littlewoods cross appeal on issue 1 and allow HMRCs appeal on issue 2. We would invite the parties, in the absence of agreement, to lodge written submissions on the appropriate form of order to be made in this case within 21 days of the handing down of this judgment.
+Where an application is made for the extradition of a convicted person to a category 1 territory, ie pursuant to a European arrest warrant, the warrant is required by section 2(6)(e) of the Extradition Act 2003 to include particulars of the sentence which has been imposed under the law of the category 1 territory in respect of the offence, if the person has been sentenced for the offence. The purpose of this requirement is to enable the court to apply section 65(2)(c), (3)(c), (4)(c) and (5)(c). These provide minimum sentences of imprisonment or detention which must have been imposed in order to disclose an extradition offence. The minimum periods are 12 months in the case of offences on the European Framework list or four months for offences which are not on the European Framework list but satisfy the relevant requirement of double criminality. In the present case, the relevant provision is section 65(3)(c), which applies to offences committed in the category 1 territory which would constitute an offence under the law of the relevant part of the United Kingdom if it occurred there, provided that a sentence of imprisonment or another form of detention for a term of four months or a greater punishment has been imposed. In many states of the European Union the criminal law provides for the aggregation of successive sentences imposed by criminal courts on different occasions so as to produce a single sentence reflecting the totality of the course of criminality disclosed. This will commonly result in a reduction of the total period of imprisonment imposed, by comparison with the period arrived at by adding up each of the original sentences. Polands aggregation procedure is contained in articles 85 86 of the Penal Code and articles 569 577 of the Criminal Procedures Code, which require a court to aggregate successive sentences to produce a single cumulative penalty. The effect of this procedure has been considered in a number of cases in which a European arrest warrant has given particulars of the cumulative penalty but not of the individual sentences which were aggregated so as to produce it. The question whether this satisfies sections 2(6)(e) and 65(3)(c) of the Act was finally settled in Pilecki v Circuit Court of Legnica, Poland [2008] 1 WLR 325. The House of Lords held that, at any rate in a case where each of the original sentences was for conduct satisfying all the other requirements for an extradition offence, it was enough for the warrant to specify the cumulative sentence. If it exceeded four months it was irrelevant that some of the original sentences might have been less than that. The present appeal concerns the converse situation. What happens if the warrant specifies only the original sentences, but after it has been issued they have been aggregated and their totality reduced? Lukasz Zakrzewski, was convicted on four occasions in Poland of various offences of dishonesty or violence. On 10 December 2003, he was convicted by the District Court in Grudziadz of assault and robbery committed on separate occasions in February 2003, for which he received a combined sentence of 14 months imprisonment. On 18 March 2004, he was convicted by the same court of two distinct offences of theft, and received a further combined sentence of 15 months imprisonment. On 28 May 2004, he was convicted of theft by the District Court of Swiecle and sentenced to six months imprisonment. On 14 January 2005, he was back before the District Court of Grudziadz, which convicted him of theft and sentenced him to a further ten months imprisonment. All of these sentences of imprisonment were initially suspended, but all of them were subsequently activated either by the commission of further offences during the period of probation which followed conviction, or by breaches of the probation terms. On 24 February 2010, Mr Zakrzewski having absconded, the Regional Court of Lodz issued a European Arrest Warrant against him, based on his conviction on these four occasions. The warrant specified the sentence passed on each occasion. Mr Zakrzewski was arrested in England on 28 September 2010 and brought before City of Westminster Magistrates Court on the same day. At that time, he was facing further criminal charges in the United Kingdom. The extradition proceedings were therefore adjourned pending the resolution of proceedings arising from them. During the adjournment, Mr Zakrzewski applied to the District Court of Grudziadz to have the four sentences aggregated. The court duly aggregated them, and on 19 April 2011 imposed a cumulative sentence of 22 months, as opposed to the aggregate of 45 months under the original sentences. When Mr Zakrzewski came back before Westminster Magistrates on 20 May 2011, it was submitted on his behalf that the aggregation order meant that the warrant no longer gave the particulars required by section 2(6)(e) because the only relevant sentence was now the cumulative sentence. It followed, so it was said, that the warrant had become invalid, or that the court should exercise an inherent jurisdiction not to proceed with the extradition on the ground that it no longer gave proper, fair or accurate particulars: see Criminal Court at the National High Court, First Division v Murua [2010] EWHC 2609 (Admin). It will be noted that each of the original sentences was for conduct in Poland which would have been criminal if it had occurred in England, and that the original sentences and the cumulative sentence all exceeded four months. The argument advanced on Mr Zakrzewskis behalf is therefore hardly overburdened with merit. It is about as technical as it could possibly be. It is common ground that a further warrant giving the same particulars but specifying the cumulative sentence would be good. District Judge Rose rejected the argument in both its forms and made the extradition order. But it was accepted in both forms by Lloyd Jones J on appeal to the High Court. He allowed the appeal against the extradition order on 7 February 2012. In summary, he held that the information in the warrant must relate to the current operative sentence and not to earlier sentences which have been subsumed in an aggregated order. In determining whether the requirement of section 65 is satisfied, the court needs to know the total length of time which the court of the requesting state has ordered must be served in prison. In the present case, that is the aggregated order.: [2012] 1 WLR 2248, para 26. The basic features of the scheme for the execution of a European arrest warrant under Part 1 of the Extradition Act 2003 are too familiar to need extensive restatement here. It has often been pointed out that the contents of the warrant are critical to the operation of the scheme of both the Council Framework Decision 2002/584/JHA of 13 June 2002 and the United Kingdom Act. Extradition under Part 1 of the Act is by way of direct execution of the warrant. To fall within the definition of a Part 1 warrant and be capable of initiating extradition proceedings, it must contain the statements and information required by section 2 of the Act, which reflect the mandatory contents provided for by article 8 of the Framework Decision. The procedure operates at each stage by reference to the prescribed particulars contained in it. Thus, under section 10, the court must decide whether the offence specified in the Part 1 warrant is an extradition offence as defined by section 64 (in an accusation case) or section 65 (in a conviction case). Both sections require the court to consider whether the offence constituted by the conduct satisfied the requirements of those sections. The conduct for this purpose means that specified in the warrant, and it is not permissible to conduct an independent examination of the elements of the offence under the law of the requesting state: Office of the Kings Prosecutor, Brussels v Cando Armas [2006] 2 AC 1, paras 16 (Lord Bingham of Cornhill) and 30 (Lord Hope of Craighead). Under section 64(2)(b) and (c), the questions whether the conduct falls within the European Framework list and whether it is punishable under the law of the requesting state by a sentence of imprisonment of three years or more are to be determined by reference to information certified by the requesting authority, which may be (and commonly is) certified in the warrant itself: see Dabas v High Court of Justice in Madrid, Spain [2007] 2 AC 31. The same applies to the corresponding provisions of section 65(2)(b) and (c). If the warrant contains the prescribed particulars and these disclose an extradition offence, the court must extradite the defendant, unless one of the limited exceptions specified in the Act applies. The exceptions to the otherwise mandatory extradition of the defendant are dealt with by sections 10 to 21 and 25 of the Act. Some of these also operate by reference to the conduct, which must in the circumstances mean the conduct specified in the warrant: see sections 15 and 19B (as inserted by section 42 of, and para 4(2) of Schedule 13 to, the Police and Justice Act 2006). All of these provisions reflect the underlying purpose of the Framework Decision and Part 1 of the Extradition Act to create a simplified and accelerated procedure based on the mutual recognition by the requested state of the antecedent decision to issue the warrant by the judicial authority in the requesting state. Recital (10) of the Framework Decision records that the mechanism of the European arrest warrant is based on a high level of confidence between member states. Or, as Lord Phillips put it in Assange v Swedish Prosecution Authority (Nos 1 & 2) [2012] 2 AC 471, para 79, under the scheme of the Framework Decision the safeguard against the inappropriate issue of an EAW lies in the process antecedent to the issue of the EAW. It follows that the scheme of the Framework Decision and of Part 1 of the 2003 Act is that as a general rule the court of the executing state is bound to take the statements and information in the warrant at face value. The validity of the warrant depends on whether the prescribed particulars are to be found in it, and not on whether they are correct. It cannot be open to a defendant to challenge the validity of a warrant which contains the prescribed particulars by reference to extraneous evidence tending to show that those statements and information are wrong. If this is true of statements and information in a warrant which were wrong at the time of issue, it must necessarily be true of statements which were correct at the time of issue but ceased to be correct as a result of subsequent events. Validity is not a transient state. A warrant is either valid or not. It cannot change from one to the other over time. It does not, however, follow from this that there is nothing to be done about it if the prescribed particulars in the warrant are or have become incorrect. It only means that the remedy must be found at the stage when the court is considering whether to extradite. Neither the Framework Decision nor Part 1 of the Act provides in terms for non extradition on the ground of a factual error in the warrant. There are, however, two safeguards against an unjustified extradition in those circumstances. The first and main one is the mutual trust between states party to the Framework Decision that informs the entire scheme. The requesting judicial authority has a right, recognised by article 15.3 of the Framework Decision, to forward additional information at any time. These are receivable in evidence by an English court under section 202 of the Act on the same basis as the warrant itself. If necessary, further information may be requested by the executing court under article 15.2. The Framework Decision proceeds on the assumption that requesting states can be trusted to ensure that statements and information in a European arrest warrant are true. By the same token, if they subsequently cease to be true, either the warrant will be withdrawn or the statements and information in it will be corrected by the provision of further information, with or without a request for it. The second safeguard lies in the inherent right of an English court, as the executing court, to ensure that its process is not abused. One form of abuse of process is the fortunately rare case in which the prosecutor has manipulated the process of the executing court for a collateral and improper purpose: see R (Government of the United States of America) v Bow Street Magistrates Court [2007] 1 WLR 1157. We are not concerned with anything of that kind on this appeal. Another category comprises cases, rather less rare, in which the prescribed particulars are given in the warrant but they are wrong. In Caldarelli v Judge for Preliminary Investigations of the Court of Naples, Italy [2008] 1 WLR 1724, para 24, Lord Bingham observed that "it might in some circumstances be necessary to question statements made in the EAW, notwithstanding the general rule. The question is in what circumstances is the power envisaged by Lord Bingham exercisable. The clearest statement of the principle is to be found in the decision of Sir Anthony May, President of the Queens Bench Division of the High Court, in Criminal Court at the National High Court, First Division v Murua [2010] EWHC 2609 (Admin), which has been followed by the High Court on a number of occasions. Murua was an accusation case. The warrant alleged serious terrorist offences involving danger to life and concealment of identity. Both of these were significant aggravating factors under Spanish law, warranting imprisonment upon conviction for up to 48 years. The particulars of the offence specified the aggravating factors, and the maximum sentence associated with them. However, at the trial in Spain of seven other defendants for the same conduct, the prosecution had accepted that these aggravating factors could not be proved. The charges were reformulated, and the co defendants convicted of lesser offences carrying a maximum term of imprisonment of three years. Sir Anthony May said, at paras 58 59: 58. The court's task jurisdiction, if you like is to determine whether the particulars required by section 2(4) have been properly given. It is a task to be undertaken with firm regard to mutual co operation, recognition and respect. It does not extend to a debatable analysis of arguably discrepant evidence, nor to a detailed critique of the law of the requesting state as given by the issuing judicial authority. It may, however, occasionally be necessary to ask, on appropriately clear facts, whether the description of the conduct alleged to constitute the alleged extradition offence is fair, proper and accurate. I understood Ms Cumberland to accept this, agreeing that it was in the end a matter of fact and degree. She stressed, however, a variety of floodgates arguments with which in general I agree, that this kind of inquiry should not be entertained in any case where to do so would undermine the principles to be found in the introductory preambles to the Council Framework Decision of 13 June 2002. 59. Ms Cumberland submitted that an argument of the kind which succeeded before the District Judge can be raised, but not with reference to section 2 of the 2003 Act. She said that the proper approach was to deal with it as an abuse argument, and this ties in with the appellant's third ground of appeal, to which I shall come in a few moments. I do not agree that the respondent's case could only be advanced as an abuse argument. It can properly be advanced, as it was, as a contention that the description in the warrant of the conduct alleged did not sufficiently conform with the requirements set out in section 2 for the reasons advanced by Mr Summers with reference to Dabas v High Court of Justice in Madrid, Spain [2007] 2 AC 31 and Pilecki v Circuit Court of Legnica, Poland [2008] 1 WLR 325. If that is shown, it is not a valid Part 1 warrant. I agree with this statement, subject to four observations. The first is that the jurisdiction is exceptional. The statements in the warrant must comprise statutory particulars which are wrong or incomplete in some respect which is misleading (though not necessarily intentionally). Secondly, the true facts required to correct the error or omission must be clear and beyond legitimate dispute. The power of the court to prevent abuse of its process must be exercised in the light of the purposes of that process. In extradition cases, it must have regard, as Sir Anthony May observed, to the scheme and purpose of the legislation. It is not therefore to be used as an indirect way of mounting a contentious challenge to the factual or evidential basis for the conduct alleged in the warrant, this being a matter for the requesting court. Third, the error or omission must be material to the operation of the statutory scheme. No doubt errors in some particulars (such as the identity of the defendant or the offence charged) would by their very nature be material. In other cases, the materiality of the error will depend on its impact on the decision whether or not to order extradition. The fourth observation follows from the third. In my view, Ms Cumberland was right to submit to Sir Anthony May in Murua that the sole juridical basis for the inquiry into the accuracy of the particulars in the warrant is abuse of process. I do not think that it goes to the validity of the warrant. This is because in considering whether to refuse extradition on the ground of abuse of process, the materiality of the error in the warrant will be of critical importance, whereas if the error goes to the validity of the warrant, no question of materiality can arise. An invalid warrant is incapable of initiating extradition proceedings. I do not think that it is consistent with the scheme of the Framework Decision to refuse to act on a warrant in which the prescribed particulars were included, merely because those particulars contain immaterial errors. I now return to the facts of Mr Zakrzewskis case. The warrant issued against him was undoubtedly a valid warrant when it was issued. It was therefore effective to authorise the commencement of extradition proceedings in the United Kingdom against him. It did not become invalid when the aggregation order was made. It follows that the only basis on which Mr Zakrzewski could object to his extradition was that the conduct of the requesting judicial authority in persisting with extradition proceedings after the aggregation order was an abuse of those proceedings. The short answer to this contention in the present case is that the particulars of the sentence in the warrant, although no longer complete, were not wrong. This is because the Regional Court of Lodz supplied further information about the effect of the aggregation order in the following terms: The consequence of a composite sentence having been passed is that the single penalties imposed for each of the offences are replaced by that single composite sentence. In such a case, the penalties imposed for each of the offences are not to be enforced separately, but replaced with the new composite sentence that is to be enforced in respect of the convict. It should be noted that the issue of a composite sentence does not invalidate any of the individual sentences. This answer was effective to explain the contents of the warrant. Its effect is that the original sentences remain valid but the cumulative sentence determines what period of imprisonment will be treated as satisfying them. Therefore, the information in the warrant about the original sentences did not cease to be true when the cumulative sentence was passed. Although true, the information in the warrant about the sentence imposed became incomplete when the cumulative sentence was passed. The prosecution of extradition proceedings on a warrant containing prescribed particulars which are (or have become) incomplete is capable of being an abuse of process, but only if the information omitted is material to the operation of the statutory scheme. In this case the fact that the period of imprisonment which would satisfy the four original sentences had been shortened was wholly immaterial, because even the shorter cumulative sentence was substantially longer than the minimum of four months. As Lord Hope observed in Pilecki [2008] 1 WLR 325, para 29, all the executing court needs to know in these circumstances is whether or not the sentence was one for at least four months. The position would be different if the composite sentence was below the four month threshold, because there would then be no extradition offence. I cannot agree with Lloyd Jones J [2012] 1 WLR 2248, para 26 that the failure of the warrant to specify the current operative sentence was fatal. The sentence of the court will rarely be the current operative sentence, since the period to be served will commonly be affected by a variety of factors, such as remission or parole. As the cases on aggregation procedure show, they may also be affected by aspects of criminal procedure which will vary from one jurisdiction to another without affecting the application of the ordinary criteria for extradition or undermining the purpose of the Framework Decision or Part I of the Act. It follows that in the ordinary course the appeal would have been allowed and the order of the District Judge restored. However, just before this judgment was due to be delivered, the Court was informed that Mr. Zakrzewski had returned voluntarily to Poland after the argument on the appeal and been arrested there. Accordingly, the warrant has been withdrawn by the court which issued it. This does not affect the issue which the Court has to decide. But it does mean that, formally, the appeal must now be dismissed: see section 43(4).
+This appeal is concerned with the interpretation of a policy of motor insurance. The question is whether the policy confers on the insured owner of a vehicle an indemnity against liability for damage caused to the property of a third party which was caused by his acts when he was carrying out substantial repairs to his car in the commercial premises of his employer. The appeal also raises questions about the meaning of the phrase, damage caused by, or arising out of, the use of the vehicle on a road or other public place in section 145 of the Road Traffic Act 1988, which defines the compulsory insurance requirements for the use of vehicles on such places. The factual background The facts behind this appeal can be stated briefly. In 2010 Mr Thomas Holden was a mechanical fitter employed by the appellants, R & S Pilling, who traded as Phoenix Engineering (Phoenix). He was the owner of a car and held a motor insurance policy (the Policy) with the respondents (UKI). On 11 June 2010 Mr Holdens car failed its MOT because of corrosion to its underside. On the following day, he asked his employer, Phoenix, if he could use the loading bay in its premises to carry out work on his car in the hope that he could enable it to pass its MOT. He intended to weld some plates onto the underside of the car to deal with the corrosion. His employer agreed. He disconnected his car battery to make sure there were no live circuits. He then used a fork lift truck to lift the car onto the drivers side to gain access to the underside of the vehicle. He first used a grinder to prepare the underside for welding and then welded a plate under the drivers side. He then re connected the battery, started the car and moved it round the other way before again disconnecting the battery, and lifting it up to expose the underside on the passengers side of the vehicle. He started welding but then stood up to answer a phone call. When he did so, he saw flames inside the car: sparks from the welding had ignited flammable material inside the car, including the seat covers. As the fire spread, it set alight some rubber mats which were lying close to the car. The fire then took hold in Phoenixs premises and in adjoining premises and caused substantial damage before it was put out. Phoenix was insured against property damage and public liability by AXA which had to pay out over 2m to Phoenix and the owner of the adjoining premises. AXA made a subrogated claim in Phoenixs name against Mr Holden. Mr Holdens only insurance policy which arguably might cover Phoenixs claim (the claim) is the Policy. As a result, UKI brought an action seeking a declaration that it is not liable to indemnify Mr Holden against the claim, and AXA, denying this, counterclaimed for an indemnity. Mr Holden was named as first defendant in the action but has taken no part in the proceedings because he is not at risk: AXA has undertaken to limit its recovery to such sum, if any, as it can obtain from UKI. The real dispute is therefore between the two insurance companies. At its simplest, UKI says that the Policy does not respond to third party claims involving the car while the car is being repaired on private premises, such as Phoenixs garage. Phoenix contends that the Policy covers accidents involving the car off road and that in any event the repair of the car can properly be described either as the use of it, or as arising out of its use, on a road or other public place. The question is the correct interpretation of the Policy against the background of domestic and EU legislation which imposes compulsory third party insurance in respect of motor vehicles. The motor insurance policy The documents which are relevant to Mr Holdens insurance cover are (a) the policy set out in UKIs policy booklet, (b) the certificate of motor insurance (the certificate), (c) the motor insurance schedule (the schedule) and (d) the motor proposal confirmation (the confirmation). The policy booklet instructed the insured that he must read the four documents as a whole. The policy booklet set out in section A the insurance cover in relation to the insureds liability to other people. It provided in clause 1a: Cover for you We will cover you for your legal responsibility if you have an accident in your vehicle and: you kill or injure someone; you damage their property; or you damage their vehicle. Clause 2 provided the following cover for other people: We will also provide the cover under section 1a for: anyone insured by this policy to drive your vehicle, as long as they have your permission; anyone you allow to use but not drive your vehicle, for social or domestic purposes; anyone who is in or getting into or out of your vehicle; The booklet listed what was not covered under section A, including liability for more than 20m for any claim or series of claims for loss of or damage to property, and also liability caused by acts of terrorism, unless such cover was compulsory under the Road Traffic Acts. The booklet contained general exceptions and stated: 1. Who uses your vehicle We will not cover any injury, loss or damage which takes place while your vehicle is being: driven or used by anyone not allowed to drive it, or used for any purpose not allowed by the Certificate of Motor Insurance or Schedule; or driven by someone who does not have a valid driving licence or is breaking the conditions of their driving licence. This exception does not apply if your vehicle is: with a member of the motor trade for maintenance or repair; stolen or permission; or being parked by an employee of a hotel, restaurant or car parking service. taken away without your The general exceptions also excluded damage caused by war etc unless we have to provide cover under the Road Traffic Acts. The certificate identified Mr Holden as the policy holder and specified the use limitations as use for social, domestic and pleasure purposes. It also contained a certificate of the Chief Executive of the insurers in these terms: I hereby certify that the Policy to which this Certificate relates satisfies the requirements of the relevant law applicable in Great Britain and Northern Ireland, the Republic of Ireland, the Isle of Man, the Island of Guernsey, the Island of Jersey and the Island of Alderney. The motor insurance schedule specified among other things the sections of the booklet which applied to the Policy and the details of the car. The confirmation, which has no bearing on this appeal, set out in summary form details of the policy holder, the Policy, the car and method of payment of premium. The context of compulsory insurance i) Domestic provision: the Road Traffic Act 1988 It has, since 1930, been a statutory requirement that a driver has third party liability insurance in respect of the use of his or her vehicle on the road and it is a criminal offence if one does not. The current statute is the Road Traffic Act 1988 (the RTA). Section 143 of the RTA provides that it is an offence to use a motor vehicle on a road or other public place unless there is in force in relation to the use of the vehicle by that person such a policy of insurance or such security in respect of third party risks as complies with Part VI of the RTA. Section 145 of the RTA, which like section 143 falls within Part VI, sets out the conditions which the policy of insurance must satisfy. It provides, so far as relevant: (1) In order to comply with the requirements of this Part of this Act, a policy of insurance must satisfy the following conditions. (3) Subject to subsection (4) below, the policy (a) must insure such person, persons or classes of persons as may be specified in the policy in respect of any liability which may be incurred by him or them in respect of the death of or bodily injury to any person or damage to property caused by, or arising out of, the use of the vehicle on a road or other public place in Great Britain (Emphasis added) At the relevant time, section 145(4)(b) provided that such a policy was not required to provide insurance in respect of damage to property of more than 1m. Section 145(3)(a) was amended by the Motor Vehicles (Compulsory Insurance) Regulations 2000 (SI 2000/726) to add the words or other public place which I have emphasised, in order to comply with the EU directives on motor insurance, which were later consolidated in the Directive which I describe below. Section 143 was amended in the same way. The amendments responded to the decision of the House of Lords in Clarke v General Accident Fire and Life Assurance Corpn plc and Cutter v Eagle Star Insurance Co Ltd [1998] 1 WLR 1647, which had held that a road did not include a car park or other public place. The current wording of section 145(3) is to that extent implementing the relevant EU legislation. ii) The EU Motor Insurance Directive Directive 2009/103/EC of the European Parliament and of the Council of 16 September 2009 (the Directive) consolidates various earlier EU directives and ensures that civil liability arising out of the use of motor vehicles is covered by insurance. Recital (2) of the Directive states: Insurance against civil liability in respect of the use of motor vehicles (motor insurance) is of special importance for European citizens, whether they are policyholders or victims of an accident. It is also a major concern for insurance undertakings as it constitutes an important part of non life insurance business in the Community. Motor insurance also has an impact on the free movement of persons and vehicles. It should therefore be a key objective of Community action in the field of financial services to reinforce and consolidate the internal market in motor insurance. Article 3, so far as relevant, provides: Compulsory insurance of vehicles Each member state shall, subject to article 5, take all appropriate measures to ensure that civil liability in respect of the use of vehicles normally based in its territory is covered by insurance. The extent of the liability covered and the terms and conditions of the cover shall be determined on the basis of the measures referred to in the first paragraph. The insurance referred to in the first paragraph shall cover compulsorily both damage to property and personal injuries. Article 12(3) provides: The insurance referred to in article 3 shall cover personal injuries and damage to property suffered by pedestrians, cyclists and other non motorised users of roads who, as a consequence of an accident in which a motor vehicle is involved, are entitled to compensation in accordance with national civil law. The prior judgments In a judgment dated 19 February 2016 ([2016] EWHC 264 (QB); [2016] 4 WLR 38) which the Master of the Rolls correctly described as clear and careful, Judge Waksman QC, sitting as a Judge of the High Court (Queens Bench Division), held that UKI was entitled to the declaration which it sought. He interpreted the Policy as extending beyond roads and public places so that its cover extended to the location of the accident on private property, if the other requirements of the Policy were made out. But he concluded that those requirements were not made out because the accident had not arisen out of the use of the car. The undertaking of the repair of the car was not using it: it was not being operated but was immobile and partly off the ground so that it could be worked on (para 63). He also rejected Phoenixs argument on causation, that the fire arose out of Mr Holdens use of the car because he had been driving it before carrying out the repair or because he would be driving it after the repair. He held (para 66): The fire was caused by and arose out of the allegedly negligent repair of the car by the use of grinders and welders without taking any precautions with regard to flammable materials in the car itself. The Court of Appeal (the Master of the Rolls, and Beatson and Henderson LJJ) allowed Phoenixs appeal ([2017] EWCA Civ 259; [2017] QB 1357). The Court, recognizing that the wording of clause 1a of the policy booklet was inadequate and that the policy booklet had to be read together with the certificate, held that the Policy should be read to cover the requirements of section 145(3) of the RTA, as the certificate states. The Policy did not have the geographical limitations of the statutory provision nor was the sum insured restricted to 1m. Section 145(3) extended the cover of clause 1a without imposing its statutory geographical limitations and did not require the owner to be in the car at the time of the accident as the express terms of clause 1a provided. The clause as so extended covered repairs which were commonplace for drivers. The court accordingly construed the opening words of clause 1a to mean: We will cover you for your legal responsibility if there is an accident involving your vehicle (emphasis added). This entailed substituting there is for you have and replacing the preposition in in the express terms of the clause with the present participle involving. As a secondary argument, the Master of the Rolls held that the repairs amounted to the use of the car under section 145(3). He stated that that interpretation was consistent with the objective of the Directive in the light of the judgment of the Court of Justice of the European Union (CJEU) in Vnuk v Zavarovalnica Triglav dd (Case C 162/13) [2016] RTR 10, which was to protect victims of accidents caused by vehicles. He held that a purposive interpretation of section 145(3)(a) to cover use of a car consistent with its normal function was consistent with English authorities which held that there may be use of a car when it is parked or immobilised. The Master of the Rolls set out the following summary in para 68 of his judgment: The following propositions as to the meaning of use of the vehicle in section 145(3)(a) of the RTA can be derived from the Directive, the CJEU jurisprudence and the English authorities. (1) Use is not confined to the actual operation of the car in the sense of being driven. (2) There may be use of a car when it is parked or even immobilised and incapable of being driven in the immediate future. (3) Use of a vehicle includes anything which is consistent with the normal function of the vehicle. (4) Damage or injury may arise out of the use of the car if it is consequential, rather than immediate or proximate, provided that it is, in a relevant causal sense, a contributing factor. The Master of the Rolls therefore concluded that Judge Waksman had made an error of principle in holding that the repair of a car is not using it for the purposes of section 145(3)(a) of the RTA. Henderson LJ agreed with this judgment and added that he found that Commonwealth authorities from Australia and Canada, some of which take a broader approach to the interpretation of motor insurance policies, were also of assistance. Beatson LJ agreed with both judgments. UKI appeals to this court. Discussion Having regard to the statutory requirements and the terms of the certificate, the Policy must be construed so that the third party cover meets the requirements of the RTA. The parties are agreed on that and they are plainly correct, because this can be done in this case without resort to rectification. So far as relevant to this appeal, the RTA requires Mr Holden to be insured to cover any liability in respect of damage to property caused by, or arising out of, the use of the vehicle on a road or other public place . The principal question in this appeal is whether the Court of Appeal went beyond the bounds of what is required to be read into the Policy to achieve this end in holding that clause 1a of section A of the policy booklet should be read to state: We will cover you for your legal responsibility if there is an accident involving your vehicle. In support of the view that the Court of Appeal was in error, UKI advances an argument for the first time in this court. It submits that there is no need to read any term into clause 1a in order to include the RTA cover because the Policy provides cover in two strands. First, there is the provision of clause 1a, whose words should be given their ordinary meaning so as to cover accidents occurring when the driver is in the vehicle wherever it is located, and, secondly and separately, there is the promise in the certificate that the Policy satisfies the requirements of the relevant law in the United Kingdom, which for present purposes is the RTA. Phoenix challenges that assertion, submitting that the Policy follows a standard structure of insurance policies, with insuring clauses which define the cover, followed by exclusions and then by conditions. The reader therefore looks to the insuring clause to determine the scope of cover before examining the extent of the exclusions and the conditions of cover. The certificate, it is submitted, is simply a declaration of compliance and does not operate as an additional insuring clause. Phoenix submits that Judge Waksman and the Court of Appeal were correct in focusing on the correct construction of clause 1a. It is necessary therefore, first, to examine UKIs two strands argument and, secondly, if it is necessary to read words into clause 1a, to address what they are. The two strands submission The two strands approach can find some support in the Policys opening statement: Your policy is made up of: the Motor Proposal Confirmation; this Policy Booklet; the Certificate of Motor Insurance; and the Schedule. You must read all these documents as a whole. The documents must be read as a whole. But what is the role of each document? It is clear from the certificate which I have quoted in para 9 above that UKI intended the Policy to meet the terms of the RTA. But is the needed cover provided by the certificate or by a corrective interpretation of the insuring clause? I am not persuaded by the two strands approach which UKI advocates. The certificate is relevant to and forms part of the Policy because it alone states the limitations as to use which the Policy imposes (para 9 above). Thus it is readily understandable why UKI requires the policy holder to read the four documents as a whole. But the wording of the Chief Executives certificate distinguishes between the Certificate of Motor Insurance and the Policy when it speaks of the Policy to which this Certificate relates. It certifies the legal effect of the Policy without purporting to provide additional cover. My concern is also that the two strands approach does not fit in easily with the provisions of the RTA which draw a distinction between an insurance policy and an insurance certificate. The certificate is the product of section 147 of the RTA and the Motor Vehicles (Third Party Risks) Regulations 1972 (SI 1972/1217) as amended (the 1972 Regulations). Section 147 provides that an insurer issuing a motor insurance policy must deliver to the insured a certificate of insurance in the form prescribed by the 1972 Regulations. The certificate serves as evidence of the existence of the policy, because, for example, a driver may be required by a police constable to produce the certificate (section 165) and a person against whom a claim is made must give the claimant such particulars of the policy as are specified in the certificate (section 154). The RTA defines policy of insurance in section 161 in a non exclusive way, stating that it includes a covering note. But the RTA also speaks of policy as something separate from the certificate of motor insurance. For example, in section 147 the insurer issuing a policy must also deliver the certificate. In section 144A, which creates the offence of keeping a vehicle which does not meet the insurance requirements, subsection (3) defines the first condition of meeting the insurance requirements in these terms: The first condition is that the policy or security, or the certificate of insurance or security which relates to it, identifies the vehicle by its registration mark as a vehicle which is covered by the policy or security. The RTAs treatment of an insurance policy as a distinct concept from a certificate of insurance points against the two strands approach. Further, if the certificate, although distinct, were interpreted as a separate contractual basis for insurance cover, questions would arise as to whether an insurer may avoid liability for a risk covered only by a certificate of insurance in circumstances in which it is barred from so doing in relation to cover under a policy. Section 151 imposes a duty on insurers to satisfy judgments obtained against persons insured against third party risks up to the maximum at the relevant time of 1m (now 1.2m). The section applies to judgments relating to a liability which section 145 requires to be covered by insurance and it is a liability covered by the terms of the policy (subsection (2)(a)). In deciding whether the terms of the policy cover the liability the section disregards any requirement in the policy that the driver have a valid driving licence (section 151(3)). The obligation to pay exists even if the insurer was entitled to avoid or cancel the policy or had avoided or cancelled it (section 151(5)). In short, section 151 focuses on the liability covered by the terms of the policy and excludes certain terms of the policy and the avoidance or cancellation of the policy. It does not envisage liability covered by the certificate or the avoidance or cancellation of the certificate. I am therefore not prepared to adopt the two strands approach. But the outcome of the appeal does not depend upon the two strands submission because I am persuaded that the Court of Appeal erred in interpreting clause 1a to include the words there is an accident involving your vehicle in place of the phrase you have an accident in your vehicle. Reading terms into clause 1a Three questions arise in relation to the arguments about the interpretation and application of clause 1a. First, one must ask what is the extent of the insurance cover which section 145(3)(a) requires. Secondly, one must ask what words should be read into the clause 1a. And the third question is whether Mr Holdens accident falls within the wording of the clause as so interpreted. i) What section 145(3)(a) of the RTA requires The first question requires the court to interpret the statutory requirement that the damage to property has been caused by, or arising out of, the use of the vehicle on a road or other public place. This involves the interpretation of the noun use and also of the causal phrase caused by, or arising out of. Both predated the various EU Motor Insurance Directives and were the subject of English and Welsh judicial decisions. In English case law use has been interpreted to extend beyond driving a vehicle so that an owner had to have third party insurance if he had the use of the vehicle on a road. Thus, a person who left his broken down vehicle on a public road, without a battery and without any petrol in its tank, was convicted of unlawfully using the car without there being in force a third party insurance under section 35(1) of the Road Traffic Act 1930, which is the precursor of section 143(1) of the RTA: Elliott v Grey [1960] 1 QB 367, 372 per Lord Parker CJ. Similarly, in Pumbien v Vines [1996] RTR 37, a motorist was convicted under section 143(1) of the RTA when he parked his vehicle on a public road for over seven months during which time the rear brakes seized, the tyres deflated and the gearbox ceased to contain any oil. The statutory concept of use in this context is that the owner has an element of control, management or operation of the vehicle while it is on the road: Brown v Roberts [1965] 1 QB 1, 15 per Megaw J. The good sense of having a broad interpretation of use in the requirement for compulsory third party insurance is clear as leaving an immobilised car on a public road may create a hazard for other road users, for example if the vehicle was left close to a blind corner. Similar considerations apply to protect members of the public in other places to which the public have access, such as car parks. The mischief is that an uninsured owner may not be able to compensate members of the public, who can be expected to be on a road or at a public place and who suffer personal injury or damage to property as a result of the presence of the vehicle in that place. It is necessary also to consider the jurisprudence of the CJEU on the Directive as section 145(3)(a) should be interpreted in the light of the wording and purpose of the Directive so long as that is not contra legem: see for example, Pfeiffer v Deutsches Rotes Kreuz (Cases C 397/01 to C 430/01) [2005] 1 CMLR 44, paras 108 114, and Dominguez v Centre Informatique de Centre Ouest Atlantique (Case C 282/10) [2012] 2 CMLR 14, paras 24 and 25. Both Judge Waksman and the Court of Appeal discussed the CJEUs interpretation of the Directive in their reasoning. Judge Waksman concluded that section 145(3)(a) was not compatible with the Directive; the Court of Appeal gave what I see as a strained interpretation to use to achieve such compatibility. Recent case law of the CJEU has demonstrated a need for Parliament to reconsider the wording of section 145(3)(a) of the RTA to comply with the Directive. As the courts below recognized, in Vnuk the CJEU held that the objective of the First to Third Directives was to protect injured parties to an accident caused by a vehicle in the course of its use, if that use is consistent with the normal function of that vehicle (para 56). As a result, the CJEU ruled that the concept of use of vehicles in article 3(1) of the First Directive (which is materially in the same terms as article 3 of the current Directive) covers any use of a vehicle that is consistent with the normal function of that vehicle (para 59 and the dispositif). In that case, the accident occurred when a tractor was reversing in a farmyard in order to place a trailer, to which it was attached, in a barn and the trailer struck a ladder on which the claimant was standing, causing him to fall. The CJEU, rejecting the contention that the article covered only use of a vehicle on a public road, held that article 3(1) of the First Directive could apply to the manoeuvre of the tractor in the farmyard. Since the judgment of the Court of Appeal was handed down in this case, the Grand Chamber of the CJEU has revisited the meaning of use of vehicles in article 3(1) of the First Directive in Rodrigues de Andrade v Salvador (Case C 514/16), 28 November 2017. The accident in that case occurred when an agricultural tractor, which had a drum with a herbicide spraying device mounted on its back, was stationary but its engine was running to drive the spray pump for the herbicide. A landslip, which was caused by among other things the vibrations of the tractor engine and the spray, carried the tractor away, causing it to fall down terraces and crush a worker who was working on the vines below. The Grand Chamber held that the concept of use of vehicles covers any use of a vehicle as a means of transport (para 38). The fact that a vehicle was stationary or that its engine was not running at the time of the accident did not preclude the use falling within the scope of its function as a means of transport (para 39). But the concept of use of vehicles did not cover a circumstance in which the tractors principal function, at the time of the accident, was not to serve as a means of transport but to generate, as a machine for carrying out work, the motive power necessary to drive the pump of a herbicide sprayer (para 42 and the dispositif). The judgments in Vnuk and Andrade were confirmed in a judgment of the Sixth Chamber of the CJEU, which concerned article 3 of the Directive, in Torreiro v AIG Europe Ltd (Case C 334/16) 20 December 2017, [2018] Lloyds Rep IR 418, which affirmed that in EU law the location of the use of the vehicle under the Directive is not confined to a road or other public place as had been understood in prior English jurisprudence. I am not persuaded that section 145(3)(a) can be read down to comply with the jurisprudence of the CJEU. In R (RoadPeace Ltd) v Secretary of State for Transport [2017] EWHC 2725 (Admin), [2018] 1 WLR 1293, Ouseley J (paras 73 and 99) recorded and accepted the view of the Secretary of State for Transport and the Motor Insurers Bureau that section 145(3)(a) could not be read down and that there required to be amending legislation. In Lewis v Tindale [2018] EWHC 2376 (QB) Soole J reached the same conclusion (paras 42 58) because reading down would go against the grain and thrust of the legislation, because it raised policy ramifications which were not within the institutional competence of the courts, and because it would necessarily impose retrospective criminal liability under section 143. I agree. It is important to note that EU law does not require a national court, hearing a dispute between private persons, to disapply the provisions of national law and the terms of an insurance policy, which follows national law, when it is unable to interpret national law in a manner that is compatible with a provision of a directive which is capable of producing direct effect: see judgment of the Grand Chamber of the CJEU in Smith v Meade (Case C 122/17) 7 August 2018 (paras 49, 55, 57 and the dispositif). In that case, the requirement for third party motor insurance cover in Irish road traffic legislation did not comply with the Directive. A motor insurance policy, which was a contract between private persons, reflected the Irish legislation. The CJEU held that the terms of the insurance policy were not to be disapplied, notwithstanding the failure to provide the cover which the Directive required; the person disadvantaged by this failure could instead seek compensation from the member state (para 56). On this basis, it is the cover required by the RTA, and not the extended cover which the CJEU jurisprudence now requires, which is to be read into the Policy. The relevant use therefore is use on a road or other public place. The matter does not stop with the interpretation of the words use of the vehicle. It is also necessary to consider the causal phrase caused by, or arising out of the use of the vehicle on a road or other public place. The addition of the words arising out of after caused makes it clear that there can be a causal link between use of a vehicle on a road and damage resulting from that use which occurs elsewhere. In Romford Ice and Cold Storage Co Ltd v Lister [1956] 2 QB 180, a case which concerned the interpretation of identical words in section 36(1) of the Road Traffic Act 1930, the majority of the Court of Appeal (Birkett and Romer LJJ) held that an accident which occurred in the yard of a slaughterhouse did not arise out of use on the road. Romer LJ (pp 211 212) opined that to hold that the accident arose out of use on a road would be stretching the language of the section beyond permissible limits. He gave the following example to illustrate his understanding of the meaning of the statutory words: An accident is caused by the use of a vehicle on a road if it runs over a pedestrian at a zebra crossing; an accident arises out of the use of a vehicle on a road if it skids off the road and injures a pedestrian who is walking on the pavement. Birkett LJ expressed a similar view (pp 204 205) in rejecting the idea that the accident arose out of the use of the lorry on the road because the lorry had to be driven on the road to get to the yard. Denning LJ took a different view, holding that because the lorry was engaged in operations incidental or ancillary to a journey on the road, the accident arose out of the use of the vehicle on the road. I agree with the majority in Romford in their interpretation of the relevant statutory words. Their interpretation was followed in the unanimous judgment of the Court of Appeal in Inman v Kenny [2001] EWCA Civ 35; [2001] PIQR P18. Were an accident similar to that in Romford to occur once the RTA has been amended to comply with the CJEU jurisprudence in Vnuk and Andrade, the result of that case would probably be different. But that does not affect the meaning of the words caused by, or arising out of the use of the vehicle. There must be a reasonable limit to the length of the relevant causal chain. In Malcolm v Dickson 1951 SC 542, a case about remoteness of damage in a negligence claim, Lord Birnam stated (p 544): It is of course logically possible, as every schoolboy knows, to trace the loss of a battle, or even of a kingdom, to the absence of a nail in a horses shoe. But strict logic does not appear to me to be a safe guide in the decision of questions such as this. I agree. Mr Eklund QC, who appeared for UKI, submitted that Dunthorne v Bentley [1999] Lloyds Rep 560 was wrongly decided. I would not so hold. The case did not turn on a point of law but on the application of the law to a particular set of facts. The Court of Appeal held in that case that the trial judge was entitled to conclude that Mrs Bentley had crossed the road and so caused the accident while she was seeking help from a colleague to continue her journey, shortly after she had run out of petrol and had parked her car at the side of the road. The judge was entitled to conclude that the accident had arisen out of her use of the car on the road. Mr Dunthornes claim was close to the line, as Hutchison LJ recognized, but it is not apparent to me that the outcome of that borderline case was wrong, having regard to the close connection in time, place and circumstance between the use of the car on the road and the accident. In summary, section 145(3) of the RTA must be interpreted as mandating third party motor insurance against liability in respect of death or bodily injury of a person or damage to property which is caused by or arises out of the use of the vehicle on a road or other public place. The relevant use occurs where a person uses or has the use of a vehicle on a road or public place, including where he or she parks an immobilised vehicle in such a place (as the English case law requires), and the relevant damage has to have arisen out of that use. ii) What term should be read into clause 1a In Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38; [2009] AC 1101, the House of Lords construed a formal commercial contract to cure a linguistic mistake. The House, in the leading speech which Lord Hoffmann delivered, stated that where the context and background of a contract drove the court to the conclusion that something must have gone wrong with the language that the parties had used, the court did not have to attribute to the parties an intention which a reasonable person would not have understood them to have had. He emphasised that it required a strong case to persuade a court that something must have gone wrong with the language (paras 14 15). For the court to adopt a corrective construction, it should be clear that something has gone wrong with the language and it should be clear what a reasonable person would have understood the parties to have meant. (para 25) In this case, there is an apparent contradiction between the terms of clause 1a, if those words are given their ordinary meaning, and the promise in the certificate (para 9 above) that the Policy satisfies the requirements of UK law, including the RTA. If, as I have concluded, the certificate is not effective to create the needed cover, there can be no doubt that it is necessary to interpret the insuring clause in the Policy so that it meets the requirements of section 145(3)(a) of the RTA by correcting the mistake in clause 1a. This is one of those rare cases where the mistake is clear as is the intended meaning, so that a party to the agreement does not need to apply for rectification of the Policy. The policy booklet is written in plain language for the benefit of the policy holder and lacks the precision which one might expect from a detailed commercial contract. For example, the statement in clause 1a that UKI will give cover for the insureds liability if you have an accident in your vehicle if read strictly would not cover an accident caused by the insured opening his car door and stepping out of the car. Yet clause 2, which appears to address the Brown judgment to which I referred in para 34 above, provides such cover for passengers getting out of the car. It was not disputed that clause 1a should be construed as covering the insured driver stepping out of his vehicle. Nor is it disputed that the clause must be construed so that it meets the requirements of the RTA. But the alteration of the clause which the Court of Appeal favoured was much more radical. In identifying the needed correction, I derive no assistance from the fact that the Policy gives extensive first party cover and cover overseas or from the fact that the maximum sum available under the Policy for third party cover far exceeds the statutory minimum. The correction which is needed is to enable the cover to extend beyond what is expressly provided for to that which the RTA requires. If, as is the case, the express terms of the Policy in some respects exceed what the RTA requires, those terms must be given effect. Construction of clause 1a to expand its cover to meet the requirements of the RTA cannot cut back that which is expressly conferred. But that which is to be added to correct the omission is that which is needed to make the cover comply with the RTA and no more. In my view the Court of Appeal erred in not adopting this approach. Its formulation did not confine the Policys cover to the express terms of clause 1a and such additions as were needed to meet requirements of RTA. Instead, the formulation we will cover you if there is an accident involving your vehicle expands the cover significantly beyond both the express terms of the clause and the requirements of the RTA by removing the statutory causal link between the use of the vehicle on a road or other public place and the accident. Indeed, the interpretation which the Court of Appeal favours appears to go beyond that which EU law currently requires. Dealing briefly with other arguments which Phoenix has raised, I see no basis for the operation against UKI of the contra proferentem rule in this context. The necessity for corrective construction arises from the fact that the terms to meet the legal requirements, which the Chief Executives certificate vouched, have not been expressed in the insuring clause. There is no doubt as to what those terms are as the statutory provision provides them. Nor do I derive any assistance by reference to the Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083) (the 1999 Regulations). The requirement in regulation 7 of the 1999 Regulations (now section 69 of the Consumer Rights Act 2015) that the interpretation most favourable to the consumer is to prevail where there is doubt about the meaning of a written term of a contract applies, for example, in the circumstances which I have discussed in para 48 above. But I am not persuaded that it can apply where the court, having recognized a mistake in the language used, is applying a corrective construction by reading into the clause words, which have not been expressed, to correct the mistake. It is important to recall that a corrective interpretation is available only if it is clear what a reasonable person would have understood the parties to have meant (para 46 above). Nor can the fact that UKI has amended the terms of the Policy to extend its cover since the events which gave rise to the claim in this case assist the process of construction of the terms of the Policy. In my view the appropriate corrective construction of clause 1a to give effect to the requirements of the RTA is to add the words or if there is an accident caused by or arising out of your use of your vehicle on a road or other public place. The clause would therefore read: We will cover you for your legal responsibility if you have an accident in your vehicle or if there is an accident caused by or arising out of your use of your vehicle on a road or other public place and Clause 2 of the Policy, which I quote in para 7 above, extends this cover to the other people which it specifies, including a person insured by the policy who is driving with the permission of the insured. iii) Does Mr Holdens accident fall within clause 1a as so interpreted? In my view, neither English domestic case law nor the jurisprudence of the CJEU supports the view that the carrying out of significant repairs to a vehicle on private property entails the use of the vehicle. The English case law which interprets use in the RTA as having the use of makes good sense in the context of vehicles which have been left on a road or in a public place, where members of the public are likely to encounter them, but less sense if applied without qualification to vehicles located on private property. In ordinary language one would not speak of a person who is conducting substantial repairs to a stationary vehicle as using that vehicle, but the presence of a vehicle on a road or other public place while the owner was carrying out such repairs would, in my view, fall within the mischief which section 145(3)(a) addresses. EU law now requires the extension of compulsory third party insurance to vehicles on private property to cover use of the vehicles as a means of transport, a concept which can include parked vehicles. I am not persuaded that a vehicle which is on its side being repaired on private property, such as a garage, is being used as a means of transport as the CJEU jurisprudence requires. But it is not necessary to decide that point because, as the CJEU has held in Smith v Meade (para 55 above) national legislation governs and the repair did not take place on a road or other public place. Turning to the statutory phrase, arising out of the use of the vehicle on the road, Phoenixs argument is that Mr Holdens repairs met the causal requirement either because the disrepair of the car was the result of its use or because the repair was a precursor to his getting the car back on the road as a means of transport. The repairs, Phoenix submitted, were ancillary and incidental to the use of the car and thus the damage to its property and that of its neighbour arose out of the use of the car. I do not accept this submission because the causal connection is too remote: viz my discussion of the Romford case in paras 42 and 43 above. It is likely that the prior use of the car as a means of transport was either a but for cause or (for example, if, without washing the underside after use on a road, the car was parked on a private driveway or in a garage for a prolonged period) a contributory cause of the disrepair of the vehicle which necessitated the repairs. I would accept that the repairs may properly be said to have arisen out of the use of the car as they were a response to the disrepair of that vehicle. But it does not follow that the property damage which is the subject of Phoenixs claim was caused by or arose out of the use of the vehicle as the RTA requires. In agreement with Judge Waksman, I consider it to be an artificial analysis to say that the property damage, which Phoenix and its neighbour suffered, was caused by or arose out of the use of the vehicle. As he stated (para 66 of his judgment), [t]he fire was caused by and arose out of the allegedly negligent repair of the car by the use of grinders and welders without taking any precautions with regard to flammable materials in the car itself. It was Mr Holdens alleged negligence in carrying out the repairs and not the prior use of the car as a means of transport which caused the relevant damage. In my view, Phoenixs claim clearly falls on the wrong side of the line. I have not overlooked the Commonwealth cases to which this court and the courts below were referred. Some, like Elias v Insurance Corpn of British Columbia (1992) 95 DLR (4th) 303 and Pilliteri v Priore (1997) 145 DLR (4th) 531, in which repair was treated as a use of a vehicle, concerned differently worded legislation which referred to damage arising out of the ownership, use or operation of a vehicle. The Australian cases, which Judge Waksman analysed in paras 52 57 of his judgment, appear to turn on their particular facts and two of the cases draw a distinction between repairs where the car is being prepared for use on the one hand and, on the other, circumstances in which the car is driven or some part of its mechanism is used in the course of repairs. Like the Master of the Rolls, I do not find the Commonwealth cases helpful. Because Mr Holden was not in his car when the accident occurred (as the express terms of clause 1a require) and because, for the reasons which I have given, the RTA does not require third party insurance cover in the circumstances of the accident in this case (with the result that the corrective interpretation does not assist Phoenix), UKI is entitled to the declaration which Judge Waksman gave in his order of 8 April 2016. Conclusion I would allow the appeal.
+The Mental Capacity Act 2005 established a comprehensive scheme for decision making on behalf of people who are unable to make the decision for themselves. The decision maker whether a carer, donee of a power of attorney, court appointed deputy or the court stands in the shoes of the person who is unable to make the decision known as P and makes the decision for him. The decision has to be that which is in the best interests of P. But it is axiomatic that the decision maker can only make a decision which P himself could have made. The decision maker is in no better position than P. So what is the decision maker to do if he has reached the conclusion that a particular course of action is in the best interests of P but the body who will be required to provide or fund that course of action refuses to do so? Specifically, what is the role of the Court of Protection where there is a dispute between the providers or funders of health or social care services for a person who lacks the capacity to make the decision for himself and members of his family about what should be provided for him? The facts MN is a profoundly disabled young man, born in November 1993, so now in his early twenties. In the words of the trial judge, Eleanor King J, at [2013] EWHC 3859 (COP), [2014] COPLR 11, para 6, he has severe learning and physical disabilities together with autism and an uncommon epileptic condition resulting in frequent seizures and risk of sudden death. A nurse has to be available at all times to administer emergency drugs to MN if the need arises. MN had poor muscle tone and uses a wheelchair. He is doubly incontinent. MN has the cognitive ability of a child aged less than 1 year. He has no speech but can express his feelings by facial expression, sounds and gestures. MN needs help with feeding as he is vulnerable to choking; he requires 2:1 care with his personal care and accessing the community. Overall MN has to have his carers nearby at all times and during the night MN has one sleeping member of staff and one member of staff who stays awake to look after him. MN is one of six siblings. He has two brothers, BN and DN, who are also profoundly disabled and live in residential care. He has two sisters who continue to live with their parents and another brother who lives independently. As Bracewell J put it in care proceedings in the Family Division: To care for three such children, requiring constant 24 hour supervision is a Herculean task which this family as a team has undertaken with love and total commitment. The closeness of the family is striking. The physical care and attention to safety has been exemplary. All the family have been involved with every aspect of minute by minute care and supervision. There is no doubt that love and commitment have been shown to these children to the highest degree. Nevertheless, despite these heroic efforts, the family were unable to cater for all their childrens needs, nor were they able to co operate with the authorities in doing so. Hence the need for care proceedings. A care order was made in respect of MN in December 2001 when he was just eight years old. Bracewell J found that his father had a long history of obstruction of professionals, of refusal to co operate with authority and of being intimidating to anyone with whom he disagreed. At its height, he received a custodial sentence for assaulting a social worker. An application to discharge the care order was refused in July 2005 when MN was 11. Bracewell J found that history had repeated itself in the intervening years. Accordingly, MN was still in the care of the local authority in August 2011. He was due to reach the age of 18 in November 2011, on which date the care order would come to an end (Children Act 1989, section 91(12)). The local authority, predicting that the parents would not see eye to eye with the authorities about what would then be best for MN, issued proceedings in the Court of Protection, seeking orders that: (1) MN reside in such accommodation and receive such education and care as directed by the local authority. (2) MNs contact with his mother, father and other family members be regulated by the local authority and be supervised by such persons when appropriate as the local authority directed. On MNs 18th birthday, responsibility for his care was taken over by the National Health Service, now the local Clinical Commissioning Group (CCG) responsible for commissioning care for him. MN has been assessed as having a primary health need (under regulation 21 of the National Health Service Commissioning Board and Clinical Commissioning Groups (Responsibilities and Standing Rules) Regulations 2012, SI 2012/2996). Two days later, with the permission of the Court, he moved to the residential care home where he now lives. It was not in dispute that MN lacks the capacity both to conduct this litigation and to make decisions about his residence, education or the arrangements for his care or contact with his family. Declarations to that effect have been made by consent. He is represented by the Official Solicitor in these proceedings. The Official Solicitor instructed an independent social worker to report on MNs best interests in respect of his residence, care, education and contact. The social worker has produced three reports in the course of these protracted proceedings. His position since 2011 has been that the care home where MN lives provides a safe, settled and supportive environment for him. The parents have for the time being accepted that this is where he should stay, although it is clear that their ultimate aim is for him to come and live with them. Despite their difficulties in working with MNs father and mother, the care home has instigated much more relaxed arrangements for contact with MN. At the time of the hearing before Eleanor King J, the plan was that, providing they gave the home one hours notice (as did the families of all the other residents), they could visit whenever they chose during the day. There are also periodic meetings at a caf and arrangements for him to meet his brothers BN and DN, who are also in residential care. Thus, by the time of the hearing, the issues between the CCG and the parents had narrowed to two. First, the parents wished for MN to come and visit them in their home, some six miles away from his care home. An occupational therapist had assessed the home and concluded that it could accommodate MN and his wheelchair for a short visit. But trained carers would have to go with him, be allowed into the home to settle him down, and wait outside while he was there (the parents have been reluctant to allow professionals into their home). One of the carers would have to be trained to administer emergency medication if required. Only the care home manager and her deputy were willing to do this, the rest of her staff fearing that the parents would not co operate, would interfere with the care they provided for MN and would be aggressive and intimidating towards them. Hence the care home was unwilling to facilitate MNs visits to the family home, which would therefore require alternative carers to be trained and paid to do so. Second, MNs mother wished to be allowed to assist the care home staff with his intimate care when she was visiting him there. The independent social worker thought that MNs interaction with his mother in this way could form an important element in his quality of life, provided that she was able to work with the staff. Once again, the care home was not willing to allow this. This was due partly to fears as to the mothers co operation but also because the parents had declined an offer of the necessary training in manual handling. MN is a grown man whose limbs can thrash around, particularly if he has a fit, which can happen at any time without warning. The final hearing of the application, initially made by the local authority but now maintained by both the CCG (as lead applicant) and the local authority, was listed for three days in November 2013. Voluminous evidence no fewer than 2,029 pages, including 1,289 pages of expert evidence, contained in five lever arch files and position statements had been filed. The independent social worker was due to attend. The CCG had written in October making its final proposals for contact between MN and his family. The CCGs position was that it was not in MNs best interests for his mother to be involved in his personal care or for him to have visits to the family home. The staff were unwilling to facilitate this and the CCG was not prepared to fund alternatives. The Official Solicitor, for MN, supported the CCGs position. The parents disputed their position and the reasons for it. In particular, they claimed that the care homes fears about lack of co operation were unwarranted and that the mother was now prepared to undergo the necessary training. At 11.32 pm on the day before the hearing was due to begin, counsel for the local authority emailed the other parties to give notice of her intention to argue that the Court of Protection had no jurisdiction to decide the issues. The matters that the parents wanted were not on the table given that the CCG had said that it was not willing to allow or to arrange them, or to commission staff or to fund the necessary resources. These were public law decisions which could only be challenged by way of judicial review. The Court of Protection could only decide between the available options, making a choice that MN could make if he were able, and it was inappropriate to use the proceedings to try and obtain a best interests declaration in order to influence a public law decision. It was, to say the least, unfortunate that the legal issue was raised so late in the day. It had been foreshadowed in a position statement from the local authority in August 2013 but at a directions hearing later that month directions were given for the filing of further evidence and the parties had prepared for a three day trial of the disputed issues of fact. No skeleton argument raising a preliminary issue of law had been filed. The parents came to court expecting the court to consider the contact issue over three days in which witnesses would be called and cross examined, after which the court would decide whether what they wanted or what the authorities proposed was in MNs best interests. They could be forgiven for feeling a burning sense of injustice at what took place instead. On the first day, Eleanor King J heard argument on the legal issue, which she labelled jurisdictional issues in her judgment. Counsel for the parents raised no objection, being aware of the issue and familiar with the authorities. Written submissions on human rights issues were also made on behalf of the father and responded to jointly by the CCG and local authority. The judge then spent the next day writing a judgment, correctly described by Sir James Munby P in the Court of Appeal as detailed and careful: [2015] EWCA Civ 411; [2016] Fam 87, para 50. She delivered this on the third day (and perfected it later). She accepted the argument put forward by the local authority and CCG and declined to embark upon a hearing of the evidence or resolving the factual disputes. Her conclusion was that the Court of Protection has no greater powers than the patient would have if he were of full capacity. As she explained, at para 53: If MN had capacity, but required the type of nursing care he currently needs due only to his physical needs, he might wish his mother to assist with his personal care. The care providers may, as here, be unwilling to allow this for whatever reason; perhaps health and safety issues or difficult relationships with MNs mother. MN with capacity would have the following options: (i) accept the conditions of residence at the care providers establishment, (ii) privately fund his care elsewhere, or (iii) seek to negotiate with the ACCG in the hope of them agreeing to fund his removal to a different residential unit which would allow his mother to assist with his personal care. What MN with capacity would not be able to do is to force, by way of court order or otherwise, the care providers to agree to his mother coming into their facility and assisting with his intimate care. Judicial review was the only proper vehicle through which to challenge unreasonable or irrational decisions made by care providers and other public authorities. In rare cases where a public authority might be acting in breach of convention rights by refusing to fund a particular form of care that could be raised in the Court of Protection by way of a formal application under section 7 of the Human Rights Act 1998. In this case, as contact at the family home was not an available option now or in the foreseeable future, the court should not embark upon a best interests analysis of contact at the parents house as a hypothetical possibility. Hence she was satisfied that the contact plan now proposed by the CCG was in MNs best interests. She therefore made a comprehensive order, among other things, declaring (1) that it was in MNs best interests to continue to reside and receive care at his current care home or, should that come to an end for any reason or the CCG or public body responsible for his residence and care decide that it is no longer in his interests, to move to and reside and receive care at a placement identified by them; and (2) that it was in MNs best interests to have contact with his parents and other members of his family in accordance with the detailed plan set out in a schedule. Both parents appealed to the Court of Appeal. The President observed that the appeal raised fundamental questions as to the nature of the Court of Protections jurisdiction and, in particular, the approach it should adopt when a care provider is unwilling to provide, or to fund, the care sought, whether by the patient or, as here, by the patients family (para 9). In his extensive review of the authorities, he took as his starting point the principle in A v Liverpool City Council [1982] AC 363, that the wardship jurisdiction of the High Court in relation to children should not be used to circumvent or challenge the statutory powers and duties of local authorities in relation to children in their care (para 11). He concluded that the judge was right in all respects and essentially for the reasons she gave (para 79). He gave four reasons why the Court of Protection should not embark on the kind of process for which the parents contended: first, it is not its proper function to embark upon a factual inquiry into some abstract issue the answer to which cannot affect the outcome of the proceedings before it; second, it should not embark upon such an enquiry in order to provide a platform or springboard for possible future proceedings in the administrative court; third, such an exercise runs the risk of confusing the different perspectives and principles governing the exercise by the Court of Protection of its functions and the exercise by a public authority of its functions; and fourth, it would risk exposing the public authority to impermissible pressure (para 82). This appeal The father, with the mothers support, now appeals to this Court. On behalf of the father, Ms Kerry Bretherton QC makes essentially the argument that she made below. The Court of Protection has power under section 16(2)(a) of the Mental Capacity Act 2005 to make a decision on any matter in relation to which P lacks the capacity to decide. Among the examples given in section 17 of the use of the courts powers under section 16 in relation to personal welfare is deciding what contact, if any, P is to have with any specified person. Hence the court has jurisdiction to make that decision. Any decision made on behalf of a person who lacks capacity must be made in his best interests. Only once that decision is made should the funding options be considered. She accepts that the court has no power to order the CCG to fund what the court considers to be in Ps best interests. But the CCG can be expected to give careful consideration to the courts findings on disputed issues of fact, such as, in this case, the willingness of the parents to co operate with the authorities and the care home staff and what would actually be required to make their proposals viable. If the CCG maintains its refusal to fund whatever the court thinks best, that can be challenged in judicial review proceedings, albeit only on the usual judicial review grounds, or under the Human Rights Act 1998 on human rights grounds. In other words, as Eleanor King J put it, Best interests first; Judicial Review second (para 51). Otherwise, a public authority would be able to cut off the Court of Protections best interests inquiry at the outset, simply by refusing to provide or fund anything other than its own proposals. Ms Weereratne QC, on behalf of the mother, supports that case. She emphasises that there were factual disputes relevant to the two issues in the case which were important to MNs quality of life; that the individuals preferences are at the centre of the care planning process and that it is the function of the Court of Protection to substitute for the preferences of a person who cannot decide or articulate them for himself; and that this approach would be more consistent with the equality and non discrimination principles of the United Nations Convention on the Rights of Persons with Disabilities, which are taken into account by the European Court of Human Rights in its interpretation of the Convention rights: see, most recently, AN v Lithuania, Application No 17280/08, Judgment of 31 May 2016, where the court cited article 12 of the Convention (para 69) and held that where a measure of protection is necessary, it should be proportionate to the degree of incapacity and tailored to the individuals circumstances and needs (para 124). The approach adopted in the courts below was supported, albeit with nuanced variations, by Mr Hugh Southey QC on behalf of the CCG and Mr Richard Gordon QC on behalf of the Official Solicitor as litigation friend of MN. Despite the wealth of authority cited in the courts below, the applicable principles are readily established from a combination of the fundamental purpose and specific provisions of the 2005 Act and the decisions of this Court and its predecessor in the House of Lords. The Mental Capacity Act 2005 The Mental Capacity Act 2005 had its origins in a project begun by the Law Commission in 1989, with the encouragement of, among others, the Mental Health Sub Committee of The Law Society. The Commission published four Consultation Papers: Mentally Incapacitated and Decision Making: An Overview (CP No 119, 1991); Mentally Incapacitated Adults and Decision Making: A New Jurisdiction (CP No 128, 1993); Mentally Incapacitated Adults and Decision Making: Medical Treatment and Research (CP No 129, 1993); and Mentally Incapacitated Adults and Other Vulnerable Adults: Public Law Protection (CP No 130, 1993). The Commissions Report, Mental Incapacity (Law Com No 231), was published in 1995. This was followed by a Consultation Paper issued by the Lord Chancellors Department, Who Decides? Making Decisions on behalf of Mentally Incapacitated Adults (1997, Cm 3803), which followed closely the Law Commissions proposals. The Governments conclusions were set out by the Lord Chancellors Department in Making Decisions: The Governments proposals for making decisions on behalf of mentally incapacitated adults (1999, Cm 4465). This adopted most of the principles put forward and recommendations made by the Law Commission. After pre legislative scrutiny by the Joint Committee on the Draft Mental Incapacity Bill (Session 2002 03, HL 189, HC 1083), the Bill which became the Mental Capacity Act was passed by 2005 and came into force in 2007. Both the Law Commissions and the Governments consultations revealed wide spread support for legislation along the lines proposed amongst health and social care professionals, carers and voluntary organisations catering for mentally disabled adults and their families and carers, as well as among lawyers and the judiciary. The Law Commissions project had begun before the decision of the House of Lords in In re F (Mental Patient: Sterilisation) [1990] 2 AC 1. At that time, there was no person with legal authority to make decisions on behalf of an adult who was unable to make them for himself, unlike the parent of a child who lacked the competence to do so. There was no jurisdiction in any court to appoint such a person or to take the decision itself. The old but little used power of the old Court of Protection to appoint a committee of the person was abolished when the Mental Health Act 1959 came into force. But there was no statutory procedure under the 1959 Act to take its place. A person who did have capacity was not able to appoint another person to make decisions about his personal welfare, as opposed to his property and affairs, should he lose capacity in the future. Hence, the decision in In re F was greeted with great relief, especially among health care professionals. The House of Lords held that the defence of necessity meant that it was lawful for such professionals and other carers to do what was in the best interests of a person who lacked the capacity to decide for himself whether it should be done. That principle has found its way, with qualifications, into section 5 of the 2005 Act. The House of Lords also held that the High Court had an inherent jurisdiction to make declarations in advance that a particular course of action would, or would not, be lawful in accordance with that principle. Nevertheless, there was still support for legislation. This would have four main purposes: it would place the necessity principle on a statutory footing; it would clarify the tests, both for incapacity and for the best interests principle; it would provide for lasting powers of attorney in relation to personal welfare decisions as well as decisions relating to property and affairs; and it would provide a new jurisdiction, in a newly constituted Court of Protection, with powers actually to take decisions on behalf of people unable to take them for themselves, or to appoint deputies to do so, as well as to make declarations as to whether or not they lacked that capacity and as to whether or not a particular course of action or inaction would be lawful. Since that time, the inherent jurisdiction of the High Court has been held to encompass situations in which the necessity doctrine does not arise, because there is no tort to which a defence is required, but there is still jurisdiction to declare whether something is, or is not, in a persons best interests: see St Helens Borough Council v PE [2006] EWHC 3460 (Fam); [2007] 2 FLR 1115. It has also been held that the 2005 Act has not abolished the inherent jurisdiction, which continues to exist alongside the new jurisdiction: see Westminster City Council v C [2008] EWCA Civ 198; [2009] Fam 11. Nevertheless, the great majority of cases are brought in the Court of Protection. It will be apparent from the above account that the jurisdiction of the Court of Protection (and for that matter the inherent jurisdiction of the High Court relating to people who lack capacity) is limited to decisions that a person is unable to take for himself. It is not to be equated with the jurisdiction of family courts under the Children Act 1989, to take children away from their families and place them in the care of a local authority, which then acquires parental responsibility for, and numerous statutory duties towards, those children. There is no such thing as a care order in respect of a person of 18 or over. Nor is the jurisdiction to be equated with the wardship jurisdiction of the High Court. Both may have their historical roots in the ancient powers of the Crown as parens patriae over people who were then termed infants, idiots and the insane. But the Court of Protection does not become the guardian of an adult who lacks capacity and the adult does not become the ward of the court. So what powers does the court have? By section 15(1) and (2) it has power to make declarations as to (a) whether a person has or lacks capacity to make a decision specified in the declaration; (b) whether a person has or lacks capacity to make decisions on such matters as are described in the declaration; (c) the lawfulness or otherwise of any act (including an omission or course of conduct) done, or yet to be done, in relation to that person. It will be seen from this that the Act focusses on capacity in relation to a specific decision or matter. This is consistent with the underlying principles of the Act. By section 1(2), a person must be assumed to have capacity unless it is established that he lacks it. Under section 2(1), the question is whether a person lacks capacity in relation to a matter. There will be people, of whom MN is probably one, who lack capacity in relation to virtually every decision in their life. But the Act recognises that capacity is variable and may fluctuate. A person may be perfectly capable of taking some decisions but not others. A person may be perfectly capable of taking the decision at some times or in some circumstances but not in others. In the Court of Appeal in this case, Sir James Munby P pointed out that the still inveterate use of orders in the form of declaratory relief might be thought to be in significant part both anachronistic and inappropriate (para 88). The scope of the declarations which may be made by the Court of Protection under section 15 may be narrower than the scope of those which may be made in the High Court: see XCC v AA [2012] EWHC 2183 (COP); [2013] 2 All ER 988. But the Court of Protection has the much wider powers of making decisions and appointing deputies under section 16 (para 88). And declarations have no coercive effect (para 90). All in all, he concluded it might be thought that, unless the desired order clearly falls within the ambit of section 15 , orders are better framed in terms of relief under section 16 (para 91). With respect, this is a view that I share. Section 16 applies if a person (P) lacks capacity in relation to a matter or matters concerning (a) Ps personal welfare, or (b) Ps property and affairs (section 16(1)). The court may then (a) by making an order, make the decision or decisions on Ps behalf in relation to the matter or matters, or (b) appoint a person (a deputy) to make decisions on Ps behalf in relation to the matter or matters (section 16(2)). But (a) a decision by the court is to be preferred to the appointment of a deputy to make a decision, and (b) the powers conferred on a deputy should be as limited in scope and duration as is reasonably practicable in the circumstances (section 16(4)). This approach is consistent with the least restrictive alternative principle, enacted in section 1(6): Before the act is done, or the decision is made, regard must be had to whether the purpose for which it is needed can be as effectively achieved in a way that is less restrictive of the persons rights and freedom of action. It also points up another distinction between the 2005 Act and the Children Act 1989: the 2005 Act does not contemplate as a norm the conferring of the full gamut of decision making power, let alone parental responsibility, over an adult who lacks capacity. Note that a court order under section 16(2)(a) simply makes the decision. There is no need to declare that the decision made is in Ps best interests, and that may be another reason for preferring orders to declarations. Section 16 also confers various ancillary powers upon the court (sections 16(5), (7) and (8)). It also provides that the court may make the order, give the directions or make the appointment on such terms as it considers are in Ps best interests, even though no application is before the court for an order, directions or an appointment on those terms (section 16(6)). In this respect, the powers of the court do resemble those of the family courts in relation to children, as do its more flexible procedures (of which more later). Section 17(1) provides that: The powers under section 16 as respects Ps personal welfare extend in particular to (a) deciding where P is to live; (b) deciding what contact, if any, P is to have with any specified persons; (c) making an order prohibiting a named person from having contact with P; (d) giving or refusing consent to the carrying out or continuation of a treatment by a person providing health care for P; (e) giving a direction that a person responsible for Ps health care allow a different person to take over that responsibility. This is not an exhaustive list and there are various limitations on the powers of deputies (sections 17(2), 20). But it is worth noting that section 17(1) does not say, for example, (a) deciding that a named care home must accommodate P, or (b) deciding that a particular person must go and see P whether he wants to or not, or (d) deciding that a person providing health care must provide a particular treatment for P, or (e) deciding that a named person must take over responsibility for Ps health care. This is consistent with what was said in the Law Commissions report (Law Com No 231), at para 8.19: Some consultees asked whether the courts power to make an order about where the person should live might provide a route to challenge a care plan made by a local social services authority under the National Health Service and Community Care Act 1990. We trust it is clear from the draft Bill that the court only has power to make any decision which the person without capacity could have made. Its role is to stand in the shoes of the person concerned. If that person has no power, under the community care legislation, to demand the provision of particular services then the court can do no such thing on his or her behalf. The Government echoed this in its white paper, Making Decisions (Cm 4465), at para 7.18: The Law Commission stressed that the court should have no powers to make decisions which the person without capacity could not have made, even if they had retained their capacity. The court could not, for example, refuse basic care. It is also consistent with what was said in this Court in Aintree University Hospitals NHS Foundation Trust v James [2013] UKSC 67; [2014] AC 591, at para 18: The judge began in the right place. He was careful to stress that the case was not about a general power to order how the doctors should treat their patient. This Act is concerned with enabling the court to do for the patient what he could do for himself if of full capacity, but it goes no further. On an application under this Act, therefore, the court has no greater powers than the patient would have if he were of full capacity. Of course, there are circumstances in which a doctors common law duty of care towards his patient requires him to administer a particular treatment, but it is not the role of the Court of Protection to decide that. Nor is that court concerned with the legality of NHS policy or guidelines for the provision of particular treatments. Its role is to decide whether a particular treatment is in the best interests of a patient who is incapable of making the decision for himself. Eleanor King J provided an excellent example of how that principle applies to the circumstances of this particular case, in the passage quoted at para 14 above. Of course, a person who has the capacity to take a decision for himself may do so for a good reason, a bad reason or no reason at all. The 2005 Act reflects this by providing, in section 1(4), that A person is not to be treated as unable to make a decision merely because he makes an unwise decision. Courts and people who take decisions on behalf of a person who is unable to take them for himself, on the other hand, have to take such decisions in the best interests of that person. Section 1(5) provides that An act done, or decision made, under this Act for or on behalf of a person who lacks capacity must be done, or made, in his best interests. Section 4 then goes into some detail about the steps which must be taken to arrive at the conclusion as to what is in his best interests. These include considering his past and present wishes and feelings, the beliefs and values likely to influence his decision if he had capacity, and other factors which he would be likely to consider if able to do so (section 4(6)). In other words, it is a decision about what would be best for this particular individual, taking into account, so far as practicable, his individual characteristics, likes and dislikes, values and approach to life. He must also be involved in the decision as far as reasonably practicable (section 4(4)). So how is the courts duty to decide what is in the best interests of P to be reconciled with the fact that the court only has power to take a decision that P himself could have taken? It has no greater power to oblige others to do what is best than P would have himself. This must mean that, just like P, the court can only choose between the available options. In this respect, the Court of Protections powers do resemble the family courts powers in relation to children. The family court must also decide what is in the best interests of the child although in the Children Act 1989 this concept is not express but implicit in the courts duty to regard the welfare of the child as its paramount consideration (1989 Act, section 1(1)). But the court cannot oblige an unwilling parent to have the child to live with him or even to have contact with him, any more than it can oblige an unwilling health service to provide a particular treatment for the child. This was explained in the case of Holmes Moorhouse v Richmond upon Thames London Borough Council [2009] UKHL 7; [2009] 1 WLR 413, at para 30: When any family court decides with whom the children of separated parents are to live, the welfare of those children must be its paramount consideration: the Children Act 1989, section 1(1). This means that it must choose from the available options the future which will be best for the children, not the future which will be best for the adults. It also means that the court may be creative in devising options which the parents have not put forward. It does not mean that the court can create options where none exist. (Emphasis supplied) The Holmes Moorhouse case is important for another reason. It demonstrates how the family court is operating on a different plane and on different principles from a public authority which is deciding how to exercise its statutory powers and duties to provide services. The parents of three children had separated, the mother remaining in the matrimonial home and the father being ordered to leave. The family court made a shared residence order, by consent, that the children should live with each parent. The father then applied to the local authority to be housed under its duties to the homeless under Part 7 of the Housing Act 1996. These duties vary depending, among other things, upon whether an applicant is in priority need. Those in priority need include A person with whom dependent children reside or might reasonably be expected to reside (section 189(1)(b)). The father argued that it was reasonable to expect the children to live with him as the family court had ordered that they should. The local authority decided that it was not. The Court of Appeal held that the shared residence order meant that it was. The House of Lords disagreed. Lord Hoffmann explained, at para 14, that the questions for the family court and for the local authority were not the same: The question which the housing authority therefore had to ask itself was whether it was reasonably to be expected, in the context of a scheme for housing the homeless, that children who already had a home with their mother should be able also to reside with the father. In answering this question, it would no doubt have to take into account the wishes of both parents and the children themselves. It would also have to have regard to the opinion of a court in family proceedings that shared residence would be in the interests of the children. But it would nevertheless be entitled to decide that it was not reasonable to expect children who were not in any sense homeless to be able to live with both mother and father in separate accommodation. The authority was entitled to take into account the fact that housing was a scarce resource, the claims of other applicants and the scale of its responsibilities, when deciding the issue of reasonableness for this purpose. Nor should a family court use its own powers as a way of putting pressure upon the local authority to decide in a particular way. Other service providing powers and duties also have their own principles and criteria, which do not depend upon what is best for the service user, although that will no doubt be a relevant consideration. The Care Act 2014, which is not relevant in this particular case but will be relevant in many which come before the Court of Protection, creates a scheme of individual entitlement to care and support for people in need of social care. But it has its own scheme for assessing those needs (section 9) and its own scheme for determining eligibility (section 13) and then deciding how those eligible needs should be met (section 24). The Act even provides for the possibility of introducing appeals to a tribunal (section 72), although this has not yet been done. The National Health Service also has its own processes for assessing need and eligibility, albeit not in a legislative context which recognises individual legal entitlement. Decisions can, of course, be challenged on the usual judicial review principles. Decisions on health or social care services may also engage the right to respect for private (or family) life under article 8 of the European Convention on Human Rights, but decisions about the allocation of limited resources may well be justified as necessary in the interests of the economic well being of the country (see McDonald v United Kingdom [2015] 60 EHRR 1). Here again, therefore, the legal considerations, both for the public authority and for the court, are different from those under the 2005 Act. Discussion So how does all this fit together in a case such as this? It is perhaps unfortunate that the issue was described in the Court of Protection as one of jurisdiction and that term was used in the statement of facts and issues before this Court. The issue is not one of jurisdiction in the usual sense of whether the court has jurisdiction to hear the case. After all, the Court of Protection made the orders which it was asked to make in this case and no one has suggested that it had no jurisdiction to do so. It was seized of an application properly made by the authorities responsible for providing services for MN. The context was a care order giving the local authority parental responsibility for him which was about to come to an end. No doubt if there had been no dispute with the family about his care, there would have been no need to make an application. Section 5 of the 2005 Act gives a general authority, to act in relation to the care or treatment of P, to those caring for him who reasonably believe both that P lacks capacity in relation to the matter and that it will be in Ps best interests for the act to be done. This will usually suffice, unless the decision is so serious that the court itself has said it must be taken to court. But if there is a dispute (or if what is to be done amounts to a deprivation of liberty for which there is no authorisation under the deprivation of liberty safeguards in Schedule A1 to the 2005 Act) then it may be necessary to bring the case to court, as the authorities did in this case. The court clearly has jurisdiction to make any of the orders or declarations provided for in the Act. The question is not strictly one of jurisdiction but of how the case should be handled in the light of the limited powers of the court. What may often follow such an application will be a process of independent investigation, as also happened in this case, coupled with negotiation and sometimes mediation, in which modifications are made to the care plan and areas of dispute are narrowed, again as happened in this case. But it does not follow that the court is obliged to hold a hearing to resolve every dispute where it will serve no useful purpose to do so. The Court of Protection has extensive case management powers. The Court of Protection Rules do not include an express power to strike out a statement of case or to give summary judgment, but such powers are provided for in the Civil Procedure Rules, which apply in any case not provided for so far as necessary to further the overriding objective. The overriding objective is to deal with a case justly having regard to the principles contained in the 2005 Act (Court of Protection Rules 2007, rule 3(1)). Dealing with a case justly includes dealing with the case in ways which are proportionate to the nature, importance and complexity of the issues and allocating to it an appropriate share of the courts resources (rule 3(3)(c) and (f)). The Court will further the overriding objective by actively managing cases (rule 5(1)). This includes encouraging the parties to co operate with one another in the conduct of the proceedings, identifying the issues at an early stage, deciding promptly which issues need a full investigation and hearing and which do not, and encouraging the parties to use an alternative dispute resolution procedure if appropriate (rule 5(2)(a), (b)(i), (c)(i), and (e)). The courts general powers of case management include a power to exclude any issue from consideration and to take any step or give any direction for the purpose of managing the case and furthering the overriding objective (rule 25(j) and (m)). It was held in KD and LD v Havering London Borough Council [2010] 1 FLR 1393 that the court may determine a case summarily of its own motion, but their power must be exercised appropriately and with a modicum of restraint. The court is clearly entitled to take the view that no useful purpose will be served by holding a hearing to resolve a particular issue. In reaching such a decision, many factors might be relevant. In a case such as this, for example: the nature of the issues; their importance for MN; the cogency of the parents demands; the reasons why the CCG opposed those demands and their cogency; any relevant and indisputable fact in the history; the views of MNs litigation friend; the consequence of further investigation in terms of costs and court time; the likelihood that it might bring about further modifications to the care plan or consensus between the parties; and generally whether further investigation would serve any useful purpose. In this case, consideration along those lines would no doubt have produced the following conclusions. The issues had been narrowed. They were important for MN but not as important as the basic question of where he should live. There were good reasons, not least in the history, for thinking that the parents wishes were impracticable and that the CCG had good reasons for rejecting them. The Official Solicitor supported this. In the light of the length of time the proceedings had already taken, and the modifications to the care plan which had been made in the course of them, it was unlikely that investigation would bring about further modifications or consensus. And it would be disproportionate to devote any more of the courts scarce resources to resolving matters. Case management along these lines does not mean that a care provider or funder can pre empt the courts proceedings by refusing to contemplate changes to the care plan. The court can always ask itself what useful purpose continuing the proceedings, or taking a particular step in them, will serve but that is for the court, not the parties, to decide. Conclusion This was not a case in which the court did not have jurisdiction to continue with the planned hearing. It was a case in which the court did not have power to order the CCG to fund what the parents wanted. Nor did it have power to order the actual care providers to do that which they were unwilling or unable to do. In those circumstances, the court was entitled to conclude that, in the exercise of its case management powers, no useful purpose would be served by continuing the hearing. I accept that Eleanor King J did not put it in quite these terms (no doubt reflecting the way the issue was argued before her). However, that is the substance of what she was doing and she was entitled in the circumstances to do it. I would therefore dismiss this appeal and uphold the orders she made, albeit not for precisely the same reasons.
+Mr Thomas Arthur Watkins lived near Tredegar in South Wales. He was employed by the National Coal Board (later British Coal Corporation) (British Coal) as a miner from 1964 until 1985. In that employment he was required to use vibratory tools and as a result of such exposure, in common with very many other miners, Mr Watkins developed Vibration White Finger (VWF) which is a form of Hand/Arm Vibration Syndrome (HAVS). He first experienced the symptoms, which consist of whitening, stiffness, numbness and tingling of the fingers of both hands, not later than the early 1980s. After he left the employment of British Coal in 1985, he worked as a driver of road sweeping vehicles until he retired in 1997. Shortly after that he was diagnosed with osteoarthritis in both knees which became increasingly acute. One symptom of VWF can be a reduction in grip strength and manual dexterity in the fingers. A common, although not invariable, consequence is that a person suffering from these conditions becomes unable, without assistance, to carry out routine domestic tasks such as gardening, do it yourself or car maintenance. The Scheme A group of test cases, representative of some 25,000 similar claims, established that British Coal had been negligent in failing to take reasonable steps to limit the exposure of employed miners to VWF from the excessive use of vibratory tools (Armstrong v British Coal Corpn [1998] CLY 975). As a result, the Department for Trade and Industry (DTI), which had assumed responsibility for British Coals relevant liabilities, set up a scheme in 1999 to provide tariff based compensation to miners who suffered from VWF as a result of exposure to excessive vibration (the Scheme). The Scheme was administered pursuant to a Claims Handling Arrangement (the CHA) dated 22 January 1999 and made between the DTI and a group of solicitors firms representing claimant miners suffering from VWF. The central objective of the CHA was to enable very large numbers of similar claims to be presented, examined and resolved expeditiously. The Scheme contemplated the making of two main types of compensatory award to miners suffering from VWF, corresponding broadly with general and special damages for personal injuries. The Scheme provided for compensation to be paid for pain, suffering and loss of amenity (General Damages), and for handicap on the labour market and other financial losses (Special Damages) including past and/or future loss of earnings. Pursuant to a Services Agreement dated 9 May 2000 the special damages could include a services award for qualifying miners in respect of the need for assistance in performing domestic tasks. Under the Scheme, each claimant was required to complete a questionnaire on his work history and IRISC, the claims handling organisation which acted on behalf of the DTI, would then allocate him to a particular occupational group, depending on his likely exposure to vibration. He would then undergo a medical examination in accordance with a defined Medical Assessment Process (MAP) by a doctor appointed under the Scheme. The resulting MAP 1 report was in standard format and was intended to determine whether the claimant suffered from VWF and, if so, the severity of the condition by reference to the stagings on the Stockholm Workshop Scale. The V score was a measure of the vascular symptoms and depended largely on reporting from the patient. The extension of blanching was recorded diagrammatically by the examining doctor. The sensori neural signs and symptoms were assessed partly from the claimants account and partly by standardised testing, the results of which were recorded as Sn markings. It was open to a claimant to challenge the findings of the MAP 1 report but there was no provision for IRISC to do so. Within 56 days of receipt of the MAP 1 report IRISC was obliged to make an offer of compensation or to reject the claim with reasons. The Services Agreement of 9 May 2000 was incorporated in the CHA as Schedule 7(1). It recorded an agreed approach to compensation for services. The respective medical experts of the parties to the Scheme rejected the idea that there should be an individual assessment of each claimants ability to carry out particular household tasks. Instead it was agreed that an assumption be made that once the condition had reached a certain level(s) causation it should be presumed that a man could no longer carry out certain tasks without assistance. The examining doctor would then merely have to consider whether there were any other conditions (VWF apart) which of themselves would have prevented the man from undertaking the task in question thereby rebutting the presumption. (Schedule 7.1, paragraph 3.1(ii)) Six tasks were identified for this purpose: gardening work, window cleaning, do it yourself, decorating, car washing and car maintenance (Schedule 7.1, paragraph 3.3). Claims under the Services Agreement were processed in the following way. The experts produced a matrix identifying in respect of each staging of 2V and 2Sn late, or higher, the tasks for which a claimant would be presumed to require assistance. Once a claimant had a staging of at least 2V or 2Sn late, a claimant was entitled to a services award if he had previously performed one of the identified tasks, but now required assistance to do so as a result of his VWF. Men at 2V on the scale would be expected to have difficulty with all tasks except do it yourself and decorating and at 3V would be expected to have difficulty with decorating. It was further assumed that the condition would not have deteriorated since cessation of exposure to vibration (Schedule 7.1, paragraphs 4.1, 4.2). A claimant did not have to show that his condition wholly disabled or prevented him from carrying out the relevant task. It was enough that he could no longer carry it out without assistance. The approach left to be determined when a claimant reached the relevant stages, whether he suffered from any other conditions which would have prevented him from continuing to carry out any tasks in any event (co morbidity), and, if so, what that condition was, when it developed and the extent to which it compromised his ability to carry out the relevant tasks expressed on a scale of nil, material, moderate, serious and complete (Schedule 7.1, paragraphs 3.7, 5.1). Factual evidence concerning a services claim was presented by a simple questionnaire completed by the claimant. Because it would be impracticable to investigate individual claims in any detail, the Scheme provided that broad assumptions will be made about the average assistance that would be required for the particular task by the individual at the relevant stage (Schedule 7.1, paragraph 6.7). Schedule 7 stated that practical and other considerations militate against other than a tariff based approach given the number of claims and the need for a quick, efficient and inexpensive approach to their settlement. (Schedule 7, paragraph 6.2) In addition, a claimants most recent helpers would complete questionnaires. A claimant would then be sent for a further medical examination (MAP 2) which was solely concerned to consider whether there were any other conditions which, of themselves, would have prevented the claimant from undertaking the task in question. A claimant was not usually contacted by IRISC concerning his claim, but helpers were. This normally consisted of a telephone interview, which might last 15 minutes, during which the helper would be asked whether he or she had assisted with the tasks claimed and, if so, when they started to do so. Even where the helper was out by a few years on dates, the information in the questionnaire would still be accepted. On receipt of the questionnaires, IRISC would consider each claim on its merits, adopting a pragmatic approach. If IRISC did not accept the claim entirely it had to set out in detail the reasons for rejecting the claim in whole or part. Compensation was calculated by application of a multiplier/multiplicand approach and an index linked tariff was set in respect of each task according to the particular staging. IRISC could reject a claim for services in whole or in part if a claimants work history after leaving the mining industry was such as to indicate that his ability to carry out the relevant tasks was not impaired. However, in order to be entitled to rebut the presumption that a man with a particular claimants stagings could not carry out the relevant tasks without assistance, IRISC had to discharge the burden of establishing that the work actually carried out by the claimant was such as to demonstrate that he could reasonably be expected to carry out all aspects of the task without assistance. Pending resolution of the services claim, a claimant was entitled to receive an interim payment in respect of his claim for general damages and handicap on the labour market. Mr Watkinss claim In February 1999 Mr Watkins instructed Hugh James Ford Simey Solicitors (the appellant) to act for him in relation to a claim under the Scheme. His claim was notified to the DTIs claims handlers on 10 February 1999. By November 1999 Mrs Barbara Kinsey, litigation solicitor within the appellant firm, had assumed responsibility for many VWF claims, including that of Mr Watkins, at the appellants office in Bargoed and, from 2001, Treharris. On 31 January 2000 Mr Watkins underwent an interview and examination performed in part by Dr Chadha, a general practitioner appointed under the Scheme, and in part by an unnamed laboratory technician, to assess whether he was suffering from VWF and, if so, how his condition should be categorised under the Stockholm Workshop Scale for its vascular and sensorineural components. This was referred to as a Medical Assessment Process 1 (MAP 1) examination. In a report dated 3 February 2000 Dr Chadha indicated that Mr Watkins suffered from VWF with stagings of 3V and 3Sn bilaterally (ie in both hands). Those stagings were sufficient for Mr Watkins to obtain general damages and to entitle him to a presumption in his favour that he satisfied the qualifying requirements for a services award. Mr Watkins did choose to seek a services award. He and his assistants completed the necessary questionnaires which were sent to the DTIs claims handlers on 23 March 2001. They initially sought to deny Mr Watkinss entire claim on the basis that he had not been exposed to excessive vibration while working for British Coal. The appellant challenged that decision and eventually the claims handlers were persuaded to accept Mr Watkinss claim under the Scheme. As a result of this delay, it was not until 12 February 2003 that the claims handlers wrote to the appellant, offering Mr Watkins the sum of 9,478 in full and final settlement of all [Mr Watkinss] claims arising out of his exposure to vibration during the course of his employment with the British Coal Corporation. 9,478 was the tariff award for general damages to which Mr Watkins would have been entitled under the Scheme on the basis of the stagings of 3V and 3Sn bilaterally. The offer made did not include any allowance for a services award. The appellant wrote to Mr Watkins on 18 February 2003, reporting the offer which had been received and advising him as to what would be involved should he wish to proceed with a special damages claim. On 23 February 2003 Mr Watkins spoke by telephone with Mrs Kinsey at the appellant and told her that he didnt want to proceed any further with the special damages claim as he had other conditions and had had various operations which in his view prevented him from carrying out certain tasks. He indicated that he was quite happy to continue with general damages only and would accept the offer. Mr Watkins completed a form of acceptance on 24 February 2003 and the appellant wrote to the claims handlers on 27 February 2003 accepting the offer in full and final settlement of Mr Watkinss VWF claim against British Coal. The professional negligence proceedings Nearly five years later, in January 2008, Mr Watkins, having seen a newspaper advertisement offering assistance to any ex miner who may have had his VWF claim settled at an undervalue, instructed fresh solicitors, who issued proceedings against the appellant on 11 August 2010. By the amended particulars of claim it is contended that as a result of the appellants negligence, Mr Watkins has lost the opportunity to bring a services claim under the Scheme or otherwise. That lost opportunity is quantified at 6,126.22 plus interest. On 22 October 2010, His Honour Judge Hawkesworth QC made an order in relation to a number of claims against solicitors arising out of the Scheme, directing that disputes about expert evidence and disclosure be dealt with at a hearing before him. The six test cases identified in the order did not include Mr Watkinss claim. Following a hearing, by order dated 3 May 2011 Judge Hawkesworth ordered that his directions should apply to all prospective and existing claims alleging negligence against solicitors in the context of the advice given by those solicitors in respect of claims for damages [under the Scheme]. He directed that expert evidence should be obtained in the form of a report by a single joint expert. A schedule to the order set out a standard form letter of instruction to such a single joint expert in terms approved by the judge. That standard form was adopted in the letter dated 21 January 2013 by which the parties to the present proceedings jointly instructed Mr Tennant, a consultant vascular surgeon. It stated: It is an issue in the proceedings whether Mr Watkins would, if properly advised, in fact have brought a Services claim at all. Whether Mr Watkins was, as a result of HAVS, in fact disabled from carrying out (in whole or in part) the tasks he alleges would have formed the basis of his Services claim is relevant to that issue. Accordingly, we wish jointly to instruct you to carry out a medical examination of Mr Watkins and, on the basis of that examination and your consideration of the documents referred to below and attached to this letter, to prepare a report stating your opinion as to whether Mr Watkins is and was at any time from the date of onset of HAVS symptoms: (1) Disabled by HAVS as a matter of fact and, to the extent that he was, unable to carry out (in whole or in part), without assistance, the tasks which he alleges would have formed the basis of his Services Claim; and (2) Suffering from any co morbid medical condition which would, in any event, have affected his ability to carry out those tasks without assistance. In relation to co morbidity, could you please express your opinion as to whether any such co morbidity was at any time since the date of onset of HAVS symptoms: nil; minor; moderate; serious; complete (ie would have prevented the carrying out of the task in any event) If, in the course of your medical examination, you conclude that Mr Watkins does not, in fact, suffer from HAVS, you should report that opinion in your Report. The letter made clear that the expert was not to apply in Mr Watkinss favour the presumption under the Scheme that he could no longer carry out the relevant tasks without assistance by reason of his VWF staging. Mr Tennant examined Mr Watkins and, in a report dated 17 May 2013, he stated: Mr Watkins gives a good description of vasospasm and is graded 1V in this report as the white discolouration reaches the distal interphalangeal joint. The only abnormality on testing was of a mild lack of dexterity. As there is no other sensory loss in a warm environment, in my opinion this amounts only to HAVS grade Sn1. There is certainly no justification for Sn3 at this examination, and to reach Sn2 would require evidence of reduced sensory perception, which I could not demonstrate. Grading of 1V, 1Sn would not be expected to produce any disability in the domains tested below. In response to further questions from Mr Watkinss solicitors, Mr Tennant confirmed on 23 June 2013 that Mr Watkins met the criteria for the diagnosis of HAVS. He further stated that it was apparent at interview that the client had devolved certain tasks to others in the long term. Mr Watkins died in January 2014 at the age of 72. His daughter, Mrs Jean Edwards, was appointed to continue the claim on behalf of Mr Watkinss estate. The trial of the claim against the appellant took place in the County Court at Leeds before Mr Recorder Miller in March 2016. The parties had permission to rely on Mr Tennants written evidence at trial but an application by the appellant, made in advance of trial, for permission to call Mr Tennant was refused and that order was not appealed. The statements of Mr Watkins were admitted as hearsay evidence. In a reserved judgment, handed down on 16 May 2016, the judge held that the claim in negligence was not time barred, that the advice contained in the appellants letter dated 18 February 2003 had been negligent and that if Mr Watkins had received appropriate advice, he would probably have decided to reject the settlement offer of 9,478 and would have continued to pursue his services claim. However, the judge also held that Mr Watkins had suffered no loss and accordingly he dismissed the claim against the appellant. He observed: If, as here, expert or other evidence which post dates the settlement or other disposal of the original claim, establishes beyond any (or any but negligible) doubt that the claim could and would have been resolved only in one specific way had that evidence been available to the parties and the tribunal at the time, then the Court in the professional negligence action has the full facts adverted to by Laws LJ in Whitehead [v Searle [2009] 1 WLR 549, para 20] and should find accordingly, thereby avoiding an uncovenanted windfall or correcting injustice to a claimant whose case has turned out to be undoubtedly stronger than had been previously assumed. In the case of Mr Watkins, I can and should find that his chose in action has been shown to have had no value given the damages actually paid to him; another way of putting it is that, as I have found on the full facts, his services claim had no chance of success, for the same reason: it is beyond a peradventure that faced with Mr Tennants clinical findings and conclusions any award would have fallen short of 9,478. It is fanciful to assume otherwise. The judge took that view because on the consultants findings Mr Watkins would only have been offered 1,790 for general damages and a services claim would not have been possible. On appeal to the Court of Appeal (Underhill, Irwin and Singh LJJ) the appeal was allowed: [2018] PNLR 30. The Court of Appeal, influenced by the decision of the Court of Appeal in Perry v Raleys Solicitors [2017] PNLR 27 (more recently reversed by this Court [2019] 2 WLR 636) held that the trial judge had been wrong to conduct a trial within a trial to determine the value of Mr Watkinss claim against the DTI and to determine the severity of his VWF. It further held that the judge had been wrong to determine these matters on the basis of the evidence of Mr Tennant, since that evidence would not have been available at the time of Mr Watkinss notional services claim under the Scheme. Irwin LJ observed (at para 70) that it would be particularly inappropriate to lose sight of what would have been the outcome under the Scheme by reference to after coming evidence which would not have been brought into being at the time. The Court of Appeal further acknowledged exceptions in the case of fraud and in cases, such as Whitehead v Searle [2009] 1 WLR 549, where the consequences of a supervening event were of such a significant or serious scale that public policy required a departure from normal principles in order to do justice between the parties. In its view, such circumstances did not exist in the present case. The appellant now appeals to this court with the permission of this court. Although the appellant sought to appeal on 14 (partly overlapping) grounds, permission was limited to the sole question of whether the prospects of success of the claim are to be judged as at the date when the claim was lost or at the date when damages are awarded and it directed that the parties consider the relevance of the principle in Bwllfa and Merthyr Dare Steam Collieries (1891) Ltd v Pontypridd Waterworks Co [1903] AC 426, namely that where the court assessing damages has knowledge of what has actually happened it should not speculate about what might have happened but base itself on what is now known to have happened. (See McGregor on Damages, 20th ed (2018), para 10 118.). Although this was the reason why permission to appeal was granted, the Court has concluded, in the light of the wide ranging arguments presented to us, that the Bwllfa principle is not relevant in the particular circumstances of this case. On behalf of the appellant, Mr Michael Pooles QC submits that the trial judge was right to rely on the evidence of Mr Tennant for four reasons. (1) In the circumstances of this case, the question whether Mr Watkins had suffered loss should be determined as at the date of the trial of the claim against the appellant, applying the Bwllfa principle. (2) In a professional negligence claim arising from personal injury litigation, the issue of loss should be determined as at the date of the trial of the professional negligence proceedings as it would have been in personal injury litigation (Golden Strait Corpn v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] 2 AC 353, per Lord Bingham of Cornhill at para 13). (3) Even if the issue of loss should be determined at an earlier date, the Court should in making that determination take account of all of the evidence available at the trial of the professional negligence proceedings, following the decisions in Charles v Hugh James Jones & Jenkins [2000] 1 WLR 1278, Dudarec v Andrews [2006] 1 WLR 3002 and Whitehead v Searle, as this would enable the court to make a more accurate assessment of what the original personal injury claim was actually worth. (4) That evidence was needed in the present case to enable the issue of loss to be determined with all the adversarial rigour of a trial as required by the Supreme Court in Perry v Raleys Solicitors: [2019] 2 WLR 636, para 19. On behalf of the respondent, Mr Richard Copnall submits that the court should assess the prospects of success as at the date when the claim was lost, on the facts as they were and the evidence available at that time, subject to the following established exceptions. (1) Evidence that would have been available, in the absence of negligence, at the time the claim was lost will be admissible (Charles; Dudarec v Andrews [2006] 1 WLR 3002). (2) Evidence of the original parties attitude to settlement at the time that the claim was lost will be admissible (Somatra Ltd v Sinclair Roche and Temperley [2003] 2 Lloyds Rep 855). (3) Evidence of dishonesty or misconduct will be admissible (Perry; Green v Collyer Bristow [1999] Lloyds Law Rep PN 798). (4) Evidence of any accomplished fact within the meaning of the Bwllfa principle will be admissible. Discussion We are concerned with a claim in the tort of negligence. Although the claim for breach of contract was time barred, the judge held that, by virtue of section 14A of the Limitation Act 1980, as inserted by section 1 of the Latent Damage Act 1986 (Special time limit for negligence actions where facts relevant to cause of action are not known at date of accrual), the claim in negligence was not. In order to succeed in negligence against Mr Watkins former solicitors his estate had to establish a negligent breach of duty, causation and loss. A negligent breach of duty was found by the judge, on the basis that the appellants letter of 18 February 2003 was misleading and deficient in a number of respects and those features were not corrected in the subsequent conversation between Mr Watkins and Mrs Kinsey on 23 February 2003. There has been no appeal against that conclusion. In addition, the judge made a finding that, had Mr Watkins received non negligent advice, he would have pursued an honest services claim. That claim had already been notified and supporting statements provided. The judge considered that, had Mr Watkins been more fully and accurately informed as to where he stood and how the scheme operated, he would probably have instructed Mrs Kinsey to let the services claim and a MAP 2 medical examination proceed. The judge expressly rejected the submission on behalf of the appellants that, in reality, Mr Watkins had realised that his evidence in support of the services claim was grossly exaggerated or invented and, as a result, he had discontinued it for fear of getting into trouble or losing out financially further down the line. There has been no appeal against that conclusion. Accordingly, the issue considered by the Supreme Court in Perry v Raleys Solicitors does not arise in this case and, in my view, that decision has no direct bearing on the issues which we have to decide. For the claim by Mr Watkinss estate to succeed, however, it is also necessary to prove loss. There is a legal burden on the estate to prove that in losing the opportunity to pursue the claim Mr Watkins has lost something of value ie that his claim had a real and substantial rather than merely a negligible prospect of success. It is only if the estate can establish that Mr Watkinss chances of success in pursuing his service claim were more than negligible that it is appropriate to go on to evaluate those chances on a loss of chance basis by making a realistic assessment of what would have happened had the original claim been pursued (Mount v Barker Austin [1998] PNLR 493 per Simon Brown LJ at pp 510D to 511C). In the view of Mr Recorder Miller, the present claim failed at the first hurdle. On the basis of the evidence of Mr Tennant the judge considered that Mr Watkinss chose in action had no value given the damages actually paid to him. It was clear, in his view, that any award would have fallen short of the 9,478 which Mr Watkins had already received under the settlement. Against this background, the argument before this court has focussed on the issue of the admissibility in a professional negligence action of subsequently acquired evidence relating to the value of the original claim, an issue on which we have heard elaborate submissions. However, it is not necessary to express a concluded view in relation to these matters because the evidence contained in Mr Tennants report was not relevant to any issue before the court in the professional negligence proceedings. As a result, the authorities relied on by the appellant are not relevant in the particular circumstances of this case. It is important not to lose sight of the fact that Mr Watkinss original claim was a claim within the Scheme and not one made in the course of conventional civil litigation. It is necessary to consider whether Mr Watkinss original claim, which was accepted by the judge to be an honest claim, was of more than negligible value within the context of the Scheme. When the evidence of Mr Tennant is considered in this light, it is not the knock out blow which the appellant suggests. The Scheme has been described by Irwin LJ in the Court of Appeal and by counsel before us as a rough and ready scheme. This is a fair description. It was intended to provide an efficient and economic system for dealing with a huge number of claims in a way that was broadly fair. No doubt, it was considered that the decision not to require a detailed medical assessment of the level of disability of every claimant for a services award was justified by the savings in cost. A deliberate decision was taken to deal with services claims by reference to presumptions derived from the diagnosis and staging found at MAP 1, as opposed to requiring a precise assessment of the underlying disability. Medical assessment in the MAP 2 procedure was to be limited to the issue of co morbidity. More specifically, there was no provision within the Scheme whereby the DTI could appeal against a general award, nor did the Scheme contemplate reopening or reassessing the diagnosis or staging of the condition or the entitlement to a general award established at MAP 1. Recoverability under the Scheme, therefore, did not depend on entitlement at common law nor did it correspond with what might have been the outcome in conventional civil proceedings. In this case Mr Watkins lost the value of his claim under the Scheme as it would have been administered in accordance with its terms. In this regard it is instructive to consider why Judge Hawkesworth QC made the order in the professional negligence proceedings for further medical reports. In his judgment of 3 May 2011, he explained that it was common ground that the claims were for the lost chance to bring a claim under the MAP 2 procedure. On behalf of the claimants it was contended that the scope of the medical evidence should be a replication of the MAP 2 procedure which was limited to the issue of comorbidity, while on behalf of the defendants it was contended, initially at least, that there should be a more comprehensive medical examination by a consultant specialist which could revisit the original diagnosis of VWF as well as address the issue of comorbidity. For the claimants it was submitted that because the MAP 2 examination did not revisit or reopen the original diagnosis it would not be appropriate for the medical expert in the professional negligence proceedings to address them. During the hearing, however, it became clear that counsel for the defendants were not contending for a medical examination in order to revisit the diagnosis and staging of the VWF condition, but in order to evaluate the claimants case on causation ie in order to assess whether a claimants failure to pursue a services claim arose from negligent advice or from an inability to assert truthfully that he had lost the ability to perform those specified activities which would enable him to bring a claim for a services award. It was said that the extent of disability was relevant to that issue, while the medical examination in the MAP 1 procedure was predominantly directed at diagnosis and staging of the condition as opposed to the level of disability. Miss Foster [who appeared for four defendant firms of solicitors] did not seek to say that the fact of a MAP 1 diagnosis and its consequences for the subsequent progression to a services claim could be called into question. However, the defendants were entitled to investigate the implied averment that had the claimant been properly advised he would have made a services claim. (at para 7) The judge seems to have made the order for expert reports on that basis but expressly left open (at para 9) the question as to the extent to which any findings by an examining doctor could or could not be taken into account in valuing the loss of a chance to bring a services claim. The joint letter of instruction sent to Mr Tennant on 21 January 2015 (set out at para 13, above) reflected this reasoning. As a result, the instructions and the resulting medical examination and report departed significantly from those in a MAP 2 procedure. Most significantly, the expert was not to apply the presumption resulting from the diagnosis and staging at MAP 1 which applied under the Scheme. Mr Tennants report may have been relevant to the issue of causation in the claim by Mr Watkinss estate against his former solicitors. However, the judge decided that issue in favour of the estate, finding that if Mr Watkins had received non negligent advice he would have pursued an honest services claim. That conclusion has not been challenged on appeal. In my view, Mr Tennants report is not relevant to the issue of loss. We must assume that had Mr Watkins pursued a services claim the Scheme would have operated in accordance with its provisions. The conclusion of Dr Chadha that Mr Watkins was suffering at the level of 3V, 3Sn bilaterally had entitled him, under the tariffs applied within the Scheme, to an award of general damages of 9,478 and also created a rebuttable presumption that he did require assistance with the tasks prescribed under Schedule 7 of CHA. Mr Watkins would have had to undergo a second medical examination but that would have been limited to assessing co morbidity. There would have been no equivalent of Mr Tennants report, no reassessment of the diagnosis or staging found in the MAP 1 procedure and no reduction of the general award. Entitlement to a services award would have been decided in accordance with the procedure described at paras 4 8 above. The appellant now seeks to add to the counterfactual situation the effect of a further medical examination and report which would never have been commissioned. There is no justification for such a modification of the counterfactual situation and the judge erred in taking it into account when concluding that the lost claim was of no value. When Mr Tennant conducted his examination of Mr Watkins and prepared his report, he acted in accordance with his instructions in expressing his view as to whether and to what extent Mr Watkins was disabled by HAVS as a matter of fact and, to the extent he was, unable to carry out without assistance the tasks which formed the basis of his services claim. His opinion is set out at para 14 above. However, he then proceeded to set out his opinion on co morbidity in accordance with the Scheme by taking as his starting point the conclusions of Dr Chadha (3V, 3Sn) as in the MAP 1 report and grading disability for the purpose of a services claim on that basis. In doing so he provided an insight into the value of the claim which Mr Watkins lost. For each of the five activities relevant to Mr Watkinss case (car washing, car maintenance, gardening, DIY and decorating) his disability is assessed as complete. Mr Tennant states that on the basis of the MAP 1 report his HAVS would be expected to produce severe or complete disability in the tested domains. The only comorbidity to take into account is Mr Watkinss arthritic knees and this results in a comorbidity finding of moderate in all of the tested domains other than gardening where the finding is severe. In these circumstances I am unable to accept that the services claim had no chance of success and that the claim lost was of no value. At the heart of this case lies Mr Pooless assertion that Mr Tennants report shows that because of an error Mr Watkins had already been over compensated and that a professional negligence claim should reflect his true entitlement to just compensation and not what would have been an uncovenanted windfall. However, this overlooks the nature and operation of the Scheme. The payment of a services award to Mr Watkins would simply have been a consequence of the way in which the Scheme operated and was intended to operate. We are not concerned here with a claim in conventional civil proceedings but with a scheme possessing unusual features. The evidence in question, the report of Mr Tennant, is simply not relevant when constructing the counterfactual situation which would have arisen if Mr Watkinss solicitors had fulfilled their duty to him. I consider, therefore, that the Recorder erred in concluding that Mr Watkinss services claim could and would have been resolved only in one specific way had Mr Tennants report, or its equivalent, been available to IRISC and in concluding that the claim had been shown to have no value given the award already paid. On the contrary, Mr Watkins had lost a claim under the Scheme of some value and the Recorder should have proceeded to assess its value on a loss of opportunity basis. I would therefore dismiss the appeal and remit the matter for assessment of the value of the loss of the opportunity to pursue the services claim.
+The law of vicarious liability is on the move. So Lord Phillips said, in the last judgment which he delivered as President of this court, in Various Claimants v Catholic Child Welfare Society [2012] UKSC 56; [2013] 2 AC 1 (the Christian Brothers case), para 19. It has not yet come to a stop. This appeal, and the companion appeal in Mohamud v WM Morrison Supermarkets plc [2016] UKSC 11, provide an opportunity to take stock of where it has got to so far. The scope of vicarious liability depends upon the answers to two questions. First, what sort of relationship has to exist between an individual and a defendant before the defendant can be made vicariously liable in tort for the conduct of that individual? Secondly, in what manner does the conduct of that individual have to be related to that relationship, in order for vicarious liability to be imposed on the defendant? Although the answers to those questions are inter connected, the present appeal is concerned with the first question, and approaches it principally in the light of the judgment in the Christian Brothers case, where the same issue was considered. The appeal in the case of Mohamud is concerned with the second question, and approaches it principally in the light of the historical development of this branch of the law. As will appear, the present judgment also seeks to relate the approach adopted to the first question to ideas which have long been present in the law. The two judgments are intended to be complementary. The first question arises in this case in relation to a public authority performing statutory functions for the public benefit, on the one hand, and an individual whose activities form part of the means by which the authority performs its functions, on the other hand. Specifically, the question is whether the prison service, which is an executive agency of the appellant, the Ministry of Justice, is vicariously liable for the act of a prisoner in the course of his work in a prison kitchen, where the act is negligent and causes injury to a member of the prison staff. The accident At the material time the respondent, Mrs Cox, worked as the catering manager at HM Prison Swansea. She had day to day charge of all aspects of catering at the prison, including the operation of the kitchen, where meals were produced for the prisoners. She was in charge of four members of staff. There were also about 20 prisoners who worked in the kitchen and came under her supervision. On 10 September 2007 Mrs Cox was working in the kitchen with a catering assistant and about 20 prisoners. Some kitchen supplies were delivered to the ground floor of the prison, and Mrs Cox instructed four prisoners to take them upstairs to the kitchen stores. During the course of this operation, a sack of rice was dropped by one of the prisoners and burst open. Mrs Cox bent down to prop it up and prevent spillage. While she was bent over, another prisoner, Mr Inder, attempted to carry two sacks past her, lost his balance, and dropped one of the sacks on to Mrs Coxs back, causing her injury. It is accepted that Mr Inder was negligent. The relevant legislation and practice Rule 31(1) of the Prison Rules 1999 (SI 1999/728) provides that a convicted prisoner shall be required to do useful work for not more than ten hours a day. In terms of rule 31(3), no prisoner shall be set to do work not authorised by the Secretary of State. Those provisions apply to prisoners detained in privately operated prisons as well as to those operated by the prison service. The Ministrys current policy in relation to prisoners work is explained in the Green Paper, Breaking the Cycle: Effective Punishment, Rehabilitation and Sentencing of Offenders (2010) (Cm 7972). According to that document, the Ministry wants prisons to use the discipline and routine of regular working hours to instil an ethos of hard work into prisoners. Prison should be a place where work is central to the regime, and where offenders learn vocational skills in environments organised to replicate, as far as practical and appropriate, real working conditions. The document speaks of the working prison, where prisoners work a full working week, and education is geared primarily to providing prisoners with skills enabling them to perform work effectively and to get a job on release. It is said that, in public prisons, 9,000 prisoners are employed in prison workshops, with many more doing essential jobs to help prisons run smoothly. Work may be provided either by the prison or by external providers in the private, voluntary and community sectors. Prisoners may work either inside or outside the prison. In the latter situation, they may undertake voluntary or charitable work, or may undertake paid work for outside employers. Work within a prison kitchen, in particular, is regarded as providing a good working environment, with regular hours and the ability to gain nationally recognised vocational qualifications. Prisoners can apply to work in the kitchen, and a selection is made after relevant assessments have been carried out, including a risk assessment considering such matters as the prisoners temperament, potential security implications, any relevant medical or hygiene problems, and the need for any relevant training in relation to such matters as manual lifting or other skills. At Swansea in particular, prisoners were assessed for their suitability to work in the kitchen by the Inmate Regime Employment Board, a panel which carried out risk assessments and decided where prisoners should work around the prison. Those selected for work in the kitchen numbered about 20, out of a total of about 400 prisoners. They received instruction and training in relation to such matters as food hygiene, the safe use of kitchen equipment and other aspects of safety at work. Each prisoner had a training record to show what instruction he had received. The prisoners worked alongside civilian catering staff as part of the team comprising the catering department, and were accountable to the catering manager and the other civilian staff. They were subject to day to day supervision by the catering staff, and could be removed from the catering department in the event that their performance was unsatisfactory. Mr Inders instructions required him to work a six day week, from 8.30 am to 5 pm each day, with a break for lunch. Under rule 31(6) of the Prison Rules, prisoners may be paid for their work at rates approved by the Secretary of State. It is the Ministrys policy, as set out in Prison Service Order No 4460 (the PSO), entitled Prisoners Pay, that all prisoners who participate in purposeful activity must be paid. The purpose of paying prisoners is explained as being to encourage and reward their constructive participation in the regime of the establishment. Prisoners doing work in pursuance of prison rules are expressly excluded from the scope of the national minimum wage: National Minimum Wage Act 1998, section 45. At the time of the accident, Mr Inder was paid 11.55 per week. If prisoners did not work in the catering department, additional costs would have to be incurred in employing staff or engaging contractors. The PSO also states that prison governors are legally required to deduct national insurance contributions and income tax from the earnings of prisoners whose wages exceed the thresholds, and to pay employers national insurance contributions. Notwithstanding the terms of the PSO, it was the Ministrys position in this appeal that there was no liability to tax or national insurance on the earnings of prisoners working within prisons under prison rules. That was disputed on behalf of Mrs Cox, but it is unnecessary to resolve the issue. Whether vicarious liability should be imposed does not depend on the classification of the relationship for the purposes of taxation or national insurance. It is also relevant to note the legislative provisions concerned with the provision of meals in prisons. In terms of rule 24 of the Prison Rules, no prisoner shall be allowed to have any food other than that ordinarily provided, subject to specified exceptions. Prisoners therefore depend on the prison service to be fed. Section 51 of the Prison Act 1952 provides that all expenses incurred in the maintenance of prisoners (an expression which is defined by section 53(2) as including all necessary expenses incurred for food) shall be defrayed out of moneys provided by Parliament. The history of the proceedings The claim was heard by His Honour Judge Keyser QC in the Swansea County Court. In a judgment given on 3 May 2013, he found that the accident occurred because Mr Inder had failed to take reasonable care for Mrs Coxs safety, but dismissed the claim on the basis that the prison service was not vicariously liable for Mr Inders negligence. On the basis of a careful review of the law on vicarious liability, as stated in particular at paras 35 and 47 of Lord Phillipss judgment in the Christian Brothers case, he focused on the question whether the relationship between the prison service and Mr Inder was akin to that between an employer and an employee. He concluded that it was not. Although he accepted that there were some respects in which the prison services relationship with Mr Inder resembled employment, he considered that there was a crucial difference. Employment was a voluntary relationship, in which each party acted for its own advantage. The employer employed the employee as the means by which the employers undertaking or enterprise was carried on and furthered. The position regarding prisoners at work was quite different. The prison authorities were legally required to offer work to prisoners. They were required, by the policy set out in the Prison Service Order, to make payment for that work. Those requirements were not a matter of voluntary enterprise but of penal policy. The provision of work was a matter of prison discipline, of prisoners rehabilitation, and possibly of discharging the prisoners obligations to the community. Although the work done by prisoners might contribute to the efficient and economical operation of the prison, the situation was not one in which prisoners were furthering the business undertaking of the prison service. An appeal against that decision was allowed by the Court of Appeal: [2014] EWCA Civ 132; [2015] QB 107. McCombe LJ, giving a judgment with which Beatson and Sharp LJJ agreed, focused like the judge on paras 35 and 47 of the Christian Brothers case, and in particular on the five features listed by Lord Phillips in para 35. He observed that the work performed by prisoners in the kitchen was essential to the functioning of the prison, and if not done by prisoners would have to be done by someone else. It was therefore done on behalf of the prison service and for its benefit. It was part of the enterprise or business of the prison service in running the prison. In short, the prison service took the benefit of this work, and there was no reason why it should not take its burdens. Although the relationship differed from a normal employment relationship in that the prisoners were bound to the prison service not by contract but by their sentences, and also in that the prisoners wages were nominal, those differences rendered the relationship if anything closer than one of employment: it was founded not on mutuality but on compulsion. The Christian Brothers case Vicarious liability in tort is imposed upon a person in respect of the act or omission of another individual, because of his relationship with that individual, and the connection between that relationship and the act or omission in question. Leaving aside other areas of the law where vicarious liability can operate, such as partnership and agency (with which this judgment is not concerned), the relationship is classically one of employment, and the connection is that the employee committed the act or omission in the course of his employment: that is to say, within the field of activities assigned to him, as Lord Cullen put it in Central Motors (Glasgow) Ltd v Cessnock Garage & Motor Co 1925 SC 796, 802, or, adapting the words of Diplock LJ in Ilkiw v Samuels [1963] 1 WLR 991, 1004, in the course of his job, considered broadly. That aspect of vicarious liability is fully considered by Lord Toulson in the case of Mohamud. It has however long been recognised that a relationship can give rise to vicarious liability even in the absence of a contract of employment. For example, where an employer lends his employee to a third party, the third party may be treated as the employer for the purposes of vicarious liability. In recent years, the courts have sought to explain more generally the basis on which vicarious liability can arise out of a relationship other than that of employer and employee. The general approach to be adopted in deciding whether a relationship other than one of employment can give rise to vicarious liability, subject to there being a sufficient connection between that relationship and the tort in question, was explained by this court in the Christian Brothers case, in a judgment given by Lord Phillips with which the other members of the court agreed. That judgment was intended to bring greater clarity to an area of the law which had been unsettled by a number of recent decisions, including those of the House of Lords in Lister v Hesley Hall Ltd [2001] UKHL 22; [2002] 1 AC 215 and Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48; [2003] 2 AC 366. The case concerned the question whether the Institute of the Brothers of the Christian Schools, an international unincorporated association whose mission was to provide children with a Christian education, was vicariously liable for the sexual abuse of children by members of the institute, otherwise known as brothers, who taught at an approved school. Another organisation managed the school and employed the brothers as teachers. It had been held to be vicariously liable for the abuse. The issue was whether the institute was also vicariously liable. The Supreme Court held that it was. Vicarious liability was thus imposed on a body which did not employ the wrongdoers, in circumstances where another body did employ them and was also vicariously liable for the same tort. At para 35 of his judgment, Lord Phillips stated: The relationship that gives rise to vicarious liability is in the vast majority of cases that of employer and employee under a contract of employment. The employer will be vicariously liable when the employee commits a tort in the course of his employment. There is no difficulty in identifying a number of policy reasons that usually make it fair, just and reasonable to impose vicarious liability on the employer when these criteria are satisfied: (i) the employer is more likely to have the means to compensate the victim than the employee and can be expected to have insured against that liability; (ii) the tort will have been committed as a result of activity being taken by the employee on behalf of the employer; (iii) the employees activity is likely to be part of the business activity of the employer; (iv) the employer, by employing the employee to carry on the activity will have created the risk of the tort committed by the employee; (v) the employee will, to a greater or lesser degree, have been under the control of the employer. At para 35 above, I have identified those incidents of the relationship between employer and employee that make it fair, just and reasonable to impose vicarious liability on a defendant. Where the defendant and the tortfeasor are not bound by a contract of employment, but their relationship has the same incidents, that relationship can properly give rise to vicarious liability on the ground that it is akin to that between an employer and an employee. At para 47, he added: The five factors which Lord Phillips mentioned in para 35 are not all equally significant. The first that the defendant is more likely than the tortfeasor to have the means to compensate the victim, and can be expected to have insured against vicarious liability did not feature in the remainder of the judgment, and is unlikely to be of independent significance in most cases. It is, of course, true that where an individual is employed under a contract of employment, his employer is likely to have a deeper pocket, and can in any event be expected to have insured against vicarious liability. Neither of these, however, is a principled justification for imposing vicarious liability. The mere possession of wealth is not in itself any ground for imposing liability. As for insurance, employers insure themselves because they are liable: they are not liable because they have insured themselves. On the other hand, given the infinite variety of circumstances in which the question of vicarious liability might arise, it cannot be ruled out that there might be circumstances in which the absence or unavailability of insurance, or other means of meeting a potential liability, might be a relevant consideration. The fifth of the factors that the tortfeasor will, to a greater or lesser degree, have been under the control of the defendant no longer has the significance that it was sometimes considered to have in the past, as Lord Phillips immediately made clear. As he explained at para 36, the ability to direct how an individual did his work was sometimes regarded as an important test of the existence of a relationship of master and servant, and came to be treated at times as the test for the imposition of vicarious liability. But it is not realistic in modern life to look for a right to direct how an employee should perform his duties as a necessary element in the relationship between employer and employee; nor indeed was it in times gone by, if one thinks for example of the degree of control which the owner of a ship could have exercised over the master while the ship was at sea. Accordingly, as Lord Phillips stated, the significance of control is that the defendant can direct what the tortfeasor does, not how he does it. So understood, it is a factor which is unlikely to be of independent significance in most cases. On the other hand, the absence of even that vestigial degree of control would be liable to negative the imposition of vicarious liability. The remaining factors listed by Lord Phillips were that (1) the tort will have been committed as a result of activity being taken by the tortfeasor on behalf of the defendant, (2) the tortfeasors activity is likely to be part of the business activity of the defendant, and (3) the defendant, by employing the tortfeasor to carry on the activity, will have created the risk of the tort committed by the tortfeasor. These three factors are inter related. The first has been reflected historically in explanations of the vicarious liability of employers based on deemed authorisation or delegation, as for example in Turberville v Stampe (1698) 1 Ld Raym 264, 265 per Holt CJ and Bartonshill Coal Co v McGuire (1858) 3 Macq 300, 306 per Lord Chelmsford LC. The second, that the tortfeasors activity is likely to be an integral part of the business activity of the defendant, has long been regarded as a justification for the imposition of vicarious liability on employers, on the basis that, since the employees activities are undertaken as part of the activities of the employer and for its benefit, it is appropriate that the employer should bear the cost of harm wrongfully done by the employee within the field of activities assigned to him: see, for example, Duncan v Findlater (1839) 6 Cl & Fin 894, 909 910; (1839) MacL & Rob 911, 940 per Lord Brougham and Broom v Morgan [1953] 1 QB 597, 607 608 per Denning LJ. The third factor, that the defendant, by employing the tortfeasor to carry on the activities, will have created the risk of the tort committed by the tortfeasor, is very closely related to the second: since the risk of an individual behaving negligently, or indeed committing an intentional wrong, is a fact of life, anyone who employs others to carry out activities is likely to create the risk of their behaving tortiously within the field of activities assigned to them. The essential idea is that the defendant should be liable for torts that may fairly be regarded as risks of his business activities, whether they are committed for the purpose of furthering those activities or not. This idea has been emphasised in recent times in United States and Canadian authorities, sometimes in the context of an economic analysis, but has much older roots, as I have explained. It was reaffirmed in the cases of Lister and Dubai Aluminium. In the latter case, Lord Nicholls of Birkenhead said at para 21: The underlying legal policy is based on the recognition that carrying on a business enterprise necessarily involves risks to others. It involves the risk that others will be harmed by wrongful acts committed by the agents through whom the business is carried on. When those risks ripen into loss, it is just that the business should be responsible for compensating the person who has been wronged. Lord Phillipss analysis in the Christian Brothers case wove together these related ideas so as to develop a modern theory of vicarious liability. The result of this approach is that a relationship other than one of employment is in principle capable of giving rise to vicarious liability where harm is wrongfully done by an individual who carries on activities as an integral part of the business activities carried on by a defendant and for its benefit (rather than his activities being entirely attributable to the conduct of a recognisably independent business of his own or of a third party), and where the commission of the wrongful act is a risk created by the defendant by assigning those activities to the individual in question. Lord Phillips illustrated the approach which I have described by considering two earlier cases in the Court of Appeal. He discussed first its decision in Viasystems (Tyneside) Ltd v Thermal Transfer (Northern) Ltd [2005] EWCA Civ 1151; [2006] QB 510. That case concerned a situation of a kind which commonly arises in modern workplaces. Employees of the third defendants were supplied to the second defendants on a labour only basis, under a contract between the two companies, and worked under the supervision of a self employed person also working under a contract with the second defendant. The question was whether the second defendant, as well as the third, was vicariously liable for the negligence of the employees in the course of their employment. The Court of Appeal agreed that it was, but for different reasons: May LJ considered that the imposition of vicarious liability depended on who had the right to control the employees activities, whereas Rix LJ formulated a test which was based not on control, but on the integration of the employees into the employers business enterprise. He stated that vicarious liability was imposed because the employer was treated as picking up the burden of an organisational or business relationship which he had undertaken for his own benefit. Accordingly, what one was looking for was a situation where the employee in question, at any rate for relevant purposes, is so much a part of the work, business or organisation of both employers that it is just to make both employers answer for his negligence: p 537. Lord Phillips endorsed the approach of Rix LJ. Lord Phillips next considered the decision of the Court of Appeal in E v English Province of Our Lady of Charity [2012] EWCA Civ 938; [2013] QB 722. In that case, a diocesan trust, treated as being equivalent to the diocesan bishop, was held to be vicariously liable for sexual abuse committed by a Roman Catholic priest when visiting a childrens home in the diocese, on the basis that the relationship between the priest and the Roman Catholic Church was akin to employment. Lord Phillips summarised Ward LJs approach as asking whether the workman was working on behalf of an enterprise or on his own behalf and, if the former, how central the workmans activities were to the enterprise and whether these activities were integrated into the organisational structure of the enterprise. Ward LJ found it possible to describe the relationship between the bishop and the priest as being akin to employment, as Lord Phillips put it, by treating the ministry of the Roman Catholic Church as a business carried on by the bishop, by finding that the priest carried on that business under a degree of control by the bishop and by finding that the priest was part and parcel of the organisation of the business and integrated into it: [2013] 2 AC 1, paras 49, 54. Lord Phillips then considered the facts of the Christian Brothers case itself. In the context of vicarious liability, the relationship between the institute and the brothers had all the essential elements of the relationship between an employer and employees. The institute was subdivided into a hierarchical structure and conducted its activities as if it were a corporate body. The teaching activity of the brothers was undertaken because the local administration of the institute directed the brothers to undertake it. It was undertaken by the brothers in furtherance of the objective, or mission, of the institute. The manner in which the brothers were obliged to conduct themselves as teachers was dictated by the institutes rules. The relationship between the brothers and the institute differed from that between employer and employee in that the brothers were bound to the institute not by contract but by their vows, and in that, far from the institute paying the brothers, the brothers were obliged to transfer all their earnings to the institute. Neither of these differences was material. Indeed, they rendered the relationship between the brothers and the institute closer than that of an employer and its employees. The relationship was therefore sufficiently akin to that of employer and employee to be capable of giving rise to vicarious liability. The three cases which I have discussed illustrate the general approach set out by Lord Phillips at paras 35 and 47 of the Christian Brothers case. It may be said that the criteria are insufficiently precise to make their application to borderline cases plain and straightforward: a criticism which might, of course, also be made of other general principles of the law of tort. As Lord Nicholls observed in Dubai Aluminium at para 26, a lack of precision is inevitable, given the infinite range of circumstances where the issue arises. The court has to make a judgment, assisted by previous judicial decisions in the same or analogous contexts. Such decisions may enable the criteria to be refined in particular contexts, as Lord Phillips suggested in the Christian Brothers case at para 83. It is important, however, to understand that the general approach which Lord Phillips described is not confined to some special category of cases, such as the sexual abuse of children. It is intended to provide a basis for identifying the circumstances in which vicarious liability may in principle be imposed outside relationships of employment. By focusing upon the business activities carried on by the defendant and their attendant risks, it directs attention to the issues which are likely to be relevant in the context of modern workplaces, where workers may in reality be part of the workforce of an organisation without having a contract of employment with it, and also reflects prevailing ideas about the responsibility of businesses for the risks which are created by their activities. It results in an extension of the scope of vicarious liability beyond the responsibility of an employer for the acts and omissions of its employees in the course of their employment, but not to the extent of imposing such liability where a tortfeasors activities are entirely attributable to the conduct of a recognisably independent business of his own or of a third party. An important consequence of that extension is to enable the law to maintain previous levels of protection for the victims of torts, notwithstanding changes in the legal relationships between enterprises and members of their workforces which may be motivated by factors which have nothing to do with the nature of the enterprises activities or the attendant risks. It is also important not to be misled by a narrow focus on semantics: for example, by words such as business, benefit, and enterprise. The defendant need not be carrying on activities of a commercial nature: that is apparent not only from the cases of E and the Christian Brothers, but also from the long established application of vicarious liability to public authorities and hospitals. It need not therefore be a business or enterprise in any ordinary sense. Nor need the benefit which it derives from the tortfeasors activities take the form of a profit. It is sufficient that there is a defendant which is carrying on activities in the furtherance of its own interests. The individual for whose conduct it may be vicariously liable must carry on activities assigned to him by the defendant as an integral part of its operation and for its benefit. The defendant must, by assigning those activities to him, have created a risk of his committing the tort. As the cases of Viasystems, E and the Christian Brothers show, a wide range of circumstances can satisfy those requirements. The other lesson to be drawn from the cases of Viasystems, E and the Christian Brothers is that defendants cannot avoid vicarious liability on the basis of technical arguments about the employment status of the individual who committed the tort. As Professor John Bell noted in his article, The Basis of Vicarious Liability [2013] CLJ 17, what weighed with the courts in E and the Christian Brothers case was that the abusers were placed by the organisations in question, as part of their mission, in a position in which they committed a tort whose commission was a risk inherent in the activities assigned to them. The present case In the present case, the requirements laid down in the Christian Brothers case are met. The prison service carries on activities in furtherance of its aims. The fact that those aims are not commercially motivated, but serve the public interest, is no bar to the imposition of vicarious liability. Prisoners working in the prison kitchens, such as Mr Inder, are integrated into the operation of the prison, so that the activities assigned to them by the prison service form an integral part of the activities which it carries on in the furtherance of its aims: in particular, the activity of providing meals for prisoners. They are placed by the prison service in a position where there is a risk that they may commit a variety of negligent acts within the field of activities assigned to them. That is recognised by the health and safety training which they receive. Furthermore, they work under the direction of prison staff. Mrs Cox was injured as a result of negligence by Mr Inder in carrying on the activities assigned to him. The prison service is therefore vicariously liable to her. A number of arguments were advanced against that conclusion on behalf of the Ministry. First and foremost, it was argued, on a number of grounds, that the relationship between the prison service and prisoners working in a prison is fundamentally different from that between a private employer and its employees. The primary purpose of the prison service, in setting prisoners to work in prison, is not to advance any business or enterprise of the prison, but to support the rehabilitation of the prisoners as an aim of penal policy. It does not seek to make a profit, but acts in the public interest. Unlike employees, the prisoners have no interest in furthering the objectives of the prison service. Even in the Christian Brothers case, the interests of the institute and the brothers were in alignment. I am unable to accept this argument. It is true that the prison service seeks to rehabilitate prisoners, and that setting them to work is one of the means by which it attempts to achieve that objective. Rehabilitation is, however, not its only objective: it has also been an aim of penal policy since at least the nineteenth century to ensure, as it was put in a 1991 White Paper, that convicted prisoners contribute to the cost of their upkeep by helping with the running and maintenance of the prison and by providing goods and services in prison industries and on prison farms: Custody , Care and Justice: The Way Ahead for the Prison Service in England and Wales (1991) (Cm 1647), para 7.22. More importantly, when prisoners work in the prison kitchen, or in other workplaces such as the gardens or the laundry, they are integrated into the operation of the prison. The activities assigned to them are not merely of benefit to themselves: a benefit which is, moreover, merely potential and indirect. Their activities form part of the operation of the prison, and are of direct and immediate benefit to the prison service itself. As for the other points, I have already explained that it is not essential to the imposition of vicarious liability that the defendant should seek to make a profit. Nor does vicarious liability depend upon an alignment of the objectives of the defendant and of the individual who committed the act or omission in question. It would be as nave to imagine that all employees are subjectively committed to the interests of their employer as to imagine that no prisoner working in a prison kitchen derives any satisfaction from doing his job well or from obtaining the vocational qualifications available to him. The fact that a prisoner is required to serve part of his sentence in prison, and to undertake useful work there for nominal wages, binds him into a closer relationship with the prison service than would be the case for an employee. It strengthens, rather than weakens, the case for imposing vicarious liability. Secondly, other aspects of the relationship between the prison service and prisoners were said to differ from the characteristics of an ordinary employment relationship. The prison service was under a duty to provide useful work for prisoners. Its choice of workers was restricted to the prisoners who happened to be held there. In that regard, it was pointed out that the courts had not imposed vicarious liability in respect of compulsory pilotage, where the master of the ship was compelled to surrender the navigation of his vessel to a pilot and had no power of selection. Furthermore, the prisoners pay was not a commercial wage, but a payment intended to motivate them. These differences do not lead to the conclusion that vicarious liability should not be imposed, applying the approach approved in the Christian Brothers case. The fact that the incentive payments made to prisoners are below the level of a commercial wage reflects the context in which prisoners work, but does not entail that vicarious liability should not be imposed. The Christian Brothers case demonstrates that the payment of a wage is not essential. The fact that the prison service, and the operators of contracted out prisons, are under a statutory duty to provide prisoners with useful work, is not incompatible with the imposition of vicarious liability. The legislation does not itself exclude the imposition of vicarious liability. Nor is it argued that any distinct point arises under section 2(1)(a) of the Crown Proceedings Act 1947, in terms of which the Crown is subject to all those liabilities in tort to which, if it were a private person of full age and capacity, it would be subject in respect of torts committed by its servants or agents. Authorities concerned with compulsory pilotage are not in point: the prison service is not required to provide particular types of employment, or to allocate particular prisoners to particular activities. In practice, prisoners can be allocated to a variety of workplaces both inside and outside prisons, having regard to the relevant risks. More particularly, the prison service is not compelled to employ prisoners in the kitchen, and has a meaningful power of selection in respect of the prisoners it chooses to employ there. It appears from the evidence that the prison service takes particular care when selecting prisoners who are suitable to work in the kitchen, having regard to the risks involved in that setting. A restricted pool from which to select a workforce was a feature of the Christian Brothers case, and is not uncommon even in ordinary cases of employment: an employer can only select from those who apply for appointment, and may often have a small pool from which to choose. Thirdly, it was argued that to hold the prison service vicariously liable for the acts of a prisoner would be a major development of the common law, which should be developed by the courts only cautiously. It does not appear to me that this case involves a major development of the law. The conclusion which I have reached follows from the application of the approach laid down in the Christian Brothers case. Fourthly, it was argued that it was always necessary to ask the broader question whether it would be fair, just and reasonable to impose vicarious liability. In that regard, reliance was placed on the fact that the prison service acts for the benefit of the public, and on the fact that any liability would have to be met out of scarce public funds. It was also argued that there was no justification for imposing vicarious liability on the prison service in addition to its common law duty of care towards Mrs Cox, and its various statutory duties. I do not consider that it is always necessary to ask the broader question. The criteria for the imposition of vicarious liability listed by Lord Phillips in the Christian Brothers case are designed, as he made clear at paras 34, 35 and 47, to ensure that it is imposed where it is fair, just and reasonable to do so. That was the whole point of seeking to align the criteria with the various policy justifications for its imposition. As I have explained, the criteria may be capable of refinement in particular contexts. But in cases where the criteria are satisfied, it should not generally be necessary to re assess the fairness, justice and reasonableness of the result in the particular case. Such an exercise, if carried out routinely, would be liable to lead to uncertainty and inconsistency. At the same time, the criteria are not to be applied mechanically or slavishly. As Lady Hale rightly observed in Woodland v Swimming Teachers Association [2013] UKSC 66; [2014] AC 537 at para 28, the words used by judges are not to be treated as if they were the words of a statute. Where a case concerns circumstances which have not previously been the subject of an authoritative judicial decision, it may be valuable to stand back and consider whether the imposition of vicarious liability would be fair, just and reasonable. The present appeal is such a case. On considering the matter, however, I do not regard the conclusion which I have reached as unreasonable or unjust. Those adjectives might more aptly describe a situation in which Mrs Coxs ability to obtain compensation for the injury she suffered at work depended entirely on whether the member of the catering team who dropped the bag of rice on her back happened to be a prisoner or a civilian member of staff. For the prison service to be liable to compensate a victim of negligence by a member of the prison catering team appears to me to be just and reasonable whether the negligent member of the team is a civilian or a prisoner. Finally, like the Fat Boy in The Pickwick Papers, counsel sought to make our flesh creep. It was argued that, if the present claim succeeded, there would be similar claims arising from the other activities undertaken by prisoners with a view to their rehabilitation, such as educational classes or offending behaviour programmes. There was also a risk of fraudulent claims being made for prisoner on prisoner incidents. A finding of vicarious liability might lead the prison service to adopt an unduly cautious approach to the type of tasks which prisoners were given the opportunity to do, given the potential impact on scarce financial resources. I am not persuaded by these apprehensions. It is true that prisoners who participate in educational classes or offending behaviour programmes contribute towards their own rehabilitation, and in that sense may be said to be acting in furtherance of one of the aims of the prison service. But there is an intelligible distinction between taking part in activities of that kind and working as an integral part of the operation of the prison and for its benefit. As for the risk of fraudulent claims, that risk is inherent in the law relating to compensation for personal injuries, and employers, insurers and the courts are all experienced in guarding against it. As for the risk of an unduly cautious approach being adopted by the prison service, that risk is entirely speculative, and is based on a consideration only of the costs potentially resulting from the imposition of vicarious liability, without taking account of the costs which would result from a decision to cease employing prisoners and instead to employ civilian staff or external contractors at market rates of pay. I would dismiss this appeal.
+The Parliamentary Commissioner Act 1967 created for the first time in the United Kingdom an officer, the Parliamentary Commissioner for Administration, charged with investigating complaints of maladministration against government departments and a limited number of other public authorities exercising the functions of the Crown or controlled or funded by the Crown. Since then, ombudsmen have come to fulfil an increasingly important role in mediating between the state and the public service on the one hand and the citizen on the other. Commissioners have been established for complaints against the National Health Service since 1973, for complaints against local government since 1974 and for complaints against social housing landlords since 1996. There are also separate Commissioners charged with examining complaints against public bodies or the providers of public services in Scotland, Wales and Northern Ireland. There are currently 19 statutory officers charged with the handling of complaints against government departments, local government, the National Health Service and other public authorities or undertakers. They are generally known as ombudsmen, after the officer of that title first established in Sweden in 1809. In some cases, the same person performs the functions of more than one ombudsman, but each role has its own statutory basis. The various enactments have a strong family resemblance. But some of them have distinctive features which mean that considerable caution is required before principles derived from one legislative scheme can be read across to another. In 1969, two ombudsmen were established for Northern Ireland. The Parliamentary Commissioner Act (Northern Ireland) 1969 established a Northern Ireland Parliamentary Commissioner for Administration (later known as the Assembly Ombudsman for Northern Ireland). His role and powers were closely modelled on those of the Commissioner established by the United Kingdom Act of 1967. The Commissioner for Complaints Act (Northern Ireland) 1969 established a Northern Ireland Commissioner for Complaints. I shall call him the Complaints Commissioner. He is charged with reporting on complaints against bodies which were not within the jurisdiction of the Northern Ireland Parliamentary Commissioner, notably local authorities, the Northern Ireland Health Board and various public statutory undertakers. Since 1972, the same person has held both offices. But until recently (see below) his two roles have had distinct legislative foundations. It is therefore necessary to have regard to the particular capacity in which an ombudsman is acting and the particular legislation governing that function in order to determine what his powers are. The current legislation comprises two Orders in Council made on the same day in 1996, which repealed and replaced the corresponding Acts of 1969. They are the Ombudsman (Northern Ireland) Order 1996 (SI 1996/1298 (NI 8)), governing the work of the Assembly Ombudsman, and the Commissioner for Complaints (Northern Ireland) Order 1996 (SI 1996/1297 (NI 7)), governing that of the Complaints Commissioner. This appeal is about the powers of the Complaints Commissioner under the latter order, which I shall call the 1996 Order. In particular it is about his powers in relation to general medical practitioners working in the National Health Service. In Northern Ireland, as in other parts of the United Kingdom, the National Health Service is one of the main sources of complaints. The original jurisdiction of the Complaints Commissioner extended to the various boards and committees responsible for the administration of the National Health Service in Northern Ireland. But it was confined to maladministration and did not extend to any action in the discharge of a professional duty by a medical or dental practitioner, pharmacist, nurse, midwife or member of a profession supplementary to medicine in the course of diagnosis, treatment or care of a particular patient: see the Commissioner for Complaints Act (Northern Ireland) 1969, Schedule 2, paragraph That jurisdiction was preserved in the 1996 Order. But the position was significantly altered by an amendment of 1997, which followed a similar amendment to the United Kingdom legislation. Its effect was to extend the Complaints Commissioners jurisdiction to the merits of a decision to the extent that it was taken in consequence of the exercise of clinical judgment: see article 8(7) of the 1996 Order as amended. 4. The main questions at issue in this appeal are whether, and if so in what circumstances, the Complaints Commissioner has power to recommend the payment of a money sum to a complainant; and whether in the event that that sum is not paid he has power to make a special report drawing the attention of the legislature to that fact. The Northern Ireland Court of Appeal decided that the answer in each case was no. These questions will shortly become moot. The Public Services Ombudsman Act (Northern Ireland) 2016 abolishes the offices of both the Assembly Ombudsman for Northern Ireland and the Complaints Commissioner with effect from 1 April 2016, and combines their functions in a new officer, the Northern Ireland Public Services Ombudsman. The jurisdiction and powers of the new office are in some respects greater than those of either of its predecessors, and his mode of operation different. But the new Act has no bearing on the present appeal. The transitional provisions provide for current matters to be transferred to the Public Services Ombudsman, but to be dealt with by him in accordance with the 1996 legislation. We have been told that there are some 53 reports completed since the decision of the Court of Appeal which have been held back pending the determination of this appeal, and that in four further cases payment of a money sum has been recommended but the recommendation has not been followed. The facts The respondent is a general medical practitioner in sole practice in Northern Ireland. The National Health Service operates in Northern Ireland through a Health and Social Care Board. The respondent provides general medical services under contract with the board for his area under Part VI of the Health and Social Services (Northern Ireland) Order 1972 (SI 1972/1265 (NI 14)). This means that complaints against him are liable to be investigated by the Commissioner under article 8 of the 1996 Order. I shall deal below with the scope of that article. The complainant is the widow of one of his patients, who has been referred to in this litigation as R. R died on 6 January 2009 of a myocardial infarction. The complaint concerns the care and treatment received by him during the last eight months of his life. He attended the respondents surgery on 30 May 2008 to ask for a heart screen. Although he had no symptoms and was not complaining of chest pains, he was referred to a NHS hospital for a treadmill test. The test was carried out in July, but terminated early due to fatigue. The test recorded negative for ischaemic heart disease at the level of exercise attained at the time it was terminated. A report to this effect was sent to the respondent, whose staff recorded it on the practice computer system, but no action was taken. On 10 December 2008, R attended the surgery again, this time complaining of chest pains. He was seen by a locum doctor, who noted typical angina pain but normal treadmill earlier in the year, but again, no action was taken. R returned to the surgery on 15 December 2008 complaining of further chest pains. He saw the respondent, who referred him to the Rapid Access Chest Pain Clinic at the same hospital. The clinic, however, declined to give him an appointment, because the earlier treadmill test had been negative. They suggested in a report dated 20 December that if any further medical review was required R should be referred to the outpatients department. Their report arrived at the practice on Christmas Eve, and was input into the practice computer system. The respondent was on holiday. The locum was on duty, but she did not review the report because it was not marked urgent. R returned to the surgery on 6 January 2009 to find out what had happened about the referral to the clinic. The locum told him that an appointment had been refused, but referred him to the clinic as an outpatient for a treadmill test, as suggested in the report. He died later that day, before anything had been done to follow up this suggestion. Mrs R complained to the Complaints Commissioner. She gave his officials to understand that she was not looking for compensation but wished to understand what had happened. The Commissioner agreed to undertake the investigation, and in due course reported. He concluded that the practice had failed to provide a reasonable level of care and treatment. In particular, he found that it was guilty of maladministration in (i) failing to take action after the treadmill test, (ii) failing to follow up promptly the clinics failure to give R an appointment, and (iii) failing to refer R to the emergency services on 6 January 2009. He also found that the respondent had acted inappropriately after Rs death in (iv) prematurely assigning responsibility to the hospital, (v) discouraging the family from making a complaint, and (vi) having promised to contact the hospital about Mrs Rs complaint against them, failing to get back to Mrs R after doing so. The Complaints Commissioner made no finding that these failures caused the death of R, and the facts that he has found do not suggest that they did. He specifically found that the failure to take appropriate action on 6 January 2009 made no difference to the outcome. But at para 70 of his report he concluded: I have identified learning points earlier in this report for the Practice and I recommend that [the GP] acts upon them. I also recommend that the Practice should pay [the complainant] 10,000 in respect of the clearly identified failings in the care provided to [the patient] and the events which consequently followed. The respondent has apologised to Mrs R and, as the Complaints Commissioners report observes, has put in hand changes to his practices procedures designed to avoid a recurrence of the administrative failings. But, having taken legal advice, he has declined to pay the money sum recommended, on the ground that he was not legally bound to do so. The Complaints Commissioner has responded by saying that in that case he was minded to issue a special report to the Northern Ireland legislature reporting the respondents failure to comply with the recommendation. The Commissioner for Complaints (Northern Ireland) Order 1996 The Complaints Commissioner is empowered to investigate and report on complaints made to him by those claiming to have suffered injustice as a result of the conduct of certain bodies and persons. The bodies and persons in question, and the matters which he is empowered to investigate are identified by articles 7 to 10 of the Order. The scheme of these provisions is that article 7 provides for the investigation of complaints about maladministration by any of the bodies listed in Schedule 2. These are all non departmental public bodies exercising functions conferred on them by statute. Schedule 2 may be amended by Order, but article 7(3) provides that such an Order may extend its operation only to bodies which either exercise statutory functions or have their expenses substantially defrayed from public funds. The investigation of Mrs Rs complaint against the respondent was conducted under article 8, which deals with the investigation of complaints against individuals who have undertaken to provide general medical, dental, ophthalmic or pharmaceutical services under Part VI of the Health and Social Services (Northern Ireland) Order 1972 or in certain circumstances those performing personal medical or dental services. Unlike the bodies whose conduct may be investigated under article 7, the persons liable to be investigated under article 8 are not public bodies. They are individuals like the respondent providing professional services under contracts or other consensual arrangements with the National Health Service. The distinction is significant, as I shall explain. article 8(a) provides for the investigation of complaints against independent health and social care providers. These are not public bodies either. Like the individuals covered by article 8, they provide services under arrangements with the National Health Service. Articles 9 and 10 restrict in certain respects the undertaking of investigations authorised under all three preceding provisions. Article 9 is mainly concerned with the potential overlap between the Complaints Commissioners investigations and other remedies available to the complainant. Article 9(3) and (4) provides: 9. Matters not subject to investigation (3) Subject to paragraph (4) and to [section 78 of the Northern Ireland Act 1998], the Commissioner shall not conduct an investigation under this Order in respect of (a) any action in respect of which the person aggrieved has or had a right of appeal, complaint, reference or review to or before a tribunal constituted under any statutory provision or otherwise; any action in respect of which the person (b) aggrieved has or had a remedy by way of proceedings in a court of law. (4) The Commissioner may conduct an investigation Article 11 provides, in relation to all three categories of investigation: (a) notwithstanding that the person aggrieved has or had such a right or remedy as is mentioned in paragraph (3), if the Commissioner is satisfied that in the particular circumstances it is not reasonable to expect him to resort to or have resorted to it; or (b) notwithstanding that the person aggrieved had exercised such a right as is mentioned in paragraph (3)(a), if he complains that the injustice sustained by him remains unremedied thereby and the Commissioner is satisfied that there are reasonable grounds for that complaint. 11. Purposes of investigation The purposes of the investigation by the Commissioner shall be to ascertain if the matters alleged in the (a) complaint (i) may properly warrant investigation by him under this Order; (ii) are, in substance, true; and to effect a settlement of the matter (b) where it appears to the Commissioner to be desirable (i) complained of; or if that is not possible, to state what action (ii) should in his opinion be taken by the body concerned, the general health care provider concerned or the independent provider concerned (as the case may be) to effect a fair settlement of that matter or by that body or provider or by the person aggrieved to remove, or have removed, the cause of the complaint. Articles 15 19 cover (among other things) enforcement. Three modes of enforcement are provided for. First, under article 15, the Complaints Commissioner is required to send a copy of the report of his investigation to specified people, including the complainant and the body or person investigated. Where the investigation is carried out under article 8 into the conduct of an individual health provider, the report must be sent to the National Health Service entity with whom he or she has contracted or arranged to provide the service in question. That body may take whatever disciplinary or other action is open to it under its arrangements with the practitioner. Secondly, article 16 provides: 16. Application for compensation by person aggrieved (1) Where on an investigation pursuant to a complaint under article 7 the Commissioner reports that a person aggrieved has sustained injustice in consequence of maladministration, the county court may, on an application by that person, by order award that person damages to be paid by the body concerned. (3) Damages awarded under this article shall be such as the county court may think just in all the circumstances to compensate the person aggrieved for any loss or injury which he may have suffered on account of expenses reasonably incurred by him in (a) connection with the subject matter of the maladministration on which his complaint was founded; and (b) his loss of opportunity of acquiring the benefit which he might reasonably be expected to have had but for such maladministration. (4) In calculating the amount of damages to be awarded by virtue of paragraph (3)(b) the county court shall apply the same rule concerning the duty of a person to mitigate his loss as applies in relation to damages recoverable at common law. The third mode of enforcement is provided for by article 17. The substance of this provision is that where the Complaints Commissioner conducts an investigation under article 7 and reports persistent or systemic maladministration, the Attorney General may, at his request, apply to the High Court for an injunction. In court proceedings under article 16 or 17, article 18(1)(a) provides that a recommendation of the Commissioner and any report of the Commissioner relating to the complaint in connection with which the recommendation is made shall, unless the contrary is proved, be accepted as evidence of the facts stated therein. It is, finally, necessary to refer to articles 19 and 21. They provide as follows: 19. Reports to the Assembly The Commissioner shall annually lay before the Assembly a general report on the performance of his functions under this Order and may from time to time lay such other reports before the Assembly as he thinks fit. 21. Disclosure of information by Commissioner Information obtained by the Commissioner or his (1) officers in the course of, or for the purposes of, an investigation under this Order shall not be disclosed except as permitted by paragraph 1(B) or for the purposes of the investigation and any report to be made (a) thereon under this Order; (b) any proceedings for an offence under the Official Secrets Acts 1911 to 1989 alleged to have been committed in respect of information obtained by the Commissioner or any of his officers by virtue of this Order; (c) any proceedings for an offence of perjury alleged to have been committed in the course of an investigation under this Order; (d) an inquiry with a view to the taking of proceedings of the kind mentioned in sub paragraphs (b) and (c); or (e) any proceedings under article 14, 16 or 17. Power to recommend monetary redress: Article 9(3) and (4) On the particular facts of this case, there is a short answer to the Complaints Commissioners appeal. Under article 9(3) of the 1996 Order, he may not carry out an investigation into any actions in respect of which the complainant has a remedy by way of proceedings in a court of law. This is, subject to article 9(4), a condition precedent to his jurisdiction. It follows, as a Divisional Court in England held about a similar provision limitation on the powers of the Commissioner for Local Administration under the Local Government Act 1974, that the operation of article 9(3) cannot depend on whether the complainants allegations are well founded. For the purposes of article 9(3) she has a remedy by way of proceedings in a court of law if, on the assumption that her complaint was justified, she would have a remedy in court: see R v Commissioner for Local Administration, Ex p Croydon London Borough Council [1989] 1 All ER 1033, 1044. By way of exception to the restriction in article 9(3), article 9(4) provides that the Complaints Commissioner may nevertheless conduct the investigation if he is satisfied that in the particular circumstances it is not reasonable to expect the complainant to resort to law. This is primarily directed to cases where litigation would not be worth the cost and trouble involved. But it may also apply in other cases, for example where the complainant is looking for explanations rather than money. According to the evidence of the Commissioners staff, this was the position of Mrs R. The Commissioner accepted that the complaint should be investigated because Mrs R said that she was not seeking monetary redress but only wanted to know what had gone wrong. I agree that that was a proper basis on which to undertake the investigation. The Commissioner could properly conclude that it would not have been reasonable to expect Mrs R to commence proceedings in court if she was not seeking financial relief. But if the only basis on which the Commissioner felt able to undertake the investigation at all was that Mrs R did not want money, it could not be proper for him to recommend a payment of money and threaten to report on the respondents failure to pay it. Power to recommend monetary redress: in general There is, however, a more fundamental question, which is directly raised by the Court of Appeals judgment, namely whether the Complaints Commissioner has power to recommend monetary redress at all. The Court of Appeal held that he did not. If that is correct, it applies irrespective of the basis on which the Commissioner satisfied the conditions in article 9(4). The starting point is the legal and constitutional status of the Complaints Commissioners reports. The practice of the United Kingdom government is to comply with the recommendations of statutory ombudsmen unless the department in question can put forward good reasons for not doing so: see Handling of Parliamentary Ombudsman Cases (Cabinet Office, 1996), para 61, and Managing Public Money (HM Treasury, 2013), para 4.12.2. This corresponds to what has been held to be the position of the United Kingdom government in relation to reports of the Parliamentary Commissioner for Administration. In R (Bradley) v Secretary of State for Work and Pensions [2008] EWCA Civ 36; [2009] QB 114, the Court of Appeal in England accepted (para 63) that where a minister was responsible to Parliament for the public body in question, he was not bound to accept the Commissioners findings or recommendations, because Parliament cannot have intended to preclude the minister from explaining his rejection of them to Parliament. Nevertheless, it was held (para 72) that he could not rationally reject them without cogent reasons. The decision in Bradley raises delicate questions about the relationship between judicial and Parliamentary scrutiny of a ministers rejection of the recommendations of the Parliamentary Commissioner for Administration. But they are not questions which arise on this appeal, because on any view the principle stated in Bradley cannot be transposed without modification to a case where the Complaints Commissioner recommends financial redress against a medical practitioner. In the first place, as I shall explain below, the Complaints Commissioner has a very different relationship with the legislature. Secondly, even in a case where his recommendation is directed to a public body, article 16, which has no equivalent in the United Kingdom legislation, provides for claims to compensation to be determined in adversarial litigation before a court. The effect is to create a statutory cause of action for maladministration which would not necessarily exist otherwise. The function of the court is to decide the issue on the merits, and not simply by way of judicial review of the Commissioners report. The Commissioners recommendations and findings are no more than rebuttable evidence of the facts. It necessarily follows that the public body in question is entitled to dispute them on any ground which may find favour with a court. Third, and critically, the recommendation which is challenged in the present case was not directed to a public body. A general practitioner working in the National Health Service is not a public body, but merely provides services to a public body under a contract or some other consensual arrangement. The Complaints Commissioner is not a court. He is an official, albeit an independent one, performing an investigatory and advisory function under statute. Except in relation to compelling the attendance of witnesses and the production of documents (see article 13 of the 1996 Order), he has no powers of compulsion. Subject to the terms of the practitioners agreement with the relevant NHS body and to any power of enforcement conferred by the relevant legislation, the Commissioners recommendations are not binding on any one as a matter of private law. At best, they are legally enforceable only by virtue of the public law duty of a public body not irrationally to reject them. But that duty is irrelevant to a person in the position of the respondent, who has no relevant public law duties. The scheme of the 1996 Order, like that of the 1969 legislation which it replaced, is based upon a similar distinction between public and private bodies. The right of a complainant to claim damages in court under article 16 is limited to cases of maladministration found in the course of an investigation conducted under article 7, ie by one of the public bodies to which that article applies. The same limitation applies to the right to request the Attorney General to apply for an injunction under article 17. Similarly, by article 21, the Complaints Commissioner is permitted to disclose information obtained in the course of or for the purpose of an investigation only for limited purposes. They are conducting the investigation and preparing his report on it, defending himself and his officers against a charge of breach of the Official Secrets Acts, and taking proceedings for perjury or obstruction in the course of an investigation. The information may also be made available for the purpose of enforcement proceedings under articles 16 and 17, both of which as I have pointed out are limited to investigations conducted under article 7. Leaving aside the possibility of a special report, to which I shall return, there is no power to use the information for the purpose of enforcement measures of any other kind. Article 11 of the 1996 Order empowers the Complaints Commissioner to try to effect a fair settlement of the complaint. If that is not possible, he may state what action should in his opinion be taken by the object of the complaint in order to effect such a settlement. In a case where the complainant has suffered loss in consequence of the defaults found by the Commissioner, a fair settlement is likely if not certain to require that that loss should be made good. It follows that if the Commissioner chooses to operate the settlement procedure, and fails to achieve a settlement, he the respondent has accepted must be entitled to recommend in his report a monetary payment sufficient to bring about a fair settlement. That power is available irrespective of the statutory basis of the investigation, and therefore whether the party investigated is a public or a private body. But the power is not relevant here, because the Complaints Commissioner never sought to operate the settlement procedure. If he had done, a settlement might well have been achieved without difficulty, since Mrs R had not sought monetary redress and the Commissioners other recommendations. Article 18(1)(a) of the 1996 Order provides that the Commissioners recommendations as well as his findings may be relevant to an action for damages against a public body under article 16. It is arguable that the Complaints Commissioner may also have power to make recommendations that would be relevant in such proceedings. But since the respondent is not a public body and not amenable to proceedings under article 16, that question does not arise on this appeal and I should prefer to leave it open. What is clear is that investigations under article 8 into the conduct of persons who are not public bodies are an entirely different matter. It is one thing for a public officer performing an investigatory and advisory role to recommend a payment out of public funds. It is another thing altogether for him to recommend the payment by a private individual out of his own pocket of a sum which that individual has no public or private law duty to pay. Articles 16 and 17, as I have pointed out, have been deliberately limited to investigations under article 7 into the conduct of one of the public bodies identified in Schedule 2. There is no statutory mode of enforcing a monetary payment against a private contractor to which the Complaints Commissioners recommendation could be relevant. More generally, a private individual has no means open to him of challenging the Commissioners findings before a court, such as a public body enjoys under article 16, except by way of judicial review, which offers only limited scope for a review of the merits. I can think of no rational reason why the draftsman of the 1996 Order should have intended that private individuals with no relevant duty of compliance should have a more limited right to challenge the Commissioners report than a public body. On the contrary, the assumption must have been that the Commissioner would not make recommendations against private individuals of a kind which could have no legal effect directly or indirectly, either under the Order or under the general law. This is, in substance, what the majority of the Court of Appeal decided. In my opinion, as applied to investigations under article 8, their conclusion was correct. Power to make a special report The Complaints Commissioners main response to this is that his recommendations do not depend for their efficacy on their legal enforceability but on the power of publicity. By publicising a respondents failure or refusal to comply with a recommendation, he can bring pressure to bear on him to comply notwithstanding the lack of any legal obligation to do so. This is what the Commissioner hopes to achieve by issuing a special report. Mr McGleenan QC, who appeared for the Commissioner before us, drew our attention to the observations of Wade and Forsyth, Administrative Law, 11th ed (2014), p 69, about the Parliamentary Commissioner Act 1967: An ombudsman requires no legal powers except powers of inquiry. In particular, he is in no sense a court of appeal and he cannot alter or reverse any government decision. His effectiveness derives entirely from his power to focus public and parliamentary attention upon citizens grievances. But publicity based on impartial inquiry is a powerful lever. Where a complaint is found to be justified an ombudsman can often persuade a government department to modify a decision or pay compensation in cases where the complainant unaided would get no satisfaction. For the department knows that a public report will be made and that it will be unable to conceal the facts from Parliament and the press. I have no difficulty with this proposition as applied to a public body and to the scheme of the United Kingdom Act. The United Kingdom Parliamentary Commissioner for Administration is an officer of the legislature. The White Paper which preceded the passing of the 1967 Act (The Parliamentary Commissioner for Administration, Cmnd 1965/2767) observes at para 4, that his office was conceived as supporting the traditional constitutional function of Parliament of receiving the grievances of citizens and holding ministers individually and collectively accountable for their amendment. The Parliamentary Commissioner in the United Kingdom is empowered to investigate complaints referred to him by a Member of Parliament against government departments and other public bodies identified in Schedule 2: see sections 4 and 5 of the 1967 Act. He has no power to investigate complaints against private individuals providing services to government departments or public bodies. The Parliamentary Commissioners practice is, in appropriate cases, to recommend that the department or public body provides financial redress, generally on a compensatory basis. If the department decides not to comply, he may make a special report under section 10(3), which provides as follows: (3) If, after conducting an investigation under section 5(1) of this Act, it appears to the Commissioner that injustice has been caused to the person aggrieved in consequence of maladministration and that the injustice has not been, or will not be, remedied, he may, if he thinks fit, lay before each House of Parliament a special report upon the case. In all of these respects, the position of the Assembly Ombudsman for Northern Ireland under the Ombudsman (Northern Ireland) Order 1996 is the same. Section 10(3) of the 1967 Act of the United Kingdom is reproduced by section 10(3) of the Parliamentary Commissioner Act (Northern Ireland) 1969, and then by article 17(2) of the Assembly Ombudsman (Northern Ireland) Order 1996. But no corresponding power was conferred on the Complaints Commissioner either by the legislation of 1969 or by that of 1996. The absence of a power in the Complaints Commissioner to make a special report of the kind which is expressly conferred on the Assembly Ombudsman was not an oversight. It reflects a significant difference in their constitutional status. The Assembly Ombudsman, like the United Kingdoms Parliamentary Commission for Administration, is an officer of the legislature. Under the Ombudsman (Northern Ireland) Order 1996, he may investigate only such complaints as are made by a member of the public to a member of the Assembly and referred by the latter to him: article 9(2). He reports to the member in question or another appropriate member, as well as to the public body under investigation: article 16. In keeping with this scheme, the sole mode of enforcing his recommendations provided for by the legislation is a special report to the legislature under article 17(2). These had also been features of the Parliamentary Commissioner Act (Northern Ireland) 1969. Their effect is that the Assembly Ombudsmans recommendations are enforceable politically, but they are not enforceable legally save arguably by way of judicial review. This reflects the fact that the bodies subject to investigation by the Assembly Ombudsman are government departments and public bodies for whom the relevant minister is responsible to the legislature. The position of the Complaints Commissioner is different. He is a public officer but he is not an officer of the legislature in the same sense as the Assembly Ombudsman. Under the 1996 Order, he receives complaints directly from the public: articles 7(7) and 8(5). He reports to the complainant and to the bodies and individuals whose conduct is at issue: article 15. There is no power to make a special report to the legislature or to any one else on non compliance with his recommendations. Instead, his recommendations and findings are legally enforceable by the court by the procedures set out in articles 16 and 17, but only as against public bodies investigated under article 7. In 1969 and 1996, it was evidently not considered appropriate to confer enforcement powers against private individuals with no relevant duties either in public or private law, whether by way of resort to the courts or by denouncing the recalcitrant party to the legislature. I do not accept the Complaints Commissioners submission that this deliberate scheme can be circumvented by resort to article 19 of the 1996 Order, which empowers him to lay before the Assembly an annual report on the performance of his functions and such other reports as he thinks fit. Reports of his investigations are governed by article 15. The context and the scheme of the legislation, both in 1969 and in 1996, show that article 19 is concerned with general reports on his work, and not with reports on individual cases. The assumption of the Complaints Commissioner that he can make a special report to the legislature on a failure to comply with his recommendations confuses his two roles, which are legislatively distinct. The position of the new Public Services Ombudsman under the 2016 Act will be different, because his power to issue a special report is wider: see section 46(2). But that is not the legislation upon which this appeal turns. The Commissioners recommendation in this case I have quoted para 70 of the Commissioners report, in which he recommends a payment by the respondent of 10,000. The respondent challenges the rationality of that recommendation. On the view that I have reached about the limits of the Commissioners powers, this question does not arise. However, I would not like to part with this case without commenting on the fact that the Commissioner thought it appropriate to make a recommendation in these terms, even on the footing that he was entitled to recommend monetary redress at all. The Commissioners recommendations, in those cases where he is entitled to make them, are discretionary and he has more latitude in arriving at a figure than a court would have. But a monetary recommendation, like any other, must be rational, and it must be explained. The only explanation proffered is that the 10,000 should be paid in respect of the clearly identified failings in the care provided to [the patient] and the events which consequently followed. The report does not explain why these failings warrant a payment of 10,000 or how that figure has been arrived at. It does not say whether Mr or Mrs R suffered any loss by the failings for which the 10,000 should be treated as compensation. Some of the failings, notably the failure to take more urgent action on 6 January 2009 are found to have made no difference and others, such as the events which followed Rs death could not in the nature of things have done so. It is possible that the recommendation was intended as a solatium for injured feelings, but the report does not say so, and in the absence of explanation 10,000 seems to be an excessive amount to recommend on that basis. On the face of it, the figure has simply been plucked out of the air. If I had concluded that the Complaints Commissioner had power to recommend a payment by the respondent, I would have regarded this particular recommendation as lacking any rational basis. Conclusion For these reasons I would dismiss the appeal.
+The claimant, Declan OByrne, was vaccinated on 3 November 1992 with an HIB vaccine (the Product). He alleges that the Product was defective and that it caused him brain damage. The vaccine in question was manufactured in France by a French company, now known as Aventis Pasteur SA (APSA). On 18 September 1992 APSA sent a consignment of the vaccine, including the Product, to a company, now known as Aventis Pasteur MSD Ltd (APMSD), in England. At all relevant times in 1992 APMSD was a wholly owned subsidiary of APSA and acted as a United Kingdom distributor for APSAs products. APMSD received the consignment on 22 September. On an unknown date, probably in late September or early October, APMSD sold part of the consignment, including the Product, to the Department of Health, which in turn supplied it to the medical practice which used it to vaccinate the claimant. On 1 August 2001 the claimant began proceedings for damages against APMSD, alleging that he had suffered damage caused by a defect in the Product which APMSD had manufactured and/or produced and so it was liable under section 2 of the Consumer Protection Act 1987. In its defence, served in November 2001, APMSD pointed out that it was not the manufacturer, but merely the distributor, of the Product. In response to a further request, in April 2002 APMSD identified APSA as the manufacturer of the Product. On 16 October 2002 the claimant issued separate proceedings against APSA, also under section 2 of the Consumer Protection Act, alleging that APSA was the producer of the Product and claiming damages against it. APSA defended the action on the basis, inter alia, that it had put the Product into circulation either on 18 September 1992, when it sent the Product to APMSD, or on 22 September 1992 when APMSD received it. APSA contended that, in these circumstances, the claimants action against it was time barred since it had been raised more than 10 years after APSA had put the Product into circulation. In advancing this defence, APSA relied on section 11A(3) of the Limitation Act 1980 and Article 11 of Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products (OJ 1985 L210, p 29) (the Directive), which provides: Member States shall provide in their legislation that the rights conferred upon the injured person pursuant to this Directive shall be extinguished upon the expiry of a period of ten years from the date on which the producer put into circulation the actual product which caused the damage, unless the injured person has in the meantime instituted proceedings against the producer. Faced with this defence in his action against APSA, in his action against APMSD with which this appeal is concerned the claimant applied on 10 March 2003 for an order that APSA be substituted as defendant in place of APMSD. The application was based on section 35(5)(b) and (6)(a) of the Limitation Act 1980 and rule 19.5(3)(a) of the CPR. It is, of course, common ground that the application was made after the expiry of the ten year time limit under Article 11 for initiating proceedings against the producer of the Product. In these circumstances APSA contended that, in so far as English law might permit APSA to be substituted after the expiry of the time limit, it was inconsistent with Article 11. By contrast, the claimant contended that provisions of domestic law permitting this substitution would not be inconsistent with Article 11. In November 2003, at the request of both parties, the High Court made a preliminary reference to the European Court of Justice. The European Court answered three questions: OByrne v Sanofi Pasteur MSD Ltd (formerly Aventis Pasteur MSD Ltd) (Case C 127/04) [2006] 1 WLR 1606. One of the questions concerned the point in time at which a product was put into circulation for purposes of Article 11 in a situation where the producer which manufactured it then transferred it to a distribution subsidiary. I quote and discuss the European Courts ruling on this point at paras 20 23 below. concerned, the European Court held, [2006] 1 WLR 1606, 1622: So far as the power to substitute one producer for another as defendant was When an action is brought against a company mistakenly considered to be the producer of a product whereas, in reality, it was manufactured by another company, it is as a rule for national law to determine the conditions in accordance with which one party may be substituted for another in the context of such an action. A national court examining the conditions governing such a substitution must, however, ensure that due regard is had to the personal scope of Directive 85/374, as established by Articles 1 and 3 thereof. In the light of this answer, Teare J allowed the claimants application for substitution of APSA in place of APSMD, pursuant to section 35(5)(b) and (6)(a) of the Limitation Act 1980 and rule 19.5(3)(a) of the CPR, on the ground that the claimant had named APMSD as the defendant in mistake for APSA: OByrne v Aventis Pasteur MSD Ltd [2007] 1 WLR 757. APSA appealed, but the Court of Appeal (Sir Anthony Clarke MR, Arden and Moore Bick LJJ) [2008] 1 WLR 1188 dismissed its appeal. The House of Lords granted APSA leave to appeal. At the hearing of the appeal a majority of the appellate committee considered that it was clear that the European Court was saying that, in some circumstances, proceedings, which are obviously intended to be proceedings against the producer but which use the wrong name, can properly be treated by national procedural law as having been proceedings against the producer. The majority considered that this would have been the proper approach in the circumstances in the present case and so they would have dismissed APSAs appeal. But, because this was not the unanimous view of the appellate committee as to the effect of the judgment of the European Court, the House of Lords referred the case to Luxembourg for a second time: [2008] 4 All ER 881. The decision on this reference was given by the Grand Chamber: Aventis Pasteur SA v OB (Case C 358/08) (unreported) given 2 December 2009. The answer returned by the European Court in response to the second reference is not in line with either of the interpretations of its judgment on the first reference which had been advanced before the appellate committee. Happily, however, this time the core answer could not be clearer: Article 11 of Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products must be interpreted as precluding national legislation, which allows the substitution of one defendant for another during proceedings, from being applied in a way which permits a producer, within the meaning of Article 3 of that directive, to be sued, after the expiry of the period prescribed by that article, as defendant in proceedings brought within that period against another person. Putting the point shortly and subject to the important qualification which I must address in a moment the Court of Justice holds that, once ten years have passed since a producer put a product into circulation, that producer cannot be sued, unless proceedings have been taken against it within the ten year period. As the Court explains, at para 38 of its judgment, Article 11: provides for a uniform 10 year period after which those rights are extinguished. It fixes, in a binding manner, the starting point of that period as the date on which the producer put into circulation the product which caused the damage. It specifies the institution of proceedings against that producer as the only reason for that period to be interrupted. It follows, as the Court says at para 44, that a rule of national law which allows the substitution of one defendant for another during proceedings cannot, under Directive 85/374, be applied in a way which permits such a producer to be sued, after the expiry of that period, as defendant in proceedings brought within that period against another person. As it explained in paras 41 43 of its judgment, the Court adopted this approach because, in its view, it gave effect to the balance which the Community legislator had intended to achieve between the interests of consumers and producers: 41. Pursuant to the 11th recital in the preamble to Directive 85/374, the latter seeks, second, to limit, at Community level, the liability of the producer to a reasonable length of time, having regard to the gradual ageing of products, the increasing strictness of safety standards and the constant progressions in the state of science and technology. 42. As is stated by the Advocate General in points 49 and 50 of her Opinion, the Community legislatures intention to limit in time the no fault liability established by Directive 85/374 is also intended to take account of the fact that that liability represents, for the producer, a greater burden than under a traditional system of liability, so as not to restrict technical progress and to maintain the possibility of insuring against risks connected with that specific liability (see, to that effect, paragraph 3.2.4 of the Report from the Commission of 31 January 2001 on the Application of Directive 85/374 on Liability for Defective Products, COM (2000) 893 final). 43. It follows that, without prejudice to the possible application of the rules on contractual or non contractual liability or a special liability system existing at the moment when Directive 85/374 was notified, the application of which is not prejudiced by the latter, as is apparent from Article 13 thereof and the 13th recital in the preamble thereto, the producer, as defined in Article 3 of that directive, is, under Article 11 of that directive, relieved of his liability under that article upon the expiry of a period of 10 years from the putting into circulation of the product in question, unless, in the meantime, proceedings have been instituted against him. The European Court also went out of its way, at para 48, to emphasise that it made no difference if the failure to sue a particular producer within the relevant ten year period had been due to some mistake on the claimants part. Even in that event what mattered was that the ten years had expired without that producer having been sued. So it could not be substituted as defendant after the ten years were up: 48. It should also be added that subjective elements deriving, for example, from the wrongful attribution, by the injured person, of the status of manufacturer of the allegedly defective product to a company which is not the manufacturer, or from the injured persons genuine intention to proceed against that manufacturer by way of its action against such other company, cannot, without infringing the objective dimension of the harmonisation rules laid down by Directive 85/374, justify the substitution, after the expiry of the 10 year period set out in Article 11 thereof, of that manufacturer in proceedings initiated during that period against another person (see, to that effect, OByrne, paragraph 26 and, by analogy, Case C 51/05 P Commission v Cantina sociale di Dolianova and Others [2008] ECR I 5341, paragraphs 59 to 63). In these circumstances the claimant now accepts that he cannot use section 35 of the Limitation Act 1980 as a basis for substituting APSA for APMSD as the defendant in the present proceedings. The claimant submits, however, that, even though he cannot make the substitution on the basis of his mistake, the European Court indicated in its judgment a different basis on which he can actually make the desired substitution. For this purpose he relies on the second answer which the Court of Justice gave on the second reference: However, first, Article 11 must be interpreted as not precluding a national court from holding that, in the proceedings instituted within the period prescribed by that article against the wholly owned subsidiary of the producer, within the meaning of Article 3(1) of Directive 85/374, that producer can be substituted for that subsidiary if that court finds that the putting into circulation of the product in question was, in fact, determined by that producer. In short, the claimant submits that the position falls within the terms of this qualification to the European Courts core answer on the effect of Article 11 and so there is nothing to prevent him from substituting APSA for APMSD on this basis. APSA contends, however, that this passage in the Courts judgment has to be interpreted in the context of the judgment as a whole and in the light of the Opinion of Advocate General Trstenjak, 8 September 2009, unreported, which preceded it. When that is done, APSA says, it can be seen that the qualification should be given a narrower interpretation, which would not allow substitution in this case. As will become apparent, in a case like the present, the possibility of substitution depends, to some extent, on various matters of fact concerning the relationship between the two entities. At the hearing before this Court, however, on the basis of what he now knows about the facts, the claimants counsel, Mr Maskrey QC, accepted that, if the Court were to conclude that APSAs interpretation of the European Courts judgment was correct, then its appeal against its substitution for APMSD should be allowed. The dispute between the parties turns, therefore, on the interpretation of paras 49 53 of the judgment of the European Court on the second reference: 49. In light of the foregoing, Article 11 of Directive 85/374 must be interpreted as precluding national legislation which allows the substitution of one defendant for another during proceedings from being applied in a way which permits a producer, within the meaning of Article 3 of that directive, to be sued, after the expiry of the period prescribed by that article, as defendant in proceedings brought within that period against another person. 50. However, the Court, giving a preliminary ruling on a reference, has jurisdiction, in the light of the information in the case file, to give clarifications to guide the referring court in giving judgment in the main proceedings (see, to that effect, Case C 366/98 Geffroy [2000] ECR I 6579, paragraph 20, and Case C 446/07 Severi [2009] ECR I 0000, paragraph 60). 51. It should be noted in that regard, first, that it is apparent from the reference for a preliminary ruling that APMSD (formerly Mrieux UK), which in 1992 supplied the vaccine which was administered to OB to the United Kingdom Department of Health, was, at that time, a wholly owned subsidiary of APSA (formerly Pasteur Mrieux). 52. In such a context, it is for the national court, in accordance with the applicable rules of national law on matters of proof, to assess whether the putting into circulation of the product in question was, in fact, determined by the parent company which manufactured it. 53. Where the national court notes that fact, Article 11 of Directive 85/374 does not preclude that court from holding that, in the proceedings instigated within the period prescribed by that article against the subsidiary under the system of liability laid down by that directive, the parent company, producer within the meaning of Article 3(1) of that directive, can be substituted for that subsidiary. Under reference to its reasoning in paras 34 48, in para 49 the European Court gave its core ruling on the construction of Article 11, which I have already discussed. The Court then went on, in the subsequent paragraphs, to give some additional guidance which it considered might be helpful to any domestic judges who were going to be dealing with this particular case. There is nothing, however, to suggest that, in these paragraphs, the Court was intending to depart from the principled approach which it had just been at such pains to develop and finally to formulate in para 49. What the Court says in paras 50 54 must therefore be read in the light of that core decision. In other words, the Court is explaining how that decision may fall to be applied, depending on the domestic courts assessment of the practical relationship between the manufacturer, APSA, and the distributor, APMSD. In venturing to give this additional assistance the European Court was following the lead of the Advocate General. Although the structure of her Opinion makes for repetition, it is clear that she, too, had concluded that only the bringing of proceedings against the particular producer could stop the Article 11 time bar from taking effect ten years after the producer had put the relevant product into circulation. See, in particular, paras 61 and 69 78 of her Opinion. So, in reaching its conclusion in para 49 of its judgment, the Court was following this aspect of the Advocate Generals reasoning. The Advocate General went on to hold, at para 68, that a substitution of the producer as a defendant when he has been released by the expiry of the ten year limitation period is equally incompatible with the Directive. She gave her reasoning for this conclusion at para 79, where she said that to allow the substitution of a producer against which proceedings had not been taken within the ten year period in place of a producer against which they had been taken would de facto be capable of also interrupting the limitation period in relation to producers. The upper temporal limit of liability for producers in Article 11 would thereby be broken through, and that is excluded in the light of the complete harmonisation of the field which is the aim of Directive 85/374. So, when reaching the comparable conclusion at paras 44 47 of its judgment, the European Court was, again, following the Advocate Generals approach. The Advocate General also gave some thought to how Article 11, thus interpreted, should be applied in a case, like the present, where the parent manufacturing producer (APSA) transferred the Product to a distributor (APMSD) which was its wholly owned subsidiary. In this connexion the Advocate General referred back to the judgment of the European Court on the first reference: OByrne v Sanofi Pasteur MSD Ltd (formerly Aventis Pasteur MSD Ltd) [2006] 1 WLR 1606. The first ruling in that judgment, at p 1622, had been in these terms: Article 11 of Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products is to be interpreted as meaning that a product is put into circulation when it is taken out of the manufacturing process operated by the producer and enters a marketing process in the form in which it is offered to the public in order to be used or consumed. This conclusion reflects what the Court says in para 27 of its judgment, which is, in turn, based on its reasoning in the preceding paras 20 26. Paragraphs 27 32, [2006] 1 WLR 1606, 1620 1621, are of importance in the present context: 27. In light of those considerations, a product must be considered as having been put into circulation, within the meaning of Article 11 of the Directive, when it leaves the production process operated by the producer and enters a marketing process in the form in which it is offered to the public in order to be used or consumed. 28. Generally, it is not important in that regard that the product is sold directly by the producer to the user or to the consumer or that that sale is carried out as part of a distribution process involving one or more operators, such as that envisaged in Article 3(3) of the Directive. 29. When one of the links in the distribution chain is closely connected to the producer, for example, in the case of a wholly owned subsidiary of the latter, it is necessary to establish whether it is a consequence of that link that that entity is in reality involved in the manufacturing process of the product concerned. 30. The examination of such a close relationship must not be influenced by the question whether or not distinct legal persons are involved. On the other hand it is of relevance whether those are companies carrying out different production activities or are, on the contrary, companies one of which, ie the subsidiary company, acts simply as a distributor or depository for the product manufactured by the parent company. It is for the national courts to establish, having regard to the circumstances of each case and the factual situation of the matter before them, whether the links between the producer and another entity are so close that the concept of producer within the meaning of Articles 7 and 11 of the Directive also includes that latter entity and that the transfer of the product from one to the other of those entities does not amount to putting it into circulation within the meaning of those provisions. 31. In any case, contrary to what is maintained by the defendants, the fact that the products are invoiced to a subsidiary company and that the latter, like any purchaser, pays the price, is not conclusive. The same applies to the question of knowing which entity is to be considered as owner of the products. 32. Therefore the reply to the first question must be that Article 11 of the Directive is to be interpreted as meaning that a product is put into circulation when it is taken out of the manufacturing process operated by the producer and enters a marketing process in the form in which it is offered to the public in order to be used or consumed. As can be seen from para 31 of the European Courts judgment, in the first reference APSA which naturally wanted to push the starting date for the ten year period back as far as possible was arguing that it had put the Product into circulation when it transferred the consignment containing the Product to APMSD in the period of 18 to 22 September 1992. In support of that argument APSA was pointing to the fact that APMSD had been invoiced for the consignment and had paid for it. The claimants counsel, who was, of course, contending for as late a date as possible for the Product being put into circulation, was contending that this had not happened until APMSD supplied it to the Department of Health. The European Court rejected any approach that was based on the formal legal relationship between the parent manufacturing producer and the subsidiary distributor. In particular, the Court emphasised, at para 30, that the fact that the manufacturer and the distributor were distinct legal entities was irrelevant. The national court had to look at all the links between the two entities and decide on that basis whether they were so close that, for the purposes of Article 11, the concept of the manufacturing producer (which would apply to APSA) really included the distributor (in this case, APMSD). In that event, even if the Product were transferred from one to the other, this would not mean that it had been taken out of the manufacturing process operated by the producer. So, applying the test in para 27 of that judgment, for the purposes of Article 11 the Product would not have been put into circulation by the manufacturing producer when it transferred it to the distributor. Obviously, the Courts concern was that, unless this were indeed the position, at least in the case of products with a long shelf life, by the time they were eventually put on the market by the distributor, a significant part of the ten year period for proceedings against the manufacturing producer might have elapsed. This would upset the balance which the Directive sought to maintain between the interests of the consumer and the producer. In paras 83 90 of her Opinion on the second reference, the Advocate General did indeed make use of this part of the Courts analysis in the first reference when considering how the domestic court might determine the date at which the Product was put into circulation. But she also used it for the rather different purpose of showing when a distribution subsidiary could be so closely involved with the parent producer that they could, in effect, be regarded as one for the purposes of Article 11. In that event, suing the subsidiary would be tantamount to suing the parent. In concrete terms, if that were the position in this case, by suing APMSD within the ten year period, the claimant would also have sued APSA within that period. So the Article 11 time bar would not bite and the claimant could, if he wished, substitute APSA for APMSD as defendant in the present action or, indeed, simply proceed with his (second) action against APSA. The Advocate Generals reasoning and conclusions on these matters are to be found in paras 109 113 of her Opinion: 109. If, by contrast, the national courts were to reach the conclusion in the main proceedings that a supplier such as APMSD was, because of its involvement in the manufacturing process operated by APSA, to be regarded together with APSA as a producer within the meaning of the first half of Article 3(1) of Directive 85/374, the bringing of proceedings in due time against APMSD would indeed have the effect of interrupting the limitation period in relation to APSA. 110. The decisive point here is the fact that a supplier who is sufficiently closely involved in the manufacturing process operated by the producer is to be classified together with the producer as a producer within the meaning of the first half of Article 3(1) of the directive. Because those two entities are to be regarded, in the light of the functional interpretation of the concept of producer, as one producer within the meaning of the first half of Article 3(1), the limitation period must also run in the same way for both entities. 111. In this connection the Court in OByrne, after carefully weighing up the interests of consumers and producers, synchronised the starting point of the 10 year limitation period under Article 11 of Directive 85/374 for the producer stricto sensu and the supplier who forms part of the manufacturing process by reference to the date on which the supplier puts the product into circulation. In the context of the same balancing of interests, the running of the limitation period must also be uniform. 112. Since the running of the limitation period under Article 11 of the directive is interrupted only by the bringing of proceedings, a uniform limitation period for the producer and supplier who are to be regarded together as a producer within the meaning of the first half of Article 3(1) presupposes that the bringing of proceedings against the supplier interrupts the running of the 10 year limitation period not only in relation to that supplier but also in relation to the producer in whose manufacturing process the supplier is involved. 113. Accordingly, my conclusion is that classification to be assessed by the national courts of the supplier of a product as its producer has the consequence that that supplier is liable under Article 1 of the directive for the damage caused by a defect in the product, regardless of whether he is classified as a producer within the meaning of Article 3(1) or a producer within the meaning of Article 3(3) of the directive. Classification of a supplier as a producer within the meaning of the first half of Article 3(1) of the directive has the further consequence that the 10 year limitation period for the producer in whose manufacturing process the supplier is involved does not start to run until the time when the supplier puts the product into circulation. At the same time, proceedings brought against that supplier will in that case interrupt the running of the limitation period under Article 11 of the directive in relation also to the producer in whose manufacturing process the supplier is involved. In the summary which she gives in para 115, the Advocate General repeats the conclusion which she reaches in para 113. Two points stand out. First, the Advocate Generals conclusion in paras 113 and 115 involves no departure from the principle that the Article 11 time bar can only be interrupted by bringing proceedings against the producer concerned. Secondly, when she contemplates the domestic court classifying a supplier as a producer within the meaning of Article 3(1), she contemplates the domestic court applying the approach of the European Court in its judgment on the first reference: OByrne v Sanofi Pasteur MSD Ltd (formerly Aventis Pasteur MSD Ltd) [2006] 1 WLR 1606. And as the Advocate General recalls at paras 111 and 113 according to that judgment, where the supplier forms part of the manufacturing process, the starting point of the ten year limitation period under Article 11 is fixed by reference to the date on which the supplier puts the product into circulation. Indeed, in the proceedings on the first reference, the claimant fought successfully to establish exactly that point. With this background in mind, it is appropriate to return to paras 51 and 52 of the European Courts judgment on the second reference: 51. It should be noted in that regard, first, that it is apparent from the reference for a preliminary ruling that APMSD (formerly Mrieux UK), which in 1992 supplied the vaccine which was administered to OB to the United Kingdom Department of Health, was, at that time, a wholly owned subsidiary of APSA (formerly Pasteur Mrieux). 52. In such a context, it is for the national court, in accordance with the applicable rules of national law on matters of proof, to assess whether the putting into circulation of the product in question was, in fact, determined by the parent company which manufactured it. It is correct to say that, unlike the Advocate General, the European Court does not actually refer to its answer to the first question on the first reference. But there is nothing whatever to suggest that it intended to depart in any way from that analysis. The assumption must therefore be that it falls to be applied where appropriate. Certainly, the Court supplies no alternative or additional theoretical analysis which could displace or supplement it. The European Court is concerned to show how the principle which it has just laid down would apply in relation to the substitution of APSA for APMSD. Certainly, to judge by the Advocate Generals analysis and there is no rival the only way in which that principle could be maintained and yet APSA could be substituted for APMSD, would be if, by suing APMSD, the claimant had, in effect, sued APSA. So the Court must be pointing the domestic court to the way in which it should approach that issue. Mr Maskrey argued, however, that the position was really much simpler. As the European Court noted, at para 51, APMSD was a wholly owned subsidiary of APSA. Secondly, APSA had determined that the Product should be put into circulation by transferring it to its wholly owned subsidiary, APMSD, and it had then in fact transferred the product to the subsidiary. So the requirements of paras 51 and 52 were fulfilled and the substitution could be made. I would reject that argument. As counsel freely admitted, this argument runs completely counter to the one which the claimant advanced on the first reference. That is, of course, merely a forensic point. More significantly, the argument is internally incoherent as well as being inconsistent with the reasoning of the Court of Justice. If, as counsel now contends, APSA put the Product into circulation when it supplied it to APMSD, then, consistently with the Courts ruling on the first reference, this can only be because the two companies are to be regarded as having operated quite distinctly so that the Product was taken out of the manufacturing process operated by APSA when it was transferred to APMSD. But the fact that APMSD was a wholly owned subsidiary of APSA, which the Court began by noting in para 51, could not be a pointer towards that conclusion. If anything, it would point against it. So, on this interpretation, the European Court could have had no reason to draw attention to the status of APMSD. Yet it did. Mr Maskrey criticised APSAs interpretation of para 52 on the specific ground that it involved reading in three words: whether the putting into circulation of the product in question by the supplier, was, in fact, determined by the parent company which manufactured it. Mr Leggatt QC accepted that this was, in effect, how he contended that the sentence should be interpreted. In my view, that is indeed the correct interpretation. The European Courts reference to APMSD being a wholly owned subsidiary of APSA is only consistent with it directing attention to factors which may point to a close connexion between the two companies. Given the context of the discussion (seeing whether proceedings against APMSD count as proceedings against APSA), that is precisely what we would expect. For the reasons already given, we should also expect the focus to be on the time when the Product was supplied by APMSD to the Department of Health, since, if APMSD was, in effect, tied into the manufacturing process of APSA, the Product would only be put into circulation when it was supplied by APMSD. And that is what we find in para 51 where the European Court refers to APMSDs status as a wholly owned subsidiary at the time when it supplied the Product to the Department of Health. Therefore, in para 52 the Court must indeed be referring to the Product being put into circulation by the supplier at the behest of its parent. That interpretation is also consistent, of course, with what the Advocate General says in paras 111 and 113 of her Opinion on the second reference (quoted at para 24 above). This interpretation of para 52 is also consistent with its language, both in the English version and in the original French (si la mise en circulation du produit concern a t dtermine en fait par la socit mre qui la fabriqu). The European Court is plainly contemplating a situation where, to all outward appearances, a supplier has decided to put a product into circulation. The domestic court must look at the circumstances to see whether, despite appearances, in fact, it was the manufacturing parent company which had determined that the product should be put into circulation. If, by contrast, the European Court had meant what Mr Maskrey suggested, it would have had no reason to use this language: all it would have required to say was that the national court was to assess whether the parent company, which manufactured the product, transferred it to its wholly owned subsidiary, the distributor. The further difficulty with that interpretation is, of course, that everyone agrees that APSA sent the consignment containing the Product to APMSD on 18 September and that APMSD received it on 22 September. There would therefore be nothing for the domestic court to assess. The European Court was therefore indicating, in para 52, that the domestic court was to consider, in accordance with domestic rules of proof, whether the manufacturer, APSA, was in fact controlling APMSD and determining when it put the Product into circulation. There is nothing in the judgment of the European Court on either reference to suggest that the fact that APMSD was a wholly owned subsidiary of APSA could somehow, of itself, be a reason for allowing APSA to be substituted after the expiry of the ten year period. Indeed, that would be inconsistent with the two companies being distinct entities. Rather, the fact that APMSD was a wholly owned subsidiary was simply one by no means decisive factor to be taken into account by the domestic court when assessing how closely the subsidiary was involved with its parents business as an Article 3(1) producer. All the circumstances would have to be taken into account. If APSA was indeed in a position to decide when the Product was to be distributed, then APMSD would be integrated into the manufacturing process and so tightly controlled by APSA that proceedings against APMSD could properly be regarded as proceedings against the parent company, APSA. Hence, as the European Court goes on to hold in para 53, the manufacturing parent company could be substituted for the subsidiary APSA for APMSD. Mr Maskrey submitted that, if the European Courts judgment were interpreted in this way, then it would allow substitution of the parent producer only where the supplier could, in any event, itself be sued as a producer falling within the definition in Article 3(1). But that is, of course, precisely what the Advocate General does say in paras 113 and 115 of her Opinion. Moreover, the criticism seems a little ungenerous. It is, after all, the claimant who, for what must presumably appear to him to be good reasons, wishes to substitute APSA for APMSD as the defendant. The Advocate General and the Court are merely responding to that situation by pointing to circumstances where it might indeed be possible for the claimant to do so. It is, of course, the case that, in any such circumstances, the claimant will also be able to sue the supplier as a producer within the terms of Article 3(1). But that is not a criticism of the approach taken by the Advocate General or the Court. If a claimant will gain nothing by suing the manufacturer in substitution for the supplier, he will presumably not try to do so. But such a course might have advantages if, say, the supplier were insolvent. The Advocate General and the European Court were entitled to assume that, in this case, the claimant had what he regarded as good reasons for wishing to make the substitution. For these reasons, I would allow the appeal and set aside paragraph 1 of the order of Teare J dated 20 October 2006 substituting Aventis Pasteur SA for Aventis Pasteur MSD in the present action, HQ02X00848.
+The issue in this appeal is: what are the statutory consequences if the fingerprints of a defendant have been taken in a police station in Northern Ireland by an electronic device for which the legislation required approval from the Secretary of State, when such approval has never been given? In particular, is any evidence which makes use of the control fingerprints thus taken inadmissible in any subsequent court proceedings? Article 61 of the Police and Criminal Evidence (Northern Ireland) Order 1989 (the Northern Ireland Order) sets out the powers of the police to take fingerprints without consent. Similar (but not in every respect identical) provision is made for England and Wales by section 61 of the Police and Criminal Evidence Act 1984. These powers are exhaustively defined; otherwise prints may only be taken with consent see article 61(1) and, in England and Wales, section 61(1). The cases where prints may be taken without consent have been varied a little from time to time and do not need to be set out seriatim here. One of the principal cases, however, was and is where a person is in police detention having either been arrested for a reportable offence, or charged with, or informed that he will be reported for, such. Another is where he has been convicted of such an offence. Generally, fingerprints may be taken once only in the course of any single investigation, although there are now provisions permitting replacement prints to be required if the first ones were of insufficient quality to allow satisfactory analysis, comparison or matching. Between 1 March 2007 and 12 January 2010 article 61(8B) of the Northern Ireland Order provided: Where a persons fingerprints are taken electronically, they must be taken only in such manner, and using such devices, as the Secretary of State has approved for the purposes of electronic fingerprinting. That provision matched an intended section 61(8A) of the Police and Criminal Evidence Act 1984, which latter provision was inserted into the 1984 Act by the Criminal Justice and Police Act 2001 but was never brought into force. Both article 61(8B) and section 61(8A) were later repealed as redundant by section 112 and schedule 8 of the Policing and Crime Act 2009, with effect from 12 January 2010, and with that repeal there disappeared from England and Wales and from Northern Ireland all requirement for statutory approval of fingerprinting devices. However, although the requirement for approval existed in Northern Ireland (but not in England and Wales) from 1 March 2007, such approval was, by oversight, not given to any device until it was belatedly provided on 29 March 2009 after the omission had been noticed. It follows that for the two years from March 2007 to March 2009 article 61(8B) was in force but no device had been approved as contemplated by it. The two appellants were defendants charged with theft in Northern Ireland. The offence was alleged to have taken place on 6 October 2007, during the two year period mentioned. A stack of building materials had been found removed from the owners depot and placed apparently ready for collection by the thieves. The appellants were found nearby in a van but said that they were there innocently and had not been near the stolen materials. Their fingerprints were taken when they were detained in the police station after their arrest. A fingerprint matching Elliotts left thumb was found on the packaging of the stolen materials. The match of fingerprints was relied upon by the Crown and proved in the magistrates court. The defendants were convicted. The device used in the police station to collect the control sample of the fingerprints of each appellant was a combination of camera, scanner and computer, known as Livescan. No one noticed that no type approval had been given for its use as required by article 61(8B). When this was appreciated, the appellants appealed to the County Court, where the appeal proceeded by way of fresh hearing ab initio. The preliminary point was taken that the evidence of comparison was inadmissible because of the absence of approval. That argument succeeded before the County Court judge but on further appeal by the Crown, by way of case stated, the Court of Appeal ruled against it. The Livescan process was and is generally used by the police throughout Northern Ireland, as well as throughout England and Wales and Scotland and, indeed, worldwide. It has very largely superseded the traditional process of ink pad and paper. It is possible to have mobile devices as well as those located in police stations. Both are linked directly to computerised storage and searching equipment located centrally. Amongst the advantages is the ease of electronic transmission, storage and sorting of the prints taken. One aspect of that is that a set of fingerprints given at a scene or in the street can now often almost instantaneously verify or refute the identity of the person tested. Another is that international exchange of data is made much easier. Livescan devices were in general use in Northern Ireland from 2006 and throughout the two year period 2007 2009 when type approval was required by article 61(8B). For the appellants, the first and principal submission of Mr McMahon QC is that the language of article 61(8B) unequivocally renders a nullity any fingerprints taken by a device which has not been approved. Therefore, no legal use can be made of them. For this reason, there is, he submits, no occasion to investigate what consequences Parliament must have intended should follow from a failure to use an approved device. That would be necessary only if there were an ambiguity in the wording. There is none, and it necessarily follows that the product of an unapproved fingerprinting process is inadmissible. Any other conclusion would, he submits, leave article 61(8B) a dead letter. The difficulty with this attractively simple submission is that the statute says nothing at all about the consequences of failure to use an approved device. There is ample precedent for such a statutory provision to be accompanied by an express provision that evidence shall only be admissible if obtained in accordance with it. An example is afforded by the statutory rules relating to evidence of speed provided by speed guns. Section 20 of the Road Traffic Offenders Act 1988 provides, for England and Wales: (1) Evidenceof a fact relevant to proceedings for an offence to which this section applies may be given by the production of a record produced by a prescribed device, and (a) (b) (4) A record produced or measurement made by a prescribed device shall not be admissible as evidence of a fact relevant to proceedings for an offence to which this section applies unless the device is of a type approved by the Secretary (a) of State, and (b) any conditions subject to which the approval was given are satisfied. Identical provisions are contained in the equivalent Northern Ireland legislation: article 23(1) and (4) of the Road Traffic Offenders (Northern Ireland) Order 1996. There are provisions to similar effect in section 6 of the Noise Act 1996, and in section 45 of the Antisocial Behaviour etc (Scotland) Act 2004, in respect of noise meters. The absence of this kind of explicit statutory provision from article 61(8B) thus raises the question of what consequence was intended to follow from non approval. This legislation was enacted against the background of the well understood general common law rule that evidence which has been unlawfully obtained does not automatically thereby become inadmissible. That has been clear since at least the decision of the Judicial Committee of the Privy Council in Kuruma v The Queen [1955] AC 197, where the defendant was charged with unlawful possession of ammunition which had been found on him as a result of an unlawful search, carried out by a policeman of insufficient seniority to make it. Lord Goddard CJ said this at p 203: In their Lordships opinion the test to be applied in considering whether evidence is admissible is whether it is relevant to the matters in issue. If it is, it is admissible and the court is not concerned with how the evidence was obtained. This proposition was endorsed by the House of Lords in R v Sang [1980] AC 402, which dealt more specifically with the judges discretion to exclude evidence which will have the effect of rendering the trial unfair (see now section 78 of the Police and Criminal Evidence Act 1984 and its equivalent, article 76 of the Northern Ireland Order). Likewise in R v Khan [1997] AC 558 evidence obtained by unauthorised surveillance and the secret recording of private conversations was admissible despite the unlawful methods by which it had been obtained. The position was summarised by Lord Fraser, with whom all other members of the House of Lords agreed, in Fox v Chief Constable of Gwent [1986] AC 281, 292A as follows: It is a well established rule of English law, which was recognised in R v Sang, that (apart from confessions as to which special considerations apply) any evidence which is relevant is admissible even if it has been obtained illegally. It is clear that this inclusive rule of relevant evidence extends equally to evidence created by an unlawful process as it does to existing material uncovered by unlawful process; the recording in Khan is an example of the former. This common law background to the legislation, of which Parliament must be taken to have been well aware, shows that inadmissibility of the fingerprints here under consideration cannot possibly simply follow from the existence of the requirement for device approval. Rather, it is necessary to examine the Parliamentary intention as to consequence. With great respect to Mr McMahons principal argument, it is not correct that article 61(8B) would have no purpose, or would be a dead letter, unless its consequence were that any fingerprints obtained from an unapproved device were inadmissible. Whether or not inadmissibility is the consequence, the article still meant that a requirement by a policeman of a suspect in custody that he provide his fingerprints on an unapproved device would be one which the suspect was entitled to refuse. It might not be very likely that a suspect would be acquainted with the presence or absence of approval, but his solicitor might well be. Such a suspect could therefore refuse to provide his fingerprints on a Livescan device and he would not thereby commit the offence of obstructing a police officer that no doubt he otherwise would. Similarly, if it became known that the police were regularly using an unapproved device, there would be no defence to an application for judicial review in which the unlawfulness of their actions would be declared and, if persisted in, no doubt prohibited. Thus the clear statutory purpose of preventing the use of a device unless it is approved by the Secretary of State would be achieved. There is no need for the additional consequence of inadmissibility of evidence in order to give content to the statute. It follows that the wording of article 61(8B) does not itself provide the solution to the issue in this appeal. It is necessary to examine the question what Parliament must have intended to be the consequence of non approval of Livescan. The correct approach to this enquiry was explained by Lord Steyn in R v Soneji [2005] UKHL 49; [2006] 1 AC 340. It had previously been thought that statutory provisions could be classified as either mandatory (carrying the consequence of total invalidity for breach) or directory (carrying lesser consequence). The over rigidity of that a priori approach had given rise to difficulty. At para 23 Lord Steyn said this: Having reviewed the issue in some detail I am in respectful agreement with the Australian High Court [in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355] that the rigid mandatory and directory distinction, and its many artificial refinements, have outlived their usefulness. Instead, as held in Attorney Generals Reference (No 3 of 1999) [2001] 2 AC 91, the emphasis ought to be on the consequences of non compliance, and posing the question whether Parliament can fairly be taken to have intended total invalidity. That is how I would approach what is ultimately a question of statutory construction. That more flexible approach does not necessarily mean that failure to comply with statutory provisions may not have far reaching consequences. It may sometimes yield the conclusion that the inevitable consequence is total invalidity. That was the outcome in R v Clarke and McDaid [2008] UKHL 8; [2008] 1 WLR 338, where the question was whether the failure to sign an indictment nullified the ensuing trial. The statutory provisions there in question were sections 1(1) and 2(1) of the Administration of Justice (Miscellaneous Provisions) Act 1933 which provided for a bill of indictment (which had of itself no legal standing save as a proposal of charges) to become an indictment when signed. It was common ground that a valid indictment was a pre condition to a valid Crown Court trial. It can be seen from Lord Binghams speech at para 18 that he faithfully posed the Soneji question, namely what Parliament had intended, when passing the 1933 Act, should be the consequence of lack of signature. Since at the time of the 1933 Act the signature was taking the place of the previously existing endorsement of the bill by a Grand Jury, the answer was inescapable, if inconvenient: the signature validated the indictment in the same way as the Grand Jurys decision previously had done. Accordingly the absence of signature did indeed invalidate the subsequent trial, notwithstanding the fact that modern changes in the routes by which criminal cases arrive in the court of trial had in the meantime reduced the signature, in practice, to mere formality. The position had to be put right by amending legislation, in the form of the Coroners and Justice Act 2009. Should a similar parliamentary intention be deduced from article 61(8B)? Mr McMahon relies upon the well established rule that the product of a breathaliser test is inadmissible unless the testing device is an approved one. The cases begin with Scott v Baker [1969] 1 QB 659, decided in the infancy of the Road Safety Act 1967, which had introduced for the first time the offence of driving with blood alcohol beyond a prescribed statutory limit. The power to require a suspect to provide a laboratory blood or urine sample, by which blood alcohol could be tested, was made dependent upon a complex step by step procedure. The first step in that procedure was the taking of a preliminary (usually roadside) breath test. By section 7 a breath test was defined as one carried out using a device approved by the Secretary of State. The court held that such approval was essential to the statutory steps leading to a validly required laboratory sample, and that approval must be proved. The details of the blood alcohol driving legislation have been changed from time to time since then, and breath tests of a different kind are nowadays used not simply as a screening test but to determine the blood alcohol level. However, it remains the statutory rule, under section 7(1) of the Road Traffic Act 1988 and, in Northern Ireland, under article 18(1) of the Road Traffic (Northern Ireland) Order 1995, that a specimen of breath may be required in the course of an investigation into the offences of driving with excess alcohol, or of driving when unfit through drink or drugs, or of causing death by careless or dangerous driving when over the limit or under the influence, and that what may be thus required is limited to: specimens of breath for analysis by means of a device of a type approved by [the appropriate person.] Mr McMahon is therefore right to say that a breath specimen may be adduced in evidence against a defendant not only when the result constitutes the very offence of driving with excess alcohol but also where it is simply some part of the evidence relied on to prove an offence with different components, such as driving when unfit through drink. No one doubts the rule, however, that the product of a breath test will not be admissible unless the device used is an approved one. The statutory requirement for approval of an electronic fingerprint reader is not, however, analogous to the approval requirements in the cases of breath test or speed gun devices. Both the latter are methods of measuring something which cannot subsequently be re measured. They capture a snapshot of a suspects activity. The snapshot is often itself the offence. It is the speed, as measured by the device, which constitutes the offence of exceeding the speed limit. It is the blood alcohol content, as measured by the device, which constitutes the offence of driving with excess alcohol. In other cases, the snapshot is simply part of the evidence, for example if the offence charged is careless driving, or driving whilst unfit through drink. But in both kinds of situation, the activity measured by the device cannot be reproduced to be re measured. It is therefore entirely comprehensible that there should be a statutory requirement that the device should be approved, and that the measurements which can be relied upon in evidence should be limited to the products of such devices. That is no doubt why there are the specific statutory provisions in relation to speed guns described at para 8 above, and it is clearly why the courts have held that the requirements for approval in the case of breath tests have the like effect. The control fingerprints taken from the appellants in the police station were not snapshots. The impressions which their fingers provided could be reproduced at any time afterwards, and would be the same. The accuracy of the Livescan readings, if disputed, could readily be checked independently by the appellants providing more samples, whether by ink and paper or by any other means, for examination by an independent expert. The ease with which this can at any time be done demonstrates that there was no need at all for Parliament to stipulate, or to intend, that the product of unapproved electronic fingerprint readers should be inadmissible. It is the fact that in the present case there was no challenge whatever to the accuracy of the control fingerprints taken from Elliott by the Livescan device; the fingerprint found at the scene matched his control prints in no less than 45 particulars and there was no sign of any reliance on expert opinion either in the magistrates court or, after the absence of approval was appreciated, in the County Court. But if there had been a dispute, as in other cases it is at least possible that there might be, it would have been the simplest possible matter for new control prints to be provided so that independent expert opinion could be obtained. There appeared at first to be some limited support for the appellants contentions in an explanatory note which accompanied the proposed insertion into the Police and Criminal Evidence Act 1984 of section 61(8A) requiring type approval of electronic fingerprint readers. That amendment of the 1984 Act would have been achieved through section 78(7) of the Criminal Justice and Police Act 2001, had that subsection ever been brought into force. The explanatory note to that subsection (number 234) read as follows: Subsection (7) provides that where fingerprints are taken electronically, the device used must have type approval from the Secretary of State. This is to ensure that the device will produce images of the appropriate quality and integrity to be used for evidential purposes. However, the other background material shown to this court demonstrates that the purpose of the proposal for type approval was not principally the protection of the individual against risk of conviction on inaccurate evidence. The concern was much more closely related to the needs for the technology to work properly so that investigations could proceed confidently, for compatibility between police forces, both domestic and foreign, and for uniform machinery for search and comparison. The then Minister of State referred to the aim of facilitating a proper evidential trail. The House of Lords Select Committee on Science and Technology had emphasised the need for the technology to be robust. It is also clear that there was thought at one time that type approval would curtail any potential for unnecessary dispute in court about the legitimacy of electronically taken control fingerprints. The initial recommendation of the Police Scientific Development Branch had been against any stipulation for type approval. The reasons for that stance included the difficulty of formulating a test standard and the frequency of developments to many of the component parts of the system. The successful operation of Livescan in England and Wales over a decade without any type approval, as well as the experience in Northern Ireland, clearly contributed to the subsequent decision in 2009 not to commence the amendment to the English statute, and to repeal both article 61(8B) and the uncommenced section 61(8A). Overall the legislative history does not suggest any basis for concluding that Parliament intended that the consequence of use of unapproved apparatus should be the exclusion of the evidence. Such a consequence would, it is clear, be unnecessary and inappropriate. It is unnecessary because a reading of control fingerprints can always be checked subsequently. It is inappropriate because to exclude such evidence would deprive courts of reliable and relevant material. Since the product can be checked, and the evidence it provides is relevant, it ought to be admissible. If it were not, it would not be open to the police to take further control fingerprints without the consent of the subject, because he would no longer be in detention following arrest on suspicion of the offence, nor would he have been convicted of it. If the control fingerprints were to be inadmissible, not only would there be a windfall benefit to those who have committed crimes, perhaps of great gravity, but also defendants would be unable to rely on the evidence of the fingerprints of others when it was necessary for them to do so in order to defend themselves. A defendant who wished to show that a fingerprint found in an incriminating place belonged to another person, whom he contends committed the offence rather than himself, would be unable to adduce the evidence to do so. Some years after the provisions which we have here to construe, the Protection of Freedoms Act was enacted in 2012. Part 1, Chapter 1 contains, by way of proposed amendments to the Police and Criminal Evidence Act 1984, prospective provisions relating to fingerprints and other biometric data. Equivalent provision for the amendment of the Northern Ireland Order is made by section 9 of and Schedule 2 to the Criminal Justice (Northern Ireland) Act 2013. Neither set of provisions is yet in force but there is a proposed timetable for commencement. If and when these provisions are commenced they will provide for the destruction of fingerprints and other data in certain defined circumstances and/or after prescribed periods. There is express provision in proposed new section 63T(2) of the Police and Criminal Evidence Act 1984 (and in proposed new article 63Q(2) of the Northern Ireland Order) making inadmissible (at least against the person to whom the material relates) fingerprints or other data which the police have come under a duty to destroy. This proposed statutory scheme is consistent with the construction of the provisions we are considering in the present case. Where the intention is to make material inadmissible, express provision is made saying so, in the same way as it was in the statutes considered at para 8 above. Moreover, the proposed new scheme for destruction of biometric data is clearly founded on a view of individual rights which was considered to justify the consequence of inadmissibility if there is a duty to destroy the material. Such considerations do not apply to type approval for the machinery of taking fingerprints which there is no requirement to destroy. For these reasons it is clear that the correct conclusion is that Parliament did not intend, by enacting article 61(8B), that the consequence of an absence of approval should be to render inadmissible any fingerprints produced electronically. The decision of the Court of Appeal that the evidence of Elliots control fingerprints was admissible was correct. It follows that this appeal must be dismissed.
+On 9 September 2004 the appellant, Steven Allison, was convicted after trial in the High Court at Glasgow of four contraventions of section 4(3)(b) of the Misuse of Drugs Act 1971. In effect, he was found guilty of being concerned in the supplying of cocaine and three other controlled drugs at his home in Cumbernauld, at an address in Falkirk and elsewhere in the United Kingdom, between 12 November and 3 December 2003. The trial judge, Lord Bracadale, sentenced him to 8 years imprisonment. The appellant appealed against both his conviction and sentence. On 7 November 2008 the appeal court (Lord Osborne, Lady Paton and Lord Philip) refused his appeal against conviction, leaving his appeal against sentence to be heard on a date to be fixed. Among his grounds of appeal against conviction was one which was first advanced in an additional Note of Appeal. It relates to the record of a police interview of a John Stronach. Mr Stronach had died before the trial and the Crown introduced the interview into evidence in accordance with the procedure in section 259(5) of the Criminal Procedure (Scotland) Act 1995. Neither before nor during the trial did the Crown disclose to the defence that Mr Stronach had a number of previous convictions and outstanding charges. In particular, he had convictions for reset, theft by opening lockfast places, assault and robbery and assault and breach of the peace. He also had a number of outstanding charges, including two alleged contraventions of the Misuse of Drugs Act 1971, an alleged theft by housebreaking and several alleged contraventions of the Road Traffic Act 1988. One of the outstanding cases under the Misuse of Drugs Act related to events covered by the trial and was known to the appellants legal advisers. The Crown disclosed the previous convictions and the other outstanding charges only while the appellants appeal was pending before the appeal court. This prompted the appellant to lodge his additional ground of appeal: The failure on the part of the Crown to disclose to the defence the existence of all the previous convictions and outstanding charges resulted in the defence being unable to prepare and properly conduct their defence and the result was that the appellant did not receive a fair trial, as guaranteed by article 6(1) of the European Convention on Human Rights. Following the dismissal of his appeal by the appeal court, the appellant applied for leave to appeal to the Privy Council in relation to the additional ground of appeal. On 6 March 2009 the appeal court (Lord Osborne, Lady Paton and Lord Mackay of Drumadoon) refused the application as incompetent, on the ground that no intimation of a devolution issue had been given to the Advocate General as required by para 5 of Schedule 6 to the Scotland Act 1998. The court went on to indicate that, if it had been open to them to grant or refuse leave, they would not have granted leave. The appellant subsequently applied to the Privy Council for special leave to appeal. The Board granted special leave. Although the statement of facts and issues included an issue relating to the competency of the appeal courts decision to refuse leave, neither the advocate depute nor the Advocate General advanced any argument on the point at the hearing of the appeal. Undoubtedly, when the appeal court determined that the Lord Advocate was not under an obligation by virtue of article 6(1) of the European Convention to disclose the outstanding charges against Mr Stronach, they were in substance determining a devolution issue in terms of para 1(d) or (e) of Part I of Schedule 6 to the Scotland Act 1998 irrespective of whether all the relevant procedural steps had been followed. It follows, as was held in McDonald v HM Advocate 2008 SLT 993, 1002, paras 48 and 49, that an appeal on that point lies to this Court under para 13(a) of Part II of that Schedule. Of course, the late Mr Stronachs name was never included in the list of Crown witnesses appended to the indictment for the appellants trial which may help to explain why the need to disclose his criminal antecedents was overlooked. But, when dismissing the appellants appeal, the appeal court rightly accepted, under reference to Holland v HM Advocate 2005 1 SC (PC) 3, 24, para 72, that the failure by the Crown to disclose Mr Stronachs previous convictions had been incompatible with the appellants article 6(1) Convention rights. Despite the further conclusion of the Privy Council in Holland, at pp 24 25, paras 73 74, that the Crown were also under an obligation to disclose material outstanding charges of which they were aware, the appeal court in the present case drew a distinction between Mr Stronachs previous convictions and his outstanding cases at the time of the trial by which the court obviously meant the charges against him which had been outstanding at the time of his death. The court continued: We consider that, in this context, a distinction has to be made between previous convictions and outstanding cases. While, in appropriate circumstances, the existence of previous convictions may be of importance in connection with the preparation of a defence and to the challenge that may be mounted to the credibility of a witness, we do not consider that the same may be said of outstanding cases. Where an individual is charged with crime, he or she is presumed to be innocent until proved guilty. If a case is outstanding, necessarily no verdict has been reached in it. In these circumstances we have insuperable difficulty in understanding how information relating to those matters could be properly deployed in the conduct of a defence. Previous generations of Scots lawyers and judges do not appear to have experienced the same insuperable difficulty as the appeal court. It is, of course, trite that an individual charged with crime is presumed to be innocent until proved guilty. But that is not to say that he has to be treated in all respects as if he were an innocent person against whom no charge had been brought. Most obviously, in an appropriate case, he can be remanded in custody pending trial or granted bail subject to appropriate conditions. Similarly, depending on the offence and the terms of his contract of employment, he may be suspended from his employment. More generally, if you know that someone has been charged with, say, fraud, you will be less inclined to enter into a commercial transaction with him; if you know that someone has been charged with sexual abuse, you will think twice before entrusting your children to her care; if you know that someone has been charged with theft, you will be less inclined to trust anything which he tells you, unless it can be confirmed from other sources. The Privy Councils decision in Holland, that the Crown should disclose outstanding charges of Crown witnesses of which they were aware, simply reflected the common sense position that just as in everyday life judges or jurors who have to assess the credibility of a witness may properly take into account not only the fact that the witness has been convicted of various offences, but also the fact that he has been charged with others. To judge from the passage quoted in para 7 above, the appeal court seem to have thought that this was an unprincipled and incoherent innovation. It is noteworthy that they did not refer to any authority. In reality, the approach of the Privy Council, in so far as it proceeds on the basis that outstanding charges may have a bearing on a witnesss credibility, merely reflects what appears to have been recognised as the proper practice in Scottish courts for more than 170 years. At one time, in Scots law anyone convicted of serious crimes became technically infamous (infamis) and was thereafter unable to give evidence at any trial. By the early nineteenth century this rule was proving self defeating for the authorities: all too often it was a gift to the defence since it prevented the only material witnesses to crimes from giving evidence. So the rule was first relaxed and then eventually abolished. The only explicit authority relating to a witness with outstanding charges comes from that era. At a High Court trial at Dumfries, when leading a Crown witness, William Higgins, the advocate depute began by establishing that he was due to be tried at the same circuit on a charge of theft by housebreaking, aggravated by his having been previously convicted of theft and being a thief by habit and repute. See John Hannah and Hugh Higgins, 17 September 1836, Bells Notes, p 256, in the Supplement to Humes Commentaries on the Law of Scotland respecting Crimes (1844 edition), vol 2. Since the court ruled on the admissibility of the advocate deputes line of questioning, the defence must have objected that the Crown were, in effect, leading a witness who, if convicted of the crime in question at his trial later in the sitting, would then be unable to testify. The court rejected the argument and allowed the question. As the author of the Notes, Sheriff Bell, comments, The court, however, in allowing the question, must have thought it relevant to affect the credit of the witness. The potential relevance of outstanding charges to the credibility of a witness appears to have been settled in the nineteenth century. See, for instance, Dicksons Treatise on the Law of Evidence in Scotland (revised edition, 1887) vol 2, para 1619. Most significantly, Macdonalds Criminal Law of Scotland (3rd edition, 1894), p 462, says: Nor may [a witness] refuse to say whether he has been convicted of or stands indicted for a crime. This passage appears in virtually the same words in the fifth and final edition (1948), pp 297 298. The passage could never have stood unchallenged in successive editions of the traditional vademecum of Scottish criminal practitioners and judges if it had not reflected practice in the courts. Not surprisingly, therefore, neither the advocate depute nor the Advocate General supported the approach of the appeal court in the present case. In Holland v HM Advocate 2005 1 SC (PC) 3 the appellant was convicted of a charge of assault and robbery at a house in Rutherglen. The Crown failed to disclose that there were outstanding charges against the complainers, relating to drug dealing at the house in question. The Privy Council held, at p 25, para 75, that information about these charges would have helped to complete the picture both of the complainers and of their milieu. In other words, it would have had the potential to weaken the Crown case and so it should have been disclosed. In his written submissions in the present appeal, the advocate depute gave examples of other situations where an outstanding charge against a Crown witness might materially weaken the Crown case or strengthen the defence case: if the witness denied he had ever been in trouble with the police, an outstanding charge could legitimately be put to him; similarly an outstanding charge might provide a potential motive for the witness giving untrue information in an attempt to curry favour with the authorities. It is unnecessary to prolong the discussion since the Crown did not deny that the outstanding charges against Mr Stronach might have weakened the Crown case by casting doubt on his character or credibility. It follows that, in accordance with Holland v HM Advocate 2005 1 SC (PC) 3 and HM Advocate v Murtagh 2009 SLT 1060, the failure of the Crown to disclose the outstanding charges to the defence was indeed incompatible with the appellants article 6(1) Convention rights. At the hearing of the appeal, all this really went without saying and the only live issue was the actual significance, in the whole circumstances of the case, of the Crowns failure to disclose the charges. The appeal court did not consider that matter, but they did, of course, consider the effect of the Crowns failure to disclose his previous convictions. Having considered the circumstances, the appeal court were not persuaded that the failure of the Crown to disclose the previous convictions of Stronach to the appellants advisers resulted in an unfair trial and hence a miscarriage of justice. They accordingly rejected the appellants appeal, so far as based on the Crowns failure to disclose Mr Stronachs previous convictions. Standing that decision, at the hearing before this Court, Mr Jackson QC, who appeared for the appellant, had to argue that the failure to disclose Mr Stronachs outstanding charges made a significant difference. In other words, the Court should conclude that there would have been a real possibility of a different outcome if the jury had been made aware, not only of Mr Stronachs previous convictions, but of the outstanding charges against him: in that event, the jury might reasonably have come to a different view as to whether the appellant was concerned in the supplying of the various drugs during the relevant period. The case against the appellant was circumstantial. It comprised, for the most part, evidence of observations by police officers who had conducted a surveillance operation over several weeks. The evidence relating to Mr Stronachs statement concerned events of 24 November 2003. DS Duncan Smith was not otherwise involved in the relevant events. He gave evidence that, at about 12.45 pm on 24 November, when checking an address, he saw a blue Peugeot, registration number M810 UEW, parked at the appellants home at 58 Whitelees Road, Cumbernauld. At 9.32 pm Mr Stronach was seen driving the Peugeot to a service station at Kilmarnock where he met up with a Ford Orion. The two cars drove in convoy to Logan, near Cumnock. There, in the car park of the Logangate Arms, the driver of the Orion spoke to Mr Stronach who did not leave his car. Mr Stronach then drove up to Glasgow and on to the M8 where he was stopped by two police officers. A Farm Foods bag, found in the glove compartment of the Peugeot, contained cocaine worth at least 30,000. The police interviewed Mr Stronach on tape in the early hours of 25 November. This is the interview which is the subject of the additional ground of appeal. The tape recording of the entire interview was played to the jury during the evidence of DC McFadden. In the course of the interview Mr Stronach said that he had been sent by a man called Stevie from Abronhill to sell the car. The appellants first name is Steven and his home was in the Abronhill district of Cumbernauld. The description of Stevie given by Mr Stronach fitted the appellant. On 27 November the appellant left his home and drove to the house of Mr Stronachs girlfriend in Denny. He then took Mr Stronachs passport to Airdrie Sheriff Court where it was used in connexion with his application for bail. A receipt for the passport from the court dated 27 November was recovered from the appellants home. Defence counsel took DC McFadden through the transcript of the interview in detail and was able to show that Mr Stronach had told many lies. When he came to address the jury, the advocate depute accepted that he had clearly lied about his movements and about his involvement in drugs. But the advocate depute suggested to the jury that it would be easier to accept those parts of the interview which were supported by other acceptable evidence. In particular, he pointed to the evidence of DS Smith, who was not otherwise involved in the investigation, that the Peugeot which Mr Stronach was driving when stopped by the police had been parked outside the appellants house earlier the same day. The advocate depute also referred to the evidence about the appellant collecting Mr Stronachs passport from his girlfriends house and taking it to Airdrie Sheriff Court in connexion with his application for bail on the drugs charges arising out of the recovery of the cocaine from the Peugeot. The advocate depute argued that it would be a spectacular coincidence if this did not indicate that the appellant knew of Mr Stronachs involvement with drugs. summarised the position in this way: In his supplementary report to the appeal court, Lord Bracadale, Taking into account the analysis of the interview of Mr Stronach carried out by [defence counsel] and the concessions made as to his credibility by the advocate depute, the jury would have been most likely to conclude that Mr Stronach did indeed tell many lies in the course of the interview. They would, however, have been entitled to be selective in their view of the evidence of Mr Stronach. Lord Bracadale then referred to Mr Stronachs previous convictions and added: In the circumstances outlined above it is difficult to see how the canvassing of the previous convictions of Mr Stronach before the jury would have bolstered the already largely successful attack on his credibility. It is also difficult to see why knowledge of the previous convictions would have discouraged the jury from being selective in the approach to the contents of the interview of Mr Stronach. Against that background, the appeal court were not persuaded that the failure of the Crown to disclose Mr Stronachs previous convictions resulted in an unfair trial and hence a miscarriage of justice. For exactly the same reasons, I am not persuaded that, if defence counsel had been able to deploy Mr Stronachs outstanding charges as well as his previous convictions, this would have made any material difference. More especially, it would not have affected the fact that the jury, who must have been well aware of the defects in Mr Stronachs statements, could still, with equal plausibility, have accepted those elements, and only those elements, in Mr Stronachs account which were corroborated by other acceptable evidence. I am accordingly satisfied that there is no real possibility that the jury would have come to a different verdict on the four charges against the appellant if they had been made aware, not only of Mr Stronachs previous convictions, but of the outstanding charges against him as well. There has therefore been no miscarriage of justice. I would accordingly dismiss Mr Allisons appeal and remit the case to the appeal court to proceed as accords. LORD HOPE make the same order as he proposes. The point of principle which this case raises is whether a failure to disclose outstanding charges against a Crown witness is incompatible with the accuseds article 6(1) Convention rights. Had it not been for the passage in the opinion of the appeal court which Lord Rodger has quoted in para 7 of his judgment, I would not have thought that there was now any room for dispute on the point. In McDonald v HM Advocate [2008] UKPC 46. 2008 SLT 993, para 51 Lord Rodger said that the decisions of the Board in Holland v HM Advocate [2005] UKPC D 1, 2005 SC (PC) 3 and Sinclair v HM Advocate [2005] UKPC D 2, 2005 SC (PC) 28 had answered this question. Included within the general description of disclosable material are two classes of material, namely police statements of any witnesses on the Crown list and the previous convictions and outstanding charges relating to those witnesses. I agree with Lord Rodger that the appeal must be dismissed, and I would The rule of law on which that classification is based is that of fairness. In McLeod v HM Advocate (No 2) 1998 JC 67, Lord Justice General Rodger said that our system of criminal procedure proceeds on the basis that the Crown have a duty at any time to disclose to the defence information which would tend to exculpate the accused. In Sinclair v HM Advocate, para 33 I said that the prosecution is under a duty to disclose to the defence all material evidence in its possession for or against the accused, and that for this purpose any evidence which would tend to undermine the prosecution case or to assist the case for the defence is to be taken as material. Sometimes the proposition is worded differently. In HM Advocate v McDonald [2008] UKPC 46, 2008 SLT 993, para 50 Lord Rodger said: Put shortly, the Crown must disclose any statement of other material of which it is aware and which either materially weakens the Crown case or materially strengthens the defence case (disclosable material) Lord Bingham of Cornhill used the same formula when describing the golden rule in R v H and others [2004] UKHL 3, [2004] 2 AC 134, para 14 when he said: Fairness ordinarily requires that any material held by the prosecution which weakens its case or strengthens that of the defendant, if not relied on as part of its formal case against the defendant, should be disclosed to the defence. In HM Advocate v Murtagh [2009] UKPC 36, 2009 SLT 1060, para 11, I said, under reference to McLeod, Holland, Sinclair and McDonald, that it was well settled that the Crown must disclose any statements or other material of which it is aware which either materially weakens the Crown case or materially strengthens the case for the defence: see also Lord Rodger, para 48. These formulations should however be regarded as expressing what has been described as the golden rule in shorthand. After all, they are describing a decision about disclosure which must normally be taken before the trial. It is a decision which will be based on an assumption as to what may happen in the future. So the question the Crown must ask itself is what the possible effect would be likely to be if the material were to be disclosed. As I said in R v Brown (Winston) [1998] AC 367, 374, it would be contrary to the principle of fairness for the prosecution to withhold from the defendant material which might undermine their case against him or which might assist his defence. Lord Collins, referring to what I said in that case, also used the word might" in Murtagh, para 75. That is the way Lord Rodger has expressed the position that the Crown has adopted in this case in para 14, above, and I respectfully agree with it. As for the point that troubled the appeal court, it is true that a distinction can be drawn between previous convictions and outstanding charges. But that does not mean that it can be assumed that information about outstanding charges of Crown witnesses can never affect their credibility. It is enough, for the disclosure rule to apply to them as a class, that they might do so. Of course the person concerned is presumed to be innocent until proved guilty. But if he is asked the question whether he has ever been in trouble with the police, he must answer it. A false or evasive answer might well be thought by a jury to undermine his credibility. Other circumstances may be envisaged where the fact that charges have been brought against the witness may have that effect. The application of the rule to outstanding charges, as the Crown accepts, is really just based on common sense and every day experience. No one should now be in any doubt that the disclosure rule applies to them, or as to the reasons why this is so. LORD WALKER that he gives I would dismiss this appeal. I am in full agreement with the judgment of Lord Rodger. For the reasons I agree with the judgment of Lord Rodger and, for the reasons that he gives, I agree with the judgment of Lord Rodger and, for the reasons that he gives, LORD BROWN I too would dismiss this appeal. LORD KERR I too would dismiss this appeal.
+This is a case concerning the application of EU rules regarding food hygiene in relation to meat and poultry to certain chicken and pork products manufactured by the appellant, Newby Foods Ltd (Newby). Newby contends that these products should not be classified as mechanically separated meat (MSM) within point 1.14 of Annex I to EU regulation no (EC) 853/2004 of the European Parliament and of the Council laying down specific hygiene rules for food of animal origin (the Regulation). Factual and procedural background Nowadays the butchering of animal carcases in the food industry across the EU is carried out in many instances not by traditional hand butchering but by machines. These can do the job more economically, but they are less accurate than skilled human butchers. The machines often leave a significant amount of meat on the bone. For chickens, breast meat is usually removed by a somewhat different mechanical process, described below, leaving other meat on the carcase. With a view to making use of this residual meat on animal and poultry carcases, in the 1970s machines were developed that would crush the carcase bones and residual meat together under high pressure to produce, after filtering, what looks like a pure. The product of this high pressure process is one form of MSM for the purposes of the Regulation (high pressure MSM). Use of high pressure MSM for the production of food is subject to specific hygiene requirements set out in paragraph 4 of Chapter III of Section V of Annex III to the Regulation. Other processes have been developed to remove residual meat from the carcase bones under lower pressure, leaving the bones intact. The product of such low pressure processes is another form of MSM for the purposes of the Regulation (low pressure MSM). Use of this kind of MSM for the production of food is subject to different hygiene requirements, as set out in paragraph 3 of Chapter III of Section V of Annex III to the Regulation. The requirements in paragraph 3 apply to the production and use of MSM produced using techniques that do not alter the structure of the bones used in the production of MSM and the calcium content of which is not significantly higher than that of minced meat. Newby has developed a machine to remove residual meat from carcase bones. This has been used by Newby to process residual meat on beef, lamb and pork bones after the initial boning of the animal carcases (that is, after the mechanical butchery to remove the main meat from those animal carcases has taken place) and on chicken carcases after the breasts have first been removed by other mechanical processes. The Newby process has two stages. In the first stage, meat bearing bones are forced into contact with each other so that meat is removed from the bones by shearing forces. In a second stage the meat removed in this way is then passed through another machine, which is effectively a mincer, producing a product which looks like minced meat. This meat product was previously known in the United Kingdom as desinewed meat (DSM), and was regarded by many, including at one stage the Food Standards Agency (FSA), as distinct from MSM. DSM is not a category of product recognised in EU law. Under EU law important consequences flow from the classification of different products derived from meat. In particular, MSM cannot be counted towards the meat content of food and must be produced under stricter hygiene conditions, as laid down in Annex III to the Regulation. Special rules apply to the labelling of MSM under Directive 2000/13/EC of the European Parliament and of the Council of 20 March 2000 on the approximation of the laws of the member states relating to the labelling, presentation and advertising of foodstuffs (as amended by Commission Directive 2001/101/EC of 26 November 2001) (the Labelling Directive). Furthermore, the sale of MSM produced from lamb and beef bones is prohibited entirely in order to minimise the risk of the spread of Transmissible Spongiform Encephalopathies (TSE), by virtue of regulation (EC) 999/2001 of the European Parliament and of the Council of 22 May 2001 laying down rules for the prevention, control and eradication of certain transmissible encephalopathies (as amended by Commission regulation (EC) 722/2007 of 25 June 2007) (the TSE Regulation). The commercial value of MSM is less than other forms of fresh meat products, including minced meat. The issue before the court is how DSM produced using the Newby process should be classified within the scheme of this EU legislation, and in particular under the Regulation. The European Commission (the Commission) maintains that DSM should be classified as MSM. It criticised the stance originally taken by the FSA that DSM products should not be classified as MSM and threatened to take action against the United Kingdom if DSM continued to be produced and sold without regard to the restrictions imposed upon MSM. This action could have involved safeguard measures restricting the export of UK meat products to the rest of the EU. Notwithstanding the fact that it disagreed with the Commissions classification of DSM as MSM, on 4 April 2012 the FSA issued a moratorium to reflect the Commissions view regarding the effect of the relevant EU legislation (the moratorium). The moratorium had the result that DSM could no longer be produced from residual meat on beef and lamb bones and could only be produced from residual meat on chicken and pork bones if it were classified and labelled as MSM and not counted towards the meat content of products in which it was present. Newby brought judicial review proceedings challenging the moratorium, contending that it was based upon an error of law as to the definition of MSM in point 1.14 of Annex I to the Regulation (point 1.14). On 16 July 2013 Edwards Stuart J made a preliminary reference to the Court of Justice of the European Union (CJEU). He gave an extended judgment to explain the background to the case: [2013] EWHC 1966 (Admin) (the reference judgment). (Case C 453/13) judgment dated 16 October 2014 its ECLI:EU:C:2014:2297 (the CJEU judgment), the Tenth Chamber (Judges A Rosas, E Juhsz and D vby (Rapporteur)) of the CJEU made a ruling in the following terms: In Points 1.14 and 1.15 of Annex I to regulation (EC) no 853/2004 of the European Parliament and of the Council of 29 April 2004 laying down specific hygiene rules for food of animal origin must be interpreted as meaning that the product obtained by the mechanical removal of meat from flesh bearing bones after boning or from poultry carcases must be classified as mechanically separated meat within the meaning of that point 1.14, since the process used results in a loss or modification of the muscle fibre structure which is greater than that which is strictly confined to the cutting point, irrespective of the fact that the technique used does not alter the structure of the bones used. Such a product cannot be classified as a meat preparation within the meaning of that point 1.15. After this ruling, Newby abandoned its challenge to the moratorium so far as concerned the prohibition against producing DSM from residual meat on lamb and beef carcases. It is relevant to note here that sheep and cows are ruminant animals, which is a significant category for the purposes of the TSE Regulation: see below. However, Newby continued its challenge to the moratorium as regards the requirement that DSM produced from residual meat on pork and chicken carcases should be treated as MSM and labelled as such. In the resumed proceedings before the national court, Newby filed further evidence in support of its case that the pork and chicken DSM it produces should not be categorised as MSM. In a judgment of 23 March 2016 [2016] EWHC 408 (Admin) (the main judgment) Edwards Stuart J concluded that the pork and chicken meat products resulting from the first stage of the Newby process are not MSM. On this view, under the EU legislation pork and chicken DSM could be counted towards the meat content of a product, did not have to be labelled as MSM and was not subject to the special hygiene regime in paragraph 3 of Chapter III of Section V of Annex III to the Regulation. The judge also found that such DSM was not a product derived from bone scrapings, which is another category of meat product under the EU legislation. The judge granted the FSA permission to appeal to the Court of Appeal on limited grounds. On the appeal, the FSA submitted that in the main judgment the judge had erred in departing from what the FSA argued was the clear ruling in the CJEU judgment that the pork and chicken products of Newbys process are, like the lamb and beef products of that process, properly to be classified as MSM within the meaning of point 1.14. The Court of Appeal [2017] EWCA Civ 400 allowed the appeal and dismissed the challenge to the moratorium. The Court of Appeal also found that Edwards Stuart J had been entitled to find that pork and chicken DSM is not a product derived from bone scrapings for the purposes of the EU legislation. Newby now appeals to this court in relation to the decision of the Court of Appeal regarding the proper interpretation of point 1.14. Regulation no 853/2004 The recitals to the Regulation include the following: Whereas: (2) Certain foodstuffs may present specific hazards to human health, requiring the setting of specific hygiene rules. This is particularly the case for food of animal origin, in which microbiological and chemical hazards have frequently been reported. (9) The principal objectives of the recasting are to secure a high level of consumer protection with regard to food safety, in particular by making food business operators throughout the Article 2(3) of the Regulation provides that the definitions in Annex I to the Regulation shall apply. Paragraph 1 of Annex I is headed Meat and sets out various definitions relevant to that topic, including as follows: Community subject to the same rules, and to ensure the proper functioning of the internal market in products of animal origin, thus contributing to the achievement of the objectives of the common agricultural policy. (20) The definition of mechanically separated meat (MSM) should be a generic one covering all methods of mechanical separation. Rapid technological developments in this area mean that a flexible definition is appropriate. The technical requirements for MSM should differ, however, depending on a risk assessment of the product resulting from different methods. 1.1 Meat means edible parts of the animals referred to in points 1.2 to 1.8, including blood. [cows, sheep and pigs fall within the scope of point 1.2 and farmed chickens are poultry within the scope of point 1.3] 1.9 and dressing. 1.10 Fresh meat means meat that has not undergone any preserving process other than chilling, freezing or quick freezing, including meat that is vacuum wrapped or wrapped in a controlled atmosphere. Carcase means the body of an animal after slaughter 1.13 Minced meat means boned meat that has been minced into fragments and contains less than 1% salt. 1.14 Mechanically separated meat or MSM means the product obtained by removing meat from flesh bearing bones after boning or from poultry carcases, using mechanical means resulting in the loss or modification of the muscle fibre structure. 1.15 Meat preparations means fresh meat, including meat that has been reduced to fragments, which has had foodstuffs, seasonings or additives added to it or which has undergone processes insufficient to modify the internal muscle fibre structure of the meat and thus to eliminate the characteristics of fresh meat. In the EU legislation, no definition is given of boning in relation to cow, pig and sheep carcases. It is common ground that this term refers to the initial process of removal of meat from a carcase. As regards the carcases of cows, pigs and sheep, the definition of MSM in point 1.14 refers to removal of the meat left on the bones of those animals after the initial phase of butchering has taken place (typically, as described above, this initial butchering is by mechanical means): ie what I have called the residual meat. As regards the carcases of poultry, the definition of MSM in point 1.14 simply refers to removal of meat from those carcases (ie from the whole body of the bird: see point 1.9), without referring to any previous process of boning or removal of meat from the bird. The reference judgment In his judgment accompanying the reference to the CJEU, Edwards Stuart J set out relevant findings and expressed his provisional conclusions. He emphasised that the DSM produced by Newbys process was very different in texture and appearance from high pressure MSM, which is nothing like fresh meat. However, he was satisfied that the muscle fibre structure of that DSM underwent some modification during the process. Accordingly, therefore, as he put it, if it is sufficient for it to be classified as MSM that there has been any modification of the muscle fibre structure, then it is MSM (para 60, emphasis in original). The position of the FSA, reflecting the view of the Commission, was that any such modification was sufficient to mean that the residual meat removed by the Newby process is MSM. The submission of Newby was that something more, in the form of significant modification of the muscle fibre structure of the meat so removed, was required before the product of that process fell to be classified as MSM. Newby relied on analysis by microscopy by experts to maintain that the modification of muscle fibre in the residual meat removed by stage one of its process was not at a significant level such that it became MSM, and submitted that stage two of the process was simply equivalent to mincing of the meat so recovered. The judge referred, at para 61, to the wording of point 1.15 of Annex I to the Regulation. In his view the words and thus to in that provision indicated that there had to be a causal link between the loss or modification of the muscle fibre structure and the elimination of the characteristics of fresh meat. Furthermore, he did not consider that this wording could be construed to mean that any diminution, however minor, of those characteristics amounts to elimination of those characteristics. It seemed to the judge that there had to be at least a significant diminution in those characteristics before they could be said to be eliminated. He considered that in this context the relevant characteristics of fresh meat are its organoleptic properties including its taste, smell and texture. The judge also referred, at paras 62 63, to an alleged inconsistency in the approach to the application of the Regulation by the Commission and by the FSA in its moratorium, as regards the treatment of chicken breasts removed from poultry carcases. According to Newbys submission, as recorded by the judge, chicken breasts are commonly removed from the carcass by mechanical means and this inevitably causes some modification of the muscle fibre structure at the point where the meat is cut, which on the approach of the Commission and the FSA to point 1.14 would appear to mean that meat removed by that process would fall within the definition of MSM; yet according to the position of the Commission in its dealings with national authorities, chicken breast meat produced in this way was properly to be categorised as fresh meat for the purposes of the Regulation, and not as MSM. Newby cited this as an example of the absurd consequences that it maintained would follow if any damage to the muscle fibre structure were to lead to the meat product in question being classified as MSM. In the alternative, Newby submitted that it demonstrated an inconsistency of the application of the Regulation. The judge stated, at para 64, that he was satisfied on the evidence before him that the product of Newbys two stage process had not resulted in the elimination of the characteristics of fresh meat. Furthermore, he did not consider that there had been a sufficient diminution of those characteristics to prevent the product falling within the definition of meat preparations in point 1.15 of Annex I. Accordingly, the judges provisional conclusion was that the DSM produced by Newbys process did not fall to be classified as MSM. However, the position was not acte clair, so the judge made a preliminary reference to the CJEU, asking the following questions: i) Do the words loss or modification of the muscle fibre structure in point 1.14 of Annex I to regulation no 853/2004 mean any loss or modification of the muscle fibre structure that is visible using standard techniques of microscopy? ii) Can a meat product be classified as a meat preparation within point 1.15 of Annex I where there has been some loss or modification of its muscle fibre structure that is visible using standard techniques of microscopy? iii) If the answer to [the first question] is no and the answer to [the second question] is yes, is the degree of loss or modification of the muscle fibre structure that is sufficient to require each product to be classified as MSM within point 1.14 of Annex I the same as that required to eliminate the characteristics of fresh meat within point 1.15 of that annex? iv) To what extent must the characteristics of fresh meat have been diminished before they can be said to have been eliminated within the meaning of point 1.15? v) If the answer to [the first question] is no, but the answer to [the third question] is also no, what degree of modification to the muscle fibre structure is required in order for the product in question to be classified as MSM? vi) On the same assumption, what criteria should be used by national courts in determining whether or not the muscle fibre structure of the meat has been modified by that degree? The CJEU judgment The CJEU proceeded to a judgment without the benefit of an Advocate Generals opinion or, despite an application by Newby, an oral hearing. It delivered its judgment on 16 October 2014. The CJEU set out the following factual account, which is not controversial: 21. The referring court states that Newby Foods has developed a machine which is capable of removing the residual meat attached to the bones after the main part of the meat had been removed from them, without crushing those bones or liquefying the residual tissues. That machine, which operates essentially by means of shearing, can be distinguished from those operating at high pressure, which turn the residual tissues into a viscous paste. The resulting product, which, at the end of the first production stage, passes through a perforated plate with 10mm diameter apertures, is then processed in another machine which minces it by making it pass through a filter with 3mm diameter apertures. This product, which looks like ordinary minced meat, is marketed in the United Kingdom as desinewed meat. As regards its appearance, that product is clearly distinguishable from mechanically separated meat obtained at high pressure. According to the applicant in the main proceedings, no one would classify the product obtained by means of its machine as anything other than meat. 22. Also according to the applicant in the main proceedings, the desinewed meat which it produces contains only very rarely particles of bones, bone skin or bone marrow; however, the presence of occasional shards of bone cannot be excluded. In the proceedings before the CJEU, Newby was supported by the United Kingdom government (presenting the view of the FSA) in its submissions against the view of the Commission regarding the proper interpretation of point 1.14. The CJEU summarised the key submission of Newby, as supported by the FSA, at para 23 as follows: According to the applicant in the main proceedings and the FSA, by reference to the documents mentioned in paras 18 and 19 of the present judgment, the product obtained by means of that process does not correspond to the definition of mechanically separated meat within the meaning of regulation no 853/2004, in the absence of significant loss or modification of the muscle fibre structure, that is to say, in the absence of a change which is sufficient to eliminate the characteristics of fresh meat. That product should rather be classified as meat preparations within the meaning of point 1.15 of Annex I to that regulation. The CJEU reformulated the questions referred, at para 40: By its questions, which it is appropriate to examine together, the referring court is essentially asking whether points 1.14 and The CJEU addressed the reformulated questions in the following way at paras 41 to 43: 1.15 of Annex I to regulation no 853/2004, which contain the definitions of the concepts of mechanically separated meat and meat preparations respectively, must be interpreted as meaning that the product obtained by the mechanical removal of meat from flesh bearing bones after boning or from poultry carcases must be classified as mechanically separated meat within the meaning of that point 1.14 only where the process used results in a loss or modification of the muscle fibre structure which is significant, while the classification as meat preparations within the meaning of point 1.15 must be chosen where that loss or modification is not significant. Secondarily, in the event that that interpretation should prevail, the referring court seeks to ascertain what degree of modification or loss is required for that modification or loss to have to be regarded as significant and what process should be used in order to determine whether the degree thus required has been attained. 41. It must be stated at the outset that the definition of the concept of mechanically separated meat set out in point 1.14 of Annex I to regulation no 853/2004 is based on three cumulative criteria which must be read in conjunction with one another, namely (i) the use of bones from which the intact muscles have already been detached, or of poultry carcases, to which meat remains attached, (ii) the use of methods of mechanical separation to recover that meat, and (iii) the loss or modification of the muscle fibre structure of the meat thus recovered by reason of the use of those processes. In particular, that definition does not make any distinction as regards the degree of loss or modification of the muscle fibre structure, with the result that any loss or modification of that structure is taken into consideration within the context of that definition. 42. Consequently, any meat product which satisfies those three criteria must be classified as mechanically separated meat, irrespective of the degree of loss or modification of the muscle fibre structure, in so far as, by reason of the process used, that loss or modification is greater than that which is strictly confined to the cutting point. 43. In the case of use of mechanical processes, that third criterion allows mechanically separated meat within the meaning of point 1.14 of Annex I to regulation no 853/2004 to be distinguished from the product obtained by cutting intact muscles; the latter product does not show a more general loss or modification of the muscle fibre structure, but reveals a loss or modification of the muscle fibre structure which is strictly confined to the cutting point. Consequently, chicken breasts which are detached from the carcase of the animal by mechanically operated cutting rightly do not constitute mechanically separated meat. At paras 44 to 48 the CJEU stated that, as regards the products which meet the criteria for MSM, the Regulation did not make any distinction other than that stemming from paragraphs 3 and 4 of Chapter III of Section V of Annex III to the Regulation, which drew the distinction between low pressure MSM and high pressure MSM referred to above. At para 46, referring to low pressure MSM, the CJEU said: This type of product, which corresponds to mechanically separated meat obtained at low pressure, like the product at issue in the main proceedings, may, by way of exception, be used in certain meat preparations within the meaning of point 1.15 of Annex I to regulation no 853/2004, namely those intended to undergo heat treatment prior to consumption, whereas, in accordance with the definition given in point 1.15, meat preparations may in principle be obtained only from fresh meat, possibly minced into fragments that is to say, meat deriving from intact muscles to the exclusion of bone scrapings. The same type of product may also be used in all of the meat products within the meaning of point 7.1 of that annex. Having referred, by way of contrast, to high pressure MSM at para 47, the CJEU stated at para 48 that the distinction between different types of MSM made in paragraphs 3 and 4 of Chapter III of Section V of Annex III was reflected in the definition of MSM in point 1.14, with the word modification being intended to refer to MSM produced by use of methods of mechanical separation operating at low pressure. The CJEU went on: 49. That scheme, which consists in the arrangement of all mechanically separated meat into a single category subdivided into two subcategories of products which present different health risks and may consequently be intended for different uses, is explained in recital 20 in the preamble to regulation no 853/2004, which was also inserted at the same stage of the drafting of that Regulation. That recital announces, for that category of products, (i) a generic definition stated in flexible terms in such a way as to cover all methods of mechanical separation and to remain appropriate notwithstanding the rapid technological developments in that area, and (ii) technical requirements which differ depending on a risk assessment of the product resulting from different methods. 50. That recital, which clarifies perfectly the EU legislatures intentions, adequately demonstrates that the EU legislature took into consideration from the outset the possibility that new low pressure methods for the production of mechanically separated meat might be developed, such as, as the case may be, that used by the applicant in the main proceedings, assuming that that process demonstrates some innovation vis vis methods using techniques which do not alter the structure of the bones used, of which the EU legislature was aware at the time when regulation no 853/2004 was drafted. At paras 51 to 54 of its judgment the CJEU compared and contrasted the definition of MSM in point 1.14 and meat preparation in point 1.15 of Annex I to the Regulation. At para 52 it said that classification as meat preparations within point 1.15 of products which, like that at issue in the main proceedings, satisfy the criteria for [MSM] is excluded by the definition there set out. At para 53 it noted that the production of MSM involved neither of the processes referred to in point 1.15, namely the addition of foodstuffs, seasoning or additives or processing within the meaning of article 2(1)(m) of regulation no 852/2004; it stated that: on the contrary, a product such as that at issue in the main proceedings corresponds to the notion of an unprocessed product within the meaning of article 2(1)(n) of that Regulation. The CJEU further noted that the concept of meat preparations has a direct link not with MSM but, rather, with the concepts of fresh meat and minced meat which are, in principle, the only usable raw material, and secondly, with the concept of meat products within point 7.1 of Annex I to the Regulation. It then stated: 55. In addition, as the French Government suggests, a classification of products, such as that at issue in the main proceedings, as fresh meat within the meaning of point 1.10 of Annex I to regulation no 853/2004 is also excluded. Disregarding their other characteristics, such products consisting in fragmented meat would be capable of coming only within the concept of minced meat within the meaning of point 1.13 of that annex, a concept from which they must, however, be excluded by reason of point 1(c)(iv) of Chapter II of Section V of Annex III to that Regulation as products obtained from bone scrapings. At paras 56 and following the CJEU pointed out, further, that a classification of products as MSM had significant consequences with reference to the TSE Regulation and the Labelling Directive. As regards the TSE Regulation, at paras 57 to 59 the CJEU noted that according to that Regulation an industrial method which produces MSM within the meaning of point 1.14 cannot be used for the processing of bovine, ovine and caprine raw material; that Contrary to the view advanced in this regard by the applicant in the main proceedings, the application of that classification [ie as MSM] to products such as that at issue in the main proceedings in order to conclude that their production from raw material obtained from ruminants is prohibited follows from the implementation of the intention expressed in clear terms by the EU legislature within the context of the measures adopted with a view to combatting those diseases (para 58); that it is apparent from recital 11b to the TSE Regulation that the EU legislature had particularly in mind the fact that MSM could contain portions of bones and of the periosteum; and that it followed from the reference judgment that the same applies in the case of a product such as that produced by [Newby] (para 59). As regards the Labelling Directive, at paras 60 to 66 the CJEU noted that in accordance with Annex I to that directive the classification of a product as MSM within the meaning of point 1.14 implies a prohibition on labelling the product as meat rather than as MSM; an important objective of that directive is to ensure that labelling should not be such as could mislead a purchaser; the provisions of that directive and recitals 1 and 7 to Directive 2001/101 indicate that MSM, which differs significantly from meat as perceived by consumers, must be excluded from the scope of that concept for the purposes of labelling and presentation; those recitals express the findings that although MSM is technically fit for human consumption in so far as it is not obtained from ruminants, it is none the less a product of inferior quality because it consists of residual meat, fat and connective tissue which remain attached to the bones after the main part of the meat has been removed (para 63); and that to interpret the EU legislation so as to allow a product such as [Newby] produces, having an appearance comparable to minced meat, such that it could not easily be differentiated by consumers from minced meat derived from better quality meat, would defeat this intended objective of the Labelling Directive and another of its objectives, namely to prevent differences in the labelling of foodstuffs which might impede the free circulation of those products and lead to unequal conditions of competition. The CJEU expressed its conclusion at para 67 in terms reflected in the dispositif set out at para 9 above. The main judgment in the national court As set out above, when the case returned to the national court for further hearing, Newby dropped its challenge to the moratorium in so far as it covered the products of its process as applied to lamb and beef carcases. Newby maintained its challenge to the moratorium as regards its application to its process as applied to pork and chicken carcases. The further hearing took place on 9 and 10 February 2016. Newby filed additional evidence for this hearing. According to the evidence before the judge, the Newby process was applied to pork meat left on bones after the initial stage of butchery of the carcase (ie after the de boning phase) and to chicken meat left on chicken carcases after an initial stage of removal of the chicken breasts by a different mechanical process, involving scraping the chicken breasts cleanly from the breast bone. The further evidence about treatment of chicken carcases also indicated that before chicken breasts were removed in this way, the wishbone would be cut out of the meat. There was some evidence to suggest that certain methods of butchering pork carcases might leave some fully intact muscles in place after the initial phase of cutting meat from the carcase. In his main judgment, handed down on 23 March 2016, Edwards Stuart J correctly observed that it was clear from the judgment of the CJEU that it considered that the product of the first stage of Newbys process should be classified as MSM. However, Newby submitted that in the light of the CJEUs interpretation of point 1.14 this was not an available conclusion on the facts, and that it was for the national court to establish the facts and apply the guidance given by the CJEU to those facts. The judge rejected a submission on behalf of Newby that since what is fed into Newbys machine consists of bones with a fairly substantial amount of meat attached it does not consist of bones from which the intact muscles have been detached and accordingly did not satisfy the first criterion for MSM formulated by the CJEU at para 41 of its judgment. The judge observed that if this submission were correct even a high pressure process of crushing the meat and bones to a slurry would not be capable of producing MSM. Newby now accepts that the judge was right about this and that the first criterion for MSM set out by the CJEU is satisfied in relation to the products of its process. It was and is common ground that the second criterion for MSM, namely the use of mechanical separation to recover the residual meat left on the bones or poultry carcases, is satisfied in relation to the products of Newbys process. There is an extended discussion in the main judgment at paras 66 to 85 regarding the third criterion for MSM set out in para 41 of the judgment of the CJEU and the discussion at paras 42 and 43 concerning the cutting point. The judge correctly recognised that the CJEU in its judgment had interpreted the EU legislation with a view to achieving clarity in the application of point 1.14 rather than making it depend on case by case assessment by microscopic examination of muscle fibres, but said that by introducing the cutting point explanation in doing so, it may have thrown the baby out with the bath water. The CJEU had provided no elaboration of what was meant by the cutting point in the context of Newbys process. Cutting in this context must mean severance or separation (at para 66). The judge identified two principal possible readings of what the CJEU meant by cutting point: (i) on a narrower reading, it refers to the cutting of intact muscles, or (ii) on a more expansive reading, it refers to the points at which the meat has been severed or separated during the process of recovering it. The FSA, in line with the position of the Commission, submitted that the narrower reading at (i) is correct, and that since the meat recovered by the Newby process was taken after the original cutting of intact muscles during the initial de boning phase (in relation to pork) or after the initial phase of removal of chicken breasts in the case of chicken carcases, it followed that this recovered meat should be categorised as MSM. Newby, on the other hand, submitted that the more expansive reading at (ii) is correct; that microscopic examination of the strips of meat produced after the first stage of its process showed that the muscle fibre structure was only affected at the points where they had been removed from the bones or separated from other pieces of meat in the initial phase of removal of meat from a carcase or in the shearing involved in Newbys process; that therefore modification of the muscle fibre structure was strictly confined to the cutting points as so understood; and that accordingly this recovered meat did not meet the third criterion for MSM as laid down by the CJEU at para 41 of its judgment, as explained at paras 42 and 43. As the domestic court had further and better evidence regarding the state of the meat strips produced in the first stage of the Newby process than had been available to the CJEU, the domestic court should interpret the CJEUs judgment and apply it to the facts as appeared from that evidence. The judge accepted the submission by Newby, holding that the expansive reading of the notion of the cutting edge at (ii) above is correct. According to him, the cutting point of the muscle fibre produced by the first stage of the Newby process refers to every severed edge of the pieces of flesh that emerge from that process: para 85. Since, on the evidence before him, it was only at the cutting points in this sense that there was modification of the muscle fibre structure of the strips of meat produced at the first stage of the Newby process, this meat did not fall to be categorised as MSM. This appeared to mean that the product of this stage of the Newby process could be used in the second stage of that process to prepare what could be classified under the Regulation as minced meat and labelled and sold as such, although the judge expressed no final positive view to that effect: see paras 86 94. In the course of his discussion the judge found on the evidence that the product of the first stage of the Newby process could not be regarded as bone scrapings, contrary to the view of the CJEU at para 55 of its judgment. In due course, the Court of Appeal held that this was a legitimate finding which was open to him to make, and there is no cross appeal to this court regarding this point. In reaching his view regarding the interpretation of the notion of the cutting point, as used by the CJEU, the judge accepted the submission of Mr Mercer that he should have regard to article 11 of the Treaty on the Functioning of the European Union (TFEU). Article 11 TFEU provides that environmental protection requirements must be integrated into the definition and implementation of the EUs policies and activities, in particular with a view to promoting sustainable development. The judge agreed that he should interpret point 1.14 and paras 41 and 42 of the CJEUs judgment in a manner which promotes environmental protection rather than undermines it. According to the judge, on Newbys proposed interpretation of the CJEUs judgment there would be less wastage of meat suitable for human consumption and so fewer pigs would have to be raised and slaughtered. The judge also referred to the further evidence regarding removal of wishbones before chicken breasts were scraped from chicken carcases by mechanical processes, which Mr Mercer submitted meant that chicken breasts were not intact muscles at the point they were removed from chicken carcases: para 76. The judge said that he was not in a position to find whether or not Mr Mercers assertions about the process of removal of the wishbone were correct, but observed that it would be an absurdity if the prior removal of the wishbone section of the breast condemned the remainder of the breast to being classed as MSM, which would be avoided on his preferred reading of what the CJEU meant by the cutting edge: para 77. The judge did not make further mention here of the fact that, as noted by him in the reference judgment, the Commission took the view that mechanically removed chicken breasts do not fall to be categorised as MSM, but as fresh meat. As appears from correspondence in evidence, that does in fact continue to be the Commissions view. The judgment of the Court of Appeal The Court of Appeal allowed the appeal by the FSA in relation to the question whether the product of the first stage of Newbys process should be categorised as MSM. The court held that the judgment of the CJEU made it clear that it should be so categorised. The court therefore dismissed Newbys judicial review challenge to the moratorium, as it applied in relation to the application of its process to produce pork and chicken meat. The lead judgment was delivered by Lloyd Jones LJ (as he then was), with whom Beatson and Moylan LJJ agreed. Lloyd Jones LJ subjected paras 41 to 43 of the judgment of the CJEU to careful analysis. At para 41 the CJEU had given a clear answer adverse to Newbys principal submission on the reference. In his view, the qualification to the category of MSM as defined in point 1.14 introduced by the CJEU in paras 42 and 43 of its judgment by reference to the notion of the cutting point was directed to answering the argument of Newby that the mechanical removal of chicken breasts from a chicken carcase would necessarily involve a loss or modification of muscle fibre structure at the point where the breast was cut away with the result that, on the Commissions interpretation of point 1.14, all mechanically separated chicken breasts would have to be classified as MSM. On Lloyd Jones LJs reading of the CJEUs judgment, that qualification is limited to the cutting of intact muscles: para 39. He set out his reasoning as follows: 40. First, this is apparent from other passages in the judgment. At para 41 the courts paraphrase of [point] 1.14 emphasises in the case of the first criterion the use of bones from which the intact muscles have already been cut. At para 43 the court states in terms that the third criterion allows MSM to be distinguished from the product obtained by cutting intact muscles, explaining that the latter product reveals a loss or modification of the muscle fibre structure which is strictly confined to the cutting point. It then goes on to state in terms that chicken breasts detached from the carcase by mechanically operated cutting rightly do not constitute MSM. There is a further reference to the removal of intact muscles from bones at para 45. Secondly, if the cutting point exception were given the wide reading for which Newby contends it would exclude from classification as MSM products made by repeated mechanical cutting of meat left on bones or carcases from which intact muscles had previously been removed. The only loss or modification of the muscle fibre structure in such a case would be at the cutting points, however numerous they were. That would, in my view, defeat the purpose of the classification. Thirdly, the paragraphs of the judgment of the CJEU in which it applies the principle to the particular facts of this case demonstrate that the court cannot have intended the cutting point exception to bear such a wide meaning. I am, therefore, unable to agree with the judges broad 41. interpretation of the qualification as referring to every severed edge of the pieces of flesh that emerge from the Newby process. The qualification relates to cutting intact muscles from the animal. In the case of the Newby process, the product is not obtained by cutting intact muscles but by cutting or otherwise removing the meat left on the carcase after the intact muscle has been removed. Mechanical separation of residual meat from bones produces separation, shearing or cutting and hence modification to the muscle fibre structure at other points in addition to the point from which the intact muscles have been removed. The CJEU concluded as a matter of principle that meat which is mechanically separated from bones from which the intact muscles have already been detached shows a more general loss or modification of muscle fibre structure beyond the cutting point. 42. I have referred earlier to the fact that when the matter returned to the referring court it was submitted on behalf of Newby that since the bones fed into the machine for the first stage of the Newby process had substantial amounts of meat attached, the Newby process did not satisfy the first of the criteria identified by the CJEU ie it was said that it did not involve the use of bones from which the intact muscles have already been detached or poultry carcases, to which meat remains attached. The judge rejected that argument, correctly in my view, on the ground that if that were correct even a high pressure process of crushing such meat and bones to a slurry would be incapable of producing MSM. As Mr Coppel points out, it must follow that the product of Newbys process is not obtained by cutting intact muscles. The intact muscles have already been detached from the bones. In the case of chicken carcases the requirement that intact muscles have already been detached does not apply. It seems to me that this explains why the CJEU had to address the question of the cutting point in the context of the three limbs of the definition of MSM. I should add that to the extent that there may be an intact muscle left on a chicken carcase after removal of the breast or on a pork bone after the removal of the prime cuts of pork, it may well be that the process would involve the cutting of intact muscles within the qualification created by the CJEU. However, the product of the first stage of the Newby process would still in part comprise MSM and the entire product would have to be classified as MSM. 43. In coming to his conclusion the judge referred to the need to have regard to article 11 TFEU and to interpret point 1.14 of the Regulation and paras 41 and 42 of the judgment of the CJEU in a manner that promotes environmental protection rather than undermines it. He thought this a powerful point. He considered that to treat DSM produced by Newby as MSM was to waste a product that the informed observer would regard as meat, albeit not of the best quality. He stated that there was an environmental cost for treating this product as MSM. More pigs would have to be raised, slaughtered and butchered in order to make up the shortfall. He considered this contrary to the objective of promoting sustainable development. While this might be an appropriate factor to take into account in interpreting an EU measure in other circumstances, there is no scope for such an approach here. The CJEU was made aware of the argument that classifying Newbys products as MSM was a waste of good meat. Nevertheless it attached no weight to that consideration. The intention of the CJEU is clear. Moreover, the preamble to the Regulation (recital 9) makes clear that the principal objective of the classification is to secure a high level of consumer protection with regard to food safety. The reading favoured by the judge would undermine that objective. Lloyd Jones LJ recognised that in a case involving a reference to the CJEU on a point of interpretation of EU law it is for the national court to find the relevant facts and to apply the law as stated by the CJEU to those facts once found, as explained in Revenue and Customs Comrs v Aimia Coalition Loyalty UK Ltd [2013] UKSC 15; [2013] 2 CMLR 51, para 54 per Lord Reed. However, Lloyd Jones LJ did not accept that there had been any material change in the factual picture given by the further evidence adduced by Newby as compared to that available to the CJEU when it delivered its judgment; according to him, the statement of law set out in paras 41 to 43 of the judgment of the CJEU was conclusive of the dispute regarding the lawfulness of the FSAs moratorium and left no scope for argument as to the application of the law to the facts: para 50. Although Lloyd Jones LJ noted at para 30 the observations of Edwards Stuart J at paras 76 77 in the main judgment regarding Mr Mercers submissions about the significance of the cutting of wishbones from chicken carcases before the removal of chicken breasts, the Lord Justice did not revert to this point in his analysis when allowing the FSAs appeal. The appeal to this court For the appeal to the Supreme Court, the court gave permission for interventions by way of written submissions on behalf of the National Farmers Union and also on behalf of the Association of Independent Meat Suppliers, the British Meat Processors Association and the British Poultry Council. They all supported the case for Newby. In their application to intervene, dated 14 August 2018, the last three interveners also indicated that they wished to adduce further evidence, but did not file such evidence with their application. The question of the admission of such further evidence was postponed to the hearing of the appeal. The further evidence which was eventually filed and served comprised witness statements from a representative of each of those organisations, being a statement of Norman Bagley dated 5 January 2019, a statement of Nicholas Allen dated 4 January 2019 and a statement of Richard Griffiths dated 4 January 2019, respectively. The statements of Mr Bagley and Mr Allen provided additional information regarding pork production and current trends regarding automation in meat production and canvassed concerns of members of the meat industry regarding possible implications of the judgment of the Court of Appeal for that industry. The statement of Mr Griffiths provided an overview of poultry production and additional detail regarding the processes by which meat is removed from chicken carcases. The FSA objected to the admission of this further evidence so late in the day. The court read the new witness statements in advance of the hearing on a de bene esse basis and viewed certain video material referred to in the statements on the same basis. Having heard the application to adduce this new evidence and the opposing submissions, the court refuses permission to admit it in the appeal. It would be unfair to the FSA for the evidence to be admitted so late in the day. The way in which the Second to Fourth Interveners went about attempting to introduce the further evidence on the appeal to this court was very unsatisfactory. They should have made the fresh evidence available at the time of their application to intervene and to adduce further evidence (that is, in August 2018), in good time before the hearing and the filing of printed cases by the parties to the appeal. In that way the court could have determined well in advance of the preparation of printed cases by the parties to the appeal and well before the hearing whether fresh evidence was or was not to be admitted for consideration on the hearing of the appeal. Instead, the Second to Fourth Interveners only filed the fresh evidence after Newbys printed case was filed on 19 December 2018 and just days before the FSA filed its printed case on 9 January 2019. The FSA did not have a fair opportunity to take this fresh evidence into account in preparing its printed case, let alone to respond to it by seeking to file further evidence itself. Furthermore, now that the appeal has been heard, it is clear that it turns on issues of law and that the fresh evidence could have no relevant bearing on the outcome of the proceedings. I turn to the merits of the appeal. In my judgment the appeal should be dismissed, essentially for the reasons given by the Court of Appeal. The Court of Appeal has correctly understood the judgment of the CJEU and was right to adopt the narrow reading it did of the notion of the cutting point as used by the CJEU. On this appeal the focus has been on the proper characterisation of the products of the Newby process after stage one, which take the form of strips of meat removed from bones. It is now common ground that these products meet the first two criteria for categorisation of MSM for the purposes of point 1.14 as set out by the CJEU at para 41 of its judgment. The issue, therefore, is whether these products meet the third criterion (ie are characterised by the loss or modification of the muscle fibre structure of the meat recovered by use of methods of mechanical separation), in light of the qualification regarding that criterion introduced by the CJEU in paras 42 and 43. In my view, Newbys products satisfy the third criterion for classification as MSM, as the Court of Appeal correctly held. This is clear from the answer the CJEU gave at para 41 to the referred questions as summarised in para 40; from the language which it used in its discussion of the cutting point qualification and elsewhere in its judgment; from the clear and repeated statements it made that Newbys products should be categorised as MSM; and from the wider contextual factors derived from other parts of the EU legislative regime on which the CJEU relied as supporting its interpretation of point 1.14. To begin with, the way in which the CJEU formulated the first criterion for classification as MSM in para 41 of its judgment is significant: the use of bones from which the intact muscles have already been detached, or of poultry carcases, to which meat remains attached. This is the CJEUs paraphrase of the following words in point 1.14: removing meat from flesh bearing bones after boning or from poultry carcases. As regards animals other than poultry, according to point 1.14, the first criterion for MSM is only satisfied after the carcases have been through a process of boning. This is not a term used in relation to poultry carcases. In its formulation, however, the CJEU has given its interpretation of the concept of boning as the detachment of intact muscles from the carcase, which is to say in the initial act of removal of meat from the carcase. This is also reflected in its description in para 63 of the meat used for MSM as residual meat, fat and connective tissue which remain attached to the bones after the main part of the meat has been removed. This notion of residual meat after the main part of the meat has been removed from a carcase appears equally apt in respect of chicken carcases after the removal of the breasts by the usual simple mechanical processes used in the industry. The CJEUs formulation of the first criterion indicates that this is its view. It speaks of meat remaining attached to poultry carcases, rather than simply referring to poultry carcases, which would include all the meat on the carcase. In other words, by its formulation of the first criterion, the CJEU had already commenced the analysis, amplified in paras 42 and 43 of its judgment, by which it equates the initial removal of meat from animal carcases with the initial removal of chicken breasts from chicken carcases. Functionally, they are equivalent processes and the CJEU treats them as such. This reading of the CJEUs judgment is not compatible with Newbys submissions as to what the CJEU meant. In the last sentence of para 41 of its judgment, the CJEU gave a clear answer to the principal issue raised by the national court by its questions in the reference judgment. The concept of mechanically separated meat does not depend upon it being established that the process referred to in point 1.14 results in a loss or modification of the muscle fibre structure which is significant (see the terms of the question posed on the reference as formulated by the CJEU in para 40). This was, of course, an outright rejection of Newbys submission as to the proper interpretation of point 1.14. In para 42 the CJEU reiterated the point that the definition of MSM does not depend upon an analysis of the degree of loss or modification of the muscle fibre structure removed by the Newby process or equivalent processes. Instead, the CJEU held that a much clearer line of demarcation applies. Meat removed from a carcase will not be MSM if it is removed by mechanical means in the first phase of cutting meat from the whole carcase, but will generally be MSM if it is removed by mechanical means thereafter. For animals other than poultry, this is explained by the focus on the prior detachment of the intact muscles as the critical aspect of the first criterion for MSM in para 41, together with the CJEUs emphasis in para 42 that to escape categorisation as MSM any loss or modification of muscle fibre structure must be strictly confined to the cutting point. It is straightforward to know whether a carcase has gone through the initial phase of having meat cut from it, and there is no requirement for refined processes of microscopic investigation to be applied. In the first sentence of para 43 of its judgment, the CJEU emphasised that this is the proper interpretation of point 1.14. Again, it explains that on its interpretation of point 1.14 there is a clear distinction to be drawn between the product obtained by cutting intact muscles, which involves loss or modification of the muscle fibre structure which is strictly confined to the cutting point, and MSM. This is the context for the courts statement, Consequently, chicken breasts which are detached from the carcase of the animal by mechanically operated cutting rightly do not constitute mechanically separated meat. It is clear that initial removal of chicken breasts from chicken carcases is, in the CJEUs analysis, equated with the initial removal of meat by mechanically operated cutting in relation to other animal carcases. That is all that the CJEU meant to say. The point of this statement about chicken breasts in para 43 was, as the Court of Appeal rightly observed, to deal with the argument by Newby (referred to at para 37 of the CJEUs judgment) that the Commissions position in opposition to Newbys case was inconsistent, because the Commission treated chicken breasts removed by mechanical means as falling outside the definition of MSM. In giving the explanation in para 43, the CJEU was clearly not intending to undermine the clear and unequivocal answer it had given in para 41 to the referred questions, which answer has the consequence that the products of Newbys process have to be classified as MSM. Contrary to the view of Edwards Stuart J, the CJEU was not throwing the baby out with the bathwater by stating an exception to the clear general rule it had declared in para 41, which exception would have the effect of wholly undermining that rule. With respect to the judge, that is not a plausible interpretation of the CJEUs judgment. In describing what happens with the mechanical removal of chicken breasts the CJEU used the word cutting, whereas the later evidence adduced by Newby for the resumed proceedings in the national court shows that what happens is a combination of cutting at the edge of the chicken breasts before they are scraped as whole muscles from the breast bone. However, this is not a significant point. The CJEU used the term cutting because that was how Newby described the process in its submissions to the CJEU (as summarised at para 37 of the CJEUs judgment) and the way in which the national court described the process in the reference judgment at para 62. On any view the process for removal of chicken breasts by mechanical means is very different from Newbys process for removing residual meat from animal bones and chicken carcases, as the CJEU correctly understood. The fuller evidence now available regarding the details of the mechanical process for removal of chicken breasts does not undermine or otherwise call in question the interpretation of point 1.14 given by the CJEU, which is a matter of law. Mr Mercer pointed out that, according to the evidence, it occasionally happens that chicken carcases will be subjected to Newbys process without the breasts first being removed. However, this does not affect the legal analysis. Newbys process is different from, and very much less targeted than, the mechanical processes used to remove breasts from chicken carcases. It does not remove them as whole muscles, but subjects them to chopping through the use of shearing forces. Mr Mercer also pointed to evidence adduced in the resumed proceedings before the national court that, in the process of removing chicken breasts whole by mechanical means, the wishbone is usually cut out of the breast meat before such removal. He sought to suggest that this evidence undermined the CJEUs analysis in paras 41 to 43 of its judgment, since the breast muscle of a chicken will have been subjected to cutting before it is removed from the carcase by mechanical means and so should be classified as MSM according to the CJEUs interpretation of point 1.14. This would be contrary to the CJEUs statement in para 43 that chicken breasts removed by mechanical means do not constitute MSM. Again, however, this evidence regarding what happens in the case of mechanical removal of chicken breasts does not undermine or otherwise call in question the clear answer given by the CJEU as a matter of law in respect of the application of point 1.14 as regards the products of Newbys process. Furthermore, no legal dispute has arisen regarding the categorisation of chicken breasts removed by mechanical means. Neither the Commission nor the FSA has sought to categorise them as MSM. Mr Mercer says that there are ways of removing meat from a pork carcase at the initial stage which leave intact muscles on the carcase which are removed at a later stage. The Court of Appeal referred to this possibility at para 42 of its judgment. Once again, this does not affect the interpretation of point 1.14 given by the CJEU, which clearly does cover the products of Newbys process. It may be that the boning of a pork carcase, as that term is used in point 1.14, covers both these stages of removal of meat, so that the product of each stage does not fall to be categorised as MSM. But this court is not in a position to state any definitive view about that. As with the wishbone point, no relevant findings of fact, based on full evidence, have been made by the courts below and no legal proceedings have been issued in respect of this issue. I do not accept the submission of Mr Mercer that the reading of the CJEUs judgment as given by the Court of Appeal renders the third criterion in para 41 superfluous. On the contrary, the third criterion informs the first criterion, making it clear that it is not necessarily the case that all the meat on a poultry carcase which is removed by use of methods of mechanical separation has to be classified as MSM. It also informs the first criterion by giving some guidance regarding the concept of boning in point 1.14, thereby allowing for the possibility that the products of each of the two stages of removal of intact muscles from a pork carcase as referred to above might all fall outside the definition of MSM in that provision. As the CJEU said at para 41 of its judgment, the three cumulative criteria in point 1.14 must be read in conjunction with one other. In its judgment the CJEU made it explicit at many points that in its view on application of the definition in point 1.14 the products of Newbys process fall to be categorised as MSM. In its analysis the court made repeated direct references to Newbys process and the products of it, indicating explicitly that those products fell lIndustrie, within the category of low pressure MSM according to the courts interpretation of point 1.14: see paras 46, 50, 52, 53, 58, 59 and 64. The court could not have been clearer about this. Mr Mercer seeks to meet this aspect of the CJEUs judgment with the submission that the CJEUs role on a reference is to give an authoritative ruling on the interpretation of EU law, whereas it is the role of the national court to apply such a ruling to the facts of the case. Moreover, he points out that there are cases in which the CJEU has given a ruling on the interpretation of EU law and has also indicated how that law applies to the facts in a particular case, where the national court later reaches a different conclusion regarding the application of the law as interpreted by the CJEU to the facts of the case: the decision of this court in Revenue and Customs Comrs v Aimia Coalition Loyalty UK Ltd [2013] UKSC 15; [2013] 2 CMLR 51 is a prime example of this. Mr Mercer gave as another example the decision of the French Conseil dtat in De Groot en Slot Allium BV v Ministre de lconomie, des Finances et de judgment of 11 December 2006 ECLI:FR:CEASS:2006:23456020061211, following a judgment of the CJEU on a reference in those proceedings in (Case C 147/04) [2006] ECR I 261. So, contends Mr Mercer, it was open to Edwards Stuart J sitting in the national court when the proceedings resumed there after the reference, to examine the facts of the case and come to a conclusion opposite to that of the CJEU regarding the application of point 1.14 to Newbys products. The first part of Mr Mercers submission, as regards the division of responsibility between the CJEU and the national court making a reference under article 267 TFEU, is correct. It reflects a well established principle of EU law: see para 54 in the judgment of Lord Reed in the Aimia case. However, it is by no means unusual for the CJEU, consistently with that principle, to say itself how EU law should be applied to the facts of a particular case which is before it when it considers that the answer is clear. By way of example, Mr Coppel QC for the FSA referred us to Medical Imaging Systems GmbH (MIS) v Hauptzolloamt Mnchen (Case C 288/15) ECLI:EU:C:2016:424, at para 34; Kreyenhop & Kluge GmbH & Co KG v Hauptzollamt Hannover (Case C 471/17) ECLI:EU:C:2018:681, at para 47; Agenzia delle Dogane e dei Monopoli v Pilato SpA (Case C 445/17) ECLI:EU:C:2018:609, at para 41; and Mitnitsa Varna v SAKSA OOD (Case C 185/17) ECLI:EU:C:2018:108, at para 43; see also the discussion in M Broberg and N Fenger, Preliminary References to the European Court of Justice, 2nd ed (2014), at para 3.1 in Chapter 11. The CJEU proceeds in this way when it considers that the application of EU law, according to the interpretation the court has given it, is clear on the facts of the case. In the present case, the CJEUs conclusion that Newbys products fell to be categorised as MSM within point 1.14 simply reflected its ruling in para 41 of its judgment regarding the clarity of the test laid down in that provision, which had the obvious consequence that Newbys products fell to be so categorised according to that test. Indeed, the CJEU spelled this out at para 51 of its judgment. There is nothing untoward in the CJEU proceeding in this way and expressing its view regarding the application of EU law to the facts in an appropriate case. The Aimia case does not assist Mr Mercer. In that case, the CJEU gave an authoritative ruling regarding the proper interpretation of EU law and stated its conclusion regarding the application of that law to the facts of the case, as they had been set out in the reference. However, when the matter returned to the national court, that court was not bound by the statement of the facts as set out in the reference and instead made other, different findings of fact. The national court then applied the CJEUs authoritative guidance regarding EU law to the different facts of the case as determined by further examination of the relevant evidence at the national level, leading to a different conclusion as regards the application of EU law to the facts of the case: see the Aimia case at paras 46 52 and 56 per Lord Reed and at para 103 per Lord Hope. But in the present case there is no doubt that the CJEU understood very well the factual position as regards the operation of Newbys process and the products of it. This had all been clearly explained in the reference judgment and in the full evidence before the national court which was sent to the CJEU with the reference. The CJEU accurately summarised the position at paras 21 and 22 of its judgment. Even if there were any doubt regarding the CJEUs understanding of the different process by which breasts are removed from chicken carcases, that would not call into question the CJEUs understanding of the relevant facts in the case, which are those which concern Newbys process. Nor would that call into question the authoritative ruling of law by the CJEU regarding the proper interpretation of point 1.14 and the clear guidance it gave as to the application of that provision in relation to the products of Newbys process. Similar points fall to be made regarding the De Groot case on which Mr Mercer relied. That case concerned the compatibility with EU law of French legislation in respect of the labelling of shallots according to which only shallots derived in a traditional way from vegetative propagation by bulbs could be offered for sale under the name shallots, whereas varieties of shallots derived from seed as developed by De Groot and others could not be. The CJEU understood the reference to be founded on a common view between the parties in relation to the factual position regarding the differences between traditional shallots and seedling shallots, namely that those differences related essentially only to the method of reproduction. On that basis, the CJEU held that the French legislation was incompatible with EU law, as it would be sufficient to protect the interests of consumers if seedling shallots were marketed under the name shallots with a neutral additional statement that they were seedling shallots: paras 76 to 80 of the CJEUs judgment. However, as in the Aimia case, the Conseil dtat was not bound by that view of the facts and on further examination of the facts it found that there were other grounds for differentiation of the two sorts of shallot to do with their taste. The Conseil dtat therefore did not simply accept the conclusion of the CJEU, but carried out its own analysis of the position, applying the principles of EU law as laid down by the CJEU (in fact, as a result of that analysis, the Conseil dtat came to the same conclusion regarding the compatibility of the French legislation with EU law). For the reasons given above in relation to the Aimia case, this authority does not assist Mr Mercer. Returning to the judgment of CJEU in the present proceedings, the court gave further reasons at paras 56 and following for its interpretation of point 1.14 by reference to the general scheme of EU law in relation to the safety and labelling of meat products as set out in the TSE Regulation and in the Labelling Directive. This part of the reasoning of the court again makes it clear that the products of Newbys process fall to be categorised as MSM within the meaning of point 1.14. Mr Mercer had no good answer regarding the significance of these points for the proper interpretation of the CJEUs judgment in these proceedings. The definition of MSM in point 1.14 in Annex I to the Regulation is applicable both in respect of meat removed from the bones of ruminant animals such as cows and sheep and in respect of meat removed from the bones of non ruminant animals such as pigs and chickens. The definition in point 1.14 is also relevant for the purposes of the TSE Regulation, which together with the Regulation forms part of the EU regime governing the production of food from animals. The TSE Regulation lays down strict rules in relation to the production of meat from ruminant animals, to prevent the spread of transmissible spongiform encephalopathies associated with such animals. To that end, as noted above, it forbids the production of MSM from residual meat on the bones of such animals. The CJEU noted at para 22 of its judgment that the Newby process does not preclude the presence of occasional shards of bone in its products (this reflects para 23 of the reference judgment). On that basis, a reading of point 1.14 in the context of and having regard to the purpose of the TSE Regulation leads to the conclusion that Newbys products must be categorised as MSM under point 1.14: see paras 57 to 59 of the CJEUs judgment. That interpretation is necessary to secure the protection against the spread of transmissible spongiform encephalopathies associated with ruminant animals which is the primary object of the TSE Regulation. Since the meaning of point 1.14 is clear in relation to ruminant animals, it is also clear in relation to non ruminant animals. The CJEU also explained in paras 60 to 66 of its judgment why the same wide interpretation of point 1.14, covering the products of Newbys process, is necessary to secure primary objectives of the Labelling Directive. That is required so as to ensure that consumers are not misled as to the quality of products on sale and to ensure the free circulation of products in a context in which there is no unequal competition. This passage in the CJEUs judgment is, again, only consistent with the reading of the courts interpretation of point 1.14 given by the Court of Appeal. Finally, Mr Mercer sought to pray in aid article 11 TFEU in support of his proposed reading of the CJEUs judgment. I do not consider that this provision helps him. Article 11 TFEU sets out a general principle which informs the interpretation of EU legislation; it does not separately inform the reading to be given to a clear judgment of the CJEU. In the present case, the CJEU was well aware of the argument that a narrow interpretation of point 1.14 was appropriate so as to avoid unnecessary wastage of meat removed from animal carcases. The reference judgment referred to evidence that a large amount of meat, sometimes up to 80%, could be left on bones after the initial boning phase. The written observations of both the UK Government (representing the position of the FSA at that time) and Newby on the reference emphasised the desirability of an interpretation of point 1.14 which would avoid the wastage of meat suitable for human consumption which might occur if the products of Newbys process were categorised as MSM. There is no warrant for the suggestion that the CJEU overlooked this point when considering the proper interpretation of point 1.14. None of Newby, the UK Government, the Commission and the other member states which submitted written observations on the reference referred to article 11 TFEU, so it is not surprising that the CJEU did not find it necessary to refer to it. In any event, the CJEU has given a clear authoritative ruling regarding the proper interpretation of point 1.14 and reference to article 11 TFEU does not permit us to go behind that. I endorse what Lloyd Jones LJ said about article 11 TFEU in the Court of Appeal at para 43, set out above. This appeal turns on the proper interpretation of the CJEUs judgment, as it applies in relation to the products of Newbys process. On the proper interpretation of that judgment, the answer is clear that those products fall to be categorised as MSM within point 1.14. The position is acte clair and no further reference to the CJEU is required. For the reasons given above, I would dismiss this appeal.
+This appeal concerns the liability for Value Added Tax (VAT) of a company which markets and arranges holiday accommodation through an on line website. The outcome turns on the appropriate characterisation of the relationship between the company, the operators of the hotels, and the holiday makers or their travel agents (which is an English law issue), and the impact of certain provisions of the relevant EU Directive on that relationship once it has been characterised (which is an EU law issue). The basic facts The appellant, Secret Hotels2 Ltd (formerly called Med Hotels Ltd, and known as Med), marketed holiday accommodation, consisting of around 2,500 resort hotels, villas, and apartments in the Mediterranean and the Caribbean, through a website, www.medhotels.com (the website). In these proceedings, everyone has focussed on hotel rooms, and has ignored villas and apartments, and I shall do the same. Around 94% of the sales of hotel rooms from the website were made to travel agents who no doubt sold them on to holiday makers; the remainder of the sales were directly to holiday makers. An hotelier who wished his hotel to be marketed by Med had to enter into a written agreement with Med headed global hotels Terms and Conditions for allotment contracts, which I will call the Accommodation Agreement. Once an hotelier had signed up to the Accommodation Agreement, his hotel would normally be included among those shown on the website. When a potential customer (be it travel agent or holiday maker) logged onto the website, she would see some Terms of Use. If, after considering what was available, she identified a hotel at which she (or a client) wished to stay, she would book a holiday through a form on the website, which set out standard Booking Conditions, which included, of course, terms as to payment. The customer had to pay the whole of the sum which she had agreed with Med to pay for the holiday (which I will call the gross sum) before the holiday maker arrived at the hotel. However, Med only paid the hotel a lower sum (which I will call the net sum) in respect of the holiday concerned, pursuant to an invoice which was rendered by the hotelier when the holiday had ended. The relevant VAT law These proceedings concern Meds liability to VAT in respect of the supply of hotel accommodation through the medium of the website between the period between December 2004 and May 2007 (the relevant period). VAT is, of course, an EU tax, which is levied on the supply of goods or services. For the majority of the relevant period, the primary source of law on VAT was contained in Directive 77/388/EEC (the Sixth Directive), but on 1 January 2007 it was replaced by Directive 2006/112/EC (the Principal VAT Directive). As the two Directives contain effectively identical, although somewhat differently worded, provisions for present purposes, I will limit my references to the current one, and all references to articles are to articles of that Directive, unless stated otherwise. By article 2.1(c), VAT is liable to be levied on the supply of goods for consideration within the territory of a Member State by a taxable person acting as such. By virtue of article 135(2)(a), while leasing of property is exempt from VAT, the provision of accommodation in the hotel sector or in sectors with a similar function is not. Article 45 states that The place of the supply of services connected with immovable property shall be the place where the property is located . The application of article 45 to travel agents could often result in their having to be registered in many member states, which could be inconvenient both for travel agents and for member states taxing authorities. Accordingly, articles 306 310 contain a special scheme relating to travel agents. Article 306, which is the crucial provision for present purposes, is in these terms (albeit adding sub paragraphs to para 1): Article 306 1. [(a)] Member States shall apply a special VAT scheme, in accordance with this Chapter, to transactions carried out by travel agents who deal with customers in their own name and use supplies of goods or services provided by other taxable persons, in the provision of travel facilities. [(b)] This special scheme shall not apply to travel agents where they act solely as intermediaries and to whom point (c) of the first paragraph of Article 79 applies for the purposes of calculating the taxable amount. 2. For the purposes of this Chapter, tour operators shall be regarded as travel agents. Article 79(c) excludes from liability to VAT the amounts received by a taxable person from the customer, as repayment of expenditure entered in his books in a suspense account. Articles 307 and 308 are also of some relevance, and (with the paragraph numbering added to article 307) they provide as follows: Article 307 1. Transactions made, in accordance with the conditions laid down in Article 306, by the travel agent in respect of a journey shall be regarded as a single service supplied by the travel agent to the traveller. 2. The single service shall be taxable in the Member State in which the travel agent has established his business or has a fixed establishment from which the travel agent has carried out the supply of services. Article 308 The taxable amount and the price exclusive of VAT, within the meaning of point (8) of Article 226, in respect of the single service provided by the travel agent shall be the travel agent's margin, that is to say, the difference between the total amount, exclusive of VAT, to be paid by the traveller and the actual cost to the travel agent of supplies of goods or services provided by other taxable persons, where those transactions are for the direct benefit of the traveller. Provisions equivalent to articles 306 310 were contained in article 26 of the Sixth Directive (which was slightly different in both wording and layout, but identical in its central provisions and effect). They were given effect in the United Kingdom through the Tour Operators Margin Scheme (known as TOMS), which was promulgated in the Value Added Tax (Tour Operators) Order 1987 (SI 1987/1806). It is unnecessary to set out the provisions of TOMS as it has never been suggested that they have any different effect from articles 306 310. The contentions of the parties in summary HM Commissioners for Revenue and Customs (the Commissioners) assessed Med for VAT in respect of the relevant period on the basis that TOMS applied. The Commissioners justified this on the ground that Med was a travel agent within the meaning of article 306, which deal[t] with customers [namely travel agents and, less frequently, holiday makers directly] in [its] own name and use[d] the services of other taxable persons [namely the hoteliers] in the provision of travel facilities. In effect, the Commissioners analysis was that Med booked a room in a hotel for the net sum, which it paid to the hotelier when the holiday had ended, and Med supplied the room to its customer in return for the gross sum, which it received in advance of the holiday. On that basis, it is agreed that Med would be a travel agent whose operations fell within article 306.1(a), and it would therefore be liable for VAT in accordance with article 307.1, namely on the gross sum paid by the customer to Med. Further, by virtue of article 307.2, the VAT would be levied in the UK, as that was Meds place of business. On the Commissioners approach, therefore, where a customer had booked and paid for a holiday in Greece, by virtue of articles 306 and 307, as enacted through TOMS, Med would be liable to the Commissioners for VAT on the margin. Med challenged this assessment on the ground that the nature of its business was such that it did not fall within article 306.1(a), but within article 306.1(b). This was on the basis that it was, during the relevant period, a travel agent which was act[ing] solely as [an] intermediar[y]. (Although article 306.1(b) also contains a requirement that point (c) of the first paragraph of article 79 must appl[y] for the purposes of calculating the taxable amount, it is common ground that it would so apply if Med was act[ing] solely as [an] intermediar[y].) Meds analysis of the position was that, through Meds agency, the hotelier supplied a hotel room to a customer for the gross sum, and that Med was entitled to the difference between the gross sum and the net sum as a commission from the hotelier for acting as his agent. On Meds approach, TOMS would not apply, and it is agreed that the difference between the gross sum and the net sum would be Meds commission for providing services to the hotelier, who was entitled to the gross sum from the customer. On that basis, the prima facie position would be as follows: (i) Med would have to register for VAT in Greece, (ii) it would have to pay VAT to the Greek taxation authorities on its commission, (iii) the hotelier would have to account for VAT on the gross sum, but (iv) the hotelier would be able to set off against its liability for that VAT, the input tax on the commission. However, by virtue of regulation 14(2) of the Value Added Tax Regulations 1995 (SI 1995/2518), there was an alternative way of accounting for VAT if Meds analysis was correct and TOMS did not apply, namely the so called reverse charge procedure. Under this procedure, provided for in article 194, the hotelier would account for the VAT on the gross sum to the Greek authorities, so that Med would not have to pay any VAT. The procedural history The Commissioners analysis based on TOMS resulted in their assessing Med to liability for VAT in respect of the relevant period in the sum of 5,643,736. Med challenged this assessment, but its challenge was rejected by the First Tier Tribunal (FTT, Miss J C Gort and Mr A McLoughlin) after a four day hearing in a carefully reasoned judgment [2010] UKFTT 120 (TC). The FTT identified the main issue as being: Does [Med] act as a principal, as the Commissioners allege, or as an agent, as [Med] contends, when making the supplies of hotel accommodation? It is common ground that if the Commissioners are correct then [Med] is in principle required to account for output tax under the TOMS and if [Med] is correct then the supplies are treated as taking place in the jurisdiction in which the hotel belongs (and are, therefore, outside the scope of UK VAT). The FTT answered that question in favour of the Commissioners. In arriving at this conclusion, they took into account both the contractual documentation and the way in which Meds business was conducted. They considered that the principal document for our consideration is the contract between [Med] and the hotel. After taking into account the way in which Med conducted its business, the FTT concluded that the document as a whole was not consistent with the notion that Med was the agent and the hotel the principal. Accordingly, the FTT dismissed Meds appeal. Med appealed against that decision to the Upper Tribunal, where its appeal was allowed by Morgan J [2011] UKUT 308 (TCC). He made the point that the agreed issue as identified by the FTT (see para 14 above) was not entirely satisfactory, as a result of which the issue was reformulated in these terms by the parties: whether the [FTT] was entitled to find (as a matter of law and fact) that [Med] was supplying accommodation services as principal, in which case it was required to account for VAT in the United Kingdom, or whether it should have found that [Med] was acting as agent for a disclosed principal, in which case the supplies of accommodation services fell to be treated as made in the jurisdiction in which the hotel was situated and so do not give rise to any liability to VAT in the United Kingdom. Morgan J considered that the FTT should not have addressed the issue by simply considering only part of the contractual documentation together with the way in which Med conducted its business. Rather, they should have started by assessing the effect of the totality of the contractual documentation, and only then asked themselves whether their assessment was altered by the way in which Med conducted its business. He approached the issue on that basis, and first decided that (i) the contractual arrangements between Med and the customers established that Med was contracting as agent for the hotelier, and (ii) the contractual arrangements between Med and the hoteliers were consistent with that conclusion. He then turned to various factors which impressed the FTT as to the way in which Med carried on business, and decided that none of those facts justified rejecting the view that Med was an agent acting for a disclosed principal. Morgan Js decision was appealed by the Commissioners to the Court of Appeal, who allowed their appeal for reasons given in a judgment by Sir John Chadwick, with which Ward and McFarlane LJJ agreed [2012] EWCA Civ 1571. They held that Morgan J was wrong to criticise the FTT for looking at the whole facts of the case as opposed to concentrating on the contractual documentation. They also held that the FTT was plainly entitled to reach the conclusion that they did, in the light of the contractual documentation and the way in which Med conducted its business. At the end of his judgment, Sir John identified a number of aspects of the way in which Med conducted its business which he regarded as being of particular weight in justifying the conclusion that it was a principal rather than an agent in terms of supplying hotel rooms to customers. Med now appeals to this Court. Overview of the issues The outcome of this appeal ultimately turns on the question whether Meds activities in relation to the provision of hotel rooms to customers fell within article 306.1(a) or article 306.1(b). That question must be decided by the proper application of the provisions of article 306 to the circumstances of this case. Once the appropriate tribunal has identified and applied the relevant legal principles, it is ultimately a question of fact for that tribunal whether a travel agent falls within para 306.1(a) or para 306.1(b). Accordingly, as the Court of Appeal held, it would only have been open to Morgan J to reverse the FTTs decision if (i) they had wrongly analysed the law, ie if they had been wrong in their view as to legal effect of the contractual relations and subsequent facts, or had wrongly interpreted or applied article 306, or (ii) the FTT had reached a conclusion which no reasonable tribunal could have reached. So far as the law is concerned, what article 306 means and how it is to be applied is a matter of EU law, a topic on which the decisions of the Court of Justice of the European Community, the CJEU, are binding on national courts see eg Customs and Excise Commissioners v Madgett and Baldwin (Joined cases C 308/96 and C 94/97) [1998] STC 1189. That case decided that the predecessor of article 306 applied not just to travel agents, but to all traders who habitually arrange travel or tours and, in order to supply the services generally associated with activities of that kind, have recourse to other taxable persons see para AG33. However, in so far as the provisions of article 306 depend upon the precise nature and character of the contractual relationship between two or more parties, that issue must be determined by reference to the proper law of the contract or contracts concerned, and, in so far as the subsequent conduct of the parties is said to affect that nature and character, the effect must also be assessed by reference to the proper law of the contract or contracts. In that connection, it is worth referring to the observation of the CJEU in Revenue and Customs Commissioners v RBS Deutschland Holdings GmbH (Case C 277/09) [2011] STC 345, para 53, that taxable persons are generally free to choose the organisational structures and the form of transactions which they consider to be most appropriate for their economic activities and for the purposes of limiting their tax burdens, albeit that this is subject to an exception for abusive transactions as discussed in Halifax plc v Customs and Excise Commissioners (Case C 255/02) [2006] Ch 387. The correct approach to article 306 Article 306.1 postulates two categories of travel agent, namely (a) those who deal with customers in their own name and use supplies of goods or services provided by other taxable persons, in the provision of travel facilities, and (b) those who act solely as intermediaries. The parties were agreed that the two categories were mutually exclusive, but also that, taken together, they were comprehensive in the sense that a travel agent arranging accommodation for a customer must fall within one of the two categories. It may be that the proper analysis is that advanced by Lord Sumption during the hearing, namely that a travel agent can only be within article 306 if it falls within category (a), but it would be taken out of the article if it also falls within category (b). However, it is unnecessary to decide whether that is right, at least for present purposes. So far as the meaning of in their own name is concerned, some useful guidance was given by the CJEU in relation to the expression in a case concerned with the provisions in the Sixth Directive relating to an operator who received bets, arguably on behalf of a bookmaker. In Belgium v Henfling (Case C 464/10) [2011] STC 1851, para 33, the CJEU said that involvement in his own name means that a legal relationship is brought about not directly between the better and the undertaking on behalf of which the operator involved acts, but between that operator and the better, on the one hand, and between that operator and that undertaking, on the other. There appears to be no case in the CJEU where the meaning of the word intermediaries has been considered. However, it would seem at any rate in most cases to be the equivalent of agents in English law, although both parties were (rightly in my view) inclined to accept that it had a wider meaning than agents. In particular, it was not suggested to be a term of article The CJEU has given guidance as to the proper approach to be adopted in a case such as the present. In Beheersmaatschappij Van Ginkel Waddinxveen BV v Inspecteur der Omzetbelasting, Utrecht (Case C 163/91) [1996] STC 825, para 21, the court said that the predecessor of article 306.1(a) in the Sixth Directive: makes the application of that article subject to the condition that the travel agent shall deal with customers in his own name and not as an intermediary. It is for the national court before which a dispute concerning the application of these provisions is brought to inquire, having regard to all the details of the case, and in particular the nature of the travel agent's contractual obligations towards the traveller, whether or not that condition is met. The point was taken a little further in Revenue and Customs Commissioners v Newey (Case C 653/11) [2013] STC 2432, where the CJEU said this, reflecting what it had said in a number of earlier decisions: 42. As regards in particular the importance of contractual terms in categorising a transaction as a taxable transaction, it is necessary to bear in mind the case law of the court according to which consideration of economic and commercial realities is a fundamental criterion for the application of the common system of VAT . 43. Given that the contractual position normally reflects the economic and commercial reality of the transactions and in order to satisfy the requirements of legal certainty, the relevant contractual terms constitute a factor to be taken into consideration when the supplier and the recipient in a supply of services transaction within the meaning of articles 2(1) and 6(1) of the Sixth Directive have to be identified. 44. It may, however, become apparent that, sometimes, certain contractual terms do not wholly reflect the economic and commercial reality of the transactions. 45. That is the case in particular if it becomes apparent that those contractual terms constitute a purely artificial arrangement which does not correspond with the economic and commercial reality of the transactions. Where the question at issue involves more than one contractual arrangement between different parties, this Court has emphasised that, when assessing the issue of who supplies what services to whom for VAT purposes, regard must be had to all the circumstances in which the transaction or combination of transactions takes place per Lord Reed in Revenue and Customs Commissioners v Aimia Coalition Loyalty UK Ltd [2013] 2 All ER 719, para 38. As he went on to explain, this requires the whole of the relationships between the various parties being considered. The correct approach in domestic law Where parties have entered into a written agreement which appears on its face to be intended to govern the relationship between them, then, in order to determine the legal and commercial nature of that relationship, it is necessary to interpret the agreement in order to identify the parties respective rights and obligations, unless it is established that it constitutes a sham. When interpreting an agreement, the court must have regard to the words used, to the provisions of the agreement as whole, to the surrounding circumstances in so far as they were known to both parties, and to commercial common sense. When deciding on the categorisation of a relationship governed by a written agreement, the label or labels which the parties have used to describe their relationship cannot be conclusive, and may often be of little weight. As Lewison J said in A1 Lofts Ltd v Revenue and Customs Commissioners [2010] STC 214, para 40, in a passage cited by Morgan J: The court is often called upon to decide whether a written contract falls within a particular legal description. In so doing the court will identify the rights and obligations of the parties as a matter of construction of the written agreement; but it will then go on to consider whether those obligations fall within the relevant legal description. Thus the question may be whether those rights and obligations are properly characterised as a licence or tenancy (as in Street v Mountford [1985] AC 809); or as a fixed or floating charge (as in Agnew v IRC [2001] 2 AC 710), or as a consumer hire agreement (as in TRM Copy Centres (UK) Ltd v Lanwall Services Ltd [2009] 1 WLR 1375). In all these cases the starting point is to identify the legal rights and obligations of the parties as a matter of contract before going on to classify them. In English law it is not permissible to take into account the subsequent behaviour or statements of the parties as an aid to interpreting their written agreement see FL Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235. The subsequent behaviour or statements of the parties can, however, be relevant, for a number of other reasons. First, they may be invoked to support the contention that the written agreement was a sham ie that it was not in fact intended to govern the parties relationship at all. Secondly, they may be invoked in support of a claim for rectification of the written agreement. Thirdly, they may be relied on to support a claim that the written agreement was subsequently varied, or rescinded and replaced by a subsequent contract (agreed by words or conduct). Fourthly, they may be relied on to establish that the written agreement represented only part of the totality of the parties contractual relationship. In the present proceedings, it has never been suggested that the written agreements between Med and hoteliers, namely the Accommodation Agreements, were a sham or liable to rectification. Nor has it been suggested that the terms contained on the website (the website terms), which governed the relationship between Med and the customers, namely the Terms of Use and the Booking Conditions, were a sham or liable to rectification. In these circumstances, it appears to me that (i) the right starting point is to characterise the nature of the relationship between Med, the customer, and the hotel, in the light of the Accommodation Agreement and the website terms (the contractual documentation), (ii) one must next consider whether that characterisation can be said to represent the economic reality of the relationship in the light of any relevant facts, and (iii) if so, the final issue is the result of this characterisation so far as article 306 is concerned. This is a slightly more sophisticated analysis than the single issue as it has been agreed between the parties, as set out in para 16 above, but, as will become apparent, at least in the circumstances of this case, it amounts to the same thing. In order to decide whether the FTT was entitled to reach the conclusion that it did, one must identify the nature of the relationship between Med, the hotelier, and the customer, and, in order to do that, one must first consider the effect of the contractual documentation, and then see whether any conclusion is vitiated by the facts relied on by either party. The effect of the documentation The provisions of the contractual documentation were set out extensively in the Tribunal decisions below see paras 27 36 of the FTTs decision, and paras 10 40 of Morgan Js decision. In my view, both the Accommodation Agreement and the website terms make it clear that, both as between Med and the hotelier, and as between Med and the customer, the hotel room is provided by the hotelier to the customer through the agency of Med, and the customer pays the gross sum to the hotelier, on the basis that the amount by which it exceeds the net sum is to be Meds commission as agent. Turning first to the Accommodation Agreement, it begins by identifying the hotelier as the Principal and Med as the Agent, and goes on to provide that, for a specified season, certain types (and sometimes certain numbers) of rooms in the hotel will be available at certain rates (which are what I have called the net sums), as set out in an attached rate sheet. The Accommodation Agreement then states that the Principal hereby appoints the Agent as its selling agent and the Agent agrees to act as such. It immediately goes on to provide that the Agent agrees to deal accurately with the requests for accommodation bookings and relay all monies which it receives from the Principals Clients (Clients) which are due to the Principal. The Agreement also states that it is to be construed in accordance with English law and that the English courts have exclusive jurisdiction. Subject to the other provisions of the Accommodation Agreement showing otherwise, the nature of the intended relationship appears to be quite clear. Med is to be the hoteliers agent for the purpose of marketing rooms in the hotel, and Clients, or customers as I have called them, will book rooms through the agency of Med directly with the hotelier. The Commissioners rely on four aspects of the Accommodation Agreement to justify the contention that it is not in fact an agency arrangement, but that, in truth, it envisages that Med will book rooms itself, with a view to sub booking them on to customers. First, there is the basic financial arrangement under which Med was entitled to receive a commission calculated as any sum charged to a Client by the Agent which is over and above the prices set out in the rate sheet. Secondly, some of the financial provisions are said to be inconsistent with agency relationship. Thirdly, it is said that the terms of the Accommodation Agreement include provisions which indicate that Meds interest is wider than that of a mere agent such as covenants by the hotelier to honour customers bookings, to insure the hotel against a number of risks, to keep the hotel clean, and to permit Meds representative to inspect the hotel. Fourthly, the Accommodation Agreement was very one sided, in that it contained no express obligations on Med beyond those in the opening provision quoted in para 38 above, not even an obligation to promote the hotel, whereas there were many obligations imposed on the hotelier. I am unimpressed with these points. They all stem from, and reflect, the fact that Med had a substantial business based on the website (as is evidenced by Meds turnover, the number of hotels for which it had an exclusive agency, and the fact that it was a member of a large group of companies including lastminute.com). This in turn means that it had built up a substantial goodwill in the holiday making market which it wished to protect, and that it was in a much more powerful negotiating position than the hoteliers with which it was contracting. More specifically, there is no reason why an agent should not be able to fix its own commission. It is common for agents acting in the sale of financial products, eg many types of insurance policies, to do so, and it has been specifically held to be an arrangement which is consistent with agency see Mercantile International Group plc v Chuan Soon Huat Industrial Group Ltd [2002] 1 All ER (Comm) 788. As to the other financial terms, it is true that the hotelier was obliged to compensate Med for its losses (including loss of commission) if it did not provide the accommodation it had agreed to provide to a customer, and that Med was entitled to retain the equivalent of the last 100 bed overnights as a guarantee to cover marketing costs for the next season. I do not see why such provisions are inconsistent with a principal and agent relationship: all they did was to reflect the relative negotiating positions of the parties. The fact that the hotelier agreed to do things which would be of benefit to people staying in the hotel is easily explained by the point that Med was anxious to maintain its goodwill among holiday makers and travel agents, and was in a strong enough bargaining position to impose such terms on the hotelier. Turning to the website terms, the Terms of Use explained that Med provides information concerning the price and availability of hotels and that [a]ny reservations you make on this site will be directly with the company whose hotel services you are booking. They also emphasised that Med acts as agent only for each of the hotels to provide you with information on the hotels and an on line reservation service. As for the Booking Conditions, they began by stating that Med act[s] as booking agents on behalf of all the hotels featured on this website and your contract will be made with these accommodation providers. They also stated that [o]nce the contract is made, the accommodation provider is responsible to you to provide you with what you have booked and you are responsible to pay for it. The Booking Conditions also explained that [b]ecause [Med is] acting only as a booking agent, it has no liability for any of the accommodation arrangements. The Booking Conditions also provide that they are governed by English law and that any dispute is to be determined by the English courts. The Commissioners point to one or two provisions of the Booking Conditions which, they say, are inconsistent with the notion that Med was only acting as the hoteliers agent rather than as a principal. First, if a customer (i) made a change to a booking or (ii) cancelled a booking, she was liable to pay to Med (i) an administration charge of 15, or (ii) a cancellation charge, whose quantum depended on how late the cancellation occurred, and in neither case did it appear that the charge was passed on to the hotelier. Secondly, if the hotelier was unable to provide the room as booked, Med agreed to try to provide [the customer] with similar accommodation of equal standard, but if this was not possible, Med would allow a cancellation free of charge. I do not consider that either of these points undermine the conclusion that Med was acting as the hoteliers agent. The failure to account for the administration charge is irrelevant; there is no reason to think that it did not reflect the genuine cost to Med. The failure to account for the cancellation charge, the no show forfeit, and the interest on the deposits is more striking. As a matter of law, these sums would have been payable to the hotelier, but the fact that they were not so paid represents a breach of the agency arrangement on the part of Med or an accepted variation of the Accommodation Agreement, either of which would merely have reflected the relative bargaining positions of Med and the hotelier, and did not alter the nature of the relationship of the arrangement between Med, the hotelier and the customer. As to Meds obligation to try to provide alternative accommodation, it is clear, as a matter of interpretation, that the obligation could, and no doubt in practice would, have involved Med procuring the provision of accommodation by another hotelier; in any event, the obligation was clearly included to protect Meds goodwill. The factors relied on by the FTT and the Court of Appeal Having decided that the effect of the contractual documentation between hoteliers, Med, and customers is that Med marketed and sold hotel accommodation to customers as the agent of the hoteliers, I turn to consider the characteristics of the way in which Med conducted its business which persuaded the FTT and the Court of Appeal that Med in fact marketed and sold the hotel accommodation to customers as a principal. At the end of his judgment, Sir John Chadwick summarised the main factors as follows (with the addition of subparagraphs and adaptations to reflect the terminology adopted in this judgment): (1) Med dealt with customers in its own name (a) in respect of the use of its website and (b) in the services of its local handling agents. (2) Med dealt with customers in its own name (and not as intermediary) in those cases where the hotel operator was unable to provide accommodation as booked and the customer rejected the alternative accommodation offered. (3) Med dealt with matters of complaint and compensation in its own name and without reference to the hotelier. (4) Med used the services of other taxable persons (the hoteliers) in the provision of the travel facilities marketed through its website. (5) In relation to VAT, Med dealt with hoteliers in other Member States in a manner inconsistent with the relationship of principal and agent. In particular, Med did not provide the hoteliers with invoices in respect of its commission (nor even notify the hoteliers of the amount of that commission); so making it impossible for the hoteliers to comply with their obligations to account to the tax authorities of that Member State in accordance with the Principal VAT Directive. (6)(a) Med treated deposits and other monies which it received from customers and their agents as its own monies. It did not account to the hoteliers for those monies. (b) It did not enter those monies in a suspense account so as to take advantage of article 79(c); and so cannot rely on the exclusion from the scope of article 306.1(b). The Commissioners also rely on the points that (7) hoteliers would invoice Med for the net sum in respect of each customer at the end of the relevant holiday, and (8) Med reserved a number of rooms, and sometimes specific rooms, in many hotels for which it paid the net sum in advance. There is nothing in factor (1)(a): until a customer selected a particular hotel on the website, Med had to deal with the customer in its own name, but that does nothing to undermine the point that, once a hotel was selected, Med acted as the hoteliers agent. As to factor 1(b), it is true that Med appointed its own local agents to look after holiday makers, but that was not inconsistent with its status as an agent of the hotelier, and is easily explicable by reference to Meds need to maintain goodwill in the holidaymaking market. The Commissioners relied on some of the terms of Meds standard form Handling Agency Agreement, but they take matters no further. Factor (2) is of no assistance: I have already discussed it at para 44 above. Factor (3) is correct, and can be said to be contrary to one of the terms of the contractual documentation, which envisage a customer sorting out complaints with the hotelier. However, particularly given that (i) Med recovered from the hotelier any compensation which it negotiated and paid to a holiday maker and (ii) Meds activities in this connection were not inherently inconsistent with its status as the hoteliers agent (albeit an agent in a strong bargaining position), the departure from the contractual terms was not of significance for present purposes. Factor (4) takes matters no further either. As to factor (5), it is quite true that Med failed to provide the hoteliers with the information necessary to enable them to provide proper VAT returns, and that it failed to account for VAT as it should have done if it had been the hoteliers agent as it contends. It is also true that this can be said to represent some sort of indication that the arrangements were not as the contractual documentation suggests. However, not only is it not a very strong point in itself, but, as Morgan J said, while Med did not account for VAT in accordance with its contentions as to the legal position, it did not account for VAT in accordance with the Commissioners contentions as to the legal position either. Factor (6)(a) is of no assistance, and my remarks about the cancellation charge in para 44 above apply. Factor (6)(b) is merely an aspect of factor (5). As to factor (7), if Med was an agent as it contends, one would have expected the hoteliers invoices to have been for the gross sums with a deduction for Meds commission, and the fact that they were for the net sums is consistent with the Commissioners analysis. However, the invoices are not financially inconsistent with the contractual arrangements contended for by Med, as the hotelier would expect Med to pay the net sum, not the gross sum. In any event, at least on their own, such invoices cannot change the nature of the contractual arrangements between Med, the customer and the hotelier, given that (i) they post date not merely the contracts but their performance, and (ii) the customer was not aware of the invoices, so it is hard to see how they could affect her contractual rights or obligations. As to factor (8), it seems to me that there is nothing inconsistent in terms of logic or law in Med reserving a hotel room in its own name in anticipation of subsequently offering it on the market, on the basis that a customer who booked the room would not contract with Med, but would contract through Med with the hotelier. The purpose of Med reserving rooms in this way is obvious, namely to maximise its opportunity to earn commission and to maintain or improve its goodwill with potential customers. The fact that Med had to pay for the rooms it reserved is unsurprising, but such payments were always recoverable, in that, if there were insufficient bookings by customers at the hotel for the season in question, the amount paid by Med was carried forward to the next season. Of course, Med ran a risk of losing its money, but that fact does not undermine the notion that Med acted as an agent. The Commissioners contend that the factors identified in para 45 above justify the conclusion that the agency arrangement was somehow varied by the parties conduct, and in particular the conduct of Med, as the commercially dominant party, so that it became the person providing the customers with hotel rooms, as opposed to the agent of the hoteliers who provided the rooms. It is unnecessary to address the question of how such a contention might be analysed in legal terms, because, for the reasons given in paras 46 49 above, those factors, even taken together, are not inconsistent with, and therefore cannot undermine, the existence and nature of the agency arrangement. The decisions below The decision of the FTT cannot stand, as they appear to have held that, after taking into account the way in which Med conducted its business, the true effect of the written contractual arrangements between Med and the hoteliers was not that Med was an agent through whom the hotelier provided the customer with a room, but that the hotelier provided Med with a room which Med then provided on to the customer. For the reasons I have given, that analysis is unsustainable. The decision of Morgan J to the contrary effect was right, and I shall consider his conclusion further in the next section of this judgment. Given that the FTT was wrong in its legal analysis of the relationship between Med, hoteliers and customers, the Court of Appeals decision, which was based on the conclusion that the FTT adopted a permissible approach, cannot stand. In these circumstances, as Morgan J was right to reverse the FTTs decision, and analysed the legal relationship between Med, the hoteliers and customers correctly, we should uphold his conclusion, unless we consider that he then went wrong in relation to the question of the application of article 306 to the facts of this case, an issue to which I now turn. If he did go wrong, then we should, if possible, resolve that question ourselves. The application of article 306 to the facts of this case Given that I have concluded [Med] was acting as agent for a disclosed principal, the consequence according to the agreed reformulated issue (set out in para 16 above) would appear to be that the supplies of accommodation services fell to be treated as made in the jurisdiction in which the hotel was situated and so do not give rise to any liability to VAT in the United Kingdom. However, as a matter of principle, it is necessary to address the question whether, as a matter of EU law, the fact that Med was acting as an agent does justify that conclusion. As explained above, the characterisation of the relationship between Med, customers, and hoteliers is a matter of English law, but the ultimate issue on this appeal is an issue of EU law, namely whether, in the light of that characterisation, Med is liable for VAT as the Commissioners allege, and that issue must be resolved by applying article 306 to the facts of this case, which include the fact that Med is an agent as it contends. The reformulated issue effectively assumes the correctness of the proposition that, once it is concluded as a matter of English law, that the effect of the contractual documentation and the way in which the parties conducted their relationship was that Med was an agent for the hotelier with whom a customer booked accommodation, as opposed to a principal who booked accommodation with the hotelier and then booked it on to a customer, Med fell within article 306.1(b), rather than article 306.1(a). That is not an assumption which can safely be made in every case, but it seems to me that in the general run of cases, such a proposition will be correct. It seems to me clear from the guidance given by the CJEU in Henfling (quoted in para 26 above) that the concepts of an intermediary and an agent are similar, as are the concepts of a person dealing in his own name and a principal. Furthermore, the CJEUs suggested approach as to how the issue should be determined seems very similar to that of the English court. I have in mind what was said in Van Ginkel and Newey (quoted in paras 28 and 29 above), namely that the travel agents contractual obligations towards the traveller are of particular importance in deciding whether article 306.1(a) or article 306.1(b) applies, but it is also necessary to hav[e] regard to all the details of the case, and, in that connection, the economic and commercial realities represent a fundamental criterion. A contract which does not reflect economic reality and a purely artificial arrangement are similar to the shams, rectifiable agreements and other arrangements considered in para 33 above. Thus, in deciding whether article 306.1(a) or article 306.1(b) applies, the approach laid down by the CJEU in order to decide whether a person such as Med is an intermediary is very similar to the approach which is applied in English law in order to determine whether Med was an agent, ie the very exercise undertaken in paras 31 50 above. One starts with the written contract between Med and the customer, as it is the customer to whom the ultimate supply is made. However, one must also consider the written contract between Med and the hotelier, as there would be a strong case for saying that, even if Med was the hoteliers agent as between it and the customer, Med should nonetheless be treated as the supplier as principal (in English law) or in its own name (in EU law) if, as between the hotelier and Med, the hotel room was supplied to Med. For the reasons set out in paras 36 44 above, I consider that the contractual documentation supports the notion that Med was an intermediary, and, in the light of the discussion in paras 45 50 above, it seems to me that economic reality does not assist a contrary view. Further, one aspect of economic reality is that it is the hotelier, not Med, who owns the accommodation and it is the customer, not Med, to whom it is ultimately supplied: that does not, of course, prevent the hotelier supplying the accommodation to Med for supply on to the customer, but it makes it hard to argue that Meds analysis that it is no more than an agent is contrary to economic reality. Further, one must be careful before stigmatising the contractual documentation as being artificial, bearing in mind that EU law, like English law, treats parties as free to arrange or structure their relationship so as to maximise its commercial attraction, including the incidence of taxation see RBS Deutschland, cited in para 24 above. As is realistically, if impliedly, acknowledged by the Commissioners (and indeed by Med) in the reformulated agreed issue on this appeal (as set out in para 16 above), once it has been decided that Med was, as it contends, the hoteliers agent in relation to the supply of accommodation to customers as a matter of English law, it follows, at least on the facts of this case, that it was an intermediary for the purpose of article 306.1, and accordingly this appeal must succeed. It may be that Morgan J was wrong not to go on to consider the EU law issue, but it is scarcely surprising that he did not do so in the light of the agreed formulation of the issue before him. Indeed, as appears from the discussion in paras 53 57 above, EU law and English law in this case seem to travel along effectively the same lines, and accordingly I consider that Morgan J reached the right conclusion for substantially the right reasons. Conclusion I would accordingly allow Meds appeal, discharge the order of the Court of Appeal, and restore the order of Morgan J in the Upper Tribunal.
+This appeal raises an issue as to the applicability of the equitable doctrine of marshalling. Lord Hoffmann explained the doctrine in characteristically pithy terms in In re Bank of Credit and Commerce International SA (No 8) [1998] AC 214, 230 231 as: [A] principle for doing equity between two or more creditors, each of whom are owed debts by the same debtor, but one of whom can enforce his claim against more than one security or fund and the other can resort to only one. It gives the latter an equity to require that the first creditor satisfy himself (or be treated as having satisfied himself) so far as possible out of the security or fund to which the latter has no claim. It is perhaps also worth setting out how Rose LJ explained the doctrine in the same case in the Court of Appeal [1996] Ch 245, 271: The doctrine of marshalling applies where there are two creditors of the same debtor, each owed a different debt, one creditor (A) having two or more securities for the debt due to him and the other (B) having only one. B has the right to have the two securities marshalled so that both he and A are paid so far as possible. Thus if a debtor has two estates (Blackacre and Whiteacre) and mortgages both to A and afterwards mortgages Whiteacre only to B, B can have the two mortgages marshalled so that Blackacre can be made available to him if A chooses to enforce his security against Whiteacre. For the doctrine to apply there must be two debts owed by the same debtor to two different creditors. The question in the present case is whether it is open to the respondent, the Serious Organised Crime Agency (SOCA), to invoke the doctrine so as to marshal a charge granted to the Royal Bank of Scotland (RBS) over the home of Mrs Szepietowski and an investment property she owned, with a later charge granted to SOCA over the investment property alone, thereby enabling SOCA to look to Mrs Szepietowskis home to satisfy the sum secured by the second charge. (Pursuant to the Crime and Courts Act 2013, SOCA was replaced by the National Crime Agency with effect from 7 October 2013, but it is more convenient to retain the nomenclature used in the parties argument and most of the documentation in these proceedings). The facts giving rise to the issue The Settlement Deed In 1999, Mr Szepietowski was one of two partners in a firm of solicitors which received a transfer of some US $2.5m which was alleged to represent the proceeds of drug trafficking (although it is right to record that neither Mr Szepietowski nor his wife has ever been charged with any offence, and they both deny any wrongdoing). In July 2005, the Assets Recovery Agency (ARA, whose staff, assets and functions were transferred to SOCA in March 2008 pursuant to the Serious Crime Act 2007) obtained an interim receiving order over certain assets acquired with the US $2.5m. Three months later, the receiving order was extended to a number of other properties, which had allegedly been acquired with proceeds of mortgage fraud and with income concealed from Her Majestys Revenue and Customs (HMRC). In November 2006, the ARA began civil proceedings against Mr and Mrs Szepietowski seeking to confiscate the various properties on the basis that the proceeds of crime could be followed into them, and they accordingly constituted recoverable property within the meaning of section 266 of the Proceeds of Crime Act 2002 (the 2002 Act). There were 20 properties in total, and they included (i) Ashford House, Weybridge (Ashford House), which was Mr and Mrs Szepietowskis home, (ii) 2 and 2a Thames Street, Walton on Thames (Thames Street), (iii) 3 and 5 Church Street, Esher (Church Street), (iv) 2, 4, and 6 Torrington Close, Claygate, and (v) 109 Hare Lane, Claygate (together Claygate). All these five properties were registered in the name of Mrs Szepietowski, and each of them was subject to an all monies charge in favour of RBS. The parties have treated RBS as having a single charge over the five properties (the RBS Charge), and I will do the same. Mr and Mrs Szepietowski and the ARA settled the proceedings on terms contained in a consent order dated 16 January 2008, which stayed the ARAs claim save for the purpose of enforcing the terms of settlement. Those terms were contained in documents attached to the consent order. Most of the terms were in a Deed of Settlement (the Settlement Deed) dated 15 January 2008, which included a schedule which had three annexes. Annexe A listed the 20 properties, and recorded the secured creditor of, the value of, the amount charged on, and the equity in, each property. Annexe B listed 13, and Annexe C a further two, of those 20 properties, with identical details plus the identity of the registered proprietor. (The figures in the Annexes were in fact somewhat historic, but nothing hangs on that for present purposes). The general scheme of the arrangement embodied in the Settlement Deed was that the 13 properties in Annexe B were vested in the Trustee for Civil Recovery (the Trustee) on behalf of the ARA, the Trustee was also to have the two properties in Annexe C vested in him, and the balance of the properties in Annexe A were to remain with their registered proprietors free of the receiving order. Any property so vested or retained was to be subject to any existing charges. Clause 2.1 of the Settlement Deed provided that it was made in full and final settlement of all of the [ARAs] claims against Mr and Mrs Szepietowski in relation to the properties and the other assets listed in Annexe A and in relation to their tax liabilities. One of the properties listed in Annexe A (but not in Annexe B or C) was Ashford House, which was accordingly to revert to Mrs Szepietowski free of the receiving order. In Annexe A, Ashford House was recorded as having a value of 2.3m, and charged to The Mortgage Business plc (TMB) and RBS for about 1.46m, but it is clear that this was only the amount outstanding to TMB. Ashford House was not in Annexe B or C. By clause 3.1 of the Settlement Deed, Mr and Mrs Szepietowski agreed to vest in the Trustee the 13 Transfer Properties listed in Annexe B, and the two Additional Properties listed in Annexe C. The Transfer Properties included Thames Street and Church Street. They were recorded as valued at 570,000 and 785,000 respectively, and (together with the Additional Properties) as (i) charged to RBS for a debt of about 3.225m and (ii) having equity of about 1.6m. Annexe C contained the two Claygate properties, at Torrington Close and Hare Lane, which were recorded as valued at 2.67m and 800,000 respectively, and, together with Thames Street and Church Street, as charged to RBS for a debt of about 3.225m, and having equity of about 1.6m. The valuations of the Additional Properties, ie of Claygate, in Annexe C suggested that the liability to RBS could be fully met from their sale, and indeed the parties anticipated that the ARA would, in effect, be able to realise the Transfer Properties free of any liability to RBS. They recorded at the end of Annexe B that this would have enabled the ARA to recover just over 5.4m from the sale of the Transfer Properties after clearing all mortgages thereon. At the time of the settlement, Mrs Szepietowski was negotiating to sell the Additional, Claygate, Properties, and clauses 4.1 4.3 of the Settlement Deed enabled and required her to proceed with the proposed sale. If she had not bindingly agreed to dispose of Claygate within six months, then, by clause 4.4, she had to elect whether Claygate should remain vested in the Trustee, who would be free to dispose of them, or be transferred to her by the Trustee. Clause 4.5 of the Settlement Deed is of some importance for present purposes, and it was in these terms (with paragraphs added for convenience): (i) If the Trustee wishes to sell [Thames Street and Church Street] (the Remaining RBS properties) before the Additional [Claygate] Properties are sold then [Mr and Mrs Szepietowski] agree that, if [RBS] consent, the [RBS Charge] over these properties and the Additional Properties in favour of [RBS] shall be transferred to the Additional Properties only. (ii) If [RBS] does not so consent then [Mrs] Szepietowski will grant a charge to the Trustee for the sums paid by the Trustee to [RBS] from the sale proceeds of the Remaining RBS properties. Clause 4.6 of the Settlement Deed contained an agreement that the total funds from the sale of the Additional Properties [would] be used in priority to the funds from the sale of the Remaining RBS Properties [ie Thames Street and Church Street] in satisfaction of the [RBS] Charge. Clause 4.7 provided that, on the sale of Claygate, the proceeds would be used to pay off what was owing under the RBS Charge insofar as it was registered against those properties, and any balance would be fully accounted for by the Trustee to [Mrs] Szepietowski without deduction or set off. The Settlement Deed contained a number of other provisions (including, in clause 13.4 an obligation on Mr and Mrs Szepietowski each to pay HMRC 687,500 in respect of back tax and national insurance payments in respect of the 14 tax years ending 2006/2007), but it is unnecessary to refer to them for present purposes. Subsequent events Towards the end of January 2008, Church Street, Thames Street and Claygate were duly vested in the Trustee, subject to the RBS Charge. However, the sale of Claygate did not proceed as anticipated. The Trustee implemented clause 4.5(i) of the Settlement Deed, and marketed Church Street and Thames Street, which were sold in April 2008 for 715,000 and 560,000 respectively. RBS declined to release them from the RBS charge, and consequently the proceeds of sale were paid over to RBS. It was becoming clear that the sum likely to be realised on the sale of Claygate (when added to the proceeds of sale of Church Street and Thames Street) would scarcely be sufficient to clear the RBS Charge. This state of affairs was in marked contrast to the common expectation of the parties at the time of the settlement, when they had anticipated that the proceeds of sale of Claygate alone (estimated in Annexes A and C to be worth around 3.54m) would be sufficient to clear the debt to RBS (recorded in the Annexes as being about 3.225m). A dispute then arose as to the properties over which Mrs Szepietowski was obliged to grant SOCA (who had by now replaced the ARA and the Trustee) a charge pursuant to clause 4.5(ii) of the Settlement Deed. In March 2009, Henderson J decided that the charge was to be over Claygate as Mrs Szepietowski contended, and not over Ashford House as well, as SOCA argued: [2009] EWHC 655 (Ch). At that hearing, Mrs Szepietowski made it clear that she wished Claygate to be vested in her pursuant to her obligation to elect in clause 4.4 of the Settlement Deed see para 35 of the judgment. Accordingly, as he recorded in the following paragraph, Henderson J ordered that Claygate be re transferred by the Trustee to Mrs Szepietowski, and that she grant a charge over them to SOCA. Claygate was duly revested in Mrs Szepietowski on 4 September 2009, and on the same day she granted a charge over Claygate to SOCA (the 2009 Charge). Clause 1 of the 2009 Charge was concerned with interpretation, and included a definition of Secured Amount as being just over 1.24m, together with any sums due to SOCA under its terms. The figure of 1.24m was equal to the net proceeds of sale of Thames Street and Church Street, which had been paid in full to RBS under the RBS Charge, but which SOCA and the Szepietowskis had hoped would be paid to SOCA under clause 4.5(i) of the Settlement Deed. Clause 2 of the 2009 Charge was headed Covenants, and clause 2.1 was a covenant by Mrs Szepietowski that on completion of any sale of the Charged Property effected by her, after paying the costs of sale, she would apply the proceeds of sale in settlement of the Secured Amount. Clause 2 also contained provisions which sought to ensure that any such sale would be effected at the best price. Clause 3 of the 2009 Charge was headed Charges, and, under it, Mrs Szepietowski charged the Charged Property and the proceeds of sale thereof by way of legal mortgage to SOCA as continuing security for the settlement of the Secured Amount. Clause 7.1 provided that the Secured Amount shall become due and the security conferred by this Charge will become immediately enforceable and the power of sale and other powers conferred by section 101 of the Law of Property Act 1925 will be immediately exercisable after four months or, if earlier, on any breach of the 2009 Charge by Mrs Szepietowski, or her death or insolvency. Clause 7.2 provided that for the avoidance of doubt, clause 7.1 did not constitute a covenant by [Mrs Szepietowski] to pay the Secured Amount to [SOCA]. Around December 2009, Mrs Szepietowski sold Claygate for a total of 2.33m, substantially less than had been anticipated two years earlier. The 2009 Charge was, of course, a second charge over Claygate, as it was still subject to the RBS Charge, and when the net proceeds of sale of Claygate were used to pay off RBS pursuant to the RBS charge, the relatively derisory figure of 1,324.16 was all that was left to satisfy SOCAs rights under the 2009 Charge. SOCAs marshalling claim The competing contentions SOCAs case is that the classic requirements of marshalling are satisfied in the present case in light of the facts that: i) ii) Claygate and Ashford House were both owned by Mrs Szepietowski, Claygate and Ashford House were both subject to the RBS charge, which secured the moneys owing to RBS by Mr and Mrs Szepietowski, iii) Claygate, but not Ashford House, was subject to the later 2009 Charge in favour of SOCA, which was a second mortgage which secured some 1.24m, iv) RBS was repaid the debt owing to it out of the sale proceeds of Claygate, while Ashford House remains unsold, and The 1.24m secured by the 2009 Charge remains unpaid (save to a minimal extent) despite the sale of Claygate. v) Accordingly, SOCA contends that, as second mortgagee of Claygate, which was subject to a first mortgage, together with Ashford House, in favour of RBS, it is entitled to look to Ashford House in order to obtain payment of the sum which was secured by the 2009 Charge on Claygate, as the proceeds of sale of Claygate were used to pay off what was due to RBS. Mrs Szepietowskis argument to the contrary has two strands. The first strand raises the contention that, in the light of the terms of the Settlement Deed and the 2009 Charge, SOCAs marshalling claim cannot be maintained. The second strand is that, even if marshalling could otherwise be justified, it cannot succeed, as the property against which SOCAs marshalling claim is focussed, namely Ashford House, is and was the home of Mrs Szepietowski, the mortgagor, whereas the property against which the RBS Charge was enforced is not and was never her home. The decisions of the courts below Henderson J held that SOCAs marshalling claim was well founded and the Court of Appeal (Arden, Sullivan and Patten LJJ) agreed with him: see [2010] EWHC 2570 (Ch) and [2011] EWCA Civ 856 respectively. The judgments in both courts concentrated on the first strand of Mrs Szepietowskis argument, and did not consider the second (because it was not raised). Henderson J had held in his 2009 judgment [2009] EWHC 655 (Ch), that Ashford House was excluded from the ambit of the charge envisaged by clause 4.5(ii) of the Settlement Deed, in the light of the terms of the Settlement Deed, and in particular clauses 4.5 and 4.6. However, in his subsequent judgment, he concluded that there was nothing in the Settlement Deed or the 2009 Charge which expressly provided, or necessarily implied, that SOCAs right to marshal was to be excluded: see [2010] EWHC 2570 (Ch), paras 27 and 37. In particular, he did not consider that clauses 4.5 and 4.6 of the Settlement Deed or the fact that there was no debt due to SOCA from Mrs Szepietowski under the 2009 Charge, precluded marshalling. He held that a debt due to SOCA arose from the creation of the charge, if not earlier, albeit one limited to satisfaction from the proceeds of the sale of Claygate para 46. He also held that there was no other reason to deprive SOCA of its prima facie right to marshal para 49. The Court of Appeal, in a judgment given by Patten LJ, agreed, and approved the reasoning, as well as the conclusion, of the Judge, although, as is frequently the position, they did not focus on all the same arguments as the Judge. In particular, they concluded that clause 2.1 of the Settlement Deed did not preclude marshalling: (see [2011] EWCA Civ 856, para 48), and that marshalling was not precluded by the fact that it was SOCA and Mrs Szepietowski, rather than RBS, who decided to sell the Claygate properties, Thames Street and Church Street: (see at para 52). Nor did the Court of Appeal consider that marshalling was precluded by the limited nature of the charge which Mrs Szepietowski gave, and the absence of any underlying obligation to pay the Secured Amount; that was treated as merely going to the discretion whether to exercise the equitable power to marshal: (see at para 54). Mrs Szepietowski now appeals to this court. Marshalling: the principles As Paul Ali explains in his monograph, Marshalling of Securities: Equity and the Priority Ranking of Secured Debt (1999), p 12, para 2.02, the earliest surviving references to marshalling appear to be in two late 17th century cases, Bovey v Skipwith (l671) 1 Ch Cas 201 and Povyes Case (1680) 2 Free 51. The principle was then considered in a number of 18th century cases, which Ali lists in footnote 6 on p 13. A relatively early exposition of the law of marshalling may be found in the judgment of Lord Hardwicke LC in Lanoy v Duke & Duchess of Atholl (1742) 2 Atk 444, 446: Is it not then the constant equity of this court that if a creditor has two funds, he shall take his satisfaction out of that fund upon which another creditor has no lien . Suppose a person, who has two real estates, mortgages both to one person, and afterwards only one estate to a second mortgagee, who had no notice of the first; the court, in order to relieve the second mortgagee, have directed the first to take his satisfaction out of that estate only which is not in mortgage to the second mortgagee, if that is sufficient to satisfy the first mortgage, in order to make room for the second mortgagee, even though the estates descended to two different persons . It is also worth referring to the judgment of Lord Eldon LC in Aldrich v Cooper (1803) 8 Ves Jun 382, 395, where he postulated a case where: two estates [were] mortgaged to A; and one of them mortgaged to B. He has no claim under the deed upon the other estate. It may be so constructed that he could not affect that estate after the death of the mortgagor. But it is the ordinary case to say a person having two funds shall not by his election disappoint the party having only one fund; and equity, to satisfy both, will throw him, who has two funds, upon that, which can be affected by him only; to the intent that the only fund, to which the other has access, may remain clear to him. Marshalling has thus been allowed to a creditor, in a case where (i) his debt is secured by a second mortgage over property (the common property), (ii) the first mortgagee of the common property is also a creditor of the debtor, (iii) the first mortgagee also has security for his debt in the form of another property (the other property) (iv) the first mortgagee has been repaid from the proceeds of sale of the common property, (v) the second mortgagees debt remains unpaid, and (vi) the proceeds of sale of the other property are not needed (at least in full) to repay the first mortgagees debt. In such a case, the second mortgagee can look to the other property to satisfy the debt owed to him. Consider a case where the mortgagor owes 2m to the first mortgagee and 2m to the second mortgagee, the common property and the other property are each worth 3m, and the common property is sold, resulting in repayment in full of the first mortgagee and a reduction of 1m in the debt of the second mortgagee. The mortgagor still owes 1m to the second mortgagee, whether or not the second mortgagee can marshal. The only effect of the second mortgagee being able to marshal would be that it could directly enforce its outstanding 1m debt against the other property rather than falling back on the status of unsecured creditor. This emphasises the point that marshalling only really comes into its own where the mortgagor/debtor is insolvent: marshalling improves the position of the second mortgagee as against the unsecured creditors of the debtor, not as against the debtor herself. Of course, the fact that the second mortgagee could proceed directly against the other property, without the need for a judgment and a charging order, is a minor disadvantage to the mortgagor of the second mortgagee being able to marshal. But Ali is correct in his statement (op cit para 4.48) that, at least in the cases where it has been held to apply, Marshalling is neutral in its impact upon the residue available to the debtor following the discharge of its creditors claims. At one time judges expressed themselves in a way which suggested that a second mortgagee with the right to marshal could compel the first mortgagee to sell the other property to pay off the debt he was owed before having recourse to the common property. Indeed, Lord Eldon LC referred to the second mortgagee ha[ving] a right in equity to compel the first mortgagee to resort to the other in Aldrich v Cooper 8 Ves Jr 382, 388. However, it soon became well established that the first mortgagee had the right to have recourse to any of his securities which first come to hand and to realis[e] his securities in such manner and order as he thinks fit: per Wood V C in Wallis v Woodyear (1855) 2 Jur (NS) 179, 180, and Parker J in Manks v Whiteley [1911] 2 Ch 448, 466 respectively. The principle behind the doctrine of marshalling has been identified by Story in his Commentaries on Equity Jurisprudence, 2nd ed (1892), pp 416 417, in these rather broad terms: The reason is obvious . [By] compelling [the first creditor with the two securities] to take satisfaction out of one of the funds no injustice is done to him . But it is the only way by which [the second creditor with one security] can receive payment. And natural justice requires, that one man should not be permitted from wantonness, or caprice, or rashness, to do an injury to another. In short we may here apply the common civil maxim: Sic utero tuo ut non alienum laedas; and still more emphatically, the Christian maxim, Do unto others as you would they should do unto you. As I see it, there are also good practical reasons for equity adopting the doctrine, namely the unattractive and adventitious benefit which would otherwise be accorded to the first mortgagee. If marshalling was not available to the second mortgagee, the first mortgagees free right to choose the property against which he enforced could have substantial value. In effect, he could auction that right as between the second mortgagee (who would be prepared to pay him to enforce against the other property) and the unsecured creditors of the mortgagor (who, especially where the mortgagor was actually or potentially insolvent, would be prepared to pay him to enforce against the common property). Further, it appears to be somewhat arbitrary that, if he could not marshal, a second mortgagee who had sufficient resources and was prepared to take any associated risk, could redeem the first mortgage (on the basis of redeem up foreclose down see Megarry & Wade, The Law of Real Property, 8th ed, paras 25 110 to 113), and then protect its position as second mortgagee by selling the other property to redeem the first mortgage, before selling the common property. So far as the limits of the applicability of the doctrine of marshalling are concerned, there are a number of cases where it has been held not to be applicable eg because there is no common debtor or where a third party mortgagee may be prejudiced. However, we were taken to no case of specific relevance to the first strand of Mrs Szepietowskis argument. Guidance of a very general nature may, however, be found in what Lord Eldon LC said in Ex p Kendall (1811) 17 Ves 514, 527: The equity is clear upon the authorities, that, if two funds of the debtor are liable to one creditor, and only one fund to another, the former shall be thrown upon that fund, to which the other cannot resort; in order that he may avail himself of his only security: where that can be done without injustice to the debtor or the creditor: but that principle has never been pressed to the effect of injustice to the common debtor On the second strand of Mrs Szepietowskis argument, there is Australian authority to support the proposition that marshalling is not available to a second mortgagee where the first mortgagee is contractually bound to look first to the other property to satisfy the debt due to him see In re Holland (1928) 28 SR (NSW) 369 and Miles v Official Receiver (1963) 109 CLR 501. This seems to me to be correct, at least where the contract is with the mortgagor or with someone else with an interest in the other property, because the basis of the right to marshal is the arbitrariness of allowing the first mortgagees decision as to which asset to enforce against to affect the second mortgagees rights. It also seems to me that the Australian cases accord with the approach of the Court of Appeal in Webb v Smith (1885) 30 Ch D 192. The first strand of Mrs Szepietowskis argument As the oral argument developed, it became apparent that the first strand of Mrs Szepietowskis argument as to why SOCA should be held to be unable to marshal involved two somewhat different contentions. Her first contention is that the simple fact that the 2009 Charge does not secure a debt from her to SOCA, or indeed any debt at all, means that there is no right in SOCA to marshal as it seeks to do. Alternatively, she contends that the provisions of the Settlement Deed and the 2009 Charge, coupled with the circumstances in which they were executed, demonstrate that marshalling is precluded. I shall take those two contentions in turn. The absence of an underlying debt from Mrs Szepietowski to SOCA The first contention raises a point on which we were told by both counsel that there is no authority. In all the cases (save in the so called surety exception discussed by Ali, op cit, chapter 8) where marshalling has been allowed, both the first mortgagee and the second mortgagee have been creditors of the same debtor/mortgagor. However, in this case, at least according to her argument, Mrs Szepietowski never owed any money to SOCA other than such sum, if any, as was payable to SOCA out of the proceeds of sale of Claygate after payment of all prior claims, and that sum has been paid to SOCA; indeed, according to her case, the 2009 Charge does not secure a debt from anybody, other than that contingent sum. Although that proposition was challenged by SOCA, I consider that it is correct. The terms of the Settlement Deed are concerned with the ownership of, and rights over, property, and not with creating or acknowledging debts (other than Mr and Mrs Szepietowskis debts to HMRC). And the 2009 Charge is notable for the absence of any provision which creates or acknowledges an obligation on Mrs Szepietowski, the mortgagor, to pay the Secured Amount. All that she is obliged to do in relation to that sum under clause 2 is to use the proceeds of sale of Claygate towards settling it, after any prior obligations have been met. It is true that clause 7.1 refers to the Secured Amount becom[ing] due, but it does not say from whom, and its language is readily explained by the terms of section 101 of the Law of Property Act 1925, to which it refers. In any event, SOCAs contention that the 2009 Charge secured a debt due from Mrs Szepietowski is given its quietus by the unambiguous terms of clause 7.2. It therefore appears clear to me that the 2009 Charge did not create, or acknowledge the existence of, any debt from Mrs Szepietowski, or anyone else, to SOCA, save that it rendered her liable for a contingent debt, in that she was bound to pay SOCA an amount of up to 1.24m out of such sum, if any, as remained from the proceeds of sale of Claygate after the RBS Charge was paid off. The notion that the 2009 Charge did not impose or acknowledge an obligation to pay the Secured Amount on the part of Mrs Szepietowski is also supported by (i) the fact that the Settlement Deed, from which it originates, did not impose such a duty, (ii) the terms of clause 4.5 of that Deed which provides for the 2009 Charge (a point dealt with more fully in para 69 below), and (iii) the fact that both the Settlement Deed and the 2009 Charge originated from proceedings under the 2002 Act, whose purpose is to recover specific properties not to recover a sum of money. The fact that the 2009 Charge involved giving SOCA security over Claygate without an underlying debt being owed by the mortgagor (or anyone else), save the contingent debt identified in para 42 above, throws up an intriguing problem in relation to the right to marshal. There is plainly a difference between marshalling in the normal case, where the mortgage to the second mortgagee is security for a debt due from the mortgagor to the second mortgagee, and marshalling in a case such as the present, where there is no underlying debt from the mortgagor (or anyone else) to the second mortgagee (other than a contingent liability to pay a sum out of the net proceeds of sale of the common property). As explained in paras 32 33 above, in the normal case, marshalling does not result in the liabilities of the mortgagor being increased after the sale of the common property. However, if the second mortgagee can marshal in a case such as this, where there is no underlying debt due to it from the mortgagor, the mortgagors liabilities would be increased at least once the common property has been sold by the first mortgagee. Thus, (i) if SOCA can marshal in this case, Ashford House would effectively be subject to a second mortgage (ranking after TMBs first mortgage see para 8 above) securing just under 1.24m, and Mrs Szepietowski would have to pay that sum to SOCA or lose her home, whereas (ii) if SOCA cannot marshal, then Ashford House would be free of any second mortgage, and Mrs Szepietowski would be free of any further liability to SOCA. We are therefore called on to decide whether, in a case where there is no underlying debt from the mortgagor to support the second mortgage (save the contingent debt described at the end of para 42 above), (i) the second mortgagee can invoke the doctrine of marshalling because the basis for its application, as described in paras 35 and 36 above, exists, or (ii) the second mortgagee should not be able to marshal as there is no underlying debt from the mortgagor to the second mortgagee after the sale of the common property and the distribution of its proceeds of sale, and there is a fundamental, if unspoken, requirement for the doctrine to be applicable that there is a debt owing to the second mortgagee at the time when he seeks to marshal. I refer to the alleged requirement being unspoken, as there is no judgment which deals with this question, although many of the explanations of marshalling assume that the second mortgagee is owed an underlying debt by the mortgagor (for instance, the passages quoted from Lord Hoffmann and Rose LJ in paras 1 and 2 above refer to a debt owing to the second mortgagor), and other definitions do not (see per Lord Hardwicke LC and Lord Eldon LC in paras 29 and 30 above respectively). In the end, I do not find any these observations of assistance on this issue because they were all made in the context of cases where there was an underlying debt due from the mortgagor which was secured by the second mortgage. The judges concerned were simply not addressing their minds to the point at issue in this case. I accept that it can fairly be said that the justification for marshalling, namely that the extent or value of the second mortgagees rights should not depend on which of the first mortgagees securities is realised first, and that the underlying reasons for marshalling identified in paras 35 and 36 above, apply in the present case. I also accept that the only difference between the result of marshalling in the cases where it has been permitted and in the present case is the identity of the party who is prejudiced by the marshalling (namely the unsecured creditors in the previous cases, as against the debtor in the present case). Accordingly, I acknowledge the force of Lord Carnwaths reasoning in paras 101 104 below. Nonetheless, despite Miss Harmans attractively developed argument to the contrary, I have concluded that as a matter of principle, marshalling is not available to a second mortgagee where, as here, the common property does not secure a debt due from the mortgagor, but is merely available as security for what the second mortgagee can extract from that property. My reasoning can be put in a number of different ways, but in the end they amount to much the same thing, namely that, in such a case, there is simply nothing, in particular no debt due from the mortgagor, from which the right to marshal can arise, once the common property has been sold and the proceeds of sale distributed in accordance with the legal priorities. As already explained, the only debt which can be said to be due from the mortgagor to the second mortgagee in a case such as this is the sum (if any) which is left from the proceeds of sale of the common property after the costs of sale and the debt due to the first mortgagee have been paid off: see clause 2.1 (supported by clause 7.2) of the 2009 Charge. Once that (admittedly derisory) sum was paid to SOCA, there was nothing due from Mrs Szepietowski (or anyone else) to SOCA, so it is difficult to see on what basis SOCA can say that it is entitled to enforce a right to be paid out of another property owned by Mrs Szepietowski. It is one thing for a second mortgagee, who was a secured creditor of the mortgagor and has not been paid in full (or at all) from the sale of the secured property, to be able to look to other property of the debtor to discharge a debt which remains outstanding. It is quite another for a second mortgagee with no outstanding debt due from the mortgagor to be able to look to another property of the mortgagor to realise what it hoped to raise from the sale of the secured property. In my judgment, once there is no debt due from the mortgagor to the second mortgagee, the second mortgagee has no right to marshal. In this case, therefore, it follows that SOCA can have no right to marshal. My conclusion receives support if one considers the position where the mortgagor is insolvent. As explained in paras 32 33 above, a second mortgagee, whose mortgage secured a debt due to him from the mortgagor would (if he could marshal) either be treated as a secured creditor whose security for the debt was the other property to the detriment of her unsecured creditors, or (if he could not marshal) would join the ranks of the unsecured creditors of the mortgagors estate in respect of his debt. If a second mortgagee with no underlying debt from the mortgagor could in principle marshal, then, were the mortgagor to be insolvent, the second mortgagee would either be treated, in effect, as a secured creditor whose security was the other property, whereas, if the second mortgagee could not marshal in such a case, it would have no claim at all against the mortgagors estate. There would be nothing surprising about the latter possibility, whereas it would be surprising if marshalling could create what for all intents and purposes was a secured debt, when, in the absence of marshalling, there would be no debt at all. My conclusion is also supported if the right to marshal is an incident of the second mortgage when it is granted, which appears to me to be logical and in accordance with the Judges approach: see [2010] EWHC 2570 (Ch), paras 27 and 37, as summarised in para 25 above. It is normally easy to imply a common intention on the part of the parties to the second mortgage (the mortgagor and the second mortgagee) that there should be a right to marshal where the second mortgage secures a debt due from the mortgagor, because such a right is to the manifest advantage of the second mortgagee and of no significance either way to the mortgagor (see paras 32 33 above). However, where there is no underlying debt due from the mortgagor (other than what the second mortgagee can extract from the common property), it would be plainly contrary to the mortgagors interest that the second mortgagee should be able to marshal; accordingly, normal principle would suggest that, at least in the absence of special facts, there should be no right to marshal in such a case. I should briefly revert to the notion that the absence of an underlying debt should be a factor which goes to the discretion of the judge when deciding whether to permit the second mortgagee to marshal, as suggested by the Court of Appeal at para 54 of its judgment. Not only does that seem to me to be wrong in principle, as already explained. It also appears to involve a recipe for uncertainty. Marshalling is an equitable right (or remedy), but that does not mean that its exercise should depend too readily on the individual merits of the case. It should, so far as possible, be governed by clear principles so mortgagors and mortgagees know where they stand. Accordingly, I conclude that, where the second mortgage does not secure a debt owing from the mortgagor to the second mortgagee, the right to marshal should not normally exist once the common property is sold by the first mortgagee and the proceeds of sale distributed, because there would be no surviving debt owing from the mortgagor to the second mortgagee. In such a case, equity should proceed on the basis that the second mortgagee normally takes the risk that the first mortgagee will realise his debt through the sale of the common property rather than the sale of the other property. I draw some support from the observation of Lord Eldon LC in Kendall 17 Ves 514, 527 that the doctrine of marshalling has never been pressed to the effect of injustice to the common debtor. Of course, this can be said to beg the question in the sense that it may be a matter of debate as to whether it would wreak an injustice on the mortgagor in a case such as this to permit marshalling. However, if one bears in mind that marshalling, as it has been understood normally, involves no net increase in the liability of the debtor/mortgagor when the second mortgagees right of marshalling arises, I consider that the observation tends to support the notion that the doctrine of marshalling does not normally apply where the second mortgagee does not secure a debt from the mortgagor. Finally on this aspect, I have intentionally used the word normally in paras 56 57 above, because marshalling is an equitable remedy. Accordingly, whether it is available in any particular case may depend on the circumstances, just as it may depend on the circumstances of a case where it would prima facie apply, whether it actually does apply. Notwithstanding what I have said in para 55, it would be wrong to rule out the possibility of an exceptional case, where the generalisations in para 56 or para 57 would not apply, although absent express words which permit or envisage marshalling, I find it hard to conceive of such a case. As I understand it, if, as I have concluded, marshalling is not normally open to a second mortgagee where there is no underlying debt, SOCA does not contend that this is an exceptional case where it would be open to it. Therefore Mrs Szepietowskis remaining two contentions need not be addressed. However, it is right to express a view upon them, as they were fully argued and may be of some significance in future marshalling disputes. The terms of the Settlement Deed and the 2009 Charge If, contrary to the above conclusion, marshalling should be available to a second mortgagee where there is no underlying debt from the mortgagor in the same way as where there is such an underlying debt, I would still have allowed Mrs Szepietowskis appeal on the basis of the other contention advanced as part of the first strand of her argument. As explained in para 25 above, the courts below approached the issue on the basis that marshalling should not be excluded unless the parties expressly agreed that it should be, or unless its exclusion was necessarily implied by the terms of the 2009 Charge. Marshalling is an equitable remedy or right, and it should not therefore be available to a second mortgagee in circumstances where it would be inequitable to allow it. While there is considerable overlap between the test applied by the courts below and inequitability, and while, as is reflected in para 55 above, any court must be careful to avoid an approach to equity which is too open textured or subjective, I consider that the approach of the courts below involved setting too high and too rigid a hurdle for a party seeking to mount a case against marshalling. In my view, the correct approach is to ask whether, in the perception of an objective reasonable bystander at the date of the grant of the second mortgage, taking into account, in very summary terms, (i) the terms of the second mortgage, (ii) any contract or other arrangement which gave rise to it, (iii) what passed between the parties prior to its execution, and (iv) all the admissible surrounding facts, it is reasonable to conclude that the second mortgagee was not intended to be able to marshal on the occurrence of the facts which would otherwise potentially give rise to the right to marshal. It is true that the possibility of marshalling can only arise some time after the mortgage is granted (and indeed that it may never arise), and it is true that facts could arise after the second mortgage which render it inequitable that the second mortgagee should have (or should not have) the right to marshal. However, it seems to me that the starting point for deciding whether there should be a right to marshal must be when the second mortgage is created. In the absence of relevant subsequent developments, the question must be judged as at that date. Furthermore, it appears to me to accord with principle that the question must be judged objectively, based on what passed between, was known to, and would consequently have been reasonably understood by, the parties. In my view, a combination of factors in this case establish that, even if, given the facts summarised in para 22 above, the normal presumption would be that SOCA, as the second mortgagee, should be entitled to marshal, it should not be able to do so in this case. First, the 2009 Charge was entered into to give effect to a claim under the 2002 Act. As Lord Carnwath points out in his judgment, ARAs (and now SOCAs) rights and powers are purely statutory in nature. For present purposes, its task under the 2002 Act was to identify, to claim and, through a court order, to obtain recoverable property see sections 243, 266, 276 and 304 310. SOCAs rights under the 2002 Act were thus against specific assets of a respondent, and there could have been no question of a debt being created in favour of the ARA against a person such as Mrs Szepietowski, unless, of course, she had agreed to it, which, as explained above, she had not. Accordingly, it seems unlikely that the parties to the 2009 Charge could have intended SOCA to have a claim against a property which was not recoverable under the 2002 Act. Secondly, there is the point that it would potentially be to the disadvantage of one of the parties to the 2009 Charge, namely Mrs Szepietowski, if the other party, SOCA, had the right to marshal. Of itself, this cannot be decisive, but, because there is no underlying debt from the mortgagor, this would make the normal presumption in favour of marshalling less strong than it would be in the normal case where there is an underlying debt due from the mortgagor. (This is not inconsistent with the point made in para 55 above, because, for present purposes, I am assuming, contrary to my earlier conclusion, that the absence of an underlying debt does not vitiate the right to marshal). Thirdly, as explained in paras 7 and 8 above, Ashford House was included in Annexe A, but not in Annexe B or C, to the Settlement Deed, so it is clear that the parties intended it to remain with Mrs Szepietowski, unencumbered by any liability to SOCA. It would therefore be somewhat curious if the effect of the 2009 Charge, which was executed pursuant to the Settlement Deed, should have the result of encumbering Ashford House with a liability to SOCA. Fourthly, in the Annexes, the parties did not treat Ashford House as subject to the RBS Charge, unlike Church Street, Thames Street and Claygate (see paras 8 and 9 above). Given that it is fundamental to SOCAs marshalling claim that Ashford House was subject to the RBS Charge, it is again somewhat curious that this claim arises out of a charge executed pursuant to a contract which plainly proceeds on the assumption that it was not. Fifthly, particularly in the context of these three points, the fact that the Settlement Deed is expressed to be in full and final settlement of all claims SOCA may have relating to the properties in Annexe A (see para 8 above) is not entirely easy to reconcile with a subsequent marshalling claim by SOCA against Ashford House. Sixthly, the effect of clauses 4.4 and 4.5 of the Settlement Deed, as explained in paras 11 and 12 above, is that Mrs Szepietowski would only have had to grant a charge over Claygate if three separate conditions were satisfied, namely (i) under clause 4.5(i), SOCA decided it wanted Thames Street and Church Street sold, (ii) under clause 4.5(ii), RBS refused to release those properties from the RBS Charge, and (iii) under clause 4.4, Mrs Szepietowski decided to have Claygate vested back in herself (as she could scarcely have granted SOCA a charge over a property it owned). If any of these three requirements had been unsatisfied, there would have been no 2009 Charge, and, of course, without that charge there would have been no possibility of marshalling, and therefore no possibility of SOCA claiming that any sum was secured in its favour over Ashford House. It seems particularly unlikely that SOCAs ability to mount such a claim would have been intended to depend on conditions (i) or (iii). Seventhly, over and above these points on the contractual documentation, there is the point that Ashford House was Mrs Szepietowskis home. Common sense suggests that it was one of the relatively few properties in Annexe A which was not vested in the Trustee, because of that fact. The Settlement Deed represented a compromise which left Mr and Mrs Szepietowski with some properties, and it seems very likely that they would have been particularly keen to keep their home, and that SOCA accepted this in the Settlement Deed. That does not fit comfortably with the idea that SOCA and Mrs Szepietowski can have intended that a document subsequently executed pursuant to that Deed should lead to a substantial potential charge over that home. In my view, the combination of these various factors establishes that, even if a second mortgagee whose mortgage secures no underlying debt from the mortgagor is entitled to marshal, the contractual documentation and background facts in this case establish that it would be inequitable for SOCA to be permitted to marshal against Ashford House. To permit SOCA to marshal would involve flying in the face of the understanding of both parties to the mortgage said to give rise to the right, namely the 2009 Charge, as revealed in the 2009 Charge itself, and the Settlement Deed from which it originates and indeed to which it refers in its preamble. The second strand of Mrs Szepietowskis argument Mrs Szepietowski contends that the fact that Ashford House is her home means that RBS would not, in reality, have been able to enforce its rights under the RBS Charge against Ashford House before it could have enforced its rights against Claygate. Accordingly, in reliance on the principle described in para 38 above and the Australian decisions there cited, In re Holland 28 SR (NSW) 369 and Miles v Official Receiver 109 CLR 501, she contends that marshalling would not, in any event, be available to SOCA. This argument relies on two separate legal points. The first is the protection given by section 36 of the Administration of Justice Act 1970 (section 36) to defaulting mortgagors of dwelling houses where the mortgagee is claiming possession. The second point is the respect which is afforded to an individuals home under article 8 of the European Convention on Human Rights (article 8). In my view, there is nothing in either of these points. The only thing which can be made of the fact that the marshalling claim relates to Mrs Szepietowskis home is the point made in para 71 above. Assuming in Mrs Szepietowskis favour that section 36 and/or Article 8 would have rendered it more difficult for RBS to enforce the RBS Charge against Ashford House than against Claygate, that would be wholly insufficient to prevent SOCA being able to marshal, if it was otherwise entitled to do so. Where the requirements of the right to marshal are otherwise present, it would require a contractually enforceable obligation, or something close thereto, on the first mortgagee to enforce against the common property in priority to the other property for the second mortgagee to lose his right to marshal. (The words or something close thereto are added out of an abundance of caution, based on an acceptance that nobody can foresee every possibility: I find it very hard to think of an arrangement short of a binding estoppel which would do). It would be wrong, both in principle and in practice, if it were otherwise. The right to marshal is based on a simple principle, and there is no reason to dilute it in the way contended for on behalf of Mrs Szepietowski. After all, the right to marshal is not based on the proposition that the first mortgagee is under an obligation to sell the other property first see para 34 above. Further, if Mrs Szepietowskis contention were accepted, one can readily imagine all sorts of arguments as to whether one property is more difficult to sell than another, and whether the extent or nature of the difficulty is such as qualifies for the purposes of the contention. Mr Tager QC suggested that if RBS had proceeded against Ashford House, the court would have stayed the proceedings on the basis that it should go against Claygate. I am by no means convinced that that is right. However, even if it was, I do not consider that would disqualify SOCA from seeking to marshal if it was otherwise able to do so. Conclusion In these circumstances, I would allow this appeal, and hold that SOCA does not have the right to marshal as it contends. I should add that, since preparing this judgment I have seen in draft the judgment of Lord Reed and the brief judgment of Lord Sumption, with both of which I agree. LORD SUMPTION I agree with the order proposed by Lord Neuberger for all the reasons that he gives. In particular I agree that subject to any contrary provision in the parties agreement, the charge must secure one or more underlying debts (or other personal liabilities) of the chargor to the chargee before the latter can require it to be marshalled with other securities given to other chargees. The reason is that a charge to secure a liability of the chargor to the chargee is a secondary benefit. It is available only for the purpose of enforcing the primary benefit, namely the underlying personal liability which the chargor owes him The right to marshall is an equity designed to ensure that the choices made by another chargee do not frustrate the enforcement of the underlying personal liability. If there is no underlying personal liability, then the sole effect of the transaction is to confer a contingent interest in the charged asset, not as the means to the recovery of any liability but as itself constituting the primary benefit. If the asset is subject to a prior charge in favour of someone else, the benefit thus conferred may not be worth very much. But that is the risk that the chargee necessarily accepts by taking no right of recourse against the chargor personally but only a potentially flawed interest in a specific asset. Once the chargee has enforced the charge against the asset in question, his claims against the chargor are exhausted. There is no possible equity that could entitle him to more. In this situation if the chargee can have the securities marshalled and proceed in addition against a different asset which was never charged to him, then the effect is to increase the chargors financial exposure. Since this would conflict with the whole basis on which equity developed the right to marshall, I cannot accept that it represents the law. I agree that the appeal should be allowed, for the reasons given by Lord LORD REED Neuberger and Lord Sumption. In view of the infrequency with which cases on this topic arise, and the application of the Proceeds of Crime Act 2002 throughout the United Kingdom, there may be some value in my adding some observations about the equivalent Scottish doctrine of catholic securities, described succinctly by Lord Adam in Nicols Trustees v Hill (1889) 16 R 416, 421: That doctrine is that when a prior creditor has one way of working out his preference which is less injurious to the postponed creditor than another, the prior creditor is bound either to adopt that course, or by assignation to put the postponed creditor into his right. The equitable basis of the doctrine, as Lord Adam described it, was explained by Lord President McNeill in Littlejohn v Black (1855) 18 D 207, 212: In the ordinary case of a catholic creditor ie, a creditor holding security over two subjects, which for the sake of simplicity I shall suppose to be heritable subjects and another creditor holding a postponed security over one of them, there can be no doubt that the catholic creditor is entitled to operate payment out of the two subjects as he best can for his own interest, but he is not entitled arbitrarily or nimiously to proceed in such a manner as to injure the secondary creditor without benefiting himself as, for instance, capriciously to take his payment entirely out of the subjects over which there is a second security, and thereby to exhaust that subject, to the detriment of the second creditor, leaving the other subject of his own security unaffected or unexhausted. The second creditor will be protected against a proceeding so contrary to equity, and the primary creditor will be compelled either to take his payment in the first instance out of that one of the subjects in which no other creditor holds a special interest, or to assign his right to the second creditor, from whom he has wrested the only subject of his security. Securities are neutral in their effect upon the debtor. Their effect is to strengthen the position of the secured creditor at the expense of unsecured creditors, since the holder of a security holds a right, accessory in nature, which he can exercise to secure the payment of the debt that is distinct from, and additional to, the right of action and execution which any creditor can exercise to enforce the performance of the debtors personal obligation. The doctrine of catholic securities can therefore operate to the prejudice of unsecured creditors, but it cannot affect the interests of the debtor. As the Lord President stated (ibid): The interest ie the legitimate interest of the primary creditor goes no farther than to get payment of his debt, and that is secured to him. The interest of the secondary creditor is to realize the value of his postponed security, and that is secured to him, in so far as is compatible with payment of the prior debt due to the primary creditor. The interest of the common debtor is truly nothing, or rather it is, or at least it ought to be, to allow both his creditors to receive full payment out of the subjects he had pledged to them. The ideas underlying the Scottish doctrine evidently have much in common with those underlying the English principle of marshalling, as explained in the authorities cited by Lord Neuberger. Lord President McNeills explanation that the Scottish doctrine protects the interests of the secondary creditor, but does not affect the interests of the debtor, appears to me to be equally true of the English principle, and to be particularly relevant to the present case. As Lord Neuberger has explained, the debt which was owed to SOCA and secured by the 2009 Charge was contingent upon a number of eventualities, one of which was whether any amount (and if so, how much) was left over after prior claims had been met out of the net proceeds of sale of Claygate: something which depended upon RBSs decision as to the order in which it should realise its securities. It follows that the short answer to SOCAs claim that it should be entitled to the benefit of RBSs security over Ashford House in order to secure the payment of the balance of the debt owed to it is that there is no such balance: it received, out of the sale proceeds of Claygate, all that it was entitled to receive. SOCAs argument to the contrary assumes, contrary to clause 7.2 of the 2009 Charge, that there was a debt owed to SOCA which was ascertainable independently of RBSs election. Another way of putting the point is to say that there is no scope for marshalling of securities, as SOCA is no longer a creditor of Mrs Szepietowski, and there is therefore no longer any personal liability which is secured by the 2009 Charge. It is because of the debts being contingent upon (amongst other things) RBSs decision as to the order in which to realise its securities that SOCAs argument is inconsistent with the principle that marshalling is neutral in its effect upon the debtor. If SOCA were entitled to treat the balance of the Secured Amount (as it was somewhat confusingly described in the 2009 Charge) as being secured over Ashford House, the effect would be to increase the amount which Mrs Szepietowski had to pay: in the light of clause 7.2, it cannot be argued that, absent marshalling, SOCA would be a creditor for the balance of the Secured Amount. That in itself demonstrates that SOCAs claim is not a proper application of the principle of marshalling. LORD CARNWATH I agree that the appeal should be allowed, but on narrower grounds than those favoured by Lord Neuberger. In my view the solution is to be found, not in the general law of marshalling, but in the interpretation of a particular contract against its unusual statutory and factual background. On that aspect, I agree with the conclusion and much of the reasoning of Lord Neuberger under the heading The terms of the Settlement Deed and the 2009 Charge (paras 60 71), but with a rather different emphasis. The starting point to my mind is the statutory jurisdiction under which SOCA was operating, and under which the compromise was agreed. SOCAs jurisdiction under this part of the 2002 Act is asset based, rather than financial. Its task is to identify and claim recoverable property, that is property acquired through unlawful conduct as provided for in the Act. The essential purpose of the settlement deed was to resolve a dispute between SOCA and the appellant as to the properties to be treated as falling within that category. It was consistent with that scheme that the appellant did not undertake a personal obligation to pay any sum of money as such, beyond the value of her interest in the properties specified. SOCA started with a potential claim to 20 items of recoverable property (listed in annexe A) but they agreed to accept the 13 transfer properties listed in annex B in full and final settlement of their claims in relation to all the properties in annexe A (cl 2.1), they being expected at the time to realise some 5.4m. Her home, Ashford House, was specifically excluded. As I understand the arrangement, the two additional properties in annexe C (Claygate) were needed solely to deal with the complication of the RBS charge over two of the transfer properties (Thames Street and Church Street). If RBS had agreed to the transfer of their charge to Claygate (under cl 4.5(i)), there would have been no such complication, the additional properties could have dropped out of the picture (cl 4.4), and no question of marshalling could have arisen. As it was, the trustees rights to Thames Street and Church Street were, on their sale, converted into another property right, a charge over Claygate for the amount (1.24m) of their sale proceeds as paid to RBS (cl 4.5(ii), 2009 charge cl 1). Consistently with the scheme of the settlement, clause 2 of the charge defined the appellants obligation on sale of that property as being to apply the proceeds of sale. , in settlement of the secured amount. In this statutory context, and taken with clause 7.2, I read this wording as not only excluding any personal liability on the part of the appellant, but as also impliedly excluding recourse to any source for payment other than those identified. If SOCA had wished to include Ashford House as potentially recoverable property, they should have done so specifically, rather than hope to bring it in later by an equitable backdoor. In the result, I agree with Lord Neubergers conclusion at paragraph 72, not so much on the basis that it would be inequitable to allow marshalling against Ashford House, but that on the proper interpretation of the agreement in its statutory context that possibility is excluded. This conclusion accords with that provisionally reached by Henderson J in his first judgment ([2009] EWHC 655 (Ch) para 31). In his later judgment on the present issues ([[2010] EWHC 2570 (Ch) paras 35 36) he changed his mind. He thought that clause 2.1 could not be read as extending to future claims against or relating to the released properties. He took account of some words of Lord Bingham of Cornhill in Bank of Credit and Commerce International SA v Ali [2002] 1 AC 251, para 19 (the BCCI case), when holding that the general release arrived at in a settlement agreement in that case did not extend to future claims for stigma damages by BCCI employees who had been made redundant in 1990. In the Court of Appeal, Patten LJ agreed. He said: The claim to be subrogated to the RBS charge against Ashford House is not a claim against Mrs Szepietowski in the proceedings or even a claim against her at all. It is a claim to enforce the subsisting clause 4.5 charge by invoking the courts equitable jurisdiction to marshal the available security between existing creditors. Clause 2.1 is not directed to that issue which arises as a result of rights granted to SOCA under the deed. (para 47) With respect to both courts, I think that Henderson Js first thoughts were correct. The marshalling claim is sufficiently linked to the subject matter of the agreement to fall within the words of clause 2.1, in the context of an agreement which, as I have said, was intended to define the limits of SOCAs property claims arising out of these particular allegations of unlawful conduct, and in relation to these properties. This is a very long way from the facts of the BCCI case. As the judge acknowledged, and as is apparent from Lord Binghams words quoted by him, that was a case in which the parties, at the time of the release, could never have had in contemplation at all the type of claims subsequently advanced. Furthermore, with respect to Patten LJ, to focus on whether the marshalling claim is one against Mrs Szepietowski herself is to disregard the whole purpose of the agreement, which as I have said was not to define personal claims, but to fix the limits of SOCAs property claims under the Act. The addition in clause 2.1 of the words (claims) in relation to the properties listed seems to me quite sufficient, if necessary, to make that clear. I would have been content to stop at that point. But in view of the attention given to the issue of marshalling in the courts below, and since I have reservations about Lord Neubergers reasoning on this topic, I think it right to add my own comments. The courts below struggled with the concept of a charge without an underlying debt, which the judge described as a contradiction in terms (para 45). He referred to Lord Hoffmanns statement that an interest provided by way of security entitles the holder to resort to the property only for the purpose of satisfying some liability due to him (whether from the person providing the security or a third party) (In re Bank of Credit and Commerce International SA (No 8) [1998] AC 214, 226 (the BCCI (No 8) Case)). This discussion arose in the context of what he called the two debts condition (para 47). This, as I understand it, he took from the statement of Rose LJ in the Court of Appeal decision in the BCCI (No 8) Case [1996] Ch 245, 271 (in the passage already quoted by Neuberger LJ para 2) that for the [marshalling] doctrine to apply there must be two debts owed by the same debtor to two different creditors. It was argued that since there was no debt due to SOCA, marshalling could not be invoked. The judge concluded that this condition was satisfied, even if the appellant could not be sued personally: That there was a debt owed by her to SOCA is in my judgment undeniable, even if it was a debt that could be enforced only by sale of the Claygate Properties (para 46). In the Court of Appeal, Patten LJ (paras 53 54) recorded that there had been no challenge to the judges finding that a debt was created by the charge. Nor was this issue as such reopened by the appellants printed case in this court (see para 154). Notwithstanding that formal position, the majority of this court have as I understand it thought it appropriate to re examine the no debt issue, in order to avoid the law being developed on a false basis. I do not dissent from that approach, although I am not convinced that the issue is one of any general importance. On any view, the concept of a charge without an underlying personal debt seems sufficiently unusual for it to be difficult to consider outside the particular factual context in which it may arise. As to the principle, I agree with Lord Neuberger (para 48) that Rose LJs words were not directed to the issue which arises in this case. They cannot in my view be read as sufficient in themselves to establish a general two debts rule. I do not find it so easy, however, to discount the words used in the 18th and 19th century authorities, since it is they which explain the basis on which the principle was developed. Those cases make clear to my mind, as Miss Harman submits, that it is a remedy which operates primarily between security holders, not between them and the common debtor or chargor. In the words of Lord Eldon LC in Aldrich v Cooper 8 Ves Jun 382, 395 (quoted by Lord Neuberger at para 30) a person having [access to] two funds shall not by his election disappoint the party having only one fund; or as Professor Story put it (quoted at para 35) it is a matter of natural justice between the two creditors. To achieve this, the second charge holder has an equity to require that the first creditor satisfy himself (or be treated as having satisfied himself) so far as possible out of the security or fund to which the latter has no claim (per Lord Hoffmann in the BCCI (No 8) Case [1998] AC 214, 231, quoted at para 1). The Scottish cases, to which Lord Reed refers, are to the same effect. With regard to the interests of the common debtor or chargor, the only qualification to be found in those judgments is in Lord Eldon LCs observation in Ex P Kendall 17 Ves 514, 527 that the principle has never been pressed to the effect of injustice to the common debtor (quoted by Lord Neuberger at para 37). However, it is not clear what form of injustice he had in mind. In the normal case, the common debtor will have accepted the risk of enforcement of the two charged sums in full against both securities. There is no injustice to him if that risk becomes fact. That position, as it seems to me, is unaffected by whether or not the charger is also subject to a personal liability. In either case, he has accepted the risk of enforcement against both properties, contingent only on the choice of the first chargee. Lord Neubergers view to the contrary depends as I understand it on looking at the position after the common property has been sold by the first chargee (paras 46 47). However, that seems to me with respect to look at the position from the wrong end. What matters is not how things turn out, but whether that result is within the scope of the risk which the chargor has undertaken at the time the charges were granted. Clearly, once the common property is sold, assuming the chargor is solvent and there is no personal liability, he will be worse off if marshalling is allowed than if it is not. Instead of enforcement being limited to what can be extracted from the second property, it will extend to the remaining value of both properties. However, there is no injustice in that result if it is within the scope of the risk which he has voluntarily accepted. On the wider issue, therefore, I agree with Miss Harmans submissions. Assuming that, at least in theory, there might be other circumstances (outside the present statutory context) in which a charge would be granted without an underlying personal liability, I see no reason in principle why the remedy of marshalling should be excluded. However, for the reasons already given, I would uphold the appeal on the issue of construction. LORD HUGHES I entirely agree that this appeal should be allowed and that on the facts of this transaction SOCA does not have the right to marshal against Ashford House. With a single exception, I do so for all the reasons given by Lord Neuberger. The single exception concerns the general proposition that before marshalling can be claimed the security held by the second chargee must secure an underlying personal debt of his to the chargor. It seems to me, as it does to Lord Carnwath, that the essence of marshalling lies in the existence of concurrent securities, rather than in the nature of the liability which they secure. Clearly there will always be some liability by the chargee to the chargor. It will normally, no doubt, be a personal debt from the chargee to the chargor. But it may occasionally be something different, as for example if the chargor is prepared to underwrite the debt of another to the extent of putting up security but is not prepared to enter into an unlimited personal guarantee. If, in such a situation, the security offered is a second charge on some asset (Blackacre) already charged to a prior chargee and if that prior chargee also has additional security (Whiteacre) for whatever liability the chargor has to him, the occasion for the second chargee to seek to marshal may arise if the prior chargee opts to enforce the common security (Blackacre) rather than his additional security (Whiteacre). There may be something in the particular transaction, as there is here, which demonstrates that marshalling would be inconsistent with its nature. But as a general proposition it seems to me that there is no obstacle in the situation described to the second chargee marshalling against Whiteacre up to the amount which would have been available to him in Blackacre if the prior chargee had opted to enforce first against Whiteacre. True it is that the second chargee has always known that he ranks second to the prior chargee and that accordingly he has always faced the risk that Blackacre may be used up by the prior chargee. But that is true equally where there is also a personal liability. The function of marshalling is to avoid his losing his security simply because the prior chargee opts to enforce against Blackacre rather than against his additional security, Whiteacre. The existence or non existence of a personal liability in the chargor makes no difference. Next, it is certainly true that it is of the essence of marshalling that it is neutral so far as the chargor/debtor is concerned, in the sense that he ends up paying in total out of the two securities no more than he was always liable to pay. However, it does not seem to me that the chargors total exposure is impermissibly beyond what it was always likely to be by marshalling in the situation described. It will still be the same as it would have been if either (a) the prior chargee had enforced first against Whiteacre or (b) the liability to the prior chargee had otherwise been discharged, both of which events were always on the cards. For these reasons, although the occasion for the distinction to bite will no doubt be rare, I prefer Lord Carnwaths conclusion on this narrow point.
+This appeal is the lead case in a number of appeals concerned with the interpretation of the phrase in section 6(1) of the Social Security Contributions and Benefits Act 1992, [w]here in any tax week earnings are paid to or for the benefit of an earner. It focuses on the meaning of the word earnings in that phrase. The context is the payment of an employers contribution to a Funded Unapproved Retirement Benefits Scheme. Until 2006 such schemes were commonly used to top up sums available through tax approved pension schemes. The facts On 11 April 2002 the appellant company (FML) established by trust deed a retirement benefit scheme to provide relevant benefits (as defined in section 612 of the Income and Corporation Taxes Act 1988) to its employees and directors. The trust provided that, upon a members retirement from service, the trustees were to apply the accumulated fund in providing the member with a pension for life or such other relevant benefits as they might agree with him. On the members death the trustees were to realise the accumulated fund and apply the net proceeds to or for the benefit of a defined discretionary class of beneficiary. On the same day Mr McHugh, a shareholder and director of FML, asked to become a member of the scheme. He informed the trustees that he wished them to exercise their discretion in favour of his wife in the event of his death. FML made an initial cash contribution to the scheme of 1,000 and transferred to it Treasury Stock with the nominal value of 162,000, both for Mr McHughs benefit. He has been the only member of the scheme. He has received no relevant benefits from the scheme. When the transfers were made to the scheme Mr McHugh was 54 years old. He had no vested interest in the assets of the scheme because the retirement age under the scheme was defined as meaning: the date between the 50th birthday and the 85th birthday notified to a Member by the Employer as the date on which the Members benefits will become payable. Such date may be varied from time to time by agreement in writing between the Employer and the Member. FML specified Mr McHughs retirement age to be his 60th birthday. But, as HMRC pointed out, he controlled FML and was in a position to bring forward his retirement date for the purposes of the trust deed. The Issue The principal issue which we address is whether the transfer of the cash and Treasury Stock to the scheme was a payment of earnings to or for the benefit of Mr McHugh within the meaning of section 6 of the 1992 Act. It was agreed that the payment was for his benefit. But was it earnings for the purposes of that section? The prior proceedings FML appealed against HMRCs decision that it was liable to pay Class 1 National Insurance Contributions on the value of the transfer. The Upper Tribunal (Tax and Chancery Chamber) (Floyd J and Judge Avery Jones) heard the appeal at first instance. It delivered a judgment on 21 February 2011 allowing the appeal. HMRC appealed to the Court of Appeal (Arden LJ, Rimer LJ and Ryder J). By a judgment dated 30 May 2012 the Court of Appeal by a majority (Arden LJ and Ryder J) allowed the appeal and restored the decision of HMRC. Before this court Mr Bramwell presented FMLs appeal on a much narrower front than the case which had been debated before the Court of Appeal. Until his oral submissions to us, FMLs case had been that earnings in NIC legislation covered the same ground as emoluments in income tax legislation. FML abandoned that position and focused principally on the contingent nature of Mr McHughs interest in the transferred assets. In short, Mr Bramwell accepted that earnings had a wider meaning than emoluments in income tax legislation. His submission was that the payment of earnings under section 6 of the 1992 Act did not extend to the employers transfer to a trust of funds or assets in which the earner had at the time of the transfer only a contingent interest. We, and Mr Jones for HMRC, therefore had to address a different argument from that advanced before the Court of Appeal. Counsel for both parties argued their cases very ably. Discussion The legislative history that lies behind our present system of national insurance shows that Mr Bramwells change of position was correct: National Insurance Contributions (NICs) have been levied on a basis which is different from the emoluments on which income tax has been raised. Mr David Lloyd George, when Chancellor of the Exchequer in 1911, introduced the first compulsory system of insurance against illness and unemployment in the United Kingdom: the National Insurance Act 1911. The Act fixed contributions rates by reference to the level of an employed persons remuneration (section 4 and Second Schedule). Lord Beveridge carried out a substantial review of the by then expanded system of national insurance and reported in 1942. The Beveridge Report (Cmnd 6404) was implemented by the National Insurance Act 1946, which established the National Insurance Fund, into which workers, employers and the state were to contribute. Employers and employed persons were required to make weekly contributions into the National Insurance Fund to pay benefits to the earners and their dependants. Contributions were paid in respect of earnings. In section 78 of the 1946 Act earnings were interpreted to include any remuneration or profit derived from a gainful occupation. The current provision for NICs is contained in the 1992 Act and subordinate legislation. Sections 6 to 9 of that Act provide, in relation to an earner employed under a contract of service, that where in any tax week earnings are paid to or for his benefit, the employed earner shall pay a primary Class 1 contribution and his employer will pay a secondary Class 1 contribution (both subject to specified thresholds). Section 3 of the 1992 Act provides that earnings includes any remuneration or profit derived from an employment. In my view it is significant that Parliament in the1946 Act, chose to use the word earnings rather than emoluments, which had been a term used in income tax legislation with a definition which had remained substantially unchanged since the Income Tax Act 1842. The latter word had been the subject of judicial interpretation. In particular, in Tennant v Smith [1892] AC 150, the case of the Montrose bank manager whose employer gave him free accommodation in a bank house which he was required to occupy, the House of Lords held that the Inland Revenue could not charge income tax on the value of the accommodation because the employee could not convert the benefit into money. The House of Lords held that emoluments were confined to actual money payments and to benefits in kind which were capable of being turned into money by the recipient. See also Lord Reids explanation of the case in Heaton v Bell [1970] AC 728, 744 745. By contrast, from the outset, the word earnings in NICs legislation has included benefits in kind which the recipient could not convert into money there and then. Part I of the First Schedule to the 1946 Act, which set out the contribution rates of employed persons, had a rate for earners earning remuneration of under 30 shillings per week and a higher rate for those earning remuneration above that sum. Like the 1911 Act (section 4 and Second Schedule) it treated remuneration, which, as I have said, formed part of the definition of earnings in section 78, as including the provision of board and lodging by providing: For the purpose of this and Part II of this Schedule [which set out employers rates] a person shall be deemed to be earning remuneration at a weekly rate of thirty shillings or less if, but only if, his remuneration does not include the provision of board and lodging by the employer and the rate of the remuneration does not exceed thirty shillings a week, and to be earning remuneration at a weekly rate exceeding thirty shillings in any other case. Since then, primary and subordinate legislation pertaining to NICs has made express provision for benefits in kind to be disregarded when Parliament has not wanted such earnings to be taken into account in the calculation of NICs. In the National Insurance Act 1959, which introduced a graduated pension scheme on top of flat rate benefits, benefits in kind which the recipient could not convert into moneys worth were excluded from the calculation of graduated contributions by the device (in section 2(1)) of deeming remuneration to include only emoluments assessable to income tax under Schedule E. That arrangement was preserved in the National Insurance Act 1965 (section 4(2)). But in 1975 the basic scheme and graduated scheme were replaced by a new scheme which provided for graduated contributions related to the level of earnings between a lower earnings limit and an upper earnings limit. The link between graduated contributions and emoluments for income tax purposes was abolished. Since then, subordinate legislation has provided for the disregard of, among others, any payment in kind or by way of provision of board or lodging (the Social Security (Contributions) Regulations: SI 1973/1264, regulation 17(1)(d); SI 1975/492, regulation 17(1)(d); SI 1979/591, regulation 19(1)(d); and now SI 2001/1004, para 1 of Part II of Schedule 3 see para 13 below). In 1985 the upper earnings limit was removed in relation to employer contributions, and since 6 April 2003 employees have been subject to an additional surcharge on earnings above the upper earnings limit (currently 2%). Under the 1992 Act and current subordinate legislation, the Social Security (Contributions) Regulations 2001 (SI 2001/1004) as amended, a similar arrangement of using earnings as the basis of calculating liability to NICs and disregarding payments in kind has been maintained. Thus in Schedule 3 to the 2001 Regulations (Part II para 1) it is provided: A payment in kind, or by way of the provision of services, board and lodging or other facilities is to be disregarded in the calculation of earnings. It is not appropriate to interpret an Act of Parliament by reference to subordinate legislation which was made years after the primary legislation (Deposit Protection Board v Barclays Bank plc [1994] 2 AC 367, 397 per Lord Browne Wilkinson; see also Hanlon v The Law Society [1981] AC 124, 193 194 per Lord Lowry). But that is not my purpose. I refer to the 2001 Regulations simply to demonstrate that the scheme of NICs legislation by which earnings includes non convertible benefits in kind unless they are disregarded, either expressly or by necessary implication, has existed at least since 1946. As FML accepts the proposition that earnings in NICs legislation is not to be equated with emoluments in income tax legislation, most of the arguments which engaged the Upper Tribunal and the Court of Appeal fall away. Instead, the debate has focused on whether FML had paid earnings to or for the benefit of Mr McHugh when it made the transfer to the trust at a time when Mr McHughs interest in the assets of the trust was only a contingent one which might have been defeated by his death before his specified retirement age. As I have said, both parties agreed that the transfer to the trust had been for the benefit of Mr McHugh. The question was: was the transfer the payment of earnings? On this narrow issue, HMRCs stance before this court was remarkable. Because of the assumptions on which the subordinate legislation had been framed, Mr Jones had to submit that earnings are paid to an earner both when assets are transferred to a pension scheme to be held on a trust and also when payments are made from the trust fund. HMRC looked to the payment and not to what the earner received. HMRC argued that the payment into the trust fund was earnings because it was a sum paid as the quid pro quo for past or future services. It was part of Mr McHughs remuneration. The sum went to a trust fund which was solely for the benefit of Mr McHugh and his wife. Mr McHugh, it was submitted, was immediately better off because he had the hope of receiving the trust fund in the future, and his family would benefit if he did not survive until his retirement age. Payments to him out of the trust fund would as a matter of principle also be earnings when made because they also were payments to him in respect of his employment. On this approach, double counting was avoided only by Part VI of Schedule 3 to the 2001 Regulations which disregards, among others, payments by way of pension (para 1) and payments by way of relevant benefits pursuant to an unapproved retirement benefits scheme (para 4). There are three reasons why I think that HMRCs argument is wrong. The first and principal reason is that the ordinary man on the underground would consider it to be counter intuitive that a person would earn remuneration both when his employer paid money into a trust to create a fund for his benefit and again when at a later date that trust fund was paid out to him. The argument would in principle apply also when a company gave an employee a bonus, which was put into a trust or in an escrow fund and was payable at a future date only if the company performed to a specified level by then: he would earn the bonus twice. I am reluctant to attribute such a view to Parliament absent clear words or necessary implication, of which there are neither. If one gives words their ordinary meaning, it is clear that a retired earner receives earnings in respect of his employment in the form of deferred remuneration when he receives his pension. So too does an earner when he receives his deferred bonus. In each case I would characterise the payment from the trust or escrow fund as deferred earnings. It follows that the payment into the trust or escrow fund would not be earnings. Secondly, it is only by looking exclusively to what was paid and ignoring what the earner received that HMRCs view can be sustained. But such an interpretation of section 6(1) of the 1992 Act denudes the word earnings of any meaning, so that the phrase earnings are paid would amount to payments are made in respect of any one employment. Earnings in this context are remuneration derived from the employment. The use of the word earnings points the reader towards what the employee obtains from his employment. Looking to what the earner receives avoids the counter intuitive result. The third and subordinate reason relates to the method of computation. HMRC, by treating the payment into the trust as earnings, fail to take into account the existence of the contingency. If Mr McHugh had died before his retirement date, the trustees would have realised the accumulated fund and paid the proceeds to a member of the defined discretionary class of beneficiary probably his wife. One must ask: what did Mr McHugh receive through the transfer? It was not the cash and Treasury Stock. The trustees received the assets transferred to them on the trusts of the fund and not unconditionally for Mr McHugh. The transfer gave him only the entitlement to a future pension or relevant benefits once a condition his reaching retirement age had been purified. It does not matter that Mr McHugh could not immediately convert his entitlement into money because, as I have said, non convertible benefits in kind are in principle earnings in the NICs legislation. But the hypothetical value to be attributed to Mr McHughs entitlement would not be the value, at the date of the transfer, of the assets paid into the fund. Rather it would be the value of his contingent right to the trust fund such as it would be at his retirement date. That calculation would not be a simple exercise. The valuer would have to allow for both the contingency of the earners pre deceasing the specified retirement date and the uncertainty of the trustees performance in managing the fund until that date. That would not be the same as the value of the cash and assets in the week in which the transfer was made. HMRCs approach, by treating the payment into the trust fund as Mr McHughs earnings, fails to address what it was that he received when the transfer was made. In my view therefore the transfer to the trust was not the payment of earnings to or for the benefit of Mr McHugh within the meaning of section 6(1) of the 1992 Act. Having reached this view on the issue which the parties presented in this appeal, I comment briefly on some of the cases to which counsel referred. This case was presented as a test case on the issue of principle. No argument was advanced as to whether a payment into a pension or bonus fund might properly be analysed as a payment out of the earners salary as in Smyth v Stretton (1904) 5 TC 36. Mr Jones stated that HMRC might take that point in an appropriate case. Edwards v Roberts (1935) 19 TC 618 assists in this case not because it is correct to equate earnings in NICs legislation with emoluments in income tax legislation but because of its application of the general law in relation to a contingent interest and its focus on what an employee receives. In that case an employee received a salary and also, if he remained in employment for more than five years, a right to receive at the end of a subsequent financial year part of the capital of a trust fund into which his employer paid a proportion of its annual profits. Lord Hanworth MR stated (p 638): [U]nder these circumstances there could not be said to have accrued to this employee a vested interest in these successive sums placed to his credit, but only that he had a chance of being paid a sum at the end of six years if all went well. I would therefore allow the appeal and reinstate the judgment of the Upper HMRC submitted and the majority of the Court of Appeal accepted that Collins J had been in error in Tullett & Tokyo Forex International Ltd v Secretary of State for Social Security [2000] EWHC (Admin) 350; [2000] All ER (D) 739 because he held that NICs were payable on what the employee receives. For the reasons set out above, I disagree with HMRCs submission. Conclusion Tribunal.
+The Scottish Parliament was established by section 1 of the Scotland Act 1998. It was opened on 1 July 1999. Section 29(1) of the Act provides: An Act of the Scottish Parliament is not law so far as any provision of the Act is outside the legislative competence of the Parliament. This provision lies at the heart of the scheme of devolution to which the Act gives effect. Section 29 has to be read together with Schedule 4 which protects certain enactments from modification, and then with section 30 and Schedule 5 which defines reserved matters. These are matters reserved to the UK Parliament, and which are therefore excluded from the legislative competence of the Scottish Parliament. The area of competence that is identified by this group of provisions forms the basis for a series of sections that are designed to ensure that the Scottish Parliament confines itself to the defined areas of competence: section 31 (scrutiny of Bills before introduction), section 32 (the responsibility of the Presiding Officer), section 33 (reference of Bills to the Judicial Committee now the UK Supreme Court for scrutiny), section 35 (the power of the Secretary of State to intervene in certain cases) and sections 98 to 103 and Schedule 6 (post enactment adjudication of issues about legislative competence by the courts). The White Paper, Scotlands Parliament, Cm 3658 (1997), para 4.3, contrasted this scheme of devolution with that which had been laid down by the Scotland Act 1978, which was repealed because less than 40 per cent of the persons entitled to vote in the referendum which was required by section 85 of that Act voted in favour of it. Under that Act legislative competence was to be transferred to the Scottish Assembly in specifically defined particular groups, further defined by reference to a long list of existing statutes. That scheme, which would have required frequent updating by the UK Parliament, was seen to be incompatible with the aim that the White Paper expressed of ensuring maximum clarity and stability. While the scheme in the 1998 Act may not strike one as a model of clarity, it does appear so far to have achieved the aim of stability. Of course, harmony between the governments at Westminster and Holyrood until the May 2007 elections to the Scottish Parliament contributed to this process, as did frequent use of legislative consent motions (also known as Sewel motions, named after Lord Sewel, Parliamentary Under Secretary of State for Scotland during the passage of the Scotland Act 1998) passed by the Scottish Parliament agreeing that the UK Parliament might pass legislation on a devolved issue extending to Scotland. But it is a remarkable fact that the myriad of devolution issues that have come before the courts for determination since May 1999 have been devoted almost exclusively to the exercise of functions in criminal cases by the Lord Advocate. Logan v Harrower [2008] HCJAC 61, 2008 SLT 1049 was the first case that brought the extent of the legislative competence of the Scottish Parliament under judicial scrutiny on grounds other than compliance with Convention rights. As in the case of the appeals that are now before this court, it arose of out of a prosecution for contraventions of section 103(1)(b) of the Road Traffic Act 1988. There was no appeal against the appeal courts determination to the Judicial Committee. The question whether an Act of the Scottish Parliament is within the legislative competence of the Parliament is a devolution issue: Schedule 6, para 1(a). So it is for the courts to decide whether an Act which is challenged is within or outside competence. But the judicial function in this regard has been carefully structured. It is not for the judges to say whether legislation on any particular issue is better made by the Scottish Parliament at Holyrood or by the UK Parliament at Westminster. How that issue is to be determined has already been addressed by the legislators. It must be decided according to particular rules that the Scotland Act 1998 has laid down. But those rules, just like any other rules, have to be interpreted. That is the courts function. It is for the court to say what the rules mean and how, in a case such as this, they must be applied in order to resolve the issue whether the measure in question was within competence. These proceedings Section 33 of and Part I of Schedule 2 to the Road Traffic Offenders Act 1988 provide that the offence of driving while disqualified under section 103(1)(b) of the Road Traffic Act 1988 may be prosecuted in Scotland either summarily or on indictment. As originally enacted, the maximum punishment for that offence if prosecuted summarily in Scotland was six months or the statutory maximum fine or both. If it was prosecuted on indictment in Scotland the maximum sentence was twelve months or a fine or both. By section 45 of the Criminal Proceedings etc (Reform) (Scotland) Act 2007, the provisions of which I shall examine in more detail later, the Scottish Parliament increased to twelve months the maximum sentence that might be imposed for this offence under the 1998 Act by the sheriff sitting summarily. That section came into force on 10 December 2007: the Criminal Proceedings etc (Reform) (Scotland) Act 2007 (Commencement No 2 and Transitional Provisions and Savings) Order 2007 (SSI 2007/479). Sean Martin was charged on summary complaint at Oban with a co accused named Rodney Cuthill. The complaint contained fourteen charges, of which charges 1, 2, 8 and 9 were directed against Martin. In charges 1 and 8 it was alleged that he drove a motor vehicle on a road while disqualified, contrary to section 103(1)(b) of the Road Traffic Act 1988, and that he committed those offences while on bail. On 14 December 2007 he pled guilty to charges 1 and 8 and to the other two charges. On 17 December 2007 he was sentenced to 12 months imprisonment on charges 1 and 8, of which four months was attributed to the fact that he committed the offences while on bail. On 12 March 2008 he presented a Bill of Suspension to the High Court of Justiciary in which he sought suspension of the sentence of imprisonment on the ground that the relevant provisions of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 were beyond the legislative competence of the Scottish Parliament. On 28 March 2008 he was granted interim liberation pending the determination of his Bill of Suspension. Ross Miller was charged on summary complaint at Stirling. The complaint contained three charges. In charge 1 it was alleged that he drove a motor vehicle on a road while disqualified, contrary to section 103(1)(b) of the Road Traffic Act 1988. On 24 April 2008 he pled guilty to charge 1 and to one of the other charges and was remanded in custody. On 14 May 2008 he was sentenced to seven months imprisonment on charge 1, back dated to 24 April 2008. On 20 June 2008 he presented a Bill of Suspension to the High Court of Justiciary in which he sought suspension of the sentence of imprisonment on the same grounds as Martin. He applied for interim liberation, but on 3 July 2008 he withdrew that application. Unlike Martin, he has now served his sentence. The two Bills of Suspension came before the appeal court for a hearing on 6 January 2009. Devolution minutes identifying the devolution issue in these proceedings had also been lodged. The court saw no reason for distinguishing these cases from its previous decision in Logan v Harrower, in which it held that the increase in the sentencing power of the sheriff sitting summarily by section 45 of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 was within the legislative competence of the Scottish Parliament. As nothing had been said to suggest that that decision was wrong, it refused to pass the Bills. It also refused the devolution minutes. On 30 January and 24 February 2009 respectively it granted the appellants leave to appeal to this court. As this narrative shows, the only reasoned decision on this issue by the appeal court is to be found in Logan v Harrower. In para 24 of that case, Lord Nimmo Smith, delivering the opinion of the court, said: We agree with the advocate depute that, in the present case, the purpose of the provision is to make Scots criminal law with regard to penalties, procedure and jurisdiction in the sheriff court apply consistently to both common law offences and statutory offences. As provided by para 3 in part I of Schedule 4 to the Scotland Act, the modifications made by section 45 of the 2007 Act to the reading of Part I of Schedule 2 to the Road Traffic Offenders Act 1988 are merely incidental to, or consequential on, the more general aspect of the provision, which relates generally to the powers of the sheriff in relation to statutory offences, whatever their origin; and the modifications do not have a greater effect upon reserved matters than is necessary to give effect to the purpose of the provision in section 45. The legislative competence rules The scheme of devolution of legislative power which the Scotland Act 1998 sets out recognises that it was not possible, if a workable system was to be created, for reserved and devolved areas to be divided into precisely defined, watertight compartments. Some degree of overlap was inevitable, for the reasons explained by Lord Rodger in his discussion of the division of responsibility on matters of policy; see paras [73] and [74]. This is a familiar phenomenon in the case of federal systems such as those in Canada and Australia, where legislative competence is divided between the Dominion and the Provinces or the Commonwealth and the States. In Prafulla Kumar Mukherjee v Bank of Commerce Ltd, Khulna (1947) LR 74 Indian Appeals 23 the Judicial Committee rejected the argument that the principles which obtain in Canada and Australia had no application in India. Lord Porter gave this explanation at p 42: It is not possible to make so clean a cut between the powers of various legislatures: they are bound to overlap from time to time. The rule that was evolved by the Judicial Committee was to examine the statute that was impugned to ascertain its pith and substance, or its true nature and character, to determine whether it was legislation with respect to matters that were in the prohibited or permitted sphere. The phrase pith and substance was first used by Lord Watson in Union Colliery Co of British Columbia Ltd v Bryden [1899] AC 580, 587. The phrase true nature and character was first used in Russell v The Queen (1882) 7 App Cas 829, 839 840. The principles that these phrases embody are sometimes referred to, by a word that went out of fashion in mediaeval times, as the respection doctrine. In Prafulla Kumar Mukherjee v Bank of Commerce Ltd, Khulna having referred to the rule and found that it applied to Indian as well as Dominion legislation, Lord Porter went on to say this at p 43: No doubt experience of past difficulties has made the provisions of the Indian Act more exact in some particulars . But the overlapping of subject matter is not avoided by substituting three lists for two, or even by arranging for a hierarchy of jurisdictions. Subjects must still overlap, and where they do the question must be asked what in pith and substance is the effect of the enactment of which complaint is made, and in what list is its true nature and character to be found. If these questions could not be asked, much beneficent legislation would be stifled at birth, and many of the subjects entrusted to provincial legislation could never effectively be dealt with. The same point had already been made by Lord Atkin in Gallagher v Lynn [1937] AC 863, which was an appeal from Northern Ireland. Section 4 of the Government of Ireland Act 1920 provided that the Parliament of Northern Ireland had power to make laws for the peace, order and good government of Northern Ireland, but not to make laws in respect of, among other things, trade with any place out of Northern Ireland. He held that an Act regulating the supply of milk in Northern Ireland which imposed controls on every person who within Northern Ireland sold or exposed for sale milk, whether produced within or without the territory of Northern Ireland, was a law for the peace, order and good government of Northern Ireland in respect of precautions taken to secured the health of its inhabitants, not a law in respect of trade. At p 870, explaining what was meant by the pith and substance doctrine, he said: If, on the view of the statute as a whole, you find that the substance of the legislation is within the express powers, then it is not invalidated if incidentally it affects matters which are outside the authorized field. The legislation must not under the guise of dealing with one matter in fact encroach upon the forbidden field. Nor are you to look only at the object of the legislator. An Act may have a perfectly lawful object, eg to promote the health of the inhabitants, but may seek to achieve that object by invalid methods, eg a direct prohibition of any trade with a foreign country. The rule that was evolved and applied in these cases, among others, provides the background to the scheme that is now to be found in the Scotland Act. It was referred to at the committee stage in the House of Lords by Lord Sewel: Hansard HL Debates (21 July 1998), vol 592, col 818 et seq. The scheme seeks to give effect to the rule. Lord Sewel, recognising that a degree of trespass into reserved areas was inevitable, said that it was intended that any argument as to whether a provision in an Act of the Scottish Parliament relates to a reserved matter must be decided by reference to its pith and substance or its purpose and if its purpose is a devolved one it is not to be outside legislative competence merely because it affects a reserved matter: col 819. The question whether that aim has been achieved must be determined by examining the provisions of the Scotland Act in which the scheme is laid out. While the phrase pith and substance was used while these provisions were being debated, it does not appear in any of them. The idea has informed the statutory language, and the rules to which the court must give effect are those laid down by the statute. As to what they mean, the Scotland Act provides its own dictionary. Section 29, which must now be quoted in full, provides as follows: (1) An Act of the Scottish Parliament is not law so far as any provision of the Act is outside the legislative competence of the Parliament. (2) A provision is outside that competence so far as any of the following paragraphs apply (a) it would form part of the law of a country or territory other than Scotland, or confer or remove functions exercisable otherwise than in or as regards Scotland, (b) it relates to reserved matters, (c) it is in breach of the restrictions in Schedule 4, (d) it is incompatible with any of the Convention rights or with Community law, (e) it would remove the Lord Advocate from his position as head of the systems of criminal prosecution and investigation of deaths in Scotland. (3) For the purposes of this section, the question whether a provision of an Act of the Scottish Parliament relates to a reserved matter is to be determined, subject to subsection (4), by reference to the purpose of the provision, having regard (among other things) to its effect in all the circumstances. (4) A provision which (a) would otherwise not relate to reserved matters, but (b) makes modifications of Scots private law, or Scots criminal law, as it applies to reserved matters, is to be treated as relating to reserved matters unless the purpose of the provision is to make the law in question apply consistently to reserved matters and otherwise. The paragraphs of section 29(2) that require to be examined in this case are paras (b) and (c). The first question is whether section 45 of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 relates to a reserved matter. Reserved matters are the matters reserved to Westminster by section 30(1) of the Scotland Act, which gives effect to the list of matters in Schedule 5. Para 1 of Part II of Schedule 5 provides that the matters to which any of the sections in the Part apply are reserved matters for the purposes of the Act. Head E Transport lists among the subject matter of section E1, which applies to Road Transport, the following: (d) the Road Traffic Act 1988 and the Road Traffic Offenders Act 1988. Section 45 of the 2007 Act does not refer expressly to any of the provisions of the Road Traffic Act 1988 or the Road Traffic Offenders Act 1988. But, as it applies to offences under enactments passed before the 2007 Act generally, it must be taken to refer to them by implication. Their subject matter is a reserved matter. The question whether a provision relates to a reserved matter in terms of section 29(2)(b) is to be determined by reference to the purpose of the provision, applying the rule set out in section 29(3). This rule lays down the primary test of what is meant by purpose. But it is necessary to have regard also to section 29(4) which deals with a special category of overlap between reserved matters and matters which are not reserved that is in point in this case. This is because section 126(5) of the Scotland Act provides that references in the Act to Scots criminal law include criminal offences, jurisdiction, evidence, procedure and penalties and the treatment of offenders, and because section 45 of the 2007 Act deals with what the head note to Part 3 of that Act refers to as penalties. The list of reserved matters has been drawn up by reference to different aspects of executive or governmental responsibility. But the spheres of activity embraced by Scots private law and Scots criminal law, which are not reserved, do not respect those boundaries. They extend across all of them. The regulation of both devolved matters and reserved matters within Scotland is likely to involve questions of Scots private law and Scots criminal law. Section 29(4) does not apply if, applying the test laid down by section 29(2), the provision in question has already been found otherwise to relate to a reserved matter. That is the effect of para (a) of this subsection. It does apply, however, if it makes modifications of Scots private law or Scots criminal law as it applies to reserved matters: para (b). Here too the boundary between what is reserved and what is not reserved is to be determined by applying a purpose test. The key word here is consistently. If the purpose is to make the relevant rule of Scots criminal law apply consistently to reserved matters and otherwise, it will pass the test. The provision will not then fall to be treated as relating to a reserved matter, and thus outside the legislative competence, because it is caught by section 29(2)(b). The question whether the provision is in breach of any of the restrictions in Schedule 4 must also be addressed in this case. The paragraphs in that Schedule that need to be considered are paras 2 and 3, which so far as relevant provide as follows: 2 (1) An Act of the Scottish Parliament cannot modify, or confer power by subordinate legislation to modify, the law on reserved matters. (2) In this paragraph, the law on reserved matters means (a) any enactment the subject matter of which is a reserved matter and which is comprised in an Act of Parliament or subordinate legislation under an Act of Parliament, and (b) any rule of law which is not contained in an enactment and the subject matter of which is a reserved matter, and in this sub paragraph Act of Parliament does not include this Act. (3) Sub paragraph (1) applies in relation to a rule of Scots private law or Scots criminal law (whether or not contained in an enactment) only to the extent to that the rule in question is special to a reserved matter 3 (1) Paragraph 2 does not apply to modifications which (a) are incidental to, or consequential on, provision made (whether by virtue of the Act in question or another enactment) which does not relate to reserved matters, and (b) do not have a greater effect on reserved matters than is necessary to give effect to the purpose of the provision. (2) In determining for the purposes of sub paragraph (1)(b) what is necessary to give effect to the purpose of a provision, any power to make laws other than the power of the Parliament is to be disregarded. There is obviously some duplication between section 29 and the provisions of this Schedule. At first sight, paragraph 2(1) declares what the reader already knows, having studied section 29(4). But, in contrast to section 29(4) which deals with the question whether a provision relates to a reserved matter, para 2(1) refers to the law on reserved matters. The meaning of this expression is set out in para 2(2)(a). The starting point is that the law on reserved matters as a whole is protected from modification by the Scottish Parliament. This appears to withdraw the protection that is given by section 29(4) to modifications of a rule of Scots private law or Scots criminal law as it applies to reserved matters whose purpose was to make the law apply consistently to reserved matters and otherwise. But paragraph 2(1) is itself qualified by the opening words of paragraph 2(3). The words is special to a reserved matter are the key words in this subparagraph. The contrast which they suggest is between a rule of Scots criminal law which is special to a reserved matter on the one hand and one which is general in its application on the other because it extends to both reserved matters and matters which have not been reserved. There is a strong family likeness between the two tests, as Lord Walker says: see para [54]. But a modification which survives the test in section 29(4) will have to pass the tests in Schedule 4: section 29(2)(c). If it passes the test in paragraph 2(3), paragraph 2(1) will not apply. It will have no need of the protection that is given by paragraph 3 to modifications that fall within the scope of that paragraph. This analysis shows that the questions which lie at the heart of this case are: (1) whether the purpose of section 45 was to make a modification to Scots criminal law as defined in section 126(5); (2) if so, whether its purpose was to make the law apply consistently to reserved matters and otherwise; and (3) if it passes those tests, whether the rule that it sought to modify was special to a reserved matter within the meaning of paragraph 2(3) of Schedule 4. Section 45 of the 2007 Act Section 45 of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 is one of a group of sections dealing with sentencing powers which appear in Part 3 of the Act under the heading Penalties. Two sections require to be noticed in addition to section 45. First there is section 43, which deals with common law offences. It amends section 5 of the Criminal Procedure (Scotland) Act 1995, which deals with the sheriffs summary jurisdiction and powers, in two respects: in section 5(2)(d), the power to impose imprisonment is raised from any period not exceeding three months to twelve; and section 5(3) is repealed. Secondly, there is section 44, which increases the maximum sentence of imprisonment for a list of particular summary only statutory offences which had attracted a maximum sentence in excess of the previous common law maximum but were below the new maximum of twelve months for offences dealt with summarily. Section 45 is headed Other statutory offences. It is not necessary for the purposes of this case to quote it in full. The provisions that are relevant provide as follows: (1) The maximum term of imprisonment to which a person is liable on summary conviction of a relevant offence is, by virtue of this subsection, 12 months. (2) Accordingly, the specification of a maximum period of imprisonment in every relevant penalty provision is, in relation to any relevant offence to which it applies, to be read subject to subsection (1). (3) Without prejudice to subsections (1) and (2), the Scottish Ministers may by order amend the specification of a maximum term of imprisonment in a relevant penalty provision so as to specify, in relation to the relevant offence to which it applies, that the maximum term of imprisonment to which a person is liable on summary conviction is 12 months. (6) In this section, a relevant offence is an offence under a relevant enactment or instrument which is (a) triable either on indictment or summary complaint, and (b) punishable on summary conviction with a maximum term of imprisonment of less than 12 months. (7) In this section a relevant enactment is an Act passed before this Act It is common ground that the Road Traffic Offenders Act 1988 is a relevant enactment and that a contravention of section 103(1)(b) of the Road Traffic Act 1988 is a relevant offence for the purposes of this section. What was the purpose of section 45? Section 29(3) of the Scotland Act provides that, when consideration is being given to the purpose of the provision, regard is to be had to its effect in all the circumstances. One of the circumstances to which it is proper to have regard is the situation before the provision was enacted, which it was designed to address. Reports to and papers issued by the Scottish Ministers prior to the introduction of the Bill, explanatory notes to the Bill, the policy memorandum that accompanied it and statements by Ministers during the proceedings in the Scottish Parliament may all be taken into account in this assessment. The sentencing powers of the sheriff, sitting as a court of summary jurisdiction, are regulated by statute. Section 7(5) of the Criminal Procedure (Scotland) Act 1995 provides that a stipendiary magistrate shall have the summary criminal jurisdiction and powers of a sheriff. Prior to the commencement of the Criminal Proceedings etc (Reform) (Scotland) Act 2007, section 5(2) of the 1995 Act provided inter alia as follows: The sheriff shall, without prejudice to any other or wider powers conferred by statute, have power on convicting any person of a common law offence . (d) to impose imprisonment, for any period not exceeding three months. Section 5(3) of the 1995 Act provided that the maximum sentence for a second or subsequent offence involving violence or dishonesty was six months. The effect of these provisions was that the power of the sheriff or stipendiary magistrate to impose a sentence of imprisonment was limited to a maximum of three months in the case of common law crimes (except in the case of certain types of repeat offences) and, in the case of statutory offences, to the maximum laid down by the relevant statute. In the case of a contravention of section 103(1)(b) of the Road Traffic Act 1988, section 33 of and Part I of Schedule 2 to the Road Traffic Offenders Act 1988 provided that the maximum if the offence was prosecuted summarily in Scotland was six months. In November 2001 the Minister of Justice appointed a committee under Sheriff Principal John McInnes QC to review the provision of summary justice in Scotland, including the structures and procedures of the sheriff courts and the district courts as they related to summary business and the inter relation between the two levels of court, and to make recommendations for the more efficient and effective delivery of summary justice in Scotland. In the report which it presented to Ministers in January 2004 the Summary Justice Review Committee identified a need to relieve pressure on the higher courts. This implied a need to move cases from the High Court of Justiciary to the sheriff and jury court, and in turn a need to move cases from the sheriff and jury court to summary procedure. In para 7.87 of its report it recommended that, to equip summary judges with the disposals that would be necessary to deal with cases that would be heard summarily in the future, the criminal jurisdiction of judges sitting summarily should be increased to a maximum of twelve months detention or imprisonment or a 20,000 fine. Having consulted on this recommendation among other proposals, the Scottish Ministers decided to accept it. In March 2005 the Minister for Justice published Smarter Justice, Safer Communities Summary Justice Reform Next Steps (Scottish Executive, March 2005). In para 4.10 reference was made to the recommendations that the Committee had made which were designed to promote case handling at a more appropriate level: Recognising the pressures on the solemn system, the Committee recommended that the sentencing powers of a sheriff sitting without a jury should be raised to one year in custody or a fine of 20,000, enabling the transfer of the least serious solemn business to the summary courts In para 4.50 it was stated that it was proposed to implement the reports recommendations in relation to the custodial sentencing powers of sheriffs sitting summarily. The Criminal Proceedings etc (Reform) (Scotland) Bill was introduced into the Scottish Parliament in February 2006. In para 186 of the explanatory notes to the Bill it was said of section 35 (which became section 45 when the Bill was passed) that it brought the maximum summary prison sentences for certain statutory offences into line with the new maximum sentence for common law offences set out in what is now section 43 of the Act. In the Policy Memorandum which accompanied the Bill it was stated in para 6 that the Bill made provision in eight main policy areas, including: increases in the criminal sentencing powers of the summary courts, ensuring that those courts can deal with an appropriate range of cases in terms of both severity and caseload, and do so more quickly than is currently the case. In para 206 it was stated that the Executive believed that professional sheriffs should be able to deal with a wider range of cases under summary procedure than they were currently entitled to, including some that would attract a higher penalty. The theme that is apparent from these earlier documents was picked up by the Justice 1 Committee in its report on the general principles of the Bill: Justice 1, 10th Report 2006, Stage 1 Report on Criminal Proceedings etc (Reform) (Scotland) Bill, 5th July 2006. In para 293 of its report the Committee said that one of the principal drivers for the reforms proposed by the Bill was that justice should be dispensed at the appropriate level and that this meant, among other things, the granting of significantly increased sentencing powers to sheriffs sitting without a jury. In para 294 it said that it broadly accepted that there was merit in some cases being dealt with at lower levels of the judicial system than was the case at present. Introducing the stage 1 debate in the Parliament on 14 September 2006, the Minister for Justice said that the Bill made a number of changes to the detailed law of criminal procedure, that each of these changes played its part in speeding up the system as a whole, that the Bill would ensure that increased sentencing powers for sheriffs would ease the pressure on the higher courts and that the bill was to be regarded as part of the executives wider work to reform the summary justice system: Scottish Parliament Official Report, cols 27664 6. In my opinion this material shows conclusively that the purpose of section 45 of the 2007 Act was to contribute to the reform of the summary justice system by reducing pressure on the higher courts. An increase in the sentencing powers of sheriffs when they were dealing with statutory offences was seen as a necessary of this process. The jurisdiction of the sheriff sitting summarily is defined by reference to the penalties that the sheriff can impose. These are pre eminently matters of Scots criminal law: see section 126(5). As it was to a rule of Scots criminal law that the provision was directed, I would hold that it does not relate to a reserved matter within the meaning of section 29(2)(b). Was it to make the law apply consistently? Section 45 of the 2007 Act forms part of a group of sections, all directed to a reform or modification of the sentencing powers of the sheriff sitting summarily. The leading provision is section 43, which increased the maximum sentence for common law offences from three (or, in the case of some repeat offences, six) months to twelve months. It is obvious however that to have left the matter there would have led to an imbalance in the system between how common law offences were to be dealt with on the one hand and how statutory offences were to be dealt with on the other. The reform that this would have achieved would have been incomplete and confusing. To achieve its object it had to be extended across the board to statutory offences as well. To draw a line between statutory offences relating to reserved matters and those relating to matters that were not reserved would have been even more confusing. When they were dealing with an offence created by a United Kingdom statute, prosecutors and sheriffs would have had to check in each case whether they were on the right side of the line. Statutory offences of all kind form a large part of the diet of the summary courts. To achieve a complete and worthwhile reform of the summary justice system a modification of the sentencing power across the whole range of statutory offences was required. In my opinion the purpose of the modification in section 45 must be taken to have been to make the law relating to the increased sentencing power of the sheriff sitting summarily apply consistently to reserved matters and otherwise. I would hold that section 45 is not to be treated as relating to a reserved matter under section 29(4). Is the rule special to a reserved matter? The question that must now be addressed is that set out in para 2(3) of Schedule 4: is the rule of Scots criminal law that the Act seeks to modify special to a reserved matter? To answer it, one must first identify the rule of Scots criminal law that is being modified. Then one must ask whether that rule is special to a reserved matter. Identifying the rule is a crucial step towards reaching the right answer to the question whether the modification that is proposed is within the competence of the Scottish Parliament or must be dealt with at Westminster. I agree with Lord Rodger that, unlike section 29(3) and (4), para 2 of the Schedule concentrates on the rule of law that is being modified by the enactment and makes no mention of the purpose of the modification: see para [122]. But the purpose of the enactment may nevertheless be referred to in order to identify the rule of law that is being modified. I think that it is clear that any modification of the maximum punishment that can be imposed for the offences that the road traffic legislation has created must be held to be a matter for the United Kingdom Parliament at Westminster. The rule of Scots law as to the maximum term of imprisonment that can be imposed would fall to be treated as a rule that was special to a reserved matter. So would any other limits on the extent of the penalties or as to the scope of offences that the Road Traffic legislation lays down. The Calman Report, Serving Scotland Better: Scotland and the United Kingdom in the 21st Century, June 2009, considered in paras 5.167 181 certain aspects of road traffic regulation including drink driving limits and speed limits. As the authors of the report were right to recognise, under the current legislation any alteration to those limits that might be thought to be acceptable in Scotland would not be within the legislative competence of the Scottish Parliament. Some concern was expressed during the progress of the Bill as to whether this reform might lead to what was referred to as sentence drift a tendency on the part of sheriffs to impose higher sentences for these offences than they would previously have regarded as appropriate. But it is plain that this was not what the reform was intended to do, and there is no evidence that this has in fact happened. So I do not think that it would right to say that the purpose of section 45 was to achieve an overall increase in the sentences that sheriffs were imposing. Had that been the purpose, it would have gone some way to identifying the rule of law that was being modified. As it is, the rule cannot be identified by that route. Section 33 of and Part I of Schedule 2 to the Road Traffic Offenders Act 1988 provide that the maximum sentence of imprisonment for the offence under section 103(1)(b) of the Road Traffic Act 1988 if prosecuted summarily in Scotland is six months and that it is twelve months if prosecuted in Scotland on indictment. They contain, in effect, two rules of Scots criminal law. One is a rule as to the overall maximum sentence, which is twelve months imprisonment. That, plainly, is a rule which is special to the Road Traffic Acts and it is a reserved matter. The other is a rule about Scots criminal jurisdiction and procedure, which is not reserved. It is that rule which determines the procedure under which the maximum sentence can be imposed. The purpose of the modification that section 45 makes is to enable more statutory offences to be prosecuted summarily. The maximum sentence of imprisonment for the offence if prosecuted in Scotland remains twelve months. The modification relates to the procedure which determines whether the sheriff has jurisdiction to impose the maximum sentence. It extends the power that is given to him when he is sitting summarily. It seems to me therefore that the rule of Scots law that is being modified is the rule of procedure, not the rule of Scots law as to the maximum sentence for the offence. The rule of procedure is a rule that applies generally to the way cases are dealt with in the sheriff court. It is not special to the Road Traffic Offenders Act 1988. The purpose of para 2(3) of Schedule 4 to the 1998 Act, as I understand it, is to avoid the fragmentation of rules of Scots criminal law which are of general application into some parts which are within the Scottish Parliaments competence and some parts which are not. It is, of course, the case that the difference between the maximum sentence that could be imposed by a sheriff sitting summarily and that which could be imposed by him in solemn proceedings was prescribed in Schedule 2 to the Road Traffic Offenders Act 1988. But in doing so the Schedule was basing itself on a distinction between two forms of Scots criminal procedure which apply generally. I think that it was within the competence of the Scottish Parliament to extend its general reform of that procedure to the forms of procedure referred in this and other statutes that deal with reserved matters, otherwise fragmentation would occur. I am not confident that it helps to reason by way of examples. Each case must be taken on its own merits. In case of doubt, the words to the extent only suggest that a generous application of para 2(3) which favours competence is to be preferred, as opposed to one which applies it narrowly. And the key to the decision in this case lies in identifying the rule in question, which is achieved by examining the purpose of the provision which is under scrutiny. One could, of course, say that Schedule 2 contains two maximum sentences, one for summary proceedings and the other for proceedings on indictment, and that as both are reserved matters it was not open to the Scottish Parliament to alter either of them. But that, in my opinion, would be to carry the process of analysis too far. The word special indicates that, in cases such as this where the decision depends on the exercise of judgment, the purpose of the provision may be the best guide. So, in agreement with Lord Walker and Lord Brown and respectful disagreement with Lord Rodger and Lord Kerr, I would hold that section 45 was not directed to a rule which was special to a reserved matter within the meaning of para 2(3) of Schedule 4, that para 2(1) of the Schedule does not apply, that it survives scrutiny under section 29(2)(c) and there is no need to refer to para 3. Had it been necessary to refer to para 3, I would have held that section 45 of the 2007 Act was not saved by it. On this point I disagree with the appeal court in Logan v Harrower. A decision as to the procedure under which a sentence of more than six months could be imposed was not a modification of an incidental or consequential nature. It was an important change in the procedure which one would expect to see set out in the body of the enactment, not in a schedule of the kind that generally deals with matters that are merely incidental or consequential on provisions found elsewhere in the enactment. Section 104 of the Scotland Act enables Her Majesty in Council or a Minister of the Crown, with the consent of both Houses of the United Kingdom Parliament, to make such provision as is considered necessary or expedient in consequence of any provision made by or under any Act of the Scottish Parliament. As the explanatory notes to that section point out, the power to make provision consequential on legislation under paragraph 3 of Schedule 4 is very limited. Among other things, it does not enable the Scottish Parliament to legislate otherwise than as a matter of Scots law. It does not have power under that provision to make any consequential provisions that require to take effect elsewhere in the United Kingdom. Examples of the use that is made of the power under section 104 are to be found in the Adults with Incapacity (Scotland) Act 2000 (Consequential Modifications) (England, Wales and Northern Ireland) Order 2005 (SI 2005/1790) and the Police, Public Order and Criminal Justice (Scotland) Act 2006 (Consequential Provisions and Modifications) Order 2007 (SI 2007/1098). There are many others. Lord Rodger in para [81] has mentioned some of them. The use of section 104 is not confined to cross border matters. The power was used in connection with the reforms introduced by the 2007 Act to make the powers to impose sanctions under the Road Traffic Offenders Act 1988 available in the justice of the peace courts that were to be established under the 2007 Act, and to make the same powers available in the district courts during the phased introduction of the justice of the peace courts: see the Criminal Proceedings etc (Reform) (Scotland) Act 2007 (Powers of District and JP Courts) Order 2007 (SI 2007/3480). I agree with Lord Rodger that the scheme for adjusting the sheriffs summary criminal jurisdiction in relation to statutory offences could have been dealt with in this way, had this been thought to be necessary. But the modification that was required in their case was to a procedural route that was already available for dealing with these offences in the sheriff court. For the reasons that I have given I consider that the judgment that was made that the modification was within the legislative competence of the Scottish Parliament was correct, and that the use of the section 104 power was not necessary. Conclusion The result of this analysis is that section 45 of the 2007 Act survives scrutiny. Endorsing what the appeal court decided in Logan v Harrower but differing from it as to the reason why the section is not in breach of the restrictions in Schedule 4, I would hold that the provision is within the legislative competence of the Scottish Parliament. I would therefore dismiss these appeals. Bearing in mind that the appellant Martin who is on interim liberation has not yet served the sentence that the sheriff imposed on him, I would remit both cases to the appeal court for any further orders that may be required. Had I been in favour of allowing the appeals I would have made an order under section 102(2)(a) of the 1998 Act removing the retrospective effect of the decision that, so far as it purports to modify the penalty provision for a contravention of section 103(1)(b) of the Road Traffic Act 1988 in Part I of Schedule 2 to the Road Traffic Offenders Act 1988, section 45(2) of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 is outside the competence of the Scottish Parliament. I would also have made an order under section 103(2)(b) suspending its effect for two months to allow the defect to be corrected as it seems to me that, in a case of this kind, these two orders go hand in hand. LORD WALKER The Scotland Act 1998 is on any view a monumental piece of constitutional legislation. Parliament established the Scottish Parliament and the Scottish Executive and undertook the challenging task of defining the legislative competence of the Scottish Parliament, while itself continuing as the sovereign legislature of the United Kingdom. That task is different from defining the division of legislative power between one federal legislature and several provincial or state legislatures (as in Canada or Australia, whose constitutional difficulties the Judicial Committee of the Privy Council used to wrestle with, often to the dissatisfaction of those dominions). The doctrine of pith and substance mentioned by Lord Hope in his judgment is probably more apt to apply to the construction of constitutions of that type. But both have to face the difficulty of defining (necessarily in fairly general and abstract terms) permitted or prohibited areas of legislative activity. The difficulties (viewed from the perspective of Northern Ireland) are discussed in Harry Calverts Constitutional Law in Northern Ireland, which, though written as long ago as 1968, still provides a very helpful commentary. It shows how different forms of words have come to be recognised as indicating a more or less proximate (or direct, or crucial) connection between a proposed enactment and an area of legislative activity. Calvert quotes (from an unidentified source), at pp 180 181, the argument of the Attorney General for Northern Ireland when Lynn v Gallagher [1937] AC 863 was before the House of Lords: The crux of this whole legislation lies in three words, the words in respect of used in section 4(1) of the Government of Ireland Act, 1920. These three words are the apt words to indicate the true subject matter of an enactment but they are not, we submit, the apt words to indicate merely the results of an enactment. They are possibly rather stronger than a word such as concerning, and than the phrase in relation to, but they certainly must have a different meaning, unless they may be construed contrary to the general use of language, from the word affecting. In the British North America Act the words used are in relation to and these words in respect of do not occur in it. We submit that these words in respect of are no weaker than the words there used. Calvert also quotes, at p 179, Higgins J in McArthur Ltd v Queensland (1920) 28 CLR 530, 565: We have to determine in each case what is the subject of the legislation what subject is the Act with respect to what it effects not what things or operations it may indirectly affect. These background matters must have been in the mind of those who undertook the drafting of the Scotland Act (and in particular the provisions directly relevant to these appeals). But in the Scotland Act Parliament has gone further, and has used more finely modulated language, in trying to explain its legislative purpose as regards reserved matters. The Court has to consider two groups of provisions, each of which has a particular nexus with reserved matters as defined in Schedule 5 of the Act. The first group of provisions consists of section 29(2)(b) as explained and qualified by subsections (3) and (4). The second group consists of section 29(2)(c) and Schedule 4, paras 2 and 3. All these provisions are set out in Lord Hopes judgment (paras 16 and 20) and I need not repeat them. But it is worth considering the manner in which reserved matters are defined in Schedule 5 (to which both groups of provisions are linked). Schedule 5, Part I, contains general reservations: the constitution, political parties, foreign affairs, public service, defence and treason. Part II then contains specific reservations under eleven heads (themselves elaborately subdivided and made subject to exceptions). Although termed specific, some of these are expressed in general terms. For instance, Head A1, Fiscal, economic and monetary policy, is as follows: Fiscal, economic and monetary policy, including the issue and circulation of money, taxes and excise duties, government borrowing and lending, control over United Kingdom public expenditure, the exchange rate and the Bank of England. Exception Local taxes to fund local authority expenditure (for example, council tax and non domestic rates). Many of the specific reservations in Part II are expressed as the subject matter of a particular statute (or part of a statute). For example Head E.1, Road Transport, includes The subject matter of . (d) the Road Traffic Act 1988 and the Road Traffic Offenders Act 1988 (subject to an exception for a few sections of the Road Traffic Act 1988). The use of the expression subject matter has been described (in an unsigned editorial in (1998) 19 Statute Law Review v) as an elegant drafting device but as having potential difficulties. So I come back to the first group of provisions, consisting of subsection (2)(b) of section 29 as explained and qualified by subsections (3) and (4). Its structure appears reasonably straightforward. Section 29(2)(b) prohibits legislation by the Scottish Parliament which relates to reserved matters. That is an expression which is familiar in this sort of context, indicating more than a loose or consequential connection, and the language of section 29(3), referring to a provisions purpose and effect, reinforces that. Section 29(4) adds to the reach of section 29(2) (as is clear from section 29(4)(a)) as regards modifications of Scots private law, or Scots criminal law, as it applies to reserved matters. Scots private law and Scots criminal law are widely defined in section 126 (4) and (5). Paragraph 29(4)s default position is restrictive: the modification is to be treated as relating to reserved matters unless the purpose of the provision is to make the law in question apply consistently to reserved matters and otherwise. Here the law in question must mean the relevant rule of Scots private law or Scots criminal law. The second group of provisions consists of section 29(2)(c) and Schedule 4, paras 2 and 3. Para 2(1) contains a general prohibition on modification (including amendment or repeal) of the law on reserved matters, that composite expression being defined in sub paragraph (2) by reference to the subject matter of an enactment or non statutory rule. So reading Schedule 4, para 2(1) and (2) together with Schedule 5, Part II, Head E1(d), we see that (if those provisions stood alone) an Act of the Scottish Parliament could not modify the Road Traffic Offenders Act 1988, because the subject matter of that Act is a reserved matter. As I understand it the Court is agreed (although not for identical reasons) that the legislation now in point, section 45 of the Criminal Proceedings etc (Reform)(Scotland) Act 2007, does not infringe section 29(2)(b) of the Scotland Act. The Court is however divided as to the effect of section 29(2)(c). Lord Rodger and Lord Kerr take the view that section 45 of the 2007 Act infringes section 29(2)(c) and Schedule 4, para 2 (being special to a reserved matter for the purposes of para 2(3) and not being saved by para 3, relating to incidental or consequential modifications). I agree that para 3 is not in point. The crucial provision is para 2(3). But it is important, in my view, to try and see it as part of a rational and coherent scheme defining the legislative competence of the Scottish Parliament. That is easier said than done, as the division within the Court indicates. When I first studied this second group of provisions I got the impression that they replicated, but in different language, the effect of what I have called the first group of provisions, and that it was hard to discern the legislative scheme or purpose underlying this. I still have difficulty with this. But I think the answer may be that section 29(2) is dealing comprehensively with the scope of any new legislation enacted by the Scottish Parliament, whereas Schedule 4 is (as its heading indicates) concerned with the protection of some existing legislation (or some non statutory rule of law) which has a reserved matter as its subject matter. However the statute book is already so heavily burdened that almost any new legislation is likely to modify existing legislation, and in Scotland a lot of new legislation will have the effect of modifying Scots private law or Scots criminal law. So in most cases both groups of provisions will be in point. Section 29(4) is concerned with a provision which makes a modification to Scots private law or Scots criminal law as it applies to reserved matters; in that case it is necessary to enquire whether its purpose is to make the law in question apply consistently to reserved matters and otherwise (that is, to non reserved matters). Schedule 4, para 2(3) is concerned with the modification of a rule of Scots private law or Scots criminal law to the extent that the rule in question is special to a reserved matter. There is to my mind an obvious degree of affinity between these two enactments, in that a provision intended to produce consistency in a rules application across the board (that is, to reserved matters and non reserved matters alike) is unlikely to apply to a rule which is special to a reserved matter. Special is to be contrasted with general and a measure intended to produce consistency across the board is general by its very nature. The two statutory tests are not identical (if Parliament had intended them to be identical it would no doubt have used the same words in each). Nevertheless they have a strong family likeness, and it would be rather surprising if a provision came within the legislative competence of the Scottish Parliament under section 29(4) but failed on the test in Schedule 4, paragraph 2(3). In applying each test it is necessary to identify the rule of Scots criminal law which is to be modified. It is to be found in sections 9 and 33 of, and Schedule 2 to, the Road Traffic Offenders Act 1988, so far as they apply to an either way offence under section 103(1)(b) of the Road Traffic Act 1988 committed in Scotland. These provisions are part of Scots criminal law, and they relate (almost by definition, having regard to the wording of Head E1(d)) to a reserved matter. It is also necessary to identify the purpose of the provision which makes the modification, that is section 45 of the 2007 Act. Its purpose was (as Lord Hope says in his judgment, para [31]) to contribute to the reform of the summary justice system by reducing pressure on the higher courts. An increase in the sentencing powers of sheriffs when they were dealing with statutory offences was seen as a necessary of this process. Similarly in Lord Rodgers view (para [105]) it was to introduce a novel, general, provision for determining the maximum term which a sheriff, sitting as a court of summary jurisdiction, could impose by way of imprisonment in respect of either way statutory offences which had previously attracted a maximum sentence of less than 12 months imprisonment. Lord Rodger gives a very similar explanation of the purpose of section 45 in para [113] of his judgment. In my opinion this statutory purpose includes achieving consistency in the sheriffs sentencing powers, on summary conviction, as between reserved and non reserved matters. Lord Rodger accepts this in para [116] of his judgment, but reaches a different conclusion on the similar point (not, I accept, exactly the same point) arising under Schedule 4, paragraph 2(3). I would accept that on my interpretation both section 29(4) and Schedule 4, para 2(3) may produce some difficult borderline cases, and some results which might appear anomalous. Perhaps they would do so on any interpretation, since in the Scotland Act Parliament was attempting to define legislative competence across the whole broad expanse of what are now regarded as the concerns of government. But (with great respect to the contrary views of Lord Rodger and Lord Kerr) I do not see this as a difficult borderline case. The relevant rule of Scots criminal law to be modified is not that driving while disqualified is a criminal offence, nor that it is a criminal offence punishable by imprisonment, nor that the maximum term of imprisonment is 12 months. All that has been enacted by the Westminster Parliament, and is left untouched. The rule to be modified is whether (and if so to what degree) the option of summary trial before the sheriff should reduce the maximum sentence that can be passed. That is to my mind a general matter relating to the Scottish system of criminal justice, and is not something special to the reserved matter of road transport. For these reasons, and for the fuller reasons in the judgment of Lord Hope, while respecting the closely argued contrary views of the minority, I agree with Lord Hope and Lord Brown that the appeals should be dismissed and the cases remitted to the Appeal Court for any further orders that may be required. LORD BROWN Section 33 of and Part 1 of Schedule 2 to the Road Traffic Offenders Act 1988 (the RTOA), as originally enacted, provided that the offence of driving while disqualified (the offence) under section 103(1)(b) of the Road Traffic Act 1988 (the RTA) could be prosecuted in Scotland either summarily or on indictment; if summarily, the maximum punishment was six months imprisonment (and/or a fine); if on indictment, twelve months (and/or a fine). The RTOA and the RTA are reserved matters. By section 45 of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 (the 2007 Act) the Scottish Parliament purported to increase from six months to twelve months the maximum sentence that could be imposed for the offence by the sheriff sitting summarily. (Although immaterial to this appeal, it may be noted that in England and Wales the offence was, and remains, triable summarily only and subject to a maximum sentence of six months imprisonment.) The sole issue for determination on this devolution appeal is whether section 45 of the 2007 Act was within the Scottish Parliaments legislative competence within the meaning of section 29 of the Scotland Act 1998 (the 1998 Act). Section 29 has already been set out in full by other members of the Court and I need not repeat it. So too the relevant paragraphs of Schedule 4 to the 1998 Act (referred to in section 29(2)(c)). Before coming to the single point on which the Court is divided it is worth noting the following basic matters. First, that section 45 of the 2007 Act, the enactment impugned, did not increase the maximum penalty available for the offence in Scotland: that remained at twelve months imprisonment; what changed was that the sheriff could impose this maximum sentence no less when sitting as a court of summary jurisdiction than as a court of solemn jurisdiction. Secondly, that the essential purpose of section 45 (indeed, of sections 43 to 49 of the 2007 Act as a whole) was not to increase the penalties imposed by the Scottish courts but rather, by enlarging the sheriffs summary sentencing powers, to reallocate business within the court system to have more cases tried summarily instead of by a jury, summary trials generally being simpler, faster and cheaper than jury trials. Thirdly, that had the 2007 Act, directed as it was to reallocating court business in this way and to standardising the sheriffs summary sentencing powers for the future, not included within its provisions modification of the RTOA and the RTA in the way described, it would have created a striking contrast between the sheriffs summary powers when dealing with reserved matters and those available to him in other cases. Of course, as Lord Rodger points out, any such anomaly or inconsistency could if necessary be cured by resort to section 104 of the 1998 Act. But was that the only lawful means of achieving the desired consistency in this case? That is the question. I understand all of us to agree that section 45 does not fall foul of section 29(2)(b) of the 1998 Act. It does not relate to a reserved matter having regard to section 29(3) and is not to be deemed to relate to reserved matters by virtue of section 29(4). On this latter point, in common with Lord Hope, I regard section 45 as making modifications of Scots criminal law as it applies to reserved matters but as doing so for the purpose of making Scots criminal law (as to the allocation of court business) apply consistently. What critically divides the Court is the question raised under section 29(2)(c): as to whether section 45 is in breach of the restrictions in Schedule 4. I do not pretend to find paragraphs 2 and 3 of Schedule 4 entirely easy to follow and naturally I recognise the force of Lord Rodgers reasoning. For my part, however, I remain unpersuaded that section 45 modifies the law on reserved matters within the meaning of paragraph 2(1), given that (by virtue of paragraph 2(3)) paragraph 2(1) applies in relation to a rule of Scots criminal law only to the extent that the rule is special to a reserved matter (which I do not regard the unamended 6 months limits of the sheriffs summary jurisdiction to be). Even, however, were I persuaded that section 45 is to be regarded as modifying the law on reserved matters within the meaning of paragraph 2, I would conclude here that paragraph 2 is then disapplied by paragraph 3 since such modification is to be seen merely as incidental to a provision being made (for reallocation of court business and the standardisation of the sheriffs summary sentencing powers) in relation to unreserved matters and has no greater effect on reserved matters than is necessary to give effect to such purpose. Given that the Scottish Parliament is plainly intended to regulate the Scottish legal system I am disinclined to find a construction of Schedule 4 which would require the Scottish Parliament, when modifying that system, to invoke Westminsters help to do no more than dot the is and cross the ts of the necessary consequences. I too, therefore, would dismiss these appeals. LORD RODGER Does an enactment of the Scottish Parliament relate to reserved matters? Does it modify a rule of Scots criminal law that is special to a reserved matter? These are the key questions in the present appeals. The answers depend on the interpretation of section 29(2)(b) and (c) of the Scotland Act 1998 (the 1998 Act), along with paras 2 and 3 of Part I of Schedule 4 to the Act. Viewed in isolation, para 2, in particular, can appear to use impenetrable language to erect an arbitrary restriction on the Parliaments powers. Matters become clearer, however, when the provisions are seen in their setting in life. A useful starting point is the situation before 1999. Policy responsibility before devolution Until devolution took effect, leaving aside the fluctuating position of Northern Ireland, the central government of the United Kingdom was carried on by a single executive and a single Parliament. The executive was responsible for, and could determine, all areas of policy for the entire United Kingdom. Similarly, Parliament could legislate to give effect to the chosen policy in all parts of the United Kingdom. In practice, Parliament did not always insist on the law being uniform throughout the United Kingdom. To take only the most obvious example, Parliament did not intervene to impose uniformity on the private or criminal laws of England and Scotland. Instead, when legislation was to apply in both jurisdictions, where necessary, it included provisions that were tailored to fit the underlying law of both systems. So, for instance, the Rehabilitation of Offenders Act 1974 had to take account of differences in the two systems of criminal procedure. Sometimes, even if Parliament was legislating for England and Wales only, for example, the legislation could not be effective unless some provisions were made to extend to Scotland and vice versa. To take another obvious example, aspects of the legislation on detained patients in the Mental Health Act 1983 and the Mental Health (Scotland) Act 1984 had a cross border dimension and would have been unworkable if various provisions of the English Act had not extended to Scotland and various provisions of the Scottish Act had not extended to England. When the legislation was being prepared, officials and, if necessary, ministers in the various departments, including the Scottish Office, would discuss the proposals and try to iron out any difficulties. Even where there was no particular cross border dimension, legislation proposed by one department might have an impact on matters for which another department was responsible. Proposed legislation on, say, education might have an impact on employment; legislation on care in the community might raise law and order questions; legislation on transport might affect the environment; legislation on planning might affect trade and industry. And so on. More particularly, to be effective, legislation on a matter for which one department had responsibility might require that a piece of legislation falling within another departments sphere of responsibility should be amended. So, when a policy was being worked up and incorporated into a Bill, while one department would take the lead, very frequently officials and ministers from a number of departments would be involved. Suppose, for instance, the Home Office and the Scottish Office had proposed legislation to adjust the jurisdiction of the courts by increasing the sentencing powers of summary courts in both England and Wales and in Scotland. Suppose also that, in order to be effective, the reforming legislation would have had to modify the penalty provisions for offences in various Acts, such as the Road Traffic Offenders Act 1988 (the RTOA). In that event, officials of the lead departments would have consulted officials and ministers from all the departments, including the Department of Transport, having responsibility for the Acts which it was proposed should be modified. Sometimes the impact of the proposed legislation on a different area would be relatively insignificant perhaps involving little more than updating statutory references or bringing the language of existing legislation into conformity with the language of the proposed legislation. In such cases the main task of the other departments might well be to help the lead department and the Bill team by identifying provisions that would require to be modified in this way. But sometimes the impact would be more significant and would trench on issues of policy. Then there could well be differences of opinion among the departments concerned as to the best way forward. If officials could not resolve them, the disputed issues could be taken for decision to the appropriate cabinet committee and ultimately, if necessary, to the full cabinet or to the Prime Minister. The result would be a Bill which made all the necessary amendments, whatever the subject matter of the legislation being amended and irrespective of the department which had responsibility for that subject. Policy responsibility after devolution In the 1998 Act and the corresponding Acts for Wales and Northern Ireland, Parliament devolved legislative and executive authority in varying degrees. The powers of the Scottish Parliament are to be found in sections 28 and 29 of the 1998 Act. Section 28(1) of the 1998 Act provides that, subject to section 29, the Scottish Parliament may make laws. In terms of section 29(1), an Act of the Scottish Parliament is not law so far as any of its provisions is outside the legislative competence of the Parliament. Under section 29(2) a provision is outside that competence in various circumstances in particular, if, (b), it relates to reserved matters or, (c), it is in breach of the restrictions in Schedule 4. Leaving aside certain matters where powers are shared (section 56), it is immediately obvious that the overall scheme was to devolve power to the Scottish Executive and Scottish Parliament, but to except certain reserved matters, which are identified in Schedule 5 to the 1998 Act. All other matters are devolved matters although that term is not used since the Act concentrates on identifying the matters lying outside the competence of the Scottish Parliament and Scottish Executive. So far as these reserved matters are concerned, policy responsibility in respect of Scotland remains with the United Kingdom government and the United Kingdom Parliament retains the sole responsibility for legislating on them. The purpose of a provision and its validity It is convenient at this stage to notice that, under section 29(3) of the 1998 Act, the question whether a provision of an Act of the Scottish Parliament relates to a reserved matter and so is outside the competence of the Parliament under section 29(2)(b) is to be determined by reference to the purpose of the provision. Sometimes the clearest indication of the purpose of a provision will be found in a report which gave rise to the legislation or in a report of one of the committees of the Parliament. But very often the purpose of a provision will be clear from its context in the Act in question. For example, the subject matter of the Carriage of Goods by Sea Act 1992 is a reserved matter: para 1 and Section E3 of Part II of Schedule 5 to the 1998 Act. Obviously, therefore, if the Scottish Parliament purported to pass a Carriage of Goods by Sea (Scotland) Act with the sole purpose of repealing the 1992 Act in Scots law, its purpose would relate to a reserved matter and so its provisions would be outside the competence of the Parliament by virtue of section 29(2)(b). In practice, such a clear example would be unlikely to get past the legal advisers to the Scottish Parliament. In real life the problem is likely to arise in more complex situations. But assume, for example, that the purpose of an Act is to increase the sentencing powers of the lower courts in Scotland so as to allow them to deal with more serious cases. The purpose of the Act plainly relates to a devolved, rather than a reserved, matter. So its provisions will not be outside the competence of the Scottish Parliament by reason of section 29(2)(b). Does it follow that all of its provisions are automatically within the competence of the Scottish Parliament? By no means. For example, any provision which was incompatible with rights under the European Convention on Human Rights or with Community law would be outside competence by reason of section 29(2)(d) even if that provision was designed to help achieve the purpose of increasing the sentencing powers of the lower courts in Scotland. Similarly, any provision which was in breach of the restrictions in Schedule 4 to the 1998 Act would be outside competence again, even though the provision was designed to help achieve the purpose of increasing the sentencing powers of the lower courts in Scotland. Quite simply, therefore, even if the purpose of an Act is within the competence of the Scottish Parliament in terms of section 29(2)(b) of the 1998 Act, the Parliament cannot achieve that purpose by enacting provisions which are beyond its competence for one of the reasons listed in the other paragraphs of that subsection. As Lord Atkin put it in Gallagher v Lynn [1937] AC 863, 870, an Act may have a perfectly lawful object but may seek to achieve that object by invalid methods. In other words, the fact that a provision may have a lawful (devolved) purpose does not validate the provision if, for some other reason, it is outside the competence of the Parliament. So, in particular, the mere fact that the purpose of a provision is to increase the sentencing powers of the sheriff, sitting as a court of summary jurisdiction, will not validate it if the provision is outside the competence of the Parliament because it purports to modify a rule of Scots criminal law that is special to a reserved matter: section 29(2)(c) of, and para 2 of Part I of Schedule 4 to, the 1998 Act. Section 104 orders The fact that the powers of the Scottish Parliament are subject to these limitations means that there is now a stark contrast between the position in England and Scotland. For England, one executive and one Parliament continue to have the necessary powers to determine policy in all subject areas and to put it into effect by legislation. For Scotland, however, the necessary powers are divided between two executives and two legislatures. Even though the legislative arrangements for Scotland have changed in this way, the nature of the problems to be tackled by legislation has not changed. So, for example, some measures, like mental health legislation, which are devolved matters, still have a cross border dimension. Similarly, proposed legislation in one field, which happens now to be devolved, may require substantial amendment to legislation in another field, which happens now to be reserved. In these situations the Scottish Parliament will not have all the powers that are needed to make a fully effective reform. So its legislation can take the matter only so far. If it is to be fully effective, the legislation passed by the Scottish Parliament will require to be topped up by legislation of the United Kingdom Parliament dealing with any aspects which are beyond its competence. The need to provide for such situations was foreseen by those who drafted the 1998 Act. Section 104, which is designed to be used when they arise, is therefore a key element of the scheme for devolution. It contains a tailor made mechanism for using the powers of the United Kingdom Parliament to supplement legislation of the Scottish Parliament, without the need for full scale legislation by Parliament: (1) Subordinate legislation may make such provision as the person making the legislation considers necessary or expedient in consequence of any provision made by or under any Act of the Scottish Parliament or made by legislation mentioned in subsection (2). (2) The legislation is subordinate legislation under an Act of Parliament made by a member of the Scottish Executive, a Scottish public authority with mixed functions or no reserved functions, or any other person (not being a Minister of the Crown) if the function of making the legislation is exercisable within devolved competence. Of course, the Scottish Parliament and Scottish Executive cannot compel a Minister of the Crown to exercise the power under section 104. The intention underlying section 104 and indeed the whole scheme of devolution is, however, that the redistribution of powers should not impair but improve the government of the United Kingdom as a whole. It proceeds on the basis that both administrations can be expected to co operate appropriately. In particular, it presupposes that the United Kingdom ministers and Parliament will not be indifferent to the effectiveness of legislation passed by the Scottish Parliament. Not surprisingly, therefore, since devolution, ministers have made more than 40 orders under section 104. Some of the section 104 orders have concerned matters with a cross border aspect. When legislating for England and Wales, Parliament can, of course, still include any provisions which require to extend to Scotland in order to make the legislation effective though, doubtless, only after discussion with the Scottish Executive and their officials. But, as already noted, it is outside the competence of the Scottish Parliament to make any provision that would form part of the law of England and Wales: section 29(1) and (2)(a) of the 1998 Act. So the Scottish Parliament cannot make any changes to English law which may be needed in order to make its legislation on the devolved matter effective. Section 104 comes to the rescue. For instance, following the enactment of the Mental Health (Care and Treatment) (Scotland) Act 2003 by the Scottish Parliament, a Scotland Office minister used his power under section 104 of the 1998 Act to make the Mental Health (Care and Treatment) (Scotland) Act 2003 (Consequential Provisions) Order 2005 (No 2078; S 9), amending the law of, inter alia, England and Wales in order to facilitate the removal of detained patients from Scotland to England or Wales. But section 104 may also be needed in cases where proposed changes in the law on one subject require changes in the law on another subject. Given the large measure of devolution in matters such as justice, education and health, many of the subjects that are likely to be affected by legislation of the Scottish Parliament will fall within the sphere of responsibility of the Scottish Executive. If the proposed amendments to existing legislation are uncontroversial, then officials can deal with them. If there are disputes on significant matters of policy between, say, the education and criminal justice directorates, it will be for the Scottish Ministers and their officials to thrash them out and incorporate the agreed policy into legislation for the consideration of the Parliament. Again, whatever the principal subject matter of an Act may be, it can be expected to include the necessary amendments to all the relevant legislation on other devolved matters. After, as before, devolution, however, legislation on a subject which is now a reserved matter is liable to have an impact on a subject which is now devolved. For example, legislation on asylum seekers (a reserved matter) might have an impact on the legislation relating to accommodation for homeless persons (a devolved matter). Given the continuing power of Parliament to legislate for Scotland (section 28(7)), there would be no difficulty in incorporating all the necessary changes into the legislation on asylum seekers presumably, after the Home Office had discussed the proposals with the Scottish Executive, just as, formerly, the Home Office would have discussed them with the Scottish Office. The converse situation is where the Scottish Executive and Parliament wish to legislate on a matter which has implications for what is now a reserved matter. If, in the days before devolution, effective legislation could often only be prepared and introduced once policy issues in a number of discrete areas had been hammered out, the position must be the same after devolution. Likewise, if different departments were the guardians of policy on different matters before devolution, the same must apply after devolution the difference being that the Scottish Ministers and their directorates are now responsible for policy on devolved matters, the United Kingdom government and its departments for policy on the other (reserved) matters. Under section 54 of the 1998 Act, the competence of Scottish ministers is, of course, modelled on the competence of the Scottish Parliament. Suppose, for instance, that the Scottish Executive wanted to introduce legislation changing the system of accommodation for homeless persons in Scotland, but the reform would involve modifying provisions in a (reserved) Act on asylum seekers. If similar legislation had been proposed by the Scottish Office before devolution, the Scottish Office and the Home Office would have discussed the relevant policy issues. Eventually, the government as a whole would have reached a view on them and this view would have been reflected in the resulting legislation if any. Obviously, after devolution, exactly the same policy issues would present themselves. By devolving power over Scottish housing policy to the Scottish Executive and the Scottish Parliament, Parliament cannot have intended to remove from the United Kingdom government the power to take all the necessary decisions on asylum matters. So, in principle, the position after devolution must remain the same as before. If the Home Office and the United Kingdom Parliament were content with the proposed changes to the legislation on asylum seekers, there would be no difficulty: they could be made by order under section 104 of the 1998 Act. One example of such an order dealing with a reserved matter is the Housing (Scotland) Act 2006 (Consequential Provisions) Order 2008 (No 1889), article 6 of which amends the list of disqualifying offices in Part 3 of Schedule 1 to the House of Commons Disqualification Act 1975. Another example is more immediately relevant to the Criminal Proceedings etc (Reform) (Scotland) Act 2007 (the 2007 Act) which gives rise to these appeals. The Criminal Proceedings etc (Reform) (Scotland) Act 2007 (Powers of District and JP Courts) Order 2007 (No 3480; S 7) repeals or amends provisions of the RTOA. I return to this order briefly at para 151 below. On the other hand, if agreement could not be reached and proposed Scottish housing legislation would involve changes to legislation on asylum seekers which the United Kingdom government regarded as unacceptable, it would have to be either dropped or modified. This would not be to single out Scottish housing legislation exactly the same would apply to any similar proposal from the ministry with responsibility for housing in England. The only difference is that, for England, the dispute would have to be settled by ministers and departments within the United Kingdom government, whereas, for Scotland, it would have to be settled between a minister and department in Westminster and a minister and directorate in Edinburgh or, ultimately, between the United Kingdom government and the Scottish Executive. If, therefore, the Scottish Parliament persisted in legislating on the matter, despite the United Kingdom governments opposition, one would expect to find that the relevant provisions affecting asylum seekers would be outside its competence and so not law. By no means all encroachments by the Scottish Parliament into the territory of reserved matters are going to be dramatic or unacceptable. As already explained, legislation on a devolved matter is quite likely to entail some change in a reserved matter. Section 29(2)(c) recognises this reality. It proceeds on the basis that, even when the legislation of the Scottish Parliament does not relate to a reserved matter and so must relate to a devolved matter the legislative package, as a whole, may require to have some impact on the law on reserved matters, if it is to be effective. Section 29(2)(c) and Schedule 4 are designed to show how far, in this respect, the Scottish Parliament can go by itself. Consistently with the general structure of the Act, these provisions prescribe what modifications of the law on reserved matters lie outside the competence of the Scottish Parliament since they would truly be a matter for the consideration of the United Kingdom government and Parliament. If a proposed reform includes aspects which fall outside the competence of the Scottish Parliament in this way, that does not mean that the reform cannot go ahead: if the United Kingdom government and Parliament are content, these aspects can be addressed by an appropriate order under section 104. Incidental or consequential modifications I shall have to look at paras 2 and 3 of Part I of Schedule 4 to the 1998 Act in more detail in due course, but it is convenient to notice one aspect at this stage. As in pre devolution days, a piece of legislation on what is now a devolved matter may require essentially minor and technical modifications to the law on what are now reserved matters. Obviously, the Scottish Parliament should be able to make these modifications for itself. And para 3(1) of Part I of Schedule 4 makes it clear that it can provided that the modifications do not go further than is necessary. Referring back to the restriction imposed by para 2, para 3(1) provides: Paragraph 2 does not apply to modifications which (a) are incidental to, or consequential on, provision made (whether by virtue of the Act in question or another enactment) which does not relate to reserved matters, and (b) do not have a greater effect on reserved matters than is necessary to give effect to the purpose of the provision. The paragraph refers to modifications which are incidental to, or consequential on, provision made . which does not relate to reserved matters. The adjectives suggest the kinds of relatively minor modifications which are often to be found in schedules, rather than cluttering up the body of a traditional United Kingdom statute. The wording of a form to be used in making an application or carrying out a transaction is an example of the kind of incidental matter which is usually consigned to a schedule. As mentioned already at para 72 above, typical consequential amendments are concerned to modernise the language of an existing provision or to update legislative references. Amendments of this kind are also usually found in a schedule to an Act. Precisely because they raise no separate issue of principle, amendments of these kinds can be safely stowed away in a schedule, which is unlikely to be debated in any detail, if at all. If the legislature approves the main provisions, then it must equally approve these technical and mechanical changes which are needed to give effect to the main provisions. Similarly, it is easy to see that a modification of that kind to the law on a reserved matter, following on from legislation on a devolved matter, would be unlikely to raise any issue of principle to which the relevant United Kingdom minister or Parliament would object. So the Scottish Parliament can deal with it. That is what para 3(1) provides. In the unlikely event that a problem arose, the Secretary of State could make an order under section 35(1)(b) of the 1998 Act prohibiting the Presiding Officer from submitting the Bill for Royal Assent. With that rather lengthy introduction, I can now turn to examine the particular problem which gives rise to these appeals. The problem in these appeals Put briefly, section 45 of the 2007 Act purports to provide inter alia that a person convicted on summary complaint of a contravention of section 103(1)(b) of the Road Traffic Act 1988 (the RTA) is liable to a maximum term of imprisonment of 12 months rather than of 6 months, as originally provided in section 33 of, and Part I of Schedule 2 to, the RTOA. The effect of para 1 and Section E1 of Part II of Schedule 5 to the 1998 Act is that the RTOA is a reserved matter. So the enactment that comprises section 33 of, and Part I of Schedule 2 to, that Act is the law on a reserved matter. The appellants maintain that, to the extent that it purported to modify the maximum term of imprisonment on summary conviction laid down by the RTOA, section 45 was special to this reserved matter and so outside the competence of the Scottish Parliament by reason of section 29(2)(c) of, and para 2 of Part I of Schedule 4 to, the 1998 Act. It is therefore not law. It follows, they say, that the maximum term of imprisonment on summary conviction of a contravention of section 103(1)(b) of the RTA remains 6 months. If so, the terms of imprisonment, of over 6 months, imposed on the appellants for their respective contraventions of section 103(1)(b) of the RTA, were incompetent and the bills of suspension must be passed and the sentences quashed. The same point came before the criminal appeal court (Lord Nimmo Smith, Lord Eassie and Lord Wheatley) in Logan v Harrower 2008 SLT 1049. The court held that section 45 of the 2007 Act was within the competence of the Parliament. In the present cases the appeal court simply followed that decision and, without issuing any written judgment, refused to pass the bills of suspension. Summary jurisdiction before the 2007 Act Before looking in detail at the provisions of the 1998 Act, it is necessary to examine the position on summary jurisdiction before section 45 of the 2007 Act was brought into force on 10 December 2007. Following the enactment of the Criminal Procedure (Scotland) Act 1995 (the 1995 Act), the only provision dealing with the summary jurisdiction and powers of the sheriff to impose a sentence of imprisonment was section 5 of that Act. By section 5(1) the sheriff, sitting as a court of summary jurisdiction, was to continue to have all the jurisdiction and powers exercisable by him at the commencement of the Act. Section 5(2) then provided that, without prejudice to any other or wider powers conferred by statute, on convicting any person of a common law offence, the sheriff was to have power, (d), to impose imprisonment, for any term not exceeding 3 months. By subsection (3), in the case of a second or subsequent conviction of an offence inferring dishonest appropriation of property (or attempt) or of an offence inferring personal violence, the sheriff was to have power to impose a term of imprisonment not exceeding 6 months. Since this was the only general provision dealing with the extent of the sheriffs summary powers of imprisonment, under the 1995 Act there was no general provision of any kind in Scottish criminal procedure which prescribed the maximum term of imprisonment which a sheriff, sitting as a court of summary jurisdiction, could impose where someone was convicted of a statutory offence. The limit depended on what the legislature had provided for the particular offence. So, if you wanted, for example, to know the maximum sentence of imprisonment available on a conviction, on summary complaint, under the Knives Act 1997 you would look at sections 1(5)(a) and 2(2)(a) of that Act. Similarly, for a summary conviction of a contravention of section 103(1)(b) of the RTA, you would look in Part I of Schedule 2 to the RTOA. Often you would find that the maximum penalty on summary conviction was 3 or 6 months. But, even as long ago as 1871, section 7 of the Prevention of Crime Act permitted the sheriff to impose 12 months imprisonment on summary conviction of an offence against the Act. And, if you looked at section 25 of, and Schedule 4 to, the Misuse of Drugs Act 1971 today, you would see that the maximum sentence on summary conviction of various offences is 12 months imprisonment. In 2004 the Summary Justice Review Committee chaired by Sheriff Principal McInnes QC recommended that, in order to relieve pressure on the courts of solemn jurisdiction, the criminal jurisdiction of judges sitting summarily should be increased: they should be able to impose a maximum sentence of 12 months imprisonment or detention and a maximum fine of 20,000. The first group of sections in Part 3 of the 2007 Act (sections 43 to 49) was designed to give effect to a slightly modified version of the Committees recommendation. Sections 43 to 45 dealt with the recommendation on imprisonment for the sheriff court. Section 46 dealt with the justice of the peace court, while sections 47 and 48 were designed to increase the maximum available fine to 10,000, rather than 20,000, as contemplated by the Committee. Section 49 dealt with compensation orders. The intention behind the relevant provisions of the 2007 Act therefore was that sheriffs sitting as a court of summary jurisdiction should be able to deal with more serious contraventions of the common law and statute law not that they should impose higher sentences for the same conduct. The anticipated benefits of the reform were thought to outweigh the admitted risk that the effect of increasing the sentences which the summary courts could impose would be an undesirable upward drift in the level of sentences. The appeal court has the necessary powers to check any such tendency in an appropriate case. The reform as carried out by the 2007 Act So far as imprisonment is concerned, the reform was effected by three separate provisions. The first, section 43, dealt with the power of imprisonment for common law offences. Most common law offences, such as assault, are triable either on summary complaint or on indictment. For these cases the reform was effected simply by substituting 12 months for 3 months in section 5(2)(d) of the 1995 Act. So now the maximum penalty for all common law offences is 12 months. Section 5(3), being no longer needed, was repealed. No common law offence falls within the area of reserved matters and so no issue as to legislative competence arises. The second provision was in section 44, which deals with certain specified offences that can be tried only on summary complaint. Again, the maximum term of imprisonment is increased to 12 months. The reform was effected by amending the penalty provisions in the individual statutes creating the offences. Since none of the offences falls within the area of reserved matters, again no issue as to legislative competence arises. Section 45 completed the scheme by dealing with statutory offences which are triable either on indictment or on summary complaint (either way offences) and which are punishable on summary conviction with a maximum term of imprisonment of less than 12 months (subsection (6)). Section 45(1) and (2) provide: (1) The maximum term of imprisonment to which a person is liable on summary conviction of a relevant offence is, by virtue of this subsection, 12 months. (2) Accordingly, the specification of a maximum period of imprisonment in every relevant penalty provision is, in relation to any relevant offence to which it applies, to be read subject to subsection (1). By section 45(2) the specification of a maximum period of imprisonment in any relevant penalty provision in any Act passed before the 2007 Act is to be read subject to section 45(1). In short, section 45 was intended to introduce a novel, general, provision for determining the maximum term which a sheriff, sitting as a court of summary jurisdiction, could impose by way of imprisonment in respect of either way statutory offences which had previously attracted a maximum sentence of less than 12 months imprisonment. In all such cases the sheriff is now to be able to impose a maximum sentence of 12 months imprisonment. In order to achieve its purpose, section 45 had to do two things. First, it had to make provision for the maximum term of imprisonment to which a person is liable on summary conviction of a relevant offence to be 12 months. That is what subsection (1) does. But, by itself, that provision would not have worked or, at the very least, would have left the position unclear. By the very terms of subsection (6)(b), section 45 applies only to offences where the statutory maximum term of imprisonment on summary complaint has already been fixed at less than 12 months. In other words, if it is to work, section 45 must also, secondly, increase the previous maximum term of imprisonment for the offences in question when tried on summary complaint. So the new rule in section 45(1) has to be made to prevail over, and to supersede, any penalty provision providing for a lower maximum term of imprisonment on summary conviction of any either way offence in any relevant enactment. That is what subsection (2) is designed to do. The present case shows subsection (2) in action. Section 33 of the RTOA provides: (1) Where a person is convicted of an offence against a provision of the Traffic Acts specified in column 1 of Part I of Schedule 2 to this Act or regulations made under any such provision, the maximum punishment by way of fine or imprisonment which may be imposed on him is that shown in column 4 against the offence and (where appropriate) the circumstances or the mode of trial there specified. (2) Any reference in column 4 of that Part to a period of years or months is to be construed as a reference to a term of imprisonment of that duration. (6) (5) (b) Summarily, in Scotland. (c) On indictment, in Scotland. (7) (4) Punishment Disqualification Endorsement Penalty points The table below sets out the entry relating to contraventions of section 103(1)(b) of the RTA in Part I of Schedule 2 to the RTOA: (3) (2) (1) Provision General Mode of creating nature of prosecution offence offence Offences under the Road Traffic Act 1988 RTA Driving (a) Summarily, (a) 6 months Discretionary. Obligatory. 6 in England and or level 5 on section while 103(1)(b) disqualified. Wales. the standard scale or both. (b) 6 months or the statutory maximum or both. (c) 12 months or a fine or both. Taking section 33 and the table together leaving the 2007 Act on one side on a summary conviction of a contravention of section 103(1)(b) of the RTA in Scotland, the maximum punishment by way of imprisonment which may be imposed on the offender is 6 months. A contravention of section 103(1)(b) of the RTA is a relevant offence in terms of section 45(6) of the 2007 Act. Similarly, section 33 of, and Part I of Schedule 2 to, the RTOA constitute a relevant penalty provision in terms of section 45(7) of the 2007 Act. So, by virtue of section 45(2), the specification of a maximum period of imprisonment of 6 months on summary conviction in column 4 of Part I of Schedule 2 is to be read subject to section 45(1) of the 2007 Act. In other words, the relevant entry in column 4 of the Schedule is to be read subject to the requirement that the maximum term of imprisonment on summary conviction of any relevant offence (including a contravention of section 103(1)(b) of the RTA) is to be 12 months. Section 45(3) of the 2007 Act gives the Scottish Ministers power by order actually to amend the specification of a maximum term of imprisonment in a relevant penalty provision. But the Court was told that the Ministers had not exercised that power in respect of Part I of Schedule 2 to the RTOA. An order amending the figure in column 4 of the Schedule from 6 to 12 would make the position clearer for anyone consulting it. But it would not change the substance. If section 45 was within the competence of the Scottish Parliament in this regard, section 45(1) prevails over the Schedule and provides that the maximum term of imprisonment for someone convicted on summary complaint of a contravention of section 103(1)(b) of the RTA is 12 months. Therefore, even if section 45 does not technically amend the figure in column 4 of the Schedule, it certainly purports to supersede, and thereby modify, the law comprising section 33 of the RTOA and the relevant entry in the Schedule. Similarly, it purports to supersede and modify all the other comparable penalty provisions which prescribe the maximum term of imprisonment that can be imposed, on summary conviction, for either way offences in statutes dealing with reserved matters. In short, section 45 purports to modify, inter alia, the maximum term of imprisonment to which someone is liable on summary conviction of a contravention of section 103(1)(b) of the RTA by increasing it from 6 months to 12 months. The issue in the appeals is whether, in so far as it purports to make this modification of the provisions of the RTOA, section 45 of the 2007 Act is outside the competence of the Scottish Parliament in any of the ways specified in section 29(2) of the 1998 Act. In fact, the parties are agreed that the only relevant limits are those in section 29(2)(b) and (c). Therefore, the Court has to decide whether section 45 of the 2007 Act falls foul of the limits in section 29(2)(b) and (c) and para 2 of Part I of Schedule 4. It is convenient to start with section 29(2)(b). Is section 45 beyond the competence of the Scottish Parliament because it relates to a reserved matter? In para 75 above, I have given a hypothetical example of an Act of the Scottish Parliament whose purpose would obviously relate to a reserved matter. The Act would therefore be outside its competence. Sometimes, of course, the purpose of a provision may be obscure. And, even when it is not obscure, people may describe the purpose in slightly different ways. But, having regard to its background and its context, I would identify the purpose of section 45 of the 2007 Act as being to adjust the jurisdiction of the Scottish courts by making 12 months the maximum term of imprisonment to which a person is liable on summary conviction of any either way statutory offence. For the sake of brevity, I shall refer to this purpose as being to increase the sheriffs summary sentencing powers. The jurisdiction and sentencing powers of the Scottish courts are not reserved matters. So the purpose of the section can on no view be said to relate to reserved matters. This is so, even though, in order to achieve its purpose, as part of the scheme for adjusting the jurisdiction of the Scottish courts, the section does undoubtedly purport to affect reserved matters, viz, by modifying the relevant penalty provision in the RTOA and, as the advocate depute accepted, by modifying penalty provisions for either way offences in any other statutes falling within the scope of the reserved matters in Schedule 5 to the 1998 Act. An example would be the maximum term of imprisonment on summary conviction of a corrupt practice under section 168(1)(b) of the Representation of the People Act 1983. Section 29(4) of the 1998 Act has also to be considered, however, since it contemplates the possibility that a provision whose purpose does not otherwise relate to a reserved matter may nevertheless be treated as relating to a reserved matter and so fall outside the competence of the Scottish Parliament. Subsection (4) applies to a provision which makes modifications of Scots private law, or Scots criminal law, as it applies to reserved matters. So the subsection would apply only if section 45 could be said to make a modification to Scots criminal law as it applies to reserved matters. The advocate depute argued that subsection (4) did not apply to a case like the present because it was restricted to cases where the provision in question applied only to reserved matters. Although no such qualification appears in the wording, he submitted that it was implicit since, if a provision applied to both reserved and devolved matters, its purpose would, inevitably, be to make the law apply consistently to reserved matters and otherwise. I accept that, where a provision applies to both reserved and devolved matters, its effect may be to make the law apply consistently to both. But its purpose may be different. It is possible, for example, to conceive of a situation where the purpose of a provision was actually to make a modification in relation to the criminal law applying to a particular reserved matter, but the provision was made to apply, incidentally, to devolved matters. Section 29(4) must be apt to catch a case of that kind. That said, I am very doubtful whether subsection (4) applies in this case. The words of the subsection obviously cover a case where some general provision of Scots private or criminal law applies to reserved matters. For example, it would cover modifications to the general law on limitation as it applied to actions relating to some reserved matter; or modifications to, say, the general law of criminal procedure as it applied to an accuseds trial, on summary complaint or on indictment, for some offence constituting a reserved matter. In such cases the provision modifies the law applying to the reserved matter; it does not modify the reserved matter itself. But Parliament provides that, subject to the unless clause, it is none the less to be treated as relating to the reserved matter. In the present case, by contrast, section 45 actually modifies the reserved matter or, rather, the law on the reserved matter viz, the penal provision in Part I of Schedule 2 to the RTOA. In my view section 29(4) is not designed to cover a provision of this kind. Therefore, as far as section 29(2)(b) is concerned, the position is regulated by section 29(3). Even if this were considered to be too narrow a construction of section 29(4) of the 1998 Act, section 45 of the 2007 Act would still not fall to be treated as relating to the reserved matter of the RTOA. A provision which makes modifications of Scots criminal law, as it applies to reserved matters, is to be treated as relating to reserved matters unless the purpose of the provision is to make the law apply consistently to reserved matters and otherwise. The phrase, the purpose of the provision, must refer to the same purpose in both subsection (3) and subsection (4). Part of the purpose of section 45 as described in para 112 above is indeed to make the law on the sheriffs power to imprison apply consistently to all either way statutory offences, whether constituting reserved matters in terms of Schedule 5 or not. So section 45 is not to be treated as relating to a reserved matter under section 29(4). In effect, the unless clause in section 29(4) allows the Scottish Parliament to make a general reform of Scottish private or criminal law, even though it modifies the law which applies to reserved matters. Again, this is not surprising since the United Kingdom Parliaments legislation on particular topics has always been framed and operated against the background of the general private and criminal law as it applies in the various jurisdictions from time to time. Equally, any reform of the general law has to take account of all the matters to which it actually applies. In agreement with all of your Lordships, I am therefore satisfied that section 45 of the 2007 Act is not outside the competence of the Scottish Parliament by reason of relating to a reserved matter. The question then arises: even though the purpose of section 45 is one that the Scottish Parliament can legitimately pursue, is the section nevertheless to some extent outside its competence because it is in breach of a restriction in para 2 of Part I of Schedule 4 to the 1998 Act? This question has to be addressed in stages. Does section 45 modify the law on a reserved matter? As already explained, under section 29(2)(c) of the 1998 Act, section 45 will be outside the competence of the Scottish Parliament so far as it breaches any of the restrictions in Schedule 4 to the 1998 Act. The relevant paragraphs for present purposes are paras 2 and 3. Paragraph 2 provides: (1) An Act of the Scottish Parliament cannot modify, or confer power by subordinate legislation to modify, the law on reserved matters. (2) In this paragraph, the law on reserved matters means (a) any enactment the subject matter of which is a reserved matter and which is comprised in an Act of Parliament or subordinate legislation under an Act of Parliament, and (b) any rule of law which is not contained in an enactment and the subject matter of which is a reserved matter, and in this sub paragraph Act of Parliament does not include this Act. (3) Sub paragraph (1) applies in relation to a rule of Scots private law or Scots criminal law (whether or not contained in an enactment) only to the extent that the rule in question is special to a reserved matter or the subject matter of the rule is (a) interest on sums due in respect of taxes or excise duties and refunds of such taxes or duties, or (b) the obligations, in relation to occupational or personal pension schemes, of the trustees or managers. At first sight, para 2(1) appears to impose a very drastic limit on the competence of the Scottish Parliament: an Act of the Parliament cannot modify (which includes amending or repealing section 126(1)) the law on reserved matters. If that were all that para 2 said, then it would prevent the Scottish Parliament from ever touching legislation on reserved matters even if the purpose of the provision related to a devolved matter. In effect, it would make section 29(2)(b) superfluous. But para 2(1) is actually qualified by para 2(3) and does not apply to modifications falling within the scope of para 3. Section 29(3) and (4) focus on the provision which is being enacted and on its purpose. By contrast, para 2 of Part I of Schedule 4 focuses on the rule of law that is being modified by the enactment and makes no mention whatever of the purpose of the modification. Paragraph 2(2)(a) defines the law on reserved matters as any enactment the subject matter of which is a reserved matter and which is comprised in an Act of Parliament or subordinate legislation under an Act of Parliament. As explained in para 95 above, the effect of para 1 and Section E1 of Part II of Schedule 5 to the 1998 Act is that the subject matter of the RTOA is a reserved matter. So the enactment comprising section 33 of, and the relevant entry in Part I of Schedule 2 to, that Act is part of the law on this reserved matter. This conclusion supports my earlier conclusion that these provisions are not provisions of Scots criminal law, as it applies to reserved matters in terms of section 29(4)(b). A provision cannot be both the law on a reserved matter and the law as it applies to the self same reserved matter. As I have already explained at para 110 above, section 45 of the 2007 Act undoubtedly purports to supersede and modify the enactment in section 33 of, and the relevant entry in Part I of Schedule 2 to, the RTOA. Therefore the power of the Scottish Parliament to enact section 45 for reserved statutes depends on whether the restriction in para 2(1) of Part I of Schedule 4 to the 1998 Act applies to the modification made by section 45. Does section 45 fall within para 3(1) of Part I of Schedule 4? In Logan v Harrower 2008 SLT 1049, 1054, at para 24, giving the opinion of the appeal court, Lord Nimmo Smith said this: While we were not fully addressed on the extent to which recourse may legitimately be had to extra statutory materials as an aid to the construction of a statutory provision such as section 45, in order to discover whether its purpose is such as to bring it within the proviso to section 29(4), it appears to us to be legitimate to have regard to the passages in the Policy Memorandum and Explanatory Notes, quoted above, which contain express statements about its purpose. From these it may be taken, as the advocate depute submitted, that the purpose and of the provision in section 45 of the 2007 Act is to increase generally the criminal sentencing powers of the sheriff, sitting as a court of summary jurisdiction, and that the provision, construed in this light, fulfils this purpose. We agree with the advocate depute that, in the present case, the purpose of the provision is to make Scots criminal law with regard to penalties, procedure and jurisdiction in the sheriff court apply consistently to both common law offences and statutory offences. As provided by paragraph 3 in Part I of Schedule 4 to the Scotland Act, the modifications made by section 45 of the 2007 Act to the reading of Part I of Schedule 2 to RTOA 1988 are merely incidental to, or consequential on, the more general aspect of the provision, which relates generally to the powers of the sheriff in relation to statutory offences, whatever their origin; and the modifications do not have a greater effect upon reserved matters than is necessary to give effect to the purpose of the provision in section 45. Lord Nimmo Smith had already explained, at para 22 of the courts opinion, that the argument before the court had centred on section 29(4) of the 1998 Act. And para 23 and the first three sentences of para 24 contain the reasoning by which the court concluded that section 45 of the 2007 Act was not to be treated as relating to reserved matters by reason of section 29(4). In the final sentence of para 24 the appeal court moved on to consider whether, nevertheless, section 45 was in breach of the restriction in para 2(1) of Part I of Schedule 4 to the 1998 Act. The court held that it was not on the view that the modifications made by section 45 of the 2007 Act to the reading of Part I of Schedule 2 to the RTOA are merely incidental to, or consequential on, the more general aspect of the provision, which relates generally to the powers of the sheriff in relation to statutory offences, whatever their origin. The appeal court had in mind para 3(1) of Part I of Schedule 4 which is set out in para 91 above. In other words, the court held that the modifications made by section 45 were incidental to, or consequential on, provision made which did not relate to reserved matters. So the prohibition in para 2(1) did not apply to those modifications. In my view the reasoning is unsound. I have already indicated, at paras 91 93 above, that para 3(1) appears to be intended to cover the kinds of minor modifications which are obviously necessary to give effect to a piece of devolved legislation, but which raise no separate issue of principle. Indeed the amendments to the RTOA replacing references to the district court with references to the justice of the peace court in para 7 of the Schedule to the 2007 Act are as good an example as any of minor consequential amendments to the law on reserved matters which para 3(1) of Part I of Schedule 4 to the 1998 Act permits the Scottish Parliament to make. In fact, para 444 of the Explanatory Notes says that Paragraph 7 is consequential upon the establishment of JP courts and inserts references to that court in place of the district court. But the modifications made by section 45 of the 2007 Act are of a completely different character and the draftsman clearly thought so, since they are effected not in the Schedule but by a separate section in the body of the Act. Section 45 is one of three sections (the others being 43 and 44) which combine to alter the jurisdiction of the sheriff sitting as a court of summary jurisdiction. None of the sections can be regarded as incidental to, or consequential on, another: they are all independent and deal with distinct aspects of the situation. Needless to say, the relevant paragraphs of the Explanatory Notes do not suggest that section 45 is to be regarded as merely consequential or incidental. Moreover, section 45 applies to any penalty provision in a relevant enactment which, by subsection (7), covers any Act passed before the 2007 Act. These are the words which bring in, for example, the RTOA. So the modifications of the law on reserved matters made by section 45 are effected by exactly the same words as the modifications of the law on devolved matters. Both sets of modifications play an equivalent part in the overall scheme the modifications to reserved penalty provisions are of no less importance than the modifications to devolved penalty provisions. Neither can be regarded as incidental to, or consequential on, the other. Despite this, in Logan v Harrower the appeal court considered that the modifications to the law in Part I of Schedule 2 to the RTOA were merely incidental to, or consequential on, the more general aspect of the provision, which relates generally to the powers of the sheriff in relation to statutory offences, whatever their origin. The reasoning is not easy to follow. It is enough, however, to observe that neither section 45 nor any other provision in the 2007 Act actually has any separate more general aspect relating generally to the powers of the sheriff in relation to statutory offences. So there is no separate devolved provision of that kind and, more particularly, no separate provision made which does not relate to reserved matters in relation to which the modifications to the RTOA made by section 45 could ever be regarded as incidental or consequential. For these reasons, like Lord Hope, I am satisfied that para 3(1) of Part I of Schedule 4 to the 1998 Act does not have the effect of preventing para 2 from applying to section 45 of the 2007 Act. It is therefore necessary to look at the qualification to para 2(1) which is to be found in para 2(3), and which the appeal court did not consider in Logan v Harrower because of their conclusion on para 3(1). Is the rule of law in the RTOA special to a reserved matter under para 2(3)? Unquestionably, section 33 of the RTOA and the relevant entry in Part I of Schedule 2 comprise a rule of Scots criminal law to the effect that, on a summary conviction of a contravention of section 103(1)(b) of the RTA, the maximum punishment by way of imprisonment which may be imposed on the offender is 6 months. That is the rule which section 45 purports to modify. Paragraph 2(1) of Part I of Schedule 4 prevents the Scottish Parliament from modifying a rule of Scots criminal law only to the extent that the rule is special to a reserved matter. So the Court has to decide whether this rule is special to a reserved matter. The advocate depute argued that the rule is not special to this reserved matter or indeed to any other reserved matter: the rule simply prescribes a maximum penalty of 6 months imprisonment for a conviction on summary complaint and that is a penalty that is found in many statutes, on both reserved and devolved matters. To be special, the penalty would have to be one that was not prescribed for an infringement of any statute dealing with a devolved matter. In theory, for instance, it would have applied if the unique penalty for an infringement of section 103(1)(b) of the RTA had been per impossibile say, whipping. Then, because that was a penalty which was found only within the sphere of reserved matters, the Scottish Parliament would be prevented from modifying it. It is fair, however, to say that the advocate depute was unable to point to any actual rule of Scottish criminal law or procedure to which, on his preferred construction, para 2(1) would apply. Although I was initially attracted by the advocate deputes argument, it cannot be right, since, on his construction, the limit makes no sense whatever. Why should the Scottish Parliaments power to modify an enactment whose subject matter is a reserved matter depend on whether there happens to be some comparable enactment dealing with a completely different devolved matter? More particularly, why should the Scottish Parliament be entitled to modify the maximum term of 6 months imprisonment on summary conviction of a contravention of section 103(1)(b) of the RTA in Part I of Schedule 2 to the RTOA simply because there happen to be a number of either way offences in the devolved area where the maximum term of imprisonment on summary conviction is also 6 months? Of course, the Parliament can alter the penalty provision for those offences because it is its business to make such amendments where appropriate. But that is, of itself, no reason why it should become the Scottish Parliaments business for whatever purpose to modify the penalty provision which Parliament has deliberately chosen to enact for a specific offence for which Parliament retains responsibility. The general point can be illustrated by reference to limitation periods. As Mr Johnston QC points out, in Prescription and Limitation (1999), Appendix II, p 371, the Prescription and Limitation (Scotland) Act 1973 (the 1973 Act) does not say that its provisions are not to apply where other enactments establish a prescriptive or limitation period for specific rights or remedies. Nevertheless, as he goes on to say, on general principles of statutory construction, it can be assumed that an enactment of a special nature takes precedence over an enactment of a general nature: the 1973 Act is therefore displaced by more specific provision in other enactments. Mr Johnston then gives a useful table listing a range of enactments which contain their own specific limitation periods. By contrast, there are many statutes which provide for civil liability but do not contain any separate, specific, provision on limitation of proceedings brought for their breach. For example, a breach of a duty under the Provision and Use of Work Equipment Regulations 1998 (No 2306) is actionable: section 42 of the Health and Safety Act 1974. But there is no special rule of law on the limitation of proceedings for such a breach: the general rule of law in the 1973 Act applies. Therefore, if the Scottish Parliament chose to alter that general rule in the 1973 Act, it could do so and the new period would apply to actions for breach of the Regulations. This is so, even though Part I of the Health and Safety Act is a reserved matter: para 1 and Section H2 of Part II of Schedule 5 to the 1998 Act. Many statutes do make special provision on limitation, however. For example, under section 568(5) of the Companies Act 2006, an action for loss suffered because of a contravention of the pre emption provision in a companys articles must be brought within 2 years. That is unquestionably the law on a reserved matter as defined in para 2(2) of Part I of Schedule 4 to the 1998 Act. It is surely unthinkable that, even as part of an exercise to tidy up the Scots law of limitation of actions, the Scottish Parliament would be able to alter that period, which is special in the sense that, instead of relying on the general law of limitation, Parliament has deliberately selected 2 years as being appropriate for proceedings of that particular kind. Leaving aside any other possible difficulties, if the Scottish Parliament could change the period, the result would be to introduce a difference between English and Scots law in an area where Parliament, legislating after devolution, must have considered that the same special rule should continue to apply in both jurisdictions. Equally surely, the power of the Scottish Parliament to alter the period in section 568(5) of the Companies Act could not be affected because, if you rooted around in the statute book, you could find that, under section 5 of the Limitations of Actions and Costs Act 1842, the limitation period for actions brought under local and personal Acts (which would, usually at least, concern devolved matters) happened also to be 2 years. Likewise, it would be irrational to conclude that, if the Scottish Parliament were to repeal or amend section 5 of the 1842 Act so that it no longer provided for a period of 2 years, this would somehow simultaneously remove a power which the Parliament had hitherto enjoyed to amend the limitation period under section 568(5) of the Companies Act 2006. Quite simply, the two enactments have nothing to do with one another. Conversely and reverting to penalties it would be absurd to hold that the Scottish Parliament could not modify a penalty provision so long as it was special to, in the sense of unique to, a reserved matter, but could give itself the power to do so by enacting the same penalty for a devolved matter. Besides being absurd, this would offend against the principle that the limits on the competence of the Scottish Parliament are fixed by the 1998 Act and cannot be altered except by new legislation by Parliament or by Order in Council under section 30(2). What, then, do the critical words mean? In my view, a statutory rule of law is special to a reserved matter if it has been specially, specifically, enacted to apply to the reserved matter in question as opposed to being a general rule of Scots private or criminal law which applies to, inter alia, a reserved matter. Only general rules whose subject matter is listed in sub paras (a) to (e) of para 2(3), as amended, are protected from modification. If interpreted in this way, para 2(3) means that para 2(1) prevents the Scottish Parliament from modifying any enactment which must be taken to reflect the conscious choice of Parliament to make special provision for the particular circumstances, rather than to rely on some general provision of Scottish private or criminal law. Whether or not to modify such an enactment involves questions of policy which must be left for the consideration of the United Kingdom government and Parliament which are responsible for the matter. On this interpretation, paras 2(1) and (3) place a comprehensible limit on what the Scottish Parliament can do. I return to the particular problem in these appeals. Suppose that, instead of increasing the maximum term of imprisonment available on summary conviction of a contravention of section 103(1)(b) of the RTA from 6 to 12 months, the Scottish Parliament had chosen to reduce it to 3 months perhaps as part of a general package of reductions in sentences designed to save money by cutting expenditure on criminal justice. The purpose of the legislation would plainly relate to a devolved matter. Nevertheless, the Scottish Parliament could not achieve that purpose by modifying the RTOA in that way because the maximum term of imprisonment on summary conviction of the offence had been specially chosen by Parliament. The modification would therefore be outside the competence of the Scottish Parliament by virtue of para 2 of Part I of Schedule 4. And it would rightly be outside competence because it would inevitably involve significant road traffic policy issues which, under the 1998 Act, it would be for the United Kingdom government (more particularly, the Secretary of State for Transport) and Parliament to evaluate. For instance, would it be acceptable if the average sentence for driving while disqualified fell because prosecutors were reluctant to mount the more complicated and time consuming sheriff and jury trials necessary to attract a prison sentence of more than 3 months? Would the potential cost cutting advantages of the policy outweigh this possible disadvantage? Mutatis mutandis, the Secretary of State for Transport and the United Kingdom government as a whole would have to consider these issues if the Ministry of Justice made an equivalent proposal for England and Wales. If they ultimately agreed, Parliament would be asked to legislate to amend the RTOA. In the case of Scotland, if the United Kingdom government and Parliament were content, the necessary changes could be made by a section 104 order. If a reduction in the maximum term of imprisonment on summary conviction would be outside the competence of the Scottish Parliament in this way, the same must apply to an increase. For these reasons I conclude that the rule of Scots criminal law prescribing the maximum term of imprisonment for a summary conviction of a contravention of section 103(1)(b) of the RTA, in Part I of Schedule 2 to the RTOA, is special to that reserved matter, in the sense that Parliament has chosen it specifically for that offence. So, by virtue of para 2(1) of Part I of Schedule 4 to the 1998 Act, the Scottish Parliament has no power to modify it. A majority of your Lordships have reached the opposite view. At para 34 of his judgment, Lord Hope accepts that, when considering para 2 of Part I of Schedule 4, the starting point is identifying the rule of Scots criminal law that is being modified. Then one must ask whether that rule is special to a reserved matter. Naturally, I agree. Lord Hope takes the view that the purpose of the enactment may be referred to in order to identify the rule of law that is being modified. I see no room for that approach in this case. Here, the purpose of the enactment is clear and undisputed: to increase the sheriffs summary sentencing powers. If, however, you want to know which rules of Scottish criminal law the enactment is modifying in order to achieve that purpose, you simply have to look at the perfectly clear terms of section 45 and apply them to the penal provisions in question. I agree with Lord Hope when he says, at paras 35 and 37, that the rule of Scots law as to the maximum term of imprisonment that can be imposed i e the maximum period of 12 months on indictment, set out in the relevant part of column 4 of the Schedule falls to be treated as a rule that is special to a reserved matter. I have explained my reasons for taking that view. These cannot, of course, be Lord Hopes reasons. But he gives no explanation for his view beyond the assertion that it plainly, is a rule which is special to the Road Traffic Acts and it is a reserved matter. In para 39 Lord Hope considers that it would be to carry the process of analysis too far to say that the Schedule contains two maximum sentences, one for summary proceedings and the other for proceedings on indictment. But that is precisely what Parliament does say in section 33(1) of the RTOA read together with the relevant entry in the Schedule (referring to the maximum punishment by way of imprisonment and giving different figures depending on the mode of trial). Lord Hope also thinks that it would be carrying the process of analysis too far to say that both of these maximum sentences are special. Apparently this is because such a decision depends on an exercise of judgment in which the purpose of the provision (here, section 45) may be the best guide. But, as the cross headings show, para 2 of Part I of Schedule 4 is designed to protect the law on reserved matters from modification. It is therefore necessary to identify which rules of Scots criminal law are to be regarded as special to a reserved matter in terms of para 2(3) and so protected from modification. Since, ex hypothesi, these rules cannot be modified, they cannot be identified by reference to the purpose of a provision which purports to modify them. In the end, therefore, all we know is that, for some unstated reason, the maximum sentence which can be imposed on conviction of a contravention of section 103(1)(b) of the RTA in a prosecution on indictment is a rule which is special to the Road Traffic Acts, but the maximum sentence which can be imposed for the same offence in a summary prosecution is not. In para 59 of his judgment Lord Walker identifies what the relevant rule of Scots criminal law to be modified is not: it is not that driving while disqualified is a criminal offence (agreed), nor that it is a criminal offence punishable by imprisonment (agreed), nor that the maximum term of imprisonment is 12 months (also agreed, since, again, this must be a reference to the maximum term of imprisonment in a prosecution on indictment). The inference seems to be that these rules might indeed be special to a reserved matter and beyond the reach of the Scottish Parliament. As Lord Walker says, however, all these rules have been left untouched. You then eagerly wait to hear about the rule that has not been left untouched: that the maximum term of imprisonment is 6 months in a summary prosecution. But you wait in vain. Instead, the rule to be modified turns out to be whether (and if so to what degree) the option of summary trial before the sheriff should reduce the maximum sentence that can be passed. With great respect, that does not really look much like a rule of Scots criminal law. But, whatever the description, it is actually the product of the two specific rules of Scots criminal law as to the maximum term of imprisonment for a contravention of section 103(1)(b) of the RTA in summary and indictment proceedings respectively. That product can itself be modified only by modifying either or both of these specific rules. By enacting section 45, the Scottish Parliament purported to modify the rule that the maximum term of imprisonment for this offence in summary proceedings is 6 months. The unavoidable question is whether that rule is special to a reserved matter in terms of para 2(3) of Part I of Schedule 4 to the 1998 Act. But that question is neither posed nor answered. Having bowed politely in the general direction of the argument, Lord Brown rests his conclusion on simple assertion. Until now, judges, lawyers and law students have had to try to work out what Parliament meant by a rule of Scots criminal law that is special to a reserved matter. That is, on any view, a difficult enough problem. Now, however, they must also try to work out what the Supreme Court means by these words. It is a new and intriguing mystery. Conclusion In my view, so far as it relates to the penalty provision in the RTOA relating to contraventions of section 103(1)(b) of the RTA, section 45 was outside the competence of the Scottish Parliament. There was, of course, nothing to prevent the Scottish Parliament from increasing the maximum term of imprisonment which a sheriff, sitting as a court of summary jurisdiction, could impose. That is what section 45(1) does and, by itself, the provision is unobjectionable since it merely deals with the jurisdiction of the sheriff. But any increase in jurisdiction brought about by section 45(1) would remain subject to all the penalty provisions in statutes which stipulate a lower maximum term of imprisonment on summary conviction. So subsection (2) was introduced in order to modify all those provisions. Modification of penal provisions in statutes falling within the devolved sphere causes no difficulty. But, for the reasons I have explained, modifying a specific penal provision in a statute within the reserved area is outside competence essentially, because it involves making a significant change to law which Parliament has decided is to be its own responsibility. Of course, it is true that the purpose of section 45 is to increase the sheriffs summary sentencing powers. That is why section 45 does not relate to reserved matters and so is not beyond the competence of the Scottish Parliament by virtue of section 29(2)(b). But a purpose of increasing the summary sentencing powers of sheriffs or other lower court judges is not a passport that entitles the Scottish Parliament to disregard the prohibitions in the other paragraphs of section 29(2) and to sweep aside any provision of the RTOA which stands in its way. The competent end does not justify the use of means which are beyond competence. If evidence to support that simple proposition were needed, it is to be found in the Criminal Proceedings etc (Reform) (Scotland) Act 2007 (Powers of District and JP Courts) Order 2007, which was made under section 104 of the 1998 Act shortly before the 2007 Act came into force. The order was not mentioned by counsel on either side. Its purpose was, first, to repeal the provisions of the RTOA which prevented the district court (and its successor, the justice of the peace court) from imposing the penalty of disqualification for traffic offences, and then to amend section 34 so as to include the district court (and, hence, the justice of the peace court) among the courts with the power to impose that penalty for such offences. Even though these changes were clearly part of the overall scheme in the 2007 Act, to allow the lower courts to hear more serious cases by increasing their sentencing powers, it was recognised that the section 104 order was needed to carry out this particular aspect of the scheme. By contrast, the minor consequential amendment to section 248C(1) of the 1995 Act, relating to the disqualification power for other offences, was made by section 80 of, and para 26 of the Schedule to, the 2007 Act. In order to achieve another part of the scheme to adjust the jurisdiction of the Scottish courts by increasing the sentencing powers of the lower courts, section 45 of the 2007 Act purports to modify, inter alia, the enactment relating to contraventions of section 103(1)(b) of the RTA in Part I of Schedule 2 to the (reserved) RTOA. As a result, the maximum term of imprisonment that can be imposed for that offence by a court of summary jurisdiction in Scotland is intended to be twice what can be imposed by the equivalent court in England. Of course, it is not essential that the two jurisdictions should march exactly in step on this matter as is plain from the availability of indictment proceedings with a maximum sentence of 12 months imprisonment in Scotland, but not in England. But that is a disparity which Parliament chose to introduce. Whether a further disparity between the jurisdictions should indeed be introduced is precisely the kind of issue like the issue as to whether the district court or justice of the peace court, rather than just the sheriff court, should have power to disqualify for road traffic offences which the 1998 Act intends that Parliament should decide. This need cause no difficulty for the Scottish Executives scheme to adjust the jurisdiction of the Scottish courts by increasing the sentencing powers of sheriffs in summary cases if the United Kingdom government and Parliament are content that the maximum available term of imprisonment for this offence on summary conviction should be increased in this way. Provided the draft is approved by both Houses of Parliament, the appropriate order can be made under section 104 of the 1998 Act: sections 114 and 115 and paras 2 and 3 of Schedule 7. This is indeed precisely the kind of situation for which section 104 was designed. Applying section 101 of the 1998 Act, I would therefore hold that the definition of relevant penalty provision in section 45(7) of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 does not include a provision of a relevant enactment or instrument which is special to a reserved matter within the meaning of para 2(3) of Part I of Schedule 4 to the Scotland Act 1998. It follows that section 45 does not modify the maximum term of imprisonment of 6 months on summary conviction of a contravention of section 103(1)(b) of the Road Traffic Act 1988 in column 4 of Part I of Schedule 2 to the Road Traffic Offenders Act 1988. I would accordingly allow the appeals, pass the bills of suspension, quash the sentence imposed by the sheriff court in each case for the contravention of section 103(1)(b) of the Road Traffic Act 1988 and remit to the appeal court to proceed as accords. LORD KERR The legislative competence of the Scottish Parliament is self evidently a subject of fundamental importance. As the appeals in these cases amply demonstrate, however, it is impossible to devise a comprehensive charter which, for every conceivable situation, infallibly prescribes the limits of that legislatures enacting power. This, it seems to me, is the inevitable consequence of the transfer by the United Kingdom government of some or even many powers to a devolved administration while retaining or, as it is more usually put, reserving, certain other matters to Parliament in Westminster. Whether a particular Act of the Scottish Parliament falls within its legislative competence will, for the most part therefore, depend on a consideration of the particular provisions of the enactment in question. The quest will usually begin with section 29 of the Scotland Act 1998. It stipulates (in subsection (1)) that any provision of an Act of the Scottish Parliament is not law so far as it is outside the legislative competence of the Parliament. Subsection (2) (b) states that a provision is outside the competence of the Scottish Parliament if it relates to reserved matters. The issue as to whether a provision does so relate is to be determined in accordance with subsection (3) which, so far as is material, provides: the question whether a provision of an Act of the Scottish Parliament relates to a reserved matter is to be determined, subject to subsection (4), by reference to the purpose of the provision, having regard (among other things) to its effect in all the circumstances. Subsection (3) has a number of component parts, each of which deserves careful consideration. The first is that which specifies that it is subject to subsection (4). This latter subsection (to which I shall turn presently) is a deeming provision designed to expand the category of cases in which a change in the law is to be considered to relate to reserved matters because it modifies Scots private or criminal law as it applies to reserved matters. The need to enlarge the group in this way appears to me to clearly indicate that the construction to be placed on the expression relates to reserved matters must be suitably restrained. If, in every instance where a provision of the Scottish Parliament touched on a reserved matter, it was to be considered to relate to a reserved matter, subsection (4) would not be needed. The phrase needs a more careful and restricted application, therefore. Guidance as to the extent of the restriction is provided by the next component part of section 29 (3). The resolution of the question whether a particular provision relates to a reserved matter is to be determined by reference to the purpose of the provision. One is immediately thereby drawn to an examination of the objective of the legislation and of the particular provision within it. Before dealing with the result of that examination, it is useful to note the next component part of subsection (3). It is to the effect that the determination (by reference to its purpose) whether an Act of the Scottish Parliament relates to a reserved matter is to be conducted having regard to (among other things) its effect in all the circumstances. It seems to me obvious that the way in which the subsection is structured signifies that the effect of the provision is subordinate to its purpose in the inquiry as to whether it relates to a reserved matter. Indeed, the assessment of the effect of the provision is directly linked to the search for its purpose. This is unsurprising. As Lord Brown pointed out in the course of argument, one will customarily expect that the purpose of a particular provision is to bring about a desired effect. The other things, apart from the effect of the provision, which are to be taken into account in ascertaining its purpose are not specified in subsection (3). Mr Brown on behalf of the appellant, Mr Miller, accepted (sensibly and correctly, in my view) that these would include statements by those responsible for the legislation which purported to identify the reasons for its enactment. The genesis of the legislation under challenge here is the report of the Committee appointed in November 2001 to review summary justice in Scotland under the chairmanship of Sheriff Principal John McInnes QC. The formal remit of the Committee was stated to be: To review the provision of summary justice in Scotland, including the structures and procedures of the sheriff courts and district courts as they relate to summary business and the inter relation between the two levels of court, and to make recommendations for the more efficient and effective delivery of summary justice in Scotland. In paragraph 9 of its summary of recommendations the Committee recorded its proposal that the criminal jurisdiction for judges in summary cases should be a maximum 12 months detention or imprisonment and a 20,000 fine. The reasons for this particular recommendation are discussed throughout the report. In paragraph 7.72 on page 78 at paragraph (iv) it is explained that the view of the majority of the Committee was that there was a need to relieve pressure on the higher courts. This required the lower courts to take on more serious cases. Consequently, some increase in sentencing powers for the judges in those courts was required. The Committee recognised that recommending an increase in the sentencing powers of the courts of summary jurisdiction could give rise to what is described in the report as sentence drift, that is a tendency to increase the normal sentencing range because of the availability of the increase in the statutory maxima. It made clear its express disavowal of any intention to bring about sentence drift in paragraph 7.89 of the report where the following appears: In proposing an increase in sentencing powers, we are clear that we do not intend any uplift of the going rate for all offences, but rather we wish to extend the range of offences that can appropriately be dealt with in the summary courts. The Ministerial response to the McInnes recommendations was contained in a report entitled, Smarter Justice, Safer Communities Summary Justice Reform published in March 2005. In paragraph 4.10 the Scottish Executive signalled its acceptance of the proposal that there be an increase in the sentencing powers of a sheriff sitting without a jury in summary proceedings, stating that this form of proceeding was generally simpler and faster than trials in a solemn court. The report also acknowledged the concern that there might be upward sentence drift but recorded the Committees finding that there was no evidence that this was linked to an increase of sentencing powers in summary proceedings (para 4.51). The Bill which was to give effect to the recommendations of the McInnes Committee (among other matters), the Criminal Proceedings etc. (Reform) (Scotland) Bill, was introduced to the Scottish Parliament on 27 February 2006. Clause 35, which became section 45 of the enacted legislation, dealt with certain statutory offences (including driving whilst disqualified) and provided for a new maximum term of imprisonment of twelve months to which a person summarily convicted of such an offence would be liable. The Bill was considered by the Justice 1 Committee of the Scottish Parliament on 19 April 2006. In answer to a question from a member of the Justice Committee concerning the possibility of an increase in the prison population because of the enlarged sentencing powers of the sheriff courts in summary proceedings, Noel Rehfisch of the Scottish Executive Justice Department said this, at Scottish Parliament Official Report, cols 2838 2839: it is clear that the intention of the changes is not to be more punitive in respect of any particular offence. For example, for any statutory offence that can be tried only summarily at present, the sentencing limit will not change. The increase to 12 months is about providing headroom in the summary system to deal with slightly more serious cases that, in the view of the McInnes Committee which ministers accepted could relevantly, competently and capably be dealt with in the sheriff summary court. On two occasions in recent years there have been increases in the maximum sentencing level in the sheriff solemn courts. The same sheriffs, albeit with a jury, are responsible for determining sentences in those cases. To date, there is no evidence that those increases have led to what might popularly be described as sentence drift. We are confident that the judiciary will continue to consider individual cases on their merits. The measures are about having the appropriate level of business in certain sectors of the system. These comments were reflected in the 10th report of the Justice 1 Committee published on 5 July 2006. At paragraph 135 of the report the following appears: In oral evidence Executive officials stated that these provisions are about seeking some form of business redistribution to ensure that every level of the system deals with the business that it ought to deal with and managing that as effectively as possible. Indeed, in the Policy Memorandum [containing the Executives comments on the provisions of the Bill], the Executive refers to its policy of creating a flexible court capacity to ensure that cases can be dealt with quickly and at the appropriate level. and at paragraph 136: The Executives expectation is that this redistribution of cases would represent a downward shift of around 500 to 550 cases per year from sheriff and jury to sheriff summary procedure. The Executive has also stated that the provisions in the Bill are not designed to be more punitive in relation to any particular offences. The Scottish Prison Service referred in oral evidence to its view that it does not expect the Bill to have a significant impact on the prison population. It appears to me from all this material that the purpose of section 45 of the 2007 Act is unmistakably clear. As the advocate depute submitted, it is to effect a reallocation of business within the court structure. The means by which this is achieved is an increase in the sentencing powers available to sheriffs sitting in their summary jurisdiction. The greater maximum penalty is not an end in itself nor is it intended that that the going rate for relevant offences should be increased. This is merely the mechanism by which the quite different purpose of providing for a more expeditious dispatch of business can be achieved. This conclusion is reinforced by the consideration that defendants charged with relevant offences are not exposed to a greater penalty in the summary proceedings than they formerly faced if prosecuted for the same offences on indictment. In this context, I should say that I consider that the analogy which the appellants sought to draw with the decision of the Divisional Court in Northern Ireland in the case of Reg (Hume) v Londonderry Justices [1972] N. I. 91 is misconceived. In that case the Parliament of Northern Ireland, in exercise of its powers under section 4 of the Government of Ireland Act 1920 to make laws for the peace, order and good government of Northern Ireland, had purported (by a regulation made in a statutory rule and order by the Minister of Home Affairs) to authorise certain members of Her Majestys forces to require an assembly of persons to disperse if a breach of the peace was apprehended. The Divisional Court held that the regulation was made in breach of section 4 (3) of the 1920 Act which forbade the making of laws by the Northern Ireland Parliament in respect of Her Majestys forces. It had been argued on behalf of the respondent that the pith and substance of the regulation was the peace, order and good government of Northern Ireland and that the conferring of powers on members of the armed forces was merely incidental. This argument was rejected, Lowry LCJ observing (at page 111) that both the object and the method of achieving it must be valid. Since the method in that case had been expressly forbidden, the regulation could not be rescued from its invalidity because it was for a permitted object. By contrast, in the present case the method (enlargement of the sentencing powers in sheriff summary proceedings) of achieving the object (the more efficient and expeditious prosecution of offences) is not expressly forbidden. For these reasons, and for the reasons more fully given by Lord Hope and Lord Rodger, I am therefore satisfied that section 45 of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 does not relate to reserved matters within the meaning to be ascribed to that condition in section 29 (2) (b) of the Scotland Act 1998. I turn to briefly consider section 29 (4). It provides: (4) A provision which (a) would otherwise not relate to reserved matters, but (b) makes modifications of Scots private law, or Scots criminal law, as it applies to reserved matters, is to be treated as relating to reserved matters unless the purpose of the provision is to make the law in question apply consistently to reserved matters and otherwise. As I have already observed, this is a deeming provision which expands the category of cases in which a change in the law is to be considered to relate to reserved matters, although not so relating for the purposes of section 29 (3). Modifications of Scots private or criminal law are to be treated as relating to reserved matters subject to two important qualifications. The first of these is that such modifications are confined to the law as it applies to reserved matters. The advocate depute argued that section 45 of the 2007 Act modified Scots criminal law generally and on that account could not be said to apply solely to reserved matters. It appears to me, however, that this first qualification is not designed to exclude from the ambit of section 29 (4) modifications that relate to both reserved and devolved matters. It was suggested in argument that the purpose of the provision was to prevent the Scottish legislature from targeting reserved matters. This may well be correct but that objective is likely to be severely curtailed if a measure of the Scottish Parliament applying to reserved and devolved measures which were unrelated to each other was exempt from the reach of section 29 (4) and it appears to me that this must be the logical conclusion of the advocate deputes argument. A final determination of this issue is not, in my opinion, strictly necessary, however, because it is quite clear that the impugned legislation comes squarely within the second qualification in section 29 (4). A provision, the purpose of which is to make the law apply consistently to reserved matters and otherwise, is not caught by the subsection. It is unquestionably clear that section 45 of the 2007 Act has that precise purpose and for that reason it does not come within section 29 (4). The final and, to my mind, most troubling issue arises from section 29 (2) (c) of the 1998 Act. It states that a provision is outside the competence of the Scottish Parliament if it is in breach of the restrictions in Schedule 4 to the Act. Paragraph 2 of that Schedule contains the following material provisions: (1) An Act of the Scottish Parliament cannot modify, or confer power by subordinate legislation to modify, the law on reserved matters. (2) In this paragraph, the law on reserved matters means (a) any enactment the subject matter of which is a reserved matter and which is comprised in an Act of Parliament or subordinate legislation under an Act of Parliament, and (b) any rule of law which is not contained in an enactment and the subject matter of which is a reserved matter, and in this sub paragraph Act of Parliament does not include this Act. (3) Sub paragraph (1) applies in relation to a rule of Scots private law or Scots criminal law (whether or not contained in an enactment) only to the extent that the rule in question is special to a reserved matter . Section 45 of the 2007 Act self evidently relates to a rule of Scottish criminal law. Is the rule special to a reserved matter? Lord Hope has concluded that the rule is not special to a reserved matter because it does not increase the penalty that can be imposed in respect of the offence but has merely changed the procedural route by which the enlarged penalty can be imposed. It is concerned with a rule of procedure that applies generally to prosecutions for offences in the sheriff court. On this analysis, section 45 is not to be regarded as directed to a rule which is special to a reserved matter. By contrast, Lord Rodger considers that a statutory rule is special to a reserved matter if it has been enacted in order to apply specifically to the rule in question. I have not found it easy to reach a view as to which of these competing and persuasively argued positions is to be preferred. It is clear that paragraph 2 (3) contemplates an ambit or scope of application for a particular rule beyond its possible impact on reserved matters. It is only on the extent to which the application of the rule is special to reserved matters that the denial of legislative competence is engaged. In this context, special to may be regarded as connoting having a specific effect on reserved matters. Where an act of the Scottish Parliament seeks to modify a rule of Scots law which has an effect on reserved matters that act will be outside the legislative competence of the Scottish Parliament. But where the rule of Scots law being modified is not special to reserved matters, Parliaments legislative power remains intact. Viewing the effect of the provision in this way, I have concluded that where an act of the Scottish Parliament modifies a statutory rule which has a specific effect on a reserved matter it comes within the prohibition contained in paragraph 2 (1) of Schedule 4 to the 1998 Act. I therefore agree with Lord Rodger that section 45 is caught by that paragraph. The question then arises whether the section can be saved by recourse to paragraph 3 of Schedule 4 to the 1998 Act which provides: (1) Paragraph 2 does not apply to modifications which are incidental to, or consequential on, provision made (whether by virtue of the Act in question or another enactment) which does not relate to reserved matters, and do not have greater effect on reserved matters than is necessary to give effect to the purpose of the provision. Both Lord Hope and Lord Rodger have concluded that a statutory provision that alters the sentencing power of the sheriff court sitting in its summary jurisdiction cannot be regarded as coming within this provision. Although I was initially attracted by the notion that the increase in sentencing powers was incidental to a provision being made for the reallocation of court business, I have come to the view that this cannot be right. The increase in sentencing powers is the provision concerned. It is not incidental to another permissible statutory rule. It cannot be saved by paragraph 3, therefore. In the result, I agree with Lord Rodger that this appeal should be allowed.
+This is an interim judgment dealing with certain threshold issues on this appeal. It is final as to the issues covered, but interim in the sense that other issues will have to be decided before the appeal can be finally determined. The court regrets the delay in reaching a final disposal of this protracted and deeply troubling case. However, as will be explained, it has become apparent that some critical and difficult issues had not been clearly identified in the agreed statement of facts and issues, nor adequately covered by the written or oral submissions. In fairness to the parties, and to enable it to reach a fully informed conclusion, the court sees no alternative to inviting further submissions on the matters to be identified at the end of this judgment. It hopes that by giving its decision on the issues covered by this judgment, it will clear the way for more focussed discussion of the remaining points, and in particular on the interaction of international and domestic law in the context of the present judicial review proceedings against the Secretary of State. The Main Issue The respondents are six refugees from various countries in North Africa and the Middle East. In October 1998, they boarded a ship in the Lebanon which was bound for Italy but which foundered off the coast of Cyprus. On 8 October, 75 passengers including the respondents were airlifted to safety by RAF helicopters and brought to Akrotiri in south Cyprus. It will be necessary to give a fuller account of the status of Akrotiri below, but for present purposes it is enough to say that Akrotiri in the south of the island, and Dhekelia on the eastern side of the island, are Sovereign Base Areas (SBAs) retained under United Kingdom sovereignty for the purpose of accommodating military bases, when the former colony of Cyprus was granted independence in 1960. The respondents have lived in highly unsatisfactory conditions in disused service accommodation in Richmond village in the Dhekelia (or eastern) SBA since shortly after their arrival in 1998. The question at issue in this appeal is whether the respondents are entitled, or should be permitted, to be resettled in the United Kingdom. It is clear, and not seriously disputed, that the respondents have no right to entry into the United Kingdom under the Immigration Rules. The Secretary of State has a discretion to admit them outside the Rules, but his policy is not to exercise this discretion in favour of persons such as the respondents who have no existing connection with the United Kingdom. The basis of the respondents case is that in the circumstances of the present case they are entitled to entry into the United Kingdom by virtue of their status as refugees protected by the United Nations Convention Relating to the Status of Refugees (1951), as modified by the Protocol Relating to the Status of Refugees (1967), or that in the exceptional circumstances of the case the Secretary of State should exercise his discretion to admit them. The Refugee Convention As originally drawn, the Refugee Convention applied only to persons who became refugees as a result of events occurring before 1951, ie for the most part those displaced by the persecutions of the Axis powers and by military operations during and in the aftermath of the Second World War. The effect of the 1967 Protocol was to apply the principal provisions of the 1951 Convention to all refugees, irrespective of when the events occurred which caused them to leave their home countries. The United Kingdom was an original signatory of the Refugee Convention and ratified it on 11 March 1954. It acceded to the Protocol on 4 September 1968. The Convention (as amended) confers a number of rights on persons who qualify as refugees in any territory of refuge in which they find themselves. These rights include the right to engage in remunerated work, the right to public services such as housing, public education and social security, generally on the same basis as other aliens lawfully present there, and the right not to be expelled save on grounds of national security or public order. It is not disputed that the respondents are refugees for these purposes. Between July 1999 and March 2000, all of them were declared by the Chief Control Officer of the SBAs to be entitled to refugee status under the 1951 Convention and the 1967 Protocol. Neither party suggested that the Convention has been incorporated generally into the law of the United Kingdom, and plainly it has not been. The position was stated by Lord Bingham of Cornhill (with whom Lord Carswell agreed) in R v Asfaw (United Nations High Comr for Refugees intervening) [2008] AC 1061, para 29: The appellant sought to address this disparity by submitting that the Convention had been incorporated into our domestic law. Reliance was placed on observations of Lord Keith of Kinkel in R v Secretary of State for the Home Department, Ex p Sivakumaran [1988] AC 958, 990G; Lord Steyn in R (European Roma Rights Centre) v Immigration Officer at Prague Airport (United Nations High Comr for Refugees Intervening) [2005] 2 AC 1, paras 40 42; section 2 of the Asylum and Immigration Appeals Act 1993; and rule 328 of Statement of Changes in Immigration Rules (1994) (HC 395). It is plain from these authorities that the British regime for handling applications for asylum has been closely assimilated to the Convention model. But it is also plain (as I think) that the Convention as a whole has never been formally incorporated or given effect in domestic law Lord Hope of Craighead expressed the same view at para 69. Lord Rodger of Earlsferry and Lord Mance dissented, but not on this point. It follows that the Convention as such confers no rights and imposes no duties as a matter of the domestic law of the United Kingdom. The Convention is however given limited statutory effect in the domestic law of the United Kingdom for certain specific purposes, of which only one is relevant to the present appeal. Section 2 of the Asylum and Immigration Appeals Act 1993 provides that nothing in the immigration rules shall lay down any practice which would be contrary to the [Refugee] Convention. It is therefore common ground that any decision regarding the entry of the respondents into the United Kingdom must be consistent with the Convention. Furthermore, as Foskett J recognised in the High Court ([2016] 1 WLR 4613, para 322ff), a failure by the Secretary of State correctly to apply the Convention may have consequences in domestic public law, as under the so called Launder principle (following R v Secretary of State for the Home Department, Ex p Launder [1997] 1 WLR 839, para 325 per Lord Hope; see also R (Corner House Research) v Director of the Serious Fraud Office [2009] 1 AC 756). Cyprus and the Sovereign Base Areas Britain occupied Cyprus between 1878 and 1960. As with Britains other Mediterranean colonies, Gibraltar and Malta, the value of Cyprus to Britain was always strategic and military, not economic. The island sits across the main sea routes to the Suez Canal and the Levant. It had been governed for three centuries as part of the Ottoman Empire. After the defeat of Turkey in the Russo Turkish war of 1877 8, Britain entered into a military alliance with Turkey under which she undertook to defend Turkey by force of arms against any future Russian attack. In return, Turkey, while retaining sovereignty over the island, ceded it to be occupied and administered by Britain in order to enable England to make necessary provision for executing her engagement: article 1 of the Cyprus Convention, 4 June 1878. Under an Order in Council dated 1 October 1878, administration of the island was vested in a High Commissioner, whose functions were to be exercised ex officio by the Commander in Chief of the British forces stationed there. These arrangements subsisted until 1914, when Turkey entered the First World War on the German side, and the Anglo Turkish Convention lapsed. Cyprus was thereupon annexed to the British Empire by Order in Council: Cyprus (Annexation) Order 1914 SR&O 1914/1629. The annexation was recognised by Turkey after the war by the treaty of Lausanne (1923). The island played a modest part in British military operations in the middle east in both world wars, but its strategic significance has increased since then. The SBAs are currently the only significant British strategic assets in the eastern Mediterranean. The Refugee Convention contains a colonial clause in the following terms: Article 40 TERRITORIAL APPLICATION CLAUSE 1. Any State may, at the time of signature, ratification or accession, declare that this Convention shall extend to all or any of the territories for the international relations of which it is responsible. Such a declaration shall take effect when the Convention enters into force for the State concerned. 2. At any time thereafter any such extension shall be made by notification addressed to the Secretary General of the United Nations and shall take effect as from the ninetieth day after the day of receipt by the Secretary General of the United Nations of this notification, or as from the date of entry into force of the Convention for the State concerned, whichever is the later. 3. With respect to those territories to which this Convention is not extended at the time of signature, ratification or accession, each State concerned shall consider the possibility of taking the necessary steps in order to extend the application of this Convention to such territories, subject, where necessary for constitutional reasons, to the consent of the Governments of such territories. On 24 October 1956 the United Kingdom notified the Secretary General under article 40(2) that, subject to certain reservations, the Convention would be extended to 16 territories for whose international relations it was responsible, including Cyprus. It is common ground that the effect was to apply the Convention, as a matter of international law, to the whole island, including those parts of it which later became the SBAs. Cyprus became independent in 1960 as part of an international settlement between the United Kingdom, Turkey and Greece. Under these arrangements, it became an independent republic, but there were excluded from its territory the two SBAs, together comprising 98 square miles (about 3% of the surface of the island), which were retained under United Kingdom sovereignty. The SBAs comprise a number of important military facilities including, in the western SBA, a major RAF base at Akrotiri, and in the eastern SBA an army base at Dhekelia and a signals station at Ayios Nicolaos. But their geographical area extends well beyond the bases themselves and they support a substantial civilian population. The population of the SBAs currently comprises a transient population of British military personnel and civilian staff employed on defence related work, who have access to health, educational, recreational and other facilities provided by the Ministry of Defence; and about 10,000 permanent residents, almost all of them Cypriot nationals, who occupy the land outside the bases themselves, pay taxes to the Republic of Cyprus, vote in its elections and are entitled to services from the Republic in the same way as if they resided in its territory. Legally, these changes were achieved by a number of instruments: i) Section 1 of the Cyprus Act, enacted on 29 July 1960, provided that on a date to be appointed by Order in Council, there should be established in the Island of Cyprus an independent sovereign republic. Section 2 provided that its territory should comprise the entirety of the Island of Cyprus with the exception of [the Sovereign Base Areas] defined by designated maps with exact boundaries to be fixed by a Boundary Commission. An Order in Council subsequently fixed the appointed day as 16 August 1960: Republic of Cyprus Order (SI 1960/1368). ii) On 16 August 1960, a treaty was signed between the United Kingdom, Greece, Turkey and the new Republic of Cyprus. Article 1 of the treaty recognised the territory of the Republic as comprising the island with the exception of the SBAs. iii) On the same date, there was an exchange of notes between the United Kingdom and the Republic of Cyprus, which is annexed to the treaty and known as Appendix O. The British note transmitted a declaration by the United Kingdom government concerning the administration of the SBAs, and stated the United Kingdoms determination to create a continuous and lasting system of administration in the Sovereign Base Areas founded on close co operation between the authorities of those areas and the authorities of the Republic of Cyprus. Article 1 of the declaration declared that the main object to be achieved was the effective use of the SBAs as military bases, full co operation with the Republic of Cyprus and protection of the interests of those residing or working in the SBAs. By article 2, the United Kingdom government declared its intention to observe certain limits on the non military use of the SBAs. In particular, its intention was: (I) Not to develop the Sovereign Base Areas for other than military purposes. (II) Not to set up and administer colonies. (VI) Not to allow new settlement of people in the Sovereign Base Areas other than for temporary purposes. The Cypriot note took due note of the above. On the same date (16 August 1960), the Sovereign Base Areas of Akrotiri and Dhekelia Order in Council 1960 (SI 1960/1369) came into force. It made arrangements for the administration of the SBAs by an Administrator, who was to be a serving officer of HM Forces and is in practice the Commander of British Forces Cyprus. The Administrator was to have extensive executive and legislative powers. Subject to any repeal or modification by the Administrator, article 5 provided that any existing law should continue to have effect in the SBAs. For this purpose, an existing law meant any law enacted by any authority established for the Island of Cyprus, any Instrument made under such a law, and any rule of law, which is in force in the Sovereign Base Areas or any part thereof immediately before the date of commencement of this Order. Refugees in Cyprus In 1963 the Republic of Cyprus notified the Secretary General that it had succeeded to the Convention. In 1968 it acceded to the Protocol. No notification has ever been made by the United Kingdom specifically in relation to the SBAs. The Secretary of States position in these proceedings has been that the Convention does not apply in the SBAs. But the declared policy of the United Kingdom is that even in those dependent territories where the Refugee Convention does not apply, as in Hong Kong before 1997, it will nevertheless apply the spirit of the Convention to genuine refugees. The result is a practical, although not (it is said) a legal consistency of approach between the Republic of Cyprus and the administration of the SBAs. Refugees became a significant issue in Cyprus and the SBAs as a result of disturbances in the Middle East in the 1990s. They began to appear in substantial numbers in the Republic and in more limited numbers in the SBAs. It appears to be common ground, but is in any event clear, that the facilities currently available within the SBAs do not enable refugees to be supported there. There are few if any prospects of employment, no educational, health or other publicly provided facilities to which refugees have access, and limited and unsatisfactory housing provision. As a result, the arrival of the respondents and other shipwrecked passengers in the SBAs in October 1998, followed by further arrivals in 2000 and 2001, gave rise to argument between the SBA Administration and the authorities in the Republic of Cyprus about which of them was to be responsible for the refugees and asylum seekers among them. These arguments were apparently resolved, at least for future arrivals, when, on 20 February 2003 the United Kingdom and the Republic entered into a Memorandum of Understanding relating to illegal migrants and asylum seekers in the SBAs. The Memorandum recited the following: In view of the full co operation between the Governments of the Republic of Cyprus and the United Kingdom envisaged in the Exchange of Notes between the Government of the United Kingdom and the Government of the Republic of Cyprus concerning the administration of the Sovereign Base Areas, dated 16 August 1960, and the attached Declaration by the Government of the United Kingdom; Emphasising the importance of the international obligations of the Governments of the United Kingdom and the Republic of Cyprus with regard to asylum seekers, including the prohibition on indirect refoulement; Bearing in mind humanitarian considerations, such as those reflected in the 1951 Convention relating to the Status of Refugees, and the need for the Republic of Cyprus and the United Kingdom to work together with a view to devising practical ways and means of respecting the rights and satisfying the needs of asylum seekers and illegal migrants in the Sovereign Base Areas; In light of the fact that the Government of the United Kingdom has committed itself not to develop the Sovereign Base Areas for other than military purposes and, in particular, not to allow new settlement of people in the Sovereign Base Areas other than for temporary purposes. The agreement which followed provided, in summary, for the full range of governmental services to be provided to refugees by the Republic, but at the expense of the United Kingdom. The relevant provisions are as follows: 1. For the purpose of this Memorandum of Understanding an asylum seeker is any person seeking international protection under the 1951 Convention relating to the Status of Refugees and the 1967 Protocol, or the European Convention on Human Rights or the United Nations Convention Against Torture 1984. 8. Asylum seekers arriving directly in the Sovereign Base Areas may move freely throughout the island of Cyprus and have the right to opt to stay outside the Sovereign Base Areas, subject to any requirements imposed upon aliens by the relevant laws of the Republic. The government of the Republic of Cyprus reserves the right to refuse entry to, or return, an asylum seeker for reasons of national security or on grounds of public policy. 9. Subject to paragraph 13, the Government of the Republic of Cyprus will grant the following benefits to asylum seekers arriving directly in the Sovereign Base Areas: (a) Free medical care in case they lack the necessary means; (b) Welfare benefits equivalent to those given to the citizens of the Republic of Cyprus; (c) The right to apply for a work permit in accordance with the relevant laws of the Republic of Cyprus; (d) Access to education. 10. Subject to paragraph 13, during their stay on the island of Cyprus persons recognised as refugees or granted any other the through form of international protection under the procedures determined in this Memorandum, will be treated so far as the authorities of the Republic of Cyprus are concerned, as if such persons had been recognised as refugees or granted another form of international protection by the Republic of Cyprus. 12. The United Kingdom, [SBA] Administration, will endeavour to resettle persons recognised as refugees in countries willing to accept those persons, not later than one year after the decision granting the relevant status has been taken. The joint consultative body established in paragraph 16 of this Memorandum will regularly review the progress made with this programme. 13. The United Kingdom will indemnify the Republic of Cyprus for the net costs incurred in giving effect to paragraphs 7, 8, 9 and 10 excluding costs in respect of those who first entered the island of Cyprus other than directly by the Sovereign Base Areas. This Memorandum of Understanding may be terminated at any time by the mutual written consent of both Participants or by either Participant giving not less than three (3) months prior notice in writing to the other Participant. Any dispute about this Memorandum will be resolved by consultations between the Participants. interpretation of the 18. Under paragraph 20 of the Memorandum, paras 7 10, 13 and 14 were to come into effect on the date of the accession of Cyprus to the European Union, in the event 1 May 2004. The authorities of the Republic of Cyprus took the position that the Memorandum did not apply to refugees such as the respondents who had already arrived in the SBAs before that date. The Secretary of States case, however, is that it was agreed between the Cypriot authorities and the SBA Administration in 2005 that it would deal with refugees recognised as such by the SBA Administration in accordance with the Memorandum of Understanding, irrespective of the date of their arrival in the SBAs. This agreement has never been recorded in writing, but evidence of it is given by Ms Lisa Young, the then Policy Secretary of the SBA Administrator, and there is documentary and other material supporting its existence and the effect claimed for it. We shall consider this further later in this judgment. 19. Shortly after the Memorandum of Understanding of 2003 was agreed, the Administrator of the SBAs enacted the Refugees Ordinance 2003. The Ordinance has been radically amended since it was first enacted, without, however, altering its essential tenor. Section 4 and Part 4 of the Ordinance gave effect within the SBAs to rights substantially corresponding to those conferred on refugees by the Convention, including in particular rights to public relief and assistance, social security, free education and the right to engage in paid employment: see section 23. Section 23(2) provided: The rights given to a refugee or asylum seeker under this Ordinance shall be treated as having been properly accorded to him whether they are accorded to him by the relevant authorities of the Areas or the Republican authorities and whether they are to be enjoyed in the Areas or in the Republic. In September 2011 in judicial review proceedings between certain refugees in the SBAs (including some of the respondents) and the SBA Administrator and the Secretary of State for Defence, the Senior Judges Court, which serves as the Court of Appeal for the SBAs, held that the Refugees Ordinance did not apply to those who were recognised as refugees before it was made: Bashir v Administrator of the Sovereign Base Areas of Akrotiri and Dhekelia and Secretary of State for Defence Appeal No 1 of 2011, 13 September 2011. The correctness of that view has not been challenged in these proceedings. Appeal lies from the Senior Judges Court to the Privy Council, but there was no appeal from this decision. The factual background relating to the respondents Foskett Js judgment contains an extensive narrative of the facts, which provides a valuable starting point for analysis. It must, however, be borne in mind that the issues between the parties have broadened in the course of the proceedings, partly because not all of the legal problems raised by the appeals were appreciated at the time of the trial, and partly because of the much broader basis on which the Secretary of State sought to justify her refusal to admit the respondents to the United Kingdom in her second decision of July 2017. As a result, Foskett Js findings may not constitute a complete statement of the facts relevant to the issues that now separate the parties. It is unnecessary for present purposes to do more than refer to some of the main points in the history. (Where relevant we give paragraph references to the HC judgment.) From 1998 2002 We have already mentioned the circumstances in which the respondents and their families arrived in the SBAs in October 1998. Their accommodation since 2000 is described in the agreed statement of facts in the following terms: Since May 2000 the respondents have been housed in disused military accommodation in Richmond Village in the Dhekelia SBA. That accommodation, which was due to be demolished in 1999, is no longer regarded as truly habitable and there is an urgent need for a move of location to take place (HC 74). There are health concerns raised by the fact that asbestos in potentially harmful quantities and form (HC 146) has been discovered in all of the accommodation. It is common ground, as Irwin LJ said in the Court of Appeal (para 84) that their present conditions are quite unacceptable. The dispute is as to the extent to which, if at all, the SBA Administration or the UK government bears responsibility for that state of affairs. Between July 1999 and March 2000, each of the respondents was declared to be entitled to refugee status under the 1951 Convention and the 1967 Protocol relating to the Status of Refugees, by orders made by the Chief Control Officer of the SBAs. The judge described in detail the extensive exchanges between the SBA Administration and officials in London as to how they should be dealt with, given the recognised impossibility of meeting the Convention obligations within the SBAs, and the unwillingness of the Republic at that time to assist in any way. At official level, there was a view that resettlement in the UK might be necessary. The judge quoted a letter from a Ministry of Defence official to the Home Office dated 22 December 1999 (HC 76): We have exhausted all the options that we thought were open to us. The refugees are the responsibility of the UK Government, but we have no means of discharging that responsibility while they remain in the Sovereign Base Areas. We frankly see no realistic alternative to their resettlement in the UK (Judges emphasis) The judge added (HC 77): 77. That same letter referred to the fact that the RoC was unprepared to accept responsibility for the those who might be assessed as refugees, that the UNHCR was not prepared to help with resettlement because its view was that it was solely the responsibility of the UK and that attempts to engage with the Canadian and US resettlement schemes had been rejected also. However, suggestions that they should be allowed to come to the UK met an unsympathetic response from Ministers. Thus, the judge noted (HC 86) a memorandum to the Minister for Europe dated 28 June 2001, which recorded that relocating them to the UK was not attractive to the Home Office and MoD Ministers have already objected to this approach, but noted that re settlement in a third country was unlikely to be realistic and that [the] Cyprus government will not take them on. The preferred option proposed to the Minister was relocation to the UK, but the Minister responded in a hand written note: I will not support relocation to the UK. This is not on politically (HC 86). To similar effect, in February 2002 a request from the SBA Authority (SBAA) seeking formal guidance, attracted a handwritten note, apparently by an MOD official: no answer is at hand. Yes they should be let into the UK, but ministers have said no. (HC 94 95) Concern about the situation of refugees in the SBAs was expressed by the UNHCR in a letter to the Permanent Representatives of Cyprus and the UK dated 13 June 2001 (HC 90). The then view of the Foreign and Commonwealth Office of the legal merits appears from an internal note (HC 91) prepared for a meeting of the Permanent Representatives and the UNHCR in November 2001, suggesting the line to adopt: Ministers decided in early 1999 that asylum seekers arriving in the SBAs should be treated in accordance with the UN Convention on Refugees, even though the Convention does not apply in the SBAs But strong reasons for the UK not allowing either the refugees or those that failed RSD permission to settle in the UK. Doing so would increase the attractiveness of the SBAs as a destination for asylum seekers and it would be politically untenable given continuing public concern at the number of asylum seekers entering the UK. The involvement of the Republic 2002 2013 Faced with the political objections to resettlement in the UK, the governments strategy in 2002, agreed apparently at Cabinet level, seems to have been to use the desire of Cyprus to become a member of the EU as leverage to secure an acceptable agreement on the treatment of all the refugees and other asylum seekers, existing and future (HC 99 101). Early drafts included provision for those already granted refugee status in the SBAs. However, the Republic was adamant that existing asylum seekers in the SBAs should be dealt with separately from future arrivals. Accordingly, the final form of the agreement was prospective, applying only to future arrivals. As already discussed, the 2003 Memorandum, concluded on 20 February 2003, was implemented in the SBAs by the Refugees Ordinance 2003, and took effect on 1 May 2004, the date of accession of Cyprus to the EU. So far as appears from the judgment, there is no record of any further consideration at UK government level at that time of those existing refugees excluded from the Memorandum. The only formal statement of the governments position in this period, in the papers before this court (though not mentioned by the judge), is in a letter from the FCO to the UNHCR dated 23 May 2005 [MS 1509]. It confirmed their view that the Convention did not in law apply to the SBA, and that it was inappropriate to extend the Convention to the SBAs because of their nature and size, and the prohibition on new settlements in the 1960 Treaty of Establishment. The letter referred to the 2003 Memorandum as providing detailed arrangements to ensure appropriate assistance by the Republic for refugees arriving directly into the SBAs. There was no reference to those already in the SBAs as refugees, such as the respondents. The next event of substance seems to have been in autumn 2004, when there began discussions between SBA officials and the Migration Department of the Republic (HC114 119). A meeting was held on 27 September 2004, followed by a letter from Mr Stainton, Administrative Secretary of the SBAA, dated 17 November 2004. This recorded that the Republic would assume responsibility for the 66 individuals who had entered the SBAs directly, and that the SBAA had also agreed to pay the costs as identified at the September meeting. There was no reply to that letter, but there was a further meeting between the SBAA and Republic officials on 28 January 2005, at which there was discussion of arrangements in relation to welfare payments, medical matters, education, housing, work and residence, and a fixed date for the transfer of responsibility. There is no written record of the actual agreement or understanding, nor of its precise content or even of its date. However, from about September 2005, it was treated by the local administration as a basis for stronger action to encourage the remaining refugees to transfer to the Republic. The judge referred to the closure of the school in September 2005 with the destruction of the playground, and the withdrawal of medical facilities, as confirmed in a memorandum from the then Fiscal Officer, Mr Pitts, dated 23 September 2005 (HC 123). Mr Pitts described the agreement as being: for all residents of Richmond Village to be transferred to the administration of the RoC and for each person to be provided with the opportunity to have their individual claim considered. The judge accepted that documentation issued thereafter, to some at least of the refugees, indicated recognition by the Republic authorities that they had obligations towards the claimants which hitherto had been denied (HC 131). The judge also described the efforts to draw the agreement to the attention of the refugees, and their immediate response, as recorded in the evidence of Mr Bashir (HC 120 121). He spoke of a meeting on 28 January 2005 at Richmond Village with the UNHCR and the SBAA Fiscal Officer Mr Jim Smart. Mr Smart told them of a new agreement which would change (their) situation and that (they) could be recognised as refugees in the Republic of Cyprus if (they) made an application to the Cypriot authorities. In response to questions why they had to make new applications when they had already been recognized as refugees, they were told of assurances that the Republic would recognise us and give us rights; but that they would need to reside in the Republic for a further seven years to be able to apply for citizenship, and that the years spent living in the SBAs would not count. The residents response was that they did not want to apply to the Republic and they would not move there, for a number of reasons: First of all, we were aware that the Cypriot Government had denied responsibility for us in 1998: The minister at the time made a public statement that we were the responsibility of the SBA and the UK. Secondly, for all the years we had lived in the SBA most of us at one time or another had been subjected to ill treatment from the Cypriot police and the Cypriot immigration authorities. Thirdly many of us were, and still are, afraid that we would be deported back to our countries of origin if we agreed to become the responsibility of the Republic of Cyprus. Fourthly, we had already been living in limbo since our arrival on the SBAs and we were not the responsibility of the Republic of Cyprus, we were and are the responsibility of the UK who should have done more to assist us. We would observe that the reasonableness or otherwise of that response has been at the heart of the dispute ever since. Sadly, it evidences the existence of something of a stand off between the SBA authorities and the refugees which has in some measure continued until today regarded by the authorities as due to obstinate non cooperation by the refugees, and by them as legitimate insistence on the discharge of the duties for which the UK, not the Republic, was responsible. However, as the judge recorded (HC 128), notwithstanding this resistance, a number of the claimants did seek paperwork promised under the agreement. In fact, it appears that all but one did this. The Republic registered them as refugees for the purposes of their domestic legislation, thereby recognising their entitlement to the support provided for by the Refugee Convention. The evidence of Mr Gondelle is that the SBAA made payments to the Republic on this basis under paragraph 13 of the Memorandum. Mr Bashir himself says that the Republic gave him and most of the refugee families Cypriot documentation, including an alien registration certificate, a temporary residence permit, a medical card for him and his family, a travel document and a work permit. Further, as their witness statements show, the respondents have made extensive use of the facilities provided by the Republic under the MoU. The lead claimant, Mr Bashir, is a good example. He declines to move from the SBA to the RoC, but he met his current wife while working in the RoC; they were married in the RoC and their children were born there and go to school there. The absence of any written record of the agreement was later confirmed by Mr Stainton, the SBA Administrator. The judge (HC 138) referred to a note by him in October 2006 of a meeting earlier that month, attended by representatives of the Republic Asylum Service and the UNHCR, at which the Asylum Service had confirmed their intention to honour their commitments under the Memorandum and more importantly that they will apply it retrospectively to those who arrived in Cyprus via Akrotiri in 1998 . This was seen by him as important because there is no written agreement that they will other than an exchange of letters agreeing the sum of money the SBAA will pay for each applicant and family member. (HC 138) Mr Stainton also recorded that he intended to cease welfare payments for those who had not registered with the RoC from 31 January 2007, followed by eviction proceedings from the village. This intention was carried into effect and led to a demonstration which went on for some weeks until (in Mr Bashirs words, quoted by the judge) around March 2007 the SBAA backed down [and] stated that they were not going to evict us or cut our weekly payments. They also agreed to issue us new travel documents (HC 140). The subsequent progress of the informal agreement was described by the judge as chequered (HC 373). Mr Gondelle, who became the SBAA Administrative Secretary in August 2008, said in evidence to the SBA courts that there were records of payments made to the Republic in respect of families recognised as refugees, but that to the best of his knowledge, the Republic had not yet given full practical effect to the agreement, and that its implementation in practice [had] not been straightforward. By the time of his involvement in 2008, it was uncertain whether the RoC [was] still willing in principle to abide by the Agreement (HC 142). The judge went further, finding in the evidence a clear indication from the RoC in 2008 that it was not prepared to adhere to the informal understanding that the 2003 Memorandum would be applied to the refugees, although the respondents were not aware of this at the time (HC 144 145). The next event of significance came in February 2009, following the discovery of asbestos in some of the properties in Richmond Village. Mr Gondelle prepared a minute with a view to inviting Ministerial approval to permit all existing residents in Richmond Village to move to the UK (HC 147 148). The minute indicated that Home Office officials were supportive, and attached a letter to the relevant Minister. As the judge observed (HC 151), the minute made reference to the 2003 Memorandum, but none to the 2005 agreement; instead it noted that the Republic was reluctant to provide assistance of any nature to the SBA because it considered that the British military should end their presence in the SBAs and return the land to the RoC. The recommendation was not accepted. At a meeting of the relevant Ministers in June 2009, the joint view was that bringing them to the UK was not a desirable option. Instead authorisation was given for a carrot and stick approach, which involved the SBA paying for rented accommodation in the Republic for an initial period while simultaneously evicting the refugees from their current housing, and discontinuing welfare payments. In an email dated 16 December 2009 Mr Gondelle noted that the Home Office, while recognising the complexities of the situation and that entry to the UK might ultimately be necessary, was unwilling to authorise a significant departure from its current policy without first exploring the alternatives. The SBA Administration remained convinced that entry to the UK will ultimately prove to be the only solution (HC 152 154). Attempts to implement the new carrot and stick approach were impeded by judicial review proceedings in the SBA courts, commenced in April 2010 (HC 160). The Senior Judges Appeal Court, in a judgment given on 13 September 2011, held that the Convention did not apply to the SBA. As already noted, there was no appeal to the Privy Council. In the course of those proceedings the respondents solicitor had written to the Republics Ministry for Foreign Affairs asking about the agreement to resettle the refugees, on which the SBA authorities were relying. The reply dated 18 June 2010 stated (as translated from the Greek): there is no written agreement with the United Kingdom as regards case of your customers. The Republic of Cyprus had merely accepted to implement commensurately the relevant Memorandum of Understanding between the Republic of Cyprus and the United Kingdom in certain cases which concern persons that had arrived in Cyprus before the date of its entry into force. The judge observed that this appeared to be the only document emanating from the [Republic] in which the existence of the 2005 understanding is mentioned (HC 161 162). However, in the course of his evidence put before the Senior Judges Appeal Court, Mr Gondelle confirmed that since 2008 he and his staff had had many meetings with the Republics Asylum Service and Ministry of Foreign Affairs, during which it had indicated its willingness to cooperate, even though the effect appears to have not always reached other departments, that during his last meeting with the Director of the Republics Civil Registry and Migration Department, in late 2009, she had confirmed arrangements were in place to ensure that recognised refugees would receive welfare benefits from the Republic and that it was only after these assurances that SBA benefits had been withdrawn. Although free transport and the assistance of SBAA officials was offered to the respondents in March 2010 to take up such benefits, this offer was rejected by all of them. The UK governments understanding of the position as at the end of 2011 appears from a letter quoted by the judge from the UK Border Agency to the UNHCR dated 8 November 2011 (HC 163). Having explained the background it stated: The Republic of Cyprus (RoC) has agreed to accept and resettle the refugee families, but due to their distrust of the RoC, the refugee families have refused to move from their current accommodation in Richmond Village (former Service family accommodation) on the SBA. A Memorandum of Understanding (MoU) was signed with the RoC in 2003 to prevent this situation occurring again. Under this MoU the RoC handles all asylum seekers that enter the SBA. This has worked well. But the original applicants remain the responsibility of the SBAA. In 2007 [sic], an informal agreement was reached between the SBAA and the RoC, under which the RoC agreed to honour any decisions made by the SBAA in respect of the families and take responsibility for them. The UK Border Agency again provided assistance and sent caseworkers to the base to interview 25 of the individuals. Unfortunately, the families failed to co operate and the interviews never took place Events leading to the present proceedings In the proceedings before the Senior Judges Appeal Court, the respondents complaint that the Republic would not honour any commitment to make payments was found to have no evidential foundation [paras 63 69, MS 859 62]. Since those proceedings, there is however evidence of a further consolidation of the respondents attitudes regarding any cooperative arrangements with the Republic pending the outcome of the present proceedings. Ms Charalambidou, the respondents legal representative in Cyprus, expressed this very clearly on their behalf in a letter of 31 December 2012: l would finally like to inform you that the refugee families continue to consider themselves as the responsibility of the SBAA and the United Kingdom and therefore they have informed me that they do not intend under any circumstances to be considered as the responsibility of the Republic of Cyprus. On 30 September 2013, following a meeting at the UNHCR offices in Nicosia, Ms Charalambidou, and the local representative of the United Nations High Commissioner for Refugees wrote jointly to the Administrator of the SBAs about the respondents predicament. They observed that although resettlement in the Republic had at one stage been seen as a desirable and practical option, the respondents did not consider this to be an option, based on their own experiences and for reasons that need not be discussed. The UNHCR representative added that in any event the Republic was no longer willing to take them because of the after effects of the financial crisis of 2008 and the number of refugees that it had already accepted. Both signatories expressed the view that resettlement in the United Kingdom was the only conceivable option. That letter was passed by the SBA Administrator to the Home Office, but there was a delay of more than a year in replying. The judge discussed the evidence about the drafting of the reply (HC 351 354) including an internal response of a Home Office official, apologising that the chasing email from the SBA had slipped under [his] radar: the UK has no legal obligation to accept the applicants, refugees or not, and there are no close family ties or previous residence in the UK or any compelling humanitarian reasons in their favour. All in all, there would be no appetite to accept this particular group, whose non cooperation and behaviour would make any country reluctant to take them. The judge commented (HC 354) that this response suggest[ed] a closed mind on the part of the Home Office to the question of admission of the refugees to the UK and to anything said in support of it by the UNHCR. The formal reply eventually came in a letter dated 25 November 2014 in a letter from Mr Rob Jones, the Home Office Head of Asylum and Family Policy. The operative part of Mr Jones letter read As was explained in a letter of 8 November 2011 to the London representative of the UNHCR (copy enclosed), Home Office Ministers and officials have consistently made it clear that there could be no question of the families on the SBA being admitted to the UK. The families have at no time been given any encouragement to believe that they could be. It would be contrary to UK policy to accept the transfer of refugees who have no close connection to the UK and it would also be inconsistent with our policy on asylum applicants who arrive in British Overseas Territories or Crown Dependencies. Although their presence on the Base has been tolerated by the SBA, their stay gives the families no claim to admission to the UK. The UKs policy on the admission of refugees is in accordance with the 1951 Refugee Convention and the UK accepts no responsibility for the consideration of applications for asylum or transfer of refugee status other than those made on UK territory, namely the mainland territory of the UK and excluding the UKs Overseas Territories, Crown Dependencies, or Sovereign Bases such as the ones in the Republic of Cyprus. Our position, therefore, is that none of the refugee families on the SBA will be considered for admission to the UK. They have no family or residential ties with the UK and there are no reasons for treating them exceptionally. The families have the right to reside in the Republic of Cyprus and have strong ties with the Republic. We do not believe that their preference for the UK should be allowed to override what is demonstrably a durable and suitable solution for their long term residence. The present proceedings were brought by way of application for judicial review of the decision of the Secretary of State said to have been communicated in that letter. The High Court The respondents application came before Foskett J in March 2016. He gave judgment on 28 April 2016. He held that as a matter of international law, the Refugee Convention did not apply to the SBAs because they were indeed a new international entity created in 1960. He went on to deal with the United Kingdoms declared policy of observing the spirit of the Convention. He recorded it as common ground (because it was accepted in internal documents passing between the SBA Administration and government departments in London) that the United Kingdom could not in practice provide the respondents with their full Convention rights within the SBAs with the facilities currently available there. Although he made no formal finding of his own to this effect, it is clear from his analysis of the evidence that he agreed. It followed that a level of support consistent with the spirit of the Convention could be achieved only (i) by effective resettlement of the respondents in the Republic of Cyprus, either by their moving there or by their remaining resident in the SBAs but relying on facilities provided by the Republic by arrangement with the SBAs; or (ii) by resettlement of the respondents in the United Kingdom. The Judge held that it would be consistent with the spirit of the Convention for the United Kingdom to support the respondents by making arrangements with the Republic of Cyprus to do so. He therefore considered that option (i) would be lawful if it could be achieved. He made no finding as to whether in fact it could be achieved. But he held that Mr Joness letter had failed to address the view expressed by the UNHCR local representative in UNHCRs letter dated 30 September 2013 that, even if relocation to the Republic of Cyprus may have been seen as the most desirable or practical option in the past, this is not the case anymore because of the financial crisis prevalent in the Republic; and that accordingly, consideration was not given as at the time of the decision letter in November 2014 to the strengths and/or weaknesses of the informal agreement reached in 2005. The decision letter had thus failed to consider a crucial factor in deciding whether to admit the claimants to the UK within the general discretion available to the Secretary of State (HC 397). He therefore quashed the Secretary of States decision. He left it to the Secretary of State to consider, when taking a fresh decision, whether support through the Republic of Cyprus was a practical proposition. The Court of Appeal The Secretary of States appeal was heard by Jackson, Briggs and Irwin LJJ in January 2017. In its unanimous judgment delivered on 25 May 2017, the Court held, overruling the judge, that the SBAs were not a new entity and that the Refugee Convention continued to apply to them by virtue of the United Kingdoms notification of 1956. In those circumstances, the question was no longer what was implied by the United Kingdoms policy of observing the spirit of the Convention. The Court of Appeal did not deal with the question whether the terms of the Convention required the United Kingdom to resettle the respondents in its metropolitan territory, nor with the question whether it was open to the United Kingdom in point of law to support the respondents through arrangements made with the Republic of Cyprus. Instead, they quashed the existing decision and directed that it be remade by 6 July 2017 on the footing that the Convention applied directly. Irwin LJ, delivering the only substantive judgment, said (para 79): In my judgment the outcome of that decision must take into account the history but cannot be determined by this court merely by re analysing the historic evidence. The decision must be taken in relation to the current facts He also identified some obvious factors which he thought absolutely critical to the decision. They included his view that the obligations of a State with responsibility for refugees could not be exported but remained with the Secretary of State (para 80); that the suggestion of counsel for the Secretary of State that they could be permitted to remain where they were was likely to be inconsistent with article 34 of the Convention, given the possibility of their assimilation into the UK or other British Overseas Territories (para 81); and that, while the arrangement with the Republic did not amount to constructive expulsion within article 32, a repeat of that approach, absent agreement to resettlement in the Republic, would be very likely to represent a repeated failure to meet the obligations which I conclude fall upon the UK (para 83). He added: 84. Prominent amongst the relevant factors must be the enormous delay which has affected these claimants and their families. There can be no justification for any future decision which leaves these claimants position unresolved for any further length of time. As the judge made clear, their present conditions are quite unacceptable. That appears to be common ground It followed from the way that the case was put in the courts below and from the somewhat different bases on which Foskett J and the Court of Appeal quashed the Secretary of States decision that neither of them needed to decide whether or not it was in practice feasible to support the respondents through the facilities provided by the Republic of Cyprus under the Memorandum of Understanding. Foskett J in terms left that matter to be determined in a new decision, in which the Secretary of State would be required to address the misgivings of the UNHCR local representative on that score. The Court of Appeal implicitly did the same, while pointing to a number of factors which she should take into account. Further exchanges On 16 June 2017, after the decision of the Court of Appeal, the United Nations High Commissioner for Refugees wrote to the Secretary of State asking her to reconsider her decision not to admit the respondents to the United Kingdom. In his letter, the High Commissioner raised doubts about the practical feasibility of supporting them through facilities provided by the Republic of Cyprus, after 19 years and in the absence of any formal agreement or assurances regarding their future in the Republic. He concluded: These refugees find themselves in a state of legal limbo with seriously compromised or no access to welfare, health care, education, and employment. Recently, welfare benefits have been reduced, and these refugees have been unable to renew their medical cards in the Republic of Cyprus, which are required to access health care. They also have not been able to access either tertiary education or employment in the Republic of Cyprus. Of serious concern, these refugees and their families are living in sub standard housing, which needs to be demolished due to the presence of asbestos. Meanwhile, the Court of Appeal having refused to stay its decision, the Secretary of State was obliged to make a fresh decision in compliance with its order by 6 July 2017. It is unnecessary to set it out in detail at this stage. She declined to allow the respondents entry into the United Kingdom. Her reasons were substantially the same as those given on 25 November 2014, except that the fresh decision, unlike the original one, directly addressed the options open to the respondents other than resettlement in the United Kingdom. It is apparent that she did not accept the version of events put forward by the UN High Commissioner. She considered that on the footing that the Refugee Convention applied in the SBAs the United Kingdom could comply with its obligations by arranging for the respondents to be supported by the Republic of Cyprus. The reason, she said, why that had not happened was that the respondents had declined to engage with the authorities in the Republic while there was any prospect that the present proceedings might result in their admission to the United Kingdom. While accepting that the 2003 Memorandum itself only applied to persons arriving in the SBAs on or after 1 May 2004, she stated again that in 2005 the Republic of Cyprus agreed to apply it to those who arrived in 1998. She addressed the concerns of the UNHCR local representative in the following terms: As you are aware, in 2003, the UK and the Republic of Cyprus signed a Memorandum of Understanding under which the Republic agreed to treat persons who arrived directly in the SBAs, and were recognised as refugees under the procedures contained in that Memorandum, as if they had been recognised as refugees by the Republic. Whilst the Memorandum itself only applies to persons arriving in the SBAs on or after 1 May 2004, in 2005 the Republic of Cyprus agreed to apply it to those who arrived in 1998. I have carefully considered the UNHCR letter of 30 September 2013, in which the UNHCR raised concerns because of the financial crisis in Cyprus at that time and claimed that the Republic of Cyprus had stated they could not take any more refugees. As was explained on the Secretary of States behalf in the Court of Appeal, the reference appeared to be to a speech by the Interior Minister, but he had actually said that the Republic could not sustain any more asylum seekers, though would still honour all international conventions and agreements on human rights. In any event, whilst I acknowledge there was a period in 2008 when it appeared that the Republic no longer stood by what it had agreed in 2005, the officials have since confirmed many times, both during the period between 2008 and 2013, and after the UNHCR letter of September 2013 that the Republic is committed to its 2005 agreement and stands by its decision in 2005 (documents in letters to you) to recognise you as refugees and grant you the rights to which you are entitled as a refugee in the Republic. The Sovereign Base Areas Administration (SBAA) is actively engaged, in cooperation with the Republics Asylum Service and its Labour Office, in efforts to assist you to access the help which this agreement clearly makes available to you. I have also carefully considered the UNHCR letter of 16 June 2017 in which concerns were raised about the impact on your health given the need to find a durable solution. However, I note that there is a durable solution available to you but you have been unwillingto engage with the Republic or take up the offer to obtain support from the Republic of Cyprus until the final outcome of the litigation. This was acknowledged by Chrystalla Katsapaou of UNHCR Cyprus at a recent meeting with the SBAA. I do not accept that you or your family members are subject to compromised or no access to welfare, health care, education or employment. This is simply not true. You are able to use the health services of the Republic and I am aware that the children already attend schools in the Larnaca district. You are entitled to register with the Labour Office and to claim welfare benefits as if you were nationals of the Republic. You would have to cooperate with the registration process of course, but that would be the same in any country to which you were resettled and I do not accept that your failure to cooperate should lead to a grant of entry clearance to the UK. Depending on the composition of each family, you can expect between 600 Euros and 1,100 Euros per family per month more than the ex gratia payments which were previously provided to you by the SBAA. I consider that there is adequate support available should you decide to take advantage of this. There is also work available that you could choose to take advantage of. The Labour Office in Larnaca will help you find work if you register with them. I am aware that the Labour Office offered to help you register and provide more information about the Republics system but you refused to do so. In addition, the Minister of the Interior has recently indicated that the Republic would look positively at applications you choose to make for naturalisation as Cypriot citizens. the SBAA, In the circumstances set out above, and as a result of ongoing discussions between the Foreign and Commonwealth Office and the Republic of Cyprus in order to try to support you, I have concluded that there remains a durable long term solution available for you to stay in the SBAs should you choose to do so, and look to the Republics government for public services and provision, as Cypriot nationals living in the SBAs do. Alternatively, there is an option for you to resettle in the Republic of Cyprus. In either case you could apply for Cypriot citizenship. I have also considered whether to grant entry clearance on compassionate grounds, in spite of the absence of any legal obligation to admit you to the UK, either under the Immigration Rules or by virtue of the Refugee Convention. In all the circumstances, I am not willing to do so. I take the view that the solution which has been on offer for many years is one which it is reasonable to expect you to take up. On 7 July 2017 the Secretary of State directly responded to the UNHCRs letter of 16 June 2017 in similar terms to her fresh decision of 6 July. The UNHCR replied to the Secretary of State on 26 October 2017 to clarify and share additional information about its June observations. Additional comments were provided on the Memorandum of Understanding and the precariousness of its application to the SBA refugees and difficulties faced by the SBA refugees regarding access to welfare assistance, access to the labour market, access to health care, access to education, access to long term residence and access to citizenship in the Republic of Cyprus. At the hearing Mr Eadie indicated that the Secretary of State was preparing a response to the UNHCRs most recent letter. The court received that response on 26 July 2018 from the Government Legal Department in the form of a letter dated 8 January 2018 without further comment from the parties on its contents. Accordingly, the present position is that the decision of 25 November 2014, which is the subject of the respondents application for judicial review, no longer exists. It has been quashed by the courts below and superseded by the fresh decision which the Secretary of State has now made in accordance with the order of the Court of Appeal. The Secretary of States current decision has not been quashed and is technically not before this court. The subject matter of the Secretary of States two decisions is, however, the same and they raise issues which partly overlap. The issues in the appeal As noted at the beginning of this judgment, the issues as they have emerged were not clearly identified in the agreed statement or in the pre hearing exchanges. No purpose would be served at this stage by examining the reasons for that failure. It would be highly unsatisfactory, as we approach the twentieth anniversary of the respondents arrival in the SBAs, to remit these issues to the High Court or leave them to be determined on a further application for judicial review of the Secretary of States decision of 6 July 2017. In these circumstances, we think that the least unsatisfactory approach is for us to identify the issues which now appear essential to the resolution of this appeal, to give judgment now on the issues which we are in a position to decide at this stage, and to make proposals for the early resolution of the remainder. In summary the following questions appear now to require decision: i) Does the Refugee Convention (as extended by the 1967 Protocol) apply to the SBAs? ii) Does the Convention by its terms entitle the respondents to be resettled in the United Kingdom? iii) Was the Memorandum of Understanding of 2003 a valid performance of the Convention obligations for those within its scope? In particular: a) Was the United Kingdom in principle entitled to fulfil its obligations under the Convention by arranging for support to be provided by the Republic of Cyprus? b) If so, were the terms of the Memorandum of Understanding (including the 2003 Refugee Ordinance) a proper basis on which to do so? If the answer to (iii) is yes: a) Was the United Kingdom entitled in 2005 to make the same arrangements in respect of the respondents without their consent, given their lawful and accepted presence as refugees in the SBAs since 2000? iv) b) If so, was the 2005 agreement with the Republic a legally effective means of doing so, having regard to its informality and the absence of incorporation into SBA law? c) Has the support of the Republic for the respondents in accordance with the 2005 agreement been available in practice, and can it be assured in the future? v) If the 2005 agreement, for whatever reason, was not a legally effective means of discharging the United Kingdoms obligations to the respondents under the Convention, or if such support has not been available in practice, what are the consequences, in terms of rights or remedies potentially available in these proceedings, and how should the court give effect to them in its order? Questions (i) and (ii), which are questions of international law, have been fully argued, and will be addressed in this judgment. We will also address issue (iii) in so far as it is relevant to the respondents case. We will then give a brief provisional view of the matters likely to require consideration under the other heads. We appreciate that Mr (now Sir) James Eadie QC submitted that at any rate points (b) and (c) under issue (iv) fell outside any issues argued below or for which leave to cross appeal to this Court has been obtained. Any objection of this nature will remain open for consideration, though we would wish to determine any issues which can fairly be determined. (i) Does the Refugee Convention (as extended by the 1967 Protocol) apply to the SBAs? The respective positions of the parties in summary are as follows. The respondents say that the Convention applies by virtue of the United Kingdoms declaration of 1956 under article 40(2). The Secretary of State says that the SBAs are new entities in international law, created in 1960, in relation to which no such declaration has been made. He accepts that the respondents have been treated as refugees protected by the Convention but contends that this was not a legal entitlement but an ex gratia concession made in accordance with the United Kingdoms policy relating to dependent territories where the Convention does not apply. Given that until 1960 the Convention unquestionably applied to the territory now comprised in the SBAs, the question is whether the political separation of that territory from the rest of the island brought an end to its application there. This is necessarily a question of international law. But while international law may identify the relevant categories and the principles that apply to them, the question whether a particular territory falls within a relevant category will depend on the facts, and these may include its domestic constitutional law. The only mode of termination expressly provided for in the Convention is denunciation, which is governed by article 44. The Convention has not of course been denounced by the United Kingdom, either generally or with respect to the SBAs. But as between contracting states, there are a number of other circumstances in which treaty obligations may come to an end, so far as they relate to particular territory. In particular, they may come to an end as a result of a sufficiently radical change in the international status of that territory. There is a substantial body of state practice bearing on this question, which is summarised in standard works such as Oppenheims International Law, 9th ed (1992), ed Sir Robert Jennings QC and Sir Arthur Watts, i, paras 62 64 and McNair, The Law of Treaties (1961), pp 600 606, 629 638. The ordinary principle is that obligations in international law are owed by international persons, primarily states. As subjects of international law, international persons enjoy rights, duties and powers established in international law and more generally a capacity to act on the international plane. Treaty obligations apply to the international entities which enter into them. Where they have territorial application, they apply to the states responsible internationally for the territory in question. It follows that treaty obligations will cease to apply to a territory where it secedes from the state which entered into the treaty, or where a formerly dependent territory becomes independent of the parent state which entered into the treaty. There is some support in state practice for the application of a broader rule to treaty obligations of a non political and especially of a humanitarian character. The broader rule would attach treaty obligations to territories rather than to the international persons responsible for them. The International Law Commission of the United Nations, in presenting draft articles on state succession to the General Assembly in 1974 (Document A/9610/Rev.1), expressed the opinion that some legal incidents may attach to an antecedent treaty on the ground that it establishes a legal nexus between the territory and the treaty such that a successor state will be bound by it: Yearbook (1974), vol ii(1), p 167, para (49). However, it is clear from the commentary that the circumstances in which the question arises are too varied and state practice on the point is insufficiently uniform and too obviously influenced by pragmatic considerations to give rise to a rule of customary international law: ibid, pp 196 199, 202 207, paras 1 9, 21 48. This is, as the editors of Brownlies Principles of Public International Law, 8th ed (2012), at p 424, note an area of uncertainty and controversy. In R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2009] AC 453, the House of Lords had to answer the question whether the European Convention on Human Rights applied in the British Indian Ocean Territory (BIOT) by virtue of the extension of the Convention to the then colonies of Mauritius and the Seychelles in 1953 under a similar colonial clause. The BIOT comprised outlying groups of islands formerly part of those colonies, which had been separated from them for defence purposes in 1965 and constituted as a distinct colony by the British Indian Ocean Territory Order 1965 (SI 1965/1920). Section 3 of the Order provided that the islands, shall together form a separate colony which shall be known as the British Indian Ocean Territory. Mauritius and the Seychelles subsequently became independent in 1968. Lord Hoffmann, with the agreement of the rest of the Appellate Committee, dealt with the question at para 64 as follows: In 1953 the United Kingdom made a declaration under article 56 of the European Convention on Human Rights extending the application of the Convention to Mauritius as one of the territories for whose international relations it is responsible. That declaration lapsed when Mauritius became independent. No such declaration has ever been made in respect of BIOT. It is true that the territory of BIOT was, until the creation of the colony in 1965, part of Mauritius. But a declaration, as appears from the words for whose international relations it is responsible applies to a political entity and not to the land which is from time to time comprised in its territory. BIOT has since 1965 been a new political entity to which the Convention has never been extended. We have been invited to overrule this decision. It is said to be inconsistent with ordinary principles of international law whereby (i) international obligations are owed in respect of specific territory, and (ii) a states international responsibility is unaffected by changes to the governance or constitutional status of some part of its territory. It will be apparent from what we have already said that we do not accept this criticism. As to proposition (i), it is a truism that a states international responsibilities are generally owed in respect of particular territory. But it does not follow that the responsibility attaches to the territory as such, rather than the international person responsible for it. Otherwise, where a state assumes treaty obligations in respect of its entire territory, the severance of part of that territory could never result in those obligations ceasing to apply to it. Yet it is accepted that that is not the position. As to proposition (ii), it is correct that a state cannot rely on its domestic law as authorising or excusing a breach of its international obligations: see Treatment of Polish Nationals and Other Persons of Polish Origin or Speech in the Danzig Territory (1932) PCIJ, Series A/B No 44, p 4, at p 24. The proposition is stated as follows in article 3 of the International Law Commissions Articles of Responsibility of States for Internationally Wrongful Acts (2001): The characterisation of an act of State as internationally wrongful is governed by international law. Such characterisation is not affected by the characterisation of the same act as lawful by internal law. This, however, assumes that the state in question is subject to the relevant international obligation. Where that obligation is derived from a treaty, the prior question is whether the treaty applies to the particular State in respect of the particular territory. That will necessarily depend on the current constitutional relationship between the state and the territory in question. Thus the international responsibility of the United Kingdom in respect of British Dominions has always depended on the constitutional relationship between them as it stood from time to time, which is a matter for their domestic law. The Statute of Westminster 1931, which confirmed the status of the Dominions as independent sovereign states, was an Act of the United Kingdom Parliament. It would have been absurd to suggest that international law would for that reason have declined to take cognizance of it, or would have treated it as an ineffective attempt by the United Kingdom to avoid the international obligations which it previously had for the Dominions acts. The decisive point is in our view a different one. The decision in Bancoult (No 2) was about the constitutional and international status of the BIOT, which is materially different from that of the SBAs. The Cyprus Act 1960 did not alter the status of the SBAs, but merely excluded them from the transfer of territory to the new Republic of Cyprus. The Sovereign Base Areas of Akrotiri and Dhekelia Order in Council 1960 has no equivalent of section 3 of the British Indian Ocean Territory Order 1965. Indeed, it says nothing at all about the status of the SBAs, but only about the organisation of their internal administration. These differences reflect the very different nature of the changes of which the orders were part. The BIOT was a territory reconstituted from parts of two other colonies to make a third colony. It had a different international status (ie vis vis third countries) from Mauritius and the Seychelles, and the United Kingdom had different international responsibilities in relation to it, notably in regard to the United States. In the case of the SBAs, the only change which occurred in 1960 was that whereas they had previously been part of the UK dependent territory of Cyprus, they were thereafter the whole of it. The mere fact the United Kingdom lost 97% of the island of Cyprus did not alter the status of the 3% that it retained. The status of the SBAs vis vis the rest of the world did not change, except in relation to the rest of Cyprus, and that was because of a change in the status of the rest of Cyprus and not because of a change in the status of the SBAs. With one exception, we find it difficult to attach much importance to the various instances cited by the respondents in which the United Kingdom has treated the creation of new colonial entities as leaving unaffected the application of treaties which previously applied to them. These instances include the separation of the Cayman Islands and the Turks and Caicos Islands from Jamaica in 1958 and the dissolution into its component territories of the Federation of Rhodesia and Nyasaland in 1963. They do not constitute a sufficient body of state practice to give rise to a rule of customary international law. At the most they show that the United Kingdom has not been consistent on this question. The exception is the treatment by the United Kingdom of treaties of mutual legal assistance which had been extended to Cyprus under colonial clauses before 1960. The United Kingdom has taken the position in its dealings with other countries party to these treaties that (in the words of a Foreign Office memorandum) treaties which had applied to the colony of Cyprus continued automatically to apply to the two pieces of territory now known as the Sovereign Base Areas. This has been tacitly accepted by all of them except, briefly, the Lebanon. The Lebanon was told that creation of an independent Republic of Cyprus effected no change in the international status of these areas (see HC 237). These exchanges do not suggest a rule of customary international law, any more than the other instances do. But they are, we think, relevant as a statement of the international status of the SBAs by the state responsible for their international relations, which is ultimately in a position to determine what their international status is to be. The position taken by the Foreign Office accords precisely with the law as we conceive it to be as a matter of analysis. We conclude that the Refugee Convention continues to apply to the SBAs by virtue of the declaration of 1956, in the same way as it applied to the whole colony of Cyprus before 1960. Article VII(4) of the 1967 Protocol provides that where a state made a declaration under article 40(1) or (2) of the Convention extending its application to a territory for whose international relations it was responsible, and then acceded to the Protocol, the declaration should apply to the Protocol also, unless that state notified the Secretary General to the contrary. In other words, no further declaration was required to extend the Protocol to dependent territories where the original Convention applied. The United Kingdom acceded to the Protocol without any reservation relating to the SBAs. It follows, since the Convention continued to apply to the SBAs after 1960, that the Protocol applies there also. That makes it inappropriate to assess the United Kingdoms treatment of the respondents by reference to the spirit of the Convention. The United Kingdom is, as a matter of international law, bound by the Convention and the Protocol as such. (ii) Does the Convention by its terms entitle the respondents to be resettled in the United Kingdom? The respondents say that they have a direct right to entry into the United Kingdom under the terms of the Convention, by virtue of their status as refugees in a territory under the United Kingdoms sovereignty. Specific reference is made to articles 26, 32 and 34. This is a question of great general importance. It may be restated as follows. Is it the effect of the Convention that, once a refugee reaches a dependent territory of a state (such as an SBA) to which the Convention applies, the refugee is entitled without more to move freely to what article 19(2) of the Convention calls the metropolitan territory of that State or to any other dependent territory of the same state to which the Convention has been extended? The territorial application of a treaty is a question of international, not domestic law. It depends, like most aspects of the law of treaties, on the intention of the contracting states. Article 29 of the Vienna Convention on the Law of Treaties (1969) provides that: unless a different intention appears from the treaty or is otherwise established, a treaty is binding upon each party in respect of its entire territory. Multilateral treaties, however, commonly provide for a different intention. As Sir Humphrey Waldock, Special Rapporteur, demonstrated in his Third Report on the Law of Treaties to the International Law Commission (1964) (A/CN.4/167), at pp 12 15, this is reflected in the practice, which can be dated back to the 1880s, of inserting clauses excluding the application of treaties to parts of the territory of a contracting state, or making their application there subject to conditions, such as local consent or subsequent notification: see, more generally, Fawcett, Treaty Relations of British Overseas Territories (1949) 26 BYIL 86, 94 99. The practice originated in the need of imperial powers, and notably the United Kingdom, to consult the governments of dependent territories on whom it had conferred a measure of autonomy, before assuming international obligations affecting them. But it has also been adopted by federal states, in cases where the federal government has exclusive responsibility for international relations but part or all of the subject matter of the treaty is within the exclusive legislative competence of its component territories. These particular concerns are commonly dealt with by colonial clauses and federal clauses. In principle, however, states are at liberty to enter into treaties on terms as to their territorial application for any reason that they see fit. The widespread use of colonial clauses reflects the principle that for certain purposes, including the application of treaties, dependent territories of a state are treated as having a status in international law distinct from that of the parent states metropolitan territory. More generally, it reflects one of the basic principles of international law declared in the United Nations Declaration on Principles of International Law concerning Friendly Relations and Co operation among States in accordance with the Charter of the United Nations (General Assembly Resolution 2625 (XXV)) (1970), that: the territory of a colony or other Non Self Governing Territory has, under the Charter, a status separate and distinct from the territory of the State administering it; and such separate and distinct status under the Charter shall exist until the people of the colony or Non Self Governing Territory have exercised their right of self determination in accordance with the Charter, and particularly its purposes and principles. It is true that the purpose of colonial clauses is to accommodate the limited autonomy accorded by some imperial powers to the more advanced dependent territories. It is also true that the purpose of this particular part of the United Nations Declaration is to accommodate the principle of self determination and the trusteeship obligations of colonial powers. These purposes may be said to have limited if any relevance to uninhabited territories or to sui generis cases such as the SBAs, which are military facilities rather than settlements, and whose indigenous inhabitants are citizens of the Republic with all the rights attaching to that status. But while the problems associated with colonial autonomy and trusteeship may have been the occasion for recognising an international status for dependent territories, distinct from that of the metropolitan territory, the principle itself cannot be confined to such cases. It would in any event be practically impossible to do so given the fine questions of degree which would arise if it were necessary to introduce a sub distinction between different dependent territories depending on the extent of their internal autonomy or the number or status of their indigenous inhabitants. Like many multilateral treaties, the Refugee Convention was so framed as to apply only to a States home country or metropolitan territory unless extended under article 40 to other territories for whose international relations the signatory state was responsible. In contrast with the position in some other contexts (see eg R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2008] UKHL 61; [2009] AC 453, para 40, and R (Keyu) v Secretary of State for Foreign and Commonwealth Affairs [2015] UKSC 69; [2016] AC 1355, para 186), the metropolitan and overseas territories of the United Kingdom for whose international relations it has responsibility are not in this context assimilated or treated as one undivided entity. Under article 40, any Contracting State is able to extend the Convention to all or any of the other territories for the international relations of which it is responsible, or to do so on terms specific to each territory. This is what happened when on 24 October 1956 the United Kingdom notified the Secretary General of the United Nations of its extension of the Convention to some 16 territories, including Cyprus. The notification was made subject to reservations, differing between some overseas territories and others, disapplying or varying particular terms of the Convention. By way of example, the right to engage in wage earning employment after completing three years residence in the country under article 17.2(a) was varied to four years in the case of 14 of the territories, but not in respect of Zanzibar and St Helena; the provisions of article 25.1 and 2 (relating to certain administrative assistance) were not accepted; and the provisions of articles 24.1(b), 24.2 and 25.3 (covering inter alia the provision of social security and certain administrative documentation) were made applicable only so far as the [local] law allows. In all these respects, the colonial clause gave effect to the individuality of each overseas territory, including by taking account of the views of any local administration. Article 40 suggests that for the purposes of the Refugee Convention the metropolitan territory and its dependent territories are to be treated as separate units. The different terms on which the Convention may extend to different territories could not be given effect, if all territories fell to be regarded as one. The Convention terminology varies between articles. Article 2 refers, for example, to a refugees duties to the country in which he finds himself, with the concomitant obligation to conform to its laws and regulations. The country in which he finds himself means whatever territory the refugee reaches. Article 4 provides that The Contracting States shall accord to refugees within their territories treatment at least as favourable as that accorded to their nationals with respect to freedom to practice their religion . The plural is used here because the article is dealing with all Contracting States territories. Where there are differences in the freedom to practise religion in different territories for the international relations of which a single State is responsible, the article will only work if applied on a territory by territory basis. A similar point applies to other articles requiring a State to accord to refugees in their territory the most favourable treatment accorded to nationals of a foreign country in the same circumstances or not less favourable [treatment] than that accorded to aliens generally in the same circumstances or the same treatment as nationals: see eg articles 15 and 17 to 24. Each territory for the international relations of which the State is responsible must in this context be treated separately. Article 26 is to be read in the same light. Headed Freedom of Movement, it reads: Each Contracting State shall accord to refugees lawfully in its territory the right to choose their place of residence [and] to move freely within its territory, subject to any regulations applicable to aliens generally in the same circumstances. The French text confirms that the word and, inserted in brackets, should be read into the English version. Article 26 is directed to movement by a refugee within whichever territory they may be, whether it be the metropolitan territory, if that is where they are, or any overseas dependent territory, if they are there. The qualification relating to aliens in the same circumstances refers naturally to the possibility of restraints on movements internally, again within either the metropolitan territory or the overseas territory as the case may be. It cannot have been directed to conferring on a refugee a right to move between all or any of a States metropolitan and overseas territories, subject only to such constraints as might affect an alien. On this point, Foskett J (para 303) was in our opinion clearly correct. In the Court of Appeal, Irwin LJ (para 82) appears in contrast to have considered that article 26 applied without limitation across all of any States territories; and further that the limitation by reference to aliens could simply be avoided (or in effect eliminated) on the basis that a refugees circumstances differ from those of an alien. On both points, he was in our opinion mistaken. The term in the same circumstances is used in the Convention to indicate that a refugee should notionally be assimilated with a person who is not a refugee but seeks to enjoy the same right, except in the case of requirements which by their nature a refugee is incapable of fulfilling: article 6. Article 19 is instructive. It reads: LIBERAL PROFESSIONS 1. Each Contracting State shall accord to refugees lawfully staying in their territory who hold diplomas recognized by the competent authorities of that State, and who are desirous of practicing a liberal profession, treatment as favourable as possible and, in any event, not less favourable than that accorded to aliens generally in the same circumstances. 2. The Contracting States shall use their best endeavours consistently with their laws and constitutions to secure the settlement of such refugees in the territories, other than the metropolitan territory, for whose international relations they are responsible. Article 19(1) addresses the position of liberal professionals in the territory in which they are (which would in the circumstances in which the Convention was drafted commonly be a metropolitan European territory) while article 19(2) gives them the exceptional privilege of an undertaking that the relevant State will use its best endeavours to secure their settlement in another territory for whose international relations that State is responsible. Such a privilege makes no sense if everyone (not just liberal professionals) had the right to move anywhere in any of the territories for whose international relations a State was responsible and to which it had extended the Convention. Each such territory is, on the contrary, to be seen as a separate unit. It is noteworthy that the privilege is only to have the State use [its] best endeavours. Anything further would risk impinging on the local interests which constitute one reason for the separate treatment in article 40 of overseas territories for whose international relations a State is responsible. As already noted, the respondents also refer to and rely on articles 32 and 34, which provide EXPULSION 1. The Contracting States shall not expel a refugee lawfully in their territory save on grounds of national security or public order Article 32 Article 34 NATURALIZATION The Contracting States shall as far as possible facilitate the assimilation and naturalization of refugees. They shall in particular make every effort to expedite naturalization proceedings and to reduce as far as possible the charges and costs of such proceedings. Article 32 gives a remedy against forced removal from the relevant territory (in this case the SBA), but says nothing about the right to move elsewhere. Although it may be relevant to other issues, it cannot be relied on in itself as providing a right to resettle in the UK. The same applies to article 34. It makes no specific reference to any territory, and there is room for argument as to how it should be interpreted in the particular circumstances of the SBAs (see, for example, A Grahl Madsen, Commentary on the Refugee Convention 1951 (1963, published 1997), Comment No 2 on article 34, on which Mr Husain relies). What however is clear is that article 34 does not seek to override the distinct treatment in the Convention of metropolitan and overseas territories. It provides no basis for submitting that a refugee is entitled to look to the State so far as possible to assimilate and naturalise himself or herself in whichever of those territories he or she may wish to settle in, irrespective of where he or she actually is or of the prevailing circumstances there. In our view, the Court of Appeal was clearly wrong if it intended, at para 81, to treat article 34 as giving any refugee in any territory anywhere, for whose international relations a State is responsible and to which the Convention has been extended, a right to have that State as far as possible facilitate his or her assimilation and naturalisation in any other of such territories. We conclude that the Convention does not by its terms entitle the respondents to be resettled in the United Kingdom. A States duties under the Convention to a refugee reaching a particular territory for whose international relations the State is responsible are in principle and in normal circumstances limited to providing and securing the refugees Convention rights in the context of that territory. (iii) Was the Memorandum of Understanding of 2003 a valid performance of the Convention obligations for those within its scope? In particular: (a) Was the United Kingdom in principle entitled to fulfil its obligations to refugees in the SBAs by arranging for support to be provided by the Republic of Cyprus? (b) If so, were the terms of the Memorandum of Understanding (including the 2003 Refugee Ordinance) a proper basis on which to do so? These issues do not arise directly for decision, since the 2003 Memorandum does not in terms apply to the respondents, and its validity as applied to those within its scope has not as far as we are aware been questioned hitherto. In any event, for the purposes of the domestic law of the SBAs, the 2003 Ordinance provides in terms that the rights under the Convention are to be treated as having been properly accorded, whether in the SBAs or the Republic: regulation 23(2). The validity of that regulation has not been questioned in these proceedings and would be a matter for the courts of the SBAs, not of the UK. The almost uniquely close practical links between the SBAs and the Republic are apparent from the complex treaty and regulatory framework which we have already summarised in paras 10 to 13 above. In summary, the international status of the SBAs and their relations with the Republic of Cyprus are governed by the Treaty concerning the Establishment of the Republic of Cyprus signed on 16 August 1960 between the United Kingdom, Greece, Turkey and Cyprus, as well as associated exchanges of notes. Annexes A and B to the Treaty of Establishment contain a broad range of mutual obligations, underlining the umbilical cooperation between the United Kingdom in respect of the SBAs and the Republic if the SBAs were to be viable. To take some examples, in addition to sovereignty over the SBAs, the United Kingdom was to have the use of and complete control over a number of Sites elsewhere in the Republic (Annex B, Part II, sections 1 and 2) and to police these Sites, but on the basis that persons arrested there would be handed over to the Republic save in cases where the United Kingdom had exclusive jurisdiction (Annex B, Part II, section 2, para 3). The Republic undertook to take necessary measures to ensure the security of the Sites, but on the basis that the United Kingdom authorities could take precautionary measures in the immediate and actual vicinity, in the event of an immediate threat, while the United Kingdom enjoyed a general right to take reasonable steps to prevent injury or damage to, or interference with, United Kingdom personnel, their dependents and United Kingdom property (Annex B, Part II, section 2, paras 4 and 5). Under Annex B, Part II, section 3, the authorities of the Republic undertook to arrange for, inter alia, such reasonable control over activities in the vicinity of United Kingdom installations and equipment in the Island of Cyprus as considered necessary by the United Kingdom to ensure their efficient operation and security (para 1); the authorities of the Republic undertook to search nearby villages where the United Kingdom authorities suspected that there might be apparatus likely to interfere with nearby installations in the Dhekelia SBA (para 2); and United Kingdom police and armed forces members were, if absolutely necessary, entitled to take into custody persons obstructing or attempting to obstruct the use or exercise of the facilities and rights accorded to the United Kingdom under the Treaty, or damaging, removing or attempting to damage United Kingdom property (para 3). The Annexes continue in a similar vein, with further mutual arrangements and obligations. The practical implications of the interdependence of the SBAs and the Republic of Cyprus are explained by Lisa Young, Policy Secretary of the SBA Administration, in her witness statement dated 15 January 2016: 10. In reality, the odd shaped boundaries of the SBAs and the existence of [Republic of Cyprus] enclaves in the [Eastern] SBA [Dhekelia] make little difference to the everyday life of people living in the SBAs. Although all people in the SBAs are subject to SBA law, the SBA courts and the jurisdiction of the SBA civil administration and SBA police, to many intents and purposes, Cypriots living in the SBAs live as if they were in the Republic. The declarations made on 18 August 1960 provide that the laws of the SBAs are as far as possible the same as the laws of the Republic and in practice this is largely the case. The SBAs have open borders and a customs union with the RoC. Residents move freely between the RoC and the SBAs, as provided in Appendix O. [T]he border is marked with inconspicuous pillars 11. RoC nationals and residents living in the SBAs can vote in the Republic. Under functions delegated in the 1960 arrangements, the RoC provides and pays for the utilities and social services (ie welfare, schools and health care, usually in the Republic) for RoC nationals living in the SBAs 13. Since 1960 the SBAs have operated and cooperated with the RoC under the principle of delegation, ie that the powers and duties are delegated by SBAs to officers of the RoC to carry out in the SBAs or in relation to the SBAs under the SBA law which is equivalent to the RoC law. The current legislation is the Delegation of Functions to the Republic Ordinance 2007. 14. The SBAA is a very small administration and the SBAs have limited resources because of their limited military purpose. The SBAs do not have the resources or authority to provide the normal civilian government and services of a modern welfare state to residents in the SBAs. The SBA does not provide any social services in the SBAs. Nor does the SBA provide any utilities to the general public living in the SBAs. Instead the relevant local RoC authorities provide public utilities (electricity, water, and civilian telecommunications services) to the Cypriot population living in the SBAs and MoD bases, and the MoD and/or SBAA make financial and practical contributions to RoC road construction. Most infrastructure is linked through the Republic. The SBAs have no international port of entry for members of the public. The public must use ports and airports in the RoC 15. Officials from the SBAA are in regular contact with their counterpart RoC officials at local government level. At the higher level, engagement with the RoC is normally through officials in the Ministry of Foreign Affairs, facilitated by the British High Commission in Nicosia It is correct that the Convention refers in many places to the appropriate standard of treatment of refugees in a States territory and the provision of facilities to refugees there. These references are commonly qualified by reference to the rights of or treatment afforded to nationals or aliens in a comparable position in the same territory. But nothing in the Convention, in our opinion, is expressly directed to a situation like that which exists on the island of Cyprus, and nothing in it is expressly inconsistent with the nature of the arrangements which the United Kingdom has made with the Republic of Cyprus. The Refugee Convention falls for interpretation in accordance with the principles laid down in the Vienna Convention on the law of treaties concluded on 23 May 1969 (the VCLT). Under article 31(1) of the VCLT: A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose. Both international courts and tribunals will, in an appropriate case, interpret an international treaty not [as] static but as open to adapt to emerging norms of international law: Case concerning the Gabkovo Nagymaros Project [1997] ICJ Rep 7, para 112. They will endeavour to place a factual situation as it has developed since the inception of a treaty within the context of the preserved and developing treaty relationship, in order to achieve its object and purpose in so far as that is feasible: ibid, para 133. The former citation was picked up in the award dated 24 May 2005 of a distinguished Arbitral Tribunal chaired by Dame Rosalyn Higgins in the Arbitration regarding the Iron Rhine (Ijzeren Rijn) Railway between the Kingdom of Belgium and the Kingdom of the Netherlands (2005) RIAA, vol XXVII, p 35. The tribunal used it in support of the proposition that an evolutive interpretation, which would ensure an application of the treaty that would be effective in terms of its object and purpose, will be preferred to a strict application of the intertemporal rule: para 80. It also referred to the principle of effectiveness in support of a dynamic and evolutive approach to a treaty: para 84. In view of the above, and subject to issues about the precise interpretation of certain articles, the court finds it hard to see any objection in principle to some or even most or all of the supporting facilities required for refugees being provided by co operative and effective arrangements with the Republic. The more difficult issues are as to its application to those already accepted as lawful refugees (as discussed under the next group of issues). However, it was part of the respondents case before this court that the 2003 Memorandum was not itself fit for purpose, even in respect of those within its scope, so that the Secretary of State could not rely on its purported extension to the respondents. Since the court has reached a clear and unanimous view on that issue, it may help to narrow the remaining areas of dispute if we give our reasons at this stage. Mr Husain QC, who appeared for the respondents, submits that the 2003 Memorandum of Understanding is in terms unfit for its purpose even on the assumption that it is applied to the respondents, and that the provision of support to refugees in accordance with its terms would be a breach of the Refugee Convention. Mr Husains first point is that the Memorandum was not signed on behalf of the SBA Administration but on behalf of the Government of the United Kingdom, and that it contains undertakings by and in favour of the United Kingdom in respect of refugees in the SBAs. We see that as entirely natural and appropriate. The United Kingdom is responsible in international law for the international relations of the SBAs and for ensuring their compliance with the Refugee Convention. The Memorandum starts unsurprisingly by noting that the United Kingdom through the [SBA] Administration has the responsibility for illegal migrants and asylum seekers that enter the island of Cyprus by the [SBAs]. Mr Husain next refers to paragraph 10 of the Memorandum, which provides that during their stay on the island of Cyprus persons recognised as refugees under the procedures determined in the Memorandum, will be treated so far as the authorities of the Republic of Cyprus are concerned, as if such persons had been recognised as refugees by the Republic of Cyprus . Mr Husain described this as very problematic and as constituting an obvious breach of the Convention, in that it relegated the respondents to the standard of treatment set by the Republic. However, the respondents have not suggested that the standard of treatment of refugees applied by the SBAs would be any higher than that applied by the Republic if the Memorandum had never been signed. Mr Husain next points to paragraph 12 of the Memorandum, which requires the United Kingdom to endeavour to resettle refugees within a year in a country willing to accept them, as indicating that it was not its intention or effect to achieve any durable long term settlement as refugees in the Republic. A similar point is taken in the most recent letter by the United Nations High Commissioner for Refugees, who reads paragraph 12 as limiting the United Kingdoms obligations to refugees to a year. That in our view misreads paragraph 12 and ignores paragraph 10. To suggest that an inter state undertaking to endeavour to resettle refugees within one year accords them rights which only extend for one year is simply wrong. Next, Mr Husain points to paragraph 19, which he submits gives the respondents no remedy for breach of the MoU. However, the Memorandum is an international agreement, which would not in itself be expected to provide any rights justiciable in the domestic law of either Cyprus or the SBAs. Such rights as there are in the domestic law of the SBAs are provided by the 2003 Ordinance. (We have no evidence of the status of the Memorandum in the domestic law of the Republic.) Finally, Mr Husain refers to paragraph 18, which he submits makes the Memorandum terminable even as regards refugees accepted as such under its terms. We consider it implausible that paragraph 18 would be interpreted as having this effect on the status of persons already accepted under paragraph 8 prior to any termination and so entitled, subject only to paragraph 13, to the treatment prescribed by paragraphs 8, 9 and 10. In any event, the United Kingdoms obligations to ensure compliance with the Refugee Convention would continue notwithstanding any such termination, and the United Kingdom would, in one way or another, have to ensure such compliance in that remote event. For these reasons, we reject the respondents submission that the 2003 Memorandum was not a proper basis for the provision of the support for refugees required by the Convention. Issues for future determination We turn to the issues on which we have found it necessary to ask for further submissions. (iv) Assuming the 2003 Memorandum was valid for those within its scope: (a) Was the United Kingdom entitled in 2005 to make similar arrangements for the provision by the Republic of facilities in respect of the respondents living in the SBAs without their consent, given their lawful and accepted presence as refugees in the SBAs? This question was not in terms identified by the agreed statement of facts and issues. However it emerged as an important part of the respondents response to the Secretary of States contention that it was permissible under the Convention to provide the respondents with facilities under arrangements made by the United Kingdom with the Republic of Cyprus. The point was put most clearly by Mr Husain QC in his written submissions (para 153): The first, and fundamental, objection to this response is that it is not open to a Contracting State to resettle lawfully present refugees in the territory of another Contracting State without their consent. There is no provision in the Refugee Convention that allows this. On the contrary, article 32 prevents a State from requiring a refugee to move to another State absent the refugees consent. Article 32 provides that, The Contracting States shall not expel a refugee lawfully in their territory save on grounds of national security or public order. The Secretary of States case is thus that the United Kingdoms obligations under the Refugee Convention in respect of the respondents living in the SBAs can and should be fulfilled on the island by cooperation between the United Kingdom and the Republic of Cyprus. This, it is submitted, follows from the international arrangements whereby the SBAs were retained under United Kingdom sovereignty and from the realities on the ground. The respondents case, by comparison, is that the fulfilment of such obligations in this way is inconsistent with the terms of the Refugee Convention. The respondents argument that the provision of support through the Republic of Cyprus amounts to an expulsion was rejected by both Foskett J (paras 341 342) and the Court of Appeal (para 83). The Secretary of State now accepts that the respondents cannot, consistently with article 32 of the Convention, be required to live in the Republic of Cyprus, or anywhere else outside the SBAs against their will. There appears at one stage to have been an attempt by the SBA Administration to drive the respondents from the accommodation that they currently occupy with a view to making them leave for the Republic, but the attempt was abandoned and the Secretary of State has made it clear that the respondents are entitled to remain. It remains open to question whether that is sufficient if their only option there is and has been to remain in accommodation which is admittedly seriously deficient. However Mr Husains point is more fundamental. He refers to comments of Professor Hathaway in The Rights of Refugees under International Law (2005), pp 965 966 on the limited window of opportunity for any resettlement other than by consent. In the passage in question, Professor Hathaway discusses mandatory resettlement schemes, such as the so called Pacific Solution operated by the Australian government. He comments that such schemes can be operated without infringing the Convention only if the non consensual diversion into a resettlement scheme occurs before the refugee concerned is lawfully in a state party and hence entitled to the more elaborate protections against expulsion found in article 32. The window of opportunity, he says, is quite short: It ends once lawful presence (not lawful stay) is established, at which point the strict limitations on expulsion set by article 32 apply so as to make enforced resettlement unviable in most cases. (pp 965 966) That view appears consistent with the UNHCR Resettlement Handbook on which the Secretary of State relies, which indicates that resettlement can only be achieved by partnership, adding that of course, refugees are themselves partners in the process (Handbook pp 4 5 [MS5046]). Although this issue was raised in the written submissions it was not addressed in any detail in oral submissions. It appears potentially relevant to the legality of the approach adopted by the UK in 2005 and thereafter. There appear to the court to be potential issues as to what may constitute, first, expulsion, second, resettlement without consent and, third, transfer of responsibility; as to whether the Secretary of States proposed treatment of the respondents amounts to any of these; and as to whether the Secretary of States proposed treatment is in any event consistent with the Convention, having regard to the unique relationship between the SBAs and the Republic of Cyprus, but bearing in mind that the respondents do not consent to the proposed treatment. The quality of the accommodation presently available to the respondents is also an issue, and the court would invite submissions from both sides as to the significance of that in the context of the issues in this case, and as to any proposals which there may be to address it. The court accordingly now invites submissions on all these points, and in particular as to whether and how the Refugee Convention is capable of operating in the context of the SBAs, and whether it was and is in the circumstances open to the United Kingdom to satisfy its Convention obligations by arranging for facilities to be available through co operation with the Republic for refugees such as the respondents who do not give their consent that the United Kingdom satisfy its Convention obligations in this way. (iv)(b) If such transfer of responsibility was permissible, was the 2005 agreement with the Republic a legally effective means of doing so, having regard to its informality and the absence of incorporation into SBA law? As indicated above, the court does not accept Mr Husains primary case that the 2003 Memorandum was not fit for purpose even for those within its scope. However, he raised a logically separate point as to the informality and tenuous nature of any agreement to extend it to the respondents (Case paras 191ff). Again this point was not developed in any detail in oral submissions. The court notes in particular the formal and detailed nature of the 2003 Memorandum, which was also incorporated into SBA law by the Refugee Ordinance so creating enforceable rights and obligations under SBA law; and the lack of any equivalent legal formality in respect of the respondents. It invites submissions on the significance of this difference for the legal effectiveness of the 2005 agreement, and its consequences in the present proceedings. (iv)(c) Has the support of the Republic in accordance with the 2005 agreement been available in practice, and can it be assured in the future? Although this issue was not identified in the agreed statement of facts and issues, it was the subject of detailed and strongly conflicting factual submissions on both sides, and addressed also in the UNHCR correspondence. There was a disagreement as to whether it was an issue properly before the court, or, if not, how if at all it should be resolved, and in what forum. The court invites further submissions on this point. (v) If the 2005 agreement, for whatever reason, was not a legally effective means of discharging the United Kingdoms obligations to the respondents under the Convention, or if such support has not been available in practice, what are the consequences, in terms of rights or remedies potentially available in these proceedings, and how should the court give effect to them in its order? The Refugee Convention creates obligations in international law. The Convention is not part of the domestic law of the UK except to the limited extent noted earlier in this judgment. The written and oral submissions of the parties were largely directed to alleged breaches of obligations under the Convention. Mr Husains argument proceeded on what he took to be the uncontested assumption that any decision regarding the entry of the respondents to the United Kingdom must be consistent with the Refugee Convention (Case para 11, relying on Asylum and Immigration Appeals Act 1993 section 2, and R (European Roma Rights Centre) v Immigration Officer at Prague Airport (United Nations High Comr for Refugees intervening) [2005] 2 AC 1, para 41 per Lord Steyn). However, as noted at the beginning of this judgment, the court considers that the interaction of the Convention and domestic public law is a matter of some importance and difficulty, both in this case and more generally. In particular it seems necessary to consider the possible distinction between the direct application of section 2 of the 1993 Act, and the application of general public law principles (including the Launder principle: para 7 above). The court invites further submissions on those matters, and on the remedies potentially available in the present judicial review proceedings, including the matters which can be properly taken into account in the exercise of its discretion. Concluding comments It may of course be that, with the benefit of this interim judgment, the parties will be able reach agreement without further argument on the position of the respondents, or at least on some of the above questions. So far as they remain in dispute, we propose that the appeal should be relisted as soon as practically possible for the hearing of argument on the further issues identified above. The Court would hope that further evidence will not, at least at this stage, be required. However, if there are matters which one or other party contends cannot fairly be determined by this Court without further evidence, they should, before finalising their written cases for any further hearing, identify to each other any further evidence that they might wish to adduce on such issues, setting it out in draft supported by affidavit. The parties should in this connection be prepared to address the contents of the United Nations High Commissioners letter of 16 June 2017, the Secretary of States decision of 6 July 2017 and the letters of 7 July 2017 and 18 January 2018.
+The question at issue on this appeal is what connection must a foreign company have with the United Kingdom to entitle an English court to wind it up, if its centre of main interests (or COMI) is in another member state of the European Union. The answer depends on the meaning of two words, economic activity, in EU Regulation 1346/2000 on Insolvency Proceedings. The legal framework Under section 221 of the Insolvency Act 1986, the English court has jurisdiction under its domestic law to wind up a foreign company. However, in the case of companies whose COMI is in another member state of the EU, the exercise of this power is constrained by the Regulation. Article 3 of the Regulation provides as follows: Article 3 International jurisdiction 1. The courts of the Member State within the territory of which the centre of a debtor's main interests is situated shall have jurisdiction to open insolvency proceedings. In the case of a company or legal person, the place of the registered office shall be presumed to be the centre of its main interests in the absence of proof to the contrary. 2. Where the centre of a debtor's main interests is situated within the territory of a Member State, the courts of another Member State shall have jurisdiction to open insolvency proceedings against that debtor only if he possesses an establishment within the territory of that other Member State. The effects of those proceedings shall be restricted to the assets of the debtor situated in the territory of the latter Member State. Where insolvency proceedings have been opened under paragraph 1, any proceedings opened subsequently under paragraph 2 shall be secondary proceedings. These latter proceedings must be winding up proceedings. 3. The COMI is not a term of art, and is not defined in the body of the Regulation. Recital (13), however, recites what is perhaps implicit in the phrase, namely that it should correspond to the place where the debtor conducts the administration of his interests on a regular basis and is therefore ascertainable by third parties. Jurisdiction to begin secondary insolvency proceedings in another European jurisdiction is established on a very different basis. It depends on the existence of an establishment within its territory. An establishment is defined in article 2(h) as any place of operations where the debtor carries out a non transitory economic activity with human means and goods. Goods is hardly a satisfactory English word to use in this context. It is apparent from the equivalent term in the other language versions that it means the same as assets (biens, Vermgen) in article 3(2). The facts Olympic Airlines SA was wound up on the direction of the Athens Court of Appeal on 2 October 2009. Since then, the main liquidation proceedings have been in progress in Greece. The appellants are the trustees of the companys pension scheme. Olympic is the principal employer in the scheme and the only employer currently participating in it. Under the rules of the scheme, it must be wound up upon the liquidation of Olympic Airlines. Upon its winding up, a deficit was ascertained of (in round numbers) 16m, which Olympic is bound to make good under section 75 of the Pensions Act 1995. On 20 July 2010, the trustees presented a winding up petition against the company in England on the ground that it was unable to meet this liability. The size of Olympics deficiency means that they are unlikely to recover much. But the winding up order was necessary in order that the scheme should qualify for entry into the Pension Protection Fund under section 127 of the Pensions Act 2004. One of the conditions of entry was that a qualifying insolvency event should have occurred, and the only available one was that the company should have been ordered to be wound up under the Insolvency Act 1986: see Pensions Act 2004, section 121(3)(g). Accordingly, the question arises whether Olympic had an establishment in the United Kingdom on 20 July 2010 so as to justify the presentation of a winding up petition on that date. Olympic had had a number of offices in the United Kingdom, but the only ones which it still occupied on 20 July 2010 were its former UK head office at 11 Conduit Street in London, which it leased from an associated company. The Chancellor heard evidence about the status of 11 Conduit Street and the activities that were carried on there at the relevant time. He and the Court of Appeal made the following findings: (1) On 28 September 2009, shortly before the commencement of the liquidation proceedings in Greece, the area manager for Olympic in London was instructed that the company would cease all commercial operations as from 00.01 on the following day. From that time all flight operations were undertaken by an unrelated company. (2) On 17 June 2010, the Greek liquidator informed the trustees of the pension fund that the employment of the 27 remaining UK staff would be terminated with effect from 14 July 2010. Three persons, Mr Savva the General Manager, Mr Platanias the Finance and Purchasing Manager, and an accounts clerk, were retained thereafter on short term ad hoc contracts. At the time of the English winding up petition, they were the only persons still working there. (3) Mr Savva attended the office at Conduit Street as required. In practice this was about three or four times a week. His function was to deal generally with anything requiring attention, principally instructions and requests from the liquidator and staff in Athens retained by him. (4) Mr Platanias arranged the payment of bills for his own salary and Mr Savvas, council tax, electricity and cleaning, and for minor repairs following a break in. He reconciled bank statements, copied and sent relevant documents to the liquidator and his staff in Athens and dealt generally with post and telephone calls. He supervised the disposal of the companys assets in England, a process which had begun before the winding up petition and continued for some time afterwards. These comprised a current and deposit account, computers and office furniture, fixtures and fittings and computerised accounting records. They had no substantial realisable value. The Chancellor found that Mr Platanias functions were exactly what is to be expected from one responsible to an overseas liquidator for winding up the affairs of a foreign branch of a formerly substantial overseas trading company. (5) The clerk assisted in these activities under the direction of Mr Savva or Mr Platanias. The decisions of the courts below The Chancellor considered that to be economic an activity did not have to amount to external market activity: [2013] 1 BCLC 415. He found that these activities constituted non transitory economic activities for the purpose of the definition of establishment and made the winding up order. The Court of Appeal (Moore Bick LJ, Sir Stephen Sedley and Sir Bernard Rix) overruled him: [2014] 1 WLR 1401. In summary, they thought that the relevant economic activity had to consist of more than the activity involved in winding up the companys affairs, and that the three remaining employees were doing no more than that. After the Court of Appeal handed down its decision, the law was changed. A statutory power under the Pensions Act 2004 was exercised so as to prescribe an additional insolvency event for the purpose of section 121. The additional event was defined in such a way as to apply only to cases in which insolvency proceedings had been commenced in another member state of the EU in respect of an employer whose COMI was located in that state, and secondary proceedings had been begun in the United Kingdom but had subsequently been set aside for want of jurisdiction: see the Pension Fund (Entry Rules) (Amendment) Regulations 2014 (SI 2014/1664). This appears to be a class of one: the present case. However, for technical reasons, the present issue remains important even though the effect of the amendment is to enable the Olympic pension scheme to qualify for the Pension Protection Fund on the basis of the Greek proceedings. The reason is that where the new insolvency event applies it is deemed to occur on the fifth anniversary of the commencement of the Greek proceedings, ie on 2 October 2014. This is rather more than four years after the date of the winding up order made by the High Court. This matters, because of the possibility that the Board of the Pension Protection Fund might require the trustees of the Olympic scheme to claw back any overpaid benefits between the commencement of the Greek liquidation proceedings and the relevant insolvency event. If that event occurred on 2 October 2014 instead of 29 May 2012, the period over which the benefits may be clawed back will be longer. Authorities The text of the Regulation is largely derived from the Convention on Insolvency Proceedings which was opened for signature in Brussels on 23 November 1995, but failed for want of a sufficient number of signatories. The Convention had been the subject of an authoritative commentary by Professor Miguel Virgos and M Etienne Schmit. According to the Virgos Schmit Report (3 May 1996, OJL 6500/96), the definition of establishment reflected a compromise between universalist states, who favoured a single liquidation with universal effect, and territorialist states, who wished to recognise a jurisdiction to open national territorial proceedings based on the mere presence of local business assets whether or not there was any local place of business. The compromise consisted in the acceptance by the territorialists that jurisdiction to open secondary proceedings should be founded on the existence of a local establishment, but with a broad definition of the activities that must be carried on there. At para 71, the Report commented on the resultant definition as follows: 71. For the Convention on insolvency proceedings, establishment is understood to mean a place of operations through which the debtor carries out an economic activity on a non transitory basis, and where he uses human resources and goods. Place of operations means a place from which economic activities are exercised on the market (ie externally), whether the said activities are commercial, industrial or professional. The emphasis on an economic activity having to be carried out using human resources shows the need for a minimum level of organization. A purely occasional place of operations cannot be classified as an establishment. A certain stability is required. The negative formula (non transitory) aims to avoid minimum time requirements. The decisive factor is how the activity appears externally, and not the intention of the debtor. The rationale behind the rule is that foreign economic operators conducting their economic activities through a local establishment should be subject to the same rules as national economic operators as long as they are both operating in the same market. In this way, potential creditors concluding a contract with a local establishment will not have to worry about whether the company is a national or foreign one. Their information costs and legal risks in the event of insolvency of the debtor will be the same whether they conclude a contract with a national undertaking or a foreign undertaking with a local presence on that market. Naturally, the possibility of opening local territorial insolvency proceedings makes sense only if the debtor possesses sufficient assets within the jurisdiction. Whether or not these assets are linked to the economic activities of the establishment is of no relevance. This provides much the most useful source of guidance. By comparison, there is very limited help to be had from decided cases. Decisions on the location of a companys COMI are addressed to a different test. Decisions on what constitutes an establishment can rarely be more than illustrative given the fact sensitive nature of the inquiry. In (Case C 396/09) Interedil Srl (in liquidation) v Fallimento Interedil Srl [2011] ECR I 9939: [2012] BUS LR 1582, the Court of Justice of the European Union dealt with the question whether the presence of immovable property was enough to confer jurisdiction to open secondary insolvency proceedings. The court did not specifically address the question what constituted economic activity, but it dealt generally with the definition of establishment at paras 61 63 as follows: 61. Article 2(h) of the Regulation defines the term establishment as designating any place of operations where the debtor carries out a non transitory economic activity with human means and goods. 62. The fact that that definition links the pursuit of an economic activity to the presence of human resources shows that a minimum level of organisation and a degree of stability are required. It follows that, conversely, the presence alone of goods in isolation or bank accounts does not, in principle, satisfy the requirements for classification as an establishment. 63. Since, in accordance with article 3(2) of the Regulation, the presence of an establishment in the territory of a member state confers jurisdiction on the courts of that State to open secondary insolvency proceedings against the debtor, it must be concluded that, in order to ensure legal certainty and foreseeability concerning the determination of the courts with jurisdiction, the existence of an establishment must be determined, in the same way as the location of the centre of main interests, on the basis of objective factors which are ascertainable by third parties. Two English decisions illustrate the application of the test to particular facts. In Shierson v Vlieland Boddy [2005] 1 WLR 3966, the Court of Appeal was concerned with an English debtor whose COMI was in Spain but who let and managed premises in England. It cited and implicitly adopted para 71 of the Virgos Schmit Report, and concluded that the letting and management of the premises themselves was enough to make them an establishment. In In re Office Metro Ltd [2012] BCC 829, Mann J was concerned with secondary proceedings in England in respect of an English company whose COMI was in Luxembourg and which was in liquidation there. It used an office in England, at which it handled the settlement of liabilities on guarantees of leases to associated companies, dealt with Companies Act filings, forwarded post, and occasionally took legal and accountancy advice. Perhaps wisely, the judge did not attempt a general definition of economic activity, but expressed the view that the activities carried out at the relevant premises were not economic activities and that in any event they were transitory. Application to the present case The definition in article 2(h) must be read as a whole, not broken down into discrete elements, for each element colours the others. The relevant activities must be (i) economic, (ii) non transitory, (iii) carried on from a place of operations, and (iv) using the debtors assets and human agents. This suggests that what is envisaged is a fixed place of business. The requirement that the activities should be carried on with the debtors assets and human agents suggests a business activity consisting in dealings with third parties, and not pure acts of internal administration. As the Virgos Schmit Report suggests, the activities must be exercised on the market (ie externally). I am inclined to think that the same point was being made by the Court of Justice when it observed in Interedil that the activities must be sufficiently accessible to enable third parties, that is to say in particular the companys creditors, to be aware of them. I do not think that this can sensibly be read as requiring that the debtor should simply be locatable or identifiable by a brass plate on a door. It refers to the character of the economic activities. They must be activities which by their nature involve business dealings with third parties. Manifestly, some activities which a company in liquidation might carry on, may satisfy the definition. This may happen not only where the liquidator carries on the business with a view to its disposal but also, for example, where he disposes of stock in trade on the market. On the other hand, where a company has no subsisting business it is clearly not the case that the mere internal administration of its winding up will qualify. Such activity would not be exercised on the market; moreover, if it were enough to establish jurisdiction then the requirement for economic activities would add little or nothing to the rest of the definition. Indeed, the definition would almost always be satisfied by a debtor who retained premises in the United Kingdom with inevitable outgoings such as the payment of rent, business rates, and so on. It is unnecessary in the present case to undertake the difficult task of drawing a precise boundary between these extremes because, on any reasonable view of the meaning and purpose of the definition, the facts of this case are on the wrong side of it. Olympic was not carrying on any business activity at 11 Conduit Street on the relevant date. The last of the companys business activities had ceased some time before. All that Mr Savva and Mr Platanias were doing was handling matters of internal administration associated with the final stages of the companys disposal of the means of carrying on business. The company cannot therefore be said to have had an establishment in the United Kingdom. Reference under Article 267 TFEU In my opinion, the necessity for showing at least some subsisting business with third parties before the definition can be satisfied is acte clair, even if the exact nature of that business and the degree to which it must be visible to outsiders may be open to argument. Since in this case no external business at all was carried on from 11 Conduit Street, there is no point of principle calling for a reference. Disposal I would dismiss the appeal.
+In early 2006 the appellant, The United States of America, decided for strategic reasons to close the watercraft repair centre, known as RSA Hythe, which the United States Army maintained in Hampshire. The respondent, Mrs Nolan, was employed there as a civilian budget assistant, and the closure on 30 September 2006 involved her dismissal for redundancy on the previous day. She brought Employment Tribunal proceedings on 9 November 2006. The proceedings were brought under Part IV Chapter II, containing sections 188 to 198 of the Trade Union and Labour Relations (Consolidation) Act 1992 as amended by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1995 (SI 1995/2587). I will call the Act as amended TULCRA and the Regulations by which it was amended the 1995 Regulations. Mrs Nolans complaint was that the appellant as her employer had, when proposing to dismiss her and other employees, failed to consult with any employee representative as required by the procedure for handling collective redundancies prescribed by Part IV Chapter II of TULCRA. There was no trade union at the base to represent Mrs Nolans and other employees interests. Accordingly, she made her complaint on the basis that she was an employee representative within section 188(1B). The appellant accepts that it made clear in June 2006 that there would be neither discussions nor consultation about the forthcoming closure. It denies that it was under the alleged duty. State immunity The appellant did not rely on state immunity when the proceedings were begun. It is common ground that it could successfully have done so. Whether this would have been under the State Immunity Act 1978 or at common law is presently immaterial. The 1978 Act is under section 16(2) inapplicable to proceedings relating to anything done by or in relation to the armed forces of a state while present in the United Kingdom. Assuming that section 16(2) applies, there would have been immunity under common law principles, summarised by Lord Millett in Holland v Lampen Wolfe [2000] 1 WLR 1573, 1583D F. Littrell v United States of America (No 2) [1995] 1 WLR 82 is an example of a successful common law plea of state immunity; see also Sengupta v Republic of India [1983] ICR 221. As to why there was no plea of state immunity, it was not apparent at the outset that the duty to consult under section 188 would apply to the closure of a base, rather than the consequences for employees after its closure. The potential for this extended understanding of the duty was only highlighted by the Employment Appeal Tribunal decision on 28 September 2007 in UK Coal Mining Ltd v National Union of Mineworkers (Northumberland Area) [2008] ICR 163. By then, the Employment Tribunal held, it was too late for the plea of state immunity which the appellant sought at that stage to raise. The validity of the extended understanding of the duty remains open to debate notwithstanding a later Court of Justice decision in Akavan Erityisalojen Keskusliitto (AEK) ry v Fujitsu Siemens Computers Oy (Case C 44/08) [2009] ECR I 8163, [2010] ICR 444, [2009] IRLR 944 (Fujitsu). TULCRA and EU law Section 188 of TULCRA is in general terms. Subsection 1 provides: (1) Where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less, the employer shall consult about the dismissals all the persons who are appropriate representatives of any of the employees who may be [affected] by the proposed dismissals or may be affected by measures taken in connection with those dismissals. Subsections (2) and (3) state the aims and nature of the required consultation. Subsection (7) provides: (7) If in any case there are special circumstances which render it not reasonably practicable for the employer to comply with a requirement of subsections (1A), (2) or (4) the employer shall take all such steps towards compliance with that requirement as are reasonably practicable those circumstances. Various types of public employment are or may be taken outside the Part IV Chapter II, or outside the Act as a whole. Service as a member of the armed forces and employment which a minister certifies as required to be excepted from the Act for the purpose of safeguarding national security are taken entirely outside the Act by sections 274 and 275. Under section 273(1) to (4) the provisions of Part IV Chapter II of TULCRA have, for present purposes, no effect in relation to Crown employment and persons in Crown employment. Crown employment here means employment under or for the purposes of a government department or any officer or body exercising on behalf of the Crown functions conferred by an enactment, and employee and contract of employment mean a person in Crown employment and the terms of employment of such a person subject to a presently immaterial exception. Employment as a relevant member of House of Lords or House of Commons staff is outside Part IV Chapter II under sections 277 and 278. Under section 280, the term employee or worker does not include a person in police service, defined as meaning service as a member of any constabulary maintained by virtue of an enactment, or in any other capacity by virtue of which a person has the powers or privileges of a constable. Finally, under section 286(2) the Secretary of State may by order made by statutory instrument provide that the provisions of inter alia Part IV Chapter II shall not apply to persons or employment of such classes as the order may prescribe, or shall only apply to them with such exceptions and modifications as the order may prescribe. Part IV Chapter II of TULCRA gives effect to the United Kingdoms duty under European Union law to implement Council Directive 98/59/EC and its predecessor Council Directive 77/187/EEC. As originally enacted, it did not do so fully, with the result that the Commission brought proceedings against the United Kingdom which led to a Court of Justice judgment dated 8 June 1994 in Case C 383/92 [1994] ECR I 2479, [1994] ICR 664. One flaw identified by the judgment was that TULCRA (and its predecessor the Employment Protection Act 1975) did not require consultation in circumstances where employees did not enjoy union representation recognised by the employer. The Court of Justice held that Council Directive 77/187/EEC required member states to ensure that employee representatives would be designated for consultation purposes in such circumstances. The 1995 Regulations make provision accordingly by amending section 188. The Directive contains the following articles: Definitions and scope Article 1 1. For the purposes of this Directive: collective redundancies means dismissals effected by (a) an employer for one or more reasons not related to the individual workers concerned where, according to the choice of the member states, the number of redundancies is: (i) either, over a period of 30 days: at least ten in establishments normally employing more than 20 and less than 100 workers, at least 10% of the number of workers in establishments normally employing at least 100 but less than 300 workers, at least 30 in establishments normally employing 300 workers or more, (ii) or, over a period of 90 days, at least 20, whatever the number of workers normally employed in the establishments in question; workers representatives means (b) the workers representatives provided for by the laws or practices of the member states. For the purpose of calculating the number of redundancies provided for in the first subparagraph of point (a), terminations of an employment contract which occur on the employers initiative for one or more reasons not related to the individual workers concerned shall be assimilated to redundancies, provided that there are at least five redundancies. 2. This Directive shall not apply to: (a) collective redundancies effected under contracts of employment concluded for limited periods of time or for specific tasks except where such redundancies take place prior to the date of expiry or the completion of such contracts; (b) workers employed by public administrative bodies or by establishments governed by public law (or, in member states where this concept is unknown, by equivalent bodies); (c) the crews of seagoing vessels. Final provisions Article 5 This Directive shall not affect the right of member states to apply or to introduce laws, regulations or administrative provisions which are more favourable to workers or to promote or to allow the application of collective agreements more favourable to workers. While TULCRA in its original form (and its 1975 predecessor) failed until the 1995 Regulations properly to implement European Union law in certain respects identified in the Court of Justices judgment in Case C 383/92 (para 6 above), in other respects they went beyond the requirements of such law. In particular: they provided until the 1995 Regulations that the consultation a) obligations arose if even a single redundancy was proposed; b) they provided for consultation at the earliest opportunity until 1995 (when this was replaced by the Directive requirement in good time) and further provided (as TULCRA continues to do) for specific time limits within which consultation must occur (there being no such time limits in the Directives); and c) they applied (and TULCRA continued until 2013 to apply) to fixed term contracts (to which the Directive under article 1(2)(a) does not apply). Most importantly for the present appeal, TULCRA in its original and amended form and its 1975 predecessor: d) contained and contain no express homologue of article 1(2)(b). They all exclude Crown employees and those in the police service. But they do not exclude public administrative bodies or public law establishments generally. The present proceedings The proceedings initiated by Mrs Nolan have not taken a straightforward course. She succeeded before the Employment Tribunal (LJ Guyer, Mrs S Foulser and Mr M W Heckford), obtaining on 17 March 2008 an order for remuneration for a one month protected period. The order was on 15 May 2009 upheld on appeal by the Employment Appeal Tribunal (Slade J, Mr D Norman and Mrs R Chapman). On a further appeal, the Court of Appeal (Laws, Hooper and Rimer LJJ) on 26 November 2010 ordered that there should be a reference to the Court of Justice on the question, raised by the decision in UK Coal, whether the obligation to consult arises (i) when the employer is proposing, but has not yet made, a strategic business or operational decision that will foreseeably or inevitably lead to collective redundancies; or (ii) only when that decision has actually been made and he is then proposing consequential redundancies? The Court of Justice did not answer this question (Case C 583/10) [2013] ICR 193. It raised the issue whether Mrs Nolans dismissal by the appellant, which is not an EU member state, fell within the scope of Directive 98/59/EC, having regard in particular to article 1(2)(b). Having heard submissions on this point, the court on 18 October 2012 gave a judgment with two parts. First, the court held that the Directive was both by virtue of its adoption under article 100 of the former EC Treaty (now article 94 TEU) and by nature part of the legislation aimed at improving the internal market; that activities like national defence, falling within the exercise of public powers, are in principle excluded from classification as economic activity; and that, by virtue of article 1(2)(b), the dismissal of staff of a military base falls outside the scope of the Directive, whether or not the base belongs to a non member state (para 43). Secondly, the court addressed Mrs Nolans submission that it should nonetheless rule on the question referred by the Court of Appeal, on the basis that TULCRA extends the provisions of the Directive in national law to cover article 1(2)(b) situations (other than in respect of Crown employment or employees and persons in the police service). The court (disagreeing on this point with Advocate General Mengozzis approach) declined to give any such ruling on the basis that If the EU legislature states unequivocally that the measure which it has adopted does not apply to a precise area, it renounces the objective [of] seeking uniform interpretation and application of the rules of law in that excluded area (para 55). The upshot was that the Court of Justice simply declined jurisdiction. So the questions raised by UK Coal/Fujitsu and the Court of Appeals reference will in the present case have to be resolved, if ever necessary, domestically without further assistance from the Court of Justice. Whether it will be necessary to resolve them in this case appears doubtful. The first part of the Court of Justices judgment lent encouragement to an argument by the appellant that, since EU law did not require or intend a foreign state to be subject to the Directives consultation obligations, United Kingdom law should be read in the same sense. When the matter came back before the Court of Appeal after the Court of Justices ruling, Mrs Nolan was prepared to concede the correctness in law of this argument and did not appear. The Court of Appeal (Moore Bick, Rimer and Underhill LJJ) [2014] ICR 685 after hearing submissions from Mr John Cavanagh QC and Sir Daniel Bethlehem QC for the appellant nonetheless dismissed the appeal, and made an order (stayed pending any appeal to the Supreme Court) that there be a further hearing to deal with the remaining UK Coal/Fujitsu issue. The appellant duly sought permission to appeal to the Supreme Court. This was given on the basis that the appellant bear its own costs in respect of the appeal, including those of any advocate to the court who might be appointed, and do not seek any costs order in respect of any instance of the proceedings. The appeal has proceeded on that basis and The Honourable Michael Beloff QC and Sarah Wilkinson have been appointed and appeared as advocates to the court. The government, which might be expected to have an interest in the third point (vires) identified in the next paragraph, has not sought to intervene. The issues The appellant has through counsel raised two points of construction and one of vires. The first point of construction, argued by Mr Cavanagh QC, is that the domestic legal provisions should be given an interpretation conforming to that given in the first part of the Court of Justices judgment, at least as regards foreign states jure imperii activity. By jure imperii, is here meant any decision or act which is not jure gestionis, (or commercial) in nature. A state enjoys no general immunity in respect of jure gestionis decisions or acts. The second point, argued by Sir Daniel Bethlehem QC, is that the same construction should be reached as regards foreign states by virtue of or by reference to principles of international law forming part of or inspiring domestic law. The third point, that of vires, argued by Mr Cavanagh, is that the 1995 Regulations were ultra vires section 2(2) of the European Communities Act 1972, in that, when providing workers without trade union representation with the protection which the Court of Justice held in (Case C 383/92) to be required, they did not confine themselves to the sphere of EU law, as confirmed by the court in the present case, but went further by conferring extended protection on workers without trade union representation employed by public administrative bodies or public law establishments. There is some overlap between the considerations relied upon by the appellant in relation to the two points of construction. The appellant focused on the overlap, which meant in its submission that TULCRA could not and should not on any view apply to foreign states jure imperii activity. The two points have however different underlying logics. The logic of the first point is that TULCRA should be construed so as not to apply to employment by any public administrative body or public law establishment. The logic of the second is that TULCRA should be construed so as not to apply to foreign states jure imperii activity. The third point, vires, only arises if neither point of construction is accepted. It would if accepted have an effect similar to the first point, but only in circumstances where there is no trade union representation. In circumstances where there is trade union representation consultation would be required by primary legislation (TULCRA without reference to the 1995 Regulations), so that no question of vires could arise. The first point of construction Taking the first point of construction, it is a cardinal principle of European and domestic law that domestic courts should construe domestic legislation intended to give effect to a European Directive so far as possible (or so far as they can do so without going against the grain of the domestic legislation) consistently with that Directive: Marleasing SA v La Comercial Internacional de Alimentacion SA (Case C 106/89) [1990] ECR I 4135, Vodafone 2 v Revenue and Customs Comrs [2009] EWCA Civ 446, [2010] Ch 77, paras 37 38 and Swift v Robertson [2014] UKSC 50, [2014] 1 WLR 3438, paras 20 21. But that means avoiding so far as possible a construction which would have the effect that domestic implementing legislation did not fully satisfy the United Kingdoms European obligations. Where a Directive offers a member state a choice, there can be no imperative to construe domestic legislation as having any particular effect, so long as it lies within the scope of the permitted. Where a Directive allows a member state to go further than the Directive requires, there is again no imperative to achieve a conforming interpretation. It may in a particular case be possible to infer that the domestic legislature did not, by a domestic formulation or reformulation, intend to go further in substance than the European requirement or minimum. R (Risk Management Partners Ltd) v Brent London Borough Council [2011] UKSC 7, [2011] 2 AC 34, considered below, is a case where the Supreme Court implied into apparently unqualified wording of domestic Regulations a limitation paralleling in scope that which had been implied by the Court of Justice into general wording of the Directive to which the Regulations were giving effect: see Teckal Srl v Comune di Viano (Case C 107/98) [1999] ECR I8121 (Teckal). It concluded that the two had been intended to be effectively back to back. A reformulation may also have been aimed at using concepts or tools familiar in a domestic legal context, rather than altering the substantive scope or effect of the domestic measure from that at the European level. But that is as far as it goes. Directive 98/59/EC introduces requirements in favour of workers engaged in fields of economic activity. But it leaves it open to member states to apply or introduce even more favourable laws, regulations or administrative provisions than those it requires (article 5), and, whether or not article 5 confirms this, it certainly leaves it open to member states to apply or introduce similar or more favourable provisions in areas of non economic activity, such as those of workers employed by public administrative bodies or public law establishments excluded from the Directive because of its internal market base and focus. Heavy reliance was placed by the appellant on the Supreme Courts decision in R (Risk Management Partners Ltd) v Brent London Borough Council and Harrow London Borough Council [2011] 2 AC 34, in furtherance of the appellants case that the Regulations must be limited in scope by reference to the Directive. The Supreme Court in Risk Management applied under the Public Contracts Regulations 2006 (SI 2006/5), passed to give effect to Council Directive 2004/18/EC, similar reasoning to that adopted by the Court of Justice in Teckal. In Teckal the Comune de Viano had decided, without inviting competing tenders, to switch responsibility for its fuel supplies and heating system servicing from a private company, Teckal, to a corporate entity (AGAC), set up by a consortium of Italian municipalities to provide energy and environmental services to the participating authorities. Teckal challenged this decision as breaching Directive 93/36/EEC (a predecessor to Directive 2004/18/EC) on supply of goods. The Court of Justice examined the principles determining whether the new arrangement fell within the Directive 93/36/EEC, which contained the following definitions in article 1: (a) public supply contracts are contracts for pecuniary interest concluded in writing involving the purchase, lease [,] rental or hire purchase, with or without option to buy, of products between a supplier (a natural or legal person) and one of the contracting authorities defined in (b) below. The delivery of such products may in addition include siting and installation operations; contracting authorities shall be the state, regional or (b) local authorities, bodies governed by public law, associations formed by one or several of such authorities or bodies governed by public law; The Court of Justice gave this guidance: 50. In that regard, in accordance with article 1(a) of Directive 93/36, it is, in principle, sufficient if the contract was concluded between, on the one hand, a local authority and, on the other, a person legally distinct from that local authority. The position can be otherwise only in the case where the local authority exercises over the person concerned a control which is similar to that which it exercises over its own departments and, at the same time, that person carries out the essential part of its activities with the controlling local authority or authorities. 51. The answer to the question must therefore be that Directive 93/36 is applicable in the case where a contracting authority, such as a local authority, plans to conclude in writing, with an entity which is formally distinct from it and independent of it in regard to decision making, a contract for pecuniary interest for the supply of products, whether or not that entity is itself a contracting authority. In Risk Management, Risk Management Partners Ltd (RMP) complained that Harrow London Borough Council had awarded insurance contracts to a mutual insurer established by various local authorities without going through the public contract award procedure required by the 2006 Regulations. The Regulations applied to a public services contract, defined as: a contract, in writing, for consideration (whatever the nature of the consideration) under which a contracting authority engages a person to provide services but does not include a public works contract; or a public supply contract; The Regulations contained a list of contracting authorities which included a local authority. Article 1 of the Directive, to which the Regulations gave effect, applied to public contracts, defined as: contracts for pecuniary interest concluded in writing between one or more economic operators and one or more contracting authorities and having as their object the execution of works, the supply of products or the provision of services within the meaning of this Directive. The Directive defined contracting authorities as meaning: the state, regional or local authorities, bodies governed by public law, associations formed by one or several of such authorities or one or several of such bodies governed by public law. There was nothing in the Regulations in issue in Risk Management positively to have prevented the legislator going further than European law required. Nonetheless, the Supreme Court in Risk Management read the wording as qualified so as to have a like scope to that which the Court of Justice had given the Directive in issue in Teckal. The Supreme Courts reasoning is however important. In his leading judgment, Lord Hope of Craighead noted that the Teckal exemption was not referred to anywhere in the Directive. It is a judicial gloss on its language (para 17), and went on to say (para 22) that: In the other leading judgment in the case, Lord Rodger of Earlsferry said to like effect (para 92): the basis for implying the Teckal exemption into the 2006 Regulations is to be found in their underlying purpose, which was to give effect to the Directive. The absence of any reference to the exemption in the Regulations is of no more significance than the absence of any reference to it in the Directive that was being transposed. The exemption in favour of contracts which satisfy its conditions was read into the Directive by the Court of Justice in Teckal because it was thought to be undesirable for contracts of that kind to be opened up for public procurement. This was not just a technicality. It was a considered policy of EU law. It would be odd if a significant and policy based exemption were to apply in some member states and not others, especially as one of the aims of the Directive was to harmonise procedures. The 2006 Regulations give effect to the Directive in English law. In other words, they are the way in which English law secures the free movement of services and the opening up to undistorted competition in relation to contracts which are to be placed by English local authorities. That being the purpose of the Regulations, they, too, cannot be meant to apply in circumstances where that purpose is not relevant because a contracting authority intends to contract with a body which is not properly to be regarded as an outside body. Although the Teckal criteria were formulated with particular reference to the predecessors of the Directive, they are simply a way of identifying situations where the authority can be regarded as obtaining the products or services which it requires in house and, so, where there is no need to secure the free movement of services and the opening up to undistorted competition. In my view, the criteria are an equally good indication of situations where, for that reason, the 2006 Regulations have no application. The insight of Advocate General Trstenjak in para 83 of her opinion in Coditel Brabant [2008] ECR I 8457, 8482 is instructive. To hold that the Regulations did apply in these circumstances would involve saying that the legislature intended to attach weight to competition law objectives in an area where they have no legitimate application. This would, in turn, involve inappropriate interference with local authorities right to co operate in discharging their public functions. Lord Hopes further observations about the domestic legal history of the Regulations are relevant not only to construction, but also to the third point on vires, which I consider later. He said (para 24): As Waller LJ said in Oakley Inc v Animal Ltd (Secretary of State for Trade and Industry intervening) [2006] Ch 337, para 39, the primary objective of any secondary legislation under section 2(2) must be to bring into force laws which, under the Treaties, the United Kingdom has agreed to make part of its laws. There is nothing in the explanatory memorandum to the Regulations that was prepared by the Office of Government Commerce and laid before Parliament to indicate that it was intended to depart from the jurisprudence of the court as to the scope of the Directive. In paras 7.2 7.4 of the memorandum it was stated that the change to the legislation was necessary to implement the new public procurement Directive, that it clarified and modernised the previous texts and that the simpler and more consistent public sector text should reduce the burdens involved under the EU rules. If the Teckal exemption were to be held not to apply to the 2006 Regulations, it could only be because the purpose of the Regulations was to apply the public procurement rules to relationships that fell outside the regime provided for by the Directive. But that would not be consistent with the memorandum, and it would not be a permitted use of the power. In Risk Management, the indications were that the domestic measure was intended in the relevant respect to be no more than back to back with the European Directive. That cannot be said to be so in the present case. TULCRA contains no equivalent of article 1(2)(b) of the Directive. Instead, it contains specific and limited exceptions for Crown employment and employees and for certain others in public service. It is true that the remainder of the category of public workers comprised by article 1(2)(b) would have been relatively confined, comprising those engaged in the exercise of public powers, rather than economic functions, as the Court of Justice indicated in Scattolon v Ministero dellIstruzione, dellUniversit, e della Ricerca (Case C 108/10) [2012] ICR 740, paras 43 44. But this remaining category is nonetheless significant. Contrary to the appellants submission, its inclusion within the scope of TULCRA cannot have been mere oversight. The careful exclusion of several specified categories of public employee speaks for itself. The variation of the Directive scheme enables, and according to the Employment Appeal Tribunal (para 84) has in many cases enabled, cases to be brought by those representing workers in public authorities. There are also other respects in which provisions of TULCRA have given protection in the form of consultation obligations which extends or has in the past extended, clearly deliberately, beyond the European requirement. It is, as Underhill LJ observed in the Court of Appeal (para 24) well understandable that a Labour government should in 1975, with trade union encouragement, have decided to give the scheme an extended domestic application to public employees. That does not mean that the legislator in the present case necessarily realised or foresaw the existence of employees of a public authority consisting of a foreign non EU member state such as the appellant, operating within the United Kingdom a base with its own employees. The appellant is the only foreign state with military bases in the United Kingdom, and it appears that civilian employees at United States Air Force (as distinct from Army) bases in the United Kingdom were and are, it seems, employed by the Crown. But the fact that a particular rare situation affecting a foreign state has not been foreseen is no reason for reading into clear legislation a specific exemption which would not reflect the wording or scope of any exemption in European law. This is particularly so, when the natural reaction to any suggestion that a foreign state might be adversely affected in its jure imperii decisions taken, according to the appellant, at the level of the US Secretary of Defense and US Secretary of the Army and in Washington would have been that the foreign state would be entitled to rely on state immunity, in response to any suggestion that it should have consulted with its workforce in relation to a strategic decision to close any such facility. While there is no positive indication that this played a part in legislative or ministerial thinking, it is a factor of relevance when considering whether objectively TULCRA must be read as containing any such implied limitation as the appellant suggests. The Court of Appeal and the advocates to the court also referred to section 188(7), with its limitation under special circumstances of any obligation to consult to whatever might be reasonably practicable in those circumstances. It may be that this could be of assistance to the appellant, in resisting a claim that it had breached the consultation obligations in section 188. But to my mind it provides an unconvincing basis for any conclusion that this was, or is objectively, the way in the legislator should be seen as having catered for the possible anomalies that might flow from expecting a sovereign state to consult about a jure imperii decision to close a naval or military facility. Section 188(7) is directed to special factual situations raising issues of feasibility apt for evaluation by the Employment Tribunal. It is much less obviously designed for situations where consultation might be thought to be incongruous for high policy reasons. The second point of construction I turn therefore to the second point of construction and to the additional considerations which it raises. As in the courts below, so before us the arguments advanced have been, as Slade J described them, both sophisticated and imaginative. They have also been careful and helpful in enabling the court to reach a conclusion on them. But like the courts below, I would reject them. In substance, Sir Daniel Bethlehems submission on behalf of the appellant is that international legal considerations should lead to the recognition by the court of a tailored exemption from TULCRA in respect of dismissals involving redundancies arising from a jure imperii decision taken by a foreign state. He does not suggest that, if TULCRA otherwise applies, the appellant enjoys any defence outside TULCRA (such as act of state, which would only here arise if the challenge was to a decision or act of the appellant in the United States). His case depends on construing TULCRA as inapplicable to what happened. His starting point is the prima facie presumption that the legislator intends to legislate consistently with, and that legislation (if reasonably capable of being so construed) should be construed consistently with, the principles of international law: Salomon v Customs and Excise Comrs [1967] 2 QB 116, Alcom Ltd v Republic of Columbia [1984] 1 AC 580 and Assange v Swedish Prosecution Authority [2012] UKSC 22, [2012] 2 AC 471, para 10. Reduced to their essence, his submissions regarding international law are that: a) the application of TULCRA to dismissals of this nature would conflict with settled international law principles that one state does not legislate to affect the jure imperii activity of another; b) it would place the appellant in a unique position of potentially infringing United Kingdom law, by failing to consult, when the Crown in respect of British bases would have no such obligation, and when EU principles of non discrimination would mean that other member states would also have to be regarded as having no such obligation; it would in that respect infringe either EU law or general international legal principles regarding non discrimination. Jurisdiction is primarily territorial in both international and domestic law. As the Permanent Court of International Justice said in The Case of the SS Lotus (1927) PCIJ Series A No 10, pp 18 19, that: the first and foremost restriction imposed by international law upon a state is that failing the existence of a permissive rule to the contrary it may not exercise its power in any form in the territory of another state. In this sense jurisdiction is certainly territorial; it cannot be exercised by a state outside its territory except by virtue of a permissive rule derived from international custom or from a convention. It does not, however, follow that international law prohibits a state from exercising jurisdiction in its own territory, in respect of any case which relates to acts which have taken place abroad, and in which it cannot rely on some permissive rule of international law. Such a view would only be tenable if international law contained a general prohibition to states to extend the application of their laws and the jurisdiction of their courts to persons, property and acts outside their territory, and if, as an exception to this general prohibition, it allowed states to do so in certain specific cases. But this is certainly not the case under international law as it stands at present. Far from laying down a general prohibition to the effect that states may not extend the application of their laws and the jurisdiction of their courts to persons, property and acts outside their territory, it leaves them in this respect a wide measure of discretion which is only limited in certain cases by prohibitive rules; as regards other cases, every state remains free to adopt the principles which it regards as best and most suitable. The following overview appears in Brownlies Public International Law 8th ed (2012), (ed by James Crawford SC, FBA), Chapter 21, pp 456 457: The starting point in this part of the law is the presumption that jurisdiction (in all its forms) is territorial, and may not be exercised extra territorially without some specific basis in international law. However, the territorial theory has been refined in the light of experience and what amounts to extra territorial jurisdiction is to some extent a matter of appreciation. If there is a cardinal principle emerging, it is that of genuine connection between the subject matter of jurisdiction and the territorial base or reasonable interests of the state in question. In the present case, the United Kingdom was in my opinion legislating in TULCRA entirely consistently with these principles. TULCRA is expressly stated to extend to England, Wales and Scotland. Part IV Chapter II regulates the procedures for dismissal on the grounds of redundancy of employees at institutions in those territories. It requires consultation within the jurisdiction with employees who are and whose employment is within the jurisdiction. Merely because the appellant may have taken a decision at the highest level in Washington, which led to dismissals on grounds of redundancy at a base in England, does not mean that the United Kingdom was legislating extra territorially. It is in this sort of situation that a plea of state immunity may be most useful. Sir Daniel Bethlehem referred to the American legal position, in particular the American Law Institute Restatement (Third) of the Foreign Relations Law of the United States (published May 14, 1986) and the United States Supreme Court decision of F Hoffmann la Roche v Empagran SA (2004) 542 US 155). Section 402 of the Reinstatement indicates that, subject to section 403, a state has jurisdiction to prescribe law with respect to (a) conduct that, wholly or in substantial part, takes place within its territory; (b) the status of persons, or interests in things, present within its territory; (c) conduct outside its territory that has or is intended to have substantial effect within its territory. The qualification in section 403 is that, even when one of the bases for jurisdiction under section 402 is present, a state may not exercise jurisdiction to prescribe law with respect to a person or activity having connections with another state when the exercise of such jurisdiction is unreasonable, this to be determined by evaluating all relevant factors. The drafters seek to give this evaluation some bones by listing eight potentially relevant (but not exclusive) factors. Among them are (a) the extent to which the activity takes place within the territory, or has substantial, direct and foreseeable effect upon or in the territory and (c) the character of the activity to be regulated, the importance of regulation to the regulating state, the extent to which other states regulate such activities . The US Supreme Courts decision in Hoffmann la Roche illustrates the significance of the principles in the Restatement. The case concerned the ambit of the Sherman Act in relation to a price fixing conspiracy between foreign and domestic vitamin sellers allegedly raising prices both inside and outside the United States. The issue was whether the Sherman Act applied to purchases (described as foreign transactions) by foreign distributors for delivery by Hoffmann la Roche outside the United States. The Foreign Trade Antitrust Improvements Act of 1982 (FTAIA) provided that the Sherman Act shall not apply to conduct involving trade or commerce with foreign nations unless (1) such conduct has a direct, substantial, and reasonably foreseeable effect (A) on trade or commerce which is not trade or commerce with foreign nations [ie domestic trade or commerce] (15 USC section 6a). The words trade or commerce with foreign nations were by the court held to cover foreign transactions. But the Court of Appeals had held that the qualifying words (unless ) brought all transactions, foreign and domestic within the Sherman Act. The US Supreme Court disagreed, holding that so far as the complaint depended on an adverse foreign effect on prices independent of any adverse domestic effect, it lay outside the scope of the Sherman Act. Breyer JA, giving the judgment of the court, identified two main reasons, derived from comity and the statutory history, for concluding that the FTAIA did not bring independently caused foreign injury within the scope of the Sherman Act. In their light he rejected linguistic arguments to the contrary advanced by the complainants. As to the first reason, comity, he said, in Part IV of the judgment (with characteristic emphasis, as italicised): this court ordinarily construes ambiguous statutes to avoid unreasonable interference with the sovereign authority of other nations. This rule of construction reflects principles of customary international law law that (we must assume) Congress ordinarily seeks to follow. See Restatement (Third) of Foreign Relations Law of the United States sections 403(1), 403(2) (1986) (hereinafter Restatement) (limiting the unreasonable exercise of prescriptive jurisdiction with respect to a person or activity having connections with another state); Murray v Schooner Charming Betsy, 2 Cranch 64, 118 (1804) ([A]n act of Congress ought never to be construed to violate the law of nations if any other possible construction remains); This rule of statutory construction cautions courts to assume that legislators take account of the legitimate sovereign interests of other nations when they write American laws. It thereby helps the potentially conflicting laws of different nations work together in harmonya harmony particularly needed in todays highly interdependent commercial world. No one denies that Americas antitrust laws, when applied to foreign conduct, can interfere with a foreign nations ability independently to regulate its own commercial affairs. But our courts have long held that application of our antitrust laws to foreign anticompetitive conduct is nonetheless reasonable, and hence consistent with principles of prescriptive comity, insofar as they reflect a legislative effort to redress domestic antitrust injury that foreign anticompetitive conduct has caused. But why is it reasonable to apply those laws to foreign conduct insofar as that conduct causes independent foreign harm and that foreign harm alone gives rise to the plaintiffs claim? Like the former case, application of those laws creates a serious risk of interference with a foreign nation's ability independently to regulate its own commercial affairs. But, unlike the former case, the justification for that interference seems insubstantial. See Restatement section 403(2) (determining reasonableness on basis of such factors as connections with regulating nation, harm to that nations interests, extent to which other nations regulate, and the potential for conflict). Why should American law supplant, for example, Canadas or Great Britains or Japans own determination about how best to protect Canadian or British or Japanese customers from anticompetitive conduct engaged in significant part by Canadian or British or Japanese or other foreign companies? The FTAIA was capable of interpretation in two senses. An interpretation which excluded from its grasp foreign transactions causing foreign damage was, for the reasons given in this passage, readily available and understandable. The present case presents a different picture. There is no lack of clarity in the wording of TULCRA. The base at RSA Hythe, the complainants, the contracts of employment and the dismissals for redundancy which were regulated (on the face of it) by TULCRA were and are all within the United Kingdom. I am ready to assume that the base was operated in the United Kingdom for strategic reasons, and it is common ground that the decision to close it was taken in the United States for strategic reasons. The appellants case is that there should be carved out of TULCRA, or any other relevant legislation, an exception for circumstances in which a foreign state takes a decision or commits an act of a jure imperii nature abroad which would otherwise lead to a person in the United Kingdom having a domestic right and remedy in respect of domestic employment or other domestic activity in the United Kingdom. The submission is far reaching. It would require substantial re formulation and expansion of the presumptive principles of construction referred to in the Restatement and in Hoffmann la Roche, and I am unable to accept it. The submission would amount, in effect, as Sir Daniel recognised, to reading domestic legislation as subject to an exception or as inapplicable, at least prima facie, in relation to a foreign state in any circumstances where the foreign state could rely on a plea of state immunity, to avoid the adjudicative processes of another state in which proceedings had been brought against it. I do not accept that there is any such principle. It would make quite largely otiose the procedures and time for a plea of state immunity. As Hazel Fox CMG QC and Philippa Webb observe in The Law of State Immunity 3rd ed (2013), p 20: Jurisdiction and immunity are two separate concepts. Jurisdiction relates to the power of a state to affect the rights of a person or persons by legislative, executive or judicial means, whereas immunity represents the independence and exemption from the jurisdiction or competence of the courts and tribunals of a foreign state and is an essential characteristic of a state. Logically the existence of jurisdiction precedes the question of immunity from such jurisdiction but the two are inextricably linked (see Chapter IV). In Chapter IV, p 82, the authors go on further to explain the relationship, in this passage: Immunity comports freedom or exemption from territorial jurisdiction. It bars the bringing of proceedings in the courts of the territorial state (the forum state) against another state. It says nothing about the underlying liability which the claimant alleges. Immunity does not confer impunity; the underlying accountability or substantive responsibility for the matters alleged in a claim remain; immunity merely bars the adjudication of that claim in a particular court. As a matter of logic, the determination of jurisdiction precedes the consideration of immunity. A states latitude to assert immunity in the face of a claim is different from the inapplicability of the law, by way of exemption or otherwise, to the impugned conduct of the foreign state in the first place. Immunity operates as a bar to the adjudicative jurisdiction of the courts of the forum state. It does not address the legislative or prescriptive jurisdiction of that state. A claim of immunity thus at some level acknowledges the forum states legislative competence and the putative application of the domestic law in question to the foreign state but for the assertion of immunity. In its written case, para 116, the appellant put the same point in a way met with the advocates to the courts assent: Sir Daniel Bethlehem sought to emphasise the importance for a foreign state such as the appellant of recognising in TULCRA an implied exemption for a decision to dismiss for redundancy taken on jure imperii grounds. The appellant would wish to comply with domestic law, and the ability to plead state immunity in any proceedings would not alter the fact that, without such an exemption, it would be and have been in breach of domestic law. That is true, but carried to its logical conclusion it would mean that all legislation should, however clear in scope, be read as inapplicable to a foreign state in any case where the state could plead state immunity. That would elide two distinct principles, and, as noted already, very largely make redundant a plea of state immunity at least in respect of any statutory claim. On Sir Daniels argument, the legislation relating to unfair dismissal on which the claimant relied in Sengupta v Republic of India [1983] ICR 221 would presumably also have to be read as containing an implied exception for foreign states in jure imperii contexts, as would perhaps also the principles of common law negligence on which the claimant relied in Littrell v United States of America (No 2) [1995] 1 WLR 82. Sir Daniel Bethlehems submissions on discrimination start with the exclusion from the scope of Part IV Chapter II of TULCRA of Crown and police service employees. The exclusion is specific, and that itself makes it difficult to argue for an equivalent implied exclusion in respect of foreign state employees. In any event, there are circumstances in which, even on Sir Daniels case, it would not be inappropriate for Part IV Chapter II to apply to a foreign government, for example in the (admittedly perhaps rare) case where a foreign state was itself responsible for a commercial activity in the United Kingdom, in respect of which it wished to declare all or some of its employees redundant. Be that as it may be, Sir Daniel argues that non discrimination is a general principle of international law. It was in terms accepted as such by the Court of Appeal in Benkharbouche v Embassy of the Republic of Sudan [2015] EWCA Civ 33, [2015] 3 WLR 301, para 61, but the context there was a claim by an individual foreign employee, asserting that section 4 of the State Immunity Act was contrary to articles 6 and 14 of the European Convention for the Protection of Human Rights and Fundamental Freedoms and/or European Union law. (This was because it only lifted a foreign states immunity in favour employees with contracts made in the United Kingdom or work to be wholly or partly performed there if such employees were nationals of or habitually resident in the United Kingdom.) A state cannot take advantage of articles 6 and 14 of the European Convention. Articles 1 and 2 of the Universal Declaration of Human Rights, article 26 of the International Covenant on Civil and Political Rights and article 14 of the European Convention, cited by the Court of Appeal, are likewise all provisions by states in favour of persons, not states. I will return to articles 20 and 21 of the Charter of Fundamental Rights of the European Union, which the Court of Appeal also cited. The position as between states is expressed in Oppenheims International Law 9th ed (1992) as follows, at para 114: Although states are equal as legal persons in international law, this equality does not require that in all matters a state must treat all other states in the same way. There is in customary international law no clearly established general obligation on a state not to differentiate between other states in the treatment it accords to them. Nevertheless, discrimination is widely regarded as undesirable, and in some particular respects a rule of non discrimination may exist, within limits which are not clear. Oppenheim goes on to discuss some possibilities, eg multi lateral treaties, none of which is relevant here. To give teeth to his submissions, Sir Daniel Bethlehem invokes European Union law, to which the Court of Appeal in Benkharbouche also referred. Article 18 TFEU provides: Within the scope of application of the Treaties, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited. The European Parliament and the Council, acting in accordance with the ordinary legislative procedure, may adopt rules designed to prohibit such discrimination. A provision in, effectively, the same terms as the first sentence is contained in the Charter of Fundamental Rights, article 21(2). On the basis of these provisions, Sir Daniel argues that United Kingdom courts would have to recognise other member states of the European Union as enjoying like exemptions from TULCRA to those TULCRA provides for UK Crown employees. This would in principle leave non EU states out on a limb, but the only non EU state actually shown to be affected would in practice be or be likely to be the appellant. That would, Sir Daniel submits, be absurd and should itself lead to an implication that foreign states should enjoy the like immunity. In any event, he submits, the principle of non discrimination operates under European Union law horizontally to protect the appellant, even though it is neither a European citizen or an EU member state; in this connection, Sir Daniel invokes the Court of Justices well known if controversial jurisprudence in Mangold v Helm (Case C 144/04) [2006] All ER (EC) 383 and Kckdeveci v Swedex GmbH & Co KG (Case C 555/07) [2010] All ER (EC) 867, both in fact cases of age discrimination. Whether article 18 TFEU and/or article 21(2) of the Charter of Fundamental Rights apply in favour of member states can be left open. Whether, if they do, it would be open to a member state to rely on them horizontally as against a complainant like Mrs Nolan can also be left open. It is not clear in European law how far and when the principles in Mangold and Kckdeveci apply in cases not involving age discrimination. The court considered such an issue in Association de mdiation sociale v Union locale des Syndicates CGT (Case C 176/12) [2014] ICR 411. The domestic Labour Code excluded from calculation holders of an accompanied employment contract (young persons being directed towards more stable employment or social activities), of whom the Association de mdiation sociale (AMS), a private non profit making organisation, employed well over 100. The result of the exclusion was that AMS counted as having only eight employees under the Labour Code, and so fell domestically below a threshold of 50 (based on the Directive 2002/14/EC) which would otherwise have triggered obligations on its part to inform and consult. The court held that the Labour Code by excluding accompanied employees from the calculation of numbers was in breach of the Directive. Article 27 of the Charter requires that Workers or their representatives must, at the appropriate levels, be guaranteed information and consultation in good time in the cases and under the conditions provided for by Union law and national laws and practices. The question thus arose whether article 27 of the Charter, read with the Directive, could be relied on horizontally in proceedings between AMS and the Union locale des Syndicates. Differing on this point from Advocate General P Cruz Villaln, the Court of Justice held that it could not, saying that it was clear from the wording of article 27 of the Charter that, for this article to be fully effective, it must be given more specific expression in European Union or national law (para 45). This was so although the Labour Code must, it appears, have contained specific provisions regarding information and consultation for those employers who, under its own defective method of calculation, did have 50 or more employees. So it is at least open to question whether article 18 TFEU or article 21(2) of the Charter, read with the provisions of TULCRA, would necessarily have direct horizontal effect in favour of another EU member state. There are however to my mind two fundamental flaws in Sir Daniels submissions at this point. The first is that articles 18 and 21(2) apply expressly only within the scope of application of European law, or, as it was paraphrased in Association de mdiation sociale, para 42, in situations governed by European law. The same point was made by the Court of Justice as long ago as 1974 in Walrave v Association Union Cycliste Internationale (Case C 36/74) [1974] ECR 1405. In the present case, the Court of Justice declined to rule on the interpretation of Directive 98/59/EC for the very reason that, to the extent that TULCRA covers workers employed by public administrative bodies or by public law establishments, it goes beyond European Union law into an area to which the EU legislature states unequivocally that the measure which it has adopted does not apply, and in which the objective [of] seeking uniform interpretation and application of the rules of law has been renounced: para 55. Since the issue in the present case arises in precisely that area, it is not possible to conclude that the appellant or indeed any EU member state, let alone any non member state, could insist on European Union law as giving it any horizontal or other entitlement. The second flaw is that I do not regard a non member state as being within the protection of articles 18 and 21(2) in any circumstances. In Patmalniece v Secretary of State for Work and Pensions [2011] UKSC 11, [2011] 1 WLR 783, para 83, Lady Hale said of the then equivalent article: This is not a general prohibition of discrimination on grounds of nationality. Only the nationals of member states are protected. Discrimination against third country nationals is not prohibited. Indeed it is positively expected. The underlying purpose is to promote the objects of the Union and in particular the free movement of workers between the member states and the free establishment of businesses within them. The Court of Justices case law is to like effect: Vatsouras v Arbeitsgemeinschaft (AGRE) Nrnberg 900 (Joined Cases C 22/08 and C 23/08) [2009] ECR I 4585, [2009] ALL ER (EC) 747, para 52 and Martinez Sala v Freistaat Bayern (Case C 85/96) [1998] ECR I 2691, para 62. The Court of Appeal recently reached the same conclusion in Sanneh v Secretary of State for Work and Pensions [2015] EWCA Civ 49, para 106. The freedom of this countrys universities to charge unrestricted tuition fees to non EU citizens, while having in this respect to assimilate citizens of other EU countries with British citizens, is an example of the impact of this principle. For these reasons, I am unable to accept the appellants second point on construction any more than its first. The third point the vires of the 1995 Regulations I come to the third point, the appellants submission that the 1995 Regulations were ultra vires section 2 of the European Communities Act 1972. When providing workers without trade union representation with the protection which the Court of Justice had in (Case C 383/92) held to be required, the Regulations did not confine themselves to the sphere of EU law, confirmed by the court in the present case. They went further by conferring extended protection on workers without trade union representation employed by public administrative bodies or public law establishments. In that respect, the appellant submits, they went beyond any power conferred by section 2. Section 2 of the 1972 Act (as amended by sections 27 and 33 of the Legislative and Regulatory Reform Act 2006 and sections 3 and 8 of and Part I of the Schedule to the European Union (Amendment) Act 2008) reads: General implementation of Treaties (1) All such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties, and all such remedies and procedures from time to time provided for by or under the Treaties, as in accordance with the Treaties are without further enactment to be given legal effect or used in the United Kingdom shall be recognised and available in law, and be enforced, allowed and followed accordingly; and the expression enforceable EU right and similar expressions shall be read as referring to one to which this subsection applies. (2) Subject to Schedule 2 to this Act, at any time after its passing Her Majesty may by Order in Council, and any designated Minister or department may by order, rules, regulations or scheme, make provision (a) for the purpose of implementing any EU obligation of the United Kingdom, or enabling any such obligation to be implemented, or of enabling any rights enjoyed or to be enjoyed by the United Kingdom under or by virtue of the Treaties to be exercised; or (b) for the purpose of dealing with matters arising out of or related to any such obligation or rights or the coming into force, or the operation from time to time, of subsection (1) above; and in the exercise of any statutory power or duty, including any power to give directions or to legislate by means of orders, rules, regulations or other subordinate instrument, the person entrusted with the power or duty may have regard to the objects of the EU and to any such obligation or rights as aforesaid. (3) (4) The provision that may be made under subsection (2) above includes, subject to Schedule 2 to this Act, any such provision (of any such extent) as might be made by Act of Parliament, and any enactment passed or to be passed, other than one contained in this part of this Act, shall be construed and have effect subject to the foregoing provisions of this section; but, except as may be provided by any Act passed after this Act, Schedule 2 shall have effect in connection with the powers conferred by this and the following sections of this Act to make Orders in Council or orders, rules, regulations or schemes. Schedule 2 paragraph 1 (as amended by section 32 of the Criminal Law Act 1977 and sections 38 and 46 of the Criminal Justice Act 1982) contains the following restriction on the powers conferred by section 2(2): The powers conferred by section 2(2) of this Act to make provision for the purposes mentioned in section 2(2)(a) and (b) shall not include power to make any provision imposing or increasing (a) taxation; or to make any provision taking effect from a date (b) earlier than that of the making of the instrument containing the provision; or (c) to confer any power to legislate by means of orders, rules, regulations or other subordinate instrument, other than rules of procedure for any court or tribunal; or (d) to create any new criminal offence punishable with imprisonment for more than two years or punishable on summary conviction with imprisonment for more than three months or with a fine of more than level 5 on the standard scale (if not calculated on a daily basis) or with a fine of more than 100 a day. Section 2 of the 1972 Act recognises the different types of EU legislative measure. Article 288 TFEU states a well known trifurcation: A Regulation shall have general application. It shall be binding in its entirety and directly applicable in all member states. A Directive shall be binding, as to the result to be achieved, upon each member state to which it is addressed, but shall leave to the national authorities the choice of form and methods. A decision shall be binding in its entirety. A decision which specifies those to whom it is addressed shall be binding only on them. Section 2(1) gives the force of law in the United Kingdom to all the rights, etc and remedies and procedures to which it refers, which are in accordance with the Treaties without further enactment to be given legal effect or used in the United Kingdom. It is the means by which Regulations have effect. Section 2(2) concerns obligations of the United Kingdom to be implemented, or rights of the United Kingdom to be enjoyed, under or by virtue of the Treaties. A right or obligation under a Directive is the classic instance. As article 288 indicates, Directives are not as specific as Regulations in their impact or, often, in their terms. Member states have a degree of latitude in their implementation, provided they achieve the intended result. Paragraph (a) of section 2(2) enables provision to be made by order in council or ministerial or departmental order, rule, regulation or scheme for the purpose of implementing any such obligation, or enabling any such right to be exercised. Paragraph (b) enables provision to be made for dealing with matters arising out of or related to any such obligation or rights or the coming into force, or the operation from time to time of subsection (1). The ambit of section 2(2) has been considered in a number of cases. The leading authority is Oakley Inc v Animal Ltd [2005] EWCA Civ 1191, [2006] Ch 337. Since then section 2(2) has been considered by Moses LJ in R (Cukorova Finance International Ltd) v HM Treasury [2008] EWHC 2567 (Admin), [2009] EuLR 317, by Lord Hope in Risk Management [2011] 2 AC 34 (para 22 above), by the Employment Appeal Tribunal in Pothecary Witham Weld v Bullimore [2010] ICR 1008 and by Floyd J, who identified as many as 14 relevant principles in ITV Broadcasting Ltd v TV Catchup Ltd (No 2) [2011] EWHC 1874 (Pat), [2011] FSR 40. In Oakley, Directive 98/71/EC on the legal protection of designs required member states to approximate their legislation, but provided an option permitting them to derogate and retain in force existing legislation for registered designs. The option, found in article 11(8) of the Directive, read: 8. Any member state may provide that, by way of derogation from paragraphs 1 to 7, the grounds for refusal of registration or for invalidation in force in that state prior to the date on which the provisions necessary to comply with this Directive enter into force shall apply to design applications which have been made prior to that date and to resulting registrations. In issuing the Registered Designs Regulations 2001 (SI 2001/3949), the Secretary of State made use of this option. By regulation 12 he retained in force the Registered Designs Act 1949, as amended in 1988, in relation to designs already registered, so making use of this option. The Court of Appeal rejected the submission that regulation 12 required primary legislation. All three members of the court considered that regulation 12 could be regarded as being within section 2(2)(a) of the 1972 Act, as having been for the purpose of implementing an EU obligation or enabling one to be implemented (para 29, per Waller LJ, para 46 per May LJ and paras 64 67 per Jacob LJ). All three members of the court also went on to express views on the scope of section 2(2)(b). Waller LJ considered that the words used in section 2(2)(b) must take their context from the primary purpose of section 2, that being the bringing into force under section 2 of the laws, which under the Treaties the United Kingdom has agreed to make part of its laws; para 39. On that basis he added this in the same paragraph: section 2(2)(b), from its position in section 2, from the fact that it adds something to both subsections (1) and (2), and from its very wording is a subsection to enable further measures to be taken which naturally arise from or closely relate to the primary purpose being achieved. I accept that I will be accused of adding the words naturally and closely, but I believe that describes the context which provides the meaning of the words. May LJ said (para 47): I do not consider that to hold that the making of these transitional provisions came within section 2(2)(a) has the effect of making section 2(2)(b) devoid of content. There is a distinction between providing something which, although it is a choice, is a choice which the implementation of the Directive requires you to make, and one which is not so required, but which has the effect of tidying things up or making closely related original choices which the Directive does not necessarily require. Section 2(2)(b) is confined by its words and context. Redefinition in the abstract is to be avoided. Jacob LJ addressed the topic in some detail. He had no doubt that section 2(2)(a) covered the case where a Directive contains explicit alternatives and the implementing statutory instrument merely selects one of these (para 73). Questioning whether it also covers the supply of detail which Directives frequently leave to member states to spell out, he observed that, in his view, the wider section 2(2)(a), the narrower section 2(2)(b) is likely to be (para 74). In paras 79 80 he expressed his provisional views: 79. My own view, provisional though it must be in the absence of any specific context relevant to this case, is this: that section 2(2)(a) covers all forms of implementation whether by way of choice of explicit options or by way of supply of detail. Both of these are for the purpose of implementing or enabling any such obligation to be implemented. Supplying detail required by a Directive is just that. 80. So section 2(2)(b) indeed adds more . How much more must depend on the particular circumstances of the case the statutory language is the guide. It says for the purpose of dealing with matters arising out of or related to. Whether a particular statutory instrument falls within those words must depend on what it purports to do and the overall context. One cannot put a gloss on the meaning. If Otton LJ [in R v Secretary of State for Trade and Industry, Ex p UNISON [1996] ICR 1003] was adding a gloss distinct, separate or divorced from it then I do not agree with that gloss. You just have to apply the statutory language to the case concerned. And in doing so you bear in mind that the purpose of the power given by the section is European the article10 purpose. Whether or not Otton LJ was right in the circumstances of, I do not decide. It would not be right to do so in the absence of the affected parties. The reference to Otton LJs words was to a sentence in which Otton LJ said that he was satisfied that the provision made was related to a Community obligation, and not distinct, separate, or divorced from it (R v Secretary of State for Trade and Industry, Ex p UNISON [1996] ICR 1003, 1014G H). Article 10 of the then Treaty establishing the European Community read: Member states shall take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising out of this Treaty or resulting from action taken by the institutions of the Community. Some general observations are possible, arising from these passages. First, so far as possible, it is clearly desirable to avoid paraphrase, though almost impossible to do so completely, if any greater light is to be shed on the scope of their application. Second, as Waller LJ (and also May LJ) indicated, words such as those used in section 2(2) must be seen in the context of the primary purpose of section 2, that being the bringing into force under section 2 of the laws, which under the Treaties the United Kingdom has agreed to make part of its laws. Third, that is the context in which Parliament was prepared to delegate law making ability to the executive because the focus of section 2(2) is on obligations to the implementation of which the United Kingdom is already committed (and rights to which it is already entitled) at the European level by virtue of its EU membership. Parliament will itself have had prior opportunities for scrutiny of, and input into the content of, the European measures giving rise to such obligations and rights, through in particular Select Committee procedures, at the stage when such measures were being developed and proposed by the European Commission and considered in Europe by member states and the European Parliament. Fourth, section 2(2) authorises the making of provisions for two differently expressed purposes. In the case of paragraph (a), the purpose expressed is implementing or enabling the implementation of any EU obligation (or the enabling the exercise of any EU right enjoyed by the United Kingdom). In the case of paragraph (b), it is dealing with matters arising out of or related to any such obligation or rights or the coming into force, or the operation from time to time, of section 2(1). It is not in my view appropriate to get too involved in a linguistic debate about whether these paragraphs should be read entirely disjunctively or whether there may be some overlap. But Jacob LJ was, I think, right in saying that the wider section 2(2)(a), the narrower section 2(2)(b) is likely to be that is so, because the language of paragraph (b) introduces bottom line limitations of the power it confers. What can in my view be said, from the wording and positioning of these two paragraphs, is that paragraph (a) is the main vehicle for implementation of EU obligations and rights which are not directly enforceable. Paragraph (b) goes further, in authorising provision for different purposes, but those purposes are limited by reference to the United Kingdoms EU obligations or rights (or the coming into force, or operation, of section 2(1)). The words arising out of limit the power to provisions dealing with matters consequential upon an EU obligation or right (or the coming into force, etc, of section 2(1)). The further phrase related to any such obligation or rights, must, unless redundant, go somewhat further. But the relationship required must exist objectively; and the positioning of the phrase and its conjunction with the earlier wording of section 2(1) suggest to me, as they did to Waller and May LJJ, that by speaking of a relationship the legislature envisaged a close link to the relevant obligation or right. A relationship cannot on any view arise from or be created by simple ministerial decision that it would be good policy or convenient to have domestically a scheme paralleling or extending EU obligations in a field outside any covered by the EU obligations. That would be to treat paragraph (b) as authorising a purpose to implement policy decisions not involving the implementation of, not arising out of and unrelated to any EU obligation. A fifth and final point is that it is, in the light of the above, possible to describe section 2(2) as both wide and confined in scope. It is wide because it authorises almost every conceivable provision required to fulfil the United Kingdoms obligations under article 4.3 TEU (or to give effect to any EU right) subject only to the restrictions in Schedule 2. It is confined because any such provision must be for the purpose of implementing, or dealing with a matter arising from or related to, such an obligation or right. Some conclusions can fairly readily be drawn. Consistently with a view taken, I understand, by all members of the court in Oakley, it is clear, that, where a Directive is in general terms leaving member states freedom to decide on the precise means for its implementation, provisions which the United Kingdom makes within the scope of such freedom will on the face of it fall within section 2(2)(a), as being for the purpose of implementing or enabling the implementation of the Directive. Second, where a Directive confers a choice of specific alternatives, as Directive 98/59/EC did in article 1(1)(a) (see para 7 above) a provision selecting one or other alternative will also fall within section 2(2)(a). Where a Directive gives member states a specific option to derogate from its provisions in a particular respect in Oakley as regards design applications made prior to the date of domestic implementation of the Directive and as regards resulting registrations then I again agree with the court in Oakley that the exercise of this option can be regarded as falling within section 2(2)(a), and, further, that if that were not so, then it would, in any event, be related to the implementation of the United Kingdoms EU obligation within section 2(2)(b). At the other end of a spectrum is a situation such as Lord Hope considered in Risk Management, para 24 (para 22 above). That is where a Directive, such as Directive 2004/18/EC in that case, (i) addresses an internal market competition issue, by introducing procedures for the award of public works, supply and service contracts, but does not cover a situation where (ii) public authorities contract inter se, or where (iii) a local authority exercises over the other contracting party a control which is similar to that which it exercises over its own departments and, at the same time, that person carries out the essential part of its activities with the controlling local authority or authorities: see Teckal (Case C 107/98) [1999] ECR I 8121, para 50. In that context, Lord Hope, with whose judgment three other members of the court agreed, considered that it would not be a permitted use of the power conferred by section 2(2) to apply the public procurement rules to relationships [such as those in (ii) and (iii)] that fell outside the regime provided for by the Directive: para 22 above. In agreement with Lord Hope, I consider that, where a Directive is based on an internal market competence and as a result limited in impact to internal market situations, its domestic extension to situations outside the internal market cannot be regarded as being within either section 2(2)(a) or (b) of the 1972 Act. This is so whether it is so limited by implication or expressly. More difficult are intermediate situations where a Directive is limited to, or specifically excludes, a particular area of the internal market. An example of a Directive limited to a particular area of the internal market is Directive 2002/47/EC which was in issue in Cukurova [2009] EuLR 317. Directive 98/59/EC in issue in the present case is an example of a Directive with both limitations and specific exclusions which appear to fall within the internal market: It is limited by article 1(1)(a) to collective redundancies. It excludes in article 1(2)(a) limited period contracts, which might affect the functioning of the internal market competition. I say nothing on the question whether the exclusion in article 1(2)(c) of the crews of seagoing vessels operates in an area which might affect the internal market or was because this was seen as a situation, like that covered by article 1(2)(b), where the internal market was not affected. In my view, provisions extending an EU regime domestically into areas not covered by or specifically excluded from the EU regime contemplated by a Directive may well fall outside both paragraphs of section 2(2). Each case would have to be considered on its own merits. Some adjustments to situations in which a Directive operates may be regarded as necessary or appropriate for the purpose of implementing or enabling the implementation of a Directive, or as being related to the relevant EU obligation in the sense already discussed. Pothecary [2010] ICR 1008 is an example of a case where the Secretary of State used section 2(2)(b) to provide for a reverse burden of proof in section 63A of the Sex Discrimination Act 1975 (as inserted by regulation 5 of the Indirect Discrimination and Burden of Proof) Regulations 2001 (SI 2001/2660) in cases of alleged victimisation. There was no obligation under European law to have a reverse burden in such cases. There was under the Burden of Proof Directive 97/80/EC an obligation to have a reverse burden in cases of alleged unequal treatment, but the Employment Appeal Tribunal concluded that the right not to be victimised did not form part of the principle of equal treatment, but was an ancillary right accorded by EU law to render that principle properly enforceable. On that basis, it held, unsurprisingly, that introducing a reverse burden in respect of a right which European law treated as ancillary to its prohibition of discrimination was dealing with a matter related to an EU obligation, within section 2(2)(b). In Cukurova Directive 2002/47/EC was expressly limited to transactions between certain institutions, but the Financial Collateral Arrangements (No 2) Regulations 2003 (SI 2003/3226) issued by HM Treasury implementing it extended the range of the regime to cover other institutions. Moses LJ was concerned with a question whether Cukurova should be allowed an extension of time within which to challenge the vires of the Regulations. Ultimately, all he did was express such considerable doubts about Cukurovas prospects of success in its challenge as to lead him to a conclusion that justice did not demand an extension of time. Nonetheless, it is worth looking at the case more closely, because in my view Moses LJ greatly underestimated the force of Cukurovas challenge. Article 1(1) of Directive 2002/47/EC stated that it lays down a Community regime applicable to financial collateral arrangements [defined by article 2.1(a) as meaning a title transfer financial or a security financial collateral arrangement] which satisfy the requirements set out in paragraphs 2 and 5 and to financial collateral in accordance with the conditions set out in paragraphs 4 and 5. Paragraph 2 stated that The collateral taker and the collateral provider must each belong to one of the following categories. These included a wide range of (a) public authorities or bodies, (b) central or development banks, (c) financial institutions subject to prudential supervisions and (d) central counterparties, settlement agents or clearing houses as well as (e) a person other than a natural person, including unincorporated firms and partnerships, provided that the other party is an institution as defined in points (a) to (d). By these categories, the Directive notably did not cover hedge funds. Paragraph 3 permitted member states to exclude from the scope of this Directive financial collateral arrangements where one of the parties is a person mentioned in paragraph 2(e). Recital 22 stated the objective of the Directive to be to create a minimum regime relating to the use of financial collateral, this being an objective which, it went on, cannot be sufficiently achieved by the member states and can therefore be better achieved at Community level . In place of the carefully delineated categories of institution and concern covered by the Directive, the 2003 Regulations put in place a regime covering title transfer financial collateral arrangements and security financial collateral arrangements where the collateral provider and the collateral taker are both non natural persons: regulation 3. I find it difficult to see how this could be regarded as having been for the purpose of implementing or enabling the implementation of the EU Directive. Equally, the extension did not arise out of the obligations in the Directive and was not related to them. It was on its face the product of a decision by HM Treasury that it would be good policy domestically to have a more extensive regime operate within the United Kingdom. That is something which was of course open to the United Kingdom under European law, since the Directive was a measure of minimum harmonisation. But it was under the United Kingdom constitution and the 1972 Act a matter which was not for the executive to decide, but for Parliament to consider and, it if thought fit, to agree as a matter of primary legislation. Returning to the present case, it falls in my view even more clearly within the category which Lord Hope was considering in Risk Management. It also concerns a Directive issued by the European legislature under its internal market competence, which in the present case specifically excludes by article 1(2)(b) situations outside that competence. The express liberty in article 5 for member states to make provisions more favourable to workers does not in my view lead or point to a contrary view. It cannot have been directed to matters which would be outside the European Unions internal market competence. Even in relation to matters within the Unions internal market competence, an article of this nature does no more on its face than confirm that the Directive is a minimum harmonisation measure, which leaves member states free to introduce more favourable provisions as a matter of domestic law. This does not mean that such provisions are necessarily to be regarded as dealing with matters related to any EU obligation or rights. It follows that, had the provisions of TULCRA in its unamended form been the product of subordinate legislation under section 2(2) of the 1972, they would, on Lord Hopes analysis, have been ultra vires at least in so far as they purported to extend the required procedure for dismissals involving redundancies to situations falling within article 1(2)(b) of Directive 98/59/EC. However, TULCRA in its unamended form was actually a piece of primary legislation. So far as Parliament chose by TULCRA in its unamended form to extend the required procedure for dismissals involving redundancies, it was fully entitled to do so. Parliament has no need to show any particular competence base for primary legislation. It can legislate at will and at the same time achieve both European Union aims and domestic aims, as long as the latter are not positively inconsistent with the former. But TULCRA in its unamended form was confined to situations where the relevant employees had trade union representation. When the executive chose to rectify this by using section 2(2) of the 1972 Act to cover situations where there was no trade union representation, it did so across the whole width of the previous legislation so as to affect not only situations within the internal market scope of Directive 98/59/EC, but also the domestic situations to which Parliament had also extended the required procedure for dismissals. If Lord Hopes analysis is correct, does this mean that the amendments to TULCRA by the 1995 Regulations must to that extent be regarded as ultra vires? I have found this a difficult and borderline question to answer. Ultimately, I have come to the conclusion that it can and should be answered in the negative. TULCRA in its unamended form represented a unified domestic regime. The Court of Justice in 1994 identified a flaw in the protection provided, in that it did not cater for non trade union situations. It is entirely unsurprising that the 1995 Regulations did not distinguish between parts of TULCRA which were and were not within the internal market competence or within article 1(2)(b) of the Directive. I think that, in these unusual circumstances, Parliament can, by enacting TULCRA in its unamended form, be regarded as having created, for the future domestic purposes of the 1972 Act, a relationship between the EU obligation (which it was a primary object of Part IV Chapter II of TULCRA in its unamended form to implement) and the categories of public employment falling within article 1(2)(b) of Directive 98/59/EC (which Parliament decided without any EU obligation to do so to cover by TULCRA in its unamended form). That relationship having been established by TULCRA in its unamended form, it seems to me that the executive was entitled to take it into account and to continue it by and in the 1995 Regulations. Conclusion For all these reasons, I would dismiss the appellants appeal on all three points, and affirm the judgments of the courts below. The case should as a result be remitted to the Court of Appeal for determination, so far as necessary, of the UK Coal/Fujitsu issue referred to in paras 3 and 10 11 of this judgment. LORD CARNWATH: (dissenting) Overview This case has an unfortunate procedural background, which has been described by Lord Mance. Among other grounds raised by the appellants (which in agreement with my colleagues I would dismiss), it raises two difficult issues at the interface between European and domestic law: first, the extent of the power conferred by section 2(2)(b) of the European Communities Act 1972 to legislate in the UK by statutory instrument on matters arising out of or related to obligations under European law; secondly, the approach of the domestic court to an issue of European law (the Fujitsu issue see below) which arises under a UK statute modelled on a European Directive, but which has been held to be outside the competence of the European court. As will be seen, the two are in my view linked. Unfortunately, only the first is before this court on the present appeal. The second will have to be determined by the Court of Appeal if the present appeal fails, and may return here at a later date. There is the further difficulty that neither of the parties to the appeal has more than a limited interest in the resolution of either issue as a matter of law. The United States of America, as appellant, has no direct interest in the resolution of issues of English or European law. It is only before the court because it failed at an early stage (for understandable reasons at the time) to claim sovereign state immunity. (It is common ground that if a claim to state immunity had been made at the outset it would have succeeded.) Mrs Nolan, the nominal respondent, has not contested the appeal, either in the Court of Appeal or in this court. The UK government, which might be thought to have a substantial interest in both issues has chosen not to intervene, though informed of the appeal. In these unusual circumstances we are more than usually grateful for the assistance of Mr Beloff QC and Miss Wilkinson as advocates to the court. However, it is no reflection on them that we have been unable to explore in any detail the wider implications of this case for the transposition of European law in this country more generally. For this reason, had my colleagues agreed with my firm provisional view that the appeal should be allowed on this issue, I would have been reluctant to reach a final conclusion without allowing the UK government a further opportunity to submit representations. The conclusions set out below are to that extent provisional. I adopt gratefully Lord Mances exposition of the facts and the relevant statutory provisions. Procedural history Lord Mance has summarised the procedural history, but some expansion may be helpful in setting the scene for discussion of the issue on which we are divided. As he has noted, an important event was the decision of the Employment Appeal Tribunal, in UK Coal Mining Ltd v National Union of Mineworkers [2008] ICR 163), given in September 2007. To explain its importance I can refer to Underhill LJs summary [2014] ICR 685, para 9: The trend of English authority until comparatively recently was to the effect that the collective redundancy provisions, even when read with the Directive, did not oblige an employer to consult about, or therefore disclose the reasons for, the underlying business decision which gave rise to a proposed collective redundancy the paradigm case being the closure of a workplace but only about the consequences of that decision. However, the decision of the ECJ in Junk v Khnel (Case C 188/03) [2005] ECR I 885, raised a serious question whether that approach was compatible with EU law. In UK Coal Mining , the Employment Appeal Tribunal (Elias J, President, presiding) declined explicitly to depart from the established approach (while expressing some reservations about it); but it nevertheless held that in a case where a decision to close a workplace and the consequent decision to make redundancies were inextricably interlinked the obligation to consult about the reasons for the latter necessarily involved an obligation to consult about the reasons for the former and thus required the employer to initiate consultations prior to the closure decision. The CJEU revisited this issue in Akavan Erityisalojen Keskusliitto (AEK) ry v Fujitsu Siemens Computers Oy (Case C 44/08) [2010] ICR 444; [2009] ECR I 8163 (the Fujitsu decision); but unfortunately the effect of its reasoning is, to put it no higher, not entirely clear. As Underhill LJ explained (para 10), this change of understanding had important implications for the present case, in particular in the context of the USAs failure to rely before the tribunal on sovereign immunity: On the approach which it had initially taken, which involved acceptance of an obligation to consult only about the consequences for employees of the closure of the base, there had been no need for the USA to take any point on its status as a sovereign state. But the approach espoused in the UK Coal case was unacceptable to it: it did not believe that it should or could be under any legal obligation to consult with employees about a decision to close a military base, which is an act done jure imperii. It was not until the remedy hearing that the USA sought for the first time to invoke state immunity; but the tribunal held that it had already submitted to the jurisdiction. That conclusion is not now in issue. Before the EAT Mr John Cavanagh QC, who represented the USA, argued, as he has before us, that as a matter of construction, and in order to avoid absurdity, section 188 should be read as excluding any obligation by a sovereign state employer to consult about a decision made jure imperii. That submission was rejected by both the EAT and the Court of Appeal. In the Court of Appeal he further submitted that in the light of the Fujitsu decision, the reasoning in UK Coal [2008] ICR 163 should not be supported, with the consequence that consultation on the business decision to close the base had not been required. In the course of a detailed review of the reasoning of the Advocate General and the CJEU in the Fujitsu case, Rimer LJ (giving the judgment of the court) [2010] EWCA Civ 1223 sought an answer to what he identified as the critical question: does the ECJ explain whether the consultation obligation arises (i) when the employer is proposing, but has not yet made, a strategic business or operational decision that will foreseeably or inevitably lead to collective redundancies; or (ii) only when that decision has actually been made and he is then proposing consequential redundancies? (para 57) He inclined to the view that the Advocate General had favoured option (ii) (para 53). But he was unwilling to venture a concluded view on the position of the court, which he considered unclear (para 59), and which could be only resolved by the CJEU itself. Notwithstanding the USAs express unwillingness to support a reference, he saw it as important not just to the disposition of this litigation but also to industrial practice generally (para 62). Before the CJEU, as Lord Mance has noted, the case took an unexpected turn. Prompted by observations of the Commission, the court invited submissions on whether, having regard to the exclusion for public administrative bodies in article 1(2)(b), the dismissal was outside the scope of the Directive, with the result that the court would have no jurisdiction to decide the question. Its answer (in its judgment of 18 October 2012, (Case C 583/10), [2013] ICR 193) was no (for reasons to which I shall return below). Accordingly, when the appeal came back to the Court of Appeal, the issue had to be considered as one of domestic law only. At the second Court of Appeal hearing, the primary submission for the USA was that, in order to achieve conformity with the Directive, words should be read into section 188 to exclude its operation to a foreign state engaged in the exercise of public powers. This was rejected by Underhill LJ (with whom the other members of the court agreed). The draftsman had made a deliberate decision not to extend the exclusion to all public administrative bodies. This was unsurprising, given that the concept of a special employment regime for public employees recognised in some civil law countries has no equivalent in the common law, and it made sense for Parliament to have settled for a touchstone for exclusion which used common law concepts and would be (comparatively) easy to apply in the United Kingdom. He added that the Labour Government in 1975 may have had policy reasons to extend the collective redundancy provisions to public administrative bodies, such as local authorities, given the influence at the time of public sector trade unions (para 24). Having rejected the argument that amendments made under the European Communities Act 1972 had been outside the powers conferred by the Act, he concluded that there would need to be a further hearing to determine the Fujitsu issue. It was regrettable but unavoidable that an issue which will in almost all other cases albeit not in this depend on EU law will have to be decided without the guidance of the CJEU (para 33) It was further ordered that in the event of an appeal to the Supreme Court, the further hearing on the Fujitsu issue should await the outcome of the appeal. The reasoning of the CJEU The European court held that the armed forces fell clearly within the exception for public administration or equivalent bodies under article 1(2)(b). This was also supported by the objectives of the Directive, concerned with improving the protection of workers and the functioning of the internal market (para 39): 41. Whilst the size and functioning of the armed forces does have an influence on the employment situation in a given member state, considerations concerning the internal market or competition between undertakings do not apply to them. As the Court of Justice has already held, activities which, like national defence, fall within the exercise of public powers are in principle excluded from classification as economic activity It followed that dismissal of staff of a military base did not fall within the scope of the Directive, irrespective of whether or not it is a military base belonging to a non member state. (para 43) The court also considered an argument that, even if the case fell outside the Directive, it was able to give a preliminary ruling, following cases in which the court had accepted jurisdiction where EU law had been rendered applicable by reference in domestic law. The court explained the limits of that principle: 46. The court has already held that where, in regulating situations outside the scope of the EU measure concerned, national legislation seeks to adopt the same solutions as those adopted in that measure, it is clearly in the interest of the European Union that, in order to forestall future differences of interpretation, provisions taken from that measure should be interpreted uniformly 47. Thus, an interpretation by the court of provisions of EU law in situations outside its scope is justified where those provisions have been made applicable to such situations by national law in a direct and unconditional way in order to ensure that internal situations and situations governed by EU law are treated in the same way However, the court noted, in paras 49 and 50, that the USA had had the opportunity in the tribunal to rely on state immunity, or on special circumstances under section 188(7). It followed that the court did not have sufficiently precise indications that the national law made the solutions adopted by the Directive automatically applicable in such a case (para 51), so as to make the provisions of the Directive applicable in a direct and unconditional way (para 52). The court continued: 53. It is true that it is in the interests of the Union to safeguard the uniformity of the interpretations of a provision of an EU measure and those of national law which transpose it and make it applicable outside the scope of that measure. 54. However, such is not the case where, as in the case in the main proceedings, an EU measure expressly provides a case of exclusion from its scope. 55. If the EU legislature states unequivocally that the measure which it has adopted does not apply to a precise area, it renounces, at least until the adoption of possible new EU rules, the objective seeking uniform interpretation and application of the rules of law in that excluded area. 56. Therefore, it cannot be stated or presumed that there was an interest of the Union that, in an area excluded by the EU legislature from the scope of the measure which it adopted, there should be a uniform interpretation of the provisions of that measure. The vires issue The arguments The scope of section 2(2)(b) was considered by the Court of Appeal in Oakley Inc v Animal Ltd [2005] EWCA Civ 1191, [2006] Ch 337. The Registered Design Regulations 2001 were made under section 2(2) in order to implement Directive 98/71/EC, concerning the approximation of laws relating to registered designs. Article 11(8) was a transitional provision which granted member states the option of retaining their old laws in relation to designs that were already registered. The Court of Appeal rejected an argument that the transitional provisions in the Regulations went further than permitted by the Directive. Of section 2(2)(b) Waller LJ said that the words arising out of and related to should be read in the context of section 2 itself, the primary purpose of which was to give effect to the laws which under the EU Treaties the United Kingdom had agreed to make part of its own laws. He observed: It seems to me that section 2(2)(b) from its position in section 2, from the fact that it adds something to both subsections (1) and (2), and from its very wording is a subsection to enable further measures to be taken which naturally arise from or closely relate to the primary purpose being achieved. (para 39) (emphasis added) May LJ contrasted sections 2(2)(a) and (b): There is a distinction between providing something which, although it is a choice, is a choice which the implementation of the Directive requires you to make, and one which is not so required, but which has the effect of tidying things up or making closely related original choices which the Directive does not necessarily require. Section 2(2)(b) is confined by its words and context . (para 47) (emphasis added) In the present case the Court of Appeal accepted that the 1995 Regulations were not within the scope of section 2(2)(a) of the 1972 Act, but held that they were authorised by section 2(2)(b). Underhill LJ said: The decision to go beyond the requirements of the Directive by extending the employee representative rights to employees in PABs (except those in Crown employment) may, as a matter of strict analysis, reflect a substantive policy choice made by the Secretary of State; but, as the judgments in the Oakley Inc case make clear, that is not in itself objectionable. In fact all that he was doing was plugging the rights created by the Regulations in cases where no trade union was recognised into the pre existing scheme of the Act and thereby reproducing, in the case of this late discovered lacuna in the implementation of the Directive, the selfsame decision as Parliament had already made in enacting the primary legislation in 1975 and 1992. It would indeed have been an extraordinary anomaly if the kinds of employment where the obligation to consult arose differed as between cases where a trade union was recognised and cases where it was not; and it was not only natural but right for the Secretary of State in making the 1995 Regulations to ensure that the position was the same in both cases. In my judgment this is precisely the kind of closely related original choice which the Directive does not require but which has the effect of tidying things up that May LJ identifies in his judgment in Oakley Inc case. (para 32) In this court, Mr Beloff QC supports the reasoning of the Court of Appeal. Article 5 of the Directive made clear that the Directive sought to achieve minimum harmonisation only. Member states were free to enact laws more favourable to workers than those required by the Directive. Section 188, as applied to public administrative bodies, arose out of the obligations under the Directive in the sense of extending them further, as the UK was entitled to do by article 5, or alternatively it related to those because the subject matter (the right to consultation) was identical to the right to be consulted in the Directive. By the same token, the 1995 Regulations, in filling a gap in the UK legislation identified by the European court in Commission of the European Communities v United Kingdom (Case C 383/92) [1994] ICR 664 fell squarely within the scope of section 2(2)(b) of the 1972 Act under which they were made. This reasoning is challenged by Mr Cavanagh QC. Mrs Nolans employment by the public employers such as the USA was not within the scope of the 1992 Act as enacted by Parliament. It was brought within it solely by the amendments made by the 1995 Regulations. The Court of Appeal were right to find that the Regulations were outside the scope of section 2(2)(a), but were wrong to find that they were within section 2(2)(b) as matters arising out of or related to a community obligation. The CJEU judgment in the present case has made clear that decisions relating to the closure of foreign military bases are within an area excluded by the EU legislature from the scope of the measure which it adopted (judgment para 56). It follows that, in so far as the 1995 Regulations purported to extend the application of section 188 to employee representatives in such cases, they had nothing to do with this countrys Community obligations, but arose solely from domestic policy considerations. They were not dealing with matters arising out of or related to EU obligations in any relevant sense. Discussion I start from the words of Lord Hope in R (Risk Management Partners Ltd) Brent London Borough Council [2011] 2 AC 34, para 24: It is true that section 2(2) of the European Communities Act 1972 is in wide terms. It does not confine any measures made under it to doing the minimum necessary to give effect to a Directive. But, if it is to be within the powers of the subsection, the measure has to arise out of or be related to an EU obligation. As Waller LJ said in Oakley Inc v Animal Ltd , the primary objective of any secondary legislation under section 2(2) must be to bring into force laws which, under the Treaties, the United Kingdom has agreed to make part of its laws The words related to in section 2(2)(b) taken out of context are so wide as to be almost meaningless. A relationship may be very close or very distant without distortion of the word. In one sense, as Mr Beloff QC appeared to suggest, any provision dealing with employees rights to consultation could be said to be related to the subject matter of this Directive, and hence within the scope of the section. More specifically, it may be said in the present context, Parliament has in the 1992 Act established a clear and direct relationship, as a matter of domestic law, between the employments covered by the Directive, and the extension to equivalent employments under public administrative bodies. If that were sufficient, then it would no doubt follow that, when legislative action was required to fill gaps in the transposition of the Directive into domestic law, the same relationship would cover the decision to take equivalent action in respect of the extension. In Oakley the Court of Appeal sought to avoid an unduly broad interpretation by introducing additional qualifications: naturally arising, closely related, tidying up. Such glosses are not justified by normal rules of interpretation, and may beg as many questions as they solve. Thus in the present case, it may be said that extending the 1995 Regulations to public administrative bodies is closely related to to the main purpose of the amendments, or (as Underhill LJ thought) simply a matter of tidying up the 1992 Act in the light of the European courts decision. Such language provides no answer to the underlying problem that the relationship is one created entirely by a domestic statute, and has no obvious relevance to the purpose of the 1972 Act. Some limitation is necessary to ensure that the power to legislate outside the normal Parliamentary process is kept within bounds. The key, as Lord Hope said, at [2011] 2 AC 34, para 25, must lie in the context. The relationship must be one relevant to the purpose of the legislation, that is to give effect to the UKs obligations in European law. In other words it must be a relationship derived in some way from European law, not one dictated solely by considerations of domestic law. On the other hand, as the language makes clear, the power is not confined to matters which arise directly from the European obligation the minimum necessary in Lord Hopes words, at para 24. Related to implies the possibility of a less direct connection. The interpretation of the 1972 Act is of course a matter ultimately for the domestic, not the European courts. However, the reasoning of the CJEU in the present case suggests the basis for a principled and workable distinction, corresponding to the limits of its own jurisdiction. This would have the additional advantage of avoiding the problem, noted by Underhill LJ, of a European question of general importance (the Fujitsu issue) having to be decided without the possibility of recourse to the European court. The court saw its jurisdiction as extending to cases where European provisions are made applicable by national law in a direct and unconditional way to internal situations outside their direct scope. A relationship adequate to give jurisdiction to the European court might be thought an adequate relationship also for the purpose of the 1972 Act. However, that solution is not available in this case. The effect of article 1(2)(b), as found by the court, is to exclude public administrative bodies entirely from the scope of the Directive, and to renounce any European interest in that excluded area. I note with respect the different view taken by Lord Mance on what he describes as a difficult and borderline question. As I understand his judgment (para 71), he might have reached a different conclusion, if TULCRA in its amended form had been the product of subordinate rather than primary legislation. I would only comment that I find it difficult to understand why the status of the original legislation should impinge materially on the relationship required by section 2(2)(b) to support the 1995 Regulations. Mr Beloff QC relies on article 5 of the Directive by which member states are permitted to introduce laws or other measures which are more favourable to workers . Although the CJEU did not refer in terms to article 5, its reasoning makes it difficult to see the present extension as coming within its scope. That allows terms more favourable to workers as defined in the Directive. But by article 1.2(b), as interpreted by the CJEU, the Directive has no application to workers in public administrative bodies, who are outside its scope altogether and hence outside the reach of article 5. The power of the national legislature to extend similar protection to such workers is a matter purely of domestic competence, and owes nothing to the Directive. I should add that the same reasoning does not necessarily apply to time limited contracts, which, as already noted, are excluded by article 1(2)(a) of the Directive, but not from the domestic legislation. Employees under such contracts may still be workers for the purposes of the Directive, and therefore potentially within the scope of article 5. Conclusion I find it difficult therefore to avoid the conclusion that the extension of the 1995 Regulations to public administrative bodies, such as the appellants, was not within the power conferred by the 1972 Act, and that the appeal should be allowed on this ground. I reach this position with some diffidence, given that the wider implications of this interpretation of the 1972 Act have not been explored, and we have had no submissions from the UK government which is primarily interested in those issues. As already indicated, before reaching a final decision, I would have wished to invite the UK government to make representations on this issue. That will not now be necessary, in view of the opposite conclusion reached by Lord Mance, with the agreement of the rest of the court. I regret that, because of the narrow basis on which the appeal has come before us, we have not been able to provide any assistance on the resolution, as a matter now of domestic law, of the difficult Fujitsu issue, which, unless the parties otherwise agree, will have to revert to the Court of Appeal. For these reasons, I would have allowed the appeal on the vires issue, but dismissed all the other grounds of appeal.
+Letham Grange is a neoclassical mansion built in the 1820s, with extensive landscaped grounds. In modern times the house was converted into a hotel, and the grounds were laid out as two golf courses. The hotel became popular with golfers, and was also used by judges sitting on circuit in the nearby town of Forfar. The hotel closed in 2011, but remains known to Scottish judges as the subject matter of a long running legal dispute. That dispute has now made its second appearance in the United Kingdoms highest court. The hotel and its golf courses (the subjects) were bought in November 1994 by Letham Grange Development Company Ltd (LGDC) for slightly over 2m. On 12 February 2001 LGDC sold them to the second appellant, 3052775 Nova Scotia Ltd (NSL), a company based in Canada. The consideration recorded in the disposition was 248,100. In December 2002 LGDC went into liquidation, and the respondent, Mr Henderson, was appointed as its liquidator. The value of the subjects at that time was estimated at about 1.8m. In January 2003 NSL granted a standard security (ie a charge) over the subjects in favour of the first appellant, Foxworth Investments Ltd (Foxworth), another company based in Canada. Later that year the liquidator began proceedings against NSL in the Court of Session, in which he sought the reduction (ie setting aside) of the 2001 disposition on the grounds that the sale was a gratuitous alienation, an unfair preference or a fraudulent preference. The action had a lengthy history. Ultimately, the liquidator obtained decree by default in 2009, when NSL failed to be represented at the hearing fixed for the proof (ie trial). It is not argued that that decree gives rise to any plea of res judicata in the present proceedings. The liquidator then began these proceedings, in which he seeks the reduction of Foxworths standard security. His action is brought on the basis that the disposition to NSL was a gratuitous alienation susceptible to reduction under section 242 of the Insolvency Act 1986 (the 1986 Act). That section, so far as material, provides that an alienation made by a company within two years of the commencement of its winding up is challengeable by the liquidator, and that on such a challenge being brought, the court shall grant decree of reduction unless, in particular, the alienation was made for adequate consideration: section 242(4)(b). Although a proviso to section 242(4) preserves any right or interest acquired in good faith and for value from or through the transferee in the alienation, the liquidator argues that Foxworth cannot bring itself within the scope of that proviso, since it knew, at the time when it obtained the standard security, that LGDC was in liquidation and that the sale by LGDC to NSL was open to challenge under section 242. In that regard, reliance is placed on the fact that the relevant decisions of all three companies LGDC, NSL and Foxworth were made by their common director, Mr Liu, who was their directing mind and had full knowledge of all the material circumstances. The proceedings are defended primarily on the basis that the sale by LGDC to NSL was made for adequate consideration: in addition to the sale price of 248,100 recorded in the disposition, NSL had, it is claimed, also assumed debts of 1.85m owed by LGDC to Mr Liu and members of his family. On that basis, it is argued, Foxworth fell within the scope of the proviso to section 242(4): it had obtained the standard security in good faith and for value. The Lord Ordinary, Lord Glennie, held after a nine day proof that the sale of the subjects by LGDC to NSL had been made for adequate consideration. Although the price recorded in the disposition was far below the value of the subjects, that price had not, he held, been the entire consideration for the sale: NSL had in addition assumed liability for debts of 1.85m owed by LGDC to Mr Liu and members of his family. The disposition had not therefore been susceptible to reduction under section 242. It followed that Foxworth had obtained its rights under the standard security in good faith. There was no live issue as to whether the standard security had been obtained for value. The standard security was therefore not liable to reduction: [2011] CSOH 66; 2011 SLT 1152. On the liquidators appeal against that decision, an Extra Division of the Inner House held, after a hearing which lasted six days, that the Lord Ordinary had erred in law: he had not made a finding that the assumption of any debts by NSL had occurred at the time of the sale, and had therefore formed part of the consideration for the sale. In the absence of such a finding, it was held, the Lord Ordinary had not been entitled to hold that the alienation of LGDCs property had been made for adequate consideration or, given Mr Lius knowledge of the circumstances, that Foxworth had obtained the standard security in good faith. Furthermore, the Extra Division considered that the Lord Ordinary had in any event failed to give satisfactory reasons for the factual conclusions which he had reached on the evidence before him, and that the matter was therefore at large for the appellate court. On the basis of the material which it considered, the Extra Division held that the sale by LGDC to NSL had been a gratuitous alienation, and that Foxworth had not obtained its rights under the standard security in good faith or for value. Decree was therefore granted for the reduction of the standard security: [2013] CSIH 13; 2013 SLT 445. The Extra Division did not require to deal with a It may be helpful at this stage to summarise the principal aspects of the cross appeal by Foxworth and NSL against the Lord Ordinarys decision in relation to expenses ([2011] CSOH 104). Foxworth and NSL now appeal to this court against the decision of the Extra Division, and also against the Lord Ordinarys decision in relation to expenses. An outline of the evidence evidence. In his evidence, Mr Liu explained that LGDC had been established as a special purchase vehicle for the acquisition of the subjects in 1994. He was its sole shareholder. The purchase was financed out of loans of over 2.3m made to LGDC by himself, his wife and his parents. The loans came from accounts held with Sanwa Bank in Canada. 200,000 was borrowed from the bank, the borrowing being guaranteed by another family company, Coquihalla. A contemporary letter dated 4 November 1994 from Mr Gardner, a partner in MacRoberts, the solicitors acting for LGDC in connection with the purchase, confirmed that he had received a transfer of 1.9m from Sanwa Bank in Canada and a further 350,000 from Mr Lius father. Mr Liu also produced letters sent by himself, as a director of LGDC, to his wife and his parents, setting out the amounts which each of them had lent to LGDC and the terms as to repayment. A similar letter to Coquihalla was also produced. The letters purport to have been signed by Mr Liu and the recipients on various dates in December 1994. A fax dated 2 December 1994, containing the same details as to the loans, was also produced, which Mr Liu said had been sent to Mr Gardner after he had requested such details. The borrowing from Sanwa was due to be repaid in October 2000. By then it amounted to 248,100 inclusive of interest. In his evidence, Mr Liu said that LGDC was at that time in dispute with its former accountants, and did not have accountants who could properly record an injection of funding into the company. In those circumstances he decided that the easiest way to repay Sanwa would be for LGDC to sell the subjects to another vehicle company for the amount required. The new vehicle company was NSL. In relation to this evidence, the Lord Ordinary observed that Mr Liu did not explain in detail, perhaps because he was never asked, why the sum could not have been advanced to LGDC as a loan. The absence of accountants did not appear to him to be a credible explanation, given the lack of formality surrounding the initial family loans to LGDC. The Lord Ordinary commented that the reason for the transaction remained a mystery. According to Mr Liu, he was told by Mr Gardner that the proposed price was not enough, since it did not reflect the value of the subjects. Mr Liu responded that, if the cash price was not enough, he would have NSL assume the liability to repay part of the sums lent by himself and his family to LGDC. After Mr Gardner confirmed in writing that 248,100 was not enough, Mr Liu agreed with his wife and parents that NSL would assume LGDCs liability to the extent of 1.85m. He did not tell Mr Gardner that the assumption of liability had occurred. Mr Liu gave unchallenged evidence that, following the sale to NSL, the sums due to Sanwa in respect of the Coquihalla loan were repaid. Mr Liu accepted in cross examination that he and his wife and parents made claims in February 2003 in the liquidation of LGDC, in respect of the loans described in the letters dated December 1994, which were excessive if, as he claimed, liability for 1.85m of the debts had been assumed by NSL. He stated that a mistake had been made by Brodies, the solicitors acting on his behalf. He had not corrected the mistake when he signed his claim form. The claims were subsequently adjusted so as to exclude the part of the loans which was said to have been assumed by NSL. The adjusted claims were rejected by the liquidator in their entirety, with the consequence that Brodies were unable to move a motion that a new liquidator should be appointed. Mr MacPherson, the solicitor at Brodies who prepared the claims, was not called as a witness, and in those circumstances the Lord Ordinary did not accept that the claims had been the result of a mistake on his part. A letter from Mr Gardner dated 7 February 2001 was produced. In the letter, Mr Gardner noted that LGDC was between accountants, and advised that if the transfer of the subjects was at a figure under its true value, then such a transfer could be attacked in the future by any liquidator of [LGDC]. The disposition was executed by MacRoberts, as the company secretaries of LGDC, on 12 February 2001. A letter from NSL to LGDC, dated 28 February 2001, was also produced. It acknowledged that, in addition to the purchase price, NSL would also assume 1.85m of debt owed by LGDC to the Liu family. The letter was signed by Mr Liu using the name J Michael Colby. He explained in evidence that he had decided to use a western name when conducting business in the West, as he felt that he was at risk of discrimination as an ethnic Chinese. Resolutions of NSL dated 26 January and 7 February were also produced. The former stated that NSL would purchase the assets of LGDC for 248,100. The latter stated that NSL would further assume 1,850,000 UK Pound Sterling of extra other debt liability of [LGDC] to the Liu family. According to Mr Lius evidence, NSLs acquisition of the subjects was financed by a loan of 300,000 advanced to it by Foxworth. A standard security in respect of the loan was executed but was not registered. In 2003 Foxworth assumed liability for debts totalling 1.7m owed by NSL to the Liu family. A fresh standard security was then executed and registered in respect of a personal bond for 2m, comprising the 1.7m of debt and the earlier loan of 300,000. That is the standard security challenged in the present proceedings. Evidence was also given on behalf of Foxworth and NSL by a number of other witnesses. Mr Lius son, who had been involved in running the family business, was called to answer allegations that he had destroyed records relating to LGDC and NSL. The Lord Ordinary records that he struck me as an honest witness and on these matters I accept his evidence. Another director of NSL gave evidence, but her recollection of that companys taking over loans from LGDC was uncertain, and the Lord Ordinary did not feel able to place reliance upon it. Mr Lius wife and parents gave evidence that they left the running of the familys business interests to him. They confirmed that they had lent money for the purpose of LGDC acquiring the subjects, and that they had been told about, and had agreed to, NSL assuming responsibility for their loans. In relation to those events, however, the Lord Ordinary did not regard their evidence as providing independent support for Mr Lius account. Mr Gardner also gave evidence. In relation to the purchase of the subjects by LGDC, he confirmed sending the letter dated 4 November 1994. There was never any doubt in his mind that the 2m or so that he received was provided by or on behalf of members of the Liu family. He had written to Mr Liu on 7 November 1994, requesting details of the breakdown of the funds. He said that he had not received a response. He had no recollection of receiving the fax dated 2 December 1994 or the letters from LGDC to Mr Liu and his wife and parents dated December 1994. The Lord Ordinary commented that it would be surprising if Mr Gardner had received no response to his request: it was not consistent with his general approach to this matter for him simply to let the matter drop. Mr Gardner also spoke to a fax which he had received from Mr Liu dated 23 February 1995 in which Mr Liu said that the split of the loans was to be between eight members of his family. Mr Liu had described this as a thought which was never implemented. Mr Gardner was not aware of anything happening which suggested otherwise than that the arrangements described in the 1994 letters were entered into and remained in operation. In relation to the sale of the subjects by LGDC to NSL, Mr Gardner confirmed having sent the letter dated 7 February 2001, warning of the risk which would result from a sale at an undervalue, following a discussion of that risk with Mr Liu. There had been mention of the loans during his discussions with Mr Liu in February 2001, but he had not been told that the consideration included the assumption of the loans. Evidence was also given by the liquidator and members of his staff. The letters dated December 1994, recording the loans made to LGDC by members of the Liu family, did not feature in the files of LGDC. Nor did the letter dated 28 February 2001 from NSL to LGDC, relating to the assumption of the loan. Error of law? As I have explained, the critical issue under section 242(4)(b) is whether the alienation was made for adequate consideration. That was clearly understood by the Lord Ordinary. He summarised the liquidators case as being that the disposition of the subjects by [LGDC] to NSL was not made for adequate consideration: in particular, the consideration of 248,100 referred to in the disposition was not adequate consideration having regard to the value of the subjects. He summarised the case advanced on behalf of Foxworth and NSL as being that the disposition was not at an undervalue because the price of 248,100 stated in the disposition did not represent the whole consideration: in particular, the consideration for the disposition included the assumption of debt, namely 1.85m owed by LGDC to members of Mr Lius family. He summarised the liquidators response as being that he challenged the assertions made by Mr Liu about the 1994 loans, and challenged the defenders case that in 2001, as part of the consideration for the subjects, NSL assumed the debt which the company owed to the Liu family. The liquidator sought to establish, in particular, that the documentation relating to the assumption of the loan had not been prepared on the dates which it bore, but had been produced subsequently in order to support a false case. is in the following terms: In relation to this matter, the critical paragraph in the Lord Ordinarys opinion It is not clear to me on the evidence when the documentation purporting to evidence the assumption of the loan by NSL was created, or indeed when the decision was made that the amount of debt assumed would be 1. 85 million rather than some other figure. Mr Liu acted for both LGDC and NSL (albeit under different names) and also took the necessary decisions so far as concerned the loans from members of his family. To that extent, once the decision was made, the documentation could follow later. It was not suggested in argument that the subsequent creation of documents to record the assumption of the loan as part of the consideration for the sale in any way invalidated what had occurred if the decision had in fact been made to assume part of the loan as part of the consideration. I find that that decision had been made. (para 90) The Lord Ordinary accordingly concluded that the sale from LGDC to NSL was made for adequate consideration and was not a gratuitous alienation. (para 92) There was no argument before the Lord Ordinary to the effect that, even if the debt assumption had taken place, that had occurred at a point in time which was too late for it to qualify as consideration. Before the Inner House, however, that argument was advanced by the counsel and solicitors newly instructed on behalf of the liquidator. It was accepted by the court. In relation to para 90 of the Lord Ordinarys opinion, Lady Paton, with whose reasoning the other members of the court agreed, stated at paras 75 76: The consideration allegedly given in exchange for the granting of the disposition of Letham Grange to NSL required to be enforceable (ie able to be vindicated) at the time when the disposition was granted on 12 February 2001. On the Lord Ordinarys own findings, however, there was no enforceable obligation binding NSL to repay Liu family loans as at that date. Taken in context, I am quite unable to read the words part of the loan in the penultimate line of para 90 of the Lord Ordinarys opinion as being referable to the precise or calculated figure of 1.85 million but, even if they were so read, I doubt whether, in the absence of any documentation whatsoever, the decision in question could properly be regarded as any more than a statement of intent on the part of Mr Liu. It was not open to the Lord Ordinary to accept that consideration was given in exchange for the disposition granted in the form of some vague obligation undertaken by NSL to repay Liu family debt. In relation to the first point made by Lady Paton, the Lord Ordinary was aware that an obligation on the part of NSL could only constitute part of the consideration for the sale if it was undertaken as the counterpart of the obligations undertaken by LGDC in relation to the sale. He distinguished at para 90 between the question, on which those then acting for the liquidator had focused, whether the documents evidencing the obligation existed at the time of the sale or were created subsequently, and the question whether the decision had in fact been made to assume part of the loan as part of the consideration. He answered the latter question in the affirmative. It is possible that, when he referred to part of the loan, he meant some wholly indeterminate amount, but only if he had failed to realise that a decision to assume liability for an amount which was entirely unquantified, and incapable of quantification, would not give rise to an enforceable obligation. I would decline to attribute an elementary error to an experienced judge if his words can reasonably be understood in a different sense, as they can in the present case, where the 1.85m was indeed part of the loan. It might be said that the Lord Ordinary could have dealt with this matter more clearly, but it is understandable that his opinion should have dealt in greatest detail with the points on which the parties had joined issue: in particular, whether the documents had been created on the dates that they bore, and whether, rather than when, any obligation was undertaken. In relation to Lady Patons second point, Mr Liu gave evidence to the effect that a decision to assume the indebtedness had been taken on behalf of NSL, with the agreement of the relevant members of his family, before the sale was completed. Subject to the separate criticism that he failed to deal adequately with the evidence, to which I shall turn next, the Lord Ordinary was entitled to accept that evidence and, on that basis, to find that an enforceable obligation had been undertaken, rather than a mere statement of intent. Failure to deal adequately with the evidence? Lady Paton described the way in which the Lord Ordinary had erred in his approach to the evidence at para 78 of her opinion: He did not take the final step of (i) clearly recognising that there was a significant circumstantial case pointing to a network of transactions entered into with the purpose of keeping Letham Grange (valued at 1.8 million) out of the control of the liquidator, and (ii) explaining why, nevertheless, he was not persuaded that the liquidator should succeed. Rather the Lord Ordinary dismissed or neutralised individual pieces of evidence without, in my view, giving satisfactory reasons for doing so, thus dismantling the component parts of any circumstantial case which was emerging from the evidence, but without first having acknowledged the existence and strength of that circumstantial case, and then explaining why he rejected it. Her Ladyship then gave five examples of this erroneous approach. I shall discuss those examples shortly. It may however be helpful to preface that discussion with some general observations. The Lord Ordinary was correct to approach the evidence as a whole with an open mind, rather than beginning with a presumptive conclusion in favour of the liquidators case, and then explaining why he was nevertheless persuaded that the liquidator should not succeed. He understood what the liquidators case was, as I have already indicated, and he set out the matters advanced on behalf of the liquidator in support of that case, as I shall explain. The fact that he found the liquidators circumstantial case less impressive than the Extra Division reflected a careful and nuanced assessment of the evidence, and an understanding of the commercial realities of the situation with which the case was concerned. The circumstantial case which impressed the Extra Division was superficially attractive, if one important circumstance, which I shall shortly come to, was disregarded. LGDC, a company owned and controlled by Mr Liu, went into liquidation. Less than two years earlier, at a time when it was in financial difficulties, all its fixed assets were transferred to another company, NSL, owned and controlled by the same individual. Lady Paton stated at para 85 that the evidence viewed as a whole gave rise to the inference which the liquidator contended for, that is to say, that the transactions in 2001 and 2003 were carried out neither in good faith nor for value, with a view to placing the valuable heritable property beyond the reach of the liquidator, thus defeating the claims of LGDCs creditors (para 77). One difficulty with this analysis is that it is not clear from the evidence that LGDC was in financial difficulties in 2001, as Lady Paton states at paras 2 and 16. Although, as with many companies, a balance sheet would have shown that its liabilities exceeded its assets, there was no evidence that it was in trading difficulties at that time, and Mr Liu gave unchallenged evidence that the winding up occurred as a result of subsequent events. There is however a more fundamental difficulty. If LGDC was heavily indebted to Mr Liu and his family, that circumstance would cast an entirely different complexion upon the inherent likelihood of the liquidators case. In that situation, it would make little commercial sense for the indebtedness to remain entirely with LGDC after its fixed assets had been transferred to NSL. If the assets were to be shifted to NSL, the obvious step was to ensure that a substantial part of the indebtedness was also transferred to that company. When one further considers (1) that Mr Liu was specifically advised that a transfer of the assets to NSL at an undervalue would be open to challenge, (2) that the assumption of the debt by NSL cost Mr Liu and his family nothing, and (3) that Mr Liu was found by the Lord Ordinary to have an acute business intelligence, it would if anything be surprising if the consideration for the sale to NSL had not included the assumption of debts owed to the Liu family. The Lord Ordinarys opinion demonstrates an awareness of this point, which appears to have eluded the Extra Division. At para 83 of his opinion, the Lord Ordinary said: Although there are questions as to the timing of the letters of 5 December 1994 evidencing the Liu family loan, and equally of the 8 December 1994 letter evidencing the Coquihalla loan, the fact of the loan itself was not challenged. This is of the utmost importance in assessing much of the other evidence in the case. It is clear that there was a loan from the Liu family in the total amount shown by the December 1994 letters. This is consistent with Mr Gardner's correspondence at the time. He may not have known of the breakdown of the loan between the various family members and it is clear that he did not but he knew that the loan to LGDC to enable it to purchase Letham Grange had been arranged by Mr Liu and came principally from Liu family sources. (emphasis supplied) He later observed: There is no doubt that he [Mr Liu] has an acute business intelligence. If Mr Gardner pointed out a possible problem with the sale, why would he not try to address that problem? Procuring that NSL, a family company, relieved LGDC, another family company, of part of its liability to repay loans to members of the family, cost him nothing. (para 88) Those passages might be contrasted with para 101 of Lady Patons opinion: I should add that it is possible that the Lord Ordinary was influenced to some extent by his understanding that the original 2 million which was paid for Letham Grange in 1994 was said to be Liu family money. Nevertheless such a consideration, if well founded (and on the state of the evidence I reserve my position on that matter) does not affect the need to recognise the strong circumstantial case referred to in this opinion. It appears from this passage that the Extra Division not only declined to accept the unchallenged evidence of the loans to LGDC (loans whose existence was also accepted on behalf of the liquidator before this court), but also failed to grasp its relevance to the case, including the question whether there was in fact a strong circumstantial case. The reason for the sale As I have mentioned, Lady Paton gave five examples of the Lord Ordinarys dismissing or neutralising the parts of the evidence which constituted the component parts of the circumstantial case advanced on behalf of the liquidator, without giving satisfactory reasons for doing so. First, in relation to the reason for LGDCs selling the subjects to NSL rather than, for example, obtaining a further loan from the Liu family, Lady Paton was critical of a passage in the Lord Ordinarys opinion in which he stated: I find the reason for the sale in 2001 to NSL somewhat elusive. As I have said, according to Mr Liu it was because the Coquihalla loan required to be repaid and LGDC did not have any money or the means of raising it. A loan from a family member or a third party might have been the answer, but without accountants Mr Liu could not properly record a loan in the books of the company. Therefore it was agreed to raise the money by selling the subjects to NSL. I find this explanation difficult to believe. The 1994 loans were not properly recorded originally, and there was no reason why an informal arrangement could not have been made. But ultimately this does not matter. The fact is that LGDC did sell the subjects to NSL, whatever might have been the true reasons for that. So the elusiveness of the reasons for the transaction do not impact upon this part of the story. A sale was arranged to NSL. (para 86) Lady Paton comments (para 80): On the contrary, the lack of a sound reason for the sale in 2001 was a highly significant piece of evidence which should have been kept in mind when assessing the overall picture (including credibility), rather than being dismissed at an early stage as unimportant. I am unable to agree with this criticism of the Lord Ordinary. He began his discussion of the case by stating that it turns on the credibility of Mr Liu (para 81). He then listed a number of criticisms of Mr Lius credibility which were well made and, in an ordinary case (if there is such a thing) would likely be regarded as fatal to the defenders case. These included difficulty in seeking to understand the underlying purpose of the sale to NSL. This was one of a number of matters which were formidable obstacles for the defenders to overcome (para 82). It is clear, therefore, that he appreciated the significance of the absence of a clear explanation for the sale when assessing credibility. The Lord Ordinary then considered the significance of the unchallenged and overwhelming evidence that there had been a loan from the Liu family to LGDC in the total amount shown in the December 1994 letters. This he rightly described as being as of the utmost importance in assessing much of the other evidence in the case (para 83). That was so for a number of reasons. First, since that evidence was not in doubt, it provided a sound foundation for the assessment of the evidence which was disputed, in so far as it bore upon it. Secondly, as I have explained, it affected the inherent probability of Mr Lius claim that part of the indebtedness of LGDC to the Liu family had been assumed by NSL at the time when the fixed assets of the former company were sold to the latter. Thirdly, it was also relevant to an assessment of the demeanour of Mr Liu and the manner in which he answered questions put to him by counsel for the liquidator: put shortly, if the loans were genuine, it followed that Mr Liu had a genuine grievance against the liquidator (who had previously declined to accept the Liu familys claims in the liquidation, and had in consequence avoided being removed from office), which could explain a reluctant and almost truculent manner. In the light of his finding that the loans had been made in the amounts shown in the 1994 letters, and the implications of that finding which I have explained, the Lord Ordinary concluded his assessment of credibility by finding that Mr Liu was endeavouring to tell the truth, so far as concerned the essentials of his case, and that the parts of his evidence that concerned those essentials could be relied on (para 84). Having made that crucial finding after, as I have explained, taking account of the lack of a clear explanation for the sale to NSL the Lord Ordinary then went through the history of events in chronological order. It is in that context that he again discussed the sale to NSL, in the passage which was criticised by Lady Paton. He had previously discussed in some detail the various questions which arose in relation to the reason for the sale (paras 77 79). He noted that Mr Liu was not cross examined in depth on the rationale for the sale to NSL or on other ways in which the debt to Sanwa might have been repaid: Mr Liu was not directly challenged along the lines that there was no commercial purpose (para 76), was never asked why [the 1.85m] could not have been advanced by way of a loan (para 77), and was not asked about this [why NSL was introduced if it did not have the money to pay LGDC] in any detail (para 78). He also noted that the reasons behind it [the fact that Foxworth did not assume the 1.85m debt] were not explored in evidence (para 79). In the context in which the passage in question appeared in his opinion, the Lord Ordinary was correct to say in para 86 that the reason for the sale did not matter. He had by then decided that the Liu family had lent over 2m to LGDC in 1994, and there was no doubt that LGDC had sold the subjects to NSL in 2001. What was important at that stage of the analysis was the amount of the consideration for the sale, and in particular whether it included the assumption of 1.85m of the loan. The answer to that question did not depend upon the reason for the sale, but essentially upon the credibility of Mr Liu. In so far as the elusiveness of the reason for the sale bore upon Mr Lius credibility, it had already been taken into account. The claims in the liquidation Lady Patons second example of the neutralising of a piece of evidence was a comment made by the Lord Ordinary in relation to the claims submitted on behalf of the Liu family in the liquidation of LGDC, which did not initially take account of the assumption of part of the loan by NSL: It seems to me to be perfectly possible that Mr Liu, in instructing his lawyers in that case, did not at that moment put two and two together so as to realise that the assumption of 1.85 million of the loan by NSL had the effect of reducing the debt due by LGDC to the family members. (para 91) Lady Paton observed that Mr Liu had not himself put forward that explanation, and stated: In my view, it is significant that Mr Liu failed to discount the Liu family claims This strand of evidence was important, and tended to suggest that the consideration given for Letham Grange had indeed been 248,100. (para 81) The Lord Ordinary did not overlook the significance of this evidence. In his discussion of the matters adverse to Mr Lius credibility, he said: Most damning of all, perhaps, is the fact that when presenting a claim in the winding up and pressing his case in the sheriff court proceedings in 2003, Mr Liu instructed his lawyers as to the amount of the family loan outstanding to date without any hint of there having been an assumption of part of this debt by NSL. This was a crucial element in the calculation of the sums claimed in the winding up. If NSL had assumed part of the debt, the sums owing by LGDC would have been pro tanto reduced. (para 82) When the Lord Ordinary referred to this matter again in the passage criticised by Lady Paton, he had by then concluded, after taking this matter into account, that Mr Liu was nevertheless a credible witness on the essential matters in dispute. The Lord Ordinary had also concluded, by that stage, that the assumption of the debt formed part of the consideration for the sale. He then stated, in the earlier part of the paragraph criticised by the Extra Division: In coming to this conclusion I have taken account of all the various criticisms of Mr Lius evidence, including in particular his failure to take account of the assumption of the loan when first presenting his case in the sheriff court proceedings (para 91). He need not have gone on to suggest a possible explanation for Mr Lius failure to tell his lawyers about the assumption of the debt until 2003: at that stage of his analysis of the case, it did not matter. The fact that he suggested an explanation one not entirely unrelated to Mr Lius evidence that he was a busy man with business interests around the world (para 74) does not vitiate his conclusion. Changes in Mr Lius position Lady Patons third example of the dismissal of a significant piece of evidence concerned changes in Mr Lius account of what he had told Mr Gardner about the consideration for the sale. The Lord Ordinary, it was said, did not expressly refer to these changes, and appeared to take no account of Mr Lius ultimate position that he deliberately did not tell Mr Gardner about the enhanced consideration (para 82). I am unable to agree with this criticism. The Lord Ordinary set out in full the explanation given by Mr Liu in his witness statement, which he adopted as part of his evidence in chief. That included the statement: It was agreed with each of my family members that liability to repay 1,850,000 of the total sum lent would be assumed by [NSL] and I told Dan Gardner that. (para 42) The Lord Ordinary emphasised the final phrase. He then noted that, in cross examination, Mr Liu gave evidence that he told Mr Gardner that NSL would assume responsibility for the loans, but did not tell Mr Gardner the amount of the loans or that the assumption of liability had already occurred. The Lord Ordinary noted that, in re examination, Mr Liu said that what he had told Mr Gardner was that he would adjust the price to what was necessary. The Lord Ordinary returned to the point in his discussion of credibility, noting as one of the points made by counsel for the liquidator that Mr Liu did not tell Mr Gardner in terms that the consideration for the sale included an assumption by NSL of 1.85 million of the Liu family debt owed by LGDC (para 82). As I have mentioned, he later said that in coming to his conclusion he had taken account of all the criticisms of Mr Lius evidence (para 91). The Lord Ordinary was therefore aware that Mr Lius position in relation to what he had told Mr Gardner changed during his evidence, and he took that into account. He clearly regarded it as significant that Mr Liu finally accepted that he had not told Mr Gardner that the loan had been assumed as part of the consideration. The changes in position were of course relevant to the credibility and reliability of Mr Lius evidence. The Lord Ordinary discussed that matter fully, and acknowledged the strength of the points made. Nevertheless, as he said, having seen Mr Liu over a considerable period in the witness box, and having heard him at length under persistent and skilful cross examination, he formed the view that his evidence was credible and reliable so far as concerned the essentials of the case (para 84). It is true that the Lord Ordinary did not refer expressly to a passage during Mr Lius cross examination, quoted by Lady Paton, in which he gave what appears to have been a rather emotional answer to the effect that the reason he had not told Mr Gardner that the debt had been assumed was because the deeds had already been prepared by then, and he felt that he would look like a fool if he asked for them to be corrected at that stage. There is however no reason to suppose that this passage in the evidence was overlooked, merely because it was not expressly mentioned. An appellate court is bound, unless there is compelling reason to the contrary, to assume that the trial judge has taken the whole of the evidence into his consideration: Thomas v Thomas 1947 SC (HL) 45, 61; [1947] AC 484, 492, per Lord Simonds; see also Housen v Nikolaisen [2002] 2 SCR 235, para 72. The discrepancy between the 1994 and 1995 correspondence Lady Patons fourth example of the dismissal of significant evidence was the Lord Ordinarys treatment of the discrepancy between the letters of December 1994, attributing the loan to LGDC to four members of the Liu family, and the fax of 23 February 1995, where eight members of the family were mentioned. Lady Paton commented that the Lord Ordinary did not draw the obvious inference that the letters did not exist in 1994 or 1995, when the letters were not shown to Mr Gardner, or in 2002, when the letters were not found by the liquidator in the records of LGDC, but were compiled by Mr Liu for his own purposes. The Lord Ordinary chose in effect to dismiss the potentially significant discrepancy by making the assumption that the money lent was all Liu family money, and taking the view that nothing turned on whether the letters were written in 1994 or some time later (para 83). The Lord Ordinary discussed at length the evidence relating to the December 1994 documents and the fax of 23 February 1995 (paras 35 37 and 54 56). I have already summarised some of that evidence. He noted fully the points made by counsel for the liquidator: The originals of such letters had not been produced. No explanation had been given for this. Being written in English, they cannot have been intended primarily for the benefit of the members of the family, whose native language was Chinese and who had very little English. They must have been intended as a record of the loans to LGDC. Yet they were not passed to MacRoberts (who acted as company secretary) in 1994. They were not found in the books and records of the company at the commencement of the liquidation. Nor were they shown to Mr Gardner when he asked about the loans. Even when he asked for particulars of the loans, he was not told of these details. Indeed, in the early months of 1995 Mr Gardner was being told that the funds made available to LGDC had come from different lenders (including the family members) and in different amounts. (para 67) The Lord Ordinary discussed the issue again when he considered the credibility of Mr Lius evidence, stating that he accepted that there was some doubt about when the 1994 letters were produced, since they were not shown to Mr Gardner at the time of LGDCs purchase of Letham Grange in circumstances where one would one have expected them to have been shown to him had they been in existence at that time (para 82). But he also observed: On the other hand, although there are questions as to the timing of the letters of 5 December 1994 evidencing the Liu family loan, and equally of the 8 December 1994 letter evidencing the Coquihalla loan, the fact of the loan itself was not challenged. (para 83) The Lord Ordinary was correct to take the doubt about the date of the letters into account when assessing Mr Lius credibility, as he plainly did: it was one of the formidable obstacles to be overcome. But he was also correct to identify as the central question whether the loan had been made, rather than whether particular evidence vouching the loan was all that it bore to be. In relation to that question, in the critical paragraph of his opinion, the Lord Ordinary observed that although there were questions as to the timing of the letters evidencing the Liu family loan, the fact of the loan itself was not challenged. It was clear that there was a loan from the Liu family in the total amount shown by the letters. As the Lord Ordinary explained, that was consistent with Mr Gardners evidence and his correspondence of that time (para 83). The Lord Ordinary concluded, in relation to this chapter of the evidence: I am satisfied that the loans were made by members of the Liu family to LGDC, in the amounts evidenced in the December 1994 letters, for the acquisition of Letham Grange. It is clear from the evidence that all decisions about this were effectively taken by Mr Liu. His family members relied on his advice. I am not persuaded that the split between the family members was necessarily decided upon by the time of the transaction (it will be recalled that different splits and, indeed, different lenders were mentioned at various times) and it may, therefore, be that the letters of 5 and 8 December 1994 were written and signed some time later. But nothing turns on this. The loans were made to LGDC and were enforceable according to the terms of the letters the fact that letters are back dated does not invalidate them in so far as they purport to be a record of a transaction. (para 85) Against the background I have described, the criticisms levelled at the Lord Ordinary in relation to this matter appear to me to miss their target. He considered the timing of the letters with care, particularly for the impact it might have upon the credibility of Mr Lius evidence. The obvious inferences which he is criticised for failing to draw do not appear to me to be obvious. His assumption that LGDCs purchase of the subjects had been financed by loans from the Liu family reflected unchallenged evidence, which for some unexplained reason the Extra Division declined to accept. His conclusion that nothing turned on the date when the letters were written was one he was entitled to reach. In essence, his doubts as to the date of the loan letters, in a situation where the existence of the loans themselves was not challenged, did not cause him to conclude that the consideration for the subsequent sale of the subjects had not included the assumption of part of the debt resulting from those loans. Brevity Lady Patons final example of the neutralising of a potentially significant strand of evidence is the Lord Ordinarys brief reference to Mr Gardners evidence about the disposition from LGDC to NSL. In the passage in question, the Lord Ordinary stated: Mr Gardner gave evidence in detail about the disposition from LGDC to NSL in February 2001. The matter is covered in paras 15 27 of his witness statement upon which he elaborated in his oral evidence both in chief and in cross examination. I do not need to set out that part of his evidence verbatim here. (para 57) Lady Paton commented: I consider, however, that the content of Mr Gardners evidence relating to the 2001 disposition was significant and at times startling, painting a picture of a client (Mr Liu) who was not being straightforward with his own solicitor. While there might be no need to set out Mr Gardners evidence verbatim, an indication of the content of his evidence would have presented a more balanced picture. (para 84) Although the Lord Ordinary did not set out Mr Gardners evidence relating to the disposition verbatim, he nevertheless gave not merely an indication of its content, but a detailed account of it, in paras 58 64 of his opinion. That account covered the aspects of this chapter of Mr Gardners evidence which were most damaging to Mr Liu. These included (1) his not having told Mr Gardner that J Michael Colby, whose signature appeared on the acceptance of the offer of sale, was himself; (2) his not having told Mr Gardner that liability for the 1.85m debt had been assumed as part of the consideration for the sale, and (3) his having in consequence misled Mr Gardner as to the amount of stamp duty payable (a matter which was subsequently rectified). In the circumstances, I cannot see any substance in this criticism of the Lord Ordinary. His treatment of this chapter of evidence was not unbalanced, and did not indicate any failure to understand it or to take it into account. More generally, he gave careful consideration to the arguments and evidence adduced on behalf of the liquidator, and explained why he nevertheless concluded that the liquidators case should be rejected. I would add that, in any event, the validity of the findings of fact made by a trial judge is not aptly tested by considering whether the judgment presents a balanced account of the evidence. The trial judge must of course consider all the material evidence (although, as I have explained, it need not all be discussed in his judgment). The weight which he gives to it is however pre eminently a matter for him, subject only to the requirement, as I shall shortly explain, that his findings be such as might reasonably be made. An appellate court could therefore set aside a judgment on the basis that the judge failed to give the evidence a balanced consideration only if the judges conclusion was rationally insupportable. Additional observations The principles governing the review of findings of fact by appellate courts were recently discussed by this court in McGraddie v McGraddie [2013] UKSC 58; [2013] 1 WLR 2477; 2013 SLT 1212. There is no need to repeat what was said there. There may however be value in developing some of the points which were made in that judgment. In the present case, the Extra Division cited earlier authorities of the highest standing. Lady Paton referred in particular to the well known dictum of Lord Thankerton in Thomas v Thomas 1947 SC (HL) 45, 54; [1947] AC 484, 488: The appellate court, either because the reasons given by the trial judge are not satisfactory, or because it unmistakably so appears from the evidence, may be satisfied that he has not taken proper advantage of his having seen and heard the witnesses, and the matter will then become at large for the appellate court. As I have explained, Lady Paton found the reasons given by the trial judge to be unsatisfactory; and I have also explained why I take a different view. Her Ladyship also cited a dictum from the opinion of Lord President Hamilton in Hamilton v Allied Domecq plc [2005] CSIH 74; 2006 SC 221, para 85, concerned with the situation where findings of fact are unsupported by the evidence and are critical to the decision of the case. She considered that that test also was met in the present case (para 89). As this court explained in McGraddie at para 31, however, that dictum was concerned with the situation where a critical finding has been made which is unsupported by any evidence, rather than the situation where the appellate court disagrees with the overall conclusion reached by the Lord Ordinary upon the evidence. It was therefore not in point in the present case. Lady Paton also cited the dictum of Lord Macmillan in Thomas v Thomas 1947 SC (HL) 45, 59; [1947] AC 484, 491, where, after mentioning some specific errors which might justify the intervention of an appellate court, his Lordship added that the trial judge may be shown otherwise to have gone plainly wrong. As Lady Paton noted, that dictum was cited by Lord Hope of Craighead in Thomson v Kvaerner Govan Ltd [2003] UKHL 45; 2004 SC (HL) 1, para 16, where he also cited Lord Shaw of Dunfermlines statement in Clarke v Edinburgh and District Tramways Co Ltd 1919 SC (HL) 35, 37 that the duty of the appellate court was to ask itself whether it was in a position to come to a clear conclusion that the trial judge was plainly wrong. Lady Paton considered that that test also was met in the present case (para 89). Given that the Extra Division correctly identified that an appellate court can interfere where it is satisfied that the trial judge has gone plainly wrong, and considered that that criterion was met in the present case, there may be some value in considering the meaning of that phrase. There is a risk that it may be misunderstood. The adverb plainly does not refer to the degree of confidence felt by the appellate court that it would not have reached the same conclusion as the trial judge. It does not matter, with whatever degree of certainty, that the appellate court considers that it would have reached a different conclusion. What matters is whether the decision under appeal is one that no reasonable judge could have reached. In Thomas itself, Lord Thankerton, with whose reasoning Lord Macmillan, Lord Simonds and Lord du Parcq agreed, said that in the absence of a misdirection of himself by the trial judge, an appellate court which was disposed to come to a different conclusion on the evidence should not do so unless it is satisfied that any advantage enjoyed by the trial judge by reason of having seen and heard the witnesses could not be sufficient to explain or justify the trial judges conclusion: 1947 SC (HL) 45, 54; [1947] AC 484, 487 488. Lord du Parcqs speech is to similar effect. Distinguishing the instant case from those very rare occasions on which an appellate court would be justified in finding that the trial judge had formed a wrong opinion, he said: There are, no doubt, cases in which it is proper to say, after reading the printed record, that, after making allowance for possible exaggeration and giving full weight to the judge's estimate of the witnesses, no conclusion is possible except that his decision was wrong. (1947 SC (HL) 45, 63; [1947] AC 484, 493) Viscount Simon, while disagreeing as to the result of the appeal, also emphasised the need for the appellate court to consider whether the trial judges decision could reasonably be regarded as justified: If there is no evidence to support a particular conclusion (and this is really a question of law), the appellate court will not hesitate so to decide. But if the evidence as a whole can reasonably be regarded as justifying the conclusion arrived at at the trial, and especially if that conclusion has been arrived at on conflicting testimony by a tribunal which saw and heard the witnesses, the appellate court will bear in mind that it has not enjoyed this opportunity and that the view of the trial judge as to where credibility lies is entitled to great weight. (1947 SC (HL) 45, 47; [1947] AC 484, 486). These dicta are couched in different language, but they are to the same general effect, and assist in understanding what Lord Macmillan is likely to have intended when he said that the trial judge might be shown otherwise to have gone plainly wrong. Consistently with the approach adopted by Lord Thankerton in particular, the phrase can be understood as signifying that the decision of the trial judge cannot reasonably be explained or justified. It follows that, in the absence of some other identifiable error, such as (without attempting an exhaustive account) a material error of law, or the making of a critical finding of fact which has no basis in the evidence, or a demonstrable misunderstanding of relevant evidence, or a demonstrable failure to consider relevant evidence, an appellate court will interfere with the findings of fact made by a trial judge only if it is satisfied that his decision cannot reasonably be explained or justified. This approach is consistent, as I have explained, with the Scottish authorities, and also with more recent authority in this court and in the Judicial Committee of the Privy Council (see, for example, In re B (A Child) (Care Proceedings: Threshold Criteria) [2013] UKSC 33; [2013] 1 WLR 1911, paras 52 53, per Lord Neuberger). A similar approach has also been adopted by the Supreme Court of Canada (see HL v Canada (Attorney General) 2005 SCC 25; [2005] 1 SCR 401, paras 55 56) and by the United States Supreme Court (see Anderson v Bessemer 470 US 564 (1985), 573 574). In the circumstances of the present case, in my opinion the Extra Division had no proper basis for concluding that the Lord Ordinary had misdirected himself or had failed to give satisfactory reasons for the factual conclusions which he reached on the evidence, or for concluding that he had gone plainly wrong. It follows that the appeal must be allowed. Expenses As I have explained, Foxworth and NSL had a cross appeal which the Extra Division did not find it necessary to determine. The Lord Ordinary found the liquidator liable to Foxworth and NSL in the expenses of the action, but added a proviso that the order for expenses was not to be enforced without a further order of the court. In his opinion, the Lord Ordinary explained that the liquidator had been awarded expenses in the previous proceedings against NSL, and that the award had not been met. He was concerned that it might be unjust to allow Foxworth and NSL to enforce an order for expenses against the liquidator when the latter held an unsatisfied order for expenses in his favour in respect of the earlier action. It was unclear to the Lord Ordinary, at the time when he considered the matter, whether Foxworth and NSL were under the same control or beneficial ownership. The solution which he adopted was to add the proviso. He stated in his opinion that, at the hearing of any motion for an order allowing enforcement of the award, he would expect to be provided with information as to (a) whether the order for expenses in the first action had been satisfied, and if not, why not, (b) the ownership and control of the two companies, (c) whether there were any creditors of Foxworth with an interest to support or oppose the motion and, if so, the extent of their claims and the extent of the assets available to meet those claims, (d) whether any such creditors supported or opposed the motion, and (e) anything else of relevance. The Lord Ordinarys order in relation to expenses was recalled by the Extra Division. In the present appeal, counsel for Foxworth and NSL argued that, in the event that the Lord Ordinarys decision on the substantive issue were to be restored, his decision on expenses nevertheless should not be in so far as it contained the proviso. The question whether the payment of an award of expenses in favour of Foxworth could be withheld on account of NSLs failure to pay another award of expenses was governed by the law of compensation which answered the question in the negative and was not a matter of judicial discretion. Questions in relation to awards of expenses in the Court of Session are generally best determined by that court. In discussion, it was accepted that no prejudice would be occasioned by remitting the question of the expenses of the proceedings in the Outer House to the Lord Ordinary. It was accepted that the non payment by NSL of the award made in the previous proceedings can be considered and taken into account, along with all other circumstances relevant to the courts exercise of its discretion, at the stage when an award is made, obviating the potential difficulty raised in the cross appeal. Conclusion I would accordingly allow the appeal and invite parties to make submissions as to the appropriate form of order.
+These appeals raise the question whether it was lawful for the Secretary of State to make subordinate legislation imposing a cap on the amount of welfare benefits which can be received by claimants in non working households, equivalent to the net median earnings of working households. The legislation is challenged under the Human Rights Act 1998 primarily on the basis that it discriminates unjustifiably between men and women, contrary to article 14 of the European Convention on Human Rights (the ECHR) read with article 1 of Protocol No 1 to the ECHR (A1P1). The discrimination arises indirectly. The cap affects all non working households which would otherwise receive benefits in excess of the cap. Those are predominantly households with several children, living in high cost areas of housing. The heads of such households are entitled, in the absence of the cap, to relatively high amounts of child benefit, which is payable in direct proportion to the number of children. They are also entitled, in the absence of the cap, to relatively high amounts of housing benefit, which reflects the rental cost of the accommodation in which the household lives, and tends therefore to reflect to some extent the size of the household and, more particularly, the level of rental values in the area. In practice, this means that non working households with several children, living in London, are most likely to be affected. The majority of non working households with children are single parent households, and the vast majority of single parents are women (92% in 2011). A statistically higher number of women than men are therefore affected by the cap. The great majority of single parent non working households are however unaffected by the cap. It is argued that the cap also affects victims of domestic violence, because they may be temporarily housed in accommodation which is relatively expensive (the rent for such accommodation having tended to reflect the amount of housing benefit payable), and in that event are entitled, in the absence of the cap, to relatively high amounts of housing benefit. That will also be the position if they are entitled to housing benefit in respect of both the temporary accommodation and also other accommodation to which they hope to return. Victims of domestic violence are also predominantly women. The justification put forward for the cap is one of economic and social policy, namely that it is necessary (1) to set a reasonable limit to the extent to which the state will support non working households from public funds, (2) to provide the members of such households of working age with a greater incentive to work, and (3) to achieve savings in public expenditure at a time when such savings are necessary in the interests of the economic well being of the country. Article 14 Article 14 provides: The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status. As is apparent from its terms, article 14 can only be considered in conjunction with one or more of the substantive rights or freedoms set forth in the Convention. In the present case, the relevant right is that set forth in A1P1: Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties. The appeal has been argued on the basis that the cap constitutes an interference with the peaceful enjoyment of possessions, within the meaning of A1P1. The general approach followed by the European Court of Human Rights in the application of article 14 was explained by the Grand Chamber in Carson v United Kingdom (2010) 51 EHRR 369, para 61: In order for an issue to arise under article 14 there must be a difference in the treatment of persons in analogous, or relevantly similar, situations. Such a difference of treatment is discriminatory if it has no objective and reasonable justification; in other words, if it does not pursue a legitimate aim or if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be realised. A violation of article 14 therefore arises where there is: a difference in treatment, (1) (2) of persons in relevantly similar positions, if it does not pursue a legitimate aim, or (3) if there is not a reasonable relationship of proportionality (4) between the means employed and the aim sought to be realised. In practice, the analysis carried out by the European court usually elides the second element the comparability of the situations and focuses on the question whether differential treatment is justified. This reflects the fact that an assessment of whether situations are relevantly similar is generally linked to the aims of the measure in question (see, for example, Rasmussen v Denmark (1984) 7 EHRR 371, para 37). In relation to the third element, the court has referred to the criteria laid down in the second paragraphs of articles 8 to 11 of the Convention as legitimate aims, where article 14 has been read in conjunction with those articles. In Sidabras v Lithuania (2004) 42 EHRR 104, for example, the court stated at para 55 that the difference in treatment pursued the legitimate aims of the protection of national security, public order, the economic well being of the country and the rights and freedoms of others. The court has also treated aims which are legitimate in the public interest in the context of A1P1, such as securing social justice and protecting the states economic well being, as legitimate aims when article 14 has been read in conjunction with that article, as for example in Hoogendijk v The Netherlands (2005) 40 EHRR SE 189 and Andrejeva v Latvia (2009) 51 EHRR 650. National authorities enjoy a margin of appreciation in assessing whether and to what extent differences in treatment are justified. The European court has emphasised the width of the margin of appreciation in relation to general measures of economic or social strategy, stating in its Carson judgment at para 61: The contracting state enjoys a margin of appreciation in assessing whether and to what extent differences in otherwise similar situations justify a different treatment. The scope of this margin will vary according to the circumstances, the subject matter and the background. A wide margin is usually allowed to the state under the Convention when it comes to general measures of economic or social strategy. Because of their direct knowledge of their society and its needs, the national authorities are in principle better placed than the international judge to appreciate what is in the public interest on social or economic grounds, and the court will generally respect the legislature's policy choice unless it is manifestly without reasonable foundation. That approach was followed by this court in Humphreys v Revenue and Customs Commissioners [2012] UKSC 18; [2012] 1 WLR 1545, where Lady Hale stated at para 22 that the normally strict test for justification of sex discrimination in the enjoyment of the Convention rights gives way to the manifestly without reasonable foundation test in the context of welfare benefits. Article 14 is not confined to the differential treatment of similar cases: discrimination may also arise where states without an objective and reasonable justification fail to treat differently persons whose situations are significantly different (Pretty v United Kingdom (2002) 35 EHRR 1, para 87). An example is the case of Thlimmenos v Greece (2001) 31 EHRR 411, where this type of discrimination was first recognised. The European court has also accepted that a difference in treatment may be inferred from the effects of a measure which is neutral on its face. In DH v Czech Republic (2007) 47 EHRR 59, the court stated at para 175: The court has established in its case law that discrimination means treating differently, without an objective and reasonable justification, persons in relevantly similar situations. The court has also accepted that a general policy or measure that has disproportionately prejudicial effects on a particular group may be considered discriminatory notwithstanding that it is not specifically aimed at that group. In such a case, it will again be necessary to consider whether the difference in treatment has an objective and reasonable justification, in the light of the aim of the measure and its proportionality as a means of achieving that aim. For example, a rule requiring that employees should be capable of heavy lifting will exclude a higher number of women than men, because of differences in the average bodily strength of the sexes. Whether that difference in treatment has an objective and reasonable justification will depend on whether the rule which results in the difference in treatment has a legitimate aim and is a proportionate means of realising that aim: a test which might be met in employments where it is necessary to lift heavy objects. The present case is essentially of a similar kind: the cap, in the form in which it has been established, affects a higher number of women than men because of differences in the extent to which the sexes take responsibility for the care of children following the break up of relationships. Whether that differential effect has an objective and reasonable justification depends on whether the legislation governing the cap, which brings about that differential effect, has a legitimate aim and is a proportionate means of realising that aim. When applying article 14 in the context of welfare benefits, the European court recognises the need for national rules to be framed in broad terms, which may result in hardship in particular cases. In its Carson judgment, for example, the Grand Chamber stated at para 62: The court observes at the outset that, as with all complaints of alleged discrimination in a welfare or pensions system, it is concerned with the compatibility with article 14 of the system, not with the individual facts or circumstances of the particular applicants or of others who are or might be affected by the legislation. Much is made in the applicants' submissions and in those of the third party intervener of the extreme financial hardship which may result from the policy . However, the court is not in a position to make an assessment of the effects, if any, on the many thousands in the same position as the applicants and nor should it try to do so. Any welfare system, to be workable, may have to use broad categorisations to distinguish between different groups in need. the court's role is to determine the question of principle, namely whether the legislation as such unlawfully discriminates between persons who are in an analogous situation. It is important to bear this in mind in the present case, where much has again been made of the financial hardship which, it is argued, may result from the cap in particular cases. The relevant question, however, is whether the legislation as such unlawfully discriminates between men and women. The present case In considering the issues arising under article 14 in the present case, I shall begin by examining the process which led to the legislation with which we are concerned, in order to identify the aims pursued by the legislation and information relevant to the issue which the court has to determine. Consideration of the Parliamentary debates for that purpose is not inconsistent with anything said in the case of Wilson v First County Trust Ltd (No 2) [2003] UKHL 40; [2004] 1 AC 816: the purpose of the exercise is not to assess the quality of the reasons advanced in support of the legislation by Ministers or other members of Parliament, nor to treat anything other than the legislation itself as the expression of the will of Parliament. The Welfare Reform Bill On 22 June 2010 the Chancellor of the Exchequer laid before Parliament his Emergency Budget: Budget 2010 (HC 61). It set out a five year plan to rebuild the British economy by reducing the structural fiscal deficit. The plan involved reductions in Government spending of 32 billion per annum by 2014/15. These reductions would include 11 billion in savings achieved through reforms of welfare. The reforms were intended to make the welfare system fairer and more affordable, to reduce dependency, and to promote employment. The following month, the Department for Work and Pensions (the Department) published a consultation document, 21st century Welfare (Cm 7913), seeking views on options to reform the system of working age benefits. In response to a question about the steps which the Government should consider to reduce welfare dependency and poverty, many respondents answered that the most effective way would be to ensure that people were significantly better off working than on benefit, and suggested the introduction of a benefit cap to restrict the amount of welfare payments which people could receive while out of work: Consultation Responses to 21st century Welfare (2010) (Cm 7971). A common view was that the cap should be set by reference to the national minimum wage. This idea was then discussed at the Departments Policy and Strategy Forum, at which the Department engages with groups representing benefit recipients. On 11 October 2010 the Secretary of State announced the Governments intention to set a cap on benefits for non working households. Further details were provided in the Spending Review 2010 (Cm 7942), which announced the intention to cap non working household benefits at around 500 per week for couple and single parent households, and around 350 per week for single adult households, so that no non working household would receive more in welfare than the median after tax earnings of working households. A household would comprise one or two adults living together as a couple, plus any dependent children living with them. The cap would be implemented by local authorities, which would assess the benefit income of housing benefit claimants, and reduce the payments of housing benefit where necessary to ensure that they did not receive more than the cap. It is relevant to note, in relation to submissions concerning the impact of the cap upon children, that the Spending Review made clear the Governments belief that the proposed reforms would promote the interests of children: The UK's existing system of support can trap the poorest families and children in welfare dependency. For many poor children the current system of support delivers little practical change in their long term economic prospects. Many born into the very poorest families will typically spend their entire lives in poverty. The Government wants to fundamentally change the prospects of these children. (para 1(54)) Contemporaneously with the Spending Review, HM Treasury published its Overview of the Impact of Spending Review 2010 on Equalities. This document considered the impact of the Spending Review on groups protected by equalities legislation, including women. It noted that decisions had been taken within the Spending Review which protected most of the services which women used more than men, in particular health, social care, early years and childcare. In order to protect those areas of spending, savings had to be made in other areas, including welfare. In relation to benefits, it was noted that any changes affecting single parent households would affect more women than men. In November 2010 the White Paper, Universal Credit: Welfare That Works (Cm 7957) was published. It included the benefit cap as part of the design of universal credit. The Parliamentary Select Committee on Work and Pensions considered the White Paper, and received evidence from, amongst others, the two interveners in the present proceedings, the Child Poverty Action Group and Shelter, as to the likely impact of the cap: House of Commons Work and Pensions Committee, White Paper on Universal Credit, Oral and Written Evidence (2011) (HC 743). The impact on larger families, and those living in high cost areas, was highlighted. That reflected the fact, recognised from the outset, that the cap would primarily affect households receiving large amounts of child related benefits and large amounts of housing benefit. On 16 February 2011 the Welfare Reform Bill received its First Reading in the House of Commons. Clauses 93 and 94 set out the proposed provisions in respect of a benefit cap. As is customary in the area of social security, the clauses were drafted on the footing that the primary legislation would establish a framework for secondary legislation in which the rules would be set out in detail. At the same time, the Department laid before Parliament an Impact Assessment for the Household Benefit Cap. That document explained the three policy aims: to deliver fiscal savings, to make the system fairer as between non working households and working households, and to incentivise the non working to work. It explained the policy options which had been considered, and the reasons for adopting the preferred option. In particular, it explained that consideration had been given to applying the cap to working households which also received benefits, but that it had been decided that they should be exempted, as including recipients of working tax credit among those affected by the cap would seriously reduce incentives to work (p 5). It had also been decided to exempt those in receipt of disability living allowance and constant attendance allowance, as disabled people with additional care or mobility costs had less ability to alter their spending patterns or reduce their housing costs in response to a cap on benefit. War widows and widowers would also be exempted, in order to recognise their sacrifice. Consideration had also been given to setting the cap at a different level, but it was decided that to base it on net median household earnings would best represent the average take home pay of working households. 26. The document explained that about 50,000 households would have their benefits reduced (representing around 1% of the out of work benefit case load), and that affected households would lose an average of 93 per week. Those affected by the cap would need to choose between taking up work (in which event they would no longer be affected), obtaining other income (such as child maintenance payments from absent parents: other reforms were designed to make it more difficult for absent parents to evade their obligation to provide financial support to single parents), reducing their non rent expenditure, negotiating a lower rent, or moving to cheaper accommodation. In March 2011 the Department laid before Parliament its Household Benefit Cap Equality Impact Assessment. The document stated that the cap was intended to reverse the disincentive effects and detrimental impacts of benefit dependency on families and children (para 5). The likely impact was analysed according to disability, race, gender, age, gender reassignment, sexual orientation, religion or belief, and pregnancy or maternity. In relation to gender, it was estimated that around 60% of claimants who had their benefits cut would be single females, whereas 3% would be single men. That was because around 60% of households affected would comprise single parents living with children, and single parents living with children were predominantly women. The impact of the cap on single parents would be mitigated by the provision of support to help them to move into work. Single parents would also be exempt from the cap if they worked for only 16 hours per week, whereas other single claimants would have to work for at least 30 hours per week before they were exempt. 27. The policy was subjected to detailed and vigorous scrutiny by both Houses of Parliament, over a period of more than 12 months, during the passage of the Bill through Parliament. That scrutiny was assisted by a number of House of Commons Research Papers, and by briefings prepared by organisations opposed to the policy. During the Committee stage which followed the Second Reading debate in the House of Commons, the Public Bill Committee also received evidence from many organisations with an interest, including the interveners. Consideration was also given to reports on the Bill produced by the Office of the Childrens Commissioner, which focused upon the impact on children, and by the Equality and Human Rights Commission. The former report expressed concern about the potential impact on children if households affected by the cap moved home in order to reduce their housing costs. It also expressed concern about the potential impact if households were unable to reduce their housing costs. 28. The discussion in Committee, and in the earlier Second Reading debate, concerned a number of issues, including the impact of the cap on single parents, its impact on children, its impact on those living in temporary 29. 30. accommodation, and the appropriateness of fixing the cap according to the net median earnings of working households, when working households receiving net median earnings might also receive certain benefits. In relation to the impact on single parents, it was argued that if such households included children under five years of age, there would be less likelihood of the parent being able to take up work, because of child care responsibilities and the potential cost of child care. Amendments to the Bill were tabled in Committee that would have exempted households from the cap where a single parent had children under five years of age, or where work was not financially more advantageous due to child care costs. In relation to the impact on children, it was argued that if households whose benefits were capped moved to areas where housing was less expensive, there could be consequent disruption in the supervision of children who were at risk of abuse, and also disruption of childrens schooling. If such households did not move to cheaper areas, they would have to economise in other ways. Amendments were moved in both Houses that child related benefits should be excluded from the scope of the cap, and that the cap should be related to household size. 32. 31. The potential impact on households living in temporary accommodation, at a relatively high cost, was also emphasised. Amendments were moved in both Houses that would have exempted households which were owed a duty by the local authority to be supported in temporary accommodation. In relation to the use of net median household earnings as the benchmark, it was argued that the cap would leave the households affected worse off than working households with equivalent earnings, since some benefits were payable to households receiving average earnings. An amendment was tabled in Committee to require the cap to reflect net average earnings plus in work benefits which an average earner might expect to receive: Hansard (HC Debates), 17 May 2011, col 970. An amendment to similar effect was also proposed in the House of Lords. In responding to these arguments during the discussion in Committee on 17 May 2011, the Minister emphasised the need to create a welfare system which was fair in the eyes of the general public and commanded public confidence, and the need to address a culture of welfare dependency. In relation to the former point, he stated that it did no service to welfare claimants if they were seen to be receiving amounts of money from the state that exceeded the average earnings of people who were working. That encouraged the view that 33. 34. 35. 36. there was something wrong, and it had the effect of stigmatising those claimants. It was important to help people into work, and it was also important to have a welfare system in which the public had confidence. At present, it was clearly demonstrable that that was not the case (col 950). In that regard, the Minister referred to the stigmatisation of non working families who received high levels of benefit, and to the level of public support for the introduction of a cap on benefits. He went on to say that it was not reasonable or fair for out of work households to have a greater income from benefits than the net average weekly wage of working households (col 952). The proposed cap for couples and families was equivalent to an earned salary of 35,000 per annum, which was considered fair (col 984). In response to the argument that average earnings were not a proper basis for comparison, since households on average earnings might also be in receipt of benefits, the Minister responded that it was necessary, for public confidence in the benefit system, to have a cap related to average earnings. He acknowledged that the proposed level of the cap was lower than the total income of a working household on average earnings which was receiving in work benefits, but said that it was necessary to ensure that people were better off in work (cols 952 and 975). The Minister also observed that the policy would only succeed in its objectives of influencing behaviour and increasing public confidence in the benefits system if there was a simple rule which people could understand (col 954). In relation to arguments based on the different needs of different types of household, such as those with several children, the Minister observed that there was a divide in philosophical view between those who thought that the cap should vary according to household size and other characteristics, and those who believed that there should be some limit to the overall benefits that the state should provide. Working people on low incomes had to cope with difficult circumstances, and they had to live within their means (cols 952, 973). Their earnings were not determined by the size of their families, and the Government believed that the same principle should apply to the level of the cap (col 975). Households whose benefits were capped might need to move to cheaper accommodation, but like other families they had to live in accommodation that they could afford. In relation to those living in temporary accommodation, the Minister observed that local authorities had a legal duty to provide accommodation which was suitable for homeless applicants, and suitability included affordability. That observation was consistent with the decision in R (Best) v Oxford City Council [2009] EWHC 608 (Admin), approved by the Divisional Court in the present proceedings: [2013] EWHC 3350 (QB), [2014] PTSR 23, para 53. The Minister explained that, whatever the cost of the 37. accommodation might be, the local authority could pass on only a charge that the applicant could afford. The issue of housing costs for those in temporary accommodation was being considered. In relation to this matter, it is relevant to note the evidence given in these proceedings by Mr Robert Holmes, the Departments lead official on the benefit cap policy. He explains that the Government used to reimburse local authorities, via the housing benefit system, the rent which they charged claimants for the provision of temporary accommodation, up to a maximum for each property of 500 per week in London and 375 per week elsewhere. It became clear that some local authorities were using this system to generate surplus revenues, by charging claimants at or about the maximum level regardless of the rental value of the accommodation in question. Claimants in temporary accommodation were then reluctant to seek employment, as they were concerned that they might lose their housing benefit and be unable to pay these artificially inflated rents. The Government was unwilling to exempt temporary accommodation from the cap, as it considered that to do so would continue to subsidise inflated rents and would discourage claimants from obtaining work. It decided instead to provide additional support for those in temporary accommodation through the discretionary housing payments scheme, to which it will be necessary to return. 38. The Bill was also considered in detail by the House of Lords, which was provided with an updated version of the Housing Benefit Cap Equality Impact Assessment (2011). The discussion in the House of Lords focused particularly upon the impact of the cap on households with children, and upon the use of median earnings, rather than income inclusive of benefits, as the benchmark. In the course of the discussion, the Minister gave an assurance that he had considered the requirements of the Human Rights Act 1998 and the ECHR in respect of the policy, and was satisfied that the way in which the Government would implement the clauses in question would meet those requirements (Hansard (HL Debates), 21 November 2011, col GC415). In relation to the use of median earnings as the basis of the cap, the Minister explained that it necessarily followed, by definition, that half the working households in the UK would have earnings below the level of the cap (col GC425). In relation to the impact of the cap on households with children, an amendment seeking to exempt single parents with children under five was opposed by the Government. In response to the argument that, since such parents were not obliged to seek work in order to be eligible to receive benefits, they ought also to be exempted from the cap on the amount of any 39. 40. benefits which they might receive, the Minister stated that the cap was intended to act as an incentive to work. Although single parents with children under five were not required to seek work as a condition of receiving benefits, that did not mean that the Government did not want to encourage them to find employment. The amendment would undermine the fundamental principles underpinning the cap: that ultimately there had to be a limit to the amount of benefit that a household could receive, and that work should always pay (col GC421). 41. A proposed amendment to exclude child benefit from the scope of the cap was opposed by the Government on the basis that its policy was that there should be a reasonable limit to the overall amount of support that non working households could receive in welfare payments, that child benefit was as much part of that support as other welfare payments, and that it should therefore be taken into account in deciding whether the limit had been reached. It was estimated that excluding child benefit from the scope of the cap would reduce the savings from the cap by 40 to 50%, and that also excluding child tax credit would reduce the savings by 80 to 90% (Hansard (HC Debates), 28 November 2011, col 763W). There would be a similar impact upon the number of households affected (Hansard (HC Debates), 23 May 2011, col 496W). 42. The Bill was also scrutinised by the House of Lords and House of Commons Joint Committee on Human Rights, which considered the human rights effects of the Bill and published its report in December 2011 (HL Paper 233; HC 1704). In written evidence to the Committee, the Secretary of State stated that it was the Governments view that, if A1P1 was engaged, the measures in the Bill were proportionate to the legitimate aim of securing the economic well being of the country. He observed that the greater employment of single parents would have a positive effect on child poverty, and that there was a wide range of support available to single parents seeking employment, to take account of their role as the main carer for their child. He added that the Government believed that the effect of the cap was proportionate, taking into account (1) the amount of the cap and the fact that it would be based on average household earnings, (2) the fact that claimants would be notified of the cap and given time to adjust their spending to accommodate their new levels of benefit, and (3) the fact that the cap would affect relatively few households and that those affected would continue to receive a substantial income from benefits. 43. At the Report stage in the House of Lords, the Bill was amended so as to exclude child benefit from the scope of the cap. When the Bill returned to the House of Commons, the House considered and voted against that amendment. When the Bill subsequently returned to the House of Lords, the House agreed, on a vote, not to insist on the amendment. 44. During the Bills passage, Ministers indicated that some of the concerns expressed in Parliament, many of them reflected in other proposed amendments, would be considered as the policy was developed. So it proved. One example was the introduction of a period of grace for benefit claimants who had previously been employed, so that their benefits would not be capped for a period of 39 weeks after they had last been in employment. That development reflected concerns which had been expressed about the application of the cap to households in which someone had been in work but had been made redundant or had left work in order to care for a child. It was also understood that child care responsibilities might make it difficult for some single parents to seek work and, by that means, to secure exemption from the cap. Measures were taken to address those difficulties by exempting benefits used to pay for child care (meeting 70% of the cost) from the cap, by providing single parents with job focused interviews to assist them in finding work, and by setting the number of hours required to be worked by a single parent, in order to obtain exemption from the cap, at a lower level, of 16 hours per week, than for other claimants. Another development was the introduction of an exception to prevent payments covering the cost of accommodation in refuges, for women who had been victims of domestic violence, from being taken into account. It will be necessary to return to that matter. Measures were also taken to ensure that the supervision of children at risk of ill treatment was not jeopardised in the event that their families moved to less expensive areas to live. 45. A decision was also taken to provide additional funding of 65m in 2013/2014 and 35m in 2014/15 for discretionary housing payments under the Discretionary Financial Assistance Regulations 2001 (SI 2001/1167) (the DHP Regulations). These are payments made by local authorities to claimants who require further financial assistance, in addition to any welfare benefits, in order to meet housing costs. They do not count towards the cap. As is stated in the guidance for local authorities published by the Government, the additional funding is intended to provide assistance to a number of groups who are likely to be particularly affected by the cap, including those in temporary accommodation, victims of domestic violence, families with children at school, and households moving to, or having difficulty finding, more appropriate accommodation. Households in those categories may be unable to avoid high costs in the short term: they may, for example, have to delay a move until suitable arrangements can be made for the education of children, or may require financial assistance to pay the deposit on a new home and the initial instalment of rent. The additional funding was intended to help them to meet those costs. The Government also undertook to review the operation of the cap, as had been recommended by the Joint Committee on Human Rights, and to lay before Parliament a report on its impact after a year of operation. The Welfare Reform Act 2012 46. The Welfare Reform Act 2012 (the 2012 Act) received Royal Assent in March 2012. The provisions relevant to the cap are sections 96 and 97. 47. Section 96 enables regulations to provide for a benefit cap to be applied to the welfare benefits to which a single person or couple is entitled. For the purposes of the section, applying a benefit cap means securing that: where a single persons or couples total entitlement to welfare benefits in respect of [a period of a prescribed duration] exceeds the relevant amount, their entitlement is reduced by an amount up to or equalling the excess (section 96(2)). 48. Welfare benefits are any benefit, allowance, payment or credit prescribed in regulations: section 96(10). The regulations cannot however prescribe as welfare benefits either state pension credit or retirement pensions: section 96(11). The relevant amount is an amount specified in regulations, which must be determined by reference to the average weekly earnings of a working household after deductions in respect of tax and national insurance: sections 96(5), (6) and (7). More detailed provision in respect of the benefit cap arrangements, including the welfare benefits or benefits from which a reduction is to be made, and any exceptions to the application of the benefit cap, are to be set out in the regulations: section 96(4). The regulations are to be made by the Secretary of State, and the first such regulations must be approved by Parliament under the affirmative resolution procedure: sections 96(10) and 97(3). Subsequent regulations must be approved under the negative resolution procedure. The Benefit Cap (Housing Benefit) Regulations 2012 49. Before laying draft regulations before Parliament, the Department consulted interested bodies, including the statutory Social Security Advisory Committee, Citizens Advice, Crisis and Shelter. That consultation influenced some of the policy changes which I mentioned in paras 44 45. 50. On 16 July 2012 the Benefit Cap (Housing Benefit) Regulations 2012 (SI 2012/2994) (the Regulations) were laid in draft before both Houses of Parliament. At the same time, the Department published updated impact assessments in respect of the cap. It was then estimated that 56,000 households would be affected (1% of the out of work benefit caseload), losing on average around 93 per week. 39% of households affected were expected to be couples with children, and 50% were expected to be single parents with children. Because single parents were predominantly women, 60% of affected claimants were expected to be single women, compared with 10% who were expected to be single men. Almost all the local authorities most affected were expected to be in London, reflecting the higher rents payable there. 51. Parliament received submissions on the draft regulations from a number of bodies, including Shelter. The draft regulations were considered by the House of Lords Secondary Legislation Scrutiny Committee, and were debated by the House of Lords Grand Chamber on 6 November 2012. They were also considered by the House of Commons Delegated Legislation Committee on the same date. The issues then considered included temporary accommodation, including womens refuges and other accommodation for victims of domestic violence, the impact upon children of households moving to areas where housing was less expensive, and the greater difficulty which people who moved out of London might experience in obtaining work. The draft regulations were approved by both Houses of Parliament, and the Regulations were then made. 52. As had been announced, the Regulations fix the cap at 350 per week for single persons and 500 for families and couples, equivalent to gross salaries of 26,000 and 35,000 per annum respectively. These figures are slightly above the median earnings of single persons and couples respectively. They are well above the national minimum wage, which in 2012 was about 12,500 per annum for a 40 hour week. The Regulations list the benefits which are to be treated as welfare benefits. As anticipated, they include the main out of work benefits, together with child benefit, child tax credit and housing benefit. Again as anticipated, exceptions from the application of the cap are made in respect of households where a person receives specified benefits based on disability or service in the armed forces, and in respect of households where a single parent works for 16 hours per week or a couple work for 24 hours (provided one of them works for 16 hours). Provision is made for the 39 week period of grace. In response to concerns expressed about the potential impact of the cap on households living in exempt accommodation (ie accommodation provided by housing associations, charities, other voluntary bodies or county councils to 53. persons receiving care, support or supervision provided by or on behalf of the landlord), including in particular those living in refuges for victims of domestic violence, the Regulations were amended with effect from 15 April 2013 (when, as I shall explain, the cap first came into partial effect) by the Benefit Cap (Housing Benefit) (Amendment) Regulations 2013 (SI 2013/546). The effect of the amendment was that housing benefit provided in respect of such accommodation was to be disregarded for the purposes of the cap. In response to contentions that some womens refuges fell outside the definition of exempt accommodation, the Minister announced in April 2013 that the issue was being addressed and that proposals would be brought forward at the earliest opportunity. The Housing Benefit and Universal Credit (Supported Accommodation) (Amendment) Regulations 2014 (SI 2014/771) (the 2014 Regulations) were subsequently made, after the present proceedings were under way. They replace the concept of exempt accommodation with a broader concept of specified accommodation, which encompasses a wider range of accommodation provided for vulnerable people, including the womens refuges previously excluded. The implementation of the Regulations 54. The Regulations were made in November 2012, more than two years after the intention to introduce the cap had been announced. From April 2012 jobcentres and local authorities implemented arrangements to provide support to households that would be affected by the cap and assist them in deciding how to respond. In May 2012 jobcentres wrote to all claimants potentially affected by the cap, notifying them that they might be affected and explaining the support available. That support included assistance from dedicated staff in moving into the labour market, obtaining access to child care provision and negotiating rent reductions with private landlords, together with advice on housing options and household budgets. A help line was also set up to provide information about the changes and the support available. Employment events were organised with local employers and training bodies. Further letters were sent to claimants in October 2012, February 2013 and March 2013. Claimants were also contacted by telephone and, where that proved ineffective, were visited. The cap was then introduced in phases, during which its impact was monitored by the Department. On 15 April 2013 the cap was applied in four local authority areas in London. Between 15 July 2013 and the end of September 2013 the cap was applied in other local authority areas. 55. Since the introduction of the cap, its impact has been discussed at meetings of the Benefit Cap Project, a forum for meetings between the Department and interested bodies, including voluntary organisations working with children and the homeless. 56. From August 2013 the Department published a number of reports on the impact of the cap. The most recent report, at the time when these appeals were heard, was that published in March 2014, which contained data for the period to January 2014. It reported that 38,665 households had had their housing benefit capped. 28% of the households which had at one time been capped were no longer capped. 39% of those had become exempt because a member of the household had entered work. 27% were no longer claiming housing benefit or had reduced their rent so as to come below the cap. Of the 20 local authorities with the highest number of capped households, 19 were in London. 95% of capped households included children. 59% of capped households, and 62% of capped households with children, comprised a single parent with children. In response to a request from this court, counsel also provided the Departments analysis of the data for the period up to March 2014 in respect of single parent households including a child under five years of age. 29% of such households which had at one time been capped were no longer capped. 38% of those had become exempt because a member of the household had entered work. These figures are in line with those for all households. 57. 58. According to the Departments most recent estimate as at the date of the hearing, the cap is expected to save 110m in 2013/2014 and 185m in 2014/2015. This level of savings is expected to continue over the longer term. These figures do not take into account the implementation costs or the additional funding made available for discretionary housing payments. Nor, on the other hand, do they take account of any reduction in benefit payments, or any receipts from income tax or national insurance, resulting from claimants moving into work. The present proceedings 59. There is no challenge in these proceedings to the 2012 Act: it is not argued that section 96 is incompatible with the ECHR. It follows that there is no challenge to the principle of a cap, the impact of which is inevitably greatest for those who would otherwise be entitled to the highest amount of relevant benefits. Nor is there any challenge to the fixing of one relevant amount (ie the cap) for single claimants and another for all other households, rather than the relevant amount being tailored to individual circumstances. Nor is there any challenge to the fixing of the relevant amount by reference to estimated average net household earnings, rather than by reference to estimated average net household income inclusive of benefits. The challenge is primarily to the compatibility of the Regulations with article 14 of the ECHR read in conjunction with A1P1. Compatibility with article 14 read with A1P1 60. Interference with possessions In considering the compatibility of the Regulations with article 14 in conjunction with A1P1, the first question is whether there is an interference with possessions. That is not a straightforward question: as the European court explained in Valkov v Bulgaria (Applications Nos 2033/04, 19125/04, 19475/04, 19490/04, 19495/04, 19497/04, 24729/04, 171/05 and 2041/05) (unreported) given 25 October 2011 at para 85, a cap may be regarded either as a provision limiting the amount of benefit after it has been calculated under the general rules, and thus an interference with a possession of the appellants, or as part of the overall set of statutory rules governing the manner in which the amount of benefit should be calculated, and thus as amounting to a rule preventing the appellants from having any possession in relation to the surplus. It is however unnecessary to resolve that question in the present appeal, since the applicability of A1P1 has not been contested on behalf of the Secretary of State. Differential treatment 61. The next question is whether the Regulations result in differential treatment of men and women. This is conceded on behalf of the Secretary of State. Given the statistics as to the proportion of those affected who are single women as compared with the proportion who are single men, that concession is understandable. It is indeed almost inevitable that a measure capping the benefits received by non working households will mainly affect households with children, since they comprise the great majority of households receiving the highest levels of benefits. It follows inexorably that such a measure will have a greater impact on women than men, since the majority of non working households with children are single parent households, and the great majority of single parents are women. That consequence could be avoided only by defining welfare benefits so as to exclude benefits which are directly or indirectly linked to responsibility for children, a possibility to which it will be necessary to return. 62. On the other hand, the argument that the Regulations also result in differential treatment of women because of their effect upon the victims of domestic violence has not in my opinion been established. In so far as the argument is based upon the failure of the Regulations, as originally made, to exempt housing benefit received in connection with all womens refuges, the amendments effected by the 2014 Regulations were designed to address that problem, and it is not argued in these appeals that they have failed to do so. In so far as the argument was that women fleeing domestic violence may live in temporary accommodation rather than refuges, and may then be entitled to housing benefit in respect of both their original home and the temporary accommodation, that problem, which is inherently of a temporary nature, is capable of being addressed under the DHP Regulations by the use of discretionary housing payments; and the funding made available by Government for such payments has been increased for that very purpose. As I have explained, guidance has been issued by the Government to local authorities advising them that the funding is specifically aimed at groups including individuals or families fleeing domestic violence, and that payments can be awarded for two homes when someone is temporarily absent from their main home because of domestic violence. It cannot therefore be said that the Regulations have a disparate impact upon victims of domestic violence. Whether problems are avoided in practice will depend upon how the discretionary payments scheme is operated by local authorities in individual cases. It is not suggested that any problems have arisen in the cases with which these appeals are concerned. Legitimate aim 63. The next question is whether the Regulations pursue a legitimate aim. In my view that cannot be doubted. They pursue, in the first place, the aim of securing the economic well being of the country, as the Secretary of State explained to the Parliamentary Joint Committee on Human Rights, and as is evident from the legislative history since the policy of reducing expenditure on benefits was first announced in June 2010. A judgment was made, following the election of a new Government in May 2010, that the current level of expenditure on benefits was unaffordable. The imposition of a cap on benefits was one of many measures designed to reduce that expenditure, or at least to constrain its further growth. It was argued on behalf of the appellants that savings in public expenditure could never constitute a legitimate aim of measures which had a discriminatory effect, but that submission is inconsistent with the approach adopted by the European court in the cases mentioned in para 10. It is also inconsistent with the acceptance of the economic well being of the country as a legitimate aim of interferences with Convention rights under the second paragraphs of articles 8 to 11, and under A1P1. An interpretation of the Convention which permitted the economic well being of the country to constitute a legitimate aim in relation to interferences with the substantive Convention rights, but not as a legitimate aim in relation to the ancillary obligation to secure the enjoyment of those rights without discrimination, would lack coherence. 64. In relation to the case of Ministry of Justice (formerly Department for Constitutional Affairs) v OBrien (Council of Immigration Judges intervening) [2013] UKSC 6; [2013] 1 WLR 522, para 69, on which the appellants relied, I would observe that acceptance that savings in public expenditure can constitute a legitimate aim for the purposes of article 14 does not entail that that aim will in itself constitute a justification for discriminatory treatment. As I have explained, the question whether a discriminatory measure is justifiable depends not only upon its having a legitimate aim but also upon there being a reasonable relationship of proportionality between the means employed and the aim sought to be realised. 65. The second aim, of incentivising work, is equally legitimate. It is, in the first place, an aspect of securing the economic well being of the country. It has however a broader social objective which Ministers made clear to Parliament. That objective is based on the view that long term unemployment is socially undesirable, because of its impact upon those affected by it (including the children brought up in non working households), and that it is therefore important to make efforts to assist those capable of working to find work: efforts which can include the removal of financial disincentives. 66. The third aim, of imposing a reasonable limit upon the total amount which a household can receive in welfare benefits, is in my opinion equally legitimate. It is again an aspect of securing the economic well being of the country: it is one of the means of achieving that objective. It also however has a broader aspect, namely to reflect a political view as to the nature of a fair and healthy society. As Ministers explained to Parliament, this objective responds in particular to a public perception that the benefits system has been excessively generous to some recipients: a perception which is related to the stigmatisation in the media of non working households receiving high levels of benefit. The maintenance of public confidence in the welfare system, so that recipients are not stigmatised or resented, is undeniably a legitimate aim. In the language used by the European court in Hoogendijk and other cases, the benefit system is the means by which society expresses solidarity with its most vulnerable members. That being so, it is in principle legitimate to reform the system when necessary to respond to a threat to that solidarity. Proportionality 67. The remaining question is whether the Regulations maintain a reasonable relationship of proportionality between the means employed and the aims sought to be realised. 68. It was argued by counsel for the appellants and interveners that the aim of setting a reasonable limit to the amount of benefits which a household can receive could have been achieved by using as a benchmark not the average earnings of working households but their average income inclusive of benefits. This would have been fair, adopting the adjective used by Ministers at some points during the Parliamentary debates, since it would have achieved parity between the maximum income received by non working households and the average income of working households. 69. There are three problems with this argument. The first is that section 96 of the 2012 Act, whose compatibility with Convention rights is not challenged, requires the cap to be set by reference to earnings. The Regulations cannot be unlawful in so far as they follow that approach (Human Rights Act, section 6(2)(a)), and would be ultra vires if they failed to do so. Secondly, the assessment of the level at which a cap would represent a fair balance between the interests of working and non working households is a matter of political judgment. Furthermore, the assumption that fairness requires an equivalence between the incomes of working and non working households ignores the costs incurred by working households in earning that income: both financial costs in respect of such matters as travel and clothing, and non financial costs in respect of the time spent commuting and working. As the Thlimmenos principle illustrates, non discrimination does not require that different situations should be treated in the same way. Thirdly, and in any event, the Government has made a judgment, endorsed by Parliament, that a cap set at the level of the average income of working households would be less effective in achieving its aims. That is not an unreasonable judgment: plainly, the fiscal savings would be less, and the financial incentive to find work would be reduced. Indeed, if the cap were set at a level which achieved parity between the income of a person on benefits and the average income of a person in work, it would act as a disincentive to work for below average earnings. Whether the aim of securing a benefit system which was perceived by the public as fair and reasonable would also have been less effectively achieved is again a political judgment, which cannot be said to be manifestly unreasonable. It was also argued that the short term fiscal savings appear to be relatively marginal at best. It is true that the savings made are a small proportion of the total welfare budget, the bulk of which is spent on pensions. They nevertheless contribute towards the achievement of the objective of reducing the fiscal deficit. It is also necessary to bear in mind that the Regulations are designed to result in savings over the longer term, as the intended change in the welfare culture takes effect. 70. 72. 71. Other criticisms of the Regulations focused upon the impact of the cap upon the income of the households most severely affected, such as those of the appellants. Emphasis was placed in particular upon the inclusion of child benefit and child tax credit among the welfare benefits, and the difficulties which single parents faced with a loss of income might encounter in finding work, because of their child care responsibilities, or in moving to cheaper accommodation, because of the impact upon their children. In relation to the reduction in income, it has to be borne in mind that the cap for a household with children has been set by Parliament at the median earnings of working households, equivalent to a salary of 35,000 per annum. By definition, half of all working households earn less than that amount. The exclusion of child benefit and child tax credit from the welfare benefits counting towards the cap would enable non working households with children to receive an income from public funds in excess of that amount. Whether that level of benefits ought to be paid by the state is inherently a political question on which opinions within a democratic society may reasonably differ widely. It is not the function of the courts to determine how much public expenditure should be devoted to welfare benefits. It is also important to recognise that the households affected were given advance notice of the reduction in their income, and that assistance was made available to them to enable them to address the implications, as I have explained. In relation to the related criticism that children in households affected by the cap are deprived of the basic necessities of life, that argument was rejected by the courts below, and I see no basis for reaching a different conclusion. As I have explained, the cap for a household with children is equivalent to a gross salary of 35,000 per annum, higher than the earnings of half the working population in the UK, almost three times the national minimum wage, and not far below the point at which higher rate tax becomes payable (in 2013/14, a salary of 41,450). Although the compatibility of the Regulations with article 14 does not depend on the individual circumstances of the appellants, as I have explained, the Court of Appeal considered in detail submissions to the effect that the cap would reduce them to a state of destitution, and concluded that their circumstances did not approach that level. The Divisional Court noted that even in cases where the cap had particularly adverse consequences, in the last resort the local authority was under a duty to secure suitable and affordable accommodation for the family. In relation to the difficulties of finding work, data from the Office for National Statistics (ONS) indicate that 63.4% of single parents with dependent children were in work during the second quarter of 2014. An ONS analysis based on data for 2012 indicated that the employment rate for single 73. 74. 75. parents with a dependent child under the age of 2 was 32%; for the age range 2 4 it increased to 42%; for the age range 5 11 it was 63%. Plainly, many single parents, including those on low incomes, make arrangements for the care of children in order to work. Their children over five years of age are required to attend school. Their younger children may attend nurseries or may be looked after by family members or child minders. The amount of work which a single parent has to perform, in order to be exempted from the cap, is only 16 hours per week. Even those hours need not necessarily be worked throughout the year: if a person works in a place of employment which has a recognisable cycle of employment, such as a school, the holiday periods during which she does not work are disregarded. As I have explained, assistance with meeting the cost of child care is available and is excluded from the cap. The statistics set out at paras 56 and 57 above do not support the contention that single parents with children under five have experienced greater difficulty in obtaining work than other claimants affected by the cap. Some people take the view that it is better for the single parent of a young child to remain at home full time with the child, but there is no basis for requiring that view to be adopted by Government as a matter of law. In relation to the argument that households with children cannot reasonably be expected to move house, because of the impact on the children, it is not merely a forensic point that one of the two adult appellants came with her family to the UK from Belgium, and that the other adult appellant came with her family to the UK from Algeria. Millions of parents in this country have moved house with their children, for a variety of reasons, including economic reasons. It is, in particular, not uncommon for working households to move out of London in order to find more affordable property elsewhere. It is also necessary to recognise that transitional financial assistance is available for households affected by the cap who cannot move until suitable arrangements have been made in relation to the children, as I have explained. Although assistance of that nature may not constitute a complete or satisfactory answer to a structural problem of a permanent nature arising from discriminatory legislation, such as the inadequacy of housing benefit to meet the cost of accommodation suitable for the needs of severely disabled claimants (as was held in Burnip v Birmingham City Council [2012] EWCA Civ 629; [2013] PTSR 117), it is relevant to an assessment of the proportionality of a measure which is liable to give rise to transitional difficulties in individual cases. 76. As I have explained, the court is concerned in a case of this kind with the question whether the legislation as such unlawfully discriminates between men and women, rather than with the hardship which might result from the cap in the cases of those most severely affected. In that regard, it is highly significant that no credible means was suggested in argument by which the legitimate aims of the Regulations might have been achieved without affecting a greater number of women than men. Put shortly, since women head most of the households at which those aims are directed, it appears that a disparity between the numbers of men and women affected was inevitable if the legitimate aims were to be achieved. 77. The greater number of women affected results from the inclusion of child related benefits within the scope of the cap. If those benefits had been excluded from the cap, the legitimate aims of the cap would not have been achieved, as Ministers made plain to Parliament. The question is raised by Lady Hale whether taking child related benefits out of the cap as it applies to single parents only would have an emasculating effect. I do not recall this point being raised with counsel for the Secretary of State, but the information available enables it to be considered. Parliament was informed that the exclusion of child related benefits would reduce the savings, and the number of households affected by the cap, by 80 to 90% (para 41). According to the most recent statistics available at the time of the hearing, single parent households form 62% of the affected households receiving child related benefits (para 56). It is therefore plain that the exclusion of child related benefits, even if confined to single parent households, would have compromised the achievement of the legitimate aims of the Regulations. Article 3(1) of the UNCRC 78. An argument of a different character was put forward on the basis of article 3(1) of the United Nations Convention on the Rights of the Child (UNCRC), which provides that in all actions concerning children the best interests of the child shall be a primary consideration. The argument developed during and after the hearing of the appeal. Initially, it was contended that the Secretary of State was obliged by section 6 of the Human Rights Act to treat the best interests of children as a primary consideration when making the Regulations, in accordance with article 3(1) of the UNCRC, since the cap had an impact upon the private and family lives of children forming part of the households affected. Article 8(1) of the ECHR was therefore applicable. Since the European court would have regard to the UNCRC when applying article 8 in relation to children, it followed that the Secretary of State was also obliged to comply with article 3(1) of the UNCRC, but failed to do so. 79. This argument raises a number of questions. In the first place, there is the question whether general legislation which limits welfare benefits, resulting in some cases in a reduction in household income, constitutes, by reason of the impact of that reduction in income upon the lives and circumstances of those affected, an interference with their right to respect for their private and family life. If it does, the ambit of article 8 is enlarged beyond current understanding so as to embrace legislation imposing increases in taxation or reductions in social security benefits. Secondly, on the assumption that such legislation falls within the ambit of article 8(1), article 8(2) permits an interference with the right to respect for family life to be justified as being necessary in a democratic society in the interests of the economic well being of the country. The argument that justification on that ground is impossible unless the best interests of the children affected by the measure in question have been treated as a primary consideration not only in the sense that they have been taken into account but, as counsel emphasised, in the sense that the legislation is in reality in the best interests of the children affected by it has major implications for the effect of the ECHR in relation to legislation in the field of taxation and social security. 80. These issues were not addressed in the course of the argument. Most of the European authorities cited in support were concerned with the different question of the eviction of individuals from their homes, which is not an issue arising on the facts of the present cases. The cases indicate that a reduction in income may have consequences which are such as to engage article 8, as for example where non payment of rent leads to the threat of eviction from ones home, but they do not indicate that the reduction in income is itself within the ambit of article 8. The only other European authority cited was the case of Neulinger v Switzerland (2010) 54 EHRR 1087, which was concerned with the return of a child under a child abduction convention. It is unnecessary to say more than that the argument has not been made out. 81. A more closely reasoned argument has been developed in submissions lodged after the hearing, which treats article 3(1) of the UNCRC as forming part of the proportionality assessment under article 14 of the ECHR read with A1P1. In consequence, a test of compliance with article 3(1) is effectively substituted for the manifestly without reasonable foundation test which all parties agree to be applicable in the present context. On that basis, article 3(1) is argued to be decisive of the appeals. It is therefore necessary to consider carefully how, if at all, article 3(1) bears on the issues in these appeals. 82. As an unincorporated international treaty, the UNCRC is not part of the law of the United Kingdom (nor, it is scarcely necessary to add, are the comments upon it of the UN Committee on the Rights of the Child). The spirit, if not the precise language, of article 3(1) has been translated into our law in particular contexts through section 11(2) of the Children Act 2004 and section 55 of the Citizenship, Borders and Immigration Act 2009: ZH (Tanzania) v Secretary of State for the Home Department [2011] UKSC 4; [2011] 2 AC 166, para 23. The present case is not however concerned with such a context. 83. The UNCRC has also been taken into account by the European Court of Human Rights in the interpretation of the ECHR, in accordance with article 31 of the Vienna Convention on the Law of Treaties. As the Grand Chamber stated in Demir v Turkey (2008) 48 EHRR 1272, para 69, the precise obligations that the substantive obligations of the Convention impose on contracting states may be interpreted, first, in the light of relevant international treaties that are applicable in the particular sphere. It is not in dispute that the Convention rights protected in our domestic law by the Human Rights Act can also be interpreted in the light of international treaties, such as the UNCRC, that are applicable in the particular sphere. 84. The approach adopted is illustrated by V v United Kingdom (1999) 30 EHRR 121, where the European court had regard to articles 37 and 40 of the UNCRC when considering how the prohibition of inhuman and degrading treatment in article 3 of the ECHR applied to the trial and sentencing of child offenders, and, in a domestic context, by R (T) v Chief Constable of Greater Manchester Police [2014] UKSC 35; [2015] AC 49, where this court referred to article 40 of the UNCRC when considering whether legislation regulating the disclosure of offences committed by children was compatible with article 8 of the ECHR. 85. The case of X v Austria (2013) 57 EHRR 405, on which the appellants and the interveners principally rely, concerned the proposed adoption of a child by the female partner of the childs biological mother. The effect of adoption under Austrian law was to sever the legal relationship between the child and the biological parent of the same sex as the adoptive parent. In consequence, therefore, Austrian law could not recognise a legal relationship between a child, an adoptive parent, and a biological parent of the same sex as the adoptive parent. An application to the European court was brought by the child, the mother, and her partner, all of whom lived together as a family, on the basis that they had been denied legal recognition of their family life by reason of the sexual orientation of the two adults, in violation of article 14 of the ECHR read together with article 8. The court considered their complaint on the basis that all three applicants enjoyed family life together, and all three were therefore entitled to complain of a violation of their rights. The effect of the Austrian law was to prevent second parent adoption by same sex couples. The justifications advanced were the protection of the family in the traditional sense, and the protection of the interests of children, both of which were legitimate aims. The question was whether the principle of proportionality was adhered to. In considering that question, the court identified a number of considerations which weighed in favour of allowing the courts to carry out an examination of each individual case, rather than imposing an absolute rule. The court added that this would also appear to be more in keeping with the best interests of the child, which was a key notion 86. in the relevant international instruments. In that regard, the court had earlier referred to a number of provisions of the UNCRC, including article 3(1). It is clear, therefore, that the UNCRC can be relevant to questions concerning the rights of children under the ECHR. There are also cases in which, although the court has not referred to the UNCRC, it has taken the best interests of children into account when considering whether an interference with their fathers or mothers right to respect for their family life with the children was justified. An example is the case of ner v Netherlands (2006) 45 EHRR 421, which concerned the deportation of an adult, resulting in his separation from his children. In circumstances of that kind, the proportionality of the interference with family life could not be assessed without consideration of the best interests of the children, a matter which was relevant to respect for his family life with them, as it was also to their right to respect for their family life with him. Indeed, they might themselves have been applicants, on the basis that their own article 8 rights were engaged. 87. The present context, on the other hand, is one of alleged discrimination between men and women in the enjoyment of the property rights guaranteed by A1P1. That is not a context in which the rights of the adults are inseparable from the best interests of their children. It is of course true that legislation limiting the total income which persons can receive from benefits, like any legislation affecting their income, may affect the resources available to them to provide for any children in their care, depending upon how they respond to the cap: something which will vary from one case to another. They may increase their income from other sources, for example by obtaining employment or by obtaining financial support for the upkeep of a child from an absent parent; or they may respond by reducing their expenditure, for example by moving to cheaper accommodation. Depending on how parents respond, the consequences of the cap for their children may vary greatly, and may be regarded as positive in some cases and as negative in others. 88. The questions (1) whether legislation of this nature should be regarded as action concerning children, within the meaning of article 3(1) of the UNCRC, (2) whether that provision requires such legislation to be in the best interests of all the children affected by it, and (3) whether the Regulations fulfil that requirement, appear to me to be questions which, for reasons I shall explain, it is unnecessary for this court to decide. Even on the assumption, however, (1) that article 3(1) of the UNCRC applies to general legislation of this character, (2) that article 3(1) requires such legislation to be in the best interests of all the children indirectly affected by it, and (3) that the legislation in question is not in reality in the best interests of all the children indirectly affected by it, that does not appear to me to provide an answer to the question 89. whether the legislation unjustifiably discriminates between men and women in relation to their enjoyment of the property rights guaranteed by A1P1. It is true that the benefits which are taken into account when deciding whether the cap has been exceeded include benefits payable to parents by reason of their responsibility for the care of children. It is also true that the differential impact of the measure upon men and women arises from the fact that more women than men take on responsibility for the care of their children when they separate. It is argued that it is therefore unrealistic to distinguish between the rights of women under article 14 read with A1P1, and those of their children under the UNCRC. There is nevertheless a clear distinction. In cases where the cap results in a reduction in the resources available to parents to provide for children in their care, the impact of that reduction upon a child living with a single father is the same as the impact on a child living with a single mother in similar circumstances, or for that matter a child living with both parents. The fact that children are statistically more likely to be living with a single mother than with a single father is unrelated to the question whether the childrens rights under article 3(1) of the UNCRC have been violated. There is no factual or legal relationship between the fact that the cap affects more women than men, on the one hand, and the (assumed) failure of the legislation to give primacy to the best interests of children, on the other. The conclusion that the cap is incompatible with the UNCRC rights of the children affected therefore tells one nothing about whether the fact that it affects more women than men is unjustifiable under article 14 of the ECHR read with A1P1. The contrary view focuses on the question whether the impact of the legislation on children can be justified under article 3(1) of the UNCRC, rather than on the question whether the differential impact of the legislation on men and women can be justified under article 14 read with A1P1, and having concluded that the legislation violates article 3(1) of the UNCRC, mistakenly infers that the difference in the impact on men and women cannot therefore be justified. 90. Nor is the argument made stronger by being recast in terms of domestic administrative law, on the basis that the decision to make the Regulations was vitiated by an error of law as to the interpretation of article 3(1) of the UNCRC. It is firmly established that UK courts have no jurisdiction to interpret or apply unincorporated international treaties: see, for example, J H Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1990] 2 AC 418, 499; R v Lyons (Isidore) [2002] UKHL 44; [2003] 1 AC 976, para 27. As was made clear in R (Corner House Research) v Director of the Serious Fraud Office (JUSTICE Intervening) [2008] UKHL 60; [2009] AC 756, it is therefore inappropriate for the courts to purport to decide whether or not the Executive has correctly understood an unincorporated treaty obligation. As Lord Bingham of Cornhill said at para 44: Whether, in the event that there had been a live dispute on the meaning of an unincorporated provision on which there was no judicial authority, the courts would or should have undertaken the task of interpretation from scratch must be at least questionable. It would moreover be unfortunate if decision makers were to be deterred from seeking to give effect to what they understand to be the international obligations of the United Kingdom by fear that their decisions might be held to be vitiated by an incorrect understanding. Lord Brown of Eaton under Heywood expressed himself more emphatically (para 67): It simply cannot be the law that, provided only a public officer asserts that his decision accords with the states international obligations, the courts will entertain a challenge to the decision based upon his arguable misunderstanding of that obligation and then itself decide the point of international law at issue. 91. The case of R v Secretary of State for the Home Department, Ex p Launder [1997] 1 WLR 839, on which reliance is placed, is distinguishable from the present case on the same basis as it was distinguished in the Corner House Research case. In the first place, as Lord Bingham pointed out (para 44), there was in Launder no issue between the parties about the interpretation of the relevant articles of the Convention, whereas in Corner House, as in the present case, the court was being asked to determine, in the absence of any international judicial authority, the meaning of a provision of an unincorporated international treaty. Secondly, as Lord Brown noted (para 66), Launder was a case in which it was plain that the decision maker would have taken a different decision had his understanding of the treaty been different: his clear intention was to act consistently with the United Kingdoms international obligations, whatever decision that would have involved him in taking. In Corner House, on the other hand, the primary intention behind the decision was to save this country from a threat which it faced, and all that the Ministers were really saying was that they believed the decision to be consistent with the international obligation in question. The intensity of review 92. Finally, it has been explained many times that the Human Rights Act entails some adjustment of the respective constitutional roles of the courts, the executive and the legislature, but does not eliminate the differences between them: differences, for example, in relation to their composition, their expertise, their accountability and their legitimacy. It therefore does not alter the fact that certain matters are by their nature more suitable for determination by Government or Parliament than by the courts. In so far as matters of that nature have to be considered by the courts when deciding whether executive action or legislation is compatible with Convention rights, that is something which the courts can and do properly take into account, by giving weight to the determination of those matters by the primary decision maker. 93. That consideration is relevant to these appeals, since the question of proportionality involves controversial issues of social and economic policy, with major implications for public expenditure. The determination of those issues is pre eminently the function of democratically elected institutions. It is therefore necessary for the court to give due weight to the considered assessment made by those institutions. Unless manifestly without reasonable foundation, their assessment should be respected. 94. As I have explained, the Regulations were considered and approved by affirmative resolution of both Houses of Parliament. As Lord Sumption observed in Bank Mellat v H M Treasury (No 2) [2013] UKSC 39; [2014] AC 700, para 44: When a statutory instrument has been reviewed by Parliament, respect for Parliament's constitutional function calls for considerable caution before the courts will hold it to be unlawful on some ground (such as irrationality) which is within the ambit of Parliament's review. This applies with special force to legislative instruments founded on considerations of general policy. 95. Many of the issues discussed in this appeal were considered by Parliament prior to its approving the Regulations. That is a matter to which this court can properly have regard, as has been recognised in such cases as R (Williamson) v Secretary of State for Education and Employment [2005] UKHL 15; [2005] 2 AC 246, R (Hooper) v Secretary of State for Work and Pensions [2005] UKHL 29; [2005] 1 WLR 1681, R (Countryside Alliance) v Attorney General [2007] UKHL 52; [2008] AC 719, and R (Animal Defenders International) v Secretary of State for Culture, Media and Sport [2008] UKHL 15; [2008] AC 1312. Furthermore, that consideration followed detailed consideration of clause 93 of the Bill, which became section 96 of the 2012 Act. It is true that the details of the cap scheme were not contained in the Bill which Parliament was debating, but the Governments proposals had been made clear, they were challenged by means of proposed amendments to the Bill, and they were the subject of full and intense democratic debate. That is an important consideration. As Lord Bingham of Cornhill observed in R (Countryside Alliance) v Attorney General [2007] UKHL 52; [2008] AC 719, para 45: The democratic process is liable to be subverted if, on a question of moral and political judgment, opponents of the Act achieve through the courts what they could not achieve in Parliament. The same is true of questions of economic and political judgment. 96. Giving due weight to the assessment of the Government and Parliament, I am not persuaded that the Regulations are incompatible with article 14. The fact that they affect a greater number of women than men has been shown to have an objective and reasonable justification. No one has been able to suggest an alternative which would have avoided that differential impact without compromising the achievement of the Governments legitimate aims. Put shortly, it was inevitable that measures aimed at limiting public expenditure on welfare benefits, addressing the perception that some of the out of work were receiving benefits which were excessive when compared with the earnings of those in work, and incentivising the out of work to find employment, would have a differential impact on women as compared with men. That followed from the fact that women formed the majority of those who were out of work and receiving high levels of benefit. The Governments considered view, endorsed by Parliament, that the achievement of those aims was sufficiently important to justify the making of the Regulations, notwithstanding their differential impact on men and women, was not manifestly without reasonable foundation. I would accordingly dismiss the appeals. LORD CARNWATH: 97. Others have explained the factual and legal background of these appeals. The following issues were agreed between the parties for consideration by the Supreme Court: (i) Was the Court of Appeal wrong to have declined to decide whether the benefit cap, as formulated in the 2012 Regulations, had an unlawfully disproportionate impact on victims of domestic violence? (ii) Was the Court of Appeal wrong not to have found that the disproportionate effect of the 2012 Regulations on victims of domestic violence was contrary to article 14 ECHR (read with article 8 and/or article 1 of Protocol 1) and unlawful? (iii) Was the Court of Appeal wrong to have found that the discriminatory effects of the 2012 Regulations on lone parents were justified and lawful, and not contrary to article 14 (read with article 8 and/or article 1 of Protocol 1)? (iv) Was the Court of Appeal wrong to have found that the Respondent has complied with his obligation to treat the best interests of children as a primary consideration when implementing the benefit cap scheme? 98. The boundaries between these heads of claim have not been very clearly delineated in the arguments before us. However, in agreement with both Baroness Hale and Lord Reed, I find it most helpful to concentrate on issues (iii) and (iv), with specific regard to article 1 of protocol 1 (A1P1). Like them I do not think that a case has been made, at least on the evidence before us, for separate treatment of the position of victims of domestic violence, the subject of issues (i) and (ii). Under issue (iii) it is common ground that the scheme falls within the ambit of A1P1, and that in the context of article 14 it is indirectly discriminatory against women, particularly lone parents. The only issue therefore is justification. 99. Article 8 was also mentioned under issue (iii), and was relied on by Mr Wise in his printed case. However, as I understood it, this was not by way of challenge to the Court of Appeals rejection of the free standing claim under article 8, which is consequently not one of the agreed issues for this court. Rather he relied on article 8 either as an alternative route into article 14, or as supporting his best interest claim under issue (iv). I note that article 8 was not relied on by Mr Drabble QC for the Child Poverty Action Group. I have not been persuaded that either of Mr Wises formulations adds anything of substance to the claim based on A1P1. 100. It is important also to understand how the interests of children affected by the scheme may be relevant to the legal analysis, either under the Convention itself, or indirectly by reference to article 3(1) of the UNCRC (best interests of children as a primary consideration). As to the Convention, the children have no relevant possessions under A1P1 in their own right; nor are they a protected class under article 14. However, as Lady Hale has said (para 218), the disproportionate impact on women arises because they are responsible for the care of dependent children. Elias LJ said in the Divisional Court (para 62): In this case there is no dispute that the rights of the adult claimants under A1P1 (the right to peaceful enjoyment of possessions) are affected by a reduction in the benefits paid to them. And although the child claimants have no A1P1 rights themselves, we agree with CPAG's submission that it would be artificial to treat them as strangers to the article 14/A1P1 arguments. The benefits in each case are paid to the mother to enable her both to feed and house herself and to feed and house her children. I agree. Accordingly, in considering the nature of the admittedly discriminatory effect of the scheme on lone parents, and its alleged justification, the effects on their children must also be taken into account. 101. The possible relevance of UNCRC article 3(1) requires a little more explanation. Before the Divisional Court (para 45) Mr Eadie QC was recorded as having submitted on behalf of the Secretary of State that, as an international instrument with no binding effect in English law, the Convention had no bearing on the case. This argument was rejected by Elias LJ and has not been renewed. The Court of Appeal said: 69. The Divisional Court held that, notwithstanding the fact that the UNCRC is an international convention which has not been incorporated into our domestic law, the court should nevertheless have regard to it as a matter of Convention jurisprudence: see Neulinger v Switzerland (2010) 28 BHRC 706, cited by Baroness Hale in ZH (Tanzania) v Secretary of State for the Home Department [2011] 2 AC 166 at para 21. This has not been challenged by the Secretary of State on this appeal. (para 69) Whether or not for this reason, issue (iv) was agreed by the Secretary of State in a form which raised directly the issue of compliance with article 3(1), without overtly questioning its legal relevance, or advancing any substantive argument on that issue. In the circumstances it seemed right to proceed on the basis, conceded rather than decided, that the obligations imposed by article 3(1) were matters to be taken into account under the Convention on Human Rights. As will be seen, this has now emerged as a crucial issue following the post hearing exchanges. However, before returning to it in that context, I will consider the treatment of the discrimination issues, and in particular article 3(1), in the courts below. 102. It is unnecessary to repeat the accounts given in other judgments of the nature of the discrimination, of the three fold justification put forward by the Secretary of State, and of the criticisms made of it by the appellants, supported by the interveners. In short, it is said, the two objectives of fairness and increasing incentives to work are largely irrelevant or misconceived in their application to the group which is the object of discrimination; and that the third, saving money, cannot on its own justify discriminatory treatment in the enjoyment of a convention right. The essential objection was put shortly by Mr Drabble for the Child Poverty Action Group: Although this is not the expressed aim of the cap, its discriminatory effect is built in to its structure. Lone parent families are more likely to be affected by the cap precisely because it is so difficult for them to move into work; and the effects of the cap on them will necessarily be much harsher the corollary is that a lone parent will be far less likely to be able to avoid the cap by moving into work (a point accepted by the Government). The effects of the cap on a single mother and her children will be more severe the more children she has to clothe, feed and house, and she must do so alone. 103. The Court of Appeal, in agreement with the Divisional Court, rejected these criticisms, holding in particular that there had been compliance with article 3(1) (para 72ff). Applying the approach of members of this court in H (H) v Italian Prosecutor [2013] 1AC 338, they held that it was not necessary for the decision maker to adopt a tightly structured approach to consideration of the issues raised by article 3(1). It was enough for him to give appropriate weight to the interests of children as a primary consideration in the overall balancing exercise. 104. They found ample evidence that the Secretary of State had satisfied this test, citing five matters (para 74): (i) The 2010 Treasury Spending Review made clear that a principal objective was to raise children out of long term poverty; (ii) The February 2011 Impact Assessment showed that the government was keenly aware of the likely impact on children; (iii) The March 2011 Equality Impact Assessment stressed the objective of reversing the detrimental impact on families and children of benefits dependency, and indicated that the government was looking at ways to ease the transition for large families; (iv) The Parliamentary debates focussed time and again on the interests of children; and (v) The July 2012 Impact Assessment revised the assessment of the number of children likely to be affected and addressed the issue of short term relief. These points have been in substance adopted in the submissions of the Secretary of State in this court. 105. The comments in this court in H (H) predated, and therefore did not take account of, the most authoritative guidance now available on the effect of article 3(1). This is in General Comment No 14, adopted by the UN Committee on the Rights of the Child early in 2013. Although this guidance was not available at the time of the decisions under challenge, it is as I understand it intended as a restatement of established practice, rather than a new departure. 106. Paragraph 6 explains that best interests in this context is a three fold concept: (a) a substantive right, (b) a fundamental, interpretative legal principle, and (c) a rule of procedure. The first and third are explained as follows: (a) A substantive right: The right of the child to have his or her best interests assessed and taken as a primary consideration when different interests are being considered in order to reach a decision on the issue at stake, and the guarantee that this right will be implemented whenever a decision is to be made concerning a child, a group of identified or unidentified children or children in general. Article 3, paragraph 1, creates an intrinsic obligation for States, is directly applicable (self executing) and can be invoked before a court. (c) A rule of procedure: Whenever a decision is to be made that will affect a specific child, an identified group of children or children in general, the decision making process must include an evaluation of the possible impact (positive or negative) of the decision on the child or children concerned. Assessing and determining the best interests of the child require procedural guarantees. Furthermore, the justification of a decision must show that the right has been explicitly taken into account. In this regard, States parties shall explain how the right has been respected in the decision, that is, what has been considered to be in the childs best interests; what criteria it is based on; and how the childs interests have been weighed against other considerations, be they broad issues of policy or individual cases. (emphasis added) 107. Later paragraphs explain that the phrase actions concerning children is to be read in a very broad sense covering actions including children and other population groups, such as those relating to housing (para 19); that where a decision will have a major impact on children a greater level of protection and detailed procedures to consider their best interests (are) appropriate (para 20); and that the childs interests have high priority and (are) not just one of several considerations larger weight must be attached to what serves the child best (para 39). 108. In relying on this guidance, Mr Wise accepted that it was not necessary for the decision maker to address the issues in a particular structured order, as the Court of Appeal may have understood his argument. What matters is the substance of what is done rather than the form. However those passages do show in my view that the evaluation needs to consider, where relevant, the interests both of children in general and of those directly affected by the action. It also needs to indicate the criteria by which the high priority given to childrens interests has been weighed against other considerations. In so far as that evaluation shows conflict with the best interests of the children affected, it needs either to demonstrate how that conflict will be addressed, or alternatively what other considerations of equal or greater priority justify overriding those interests. 109. Accordingly, as the submissions and evidence stood at the end of the hearing, my view was that, judged by those criteria, the matters relied on by the Court of Appeal fell well short of establishing compliance. The Treasurys long term objective of taking children out of poverty, laudable in itself, was no substitute for an evaluation of the particular impact on the children immediately and directly concerned, and their parents. The February 2011 Impact Assessment and the March 2011 Equality Impact Assessment may have shown that the government was keenly aware of the likely impact on children, and was looking at ways to ease the transition, but they did not provide the answers. In any event, those assessments were related to the statute rather than the regulations which are now under challenge. 110. Those assessments also predated the report by the Childrens Commissioner in January 2012, which set out a number of likely outcomes of concern to the Commissioner. They included increase in child poverty (including diversion to housing costs of money which would otherwise have been spent on necessities for childrens health and wellbeing), children losing their homes, incentivising family breakdown, and disproportionate impact on children from some BME groups. The Commissioner expressed the view that the universal imposition of the cap without regard to the individual circumstances of children would conflict with the best interests principle under UNCRC article 3(1). This view had special significance, as that of the authority responsible under the Children Act 2004 for advising the Secretary of State on the interests of children. 111. The subsequent Equality Impact Assessment of July 2012, prepared by the Department in support of the regulations, did indeed make some revisions to the earlier figures, and mentioned the short term relief to be provided by discretionary housing payments. But it did not in terms respond to the more fundamental points of concern raised by the Commissioners report. In his evidence for the Secretary of State, Mr Holmes observed simply that the government did not agree with the Commissioners assessment, but without further detail. The July assessment also indicated that there would in due course be a full evaluation of the operation of the benefit cap, to be published in autumn 2014. (We have not been given any information relating to this exercise, nor has it been suggested that it is relevant to our consideration of the legal issues relating to the decisions under challenge.) 112. For these reasons, my provisional view at the end of the hearing was that, in their application to lone parents and their dependent children, the regulations were not compatible with Convention rights, and that the court should so declare. Post hearing submissions 113. In post hearing submissions permitted by the court, the point was taken on behalf of the Secretary of State that A1P1 (with or without article 14) was not the context in which article 3(1) UNCRC had hitherto been relied on by the appellants. I observe that this limitation is not apparent from the agreed wording of question (iv). Nor it seems was the discussion in the courts below so limited. Lord Dysons reference to this argument (paras 67 75), and to its treatment by the Divisional Court, came immediately after his discussion of article 14 (read with A1P1); he observed that the argument had featured prominently in Mr Wises submissions on justification in relation to article 14 (as well as in relation to article 8 which we deal with below. It is fair to say however that at the hearing Mr Wises submissions in that connection were directed mainly to article 8. For this reason, and because of the importance of the issue for this case and others, counsel for the Secretary of State were given the opportunity to make further written submissions. 114. They summarised their submissions in the following six points: (i) Article 3(1) of the UNCRC is a provision of an unincorporated treaty which may only be relied on to the extent that it has been transposed into domestic law; (ii) The ECtHR uses international law when determining the meaning of provisions of the ECHR, in accordance with the Vienna Convention on the Interpretation of Treaties; (iii) Article 3(1) of the UNCRC is, as a matter of principle and in accordance with Strasbourg authority, not relevant to the question of justification of discrimination under article 14 read with A1P1. It has no role to play in determining the meaning of article 14 (read with A1P1 or otherwise), and does not inform or illuminate the question whether the differential impact on women of the benefit cap is proportionate; (iv) Article 3(1) of the UNCRC does not supplant, dilute or compromise the Stec test which all parties have agreed, at every stage of these proceedings, applies both when considering whether the aims are legitimate and when determining whether the 2012 Regulations, having regard to their differential impact on women, are proportionate; (v) Even if the Court were to consider it foreseeable that the ECtHR may develop its case law to have the effect that a breach of article 3(1) of the UNCRC renders legislation disproportionate, there are strong constitutional reasons why the Court should refrain from going beyond the current Strasbourg jurisprudence; and (vi) In any event, the 2012 Regulations do not breach article 3(1) of the UNCRC. The Secretary of State fully took into account the best interests of children, as a primary consideration, and these were extensively debated in Parliament. 115. I have little difficulty with points (i), (ii), (iv) and (v). There has been no dispute as to the application of the Stec test to the issue of proportionality (iv), and no one has argued that we should go beyond existing ECHR jurisprudence (v). As to (i) it is of course trite law that, in this country at least, an international treaty has no direct effect unless and until incorporated by statute, but that it may be taken into account as an aid to interpretation in cases of ambiguity. To that extent the present case is to be contrasted with cases such as ZH (Tanzania) v Secretary of State for the Home Department [2011] 2 AC 166, in which as Lady Hale explained (para 23), UNCRC article 3(1) was reflected in the relevant statutory provisions. Ministerial statements of the governments commitment to giving due consideration to the UNCRC articles (see Lady Hale para 214), may have political consequences but are no substitute for statutory incorporation. 116. It is equally clear (ii) that, under the ECHR and in accordance with the Vienna Convention, regard may be had to principles of international law, including international conventions, for the purpose of interpreting the terms and notions in the text of the Convention: see Demir v Turkey (2008) 48 EHRR 1272, paras 65, 67, 85. Demir itself is a good illustration of that proposition. For the purpose of determining whether article 11 (right to join a trade union) extended to civil servants, reference was made to article 22 of the International Covenant on Civil and Political Rights. It was noted by the court (para 99) that the wording of that article was similar to that of article 11 of the Convention, but that it was expressed to be subject to the right of the state to exclude the armed forces and the police, without referring to members of the administration of the state. Similarly, in Neulinger v Switzerland, to which Elias LJ referred, the court had regard to the Hague Convention on the Civil Aspects of International Child Abduction in determining whether forced return of a child to Israel would involve a breach of his rights under article 8 of the Convention. Point (iii) international treaties and article 14 117. Point (iii) questions the application of this approach in the context of article 14 taken with A1P1, and more specifically to the issue of justification. There seems to be no reason in principle why the Demir approach should not apply to article 14. Mr Drabble relies on X v Austria (2013) 57 EHRR 405, as the clearest example, in that case relating to article 14 taken with article 8. The court held that a law preventing second parent adoption in the case of same sex marriages involved discrimination under 14, and, although the law served a legitimate aim, it had not been shown that an absolute prohibition was necessary for the protection of the families or children. Early in its judgment (para 49) the court had quoted UNCRC article 3, and also article 21 which requires that systems of adoption shall ensure that the best interests of the child shall be the paramount consideration. In considering the question of justification, the court listed the factors which seemed rather to weigh in favour of allowing the courts to carry out an examination of each individual case adding (with a reference to the earlier quotations): This would appear to be more in keeping with the best interests of the child, which is a key notion in the relevant international instruments (para 146) Of this case Mr Sheldon QC for the Secretary of State commented: the court carried out the proportionality exercise (in respect of article 14 read with article 8) in the usual way and only subsequently observed that the outcome would also appear to be more in keeping with the best interests of the child. That is not the same as using the UNCRC for the purposes of carrying out the balancing exercise itself. Still less does it involve using the UNCRC to alter the proportionality test. If that was intended to suggest that the reference to the UNCRC was purely incidental to the courts reasoning, I cannot agree. The prominence given to the relevant articles in the earlier exposition of the relevant law shows to my mind that it was treated as a significant part of the consideration of article 14, albeit in a very different factual context to the present case. 118. Another Strasbourg case in which reliance was placed on the UNCRC as an aid to interpretation of the Convention, in this case in favour of the state, was Ponomaryov v Bulgaria (2011) 59 EHRR 799. The complaint was of a violation of article 14 taken with A2/P1 (right to education), by direct discrimination on the grounds of nationality with respect to the provision of secondary education. In dismissing the application, the court relied on UNCRC article 28 as supporting the view that the state enjoyed a greater margin of appreciation in relation to secondary as compared to primary education (para 57). 119. There are examples also in domestic jurisprudence. Lady Hale has referred to the judgment of Maurice Kay LJ in Burnip v Birmingham City Council [2013] PTSR 117, concerning discrimination in the application of housing benefit for a disabled person. Although the court was able to arrive at its decision on other grounds, Maurice Kay LJ would have relied if necessary on the UN Convention on the Rights of Persons with Disabilities (CRPD) to resolve any uncertainty over the meaning of article 14 discrimination in the circumstances of the case (para 22). Of this case Mr Sheldon comments: Even if that was a correct approach, it does not justify using a treaty involving one group (here, children) to resolve any uncertainty about a claim for discrimination brought by, and in respect of, an entirely different group (here, women). I see no reason to question Maurice Kay LJs approach as applied to the case before him, which seems wholly consistent with the ECHR cases already cited. I accept however that the treaty in question was directly related to the particular form of discrimination there in issue. I will return to that point. 120. I see no inconsistency between such reference to international treaties where relevant and the Stec test. In Burnip. Henderson J, giving the lead judgment, cited the passage in Stec which established the manifestly without reasonable foundation test as appropriate for review of general measures of economic or social strategy, and declined to adopt an enhanced test requiring very weighty reasons for the discrimination. It was in this context that Maurice Kay LJ, who agreed with Henderson J on the issue of justification (para 23), drew assistance from the CRPD. 121. Before considering the application of that approach to the present case, it is convenient to consider point (vi), that is whether the latest submissions throw any further light on the issue whether the regulations were in compliance with article 3(1). Compliance with article 3(1) 122. It is not in dispute that, as asserted, issues in relation to the interests of children were extensively debated in Parliament or that the views so expressed were taken into account by Ministers. But article 3(1) is more than a restatement of the ordinary administrative law duty to have regard to material circumstances. The principles were summarised by Lord Hodge in Zoumbas v Secretary of State for the Home Department (AF (A Child) intervening) [2013] 1 WLR 3690 (paras 10 13) in seven points. I would emphasise the first and last: (1) The best interests of a child are an integral part of the proportionality assessment under article 8 ECHR ; (7) A child must not be blamed for matters for which he or she is not responsible, such as the conduct of a parent. On the other hand, as he added (by reference to H (H)) there may be circumstances in which the weight of another primary consideration can tip the balance and make the interference proportionate even where it has very severe consequences for children (para 13). 123. In considering how the government approached that task, rather than trawling through the parliamentary debates, we are entitled to rely on the evidence given in these proceedings on behalf of the Secretary of State. The Court of Appeal quoted (paras 32 33) the evidence of Mr Holmes that: if the level of the benefit cap was based on the number of children in a household it would undermine the intention that there should be a clear upper limit to the amount of benefit families can receive. and Agreeing to exclude child benefit from the cap would have effectively resulted in there being no limit to the amount of benefit a household could receive. Further, Child Benefit, like other welfare benefits, is provided by the state and funded by taxpayers and therefore with the aim of reducing welfare expenditure and reducing the deficit the Government believes it is right that it is taken into account along with other state benefits when applying the cap. It is noteworthy that, as far as Mr Holmes evidence went, the Secretary of State offered no substantive response to the specific concerns expressed by the Childrens Commissioner and others about the practical impact on children of families affected by the cap. Of the two points made by him, the second is no more than a general statement of the desirability of limiting government expenditure, without any direct reference to the interests of children. The first point the need for a clear upper limit begs the question whether it is consistent with the statutory framework to treat child benefits as no more than a component of the family income. 124. The difficulty with that response, in the context of a duty to treat the best interests of the child as a primary consideration is that it ignores the distinctive statutory purpose of the child related benefits. Lord Reed (para 35) refers to a ministerial response in the course of the Parliamentary debate, to the effect that working people on low incomes had to cope with difficult circumstances and live within their means; that their earnings were not determined by the size of their families, and that the government believed that the same principle should apply to the level of the cap. 125. As applied to child related benefits, in my view, this was a false comparison. No doubt for that reason it was not a point made by Mr Holmes. The benefits are paid regardless of whether their parents are in work or not. In this respect therefore workers and non workers alike were (before the cap) able to rely on this extra assistance in coping with difficult circumstances in the interests of their children. Although paid to the parents, these benefits are designed to meet the needs of children considered as individuals. As Lady Hale said in Humphreys v Revenue and Customs Comrs (summarising the case for the Revenue): The aim of child tax credit is to provide support for children. The principal policy objective is to target that support so as to reduce child poverty. The benefit attaches to the child rather than the parent. ([2012] 1 WLR 1545 para 25) The same could be said of child benefit. 126. As Mr Drabble QC submitted, the cap was a complete innovation in the combined benefits/tax system, which had always contained a mechanism to adjust for family size. The cap has the effect that for the first time some children will lose these benefits, for reasons which have nothing to do with their own needs, but are related solely to the circumstances of their parents. It is difficult to see how this result can be said to be consistent with the best interests of the children concerned, or in particular with the first and seventh principles in Zoumbas. 127. Lord Reed has referred to statements made to Parliament in November 2011 that excluding both child benefit and child tax credit would reduce the savings from the scheme by 80 90%, and so emasculate the scheme. It is not clear whether these are up to date estimates, or how they relate to the regulations as opposed to the Bill. If correct, they raise the questions why the viability of a scheme, whose avowed purpose is directed at the parents not their children, is so disproportionately dependent on child related benefits. There is nothing in Mr Holmes evidence which addresses or answers these questions. 128. Accordingly I remain of the view that the Secretary of State has failed to show how the regulations are compatible with his obligation to treat the best interests of children as a primary consideration. UNCRC article 3(1) and A1P1 129. The more difficult question, now that it has been put in issue, is how that finding in relation to the interests of children under UNCRC article 3(1) affects the resolution of issue (iii): that is the alleged justification for the admittedly discriminatory effects on women as lone parents. As Mr Sheldon submits, even if article 3(1) had a role to play in illuminating article 14, this could only be where the alleged indirect discrimination, or differential treatment, was in respect of children. In the present case, by contrast, the allegation is of discrimination, not against children, but against their mothers. The children, it is said, will be treated the same whether their lone parents are male or female. With considerable reluctance, on this issue agreeing with Lord Reed, I feel driven to the conclusion that he is right. 130. In all the article 14 cases to which we have been referred to in this context there was a direct link between the international treaty relied on and the particular discrimination alleged: (i) In X v Austria (2013) 57 EHRR 405, where the complaint concerned discrimination by restrictions on adoption by single sex couples, the court referred not only to UNCRC article 3(1), but also to article 21 which applied the best interests principle specifically to adoption. In Ponomaryov v Bulgaria (2011) 59 EHRR 799, where the complaint was of discrimination in respect of education, reference was made to UNCRC article 28 relating also to education. (ii) (iii) In Burnip v Birmingham City Council [2013] PTSR 117, where the alleged discrimination related to the treatment of the disabled, reference was made to the CRPD, covering the same subject matter. In each of these cases, it can plausibly be argued that the court was using the international materials to fill out, or reinforce, the content of a Convention article dealing with the same subject matter. They can be justified broadly as exercises in interpretation of terms and notions in the Convention, consistently with the Demir principle. 131. There is no such connection in the present case. The discrimination with which we are concerned under article 14 is in relation to women and their possessions. Those concepts require no relevant illumination by way of interpretation. It is true that the discrimination in this case is related to their responsibilities as lone parents, and to that extent, as Elias LJ accepted, the children are not strangers to the article 14/A1P1 arguments. But that is a comment on the facts, not on the interpretation of the convention rights. Indeed, as has been seen, it is the distinct interest of the children in the benefits as individuals that has reinforced my view of the breach under article 3(1). As Lord Reed says (para 89) the fact that children are statistically more likely to be living with a single mother than with a single father is unrelated to the question whether the childrens interests have been treated as a primary consideration as required by UNCRC article 3(1). 132. We have been shown no precedent in the Strasbourg jurisprudence for the use of an international treaty in this indirect way. Mr Sheldon argues that there are strong constitutional reasons why the court should not go beyond Strasbourg on an issue of this kind. Whether or not that is so, we have heard no argument that we should do so. The appellants and their supporters have relied simply on the principles to be extracted from the existing case law. Conclusion 133. In conclusion I would dismiss the appeal, albeit on grounds much narrower than those accepted by the courts below. I would hope that in the course of their review of the scheme, the government will address the implications of these findings in relation to article 3(1) itself. However, it is in the political, rather than the legal arena, that the consequences of that must be played out. LORD HUGHES: 134. I agree with the judgment and conclusions of Lord Reed and would like him dismiss this appeal. I add only some additional observations in view of the difference of opinion which is disclosed by the judgments of Lady Hale and Lord Kerr. 135. There is much common ground. (i) The suggested discriminatory effect upon the victims of domestic violence adds nothing to the accepted discriminatory effect upon women. Moreover neither of the adult appellants is suffering any of the adverse effects of the cap relied upon as affecting such victims, so that the Court of Appeal was fully justified in declining to decide the issue of such victims. Further, the principal adverse effects peculiar to such victims which were relied upon (the treatment of refuges and the possible need for two sets of rent to be within housing benefit) have both been addressed by amendments to the original form of the Regulations. It is agreed on all sides that the scheme has legitimate aims. At the very least, the principal aim of discouraging benefit dependence and encouraging work is agreed to be legitimate. For my part I agree that at a time of national economic crisis it was also legitimate to seek to reduce the overall expense on benefits, and that establishing a different balance between those who worked and paid taxes and those who did not was a further legitimate aim. (ii) (iii) A1P1 to the First Protocol is agreed to be engaged to the extent that Stec v United Kingdom (2006) 43 EHRR 1017 establishes that, although it does not give an entitlement to benefits, the ECHR does require that if they are provided they must be administered in a manner which is not discriminatory contrary to article 14. Here a discriminatory effect of the regulations upon women is conceded, because they represent much the largest proportion of lone parents forming a household with children. Accordingly the scheme as a whole, including its discriminatory effect, must be justified. The test, in a case involving high level social/economic policy, is agreed by all parties to be that laid down in Stec, namely that it fails to be justified if it is manifestly without reasonable foundation. 136. The difference of opinion reduces itself to the place of article 3 of the UN Convention on the Rights of the Child (UNCRC). That in turn involves two questions: (a) does article 3 have legal effect in English law and if so by what (b) route? and if it does, has there been a breach of it such as to render the Regulations unlawful? The legal relevance of article 3 UNCRC 137. Article 3 UNCRC is contained in an international treaty ratified by the UK. It is binding on this country in international law. It is not, however, part of English law. Such a treaty may be relevant in English law in at least three ways. First, if the construction (ie meaning) of UK legislation is in doubt, the court may conclude that it should be construed, if otherwise possible, on the footing that this country meant to honour its international obligations. Second, international treaty obligations may guide the development of the common law. For these two propositions see for example R v Lyons (Isidore) [2002] UKHL 44; [2003] 1 AC 976, para 13. Neither has any application to this case. This case is concerned with legislation, not with the common law, and it is not suggested that there is any room for doubt about the meaning of the regulations. Thirdly, however, the UNCRC may be relevant in English law to the extent that it falls to the court to apply the European Convention on Human Rights (ECHR) via the Human Rights Act 1998. The European Court of Human Rights has sometimes accepted that the Convention should be interpreted, in appropriate cases, in the light of generally accepted international law in the same field, including multi lateral treaties such as the UNCRC. An example is Demir v Turkey (2008) 48 EHRR 1272 which concerned the scope of article 11 (right of freedom of association), and which is cited by Lord Reed at para 83 above. 138. It was on this third basis that the UNCRC was advanced in argument before this court and, as I understand it, in the courts below. Until post hearing submissions in this court, this argument was confined to praying in aid article 3 UNCRC upon the application or content of article 8 of the ECHR (respect for private and family life). In turn, the complaint of infringement of article 8 was based upon the rights of the children affected by the cap, not of their mothers except to the extent that they were, as carers, directly involved in the article 8 rights of their children. Article 3 UNCRC was not, until the post hearing submissions, advanced as relevant to the justification of the admitted indirect discrimination against women in relation to their A1P1 rights. 139. For the reasons set out by the Court of Appeal, the article 8 rights of children are not arguably infringed by the benefit cap scheme. Elastic as that article has undoubtedly proved, it does not extend to requiring the State to provide benefits, still less benefits calculated simply according to need, nor does it require the state to provide a home. See Chapman v United Kingdom (2001) 33 EHRR 399, para 99; R (TG) v Lambeth London Borough Council (Shelter intervening) [2012] PTSR 364, paras 34 and 40; AM v Secretary of State for Work and Pensions [2014] EWCA Civ 286, para 22 and the cases there cited. Winterstein v France [2013] ECHR 984 depended upon the long toleration of itinerants on the land from which they were evicted and the absence of provision of alternative accommodation, and does not lead to a different conclusion. Moreover, the likely impact of this scheme upon some children who are members of larger families living in high rent homes is at most to make it unavoidable for the family to move; the duty of Local Authorities to provide accommodation under the Housing Act 1996, Part 7, remains. None of the judgments suggests that article 8 is engaged. I agree that it is not. It follows that article 3 UNCRC cannot have effect in English law on the grounds that it is relevant to its interpretation. 140. The additional argument now formulated before this court and accepted by Lady Hale and Lord Kerr would give article 3 UNCRC the force of domestic English law on the grounds that it bears on the issue of whether the agreed discrimination against women in relation to their A1P1 rights was justified. Lord Kerr would additionally give article 3 direct effect on the grounds that the UKs signature to the convention is sufficient to impose a domestic duty to comply with it. Like Lord Reed and Lord Carnwath, I am unable to accept these arguments. 141. It may not be difficult to see that in interpreting the content of the article 8 rights of children, it may be legitimate to take into account the international obligation contained in article 3 UNCRC. ZH (Tanzania) v Secretary of State for the Home Department [2011] UKSC 4; [2011] 2 AC 166 was an article 8 case where the relevance to that article of the interests of the children of a potential deportee was conceded. Similarly, Neulinger v Switzerland (2010) 54 EHRR 1087 depended upon article 8. It concerned an order directly about the upbringing of a child, namely an order for return to another state pursuant to the Hague Convention on the Civil Aspects of Child Abduction, and the very first words of that convention declare the interests of children to be of paramount importance in matters relating to their custody. If article 8 rights are engaged, the question will often become: is such impairment of respect for private and family life nevertheless permissible under article 8(2)? If the article 8 rights relied upon are those of children, as was asserted here, or of their parents in the form of their relationship with their children, as in ZH (Tanzania), there is scope for the argument that an internationally recognised duty to approach the childrens interests in a particular way bears on whether article 8(2) is satisfied in the context of these regulations whether any impairment of childrens article 8 rights was permitted on the grounds that it is necessary in a democratic society in the interests of the economic well being of the country or the protection of the rights and freedoms of others, such as those taxpayers who do not claim benefits. 142. The Demir approach is not of course limited to article 8, as that case itself shows. And it may extend to cases where discrimination is in issue. Opuz v Turkey (2009) 50 EHRR 695 was an article 2/article 14 case involving a complaint of failure to protect from domestic violence. The court relied in part on the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) in determining the scope of article 14: see paras 185 187. Ponomaryov v Bulgaria (2011) 59 EHRR 799 was a complaint of discrimination against foreign nationals by charging for education when Bulgarian nationals received free provision. Obiter, the court referred at paras 56 57 to international conventions which indicated that the states margin of appreciation increased as one moved from primary, through secondary, to tertiary education. Burnip v Birmingham City Council [2013] PTSR 117 was a benefits case involving A1P1 and a derivative article 14 claim. In the Court of Appeal Maurice Kay LJ would have been prepared to adopt a similar approach by gaining assistance on the scope of article 14 from the UN Convention on the Rights of Persons with Disabilities (CRPD) if the extent of article 14 had been in doubt. Obiter, he also offered the opinion that CRPD might illuminate the approach to justification, but the occasion to test this did not arise. But before the Demir approach to the interpretation of the ECHR can be relevant, there has to be the necessary connection between the international law invoked and the Convention right under consideration. This was clearly present in each of Opuz, Ponomaryov and Burnip. In each, the international instruments referred to were directly concerned with the particular form of discrimination in issue. Demir does not mean that the UNCRC (in this case) becomes relevant to every ECHR question which arises, simply because children are as a matter of fact affected by the decision or legal framework under consideration. 143. It is said that the Strasbourg court has invoked article 3(1) UNCRC in the context of a discrimination claim in X v Austria (2013) 57 EHRR 405. That was a case in which the same sex partner of a childs mother wished to adopt the child, who lived with the two ladies. The effect of Austrian law was that adoption substituted the adoptive parent for the natural parent of the same sex. Thus second parent adoption (adoption by the partner of the natural parent) by a same sex partner was legally ineffective, since if the adoption order were made the same sex partner of the mother would achieve parental rights, but in place of the natural mother, leaving the legal relationship of the absent father to the child unaltered. Conversely, second parent adoption by the different sex partner of the natural parent was effective. The claimants in that case were scrupulous in limiting their complaint about Austrian law to the resultant difference of treatment between, on the one hand, a different sex unmarried couple and, on the other, a same sex unmarried couple such as themselves. They disclaimed any complaint about any different treatment as between married couples and unmarried couples, which the court had previously found to be within the margin of state appreciation: see Gas & Dubois v France [2014] 59 EHRR 22. 144. The court decided the case on the grounds advanced by the claimants. The discrimination between different sex couples and same sex couples was based upon sexual orientation alone. Where such discrimination is in question, the margin of appreciation is narrow and proportionality requires not merely that the measure in question pursues a legitimate aim but also that it is necessary: see paras 140 141. The relevant Convention rights to which the derivative article 14 claim to discrimination was attached were the article 8 rights of all three people, the mother, her partner and the child. In the absence of any evidence submitted to suggest that a child was generally better brought up by a different sex couple than by a same sex couple, there was no justification for the different treatment as between such couples. The court adopted its usual practice of setting out international instruments in the field, and thus included article 3(1) UNCRC. The decision in question (adoption) related directly to the upbringing of the child. It is unsurprising that the court referred (somewhat in passing) at para 146 to the fact that its conclusion was also more in keeping with the best interests of the child, which it noted to be a key notion in the relevant international instruments. It might have added that in the great majority of developed states there is consensus that questions of a childs upbringing must be determined by his or her best interests or welfare as the dominant or paramount consideration: in England this principle is long established law and now encapsulated in section 1(1) of the Children Act 1989. 145. At its highest, this decision is another in which the UNCRC is referred to as relevant to the content of article 8 rights, and thus to the issue of justification for discrimination in relation to such rights. That is a very long way from saying that article 3(1) is relevant to justification upon any kind of discrimination issue, whether or not the decision is about the childs upbringing, and whether or not either the ECHR rights of the child or article 8 rights of his family are at stake. Such issues simply did not arise in X v Austria. 146. If the rights in question are the A1P1 property rights of women, and their associated derivative right not to be discriminated against in relation to those rights, it is an impermissible step further to say that there is any interpretation of those rights which article 3 UNCRC can inform. In the case of article 8, the childrens interests are part of the substantive right of the parent which is protected, namely respect for her family life. In the case of A1P1 coupled with article 14, the childrens interests may well be affected (as here), but they are not part of the womans substantive right which is protected, namely the right to be free from discrimination in relation to her property. There is no question of interpreting that article 14 right by reference to the childrens interests. The protected right to respect for family life under article 8 is entirely different from the protected right to property under A1P1. Nor can the article 8 rights of the child be said to be in need of interpretation when it is clear for the reasons given in all the judgments that they are not infringed. The necessary connection between the ECHR right under consideration and the international instrument is not present. That can be seen by considering the position of the appropriate comparator, namely a lone non working father with the same children and household outgoings. The interests of the children would be exactly the same in his case, but he would have no article 14 claim to discrimination. 147. I also agree that to treat failure to comply with article 3(1) UNCRC as determinative of the present case would be tantamount to departing from the Stec test for justification which has been agreed on all sides throughout this litigation. Was there a breach of article 3 UNCRC? 148. It is unnecessary to decide this question, but I ought to say that in my view it is clear that there was in any event no breach of article 3. 149. The language of article 3(1) does give rise to some difficulty. It is in these terms: In all actions concerning children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration. This departs from the formulation of the paramountcy principle for decisions about the upbringing of a child, or for legislation designed for the protection/advancement of children, mentioned at para 142 above. This paramountcy formulation is employed in the UNCRC but only in relation to one kind of upbringing decision, namely adoption (article 21). The different language of article 3(1) begs two important questions: (a) what is the extent of the expression actions concerning children; and (b) what is the meaning of a primary consideration 150. It might be thought that article 3 was intended to apply to decisions directly about a child, or perhaps to those and to others directly affecting him, such as for example decisions relating to the provision of education or child support facilities, and that a primary consideration therefore imports some priority for the best interests of children even if short of making them determinative, as the paramountcy principle does. That might perhaps be suggested by article 3(3) which clearly is specific to the care and protection of children, while article 3(2), which requires states to take appropriate legislative and administrative measures to ensure that the child has such protection and care as is necessary for his well being, is also perfectly consistent with this. This is not, however, the view taken in General Comment 14, adopted by the UN Committee on the Rights of the Child at its 2013 session, referred to by Lord Carnwath at para 105, and foreshadowed by earlier similar documents. 151. That Comment suggests (at para 19) that article 3 extends well beyond decisions directly about children to those which indirectly affect either individual children or children in general, eg related to the environment, housing or transport. If the meaning of article 3(1) is as broad as this, then all manner of court decisions may fall within it; a planning decision relating to housing development might be one, whilst the making of a possession order against a tenant who has children, or the enforcement of money judgments against the family motor car, or the sentencing of him for a serious criminal offence might be others. 152. Pace Lord Carnwath, I do not take it as read that the Committees views, although entitled to careful consideration coming from the source that they do, can be regarded as binding upon party States as to the meaning of the treaty to which they agreed. But it is neither necessary nor appropriate to attempt to resolve these issues in this case, especially since we heard no argument upon them. All that needs to be said is that it is clear that the wider the reach of the concept of decisions concerning either an individual child or children in general, the less possible it is to impose the best interests of such child or children as a determinative or even priority factor over the frequently complex legal or socio economic considerations which govern such decisions. The committees general comment gives some acknowledgement to this problem in, for example, para 20, which recognises that although all State actions may affect children, a full and formal process of assessing their best interests is not called for in every case, and in para 32 where it is stated that the concept of the childs best interests is flexible and adaptable. 153. The Committees General Comment also realistically recognises that the relevant best interests of children will, in relation to decisions which are not simply about identified individual children, include those of children generally. This is apparent throughout the document, including in those passages from para 102 cited by Lord Carnwath. I respectfully agree with Lady Hale that where article 3(1) applies it is not enough to consider only the interests of children generally, without also evaluating the interests of any likely to be particularly affected by the legislation in prospect, but the converse is also true. It is obvious that in the context of this kind of socio economic legislation, there will be a tension between, on the one hand, the interests of children generally in promoting the legitimate aims of reducing a culture of benefit dependency and encouraging work and, on the other, the special interests of those children most likely to suffer an adverse effect of the cap, such as the present appellants. This is realistically recognised by the UN Committee in, for example, para 32 of the Comment, which reads: The concept of the child's best interests is complex and its content must be determined on a case by case basis. It is through the interpretation and implementation of article 3, paragraph 1, in line with the other provisions of the Convention, that the legislator, judge, administrative, social or educational authority will be able to clarify the concept and make concrete use thereof. Accordingly, the concept of the child's best interests is flexible and adaptable. It should be adjusted and defined on an individual basis, according to the specific situation of the child or children concerned, taking into consideration their personal context, situation and needs. For individual decisions, the child's best interests must be assessed and determined in light of the specific circumstances of the particular child. For collective decisions such as by the legislator the best interests of children in general must be assessed and determined in light of the circumstances of the particular group and/or children in general. In both cases, assessment and determination should be carried out with full respect for the rights contained in the Convention and its Optional Protocols. (emphasis supplied) 154. Whilst the appellants in the present case relied upon article 3(1) as substantive and not merely procedural they did not analyse the extent to which it was asserted that priority ought to be given to childrens best interests, still less the interests of which children. Their chief reliance was upon the suggested failure of the Secretary of State properly to have analysed and considered the best interests of children. Relying upon paragraph 6 of the UN Committees General Comment, the principal submission of Mr Wise QC was that the article 3 obligation required (a) careful consideration of how many children will be or are likely to be affected by the cap, (b) asking what the effect on those children particularly affected by it would be, (c) asking whether the cap could be implemented in a manner protecting such children from adverse effects, and (d) asking whether the general proposition that the cap will lift children out of welfare dependency outweighs the risk to those particularly affected. 155. Like both courts below I regard it as plain that the Secretary of State did not fail to undertake all these exercises. There was the fullest public debate about not only the concept of the cap but its proposed details. This country has four Childrens Commissioners, charged with the duty of monitoring childrens interests and advocating them publicly. All participated in the debate and made strongly the case now made by the appellants that the general benefits to families and children which would be brought by the cap were outweighed by the likely adverse consequences for particular children in situations exactly like those of the present appellants. The two Impact Assessments and the Equality Impact Assessment written by the Government recorded the likely adverse consequences for children such as these, in particular those in larger one parent families living in high rent areas. The Parliamentary debate on the detailed proposals returned time and again to this topic. There was a specific proposal, supported by the House of Lords, to amend the Bill by excluding child benefit from the cap, which, as Lady Hale observes, would no doubt remove the adverse impact on the appellants here relied upon; this proposal was considered but rejected by the House of Commons and withdrawn in consequence by the House of Lords. The Secretary of State concluded, and still concludes, that to do this would drive a coach and horses through the whole policy. The evidence could not really be clearer that the Secretary of State did indeed ask the questions which Mr Wise contends are required by article 3 UNCRC. The appellants real complaint is that he reached what they say is the wrong value judgment when it came to balancing the interests of children (and society) in general against those of particular children likely to suffer adverse effects from the cap. Reasonable people may well either agree or disagree with this value judgment, but to say that one disagrees is not the same as saying that the decision is unlawful. LADY HALE: 156. The benefit cap is one of a package of measures provided for in the Welfare Reform Act 2012. The total amount of benefit to which a couple or a single person is entitled is capped at a prescribed sum, irrespective of how much they would otherwise be entitled to. The bare bones of the scheme are provided for in the 2012 Act, but its detailed implementation is contained in the Benefit Cap (Housing Benefit) Regulations 2012. 157. The appellants do not challenge the compatibility of the Act with their rights under the European Convention on Human Rights, but they do challenge the compatibility of the way in which it has been implemented by the 2012 Regulations. They argue that it has a disproportionate impact upon lone parents and upon the victims of domestic violence; both groups are predominantly, although not exclusively, composed of women; hence the scheme is indirectly discriminatory on grounds of sex. As the scheme falls within the ambit of the protection of property rights in article 1 of the First Protocol to the Convention, this violates their right, under article 14 of the Convention, to enjoy such rights without discrimination unless it can be justified. The Secretary of State accepts that the scheme falls within the ambit of article 1 of the First Protocol and that it is indirectly discriminatory against lone parents and thus against women. The question, therefore, is whether it can be justified. A further question, which has only emerged after the hearing in April 2014, is the extent to which, if at all, the obligations of the United Kingdom under the United Nations Convention on the Rights of the Child is relevant to that issue. 158. Both the Divisional Court and the Court of Appeal held that it can be justified: [2013] EWHC 3350 (QB) and [2014] EWCA Civ 156. This raises several questions: whether the justification advanced relates to the scheme as a whole rather than to its discriminatory effect; what is the test to be applied in deciding whether the discrimination is justified; and what is the part played by the international obligations of the United Kingdom under the United Nations Convention on the Rights of the Child in assessing that. 159. The benefit cap is, of course, quintessentially a matter of social and economic policy. In such matters, as Lord Hope of Craighead observed in R v DPP, Ex p Kebilene [2000] 2 AC 326, at p 381, it will be easier for the courts to recognise a discretionary 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. As Lord Reed explains, the introduction of the cap was indeed extensively debated in Parliament and various amendments were proposed and resisted which would have mitigated the adverse effects with which we are here concerned. But the details of the scheme, including those adverse effects, were deliberately left to be worked out in regulations. It is therefore the decisions of the Government in working out those details, rather than the decisions of Parliament in passing the legislation, with which we are concerned. 160. Furthermore, as Lord Hope went on to say in In re G (Adoption: Unmarried Couple) [2009] 1 AC 173, para 48, protection against discrimination, even in an area of social and economic policy, falls within the constitutional responsibility of the courts: Cases about discrimination in an area of social policy, which is what this case is, will always be appropriate for judicial scrutiny. The constitutional responsibility in this area of our law resides with the courts. The more contentious the issue is, the greater the risk is that some people will be discriminated against in ways that engage their Convention rights. It is for the courts to see that this does not happen. It is with them that the ultimate safeguard against discrimination rests. Therefore, even in the area of welfare benefits, where the court would normally defer to the considered decision of the legislature, if that decision results in unjustified discrimination, then it is the duty of the courts to say so. In many cases, the result will be to leave it to the legislature to decide how the matter is to be put right. The scheme 161. It is not necessary to go into the scheme in great detail, but it is necessary to understand the essentials. Section 96(1) of the Act provides that Regulations may provide for a benefit cap to be applied to the welfare benefits to which a single person or couple is entitled. Section 96(2) provides that where their total entitlement to welfare benefits exceeds the relevant amount, their entitlement is reduced by the amount of the excess. This is the cap. The relevant amount is to be specified in Regulations (section 96(5)), but is to be determined by reference to estimated average earnings (section 96(6)). By this is meant the amount which, in the opinion of the Secretary of State, represents at any time the average weekly earnings of a working household in Great Britain after deductions in respect of tax and national insurance contributions (section 96(7)). Welfare benefits means any benefit, allowance, payment or credit prescribed in regulations (section 96(10)); but retirement pensions and state pension credit may not be prescribed (section 96(11)). Regulations may also provide for exceptions to the application of the cap (section 96(4)(c)) and also for the benefit or benefits from which the reduction is to be made (section 96(4)(b)). 162. Thus it will be seen that all the details of the scheme are to be covered in the regulations. The only principle required by the Act, should the Government decide to introduce a cap at all, is that it is set by reference to average weekly earnings net of tax and national insurance contributions. This, as Mr Holmes, the lead official in the Department of Work and Pensions responsible for the benefit cap policy, points out, produces a much higher figure than would be produced by working 40 hours a week for the minimum wage or even the London living wage. But the Government was left a free hand in deciding what working age benefits would count towards the cap. 163. In fact, the cap operates by way of a deduction from housing benefit. Hence the 2012 Regulations amend the Housing Benefit Regulations 2006, principally by introducing a new Part 8A, entitled Benefit cap. The relevant amount is set at 350 for a single claimant (without dependent children) and 500 for all other claimants (that is, couples and lone parents with dependent children) (regulation 75G). This is the equivalent of a gross annual salary of 35,000 a year and 26,000 net. A long list of welfare benefits is prescribed, most importantly for our purposes including housing benefit, child benefit and child tax credit (regulation 75G). Once the cap is reached, therefore, no account is taken of the number of children in the family. On the other hand, the benefit cap does not apply at all where the claimant, the claimants partner or a child or young person for whom either is responsible is receiving any of a long list of benefits; these are mainly disability related but include a war pension (regulation 75F). 164. The cap does not apply at all where the claimant is, or the claimant and her partner are jointly, entitled to working tax credit (regulation 75E(1), (2)). This effectively exempts most working households from the cap; the rules are complicated, but a lone parent responsible for a child would qualify for working tax credit if she worked at least 16 hours a week, while a couple responsible for a child would qualify if they worked a total of 24 hours a week, as long as one of them worked for at least 16 hours a week; the normal requirement is 30 hours work a week (Working Tax Credit (Entitlement and Maximum Rate)) Regulations 2002, regulation 4, as amended by the Tax Credits (Miscellaneous Amendments) Regulations 2012, regulation 2). Not only that, if the claimant or her partner have been employed or engaged in work for payment for 50 out of the preceding 52 weeks, the benefit cap will not apply for 39 weeks from their last day of work (regulation 75E(1), (3) (5)). This gives a period of grace in which to find another job or to move house. 165. The final regulation which is relevant for our purposes is that which provides, in effect, that the housing benefit payable for what is now (following a recent amendment) to be termed specified accommodation is disregarded (regulation 75C(2)(a)). The amendment means that womens refuges are now covered, whereas previously many of them were not. However, there is no comparable exemption for housing benefit paid in respect of temporary accommodation provided under the homelessness provisions of Part 7 of the Housing Act 1996. 166. The benefit cap was introduced in April 2013 in four London boroughs, rolled out in July 2013 to a further 335 local authorities and in August 2013 to the remaining 40 authorities in England, Wales and Scotland. It has not yet been implemented in Northern Ireland. Between April 2013 and January 2014, a total of 38,655 households were capped, 47% of these in London and the vast majority in England. 167. As Elias LJ, giving the judgment of the Divisional Court, observed at [2013] EWHC 3350 (Admin), para 11, It was obvious from the outset that the introduction of the cap would have severe and immediate consequences for claimants who had been receiving substantially in excess of the relevant amount. To mitigate this, the Government provided additional funds to local authorities to enable them to make discretionary housing payments (DHPs) to claimants affected by the cap (along with the other purposes for which such payments may be made). This was specifically intended as a short term solution where transitional help was necessary and not as a long term solution to the needs generated by the cap (see Holmes, Witness Statement No 1, para 130). 168. Elias LJ continued, at para 12: The two items most likely to trigger the operation of the cap [are] housing benefit [and] the number of children in the family. Housing benefit reflects (but does not necessarily meet in full) the cost of housing, whether social or private. Accordingly, the cap will bear most heavily on those in receipt of benefit who live in areas where rental costs are high. In practical terms, therefore, this means that those who live in London or in the centre of other big cities where rents tend to be high will be most likely to be affected. It is a striking feature of the scheme and lies at the heart of this application that the cap applies equally to a childless couple in an area with cheap and plentiful social housing as it does to a lone parent mother of several children in inner London compelled to rent on the private market. The appellants circumstances 169. The four appellants are the lone mother and her youngest child in two families (a third family has now withdrawn from the case as the cap no longer applies to them). The following evidence of their circumstances was before the court when the case was heard in April 2014. 170. Ms SG and her family live in Stamford Hill, North London. This is important because they are members of a particular orthodox Jewish sect. The school age children attend a local Jewish school, kosher food is readily available (but expensive) in the local shops, they can walk to the synagogue and there is a support network of family and friends there. Their lone mother has six children in all, but only three of them live with her: a son now aged four, a daughter now aged seven and another daughter now aged nine. The family used to live in Belgium, but SG left her husband and came to live near her relatives in Stamford Hill in order to escape from her husbands abusive behaviour towards her and their eldest daughter, now aged 18. The daughter was made a ward of court to prevent her father removing her from this country. Because of her behavioural and psychological difficulties she was placed by the local authority in foster care within the same community. She has since married but still lives locally and relies heavily upon her mother for support. The oldest son studies in a yeshiva abroad and is unlikely to rejoin the family, but there are currently proceedings in Belgium about the residence of the second son, now aged 12, whom his mother earnestly hopes can return to live with the family in London. 171. The family live in a two bedroomed flat rented from a private landlord. This is already too small for them and would be quite unsuitable were the 12 year old boy to come and live with the family again. When these proceedings began, the rent was 300 per week, but the landlord was proposing to put it up. They were entitled to 289.20 housing benefit, 71.70 income support for SG, 167.30 Child Tax Credit (all means tested benefits), and 47.10 child benefit. Hence their total benefit entitlement before the cap was 575.30 a week. The cap has therefore resulted in a reduction of 75.30 in their weekly income. The landlord has notified an increase in her rent to 420 from 31 January 2014, which would leave them with only 80 to live on. 172. The Secretary of State correctly points out that housing benefit would not in any event meet such a high rent in full (because it exceeds the local housing allowance limit for that part of London). He also argues that there are cheaper two bedroomed flats available in the area, but the appellants dispute this. We are not in a position to resolve such factual disputes. However, it is obvious that SG has very good reasons for wanting to continue to live in Stamford Hill, that accommodation there is in short supply because of demand from the local community, and that if she does stay there her weekly income will fall well below that which the State deems necessary for her and her three young children to live on. 173. For a time, she did have part time work for 16 hours a week and thus the benefit cap did not apply. But she was unable to sustain this, owing to the demands of the court proceedings relating to her children, both here and in Belgium, and the need to care for the younger children. The 39 week grace period expired in November 2013, since when her benefits have been capped. She has been receiving a discretionary housing payment to meet the shortfall between her rent and her housing benefit, but only until 30 June 2014, when it was due to be reviewed having regard to the steps she has taken to avoid the cap. 174. Mrs NS is also the lone mother of three children, daughters now aged 4, 11 and 12. There is a long history of sexual abuse and domestic violence within her marriage, much of it witnessed by the children. She had left her husband to stay in a womens refuge with the children on two previous occasions before their final separation in December 2012. After a period in unsuitable accommodation, she obtained orders excluding her husband from the family home, and returned there with the children in April 2013. Her husband is prohibited from contacting the family there, but last summer they had to turn to him for help with transport when one child suffered an accident requiring surgery and the other two became ill. NS is concerned that the local childrens services authority will consider her children to be at risk of harm if they have contact with their father. 175. Their home is also a two bedroomed flat rented from a private landlord. It is also too small for them but is close to the childrens schools. The rent is 270 a week. She is entitled to 270 housing benefit, 71.70 income support for NS, child tax credit for the children of 166.94 (although she says that she gets only 162.44), and child benefit of 47.10. Her total entitlement therefore should amount to 555.74 (although she says that she gets only 550.44). Whichever it is, the cap reduces it to 500. 176. NS was awarded discretionary housing payments, but only after a delay during which arrears accrued to her rent account, and only until 31 March 2014. The local authority has yet to decide upon its DHP budget for this year and so she does not know whether or not she will get it. She is of course concerned that the landlord may seek to evict her if she falls into arrears. 177. NS did not work outside the home during her marriage, nor has she done so since it ended. She was allowed very little freedom by her husband and speaks very little English. Why is the scheme discriminatory? 178. It is common ground that the scheme falls within the ambit of article 1 of the First Protocol, which protects the right to peaceful enjoyment of possessions. Possessions for this purpose includes entitlement to welfare benefits, not only those which have been paid for by national insurance contributions, but also those which the State provides on a non contributory basis to supply its people with the basic necessities of life. As the Strasbourg court explained in Stec v United Kingdom (2006) 43 EHRR 1017, para 53: Article 1 of protocol No 1 does not include a right to acquire property. It places no restriction on the Contracting States freedom to decide whether or not to have in place any form of social security scheme, or to choose the type or amount of benefits to provide under any such scheme. If, however, a state does decide to create a benefits or pension scheme, it must do so in a manner which is compatible with article 14 of the Convention. 179. It has not been argued that the benefit cap is itself a violation of article 1 of the First Protocol, on the basis that it deprives affected households of the benefits to which they would be entitled under the usual rules relating to needs related welfare benefits. Instead, it is argued that it violates article 14, which provides that the enjoyment of the rights and freedoms set forth in the Convention shall be secured without discrimination on any ground such as sex . It is not suggested that the scheme is directly discriminatory against women, as it affects all benefit claimants in the same way, irrespective of their sex. However, as the Divisional Court observed, It is clear, and indeed conceded, that the benefit cap has a disproportionate adverse impact on women (para 71). This brings it within the concept of indirect discrimination, which was recognised by the Grand Chamber of the European Court of Human Rights in DH v Czech Republic (2007) 47 EHRR 59, at para 175 (see also para 184): The court has also accepted that a general policy or measure that has disproportionately prejudicial effects on a particular group may be considered discriminatory notwithstanding that it is not specifically aimed at that group, and that discrimination potentially contrary to the Convention may result from a de facto situation. The court had earlier recognised the same concept in the cases of Jordan v United Kingdom (2001) 37 EHRR 52, at para 154, and Hoogendijk v Netherlands (2005) 40 EHRR SE 189, at p 207. 180. The prejudicial effect of the cap is obvious and stark. It breaks the link between benefit and need. Claimants affected by the cap will, by definition, not receive the sums of money which the state deems necessary for them adequately to house, feed, clothe and warm themselves and their children. Furthermore, the greater the need, the greater the adverse effect. The more children there are in a family, the less each of them will have to live on. Ms SG, for example, will receive no more benefit if her 12 year old son rejoins the family, even though a court (either here or in Belgium) has decided that it is in his best interests to do so. This prejudicial effect has a disproportionate impact upon lone parents, the great majority of whom are women, and is also said to have such an impact upon victims of domestic violence, most of whom are also women. 181. The disproportionate impact upon lone parents is relatively straightforward to explain. The relevant comparison is between those housing benefit claimants who are, and those who are not, affected by the benefit cap. Lone parents constitute around 24% of all claimants for housing benefit, but have so far constituted between 59% and 74% of those affected by the cap. This is more than double their proportion in the housing benefit population as a whole. Overall some 92% of lone parents are women. Hence it is not surprising that the Government predicted, in its first Equality Impact Assessment of the Benefit Cap (March 2011, para 27), that single women, mostly lone parents, would constitute 60% of those affected. 182. The reasons for this are fairly obvious. It is much more difficult for lone parents to move into paid employment, even for the 16 hours which would take them out of the cap. It is more difficult for them to do so, the more children they have, because of the problems of delivering and collecting children from different schools or day care placements, the problems of making appropriate day care arrangements for very young children and for all children during the school holidays, the problems of responding to their childrens illnesses, accidents and to casual school closures. The more children they have, the harder it will be for them to move into work; and the more children they have, the harsher will be the effects of the cap. These problems arise irrespective of the ages of the children, but are obviously more acute when any or all of them are under school age. 183. The disproportionate effect which the cap is said to have upon victims of domestic violence, most of whom will also be parents, is a little more complicated. It stems from the limited options available to victims who wish to escape, with their children, from the violence and abuse which they are suffering at home. Some victims are fortunate enough to be able to stay in their own homes while the perpetrator either agrees or is ordered to leave and having done so can be relied upon to stay away. But many are not so fortunate. Their only way of escaping the violence, at least in the first instance, is to leave home. If they go to a refuge, the problem is that the costs may easily take them over the cap. Under the original scheme, some refuges counted as exempt accommodation, which effectively created an exception to the cap, but many did not. Very recently, the Government has addressed this, by amendments which will create an exception for all refuges. 184. But not all victims can go to a refuge. Their other alternative is to apply to the local authority for accommodation under the homelessness provisions of Part 7 of the Housing Act 1996. Unlike the cost of refuges, the cost of other types of temporary accommodation is not exempt. Temporary accommodation is often in the private sector and much more expensive than permanent accommodation in social or other forms of affordable housing. Furthermore, as the intervention from Shelter makes clear, a homeless person has very little choice about where she is housed. She has to accept any offer of suitable accommodation or risk becoming literally without a home (and even having her children taken away from her as a result). In areas of high housing need, families may stay for a very long time in so called temporary accommodation before affordable permanent housing becomes available. 185. Some of these victims will want to keep open the possibility of returning to the family home, or securing a transfer, once the family court has decided who is to live there. Hence, very sensibly, the housing benefit scheme provides that in certain circumstances councils may continue to pay benefits in respect of two homes for a certain length of time (Housing Benefit Regulations 2006, regulation 7(6)(a)). But this, of course, means that the total amount of housing benefit, when taken together with other benefits, will take the claimant over the limit where the cap applies. 186. Thus, even with the recent change relating to refuges, the effect of the cap is to undermine the humane treatment given to victims of domestic violence both by the homelessness regime and by the housing benefit scheme. However, although both of the families whose cases are before us have suffered from domestic violence and abuse, they have not suffered these particular adverse effects (we do not know whether Mrs NSs family was in receipt of dual housing payments between December 2012 and April 2013, but in any event that was before the cap came into force), nor do they claim to be at risk of suffering them in the future. For this reason, the Divisional Court and the Court of Appeal declined to decide whether the cap did have a disproportionate effect upon the victims of domestic violence. Mr Wise QC, for the appellants, complains that they should have done so. The appellants have both suffered domestic violence and abuse and Mrs NS might well have to flee to expensive temporary accommodation while wishing to retain the family home should her husband once again try to assert his control over her. 187. In my view, however, the problems suffered by the victims of domestic violence are principally suffered because they are parents who have every reason to separate from the other adult in the household, not only for their own sake but also for the sake of their children. Of course, there may be some victims of domestic violence who are not responsible for the care of children, but it has not been shown how likely it is that they will be affected by the cap or how difficult they would find it to escape its adverse impact. I would therefore treat the victims of domestic violence as a subset of lone parents, who may be more likely to be affected by the cap because of the high cost of temporary accommodation and the dual payments problem, and who will have the same problems in escaping its effects. How is the discrimination justified? 188. The applicable principles are set out in the Grand Chamber judgment in Stec v United Kingdom (2006) 43 EHRR 1017, para 51: Article 14 does not prohibit a Member State from treating groups differently in order to correct factual inequalities between them; indeed in certain circumstances a failure to attempt to correct inequality through different treatment may in itself give rise to a breach of the article. A difference in treatment is, however, discriminatory if it has no objective and reasonable justification; in order words, if it does not pursue a legitimate aim or if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be realised. The Contracting state enjoys a margin of appreciation in assessing whether and to what extent differences in otherwise similar situations justify a different treatment. Two points are clear from this. The first is that it is not the scheme as a whole which has to be justified but its discriminatory effect: see A v Secretary of State for the Home Department [2005] 2 AC 68, per Lord Bingham at para 68; AL (Serbia) v Secretary of State for the Home Department [2008] 1 WLR 1434, per Baroness Hale at para 38. It is not enough for the Government to explain why they brought in a benefit cap scheme. That can readily be understood. They have to explain why they brought in the scheme in a way which has disproportionately adverse effects upon women. 189. However, it is important to understand that what is needed to justify indirect discrimination is different from what is needed to justify direct discrimination. In direct discrimination, it is necessary to justify treating women differently from men. In indirect discrimination, by definition, women and men are treated in the same way. The measure in question is neutral on its face. It is not (necessarily) targeted at women or intended to treat them less favourably than men. Men also suffer from it. But women are disproportionally affected, either because there are many more of them affected by it than men, or because they will find it harder to comply with it. It is therefore the measure itself which has to be justified, rather than the fact that women are disproportionately affected by it. The classic example is a maximum age bar on recruitment to particular posts; it applies to all candidates, women and men; but it disadvantages women because they are more likely to have taken a career break to have or care for children than are men. The question therefore is whether the age bar can be independently justified. This long standing position is reflected in the definition of indirect discrimination in section 19 of the Equality Act 2010. It was also the approach of the Strasbourg court in Hoogendijk v Netherlands (2005) 40 EHRR SE 189, a case of indirect discrimination in relation to welfare benefits. 190. Turning to the explanations offered for the cap, it is important to recognise that the Government has never claimed that its aim is to encourage claimants to limit the size of their families or to penalise those who already have large families (had they done so, they might perhaps have faced discrimination claims on other grounds). The evidence before the court is contained in two witness statements from Mr Holmes. He states that the Government had three specific aims in introducing the benefit cap: (i) (ii) to introduce greater fairness in the welfare system between those receiving out of work benefits and tax payers in employment; to make financial savings (anticipated to be 110m in 2013/14 and 185m in 2014/15) and more broadly, help make the system more affordable by incentivising behaviours that reduce long term dependency on benefits; and (iii) to increase incentives to work. This is later described as the main aim of the policy (Holmes, Witness Statement No 1, para 107). To a great extent, these objectives overlap, as the principal aim is to make being in work more attractive than being out of work, to encourage people into work, and to reduce long term dependence on benefits, thus not only saving public money but also improving the long term future of these families. No one can seriously doubt that these are legitimate aims which would probably be supported by most of the population. The question, however, is whether these reasons for bringing in the cap can justify the sex discrimination involved in the way in which it has been implemented. Before turning to that question, however, it is worth examining the criticisms made of each of the objectives claimed. (i) Fairness 191. It is accepted that achieving fairness between those in work and those out of work is a legitimate aim. As Elias LJ recognised, the fairness concept has sometimes been justified by relying on the notion that those on benefit should face difficult decisions of the kind facing those in work (para 94). But there are many different ways of defining such fairness. It could be that a family on benefits should never be better off than a working family of the same size living in the same accommodation. It could be that a family on benefits should always be worse off than the equivalent working family. Or it could be that a family on benefits should always be much worse off than the equivalent working family. 192. The criticism levelled at the Governments concept of fairness, in particular in the intervention from the Child Poverty Action Group, is that the benefit cap scheme as implemented does not compare like with like. It compares the maximum level of benefit with average earnings, thus ignoring the benefits which are also available to people who are in work. CPAG have produced tables (not challenged in these proceedings) comparing the income available to each of the appellant families according to whether they are (a) not working but without the cap, (b) working 16 hours per week on the minimum wage, (c) working for average household earnings, and (d) working 35 hours a week for the minimum wage. These show that both Ms SG and her children and Mrs NS and her children would be (in round figures) 94 a week better off in scenario (b) than in scenario (a), 163 better off in scenario (c), and 122 better off in scenario (d). In other words, they would always be significantly better off in work than not in work. CPAG have also produced tables which show that this would also be the case wherever in the country these families were living. The effect of the cap is simply to increase the differential which is already there. 193. Thus, it is said, there was no need to introduce the benefit cap in order to ensure that families on benefit have to make the same difficult choices that working families have to make. They already do have to make those choices. If this is so, the focus shifts to the other two objectives. (ii) Saving public money 194. The savings projected by the Treasury in the 2013 budget were 110m in 2013 2014 and 185m in 2014/15. These did not take into account the possible implementation costs or the additional funding made available for DHPs of 65m and 35m respectively. On the other hand, nor did they take into account any resulting behavioural changes. The aim was not merely to make savings in the short term but to produce a positive cultural shift (Holmes, Witness Statement No 2, para 36). 195. It has to be accepted that the savings made are a drop in the ocean compared with the total benefit bill, let alone the total housing benefit bill. The Government predicted that only 1% of housing benefit claimants would be affected by the cap. In May 2013, there were approximately five million housing benefit claimants, yet in January 2014 there were less than 28,000 households subject to the cap, not much over half a percent of all claimants. Lone parents subject to the cap were 1.37% of all claimants (further demonstrating that they are disproportionately affected). 196. However, the main argument made against this aim is that, standing alone, it is not sufficient to justify discriminatory treatment in the enjoyment of a convention right. The authority cited for this proposition is OBrien v Ministry of Justice [2013] UKSC 6, [2013] 1 WLR 522. This was a case about discrimination between full time and part time workers, which is prohibited by the Framework Agreement on Part time Work, annexed to Council Directive 97/81/EC. 197. However, in Andrejeva v Latvia (2009) 51 EHRR 650, the Strasbourg court accepted that the protection of the countrys economic system is a legitimate aim which is broadly compatible with the general objectives of the Convention (para 86). They therefore looked to see whether there was a reasonable relationship of proportionality between that legitimate aim and the means employed. As the discrimination in that case was based solely on nationality, for which very weighty reasons would be required for compatibility with the Convention, the court held that it was not justified (paras 87 88). The same would apply to sex discrimination. If the state introduces a benefit, for example for older people, but denies it to women on the basis that this will save money, this would be contrary to article 14 read with article 1 of the First Protocol, unless there were some other justification for the difference in treatment. The court found such a justification in Stec, because the difference complained of was the result of the difference between the retirement ages of men and women, itself a response to the disadvantage suffered by women in the workplace. This brings the focus back to the proportionality of any discrimination involved in a money saving measure. 198. Mr Holmes also refers in his evidence to a clear, simple message that there has to be a maximum level of financial support beyond which claimants cannot expect the state to provide (Witness Statement No 1, para 98) and one of the key drivers for introducing the cap, that ultimately there has to be a limit to the overall amount of financial support that households in receipt of out of work benefits can expect to receive in welfare payments (para 104). However, it is difficult to see how the delivery of such a message can be an aim in itself if the message is the product of a measure which cannot be justified. (iii) Incentivising work and promoting long term behavioural change 199. On analysis, it is therefore said, the Governments aims come down to incentivising work and promoting long term behavioural change. Again, no one doubts that these are legitimate aims, not only in order to save public money but also, as Mr Holmes put it, to achieve long term positive behavioural effects by changing attitudes to welfare and work and encouraging responsible life choices, which will benefit adults and children alike (Witness Statement No 1, para 121). Put another way, it is not good for children to grow up in a household which is wholly supported by the state, if thereby they absorb the message that there will be no need for them to support themselves when they grow up. 200. However, the Government has accepted that certain people should not be expected to seek work in order to escape the cap. Thus retirement pension and state pension credit are not taken into account because the policy is primarily a work incentive aimed at people of working age (Holmes, Witness Statement No 1, para 100). Thus also the cost of supported accommodation is not taken into account because households in supported accommodation are likely to be in vulnerable situations and they will not generally be in a position to make quickly the behavioural changes required to remove themselves from the cap (para 105). Thus also the disability related exemptions mean that the cap will not apply to people who are least likely to be able to work and who perhaps have the least scope to adjust their circumstances to improve their employment prospects (para 112). Lone parents of children under five are also not expected to seek work, but they are subject to the cap. 201. As well as moving into work, the other choices the Government wished to encourage as a way of avoiding the cap included persuading the landlord to take less rent, moving to cheaper accommodation, reducing expenditure on non housing items, and in the case of lone parents seeking child maintenance from the other parent, which is wholly disregarded for the purpose of the cap (Holmes, Witness Statement No 1, para 124). 202. Against this, both the appellants and the interveners argue that these expectations are simply unrealistic in the case of the families of lone parents and victims of domestic violence, upon whom the policy has such an adverse effect. For the reasons already mentioned, lone parents, especially those with more than one child, find it particularly difficult to obtain even part time work which will fit in with their child care responsibilities. It is accepted, of course, that there are some lone parents, even of very young children, who do manage to do this. Adequate and subsidised day care is now more readily available. But it is unrealistic to assume that parents will always be able to find acceptable solutions without prejudice to their childrens welfare. The Government accepts that lone parents of children under five should not be expected to look for work, no doubt partly because of the difficulties of finding acceptable and affordable child care, but perhaps also because many parents and child care professionals consider it better for very young children to have the full time loving care of a committed parent rather than be separated from them and placed in institutional settings, however competent, for a large part of the day. Even if we accept that it is justifiable to deny this choice to those lone parents who are subject to the benefit cap, we should not accept that their childrens welfare should be put at risk by their having to make unsatisfactory child care arrangements or (as in the case of Mrs NS) to rely upon assistance from a violent partner which the local childrens services authority fears may put the children at risk. 203. Nor is it realistic to assume that they will eventually be able to move to cheaper accommodation. Many private landlords, particularly in the more expensive areas, are unwilling to take tenants who are dependent on housing benefit. In any event, they will require deposits and rent in advance, which the family will not be able to afford (unless they can persuade the local childrens services authority to help out under section 17 of the Children Act 1989). Social housing is in short supply, with long waiting lists which may well require a qualifying period of residence in the area before a person is even placed on the list. The allocation criteria under Part 6 of the Housing Act 1996 do give preference to those homeless families to whom the full housing duty is owed under Part 7 of that Act (1996 Act, section 167(2)(a)). But if the family try to move to another local authority area where housing is cheaper or more plentiful, they may be refused on the ground that they have no local connection with that area. It will be particularly difficult for them to move if they have rent arrears, but the benefit cap is very likely to lead to rent arrears unless there is a speedy grant of a discretionary housing payment to fill the gap, which certainly cannot be guaranteed. 204. The Court of Appeal has recognised that discretionary housing payments are not an answer. In Burnip v Birmingham City Council [2012] EWCA Civ 629, [2013] PTSR 117, the Court of Appeal held that it was unjustifiably discriminatory to limit a severely disabled man who needed an overnight carer to the housing benefit payable for a one bedroomed flat. As Henderson J explained at para 46, where there is a gap between objectively verifiable need and the housing benefit payable, [d]iscretionary housing payments were in principle available as a possible way of bridging this gap, but they cannot in my judgment be regarded as a complete or satisfactory answer to the problem. This follows from the cumulative effect of a number of separate factors. The payments were purely discretionary in nature; their duration was unpredictable; they were payable from a capped fund; and their amount, if they were paid at all, could not be relied upon to cover even the difference between the one and two bedroom rates of LHA [local housing allowance], and still less the full amount of the shortfall. To recognise these shortcomings is not in any way to belittle the valuable assistance that discretionary housing payments are able to provide, but is merely to make the point that, taken by themselves, they cannot come anywhere near to providing an adequate justification for the discrimination in cases of the present type. The additional money made available for DHPs when the benefit cap was introduced is not ring fenced. As Mr Holmes makes clear, these payments were never intended to be a long term solution to the problems facing claimants like these. 205. It was predicted that there would be an increase in evictions and homelessness as a result of the benefit cap. If the family does become homeless because of the cap, the Government hopes that neither the local housing authority nor the courts will regard them as intentionally homeless. They will have a priority need and should therefore be owed the full housing duty under Part 7 of the 1996 Act (1996 Act, sections 189(1)(b), 193(2)). Nevertheless, it may take a very long time before permanent accommodation becomes available, during which time they will be placed in temporary accommodation, often in the private sector. This is known to be more expensive than permanent accommodation. In other words, if they become homeless as a result of the cap, they are equally likely to be capped in their temporary accommodation. They do not have a choice. Provided the accommodation is suitable they have to take what is offered. The Government points out that affordability is part of suitability, but there may well be nothing else available. Local housing authorities have difficulty finding enough accommodation, and it is simply unrealistic to expect a homeless family to turn down an offer of otherwise suitable accommodation on the basis that it is not affordable. The Government wishes to encourage local authorities to move people out of temporary accommodation as soon as possible (Holmes, Witness Statement No 1, para 114), but the question is whether depriving homeless families of the full cost of such accommodation is a proper way to put pressure on local authorities to do so. 206. In addition, there are many other reasons why it may be quite unreasonable to expect a lone parent to move to another area. Finding new schools for several children in an unfamiliar area is not straightforward, nor is it good for the education which will in the long term be the best way of lifting those children out of poverty. Thus the Divisional Court concluded (at para 27, echoed almost precisely at para 22 in the judgment of the Court of Appeal): In the case of each of these claimants, therefore, there are powerful reasons why the suggested ways of mitigating the effects of the cap are not appropriate. The sums are too great to bring [their] finances under control by prudent housekeeping; they are for various reasons not in a position to work; and they have educational and/or cultural and support reasons why they do not want to move any distance from their current homes. 207. As CPAG point out, the Government accepted in its grounds of resistance to the claim that the aim of incentivising claimants to work may be less pertinent for those who are not required to work (such as parents with young children). Hence it has to fall back on making fiscal savings and creating a system which is fairer as between those receiving out of work benefits and working households. The test 208. The Strasbourg court will, of course, allow Contracting states a margin of appreciation in assessing whether the difference in treatment is justified. As is well known, the width of that margin differs according to the subject matter. In Stec, the court went on to explain, in para 52: The scope of this margin will vary according to the circumstances, the subject matter and the background. As a general rule, very weighty reasons would have to be put forward before the court could regard a difference in treatment based exclusively on the ground of sex as compatible with the Convention. On the other hand, a wide margin is usually allowed to the state under the Convention when it comes to general measures of economic or social strategy. Because of their direct knowledge of their society and its needs, the national authorities are in principle better placed than the international judge to appreciate what is in the public interest on social or economic grounds, and the court will generally respect the legislatures policy choice unless it is manifestly without reasonable foundation. 209. The references cited for the manifestly without reasonable foundation test were James v United Kingdom (1986) 8 EHRR 123, para 46, and National & Provincial Building Society v United Kingdom (1997) 25 EHRR 127, para 80, both cases complaining of a violation of article 1 of the First Protocol. In AXA General Insurance Ltd v HM Advocate [2011] UKSC 46, [2012] 1 AC 868, both Lord Hope, at para 31, and Lord Reed, at para 124, treated this test as directed towards whether the measure is in the public interest, in other words to whether it has a legitimate aim. They dealt separately with whether the interference with property rights was proportionate. They relied upon cases such as Pressos Compania Naviera SA v Belgium (1995) 21 EHRR 301, at para 38, where the Strasbourg court appears to have regarded this as a separate question: An interference with the peaceful enjoyment of possessions must strike a fair balance between the demands of the general interest of the community and the requirements of the protection of the individuals fundamental rights. In particular, there must be a reasonable relationship of proportionality between the means employed and the aim sought to be realised by any measure depriving a person of his possessions. (see also In re Recovery of Medical Costs for Asbestos Diseases (Wales) Bill [2015] UKSC 3, [2015] 2 WLR 481, para 52). In this case, the complaint is of discrimination in interfering with the peaceful enjoyment of possessions rather than of deprivation of possessions as such. Nevertheless, the benefit cap does come close to a deprivation of possessions, given that it removes, by reference to a fixed limit, benefit to which the claimants would otherwise be entitled by virtue of their needs and, more importantly, the needs of their children. 210. When it comes to justifying the discriminatory impact of an interference with property rights, a distinction might similarly be drawn between the aims of the interference and the proportionality of the discriminatory means employed. However, it has been accepted throughout this case that the manifestly without reasonable foundation test applies to both parts of the analysis; but that, as this court said in Humphreys v Revenue and Customs Commissioners [2012] UKSC 18, [2012] 1 WLR 1545, at para 22, the fact that the test is less stringent than the weighty reasons normally required to justify sex discrimination does not mean that the justifications put forward for the rule should escape careful scrutiny. Relevance of the United Nations Convention on the Rights of the Child 211. In Burnips case, at para 21, Maurice Kay LJ pointed out that In the recent past, the European court has shown an increased willingness to deploy other international instruments as aids to the construction of the Human Rights Convention. He cited, among others, the important case of Opuz v Turkey (2009) 50 EHRR 695, at para 185: When considering the definition and scope of discrimination against women, in addition to the more general meaning of discrimination as determined in its case law, the court has to have regard to the provisions of more specialised legal instruments and the decisions of international legal bodies on the question of violence against women. 212. Burnip was concerned with discrimination against disabled people by failing to make reasonable accommodation for their special needs. The United Nations Convention on the Rights of Persons with Disabilities (CRPD) was cited to the Court of Appeal, but not, it appears, the case of Glor v Switzerland, Application No 13444/04, 30 April 2009, where the Strasbourg court reiterated that the Convention must be interpreted in the light of present day conditions, including the European and worldwide consensus on the need to protect people with disabilities from discriminatory treatment, citing in particular the CRPD. The Court of Appeal in Burnip felt able to determine the issue without resort to the CRPD, but had he not been able to do so, Maurice Kay LJ would have resorted to that Convention, which would have resolved any uncertainty in favour of the claimants. He continued It seems to me that it has the potential to illuminate our approach to both discrimination and justification (para 22). 213. Likewise, our approach to both discrimination and justification in this case may be illuminated by reference to other international instruments to which the United Kingdom is party, including not only the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW), which was the relevant instrument in Opuz v Turkey, but also most notably the United Nations Convention on the Rights of the Child (UNCRC). In Neulinger v Switzerland (2010) 54 EHRR 1087, for example, the Grand Chamber observed, at para 131: The Convention cannot be interpreted in a vacuum but must be interpreted in harmony with the general principles of international law. Account should be taken of any relevant rules of international law applicable in the relations between the parties, and in particular the rules concerning the international protection of human rights . It went on, at para 135, to note that there is currently a broad consensus including in international law in support of the idea that in all decisions concerning children their best interests must be paramount. 214. This may be putting matters a little too high. The relevant international instruments relied upon by the Grand Chamber were, principally, article 3(1) of UNCRC: In all actions concerning children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration. This is pithily echoed in the Charter of Fundamental Rights of the European Union, article 24(2): In all actions relating to children, whether taken by public authorities or private institutions, the childs best interests must be a primary consideration. 215. As this court recognised in ZH (Tanzania) v Secretary of State for the Home Department [2011] UKSC 4, [2011] 2 AC 166, para 25, a primary consideration is not the same as the primary consideration still less the paramount consideration. Nevertheless, the obligation to treat their best interests as a primary consideration in all actions concerning children is binding upon the Government of this country in international law. It has also become relevant in domestic law in at least two ways. First, section 11 of the Children Act 2004 places a duty on a wide range of bodies providing public services to carry out their functions having regard to the need to safeguard and promote the welfare of children. This duty has also been placed on the Secretary of State for the Home Department in the exercise of her functions in relation, among other things, to immigration, asylum or nationality, by section 55 of the Borders, Citizenship and Immigration Act 2009. 216. This duty has not yet, however, been extended to all Government departments, including the Department of Work and Pensions, with whose decisions we are concerned in this case. Nevertheless, in a Written Statement to Parliament on 6 December 2010, the Minister of State for Children and Families made a clear commitment that the Government will give due consideration to the UNCRC articles when making new policy and legislation. In doing so, we will always consider the UN Committee on the Rights of the Childs recommendations but recognise that, like other state signatories, the UK Government and the UN Committee may at times disagree on what compliance with certain articles entails. It is not surprising, therefore, that the Joint Committee on Human Rights, in its scrutiny of the Welfare Reform Bill, regretted that the Government had failed to carry out any detailed analysis of the compatibility of the Bill with the UNCRC (Session 2010 2012, 21st Report, Legislative Scrutiny: Welfare Reform Bill, para 1.35). The Government has not resiled from that commitment, which is repeated in the Cabinet Office Guide to Making Legislation (July 2013, para 11.30), but it has not yet been translated into domestic law. 217. However, the international obligations which the United Kingdom has undertaken are also taken into account in our domestic law insofar as they inform the interpretation and application of the rights contained in the European Convention, which are now rights in UK domestic law. There is no reason at all why those obligations should not inform the interpretation of the Convention right to the enjoyment of the substantive Convention rights without discrimination just as much as they inform the interpretation of the substantive Convention rights. ZH (Tanzania) happened to be a case about article 8, as were H (H) v Deputy Prosecutor of the Italian Republic, Genoa [2012] UKSC 25, [2013] 1 AC 338, and Neulinger itself. The Strasbourg court has taken the UNCRC into account in construing other articles of the Convention, most notably article 6 in relation to the fair trial of juvenile offenders, in T v United Kingdom (1999) 30 EHRR 121. 218. For these reasons, echoing Maurine Kay LJ in Burnip, I agree that our international obligations under the UNCRC and CEDAW have the potential to illuminate our approach to both discrimination and justification. Whatever the width of the margin of appreciation in relation to the subject matter of a measure, the Strasbourg court would look with particular care at the justification put forward for any measure which places the United Kingdom in breach of its international obligations under another human rights treaty to which we are party. 219. Hence it is no surprise that the Divisional Court held that the court should have regard to the UNCRC as a matter of Convention jurisprudence and the Secretary of State did not challenge that view in the Court of Appeal (see para 69 of their judgment) or, initially, in this court. The Statement of Facts and Issues agreed between the parties for this court included: (c) Was the Court of Appeal wrong to have found that the discriminatory effects of the 2012 Regulations on lone parents were justified and lawful, and not contrary to article 14 (read with article 8 and/or article 1 of Protocol 1); and (d) Was the Court of Appeal wrong to have found that the respondent has complied with his obligation to treat the best interests of children as a primary consideration when implementing the benefit cap scheme? Not surprisingly, therefore, this court took it as common ground that article 3(1) of the UNCRC was relevant to the discrimination issue. The question was whether it had been complied with. After the hearing, however, it became clear that the Secretary of State no longer accepted that article 3(1) was relevant to whether the admitted indirect discrimination could be justified. He was therefore permitted to file further arguments on the issue, to which the appellants and the interveners were permitted to reply. This has had the beneficial effect of enabling us to consider the issue in more detail. 220. The Secretary of State makes two main arguments against taking article 3(1) of UNCRC into account in deciding whether this discrimination can be justified. The first is that the UNCRC, like other international conventions, can inform the substantive content of the Convention rights, but not the approach to proportionality and discrimination. As to proportionality, this argument is clearly negated by the Grand Chamber decision in Neulinger v Switzerland (2010) 54 EHRR 1087, where the best interests of the child were taken into account in deciding whether the interference with the parties rights to respect for their family life, entailed in an order to return to the childs home country of Israel, was proportionate. Reference was also made to the long line of cases dealing with the expulsion of aliens, according to which, in order to assess the proportionality of an expulsion measure concerning a child who has settled in the host country, it is necessary to take account of the childs best interests and well being (para 146). In those cases, the best interests of a child have been taken into account in assessing the proportionality of an interference with the Convention rights of others: see Uner v Switzerland (2006) 45 EHRR 421, at paras 57 58. 221. It is no doubt for that reason that the Secretary of State for the Home Department conceded, in ZH (Tanzania) [2011] 2 AC 166, that removing the mother would be a disproportionate interference with the childrens article 8 rights. This concession was rightly made, irrespective of section 55 of the Borders, Citizenship and Immigration Act 2009. The relevance of the duty in that section was to whether the decision was in accordance with the law (see para 24) rather than to its proportionality. 222. As to discrimination, the Secretary of States argument is clearly negated by the Grand Chamber decision in X v Austria (2013) 57 EHRR 405. This was a case of alleged discrimination on grounds of sexual orientation. A same sex partner could not adopt so as to become a joint parent with the birth parent partner, whereas an opposite sex partner could do so. When dealing with the relevant international law, at para 49, the court begins with the article 3(1) of the UNCRC, before turning to article 21 and other specific provisions on adoption. When discussing the suggested justifications for the discrimination, at para 146, the court concludes that Unless any other particularly convincing and weighty reasons militate in favour of such an absolute prohibition, the considerations adduced so far would seem rather to weigh in favour of allowing the courts to carry out an examination of each individual case. This would also appear to be more in keeping with the best interests of the child, which is a key notion in the relevant international instruments. The footnote refers back to para 49. In common with Lord Carnwath, I read this case as clearly indicating that the best interests of the child are to be taken into account in determining whether discrimination is justified under article 14. 223. The second argument now advanced by the Secretary of State is that the discrimination in this case is not against the children involved but against their mothers. It is not suggested that the rights of the children themselves have been infringed. This case may be contrasted with Neulinger, and indeed ZH (Tanzania), in which the complaint was of interference with the childrens right to respect for their family lives, as well as their mothers. However, the same cannot be said of X v Austria. The child was a complainant, but it was not suggested that there had been discrimination against her; rather it was that the discrimination against her mother and her mothers same sex partner affected (but did not infringe) her right to respect for her family life. It is difficult indeed to see how the family life of the child in that case was any more affected by the legal status of the people looking after her than is the family life of the children involved in this case by the financial situation in which the benefit cap has placed their parents. 224. There is the further point, most clearly articulated by Lord Reed at para 89 of his judgment, that the children living with lone parent fathers suffer just as much as the children living with lone parent mothers. Their welfare cannot therefore be relevant to justifying the discrimination between them. However, for the reasons explained in para 189 earlier, this point does not arise when the discrimination complained of is indirect rather than direct. It is of the nature of indirect discrimination that the measure in question applies to both men and women. What has to be considered is whether the measure itself, which in this case I take to be the benefit cap as it applies to lone parents, can be justified independently of its discriminatory effects. In considering whether that measure can be justified, I have no doubt at all that it is right, and indeed necessary, to ask whether proper account was taken of the best interests of the children affected by it. Application 225. Both the Divisional Court and the Court of Appeal concluded that the Government had complied with its obligation to treat the best interests of the children concerned as a primary consideration (paras 75 and 49, respectively). They were, of course, correct to say that the Government was keenly aware of the impact the benefits cap would be likely to have on children (Court of Appeal, para 74(2)). But it does not follow from that that the the rights of children were, throughout, at the forefront of the decision makers mind (para 75, emphasis supplied). Still less does it follow that their best interests were being treated as a primary consideration. In agreement with the powerful judgments of Lord Carnwath and Lord Kerr on this point, it is clear to me that they were not. 226. The Governments contention was that the long term shift in welfare culture, or reversing the impact of benefit dependency on families and children, would be beneficial to children in the longer run. This may well be so, although it is interesting how little prominence was given to this aspect of the matter in the justifications put forward by the Government for their policy. But in any event, this is to misunderstand what article 3(1) of the UNCRC requires. It requires that first consideration be given to the best interests, not only of children in general, but also of the particular child or children directly affected by the decision in question. It cannot possibly be in the best interests of the children affected by the cap to deprive them of the means to provide them with adequate food, clothing, warmth and housing, the basic necessities of life. It is not enough that children in general, now or in the future, may benefit by a shift in welfare culture. Insofar as the Secretary of State relies upon this as an answer to article 3(1), he has misdirected himself. 227. It may be worth noting that the UNCRC contains some specific obligations which go beyond treating childrens interests as a primary consideration when making decisions concerning them. Article 27(1) provides that States Parties recognise the right of every child to a standard of living adequate for the childs physical, mental, spiritual, moral and social development. Although parents have the primary responsibility to secure, within their abilities and financial capacities, the conditions of living necessary for the childs development (article 27(2)), States Parties have to take appropriate measures to assist parents and others responsible for the child to implement this right and shall in case of need provide material assistance and support programmes, particularly with regard to nutrition, clothing and housing (article 27(3)). The usual approach of the Strasbourg court is that the Convention confers no right to be provided with any particular welfare benefit but that, if it is provided, it must be provided in a non discriminatory manner. The United Kingdom performs its obligations towards children, among other ways, through the welfare benefits system, which provides specific benefits in order that children shall be free from want. The benefit cap deprives some children, principally those in larger families living in high cost accommodation, of provision for their basic needs in order to incentivise their parents to seek work, but discriminates against those parents who are acknowledged to be least likely to be able to do so. The children affected suffer from a situation which is none of their making and which they themselves can do nothing about. 228. This case is therefore very different from the case of Humphreys v Revenue and Customs Commissioners [2012] UKSC 18, [2012] 1 WLR 1545, in which the Government had to justify the discriminatory effect of paying child tax credit to the parent with the main responsibility for looking after the child, even though the care of the child was shared with another parent. This was indirectly discriminatory against fathers, but the object was to concentrate the help for the child where it was most needed and to maximise the amount of public money available to support children. As the Government put it, the benefit attaches to the child rather than the parent (para 25). 229. Viewed in the light of the primary consideration of the best interests of the children affected, therefore, the indirect discrimination against women inherent in the way in which the benefit cap has been implemented cannot be seen as a proportionate means of achieving a legitimate aim. Families in work are already better off than those on benefits and so the cap is not necessary in order to achieve fairness between them; saving money cannot be achieved by unjustified discrimination; but the major aim, of incentivising work and changing the benefits culture, has little force in the context of lone parents, whatever the age of their children. Depriving them of the basic means of subsistence cannot be a proportionate means of achieving it. Relief 230. The claimants seek both declaratory relief and an order quashing Part 8A of the Housing Benefit Regulations. The latter would not be appropriate, given that it is not suggested in this case that the implementation of the cap in relation to single person and two parent households is incompatible with the Convention rights. It is the implementation in relation to lone parents, some of whom will be fleeing domestic violence, and their dependent children, which has been shown to be incompatible. 231. There are several different ways in which that incompatibility might be cured, most notably perhaps by taking the child tax credit and/or child benefit payable to lone parents out of the list of welfare benefits taken into account in calculating the cap. It is true, of course, that the Government resisted amendments to take housing benefit, child benefit and child tax credit out of the cap, on the ground that this would be to emasculate its policy objectives. It is easy to see how this might be so, if it were done for all claimants. But it has not been shown that taking the child related benefits out of the cap as it applies to lone parents would do so. In any event, it is obvious that there is sufficient flexibility in the statutory scheme to enable appropriate solutions to be crafted. It is not for this court to suggest any particular way in which the problem might be solved. 232. In my view, therefore, the appropriate relief would be a declaration that Part 8A of the Housing Benefit Regulations is incompatible with the Convention rights in that its application to lone parents is indirectly discriminatory on grounds of sex, contrary to article 14 of the Convention read with article 1 of the First Protocol. LORD KERR: 233. As Lord Hughes has observed, there is much common ground among the members of the panel about the issues that arise on this appeal. He has helpfully outlined the areas of agreement in para 135 of his judgment. I am also in broad agreement with virtually all of Lord Carnwaths judgment (except as to outcome) and am in complete agreement with Lady Hale that the appeal should be allowed for the reasons that she has given. On one view, therefore, there is nothing to be gained from my contributing further to the debate. But I have changed the view that I originally held about the direct effect of article 3 of UNCRC and wish to explain why. If I am wrong in my revised view, there remain two particular issues which separate the majority from Lady Hales approach (which I would favour as an alternative to my principal conclusion) that I believe are of vital importance and which have implications well beyond this appeal. For that reason, I feel constrained to say something of them as well. 234. The two issues are these: (i) if article 3 does not have direct effect, what is the use to which it may be put in considering the proportionality of a measure which interferes with a Convention right; and (ii) whether there is a sufficient identity of interest between a child and her or his lone parent so as to render discrimination against the child discrimination against the parent. Before turning to those issues, however, I wish to begin by examining the role of unincorporated treaties. The role of unincorporated treaties 235. Two dominant principles have traditionally restricted the use of international treaties in British domestic law. The first is that domestic courts have no jurisdiction to construe or apply treaties which have not been incorporated into national law; that they are effectively non justiciable. The second is that such treaties, unless incorporated into domestic law, are not part of that law and therefore cannot be given direct effect to create rights and obligations under national or municipal law. This is a matter of constitutional orthodoxy. It underpinned the series of decisions in which courts consistently refused to give effect to Convention rights before the coming into force of the Human Rights Act 1998. See, for instance, R v Secretary of State for the Home Department, Ex p Brind [1991] 1 AC 696, 747 748, Lord Bridge of Harwich and at 762B D Lord Ackner; NALGO (1992) 5 (Admin) LR 785, 798, Re McKerr [2004] UKHL 12; [2004] 1 WLR 807: Lord Nicholls of Birkenhead at para 25, Lord Steyn at para 48, Lord Hoffmann at para 63, Lord Rodger of Earlsferry at para 80 and Lord Brown of Eaton under Heywood at para 90. 236. Perhaps the high water mark of the dualist conception of the restriction on the use of international law was reached in J H Rayner (Mincing Lane) Ltd v Department of Trade and Industry (International Tin Council) [1990] 2 AC 418. The House of Lords reaffirmed the two principles of non justiciability and no direct effect. This was on the basis that domestic courts had no competence in respect of the legal relations between sovereign states, nor was the royal prerogative reviewable. At 499F/500C Lord Oliver of Aylmerton said: It is axiomatic that municipal courts have not and cannot have the competence to adjudicate upon or to enforce the rights arising out of transactions entered into by independent sovereign states between themselves on the plane of international law On the domestic plane, the power of the Crown to conclude treaties with other sovereign states is an exercise of the Royal Prerogative, the validity of which cannot be challenged in municipal law . That is the first of the underlying principles. The second is that, as a matter of the constitutional law of the United Kingdom, the Royal Prerogative, whilst it embraces the making of treaties, does not extend to altering the law or conferring rights upon individuals or depriving individuals of rights which they enjoy in domestic law without the intervention of Parliament. Treaties, as it is sometimes expressed, are not self executing. Quite simply, a treaty is not part of English law unless and until it has been incorporated into the law by legislation. 237. Of course the prerogative can now be reviewed, in appropriate circumstances see, for instance, Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374; R (Abbasi) v Secretary of State for Foreign and Commonwealth Affairs [2002] EWCA Civ 1598, [2003] UKHRR 76. The conduct of foreign affairs, including the making of treaties is still considered to be beyond the reach of judicial review, however. In R (Campaign for Nuclear Disarmament) v Prime Minister of the United Kingdom [2002] EWHC 2759, 126 ILR 727 the High Court held that domestic courts will not determine the meaning of an international instrument (in this case a UN Security Council Resolution) operating purely on the plane of international law. It was said that the only cases in which the court would pronounce on an issue of international law are those where it is necessary to do so in order to determine rights and obligations under domestic law, so as to draw the court into the field of international law (at paras 36 40, 47(i)). 238. Despite the seemingly comprehensive ban on the use by the courts of unincorporated international treaties to recognise rights on the domestic law plane, there are three possible ways which have been considered by the courts in which such treaties may have an impact on national law (i) as an aid to statutory interpretation; (ii) as an aid to development of the common law; and (iii) as a basis for legitimate expectation. Unincorporated treaties as an aid to statutory interpretation 239. Where a legislative provision is ambiguous there is a presumption that Parliament intended to legislate in a manner which does not involve breach of international treaty obligations: Salomon v Commissioners of Customs and Excise [1967] 2 QB 116, 143E G; Garland v British Rail Engineering Ltd [1983] 2 AC 751, 771 (Lord Diplock). See also Sir John Laws [1993] PL 58, 83. While New Zealand allows non ambiguous legislation to be read down, or additional words to be read in for the purpose of consonance with international treaties (eg Sellers v Maritime Safety Inspector [1999] 2 NZLR 44, CA), this is not currently the case in the UK see Collco Dealings Ltd v Inland Revenue Commissioners [1962] AC 1, 19; Quazi v Quazi [1980] AC 744, 808D E; JH Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1990] 2 AC 418, 481F H, 500E (the International Tin Council case); R v Secretary of State for the Home Department, Ex p Brind [1991] 1 AC 696, 747 749, 760D G; Brown [1994] 1 AC 212, 256E F; J A Pye (Oxford) Ltd v Graham [2002] UKHL 30; [2003] 1 AC 419, 65; R v Lyons (Isidore) [2002] UKHL 44, [2003] 1 AC 976, 13; Boyce v The Queen [2004] UKPC 32, [2005] 1 AC 400, 25 and 81; Abdirahman v Secretary of State for Work and Pensions [2007] EWCA Civ 657, [2008] 1 WLR 254, at 35 40. 240. But the presumption of compatibility of domestic legislation with international law is well established. A recent example is to be found in Assange v Swedish Prosecution Authority [2012] 2 AC 471 where at para 122 Lord Dyson said: there is no doubt that there is a strong presumption in favour of interpreting an English statute in a way which does not place the United Kingdom in breach of its international obligations. Unincorporated treaties and the development of the common law 241. It is clear that unincorporated treaties may have a bearing upon the development of the common law: Lyons [2002] UKHL 44, [2003] 1 AC 976, 13 per Lord Bingham. Developments of the common law should ordinarily be in harmony with the UKs international obligations: A v Secretary of State for the Home Department (No 2) [2005] UKHL 71; [2006] 2 AC 221 Lord Bingham at para 27. Unincorporated treaties may also be used to resolve ambiguities in the common law: Derbyshire County Council v Times Newspapers Ltd [1993] AC 534. See also Director of Public Prosecutions v Jones (Margaret) [1999] 2 AC 240 Lord Slynn at 265D F, Lord Hope at 277E 278F: reference to the ECHR for guidance was found to be inappropriate in context as there was no doubt about the content of the common law. By implication, at least, where such doubt is present, consideration of an international convention or treaty such as ECHR would be appropriate in order to determine what the common law position is or should be. 242. The proposition that the common law cannot be used to incorporate treaties through the backdoor has, however, been reasserted in, for instance, A v Secretary of State for the Home Department (No 2) [2004] EWCA Civ 1123; [2005] 1 WLR 414 Laws LJ at paras 266 267, Neuberger LJ at para 434. Unincorporated treaties and legitimate expectation 243. In Chundawadra v Immigration Appeal Tribunal [1998] Imm AR 161 it was argued that every citizen had a legitimate expectation that, if the ECHR was relevant to a matter under consideration, the Minister would take it into account when deciding how to exercise his powers. The Court of Appeal refused to accept this argument, holding that it was not appropriate to introduce the Convention into domestic law by the back door in this way. 244. Arguments based on the Australian authority of Minister of State for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273; 128 ALR 353 were considered by the Court of Appeal in Behluli v Secretary of State for the Home Department [1998] Imm AR 407, at para 415. The court expressly refused to follow Teoh; it held that mere ratification of a treaty could not generate a legitimate expectation that the treaty would be followed. Two months later, however, a different division of the Court of Appeal indicated a willingness to adopt and follow Teoh in relation to decisions taken under the Royal Prerogative. In R v Secretary of State for the Home Department, Ex p Ahmed and Patel [1998] INLR 570, the Court of Appeal held that the entering into a treaty by the Crown could give rise to a legitimate expectation because, subject to any indication to the contrary, ratification amounted to a representation that the Crown would act in accordance with the obligations imposed on it by the treaty in question. The High Court followed this approach in R v Uxbridge Magistrates' Court, Ex p Adimi [2001] QB 667, DC, (Simon Brown LJ at para 686, Newman J at paras 690 691), although apparently without having Chundawadra or Behluli cited to it. 245. In the High Court in R v Director of Public Prosecutions, Ex p Kebilene [2000] 2 AC 326 Lord Bingham CJ rejected an attempt to base a legitimate expectation on the ratification of the ECHR, observing that ratification took place nearly half a century ago at a time when it was generally assumed that ratification would have no practical effect on British law or practice. (This view was endorsed by the House of Lords). Laws LJ at pp 353 356, agreeing with Lord Bingham, referred to what had by then become the somewhat hackneyed theme that the legitimate expectation argument would effectively introduce the ECHR through the back door. He acknowledged, however, that the Convention had plainly informed the common law and he noted Teoh but suggested that any extension of this area would have to be at a higher level, to overcome the House of Lords authority of Brind. 246. The proposition that the doctrine of legitimate expectation can generate a right to rely on the provision of an unincorporated treaty in the interpretation and application of domestic law is, at least, controversial. But treaties concerning human rights are, for reasons that I will develop, in a different position. Human rights cases 247. A small opening for an exception in relation to human rights treaties can perhaps be seen in Lewis v AG of Jamaica [2001] 2 AC 50 PC, where Lord Slynn, although upholding the traditional principles of non justiciability and no direct effect, acknowledged the argument that an exception might be read into these rules when the treaty in question was a human rights treaty: even assuming that that [rule] applies to international treaties dealing with human rights . : p 84. In Foreign Relations and the Judiciary (2002) 51 ICLQ 485, 496 Lord Collins has commented on this passage: these words contemplate the possibility that unincorporated treaties relating to human rights may be given effect without legislation [I]t may be a sign that one day the courts will come to the view that it will not infringe the constitutional principle to create an estoppel against the Crown in favour of individuals in human rights cases. 248. In Re McKerr Lord Steyn cast doubt on the applicability of the fundamental principles set out in International Tin Council so far as they governed the position in relation to human rights treaties, arguing that the rationale of the dualist theory, which underpins the International Tin Council case, is that any inroad on it would risk abuses by the executive to the detriment of citizens. It is, however, difficult to see what relevance this has to international human rights treaties which create fundamental rights for individuals against the state and its agencies. A critical re examination of this branch of the law may become necessary in the future at paras 49 50. 249. While acknowledging that the point had not been the subject of argument, Lord Steyn referred to some academic criticism of International Tin Council and highlighted what he termed growing support for the view that human rights treaties enjoy a special status, citing the views of Murray Hunt (Using Human Rights Law in English Courts (1998)), at pp 26 28) and the extra judicial comments of Lord Collins quoted above. 250. In International Law in Domestic Courts: The Developing Framework (2008) 124 LQR 388 Philip Sales and Joanne Clement attack this argument, pointing out that the rationale for International Tin Council is that the Crown cannot change domestic law by the exercise of prerogative powers as this would infringe the sovereignty of Parliament. In adopting what might be regarded as a somewhat absolutist position, Sales and Clement argue at para 388: In a dualist state such as the United Kingdom, international law and domestic law are regarded as separate legal systems, operating on different planes. International law does not, as such, form part of the domestic legal system. While in particular instances rules of international law may apply in domestic law, they do so by virtue of their adoption by the internal law of the state. 251. The Sales and Clement article provides a comprehensive survey of international law in this area. They argue forcefully that unincorporated treaties should not be extended so as to have direct effect in national law. The dualist structure of our law, which treats international law as operating on a separate plane, has, they suggest, been repeatedly upheld as a central constitutional, legal and political principle. They conclude at 421: The risk of some degree of dissonance between domestic law and international law is the natural consequence of self government by states and of parliamentary sovereignty as the primary constitutional principle of government within the state, and its elimination is a matter for the political process. It is not the proper function of the domestic courts to change domestic legal principles to eliminate such dissonance. 252. In an article entitled Human Rights Treaties in the English Legal System published in [2011] PL, 554 576, Dr Bharat Malkani has challenged the central thesis of Sales and Clement. He argues that one needs to question why Parliament should be treated as the proper locus of law making power. Dr Malkani suggests that the enactment of the Human Rights Act and the incorporation of ECHR into domestic law brought about a change in the constitutional order and that parliamentary sovereignty is no longer the principal basis of the British constitution. This was, rather, the rule of law. On this basis he argues that the constitutional principle of parliamentary sovereignty does not require that international conventions on human rights be transformed into domestic law in order to create rights, citing Alan Brudner The Domestic Enforcement of International Covenants on Human Rights: A Theoretical Framework (1985) 35 University of Toronto Law Journal. Brudner propounds a theory which would be regarded as highly radical in UK law to the effect that a convention while in origin a treaty between independent states, is in content the legislation of a universal community of rational beings. On this account, he argues that since international conventions on human rights articulate principles rationally connected to the common good, they do not require to be transformed into national law. 253. In light of the authorities that I have earlier considered, it may safely be said that such a far reaching approach is unlikely to find favour in the courts of this country. It is perhaps noteworthy, however, that other commentators have been critical of the courts adherence to the dualist theory of international law, especially in relation to human rights conventions see, for instance, Brice Dickson, Safe in Their Hands? Britains Law Lords and Human Rights (2006) 26 Legal Studies 329, 335; D Beyleveld The concept of a human right and incorporation of the European Convention on Human Rights [1995] PL 577; M Hunt Using Human Rights Law in English Courts (Oxford: Hart, 1997). 254. I consider that the time has come for the exception to the dualist theory in human rights conventions foreshadowed by Lord Slynn in Lewis and rather more firmly expressed by Lord Steyn in Re McKerr to be openly recognised. This can properly be done in relation to such conventions without espousing the complete abandonment of the theory advocated by some of the commentators referred to above. 255. If Lord Steyn is right, as I believe he is, to characterise the rationale for the dualist theory as a form of protection of the citizen from abuses by the executive, the justification for refusing to recognise the rights enshrined in an international convention relating to human rights and to which the UK has subscribed as directly enforceable in domestic law is not easy to find. Why should a convention which expresses the UKs commitment to the protection of a particular human right for its citizens not be given effect as an enforceable right in domestic law? 256. Standards expressed in international treaties or conventions dealing with human rights to which the UK has subscribed must be presumed to be the product of extensive and enlightened consideration. There is no logical reason to deny to UK citizens domestic laws vindication of the rights that those conventions proclaim. If the government commits itself to a standard of human rights protection, it seems to me entirely logical that it should be held to account in the courts as to its actual compliance with that standard. This is particularly so in the case of UNCRC. On its website UNICEF has stated that: The CRC is the basis of all of UNICEFs work. It is the most complete statement of childrens rights ever produced and is the most widely ratified international human rights treaty in history. 257. I therefore consider that article 3(1) of UNCRC is directly enforceable in UK domestic law. A primacy of importance ought to have been given to the rights of children in devising the regulations which bring the benefits cap into force. For the reasons given by Lady Hale, I have concluded that this has not taken place. The alternative argument 258. In the Court of Appeal Lord Dyson MR said at para 69: The Divisional Court held that, notwithstanding the fact that the UNCRC is an international convention which has not been incorporated into our domestic law, the court should nevertheless have regard to it as a matter of Convention jurisprudence: see Neulinger v Switzerland (2010) 54 EHRR 1087, cited by Baroness Hale in ZH (Tanzania) v Secretary of State for the Home Department [2011] 2 AC 166, para 21. This has not been challenged by the Secretary of State on this appeal. 259. One starts therefore with the proposition that UNCRC is, as Lord Carnwath has put it, legally relevant. Its legal relevance stems from the fact that, as again Lord Carnwath has put it, under ECHR and in accordance with the Vienna Convention, regard may be had to principles of international law, including international conventions in order to interpret the terms and notions of the Convention Demir v Turkey (2008) 48 EHRR 1272. Lord Carnwath has said that in the cases of X v Austria (2013) 57 EHRR 405, Ponomaryov v Bulgaria (2011) 59 EHRR 799 and Burnip v Birmingham City Council [2013] PTSR 117, the court used international materials to fill out, or reinforce, the content of a Convention article (para 130). I would prefer to put the matter slightly differently. 260. What the courts did in those cases, following the Demir approach was to recognise that the nature and content of Convention rights could be informed by international instruments which expressed standards that were internationally recognised. This does not involve directly applying the provisions of an international treaty which had not been incorporated into domestic law. It does not introduce those provisions by the back door. Rather, it reflects the courts obligation, charged as we are with the duty of obtaining a proper understanding of the nature of an avowed right, to have regard to standards which have found expression in those treaties. We should do this for the prosaic but extremely important reason, as I have said in para 256 above, that they have been the product of extensive and, hopefully, enlightened consideration. 261. If the rights enshrined in those treaties are not directly enforceable in domestic law it is, of course, open to domestic courts to refuse to allow such treaties to have any influence whatever on our conclusions as to the content of the right. Such an approach would be justified where, for instance, the right was too broadly expressed or too remote from the subject under consideration. Or we could conclude that the right was too ambivalently stated to allow any influence to be brought to bear on the content of a right asserted under domestic law. But where the claimed right is directly relevant to the domestic issue to be decided, then recourse to the standards that the international instrument exemplifies is not only legitimate, it is required. How, otherwise, are we to acquire a true understanding of the proper contours and content of the right under discussion? This is not applying an unincorporated international treaty directly to domestic law. It is merely allowing directly relevant standards to infuse our thinking about what the content of the domestic right should be. 262. Article 3(1) of UNCRC is unquestionably directly relevant to the question of whether a primacy of importance was given to the interests of children in formulating the regulations which give effect to the benefits cap. As I have already said, I agree with Lady Hale that it was not. I will say no more on that topic. The critical issue now is whether there is a sufficient connection between the interests of the children and those discriminated against, viz their lone mothers, to make discrimination against the children of those mothers discrimination against them also. Put another way, as Lord Carnwath does in para 115 of his judgment, is there a direct link between the international treaty relied on and the particular form of discrimination alleged? The indissociability of a child and her/his lone mother 263. In this case the government accepts that the benefits cap discriminates against women as lone parents. Its defence of this admitted discrimination rests exclusively on its claim that it is justified by the social objectives which it pursues. It claims, however, that justification of those objectives does not require it to give primary consideration to the impact of the benefit cap on the children of lone mothers. That, the government says, is because the interests of lone mothers can be disassociated from those of their children. Lord Carnwath has accepted this argument. He considers that the interests of children are distinct from their single parent mothers. I cannot agree. 264. The particular species of discriminatory impact here is on women who, by reason of their position as lone mothers, claim to suffer a disproportionate interference with their Convention rights. Justification of the interference must be related to the condition which provides the occasion for the discrimination viz the position of these women as lone parents. A mothers personality, the essence of her parenthood, is defined not simply by her gender but by her role and responsibility as a carer of her children, particularly when she is a lone parent. 265. Justification of a discriminatory measure must directly address the impact that it will have on the children of lone mothers because that impact is inextricably bound up with the womens capacity to fulfil their role as mothers. If you take money away from children which mothers would receive on their behalf, money which they use to realise their role as mothers, the discrimination that you perpetrate involves withholding resources necessary to fully discharge their maternal role. Because, therefore, one cannot segregate the interests of the deprived children from those of their mothers, the discrimination against mothers and their children is of the same stripe. No hermetically sealed compartmentalisation of their interests is possible. 266. A lone mothers interests, when it comes to receiving state benefits, are indissociable from those of her children. The rate of her benefits is fixed by reference (among other things) to the number and needs of those children. Her capacity to care for her children is likewise directly connected to the amount of state benefits that she receives. The interests of single mothers are, therefore, inextricably bound up with the interests of their dependent children, for the trite and prosaic reason that they are parents. Any adverse impact on a lone parents financial position is inevitably transmitted to the child because of her or his dependence (financially as well as otherwise) on the parent. For these reasons, when one comes to consider the justification for interference with a lone parents Convention right, the interests of the children of that parent cannot be left out of account. 267. If the disproportionate effect on lone parents can only be justified by addressing their position as the providers for dependent children, attention to the interests of those children is an integral part of the process. How, otherwise, are their interests to be taken into account? As Lord Reed has said, regard has been had to the UNCRC by the European Court of Human Rights in the application of the ECHR, when considering how its substantive guarantees apply to children. When considering the rights of children as a component part of their mothers rights under A1P1 and article 14, there is no reason that UNCRC should not likewise infuse the determination of what the content of those rights should be. I therefore agree with Lady Hale that, in considering whether the particular species of interference in this case is justified, the interests of the children affected are, by reason of article 3(1) of UNCRC, to be treated as a primary consideration. 268. Once this position is reached, the question for the government is how to meet the challenge of showing that the measures which discriminate against the child (and ergo the mother) are no more intrusive than they need to be. In this context, I have no difficulty in accepting that the test set out in Stec v United Kingdom (2006) 43 EHRR 1017 continues to apply. So, as a yardstick of the proportionality of this general measure of economic or social strategy, the question is whether it was manifestly without reasonable foundation. But, if article 3(1) of UNCRC has to play its part in deciding whether the benefits cap was without reasonable foundation, it requires that first consideration be given to the best interests of the children directly affected by the decision. 270. I would therefore allow the appeal and make the order that Lady Hale proposes. 269. For the reasons given by Lady Hale in para 220, it cannot be in the best interests of the children affected by the cap to deprive them of the means of having adequate food, clothing, warmth and housing. Depriving children of (and therefore their mothers of the capacity to ensure that they have) these basic necessities of life is simply antithetical to the notion that first consideration has been given to their best interests.
+The appellant brought a claim for judicial review of a decision of the respondent, on 21 February 2012, to approve a Revenue Budget for 2012/13 in relation to the provision of youth services. In his claim form he applied for declarations that the respondent had failed to comply with section 149 of the Equality Act 2010 and section 507B of the Education Act 1996 and for an order quashing the decision to approve the budget. The claim was dismissed at first instance (Wyn Williams J) and the appellant was ordered to pay the respondents costs, subject to a proviso against enforcement of the order without further permission of the court. He obtained limited permission to appeal on two grounds. The Court of Appeal (Moore Bick, Rimer and Underhill LJJ) decided the two substantive issues in his favour but did not grant him any relief, dismissed his appeal and ordered him to pay half of the respondents costs of the appeal. This appeal is about the form of the Court of Appeals disposal of the matter. The appellant submits that since the court held that the respondent had failed in its statutory obligations, it should have made a declaration to that effect and should have made an order for costs in his favour. The underlying facts and issues are set out in the very thorough judgment of Wyn Williams J, [2012] EWHC 1928 (Admin), and recapitulated, so far as was necessary, in the judgment of the Court of Appeal delivered by Rimer LJ, [2013] EWCA Civ 1320. For present purposes a briefer outline will be sufficient. The appellant was born on 17 April 1991. He suffers from ADHD and has other difficulties. He was therefore a qualifying young person within the meaning of section 507B of the 1996 Act, which required the respondent, so far as reasonably practicable, to secure access for him to sufficient educational and recreational leisure time activities for the improvement of his well being. Section 507B(9)(b) required the respondent in exercising its functions under that section to secure that the views of qualifying young persons in the authoritys area are taken into account. The appellants disability was also a protected characteristic which brought into play, in relation to him, the public sector equality duty (PSED) contained in section 149 of the 2010 Act. The section required the respondent to have due regard to the statutory equality needs in the exercise of its functions. By its decision on 21 February 2012 the respondent approved a reduction in its youth services budget for 2012/13 of 364,793. The appellant was concerned about the impact which this was likely to have on the provision of services for young persons with disabilities and, in particular, on a weekly youth club for vulnerable young people which he used to attend. At first instance wide ranging criticisms were made of the way in which the respondent had reached its decision. They were all rejected. At the end of the hearing and before giving judgment, the judge asked counsel for written submissions on relief if he found that there had been illegality. The note on relief provided by Mr David Wolfe QC and Ms Aileen McColgan on behalf of the appellant stated that he asked for a quashing order. No mention was made of alternative relief in the form of a declaration. Ms Jane Oldham noted the omission in her response on behalf of the respondent, observing that it appears that no declaratory relief is sought and D takes it that the claim for declaratory relief [in the claim form] is abandoned, since otherwise C would, in response to the request of Wyn Williams J, have set out the terms of any declaratory relief sought. Mr Wolfe and Ms McColgan provided a written reply which again made no reference to asking for declaratory relief. In view of the judges rejection of the challenges to the legality of the respondents approval of the budget, the question of relief did not arise for decision, but the judge rejected an argument by the respondent that the provisions of the Local Government Finance Act 1992 would have prevented him from quashing the decision to approve the budget. He said that if he had been persuaded that the respondent had acted unlawfully, it would have been open to him to grant any remedy which was appropriate. The grounds on which the appellant was given leave to appeal were that the respondent had failed in its equality duty (PSED) under section 149, because although equality impact assessments (EIAs) had been carried out relating to the impact of the budgetary cuts, the EIAs had not been provided to the members who took the decision (and the judge had been wrong to infer that the members had read them merely because they had been told how they could be accessed); and that it had failed in its consultation duty under section 507B(9)(b) because there was no evidence of consultation with young people before making the decision to cut the budget (as distinct from meetings with management committees of young peoples organisations to explain to them where the axe would fall). These grounds were developed in the appellants skeleton arguments in the Court of Appeal. As to relief, it was submitted that the decision under challenge should be quashed. No alternative submission was made about declaratory relief. The judgment of the Court of Appeal was given on 6 November 2013. The court upheld the appellants argument under section 149. It expressed some doubt about whether section 507B(9) was applicable, but this was not disputed by the respondent. Accordingly the court proceeded on the assumption (but without deciding) that the section was applicable, and on that assumption it upheld the appellants argument. However, the court refused to make the quashing order which was sought. Rimer LJ said that although in theory a quashing order could be made, the court could not see how this could be done without quashing the respondents decision to approve the entire revenue budget for the financial year 2012/13, which had expired nearly three months before the appeal was heard. He concluded: 94. It is now too late to unwind what has been done. Judicial review is a discretionary remedy and, even though we have accepted the substantive points which Mr Hunt has advanced, we are of the firm view that he ought not to be granted the quashing order for which he asks. To do so would be detrimental to good administration. 95. We refuse to grant any relief to Mr Hunt and therefore dismiss the appeal. No mention was made in the judgment about whether the order should include a declaration to reflect what was said in it about the respondents failure to discharge its statutory obligations, no doubt because the subject had never been raised on behalf of the appellant and in any event it would be open to counsel to make suggestions as to the appropriate form of order in the light of the matters determined in the judgement. It would have also have been open to counsel to raise the matter of declaratory relief on receiving the judgment in draft if it was something which they had meant to raise. Counsel for the appellant did neither. Counsel for the respondent prepared a draft order stating that the appeal was dismissed, and counsel for the appellant stated in written submissions that the parties were agreed on the order except in relation to costs. I would reject the appellants complaint that the Court of Appeal was wrong not to make a declaration of its own initiative. The complaint is redolent of hindsight. It is no doubt triggered by the courts decision on costs, but they are separate matters. The judgment of the Court of Appeal itself ruled that the respondent acted unlawfully, and the authority of the judgment would be no greater or less by making or not making a declaration in the form of the order to the same effect. However, in circumstances where a public body has acted unlawfully but where it is not appropriate to make a mandatory, prohibitory or quashing order, it will usually be appropriate to make some form of declaratory order to reflect the courts finding. In some cases it may be sufficient to make no order except as to costs; but simply to dismiss the claim when there has been a finding of illegality is likely to convey a misleading impression and to leave the claimant with an understandable sense of injustice. That said, there is no must about making a declaratory order, and if a party who has the benefit of experienced legal representation does not seek a declaratory order, the court is under no obligation to make or suggest it. The appellant is on much stronger ground in relation to costs. The submissions to the Court of Appeal on his behalf made no reference to the costs at first instance, and it was remiss to agree to an order that the appeal should be dismissed, when there were obvious grounds for arguing that in relation to costs the judges order should be set aside and replaced by an order in the appellants favour. However, in relation to the costs in the Court of Appeal, the points were properly made that the appellant had succeeded on both the issues as to the respondents statutory duty; that there were wider lessons for local authorities to learn from the case about their duties under each of the relevant sections; that the lapse of time, as a result of which the relevant financial year had now passed, was not the fault of the appellant; and that to deny the appellant his costs would be likely in practice to dissuade claimants from pursuing legitimate public law challenges. The respondent submitted that the appellant had not in substance been successful; that he had not obtained any result of any practical utility; and that he had known about the practical problems which would be involved in attempting to unwind the budget from evidence submitted by the respondent before the original hearing. Delivering the reasons for the courts judgment on costs, ([2013] EWCA Civ 1483) Rimer LJ said that by the time that the appeal came on for hearing, it was far too late to consider granting any relief (by which he must have had in mind a quashing order), even if as to which the court had doubts it might have been appropriate for relief to be granted a year earlier when the matter was before Wyn Williams J. He continued: 5. In these circumstances, the court considers that it would be wrong in principle to award any costs to Mr Hunt. The appeal proved to be of no practical value to him; and, in the courts view it was always one which was destined to fail. 6. As the council was the successful party in the appeal, the court considers that it is in principle entitled to its costs. On the other hand, the court has regard to the fact that the council resisted the appeal not only on the basis that this was not a case for relief, but also on the two substantive grounds on which it lost. Its resistance on those two grounds increased the costs of the appeal. We regard that consideration as pointing away from an order awarding the council all of its costs. The court concluded that the respondent should be entitled to recover half of its costs of the appeal. The discretion of a court in a matter of costs is wide and it is highly unusual for this court to entertain an appeal on an issue of costs alone. But the Court of Appeal said that it reached its decision as a matter of principle, treating the respondent as the successful party. In adopting that approach, I consider that the court fell into error. The rejection of the respondents case on the two issues on which the appellant was given leave to appeal was of greater significance than merely that the respondent had increased the costs of the appeal by its unsuccessful resistance. The respondent was successful only in the limited sense that the findings of failure came too late to do anything about what had happened in the past, not because the appellant had been slow to raise them but because the respondent had resisted them successfully until the Court of Appeal gave its judgment. The respondent was unsuccessful on the substantive issues regarding its statutory responsibilities. There are also wider public factors to consider. Public law is not about private rights but about public wrongs, as Sedley J said in R v Somerset County Council, Ex p Dixon [1998] Env LR 111 when considering a question of standing. A court may refuse permission to bring a judicial review claim if it considers the claimant to be a mere meddler or if it considers that the proceedings are unlikely to be of sufficient significance to merit the time and costs involved. But in this case the court considered that the issues were of sufficient significance to give permission. And the ruling of the court, particularly under section 149, contained a lesson of general application for local authorities regarding the discharge by committee members of the councils equality duty. If a party who has been given leave to bring a judicial review claim succeeds in establishing after fully contested proceedings that the defendant acted unlawfully, some good reason would have to be shown why he should not recover his reasonable costs. I cannot see that the fact that in this case the determination of illegality came after it was too late to consider reopening the 2012/13 budget provided a principled reason for making the appellant pay any part of the respondents costs. On the contrary, for the reasons stated the appellant was in principle entitled to some form of costs order in his favour. The issues raised by the appellant at first instance were considerably wider than the issues on which he was given permission to appeal. They included, for example, a far reaching challenge to the adequacy of the respondents EIAs. This challenge required detailed rebuttal by the respondent. The appellant also persisted in seeking an order to quash the decision approving the budget when that was unrealistic. Those are reasons for limiting the order for costs in his favour. Logically it might be said that a distinction should be drawn between the costs at first instance and in the Court of Appeal to reflect the different issues, but each hearing occupied the court for one day and the assessment can only be broad brush. I would allow the appeal, set aside the Court of Appeals order and substitute an order that the appellant should recover two thirds of his costs both at first instance and in the Court of Appeal. Having succeeded in reversing the costs orders made by the courts below, the appellant is entitled to his reasonable costs of so doing. However, a significant proportion of his written and oral argument before this court was directed to the question of a declaration. On that issue his argument had no merit when examined against the way that his case was presented in the lower courts, which only emerged fully from the submissions of the respondent. As at present advised, I would order that the appellant should recover two thirds of his costs in this court, to be assessed if not agreed; but the order should not be drawn up for seven days, during which time either party may, if so advised, make written submissions as to why a different order should be made.
+On 7 July 2002 the oil rig supply vessel Far Service (the vessel) was damaged by fire while berthed in Peterhead harbour. She was owned by the pursuer, Farstad Supply AS (the owner), and was under charter to the third party, Asco UK Limited (Asco). Asco had engaged the defender Enviroco Limited (Enviroco) to clean out some of the tanks on board the vessel. Enviroco was carrying out the work. On Ascos instructions the master of the vessel started up the engines, preparatory to moving to another berth. At the same time an employee of Enviroco inadvertently opened a valve which released oil into the engine room near hot machinery. The oil ignited and caused the fire. The claims The owner sued Enviroco for damages in negligence. Enviroco denies liability but for the purposes of the appeal it is to be assumed that it is liable. Enviroco says that the fire was materially contributed to by the contributory negligence of both the owner and Asco. Those allegations are denied but for the purposes of the appeal it is to be assumed that Asco would be liable in negligence to the owner for the consequences of the fire but for any defence Asco might have under the terms of the charterparty. Although there is a contract between Enviroco and Asco, the terms of that contract are not before the Court and, so far as I am aware, Enviroco has not alleged any breach of that contract against Asco. Envirocos claim is solely for contribution. It says that, if it is liable to the owner, it is entitled to a contribution from Asco under section 3(2) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940 (the 1940 Act). If it is entitled to such a contribution, it is agreed that Asco will (at the least) be entitled to an indemnity from the owner under clause 33(5) of the charterparty. Asco has played no part in the debate at any stage. That is no doubt because, whatever the result, it will not ultimately be liable. It either has a defence to Envirocos claim for contribution or it is entitled to an indemnity from the owner under the terms of the charterparty. The owner accepts that that is the case and has accordingly made the submissions which Asco would have made. After a debate on the assumed facts, on 23 April 2008, the Lord Ordinary, Lord Hodge, held that Enviroco was not entitled to a contribution from Asco: see 2008 SLT 703. Enviroco enrolled a reclaiming motion and on 1 May 2009 an Extra Division allowed the reclaiming motion by a majority, comprising Lady Paton and Lord Carloway, with Lord Osborne dissenting: see 2009 SC 489. With the judicial score being two all, the owner appeals to this Court in order to restore the interlocutor of the Lord Ordinary. The issues As set out in the agreed Statement of Facts and Issues the issues in this appeal are these: i) What is the meaning and effect of section 3(2) of the 1940 Act? ii) In particular, can a defence provided by a pre existing contract such as the charterparty be taken into account in determining whether a person if sued, might also have been held liable for the purposes of section 3(2)? iii) If the answer to question ii) is yes, does clause 33(5) of the charterparty have the effect that Asco is not a person who, if sued, might also have been held liable to the appellants for the purposes of section 3(2)? The 1940 Act It is convenient to consider the first two questions together because they both involve the construction of the 1940 Act. It is common ground that at common law the position in Scotland (unlike in England) was that, where more than one wrongdoer was jointly and severally liable to pay damages in respect of any loss or damage, and where that wrongdoer had paid more than his pro rata share, each such wrongdoer was liable inter se to pay a pro rata share of the damages. Thus if there were two such wrongdoers, A and B, the contribution of each would be 50 per cent and, if A paid, say, 75 per cent of the damages, he was entitled to recover the 25 per cent excess from B. That was so, whether or not a claim had been made by the pursuer against B. The common law position is explained by Lord Keith of Kinkel in Comex Houlder Diving Ltd v Colne Fishing Co Ltd 1987 SC (HL) 85 at 120 1. The 1940 Act was enacted to reform the common law position. Section 3 is entitled Contribution among joint wrongdoers and provides, so far as relevant, as follows: (1) Where in any action of damages in respect of loss or damage arising from any wrongful acts or negligent acts or omissions two or more persons are, in pursuance of the verdict of a jury or the judgment of a court found jointly and severally liable in damages or expenses, they shall be liable inter se to contribute to such damages or expenses in such proportions as the jury or the court, as the case may be, may deem just: Provided that nothing in this subsection shall affect the right of the person to whom such damages or expenses have been awarded to obtain a joint and several decree therefor against the persons so found liable. (2) Where any person has paid any damages or expenses in which he has been found liable in any such action as aforesaid, he shall be entitled to recover from any other person who, if sued, might also have been held liable in respect of the loss or damage on which the action was founded, such contribution, if any, as the court may deem just. (3) Nothing in this section shall . (b) affect any contractual or other right of relief or indemnity or render enforceable any agreement or indemnity which could not have been enforced if this section had not been enacted. The essential purpose of the section was to replace the common law pro rata rule with a flexible rule of apportionment according to the courts view of what was just. In the instant case the claim for contribution is made under section 3(2) but in my opinion section 3(2) must be construed in the context of the section as a whole and, in particular, subsection (1). Subsection (1) deals with the case where the pursuer (here the owner) proceeds against two defenders in respect of loss or damage caused by both and a judgment is given against both, so that they are both found jointly and severally liable in damages or expenses. This might have been the case here if the owner had sued both Enviroco and Asco and had obtained a decree against Enviroco and Asco in respect of loss and damage arising out of the fire. The effect of subsection (1) would then have been that Enviroco and Asco would have been liable to contribute to such damages and expenses in such proportions as the court deemed just. It is important to appreciate that in such an action, in order for the owner to obtain a decree against Asco, it would have had to establish that Asco was liable to it in damages. That would have involved establishing that Asco was liable for damages for breach of duty, which in turn would have involved the court considering whether Asco had a defence under the charterparty. That is so whether the alleged duty was a contractual duty or a duty of care at common law. Although the Statement of Facts and Issues says that, for the purposes of this appeal, it is to be assumed that Asco would have been liable to the owner in negligence jointly and severally with Enviroco but for any defence arising from the terms of the charterparty, that assumption would not have carried the owner far enough. That is because the right to contribution under section 3(1) depends upon there being a decree that Enviroco and Asco were jointly and severally liable in damages and the owner could not have obtained such a decree against Asco if Asco had a contractual defence, whether the source of the alleged liability was in contract or delict. The relations between the owner and Asco were governed by the charterparty and I can see no basis upon which Asco could have been liable to the owner in negligence, and thus in delict without reference to the terms of the charterparty. The question in a case to which section 3(1) applied would be whether Asco had a defence under the charterparty to the owners claim. I turn to section 3(2). It applies to a claim for contribution by a person who has been held liable in any such action as aforesaid. The reference to any such action is a reference to the action identified in subsection (1) and is thus a reference to an action by a pursuer against a defender in respect of loss or damage arising from any wrongful acts or negligent acts or omissions by the defender. If a defender, as such a wrongdoer, has been held liable to pay damages or expenses to a pursuer and if he pays the damages he has a right to recover such contribution, if any, as the court may deem just from any other person who, if sued, might also have been held liable in respect of the loss or damage on which the action was founded. As I see it, the subsection is specifically intended to deal with the position where there are two actions. In the first action a wrongdoer A is held liable in damages or expenses to the pursuer and A then pays the pursuer and begins a separate action against a second person B who, if sued in the first action, might have been held liable to the pursuer in the first action. However, no one suggested that the subsection was limited to such a case. It was not suggested that the claim for contribution could not be made by third party proceedings in the same action, even though no liability for contribution can arise until A has paid the pursuer. In the instant case A is Enviroco and is assumed to be liable in delict to the owner in respect of loss and damage caused by the fire. Let it also be assumed that it has paid the pursuer the amount of damages awarded against it. Enviroco is entitled under subsection (2) to recover a contribution to its liability from Asco if it shows that Asco is a person who, if sued, might also have been held liable in respect of the same loss. It is clear that the expression if sued means if sued by the owner. So the question is whether, if Asco had been sued by the owner, it might have been held liable to the owner in respect of the loss or damage caused by the fire. There has been some consideration of the expression if sued in the cases. For example, in Dormer v Melville Dundas & Whitson Ltd 1989 SC 288 at 298, the Inner House followed earlier dicta of Lord Keith in Central SMT Co Ltd v Lanarkshire CC 1949 SC 450 at 461 to the effect that those words assume that the person in Ascos position had been relevantly, competently and timeously sued; in other words, that all the essential preliminaries to a determination of the other partys liability on the merits have been satisfied. In that sentence the other party in this case is Asco. It is not suggested that all such preliminaries had not been satisfied on the facts of this case. So it is not necessary to consider possible problems which might arise on the facts of specific cases, some of which are considered by Lord Hodge in his clear and concise analysis at paras 8 to 19 of his judgment. It follows that the question under section 3(2) is whether, if Asco had been sued by the owner, it would have been liable to the owner. The answer to that question is thus the same as it would have been if the owner had sued both Enviroco and Asco and the case had fallen within section 3(1) and not section 3(2). For the reasons already given, however the duty is formulated, that depends upon whether Asco would have had a defence to the owners claim for damages arising out of the fire. It follows therefore that, in my opinion, the outcome of this appeal depends upon the true construction of the charterparty. In this regard I entirely agree with the conclusions and reasoning of Lord Mance. In particular I agree with him that, if Asco is not liable to the owner because it has a contractual defence under the charterparty, Enviroco will not be entitled to contribution from Asco and that the reason for that cannot be described as the result of a whim on the part of the owner but is the result of deliberate contractual arrangements apportioning risk between them as owner and charterer under the charterparty. I make two points by way of postscript on this part of the case. The first is that it is submitted on behalf of Enviroco that it would be unjust to allow Asco to rely upon a contractual defence of which Enviroco was unaware. I would not accept that submission. For the reasons I have explained, the whole basis of the right to contribution under subsections (1) and (2) of section 3 is that both Enviroco, as the defender, and Asco, as second defender or third party as the case may be, are liable to the owner. If Asco is not liable to the owner, the whole basis of its liability to contribution is removed. I see nothing unjust in such a result. In this regard too I agree with Lord Mance. Enviroco carried out its work pursuant to a contract with Asco and must have known that there was a charterparty governing the relationship between the owner and Asco. It could of course have refused to contract with Asco without obtaining and considering the terms of the charterparty. Moreover, if Enviroco wished to recover a contribution or indemnity on facts such as these, the way to do it was to make provision for it in its contract with Asco. The second point is related. It is that the case pleaded against Asco is put in negligence. As Lord Hodge put it at para 2, Enviroco alleged that Asco failed in its duty as charterer and base operator to direct and supervise the operations carried out on the vessel while the vessel was in port. He added that, although it is not expressly averred, the pleadings imply that Asco failed in its duty to the owner to take reasonable care to avoid causing physical damage to the vessel. As stated above, however the duty is framed, the question whether Asco would have been liable to the owner depends upon whether it has a defence to the claim by reason of the terms of the charterparty. I turn to that question. The charterparty The charterparty is dated 4 February 1994. By clause 48, it is governed by English law and the parties agreed that the High Court in London should have exclusive jurisdiction over any dispute arising out of it. It was between Asco as charterer and Farstad Shipping A/S as owner, but it was agreed in the Statement of Facts and Issues that Farstad Supply AS was and is to be treated as the owner under the charterparty. In the light of that agreement it is not necessary for me to trace the route to that conclusion. The charterparty was for an original period of five years but was subsequently extended by agreement. By clause 18 the owner was to provide and/or pay for all requirements, costs or expenses of whatsoever nature relating to the Vessel and Owners personnel . The critical provisions of the charterparty for present purposes are to be found in clause 33, which is set out in full in the Appendix to this judgment. The owner submits that on the true construction of clause 33.5 the parties agreed that Asco was not to be liable in respect of loss or damage to the vessel even if caused by its negligence. Alternatively the owner submits that, if clause 33.5 is not an exclusion clause but is, as Enviroco submits, an indemnity clause (without being an exclusion clause), the owner would not have obtained a decree to the effect that Asco was liable to it within the meaning of section 3(1) because of what has been described as the Scottish brocard frustra petis quod mox es restiturus (which is the same principle as the English law defence of circuity of action) and therefore Enviroco cannot establish that, if sued, Asco might have been liable in respect of the loss or damage caused by the fire. All depends upon the true construction of the charterparty. Like any other term in a contract, clause 33.5 must be construed in its context as part of clause 33 as a whole, which must in turn be set in its context as part of the charterparty, which in its own turn must be considered against the relevant surrounding circumstances or factual matrix. The vessel was chartered for work in the oil rig supply industry and was a comparatively long term contract. Clause 33 contains a division of responsibility between the owner and charterer of a type which has become familiar. However, that fact is no more than part of the factual matrix. Ultimately all depends upon the true construction of the language of the particular clause in its context. The features of clause 33 which are of particular importance seem to me to be these. Clause 33 as a whole is entitled EXCEPTIONS/INDEMNITIES and clause 33.1 expressly provides that specific clauses are to be unaffected by the exceptions and indemnities set out in clause 33. With that introduction one would expect the clause to contain both exceptions and indemnities. Each of the clauses except clauses 33.7 and 33.10 provides that the owner or charterer as the case may be shall defend, indemnify and hold harmless the other against various events. The critical clause is clause 33.5, which provides: Subject to Clause 33.1, the Owner shall defend, indemnify and hold harmless the Charterer, its Affiliates and Customers from and against any and all claims, demands, liabilities, proceedings and causes of action resulting from loss or damage in relation to the Vessel (including total loss) or property of the Owner, including personal property of Owners Personnel or of anyone for whom the Owner may be responsible on the Vessel, irrespective of the cause of loss or damage, including where such loss or damage is caused by, or contributed to, by the negligence of the Charterer, its Affiliates or Customers. The question is whether clause 33.5 excludes the charterers liability to the owner in respect of damage to the vessel caused by the charterers negligence. In my opinion it plainly does. As appears below, the word indemnify is capable of having a wide meaning but, even assuming that by itself it might (depending upon the context) have a narrow meaning, it does not stand alone in the clause. The owner must defend . and hold harmless the charterer, not only against liabilities and causes of action, but also against all claims, demands and proceedings. The natural meaning of that expression is that, since the owner must hold Asco harmless from a claim by the owner in respect of damage to the vessel caused by Ascos negligence, Asco cannot be liable to the owner in respect of such damage. The Lord Ordinary analysed this point with admirable clarity and brevity at paras 24 to 27 of his judgment, to which I would like to pay particular tribute. I entirely agree with him that, as he put it at para 27, the obligation to hold harmless goes further than the obligation to reimburse because they are words of exception. In some contexts the words indemnify and hold harmless have the same meaning. So, for example, in the second edition of the Oxford English Dictionary 1989, indemnify is given three meanings, two of which are these: 1. trans. To preserve, protect, or keep free from, secure against (any hurt, harm, or loss); to secure against legal responsibility for past or future actions or future actions or events; to give an indemnity to. 2. To compensate (a person etc) for loss suffered, expenses incurred, etc) It is of interest to note that one of the sources quoted, dated 1651, gives the definition of indemnify as Save harmless and keep indemnified. See also the discussion by the Lord Ordinary of the position in the United States at paras 24 and 25. The word indemnify can sometimes mean indemnify a third party. As ever, all will depend upon the context. Here the context is plain. The expression defend, indemnify and hold harmless is used in both senses and is wide enough to include the exclusion of liability for loss incurred by the owner or charterer as the case may be. This is plain from clause 33.11(a), which, as appears in the Appendix, provides that the Owner shall defend, indemnify and hold harmless Charterer from any consequential or indirect losses that Vessel Owner may suffer as a result of the performance of the Charter. Clause 33.11(b) is a mirror of clause 33.11(a) but provides for the charterer to defend, indemnify and hold harmless the owner in respect of consequential or indirect losses. The significance of clauses 33.11(a) and (b) for present purposes is that they each plainly operate as an exceptions clause against liability for loss and that the language used is the same as in clause 33.5. They thus show that in this charterparty the expression defend, indemnify and hold harmless is wide enough both to provide a defence for one party to claims made by the other party and to provide an indemnity in respect of the claims of third parties. Further, as can plainly be seen from the Appendix, the same expression, namely defend, indemnify and hold harmless, is used throughout clause 33, whether for the protection of the owner or the charterer. Clause 33 as a whole represents a carefully considered balance between the interests of the owner on the one hand and those of the charterer on the other. I entirely agree with Lord Mances analysis of the clause and was particularly struck by his point at para 58 below that Envirocos submissions can be tested by looking at the opposite sides of the coin. In all the circumstances, I would hold that the effect of clause 33.5 is inter alia to exclude the charterers liability in respect of damage to the vessel caused by its own negligence. It follows that, on the assumed facts, Enviroco is not entitled to contribution from Asco under section 3(2) of the 1940 Act because it cannot establish that if sued Asco might have been liable to the owner in respect of damage to the vessel (and other losses) caused by the fire: Asco would have had a defence to the owners claim because any such liability was excluded by clause 33.5 of the charterparty. The conclusion that Asco would have such a defence makes the remaining question which formed part of the argument irrelevant. That question was whether, if clause 33.5 is not an exclusion clause but only an indemnity clause, the position would be different. The argument, accepted by the majority in the Inner House, was that in such a case the owner would have been entitled to judgment against Asco because clause 33.5 did not afford it a defence but would have been liable to indemnify Asco against that liability under the clause. It was said that in those circumstances, if the action had been brought by the owner against both Enviroco and Asco, as contemplated in section 3(1) of the 1940 Act, it would have been entitled to a joint and several decree against both and thus both would have been found jointly and severally liable in damages within the meaning of section 3(1). Again I agree with Lord Mance that that argument cannot be accepted. The charterparty is governed by English law and such a claim by the owner would be met by the defence of circuity of action and judgment would be given, not for the owner, but for Asco. There would thus be no order of the court that Asco pay damages to the owner. I agree with Lord Mance that that would be a matter for English law as the proper law of the charterparty. However, if it were a matter of Scots law, the position would be the same. It has been held, at any rate in England, that the principle encapsulated in the phrase frustra petis quod mox es restiturus is the same as the English doctrine of circuity of action: see eg Post Office v Hampshire [1980] QB 124 per Geoffrey Lane LJ at page 134. The principle is clear from the example of its application given by Lord Normand in Workington Harbour and Dock Board v Towerfield (Owners) [1951] AC 112 at 148, where he said: But if the shipowner might have recovered as damages in an action in negligence the sum paid to the harbour authority under section 74, the decision would be saved frustra petis quod mox es restiturus. In French Marine v Compagnie Napolitaine dEclairage et de Chauffage par le Gaz [1921] 2 AC 494 at 510 Lord Dunedin described the principle as a brocard of the civil law and held that judgment for the full charter hire should not be given where, although the hire had been due, it could be shown that it would be repayable in part, because, as Lord Dunedin put it, it would be useless to give judgment for the respondents for more than the sum which was not repayable. That principle would apply here if, contrary to the view expressed above, clause 33.5 was no more than a narrow indemnity clause. Even if Asco was in principle liable to the owner, it would be entitled to be immediately indemnified by the owner, which would be bound the repay the amount of the liability. In these circumstances it would, as Lord Dunedin put it, be useless to give judgment for the owner against Asco. Accordingly, if Asco had been sued by the owner, no such judgment would have been given for damages against it. It follows that for these reasons, which are the same as those given by Lord Mance, clause 33.5 protects Asco against the possibility of a judgment being given against it, whether it is construed as an exceptions clause or as a narrow indemnity clause. CONCLUSION For the reasons I have given I would construe the 1940 Act as set out above. I would reject the submission that the terms of the charterparty between the owner and Asco are irrelevant and would hold that, whether Enviroco is entitled to a contribution in respect of any liability it would, if sued, have had to the owner arising out of the fire depends upon whether Asco would have had a defence under the charterparty. The answer to that question depends upon the true construction of the charterparty. As to the construction of the charterparty, I would hold that any liability of Asco to the owner in negligence, or based on its negligence, is excluded by clause 33.5. If, contrary to that view, clause 33.5 is not an exclusions clause but a narrow indemnity clause, I would hold that Asco would not, if sued, have been liable to the owner because it would have had a defence of circuity of action or of frustra petis quod mox es restiturus. It follows that I would allow the appeal, recall the interlocutor of the Inner House dated 1 May 2009 and restore the interlocutor of the Lord Ordinary dated 23 April 2008 and remit the cause to the Lord Ordinary to proceed as accords. APPENDIX 33 EXCEPTIONS/INDEMNITIES 33.1 Clauses 4, 6, 7, 18, 19 and 20 and any provisions for the cessation of hire under any Charter shall be unaffected by the exceptions and indemnities set out in this Clauses 33. 33.2 Subject to Clause 33.1, the Charterer shall defend, indemnify and hold harmless the Owner from and against any and all claims, demands, liabilities, proceedings and causes of action resulting from the loss of or damage to cargo irrespective of the cause of such loss or damage, including where such loss or damage is caused, or contributed to, by the negligence of the Owner. 33.3 Subject to Clause 33.1 the Owner shall defend, indemnify and hold harmless the Charterer, its Affiliates and Customers from and against any and all claims, demands, proceedings and causes of action resulting from the death or illness of, or injury to, any Owners Personnel or anyone for whom the Owner may be responsible on the Vessel, irrespective of the cause of such death, illness, or injury including where such death, illness or injury is caused by, or contributed to, by the negligence of the Charterer, its Affiliates or customers. 33.4 Subject to Clause 33.1, the Charterer shall defend, indemnify and hold harmless the Owner from and against any and all liability, and against any and all claims, demands, proceedings and causes of action resulting from the death or illness of, or injury to, any of the Charterers and its Affiliates and Customers officers and employees. 33.5 Subject to Clause 33.1, the Owner shall defend, indemnify and hold harmless the Charterer, its Affiliates and Customers from and against any and all claims, demands, liabilities, proceedings and causes of action resulting from loss or damage in relation to the Vessel (including total loss) or property of the Owner, including personal property of Owners Personnel or of anyone for whom the Owner may be responsible on the Vessel, irrespective of the cause of loss or damage, including where such loss or damage is caused by, or contributed to, by the negligence of the Charterer, its Affiliates or Customers. 33.6 Subject to Clause 33.1, the Charterer shall defend, indemnify and hold harmless the Owner from and against any and all claims, demands, liabilities, proceedings and causes of action resulting from the loss of or damage to the property of the Charterer, its Affiliates and Customers. Immediately on execution of the Charter, and prior to commencement of Services, the Owner undertakes to exchange mutual hold harmless indemnities in respect of property and personnel with the owner of any Offshore Installation providing services under contract to any Customer and to which the Vessel may be ordered by the Charterer. 33.8 Without prejudice to the provisions of Clauses 33.2, 33.4 and 33.6 hereof, and 33.7 subject to Clause 33.1 above, in order that Owners are effectively indemnified pursuant to said clauses 33.2, 33.4 and 33.6 hereof: a) Charterer as agent on behalf of Customers shall indemnify and hold Owners free and harmless from and against any and all claims, demands, liabilities, proceedings and causes of action or costs thereof arising out of or in connection with; i) Loss of or damage to cargo carried on behalf of Customers irrespective of the cause of such loss or damage including where such loss or damage is caused, or contributed to by the negligence of the Owners. ii) Death or illness of, or injury to any of Customers officers and employees. iii) Loss of or damage to the property of the Customers. 33.9 Without prejudice to the provisions of Clauses 33.3 and 33.5 hereof and subject to Clause 33.1, in order that Customers are effectively indemnified pursuant to sub clauses 33.3 and 33.5 hereof: a) Owners shall defend indemnify and hold harmless Charterer as agent on behalf of Customers from and against any and all claims, demands, liabilities, proceedings and causes of action or costs thereof, whether arising in contract, tort or in any other way out of or in connection with: i) Death or illness of, or injury to any Owners Personnel or anyone for whom the Owner may be responsible on the vessel, irrespective of the cause of such death, illness or injury including where such death, illness or injury is caused by, or contributed to by the negligence of the Charterer, its Affiliates or Customers. ii) Loss or damage in relation to the Vessel (including total loss) or property of the Owner, including personal property of Owners Personnel, or of anyone for whom the Owner may be responsible on the vessel, irrespective of the cause of loss or damage, including where such loss or damage is caused or contributed to by the negligence of Charterer, its Affiliates or Customers. 33.10 Charterer confirms and owner accepts that it is empowered to act as agent on behalf of Customers only for the purpose of giving, receiving and when necessary enforcing indemnities pursuant to sub clause 33.8 and 33.9 and confirms that in all other respects and for all other purposes of this Charter Party, it is acting as principal. 33.11 Notwithstanding any other provision of this Clause 33 or any other provision of this Charter: a) Owner shall defend, indemnify and hold harmless Charterer from any consequential or indirect losses that Vessel Owner may suffer as a result of the performance of the Charter. b) Charterer shall defend, indemnify and hold harmless Vessel Owner from any consequential or indirect losses that Charterer may suffer as a result of the performance of the Charter. c) The expression consequential or indirect losses includes by way of example but is not limited to loss of anticipated profits, loss of use, loss of production and business interruption whether or not foreseeable at the date hereof and irrespective of the cause of such loss or damage, including amongst other things where such loss or damage is caused by or contributed to by the negligence on the part of either Vessel Owner or Charterer. d) For the avoidance of doubt, the provisions of this Sub Clause 33.11 shall remain in full force and effect notwithstanding any breach of, or termination of, this Charter on any grounds whatsoever. LORD HOPE I agree with Lord Clarke and Lord Mance, for the reasons they give, that the appeal must be allowed and I too would restore the interlocutor of the Lord Ordinary. The meaning to be given to the words if sued in section 3(2) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940 has puzzled generations of Scots lawyers ever since that provision was enacted. No doubt the draftsman saw no need to elaborate. He must have assumed that section 3(1) and section 3(2) would be read together, and it is obvious that the second subsection takes its meaning from the first. Although section 3(2) does not say this in so many words, the phrase found liable in any such action as aforesaid is a sufficient indication. It must refer back to the phrase in any action of damages in section 3(1). So the situation that is contemplated in both cases is one where the party who seeks the relief has been sued to judgment. If sued in section 3(2) must therefore mean, in regard to the third party, that it is to be assumed that he has been sued to judgment also. But this approach to the meaning of these words still leaves some questions unanswered. It is normal practice for the third party procedure to be used, as it has been in this case, by a defender to claim relief under section 3(2) from a party whom the pursuer has not called as a defender in the same action. This procedure cannot have been in contemplation in 1940, as it had only recently been abolished by an Act of Sederunt of 25 May 1937 (SR&O 1937/180). The reasons for this are obscure, as the procedure which was first introduced only a short time previously by rule 20(d) of the Rules of the Court of Session 1934 (SR&O 1934/772) had been found to work well. It has been suggested that it was unpopular with the judges, perhaps because they found it difficult to retain control of an enquiry into the facts where the interests involved were many and varied: see Third Party Notice, 1937 SLT (News) 98. However that may be, the procedure was re introduced by rule 85(c) of the Rules of Court of Session 1965 (SI 1965/321): see now chapter 26 of the Rules of the Court of Session 1994 (SI 1994/1443). It is also available in the sheriff court under the Ordinary Cause Rules 1993 (SI 1993/1956), chapter 20. This procedure enables questions arising out of one matter including claims by a defender for relief against a third party to be dealt with in one action, thus saving time and expense, even if this deprives a pursuer of his right to jury trial: Beedie v Norrie 1966 SC 207. As Lord Clarke points out, section 3(2) contemplates that no liability for contribution can arise until the defender has paid the pursuer. But that is not how the third party procedure works in practice. It is not necessary for the defender first to be found liable and then to pay the pursuer before making his claim for contribution in the same action. As the Lord Ordinary has shown in his admirably succinct opinion, several points arising from the phrase if sued have been settled by judicial decision. First, as if sued means if sued to judgment, the defender is not deprived of his right of relief if the pursuer, having originally sued the third party as well, abandons his action against the third party so that he is released from the process without having a judgment pronounced in his favour: Singer v Gray Tool Co (Europe) Ltd 1984 SLT 149. As Lord President Emslie described this situation in that case at p 151, the third party has merely been the beneficiary of a formal order pronounced as a result of the pursuers decision to prosecute the action against him no further. Secondly, the defender is not disabled from seeking relief against the third party by reason of the fact that the pursuers claim against him has been held to have been, or would be, time barred: Dormer v Melville Dundas & Whitson Ltd 1989 SC 288. This is because the words if sued assume that the third party has been relevantly, competently and timeously sued by the pursuer in other words, that all the essential preliminaries to a determination of the other partys liability have been satisfied: Central SMT Co Ltd v Lanarkshire County Council 1949 SC 450, 460, per Lord Keith; see also Singer v Gray Tool Co (Europe) Ltd 1984 SLT 149, 151; Comex Houlder Diving Ltd v Colne Fishing Co Ltd 1987 SLT 13, 19; Taft v Clyde Marine Motoring Co Ltd 1990 SLT 170, 175, per Lord Dervaird. The question whether the third party has been sued relevantly, competently and timeously falls to be tested at the date when the pursuer sued the person who is seeking relief. It is enough that he could have sued the third party at that date: George Wimpey & Co Ltd v British Overseas Airways Corporation [1955] AC 169, 186, per Lord Reid; Dormer v Melville Dundas & Whitson Ltd, pp 299 300. The question which has arisen in this case was not resolved by these decisions. Cross indemnities of the kind seen in this charterparty are no doubt commonplace in the oil and gas industry. But they are not usually met with in the situations that have given rise to most claims for damages for personal injury in the Court of Session. So that court has not had occasion until now to consider the effect of a contract between the pursuer and the party from whom a contribution is sought which provides that party with a defence to the pursuers claim or entitles him to an indemnity from the pursuer under the contract. Difficulty has however been caused by Lord President Emslies observation in Singer v Gray Tool Co (Europe) Ltd 1984 SLT 149, 150, that section 3(2) does not put into the hands of the pursuer at his whim to defeat the rights of a person to obtain relief against a joint wrongdoer. Lord Robertson had made a comment to the opposite effect in Travers v Neilson 1967 SC 155, 160 where, having held that as the pursuer had abandoned his action against the third party the defenders claim for a contribution by way of a third party notice was incompetent, he expressed regret at the fact that the right to a contribution was capable of being defeated at the pursuers whim. The Lord Presidents statement in Singer disapproving what Lord Robertson had said was repeated by Lord Allanbridge when he was delivering the opinion of the First Division in Dormer v Melville Dundas & Whitson Ltd. At p 300 he said that it was never within the power or whim of an injured party to determine by his own actings whether or not one joint wrongdoer would be liable to relieve another in respect of damages payable to the injured party. These rather sweeping observations were taken by Lord Carloway in the Inner House in this case to mean that the pursuer cannot exclude the right of relief by a contract which he enters into with the third party before the accident. In para 53 he said that the decisions which had analysed section 3 had all emphasised that the relevant right of relief was not capable of being discharged or extinguished by the actings of others, notably the victim of the wrongdoing. Referring to Lord President Emslies statement in Singer v Gray Tool Co (Europe) Ltd 1984 SLT 149, 150 he said: Although it could be said that entering into a contract prior to an accident forming the subject matter of a dispute ought not to be categorised as a whim, nevertheless the point is well made that a victim ought not, standing the existence of a general right of relief, to be able to extinguish that right by a private arrangement with other potential wrongdoers, whether that arrangement is made before or after the accident. There is nothing in the language of section 3 that supports this approach. There is no indication in either section 3(1) or section 3(2) that the ordinary rules by which parties are free to enter into a contract which apportions the risk of loss or damage between them are suspended. In this situation the words found liable are to be given their ordinary meaning, which places no restriction on the grounds on which the third party may be found not liable. Mr Howie QC for the respondent, Enviroco, had to accept that if the owner, Farstad, had adopted Envirocos case against Asco, with the result that Envirocos claim for a contribution from Asco would have been brought under section 3(1) of the 1940 Act, an exclusion clause in its contract with the owner would have provided Asco with a complete defence to the owners claim. Asco would have been found not liable to the owner in that action. The owners claim for damages would have been excluded by the exclusion clause. It follows from this concession, which I think he could not have withheld, that an exclusion clause in a contract between the third party and the pursuer will defeat the defenders claim for a contribution from the third party under section 3(2) too. This is because the third party, if he had been sued to judgment by the pursuer, would have been held not liable. The pre requisite for a successful claim under section 3(2) would be incapable of being met. I respectfully agree with Lord Clarke that the effect of clause 33.5 of the charterparty is to exclude any liability of Asco to the owner in negligence. That being so, Envirocos claim for a contribution from Asco must be held to be irrelevant. I would have reached the same conclusion if, on a proper construction of the charterparty, the clause was to be regarded as providing Asco with an indemnity. The fact that the indemnity was provided for under a private contractual arrangement between the injured party and one of the alleged joint wrongdoers does not, for the reasons already given, provide a ground for disregarding its effect. The defence of circuity of action is not, in so many words, known to Scots law. But the underlying principle certainly is, though it was overlooked by the majority in the Inner House. Among the various examples of references to the brocard frustra petis quod mox es restiturus that could be mentioned is Lord Camerons observation in Nordic Travel Ltd v Scotprint Ltd 1980 SC 1, 26, that the pursuers counsel, Mr Bruce, did not suggest that a successful argument could be made founding upon it to defeat the defenders case that, as it was in control of his own assets, it was entitled to pay on demand the debt which was due. Ascos right to an indemnity from the owner for the losses claimed for would be sufficient to defeat the owners claim upon the application of this principle. The result is that, for the purposes of section 3(2), Asco would, if sued, be found not liable to it in respect of the loss and damages on which the action against Enviroco is founded. LORD RODGER I am in complete agreement with the judgments of Lord Clarke and Lord Mance. This footnote simply indicates that the Courts construction of section 3(2) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940 (the 1940 Act) is in line with the established case law of the courts in New Zealand and Canada on similar provisions. In Herrick v Leonard and Dingley Ltd [1975] 2 NZLR 566 the plaintiffs car was irreparably damaged while stevedores were unloading it from a ship. The plaintiff sued the stevedores, who were found liable in negligence. They blamed the first third party, the charterers of the ship, and the second third party, the agents of its owner. The third parties argued that the defendant stevedores were not entitled to any contribution from them because there were exclusion clauses in the contract of carriage which exempted them from liability to the plaintiff for loss or damage to his car. McMullin J held that the third parties had not been negligent. But he went on to consider the position if they had been. Under section 17(1)(c) of the Law Reform Act 1936, as amended by section 35(2) of the Limitation Act 1950, a tortfeasor may recover contribution from any other tortfeasor who is, or would if sued in time have been, liable in respect of the same damage. His Honour observed, at p 572, lines 42 51: Before a claim under that subsection can succeed, the person from whom the contribution is sought must be a tortfeasor vis vis the plaintiff and, if sued, have been liable in respect of the same damage for which the other tortfeasor is held liable. Had the plaintiff sued either of the third parties, he would have been met by conditions 1, 2 and 7 of the contract. Consequently, the defendant would not have been able to succeed against either of the third parties for contribution, even if negligence or breach of an implied term had been proved. Moving on to Canada, in Giffels Associates Ltd v Eastern Construction Co Ltd [1978] 2 SCR 1346, engineers who had been found liable in damages for the plaintiffs loss arising from a defective roof, sought contribution from the main contractor, Eastern Construction. Under a term in the plaintiffs contract with Eastern, the plaintiffs could not sue Eastern for faulty materials or workmanship which appeared more than a year after the date of substantial completion. It was agreed that the period had elapsed several years before the problem with the roof emerged. Section 2(1) of the Negligence Act, RSO 1970, c 296 was in comparable terms to section 3(1) of the 1940 Act. The Supreme Court of Canada held that Giffels claim for contribution from Eastern must fail. Laskin CJ said, at pp 1355 1356: I am prepared to assume, for the purposes of this case, that where there are two contractors, each of which has a separate contract with a plaintiff who suffers the same damage from concurrent breaches of those contracts, it would be inequitable that one of the contractors bear the entire brunt of the plaintiffs loss, even where the plaintiff chooses to sue only that one and not both as in this case. It is, however, open to any contractor (unless precluded by law) to protect itself from liability under its contract by a term thereof, and it does not then lie in the mouth of the other to claim contribution in such a case. The contractor which has so protected itself cannot be said to have contributed to any actionable loss by the plaintiff. This result must follow whether the claim for contribution is based on a liability to the plaintiff in tort for negligence or on contractual liability. In either case there is a contractual shield which forecloses the plaintiff against the protected contractor, and the other contractor cannot assert a right to go behind it to compel the former to share the burden of compensating the plaintiff for its loss. What we have here is a case where the immunity of Eastern from liability did not arise from some independent transaction or settlement made after an actionable breach of contract or duty, but rather it arose under the very instrument by which Easterns relationship with the plaintiff was established. Giffels had no cross contractual relationship with Eastern upon which to base a claim for contribution; and once it was clear, as it was here, that Eastern could not be held accountable to the plaintiff for the latters loss, any ground upon which Giffels could seek to burden Eastern with a share of that loss disappeared. That approach was applied by Iacobucci J, on behalf of the majority of the Supreme Court, in Bow Valley Husky (Bermuda) Ltd v Saint John Shipbuilding Ltd [1997] 3 SCR 1210, at para 123, and by Finch JA, giving the judgment of the British Columbia Court of Appeal, in Laing Property Corporation v All Seasons Display Inc (2000) 190 DLR (4th) 1, 16 20. There is no doctrine or principle of Scots Law which would dictate, or even suggest, that a different approach should be applied to section 3 of the 1940 Act. On the contrary, the policy which underlies the decisions in these cases is equally applicable in Scots Law. LORD MANCE I agree with the judgment of Lord Clarke, as well as with his endorsement of the lucid and compelling judgment given by the Lord Ordinary ([2008] CSOH 63; 2008 SLT 703). Were it not for the opposite result reached by the majority in the Inner House, I would have thought it unnecessary for anything more to be said. Enviroco is being sued in Scotland in delict for the damage to Farstads oil supply vessel, MV Far Service. The issue before us is whether, assuming that Enviroco is held liable to pay and pays Farstad damages in this action, ASCO as charterer of MV Far Service is a person who, if sued, might also have been held liable in respect of the [same] damage within section 3(2) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940. That issue breaks down into two questions: (a) can Asco fall within section 3(2) if it was, under the terms of its charter of the vessel from Farstad, never under any liability to Farstad for such damage? (b) if the answer is negative, did the terms of the charterparty mean that Asco never had any such liability? The first question is one of Scots law. The second is one of English law, to which the charterparty was expressly subject (clause 48). Before the Lord Ordinary, Enviroco conceded that the answer to question (a) was in the negative. But in the Inner House 2009 SC 489 Lord Carloway regarded the concession as misplaced. He said that The fact that a party, had he been sued by the victim, had such a defence to the action, including one based on a contractual indemnity, or even an exclusion of liability clause, is irrelevant (paragraph 54). He cited statements in the case law that, where a victim (A) obtains judgment against one wrongdoer (B), that wrongdoer may obtain contribution from any other wrongdoer (C) liable in respect of the same damage, even though any claim by (A) against (C) was barred by limitation before the date when (A) sued (B) (Central S.M.T. Co. v Lanarkshire C.C. 1949 S.C. 450, 461 per Lord Keith) and even though (B) has obtained a decree of absolvitor as the result of the abandonment by A of proceedings against him, or such proceedings have been struck out for want of prosecution (Singer v Gray Tool Co. (Europe) Ltd. 1984 S.L.T. 149, 150 151 per Lord Emslie). These statements were based on the view that Section 3(2) does not put it into the hands of the pursuer at his whim to defeat the rights of a person to obtain relief against a joint wrongdoer and that the words if sued assume that the other party has been relevantly, competently and timeously sued (Central S.M.T., p. 461; Singer, 150). That view could be justified if the words if sued in section 3(2) could be read as referring to hypothetical proceedings brought against (C) immediately after the wrongdoing, rather than at the same time as (As) actual proceedings against (B). It is unnecessary to consider the correctness or otherwise of either the statements or this possible justification on this appeal. Whether correct or not, they have nothing to do with the situation where (C) could never have been sued successfully by (A); and where the reason for this could never be described as being the result of a whim on the part of (A), but was the result of deliberate contractual arrangements apportioning risk between (A) and (C). Subsections (1) and (2) of section 3 were on their face designed to dovetail with each other. The first deals with the situation where (B) and (C) are sued to judgment in one action; the second with the situation where only (B) is sued to judgment, but (C) if sued, might also have been held liable. They cover only limited situations, leaving uncovered, for example, that where (B) recognising his liability to (A) pays up without judgment ever being given against him (although a formal decree giving effect to an agreed settlement was held sufficient for the purposes of subsection (2) in Comex Houlder Diving Ltd. v Colne Fishing Co. Ltd. 1987 S.C. (H.L.) 85). If (B) and (C) are sued in one action, and (C) defeats the claim by reference to a contractual exceptions clause, there can be no question of (B) claiming contribution from (C) under subsection (1). There is neither logic nor plausibility in an analysis whereby (B) is in a better, and (C) in a worse position, as regards contribution, if (A) never sues (C), perhaps because (A) appreciates, realistically, that such a suit would inevitably fail. The word might is used in subsection (2) because (C) has not in fact been sued, and not because it is sufficient that, in some parallel universe, (C) might have been party to some different contractual arrangement under which he might have undertaken a contractual responsibility which it can be shown in fact that he never had. Lord Carloway also considered that the view which he took of the scope of section 3(2) avoided an inequitable result (paragraph 55), in that it might lead, as the Lord Ordinary had said (paragraph 31), to a party who has only a minor responsibility for causing an accident having to bear the entire financial loss. But no wrongdoer has a right to assume that there will be other wrongdoers available to contribute to the liability which he incurs; and there are also many reasons, legal and factual, why any expectation which he may unwisely hold to that effect may be frustrated. In the present case, the consequence of giving effect to Lord Carloways view would be to ignore the actual legal position between (A) and (C) and to introduce by the back door a liability which was barred at the front door. Lady Patons view that the result achieved by the majority decision was broadly equitable (paragraph 43) was based on the consideration (which is common ground) that ASCO would, under the charterparty, be able to call upon Farstad to indemnify it in respect of any liability which Asco might have to make by way of contribution to Enviroco, so that Farstad would receive reduced damages. But the existence of such an indemnity is a special circumstance, which in many contexts would not be replicated with the result that a person in (Cs) position would indirectly bear a liability for which it never contracted. I turn to the construction of the charterparty, and of clause 33.5 in particular. It is argued that clause 33.5 does no more than require Farstad to indemnify Asco in respect of third party liabilities, such as, here, any contribution claim that Enviroco may have against Asco. The majority in the Inner House accepted this (Lady Paton and Lord Carloway, paragraphs 40 and 58). However, clause 33 is headed Exceptions/Indemnities and clause 33.1 provides that various other charterparty clauses are unaffected by the exceptions and indemnities set out in this Clause 33. No distinction appears between exceptions and indemnities in any part or sub clause of clause 33. Under each of sub clauses 33.2 to 33.6, 33.9 and 33.11, either Farstad, as the owner, or Asco, as the charterer, agrees to defend, indemnify and hold harmless the other, from and against any and all claims, demands, liabilities, proceedings and causes of action (sub clauses 33.2, 33.5, 33.6, 33.8 and 33.9) or from and against the same risks except for liabilities (sub clauses 33.3 and 33.4), though it is hard to think that this could make any difference. Clause 33.8 provides that, in order that Owners are effectively indemnified pursuant to . clauses 33.2, 33.4 and 33.6 Asco as agent on behalf of Customers shall indemnify and hold Owners free and harmless. In the case of sub clause 33.11, Farstads agreement is to defend, indemnify and hold harmless Charterer from any consequential or indirect losses that Vessel Owner may suffer as a result of the performance of the Charter. Farstad was the vessels owner and this sub clause indicates that the phrase defend, indemnify and hold harmless is used in a sense wide enough to embrace agreement to exclude the other contracting party from responsibility. That to my mind is anyway the sense in which it is used in all these clauses. Both the words hold harmless and indeed indemnify alone can have that sense. On Envirocos construction, the parties provided that Asco should be indemnified against third party claims, demands and liabilities it incurred resulting from loss or damage in relation to the Vessel (including total loss) or property of the Owner [Farstad], but made no provision at all for claims, demands, etc. by Farstad itself, so leaving Farstad free to make any claims and demands and to establish any liability it wished as against Asco for damage to Farstads own vessel. That makes no sense as a contractual scheme. Lady Paton thought that, on the basis of Farstads case, words such as arising from a claim made by any party other than Farstad would have to be implied after the word liabilities in clause 33.5 for if they were not implied, liabilities would prima facie include a liability to Farstad arising from negligence on the part of Asco causing loss or damage in relation to the vessel (para 39). But this is precisely what the parties intended to exclude with the obvious concomitant that Farstad should insure against all risk of loss to their property, and that of their personnel and others for whom they were responsible (while Asco would insure against all such risks to their own as well as their affiliates and customers property: clause 33.6). The point can be tested by looking at the opposite side of the coin claims from Ascos side against Farstad. Clauses 33.2, 33.6 and 33.8 relate to claims arising from loss or damage to cargo or other property, including that of Ascos customers. On Envirocos case, the parties were careful to provide Farstad with an indemnity in relation to any exposure it might incur towards third parties on that score, but entirely content to leave Farstad open to claims or demands from or liabilities towards Asco itself. Again, that makes no sense of the language. The language therefore operates as a series of indemnities against third party exposure combined with exclusions of direct exposure to the other contracting party. This is both what the heading of clause 33 and what common commercial sense would lead one to expect under a scheme clearly intended to divide risk between the contracting parties. It is unnecessary to consider the position on the unreal hypothesis that clause 33.5 operates as a pure indemnity, enabling Farstad to make any claims or demands and to assert any liability it liked as against Asco in respect of loss or damage suffered by Farstad, but requiring Farstad to indemnify Asco for the claims and demands so made and any liabilities so established. The consequence of this hypothesis would seem to me probably a matter for English law, as the law governing the charterparty, rather than Scottish law. But, under both English and Scottish law, the action would clearly fail, whether for circuity of action in English terminology or pursuant to the Scots maxim frustra petis quod mox es restiturus: see for example Workington Harbour and Dock Board v Towerfield (Owners) [1951] AC 112, 148, per Lord Normand and 152 per Lord Oaksey; Post Office v Hampshire County Council [1980] QB 124; and Rover International Ltd. v Cannon Film Sales Ltd. [1989] 1 WLR 912, especially at 936C F per Dillon LJ. On that basis, too, it could not be said that Asco was a person, who, if sued, might also have been held liable in respect of the loss or damage to the MV Far Service. I would allow the appeal, recall the Inner Houses interlocutor dated 1 May 2009, restore the Lord Ordinarys interlocutor dated 23 April 2008 and remit the cause to the Lord Ordinary to proceed as accords.
+This is a remarkable case in more than one respect. The appeal depends upon whether the Court is bound to stay action 2006 Folio 815 (the 2006 proceedings) under Article 27 of Regulation 44/2001 of the Council of the European Union (the Regulation) and, if not, whether it should do so under Article 28. Before Burton J (the judge), the respondents expressly disclaimed any intention to rely upon Article 27 but relied upon Article 28 in support of a submission that the court should stay the 2006 proceedings in favour of proceedings in Greece. The judge refused to grant a stay and gave summary judgment for the appellants against the respondents. The judge granted the respondents permission to appeal to the Court of Appeal on various grounds, including a ground based on Article 27. The Court of Appeal (Longmore, Toulson and Rimer LJJ) held that it was bound to stay the action under Article 27. It also gave some consideration to Article 28 but held that it was not necessary to reach a final conclusion in that regard because of its decision under Article 27. It declined to consider the issues relevant to summary judgment on the ground that, if there was to be a stay, those issues should be determined by the courts in Greece. The facts and the 2006 proceedings I can take the relevant events from the judgment of Longmore LJ in the Court of Appeal. He in turn took them from the judgment of the judge. On 3 May 2006 the vessel Alexandros T sank and became a total loss 300 miles south of Port Elizabeth, with considerable loss of life. Her owners were Starlight Shipping Company (Starlight). They made a claim against their insurers, who denied liability on the basis that the vessel was unseaworthy with the privity of the assured, namely Starlight. The insurers also said that Starlight had failed properly to report and repair damage to the vessel in accordance with Class Rules. Starlight, through their solicitors Messrs Ince & Co, made a number of serious allegations against the insurers which fell into two categories, as summarised by Longmore LJ at para 4: (1) allegations of misconduct by the insurers and their underwriters involving alleged tampering with and bribing of witnesses, in particular the bosun, a Mr Miranda, to give false evidence, coupled with other allegations of spreading false and malicious rumours (described for some reason as malicious scuttlebutt) against Starlight in the course of purported investigation of their claims; and (2) deliberate failure by the insurers to pay up under the policy, said to have had consequential financial impact upon Starlight, and to have led to substantial recoverable loss and damage. The insurers also relied upon material non disclosure. Those allegations were made before the issue of proceedings and, in particular, in a letter dated 18 July 2006 from Ince & Co to the insurers solicitors, who were Hill Dickinson LLP, then Hill Taylor Dickinson, whom I will together call HD. On 15 August 2006 Starlight issued the 2006 proceedings in the Commercial Court against various insurers. The first four defendants have been described as the Company Market Insurers (CMI) and the fifth to seventh defendants as the Lloyds Market Insurers (LMI). The policies issued by both the CMI and the LMI contained exclusive jurisdiction clauses. They provided for English law and each party expressly agreed to submit to the exclusive jurisdiction of the Courts of England and Wales. Overseas Marine Enterprises Inc (OME) were identified in the policies as managers. In paras 5 to 8 of his judgment Longmore LJ spelled out in some detail issues between the parties in the 2006 proceedings. It is plain that the points raised by Ince & Co to which I have referred were both pleaded and central to the issues between the parties in those proceedings. Thus, in para 7 Longmore LJ referred to a witness statement in which Mr Crampton of Lax & Co, who were now acting for Starlight, asserted that the allegations made by the insurers in defence of the claim were based on false evidence which they had obtained from the bosun. He also relied upon significant payments said to have been made to the bosun on behalf of the insurers in this connection. In addition, a witness statement was introduced in support of a proposed amendment of the claim form alleging that Starlight had sustained losses beyond the measure of indemnity in the relevant policy. It was alleged that, but for the failure of the insurers to pay under the policy, Starlight would have purchased a replacement vessel and had lost between US$ 45 million and US$ 47.7 million by way of increased capital cost and chartering losses. However, on 14 December 2007, Tomlinson J refused to allow the amendment on the basis of the decision of the Court of Appeal in Sprung v Royal Insurance [1999] Lloyds Rep IR 111, approving the decision in The Italia Express (no. 2) [1992] 2 Lloyds Rep 281. As Longmore LJ explained in para 1, as a matter of English law, an insurer commits no breach of contract or duty sounding in damages for failure promptly to pay an insurance claim.1 The law deems interest on sums due under a policy to be adequate compensation for late payment; this is so, even if an insurer deliberately 1 Toulson LJ noted at paras 74 and 75 that the present state of English law was criticised by the Law Commission and the Scottish Law Commission in para 2.87 of a joint consultation paper on Insurance Law; Post Contract Duties (LCCP201/SLCDP152) published on 20 December 2011. The Commissions have provisionally proposed that the law should be reformed. withholds sums which he knows to be due under a policy. If parties agree that English law is to apply to a policy of insurance, this principle is part of what they have agreed. English law, moreover, gives no separate contractual remedy to an insured who complains that an insurer has misconducted himself before settling a claim. In either case the remedy of the insured is to sue the insurer and, if no settlement is forthcoming, proceed to judgment. The trial was fixed for 14 January 2008. The settlements On 13 December 2007, which was the day before the hearing before Tomlinson J referred to above, the 2006 proceedings had been settled between Starlight and OME and the LMI for 100% of the claim, but without interest and costs, in full and final satisfaction of the claim. It was a term of the settlement agreement that Starlight would obtain a stay by way of a Tomlin Order, and a Tomlin Order by consent between Starlight and the LMI was accordingly made on 20 December 2007, backdated to 14 December, in these terms: Save for the purposes of carrying into effect the terms agreed between the Claimant and the Fifth to Seventh Defendants, all further proceedings between the Claimant and the Fifth to Seventh Defendants shall be stayed with effect from 14 December 2007 or such earlier date as may be agreed between the parties or otherwise ordered hereafter. A similar settlement agreement dated 3 January 2008 was made between Starlight and OME and the CMI and a similar Tomlin Order was made on 7 January 2008, but with immediate effect. In each settlement agreement the Assured were defined as being [OME] and Starlight as Managers and/or Owners and/or Associated and/or Affiliated Companies for their respective right and interest in the ship Alexandros T. The CMI settlement agreement then provided: 1. Each Underwriter agrees to pay on or before 18 January 2008 their due proportions of the sum of US$16m being 100% of their due proportions of the sum insured being 50% of the US$32m without interest or costs. 2. The Assured and Claimant agree to accept the EURO equivalent of each Underwriters due proportion of US$16m in full and final settlement of all and any claims it may have under Policy No 302/CF 000220Z against the Underwriters in relation to the loss of Alexandros T, including all claims for interest and costs (including in respect of all costs orders made to date in the proceedings) but without effect to any other insurance policy in which each Underwriter may be involved. 3. The Assured and Claimant agree to Indemnify each Underwriter against any claim that might be brought against it by any of the Assureds or the Claimant's associated companies or organisations or by any mortgagee in relation to the loss of Alexandros T or under Policy No 302/CF000220Z. 4. Following the signing of this agreement, and in consideration of the promises herein, the Claimant and the Underwriters will apply to stay the Proceedings as against the Underwriters, the Proceedings to be stayed for all purposes save for the purposes [of] carrying the terms agreed herein into effect, such stay to have effect from the first obtainable date after 27 December 2007 5. Following the due and proper payment by the Underwriters of the amount specified in paragraph 1 above, the Assured and Claimant and the Underwriters agree to file a consent order dismissing the Proceedings, with no order as to costs. 6. This agreement is subject to English law and to the exclusive jurisdiction of the High Court in London. 2. The underwriters agree to pay on or before 24 December 2007 the sum of US$8M being 100% of their due proportions of the sum insured being 25% of US$32m without interest or costs 3. The Assured and claimant agree to accept the EURO equivalent of US$8M in full and final settlement of all and any claims it may have under Policy No against the Underwriters signing below in relation to the loss of Alexandros T 4. The Assured and Claimant agree to indemnify the underwriters signing below against any claim that might be brought against them by any of the Assureds or the Claimant's associated companies or organisations or by any mortgagee in relation to the loss of Alexandros T or under Policy The LMI settlement agreement provided in similar but not identical terms: 5. This agreement is subject to English law and the jurisdiction of the High Court of London. The Greek proceedings After setting out the terms of the settlement agreements, Longmore LJ wryly observed at the end of para 12 of his judgment that one might have expected that to be that, but it was not to be. He described what then happened in paras 13 to 15. More than three years later, in April 2011, nine sets of Greek proceedings, in materially identical form, (Greece 1), were issued by Starlight, by OME, by their co assureds under an associated Fleet Policy and by individual officers of those companies, against the LMI and the CMI, some of their employees or underwriters, and HD and some of their partners and employees (the HD defendants). The claims are for compensation for loss of hire and loss of opportunity by Starlight totalling approximately US$ 150 million and for pecuniary compensation due to moral damage amounting to 1 million. The claims also include similarly substantial claims by the other claimants in respect of alleged acts, all done unlawfully and in breach of good faith for the alleged purpose of avoiding the performance by the defendants of their legal obligations. All the claims rely upon breaches of the Greek Civil and Criminal Code. However the factual allegations, which Longmore LJ noted had been said by the judge to be entirely familiar, include the allegation that the appellants were responsible for using false affidavits of witnesses (primarily Mr Miranda) with intention to harm the claimants, described thus by Mr Crampton in a statement summarising the Greek claims: The underwriters pursued this criminal effect by intentionally fabricating false evidence with the purpose that the underwriters (who were responsible for the payment of insurance indemnity for the vessel) avoid paying this insurance indemnity, contrary to their contractual obligations and their legal obligations and in particular contrary to the provisions of the insurance contract, providing for the timely payment of the insurance indemnity. They also include the claim that the appellants were asserting and disseminating false information to third parties, although they were aware of their falsity, damaging the claimants reputation and credibility with the purpose that the underwriters (who were responsible for the payments of the insurance indemnity for the vessel) avoid paying the insurance indemnity, contrary to their contractual obligation and their legal obligation and in particular contrary to provisions of the insurance contract providing for the timely payment of the insurance indemnity Mr Crampton then turned to what he called the [i]ntentional fabrication of false evidence for defrauding the English court and [t]he moral instigation alternatively complicity of the underwriters to perjury and on the defrauding of the court by the underwriters. He summarised the position in this way in paragraph 20 of his witness statement: The essence of the complaint against the Defendants in the Greek proceedings concerns the allegation that the Defendants obtained false evidence in Greece from the bosun of the Alexandros T, Aljess Miranda This evidence was then deployed in these proceedings in England and also in the Greek proceedings. There is a substantial section of the Greek pleadings relating to the financial consequences of the failure by the insurers to comply with their obligations under the policy and the way in which they allegedly handled the investigations. In a further set of proceedings, known as Greece 2, two additional heads of loss are claimed by Starlight and OME, arising out of substantially the same allegations. As Longmore LJ put it in para 15, in apparent recognition of the problem raised by the fact that such claims had either not been brought in England or had been ruled out as a matter of English law by Tomlinson J, Mr Crampton, in paragraph 27 of his witness statement, explained that the claims are advanced in two ways in the Greek pleadings: first, that as a result of the underwriters intention to avoid payment of the insurance indemnity, eventually resulting in late payment of the policy proceeds, the claimants missed the opportunity to use the policy proceeds to invest in three vessels (not just the one referred to in the 2006 proceedings); and, secondly, that, as a result of the defendants actions in acquiring the false evidence of Mr Miranda, his clients were not able to insure the vessels and without insurance they would not have been able to trade them and could not purchase them. He stated that his clients would amend their pleadings prior to the hearing of the disputes in Greece so as to clarify this head of claim, such that no claim is made in respect of the late payment of the policy proceeds. The expert evidence from the defendants is that it is not possible to amend the pleadings in the Greek courts, but, treating the proposed draft amendment, which he exhibited, as a clarification, it did not seem to the judge that it in any way cured the defect, if defect there was. It is further said that the insurance of the three potential new vessels was rendered impossible, since all the London insurers refused to quote for the vessels because of the refusal of the defendant underwriters to quote for them and because of the defamatory accusations spread as to the unseaworthiness of the Alexandros T. All these allegations arise out of the alleged manner in which the defendants handled Starlight's claim in respect of the Alexandros T, and, even though the consequences and the consequential losses have expanded, and the claim for moral damages has been included, and although it seems that Starlight now rely on an expanded affidavit of Mr Miranda, the allegations, even though put into the context of Greek law, were said by the judge to be materially identical to those made prior to the settlement agreement. The acts complained of are all said to have constituted delicts under Greek law akin to the torts of defamation and malicious falsehood under English law. The present position Since the issue of the Greek proceedings, as Longmore LJ explained in para 16 (and the judge at his para 14), the insurers have taken further steps and brought further proceedings in England as follows. By applications issued in the 2006 proceedings on 25 July and 3 August 2011, the CMI and the LMI respectively sought, pursuant to the Tomlin Orders (if necessary after lifting the stay imposed by them) summary relief pursuant to CPR Part 24 by way of declarations and damages against Starlight. The LMI, because permission was given to them to join OME as a third party, also sought summary relief pursuant to Part 24 against OME (which filed an acknowledgment of service and a defence) to enforce the LMI settlement agreement, to which it also was a party. In addition, fresh proceedings (2011 Folio 702) were commenced by the LMI, without prejudice to their case that sufficient relief could and would be obtained in the 2006 proceedings, against both Starlight and OME, and, after an acknowledgment of service and defence were filed, an application was made under Part 24 for similar relief to the claim in the 2006 proceedings. The LMI also brought fresh proceedings (2011 Folio 1043) against Starlight's co assured and, again after acknowledgments of service and defence had been filed, sought declaratory relief and damages for breach of the exclusive jurisdiction clause in their insurance policies, by virtue of the issue of the Greek proceedings by those co assured. Also in fresh proceedings (2011 Folio 894), the CMI brought claims against OME and the same co assured in respect of similar claims for breach of the exclusive jurisdiction clause in the policy, and in respect of OME by reference to breach of the terms of the settlement agreement. Judgment in default was entered by the CMI against all those defendants on 26 October (amended on 14 November) 2011. Those proceedings are not the subject of this appeal and no issue therefore currently arises with respect to them. Finally, and by separate application, the HD defendants were joined as defendants in the 2006 proceedings so that, in due course, they too might be able In summary, the claims made in the various proceedings are these. to claim relief by seeking declaratory relief within the original proceedings. Starlight and their associates applied to stay both the 2006 proceedings in their current form and 2011 Folios 702 and 1043. (a) The 2006 proceedings. (1) The CMI claim against Starlight and, through Part 20 proceedings, against OME (i) a declaration that the Greek claims fall within the terms of the release in the CMI settlement agreement; (ii) a declaration that the bringing of the Greek claims was a breach of the release in the settlement agreement; (iii) damages for breach of the release in the settlement agreement; (iv) a declaration that the bringing of the Greek claims was a breach of the jurisdiction clauses in the settlement agreement and the policies; (v) damages for breach of the jurisdiction clauses in the policies and CMI settlement agreement; and (vi) an indemnity under clause 3 of that agreement in respect of claims brought by Starlight and/or its associated companies in the various Greek proceedings; (2) the LMI claim against Starlight (i) declarations that the LMI settlement agreement settles any claim against them by Starlight in respect of the loss of the Alexandros T and covers Starlights claims in the Greek proceedings (para 3); (ii) a declaration that Starlight is in breach of that agreement in bringing the Greek proceedings; (iii) damages for breach of the settlement agreement; and (iv) a declaration that the agreement entitles the LMI to an indemnity against Starlight in respect of the matters covered by the indemnity, which includes all claims by Starlight and its associated companies in the Greek proceedings; and (3) the LMI claims against OME by Part 20 proceedings: (i) like relief to that which the LMI claim against Starlight, as summarised above; and possibly (ii) damages for breach of the exclusive jurisdiction clause in the policy, although this claim is not repeated among the prayers. (b) Action 2011 Folio 702. The LMI claim against Starlight and OME: (i) declarations that the LMI settlement agreement settles any claim against them by Starlight and/or OME in respect of the loss of the Alexandros T and covers Starlights and/or OMEs claims in the Greek proceedings; (ii) damages for breach of that agreement; (iii) damages for breach of the jurisdiction clause in the policy; and (iv) damages for breach of the jurisdiction clause in the settlement agreement. (c) Action 2011 Folio 1043. The LMI claim against five of Starlights co assureds for breach of their policy jurisdiction clauses. The decisions of the judge and the Court of Appeal The insurers sought to enforce the settlement agreements referred to in the Tomlin Orders and, in a judgment handed down on 19 December 2011, having refused a stay under Article 28, the judge held that they were entitled to summary judgment for (inter alia) a declaration that the matters sought to be raised in Greece were part of the settlement of the claim and that Starlight (and OME) are bound to indemnify the insurers against any costs incurred and any sums that may be adjudged against them in the Greek proceedings. As stated above, the Court of Appeal held that it was bound to stay the 2006 proceedings and 2011 Folio 702 and 1043 under Article 27, made no final determination of the position under Article 28 and declined to consider the issues of summary judgment. The Court of Appeal also held that it was not too late for the respondents to rely upon Article 27 or Article 28. The issues In this Court the appellants challenge the correctness of the Court of Appeals conclusion under Article 27 and, on the respondents cross appeal, submit that the judge was correct to refuse a stay under Article 28. If the appellants succeed under both articles, the case will have to be remitted to the Court of Appeal to consider the respondents appeal from the summary judgment granted by the judge. Article 27 The questions for decision under Article 27 are whether, in the events which happened, the Court of Appeal was wrong to hold that it was not too late for the respondents to rely upon Article 27, whether the proceedings in Greece and the proceedings in England involve the same cause of action, whether they are between the same parties and which court was the court first seised. For reasons which will appear, I will defer consideration of the too late point until after consideration of the other issues. Article 27 must be construed in its context. The immediate context of Articles 27 and 28 is that they form part of Section 9 of Chapter II of the Regulation, which must be read in the light of Recitals 2 and 15 of the preamble. It is apparent from Recital 2 that the Regulation aims, in the interests of the proper functioning of the internal market, to put in place: Provisions to unify the rules of conflict of jurisdiction in civil and commercial matters and to simplify the formalities with a view to rapid and simple recognition and enforcement of judgments from Member States bound by this Regulation. Recital 15 provides: In the interests of the harmonious administration of justice it is necessary to minimise the possibility of concurrent proceedings and to ensure that irreconcilable judgments will not be given in two Member States. There must be a clear and effective mechanism for resolving cases of lis pendens and related actions and for obviating problems flowing from national differences as to the determination of the time when a case is regarded as pending. For the purposes of this Regulation that time should be defined autonomously. The mechanism referred to in Recital 15 is provided by Section 9 of Chapter II of the Regulation, which includes Articles 27 and 28: Section 9 Lis pendens related actions Article 27 1. Where proceedings involving the same cause of action and between the same parties are brought in the courts of different member states, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established. 2. Where the jurisdiction of the court first seised is established, any court other than the court first seised shall decline jurisdiction in favour of that court. Article 28 1. Where related actions are pending in the courts of different member states, any court other than the court first seised may stay its proceedings. 2. Where these actions are pending at first instance, any court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof. 3. For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. Article 29 Where actions come within the exclusive jurisdiction of several courts, any court other than the court first seised shall decline jurisdiction in favour of that court. Article 30 For the purposes of this Section, a court shall be deemed to be seised: 1. at the time when the document instituting the proceedings or an equivalent document is lodged with the court, provided that the plaintiff has not subsequently failed to take the steps he was required to take to have service effected on the defendant, or 2. if the document has to be served before being lodged with the court, at the time when it is received by the authority responsible for service, provided that the plaintiff has not subsequently failed to take the steps he was required to take to have the document lodged with the court." The Regulation is the successor to the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968 (the Brussels Convention), in which the equivalent provisions to Articles 27 and 28 were Articles 21 and 22 respectively. The Court of Justice of the European Union (the CJEU) has held that the principles developed in its case law with regard to Articles 21 and 22 of the Brussels Convention apply equally to Articles 27 and 28 of the Regulation: see Folien Fischer AG v Ritrama SpA (Case C 133/11) [2013] QB 523 at paras 31 and 32. The CJEU was of course previously the European Court of Justice (ECJ). Although some of the decisions to which I refer were made by the ECJ, for simplicity I will refer to all the European decisions as those of the CJEU. The CJEU has laid down a number of general principles which are of some importance. They include the important principle that a court in a Member State must not grant an anti suit injunction to restrain the bringing or continuing of proceedings in another Member State, whether to restrain an abuse of process or to restrain proceedings brought or continued in breach of an exclusive jurisdiction clause: see eg Turner v Grovit (Case C 159/02) [2005] 1 AC 101 and West Tankers Inc v Allianz SpA (The Front Comor) (Case C 185/07) [2009] 1 AC 1138. They also include the following, with specific reference to Articles 27 and First, the purpose of Article 27 is to prevent the courts of two Member States from giving inconsistent judgments and to preclude, so far as possible, the non recognition of a judgment on the ground that it is irreconcilable with a judgment given by the court of another Member State: Gubisch Maschinenfabrik KG v Palumbo (Case C 144/86) [1987] ECR 4861 at para 8. Second, the objective of Article 28 is to improve co ordination of the exercise of judicial functions within the European Union and to avoid conflicting and contradictory decisions, thus facilitating the proper administration of justice: see eg The Tatry (Case C 406/92) [1999] QB 515 at paras 32, 52 and 55 and Sarrio SA v Kuwait Investment Authority [1999] 1 AC 32, per Lord Saville at 39F H. The CMI claims: same causes of action? 28. It is convenient to consider first the position of the CMI claims. The first specific question is whether the 2006 proceedings involve the same cause or causes of action as the Greek proceedings, by which I mean Greece 1 and Greece 2. The principles of EU law which are relevant to the determination of this question are in my opinion clear. They have been considered in a number of cases in the CJEU and are essentially as submitted on behalf of the CMI. They may be summarised in this way. i) ii) iii) iv) The phrase "same cause of action" in Article 27 has an independent and autonomous meaning as a matter of European law; it is therefore not to be interpreted according to the criteria of national law: see Gubisch at para 11. In order for proceedings to involve the same cause of action they must have "le mme objet et la mme cause". This expression derives from the French version of the text. It is not reflected expressly in the English or German texts but the CJEU has held that it applies generally: see Gubisch at para 14, The Tatry at para 38 and Underwriting Members of Lloyds Syndicate 980 v Sinco SA [2009] Lloyd's Rep IR 365, per Beatson J at para 24. Identity of cause means that the proceedings in each jurisdiction must have the same facts and rules of law relied upon as the basis for the action: see The Tatry at para 39. As Cooke J correctly stated in JP Morgan Europe Ltd v Primacom AG [2005] 2 Lloyd's Rep 665 at para 42, The expression 'legal rule' or 'rule of law' appears to mean the juridical basis upon which arguments as to the facts will take place so that, in investigating 'cause' the court looks to the basic facts (whether in dispute or not) and the basic claimed rights and obligations of the parties to see if there is co incidence between them in the actions in different countries, making due allowance for the specific form that proceedings may take in one national court with different classifications of rights and obligations from those in a different national court. Identity of objet means that the proceedings in each jurisdiction must have the same end in view: see The Tatry at para 41, Gantner Electronic GmbH v Basch Exploitatie Maatschappij BV (Case C 111/01) [2003] ECR I 4207 at para 25, Primacom at para 42 and Sinco at para 24. v) The assessment of identity of cause and identity of object is to be made by reference only to the claims in each action and not to the defences to those claims: see Gantner at paras 24 32, where the CJEU said this in relation to Article 21 of the Brussels Convention: . in order to determine whether two claims brought between the same parties before the courts of different Contracting States have the same subject matter, account should be taken only of the claims of the respective applicants, to the exclusion of the defence submissions raised by a defendant. See also to similar effect Kolden Holdings Ltd v Rodette Commerce Ltd [2008] 1 Lloyd's Rep 434, per Lawrence Collins LJ at para 93 and Research in Motion UK Ltd v Visto Corporation [2008] 2 All ER (Comm) 560, per Mummery LJ at para 36. vi) It follows that Article 27 is not engaged merely by virtue of the fact that common issues might arise in both sets of proceedings. I would accept the submission on behalf of the CMI that this is an important point of distinction between Articles 27 and 28. Under Article 28 it is actions rather than claims that are compared in order to determine whether they are related. vii) After discussing Gubisch, The Tatry, Sarrio, The Happy Fellow [1998] 1 Lloyds Rep 13 and Haji Ioannou v Frangos [1999] 2 Lloyds Rep 337, Rix J summarised the position clearly and, in my opinion, accurately in Glencore International AG v Shell International Trading and Shipping Co Ltd [1999] 2 Lloyds Rep 692 at 697: It would appear from these five cases, of which the first two were in the European Court of Justice, and the latter three in the domestic Courts of England, that, broadly speaking, the triple requirement of same parties, same cause and same objet entails that it is only in relatively straightforward situations that art 21 bites, and, it may be said, is intended to bite. After all, art 22 is available, with its more flexible discretionary power to stay, in the case of related proceedings which need not involve the triple requirement of art 21. There is no need, therefore, as it seems to me, to strain to fit a case into art 21. The European Court, when speaking in Gubisch (at para 8) of the purpose, in the interests of the proper administration of justice within the European Community, of preventing parallel proceedings in different jurisdictions and of avoiding in so far as it is possible and from the outset the possibility of irreconcilable decisions, was addressing arts 21 and 22 together, rather than art 21 by itself. Thus a prime example of a case within art 21 is of course where party A brings the same claim against party B in two jurisdictions. Such a case raises no problem. More commonly, perhaps, the same dispute is raised in two jurisdictions when party A sues party B to assert liability in one jurisdiction, and party B sues party A in another jurisdiction to deny liability, or vice versa. In such situations, the respective claims of parties A and B naturally differ, but the issue between them is essentially the same. The two claims are essentially mirror images of one another. Gubisch and The [Tatry] are good examples of this occurrence. On the other hand, Sarrio v KIA is a case where the same claimant was suing the same defendant on different bases giving rise to different issues and different financial consequences, and where liability on one claim did not involve liability (or non liability) on the other. Haji Ioannou v Frangos illustrates the situation where even though the cause is the same, and even though there is some overlap in the claims and issues, nevertheless different claims, there the proprietary claim to trace, may raise sufficiently different issues of sufficient importance in the overall litigation for it to be concluded that the objet differs. The authority of The Happy Fellow at first instance may be somewhat shaken by the reservations expressed by Lord Justice Saville on appeal, but it too may be said to illustrate the process of analysing the claims and issues in the respective proceedings to identify whether they are the same. Where, for instance, there is no dispute over a shipowners right to limit should he be found liable (a separate question, which need not even be resolved at the time when a limitation action is commenced or a decree given), I do not for myself see why it should be held that the liability action and the limitation action involve the same cause of action for the purposes of art 21. How do these principles provide an answer to the question whether the 2006 proceedings involve the same cause or causes of action as the Greek proceedings? It is necessary to consider the claims advanced by the CMI and the LMI separately and, in the case of each cause of action relied upon, to consider whether the same cause of action is being relied upon in the Greek proceedings. In doing so, the defences advanced in each action must be disregarded. The essential question is whether the claims in England and Greece are mirror images of one another, and thus legally irreconcilable, as in Gubish and The Tatry, in which case Article 27 applies, or whether they are not incompatible, as in Gantner, in which case it does not. Thus in Gantner a claim for damages for repudiation of a contract and a claim for the price of goods delivered before the repudiation could both have succeeded and the fact that a set off of the damages would make the price less beneficial to the seller did not make them incompatible. And in Maersk Olie & Gas A/S v Firma M de Haan en W De Boer (Case C 39/02) [2004] ECR I 9657 owners of a vessel which damaged a pipeline (owned by Maersk) sought a declaration that they were entitled to limit their liability under the 1957 International Convention relating to the Limitation of Liability of Owners of Sea going Ships and the Dutch legislation that gave effect to it and that a limitation fund be established. Maersk subsequently commenced proceedings in Denmark claiming compensation for damage to the pipeline. The CJEU held that the causes of action were not the same: see paras 35 to 39. The CJEU underlined both the principle in Gantner that account should be taken only of the claims and not of the defences advanced and the principle in The Tatry that the cause of action comprised both the facts and the legal rule invoked as the basis of the application. It held on the facts, at para 38, that: the unavoidable conclusion is that, even if it be assumed that the facts underlying the two sets of proceedings are identical, the legal rule which forms the basis of each of those applications is different. The action for damages is based on the law governing non contractual liability, whereas the application for the establishment of a liability limitation fund is based on the 1957 Convention and the Netherlands legislation which gives effect to it. The CJEU thus distinguished Gantner and The Tatry on the basis that in those cases, by contrast, the claim brought in the second set of proceedings mirrored that brought in the first set. What then is the position on the facts? The CMI advance the claims referred to in para 18 above under three heads, each of which relies upon provisions either of the CMI settlement agreement or the policies. It is convenient to consider the claims under the three heads in this order: indemnity, exclusive jurisdiction and release. Indemnity claims These are based on clause 3 of the settlement agreement set out above. The claims are simple. By clause 3 the Assured as defined agreed to indemnify the CMI against any claim that might be brought against them by any of the Assureds or the Claimants associated companies or organisations or by any mortgagee in relation to the loss of Alexandros T or under the relevant policy. The CMI say that the Greek proceedings are in respect of such claims and that they are entitled to be indemnified against the consequences of those proceedings. They say that that claim under clause 3 does not give rise to the same claim or cause of action as any claim or cause of action in the Greek proceedings. They say that, on the contrary, it assumes that the Greek proceedings will proceed and that the claimants in Greece may succeed. I would accept that submission. In my opinion, none of the causes of action relied upon in the Greek proceedings has identity of cause or identity of object with the CMIs claim for an indemnity. As to cause, the subject matter of the two claims is different. The former are claims in tort (or its Greek equivalent) and the claim for an indemnity is a claim in contract. As to object, that of the Greek proceedings is to establish a liability under Greek law akin to tort, whereas, as for example in the case of a claim on an insurance policy, the object of the CMIs claim is to establish a right to be indemnified in respect of such a liability. Further, whereas Starlight and its co assureds and the individual officer claimants in the Greek proceedings are seeking each to recover its or his own loss, the indemnity clause will, if the indemnity claim is otherwise good, entitle the CMI to recover from Starlight not just any sum awarded in Greece to Starlight, but also any sums awarded to any of Starlights co claimants. So the object of the English indemnity claim against Starlight differs from, and is in fact much wider than, the object of Starlights claim in the Greek proceedings. Moreover, the claim for an indemnity in the 2006 proceedings in England does not interfere in any way with the Greek proceedings or vice versa. There is no attempt in Greece to impugn the settlement agreements or the indemnity agreements contained in them. The respondents do not assert, for example, that the indemnities do not apply to some or all of the Greek claims. I would determine this point in favour of the CMI on this simple basis. The CMIs cause of action for an indemnity under clause 3 of the settlement agreement is not the same cause of action as any of the causes of action relied upon in Greece, which are tortious. The respective causes of action have neither the same object (le mme objet) nor the same cause (la mme cause). Exclusive jurisdiction clauses The same is in my opinion true of the CMIs claims that the respondents have brought the proceedings in Greece in breach of the exclusive jurisdiction clauses in the settlement agreement and/or in the insurance policies. Clause 6 of the settlement agreement expressly provides that it is subject to English law and the exclusive jurisdiction of the High Court in London. The CMI say that, in bringing the Greek proceedings, the respondents are in breach of clause 6 and that they are entitled to damages as a result. They do not seek an anti suit injunction to restrain the Greek proceedings. They simply seek a declaration that the claims brought by Starlight and OME in Greece 1 and Greece 2 fall within the scope of the settlement agreement. Moreover the respondents do not assert in the Greek proceedings that the settlement agreements do not preclude the bringing of their claims in Greece. It may be that the reason they do not advance that argument is that they would be met with the response that a dispute as to the meaning and effect of the settlement agreements is subject to the English jurisdiction clause so that the court in Greece would have to decline jurisdiction. However that may be, they do not in fact advance the argument. It follows that in this respect too the Greek proceedings are not the mirror image of the English proceedings or vice versa and that the cause or causes of action based on an alleged breach of clause 6 of the CMI settlement agreements are not the same cause or causes of action as are advanced by the respondents in Greece. They do not have le mme objet et la mme cause. As I see it, the position is the same in the case of the alleged breach of the exclusive jurisdiction clauses in the insurance policies. There is an established line of cases in England to the effect that claims based on an alleged breach of an exclusive jurisdiction clause or an arbitration clause are different causes of action from claims for substantive relief based on a breach of the underlying contract for the purposes of Article 21 of the Brussels Convention and Article 27 of the Regulation: see eg Continental Bank NA v Aeakos Compania Naviera SA [1994] 1 WLR 588 per Steyn LJ (giving the judgment of the Court of Appeal) at 595H 596C; Alfred C Toepfer International GmbH v Molino Boschi Sarl [1996] 1 Lloyds Rep 510 per Mance J at 513; Toepfer International GmbH v Socit Cargill France [1997] 2 Lloyds Rep 98, per Colman J at 106; Sinco per Beatson J at paras 50 and 54; and WMS Gaming Inc v Benedetti Plus Giocolegale Ltd [2011] EWHC 2620 (Comm) per Simon J at para 32. Those cases support the conclusion that the claims of the CMI in the 2006 proceedings for breach of the exclusive jurisdiction clauses in the insurance policies (or indeed in the settlement agreement) do not involve the same cause or causes of action within the meaning of Article 27 as the respondents claims in (or akin to) tort in the Greek proceedings. I understand that this point has been reserved for decision by the Court of Appeal but, as I see it at present, nothing in the relief sought by the CMI offends the principle of mutual trust and confidence which underlies the Regulation: see eg Erich Gasser GmbH v MISAT Srl (Case C 116/02) [2005] QB 1. The CMI do not seek to stop the Greek proceedings or to restrain Starlight and OME from pursuing them. They merely seek declarations as to the true position under the settlement agreements which are both governed by English law and subject to the exclusive jurisdiction of the English courts and under the clauses in the insurance contracts which also provide for the exclusive jurisdiction of the English courts. This has the advantage that the courts with exclusive jurisdiction decide what is the true meaning of the settlement agreements and the jurisdiction clauses. Release The same is also, in my opinion, true of the claims based on what are called the release provisions in the CMI settlement agreement. It is said that the provision that the sums agreed to be paid under the CMI settlement agreement are to be paid in full and final settlement of all and any claims it may have under the policy precludes the payment of any further sums arising out of the loss of the vessel insured. It is said that, in the light of the agreement, the CMI are entitled to a declaration that the Greek claims fall within the terms of the agreement, that they are entitled to a declaration that the bringing of those claims is a breach of the agreement and that they are entitled to damages for that breach. The question is whether these claims involve le mme objet et la mme cause as the claims in the Greek proceedings. In my opinion they do not for the same reasons as in the case of the claims for an indemnity and the claims arising out of the exclusive jurisdiction clauses. The Greek claims are claims in tort and these are contractual claims. The factual bases for the two claims are entirely different. Moreover the object of the two claims is different. This is to my mind clear in the case of the claims for damages for breach of the release provisions in the settlement agreements and for a declaration that the bringing of the Greek claims is a breach of the settlement agreement. The nature of the claims is almost identical to the nature of the claims for breach of the jurisdiction agreements. In both cases the alleged breach is the bringing of the claims in Greece. Moreover, like the claims for an indemnity, the claim for damages for breach of the settlement agreement assumes that the claims in Greece may succeed. Is the position different in respect of the claim for a declaration that the Greek claims fall within the terms of the release in the settlement agreements? In my opinion the answer is no. All these claims have the same thing in common. It is that the legal basis for the claims in Greece is different from the legal basis of the claims in England. In Greece the legal basis for the claims is tortious, whereas in England the legal basis of the claims is contractual. It is thus not a case like Gubisch, where, as the CJEU put it at para 15, the same parties were engaged in two legal proceedings in different Contracting States which were based on the same cause of action, that is to say the same contractual relationship. The cause was therefore the same. Equally the objet of the actions was the same, namely to determine the effect if any of the contract. As the CJEU put it at para 16, the action to enforce the contract was aimed at giving effect to it, while the action for its rescission or discharge was aimed precisely at depriving it of any effect. The question whether the contract was binding lay at the heart of the two actions. That is not true here because the object of the English action is to enforce the contract, whereas the object of the Greek proceedings is to establish a different liability in tort. Lord Mance takes a different view in one respect. So far as the claims for damages for breach of the releases in the settlement agreements, the claims for a declaration and damages for breach of the jurisdiction clauses and the claims for indemnities are concerned, there is no difference between us. However, so far as the claims for a declaration that the Greek claims fall within the terms of the release in the settlement agreements is concerned, Lord Mance takes a different view. He notes in para 140 the terms in which the claims are pleaded. The formulation in paragraph 18(a) above, which was adopted by the respondents, is in fact derived from the declaration made by the judge. However, to my mind nothing turns on this difference. Moreover, I do not see that it makes any difference that the respondents discharged their obligations under the settlement agreements. The critical point is that on the facts here the legal basis of the claims in tort in Greece is different from the legal basis of the contractual claims in England. It is true that, if successful, a declaration that the tortious claims have been settled or released will or may afford the appellants a defence to the Greek proceedings but the cases show that defences are irrelevant. Viewed through the perspective of the claims, the two claims are not the mirror image of one another. Even if (contrary to my view) the two sets of proceedings had in this respect le mme objet they did not have la mme cause, whereas the cases show that, in order to involve the same cause of action, they must have both le mme objet et la mme cause. The position would be different if the CMI were to advance a claim in the English proceedings claiming a declaration that they are not liable to the respondents in Greece. That claim would be the mirror image of the claims being brought by the respondents in Greece and would fall within the principles laid down in Gantner and The Tatry. In fact, after the judge had delivered his judgment, the CMI did, as I understand it, make an application for such a negative declaration in the light of the fact that Starlight and OME had commenced Greece 2. We were told that in the event the application was never determined and that the CMI do not pursue it. It has been confirmed that any such claim has now been abandoned. For these reasons, subject to a possible reference to the CJEU discussed in paras 58 59 below, I would hold that Article 27 does not apply to any of the causes of action advanced by or against the CMI. I appreciate that, in reaching these conclusions I have reached a different view from that of the Court of Appeal. Before I express my reasons, I should say that I suspect that the focus of the argument in the Court of Appeal was somewhat different from that in this Court. The reasons are I think twofold. First, in para 40 of his judgment Longmore LJ distinguished Sinco on the basis that the difference between this case and that is that in that case, in contradistinction to this, there was no settlement agreement which could, as he put it, supposedly deny the Greek claimants the right to bring proceedings at all. I do not see that as correct. As explained above, the CMI do not seek to deny the respondents the right to commence proceedings in Greece but merely say that the causes of action in the two sets of proceedings are different. The second point is perhaps more significant. In para 46 Longmore LJ correctly notes that the CMIs case is that the bringing of the Greek proceedings is a breach of the jurisdiction clauses in the policies and a breach of the terms of the settlement agreement and, again correctly, states that the primary relief claimed by the CMI in England is a declaration that Starlight will be liable to indemnify the CMI against any costs incurred in the Greek proceedings and any liability in those proceedings. I have already given my reasons for concluding that those are different causes of action from the causes of action in tort relied upon by the respondents in Greece. They are not a mirror image of one another. As I see it, the Court of Appeal treated the question as a broad one focusing on the overall result in each jurisdiction. This can be seen from paras 47 to 50 of Longmore LJs judgment. In paras 46 and 47 he summarised the claims of both the CMI and the LMI. He then said this at paras 48 and 49: 48. It is clear that the first 3 paragraphs of the LMI application are in terms an assertion that LMI are not liable in respect of the claims in Greece. CMI's allegation that the Greek claimants are in breach of the settlement agreements is in effect a similar assertion. It may be said that there are other causes of action in the English proceedings which are not exactly mirror images of the allegations in the Greek proceedings but to the extent that they are not, they are essentially the same in the sense that the key assertion in Greece is that there are non contractual claims and the key assertion in England is that those non contractual claims have been compromised by the settlement agreements. The claims for damages and indemnity are in any event parasitic on the central contention that, once a settlement had been reached, all matters in issue had been compromised. It is, of course, elementary that Article 27 has regard to causes of action rather than proceedings and that is why it is necessary to concentrate on the allegations relating to the settlement agreement. It is certainly the case that there is a considerable risk of inconsistent judgments if one of the sets of proceedings is not stayed and the rationale behind Article 27 therefore favours a stay if the Greek court was the court first seised. 49. I therefore conclude that, in so far as the English proceedings assert non liability by reason of the settlement agreements, there is an identity of issues and the respective causes of action are the same. To the extent that allegations are made in England that the Greek parties are in breach of the settlement agreements or in breach of the exclusive jurisdiction clauses in either the insurance policy or the settlement agreements themselves (and that they should therefore indemnify the insurers for the cost of the Greek proceedings) they are parasitic and dependent on the basic cause of action in England for a declaration of non liability. They cannot proceed in their own right until the underlying question of the ambit of the settlement agreements as a defence to the Greek actions in tort has been resolved. In my opinion that analysis is not consistent with the principles laid down by the CJEU set out above. As already stated, those principles require a comparison of the claims made in each jurisdiction and, in particular, consideration of whether the different claims have le mme objet et la mme cause without regard to the defences being advanced. As I see it, Article 27 involves a comparison between the causes of action in the different sets of proceedings, not (as in Article 28) the proceedings themselves. In para 48 Longmore LJ recognises that there are causes of action in the English proceedings which are not (as he puts it) exactly mirror images of the allegations in the Greek proceedings but says that, to the extent that they are not, they are essentially the same in the sense that the key assertion in Greece is that there are non contractual claims and the key assertion in England is that those non contractual claims have been compromised by the settlement agreements. And at the end of para 49 he says that the claims in England cannot proceed in their own right until the underlying question of the ambit of the settlement agreements as a defence to the Greek action in tort has been resolved. I respectfully disagree with that approach. It focuses on the nature of the settlement agreements as a defence to the Greek action in tort, which the authorities in the CJEU show is irrelevant. Given the fact that defences are irrelevant, the analysis cannot involve a broad comparison between what each party ultimately hopes to achieve. The analysis simply involves a comparison between the claims in order to see whether they have the same cause and the same object. In so far as Andrew Smith J treated the question as a broader one in Evialis SA v SIAT [2003] 2 Lloyds Rep 377 I respectfully disagree with him, although, as Beatson J observed in Sinco at para 50, Evialis was distinguishable on the facts because the insured had brought a substantive claim in the English proceedings in addition to their claim in the Italian proceedings, which rendered the former a mirror image of the latter. This case can be distinguished on the same basis, at least in the case of the CMIs claims. I also note in connection with Sinco that at para 40 Longmore LJ observed that the difference between that case and this was that in that case there was no settlement agreement which could supposedly deny the right of the Greek claimants to bring proceedings at all. For the reasons I have given I would respectfully disagree with that approach. A settlement agreement might be a defence to a claim. It could not deny the right of the Greek claimants to bring proceedings at all. For these reasons I would hold that Article 27 has no application to the case of the CMI. Moreover, subject to one point discussed at paras 58 59 below, I would not order a reference to the CJEU on this question because the relevant principles are clearly set out in its jurisprudence and are acte clair. In these circumstances, where none of the causes of action in the English proceedings is the same as the causes of action in the Greek proceedings, it is not necessary in the case of the CMI to consider the other issues which might arise, namely the position in relation to other parties and which court was the court first seised for the purposes of Article 27. The LMI claims: same causes of action? Save possibly for two points, the position of the LMI is essentially the same as in the case of the CMI. The first point is that the jurisdiction clause in clause 5 of the LMI settlement agreement differs from that in clause 6 of the CMI settlement agreement in that it does not expressly provide for the exclusive jurisdiction of the High Court in London but merely for the jurisdiction of the High Court in London. However, subject to its detailed provisions, Article 23 of the Regulation provides that, where parties have agreed that a court or the courts of a Member State shall have jurisdiction, that court or those courts shall have jurisdiction and, moreover, that such jurisdiction shall be exclusive unless the parties have agreed otherwise. The question whether the parties had agreed otherwise was discussed by the judge at paras 19 to 23 of his judgment, where he held that the parties had not agreed otherwise and that clause 5 of the LMI was an exclusive jurisdiction clause. No appeal was brought against that part of the judges ruling. The second point is this. I had understood during the argument that the LMI were seeking a negative declaration of the kind which the CMI were not. It now appears that I was mistaken. I understand that the LMI had indicated an intention of doing so if the CMI proceeded with an application for permission to do so but, since they did not, nor did the LMI, who have now expressly stated that, like the CMI, they will not do so. As I see it, in these circumstances the position of the LMI is the same as that of the CMI. The causes of action advanced in England in the 2006 action and in 2011 Folio 702, as summarised on behalf of the LMI, are claims by the LMI against Starlight and OME based on clauses 3, 4 and 5 of the LMI settlement agreement. Those advanced in 2011 Folio 1043 are claims by the LMI against the co assureds to enforce the English jurisdiction clause in the insurances. Since, on this basis, the relief sought by the LMI is not a declaration of non liability, the conclusions and reasoning set out above on the question whether the causes of action are the same apply to it. It follows that I would allow the appeals of both the CMI and the LMI on the Article 27 point. However these conclusions are subject to the question whether any of the issues discussed above should be referred to the CJEU. Left to myself, I would not refer any of them because the principles of European law are clear and the only question is how they should be applied in the instant case. However, Lord Mance has arrived at a different view from me on the question whether Article 27 applies to the claims by both the CMI and the LMI for a declaration that the Greek claims fall within the terms of the release in the settlement agreements or that under the agreements the tort claims have been settled. In short he is of the view that those claims are essentially for declarations of non liability. In these circumstances, I have reached the conclusion that the position is the same as I previously considered it to be when I thought that the LMI were seeking a declaration of non liability. That is that, unless the CMI and the LMI abandon those claims within 14 days, we should refer the question whether the claims for those declarations involve the same cause of action as the claims in Greece within the meaning of Article 27. Lord Neuberger has also given reasons why, absent such abandonment, this question should be referred. On the other hand, if the CMI and the LMI do abandon those claims, I would allow both their appeals under Article 27 and refuse a mandatory stay of the proceedings under it. If they do not abandon those claims, I would allow the appeals under Article 27 in respect of the other claims but refer the question referred to above to the CJEU and defer a decision on that issue until the CJEU has determined the question. Seisin under Article 27 It is not I think in dispute (and is in any event correct) that a court is only seised of claims by or against new parties from the date that those parties are added to the proceedings. In relation to the 2006 proceedings, the English court was only seised of claims against OME once OME was joined to the proceedings on 20 September 2011 and, for example, to the extent that the LMI in action 2011 Folio 702 are seeking declarations relying on the settlement agreement as a settlement of or defence to Starlight's and OME's claims in the Greek proceedings, the English courts were only seised of that action in 2011. It follows that, in each of those cases the court first seised was the Greek court and not the English court, and that, to the extent that the LMI advance claims for a declaration that the Greek claims fall within the terms of the release in the settlement agreement or that under the agreement the tort claims have been settled, unless the English court is the court first seised, they will be entitled to a stay under Article 27. The same is essentially true of the CMI claims. The question is which court is first seised of what in circumstances where some of the claims brought in England are different from and based on different causes of action from those brought in Greece and one of them in each case, namely the claim for the declaration or declarations referred to above, is based on the same cause of action. The approach of the parties is starkly different. It is submitted on behalf of the appellants that the answer is to be found in the language of Articles 27 and 30 and is that the court first seised is that in which the proceedings were first brought and that the court remains the court first seised of the proceedings even where those proceedings are subsequently amended by the addition of new claims or otherwise. It is submitted on behalf of the respondents, by contrast, that if a new claim is added by amendment, the court is seised of the proceedings so far as that amendment is concerned when the amendment is made and not at the time of the institution of the original, unamended proceedings. It seems to me that there is considerable force in the appellants analysis of the language of the Regulation but the respondents case has support both in the English cases and in the textbooks. In the course of this judgment I will consider the issues (interesting as they are) only briefly because I have reached the conclusion that, if the appellants persist in their claims for the declarations referred to in paras 58 and 59 above and this issue is critical for the resolution of the appeal, the proper course is to refer the question to the CJEU. The case for the appellants can be summarised thus. Article 27 is concerned with proceedings involving the same cause of action. So, for the purposes of deciding whether to grant a stay of its proceedings under Article 27, the court must compare the cause or causes of action in each set of proceedings. It is Article 30 that determines when the court is deemed to be seised and, by Article 30(1), it provides that (subject to the limited exceptions at the end of Article 30(1) and in Article 30(2)), it is deemed to be seised when the document instituting the proceedings or an equivalent document is lodged with the court. Where the question is which of two courts is first seised, the two dates on which the courts are deemed to be seised are compared and the court deemed to be seised first is the court first seised. The appellants also rely upon the transitional provisions in Article 66, which they say support the proposition that proceedings have only one date upon which they are instituted and is inconsistent with the idea that they can have several such dates as and when new claims are added by amendment. The appellants say that in this case the answer is that the English court was the court first seised because the Greek court was not seised until some five years later. They say that this is a simple rule which is easy to apply and that there is no warrant in the language of the Regulation for concluding that it was intended that the court should be seised anew each time a new claim is added by amendment, which would be complicated and unnecessary and give rise to endless interlocutory disputes. The appellants criticise Longmore LJ for asking in para 52 whether it can be said that the English court was first seised of the relevant causes of action now pursued in Greece and for noting that Article 27 only has regard to "causes of action" rather than proceedings. They say that that is inconsistent with Articles 27 and 30 because Article 27(1) uses the word "proceedings" twice and it is used again in Article 30(1). They recognise that for the purpose of deciding whether there is le mme objet or la mme cause the court must look to the claims made but, for the purpose of deciding which court is deemed to be "first seised" under Article 27, the autonomous test in Article 30 is applied. Finally, they say that Article 30 does not mention "causes of action" and that the Court of Appeal overlooked the word "proceedings" used twice in Article 27, and did not refer to Article 30 at all. Moreover, although the word "proceedings" is not defined in the Regulation, it appears nearly 50 times in the Regulation used as a word of general application. The uses of the word show that issues or causes of action (or claims) may change during the course of the "proceedings". The appellants further criticise Longmore LJ in the Court of Appeal by reference to paras 53 and paras 64 66. They contrast the reference in para 53 to Article 27 having regard only to causes of action rather than proceedings, with the reference in para 64, with apparent approval, to this quote from the judgment of Saville LJ in The Happy Fellow at pages 17 18: article 21 is concerned with proceedings and article 22 with actions. The questions are whether the proceedings involve the same cause or object or whether the actions are related. It is thus a misreading of the Convention to ask which Court is first seised of issues which are or might be raised within the proceedings or actions. If such were the case, then the articles would achieve precisely the opposite of their intended purpose which is, to achieve the proper administration of justice within the Community . " Saville LJ was there considering the position under what is now Article 28. However the appellants say that the word action in Article 28 means the same as proceedings in Article 27 and that Longmore LJ was correct in paras 64 66 and wrong in para 53. Although the appellants case has to my mind the merit of simplicity and of the avoidance of time consuming and expensive satellite litigation, the respondents say that it is simplistic and contrary to both principle and authority. It is fair to say that there is considerable support in the authorities and the text books for the proposition that the new claims added to the 2006 proceedings, which were founded on the Greek proceedings and thus made second in time, were new claims, that the English court should be regarded as seised of them only when they were added to the 2006 proceedings and that the Greek court was the court first seised within the meaning of Article 27. In the important case of FKI Engineering Ltd v Stribog Ltd [2011] 1 WLR 3264, which was itself a case on Article 28, the Court of Appeal considered Article 27 and a number of cases decided under it. At para 84 Rix LJ said that the essence of the cases was that, where the same cause of action or the same parties are introduced only by way of service, or amendment, the relevant proceedings are only brought at the time of such service or amendment, not at the time of the institution of the original, unamended proceedings. Neither Mummery LJ nor Wilson LJ expressed a different view. The respondents also rely upon Sinco per Beatson J at paras 61 to 68 and, in that connection, upon this comment in Briggs on Civil Jurisdiction and Judgments, 5th edition, 2009 at para 2.235, page 327, note 1: In [Sinco] the proposition that an English court was first seised of a claim for damages for breach of a jurisdiction clause, which could only have been brought before the English court after the objected to proceedings were instituted before the foreign court, was rather challenging. And in Research in Motion UK Ltd v Visto Corporation [2007] EWHC 900 (Ch), Lewison J said at para 19: It is also common ground that the counterclaim is to be treated as an action in its own right for the purposes of the judgment regulation. It seems to me that once RIM's English non infringement action is out of the way the only relevant proceedings are Visto's counterclaim and the Italian proceedings. Of those two, the Italian court is plainly the first seised. Indeed it cannot be otherwise since the very fact of the Italian claim is part of the foundation of the counterclaim. The respondents rely upon Briggs at para 2.235, where, as I read it, their case is supported, although some doubts are expressed as to the desirability of this approach. The respondents also relied upon the 15th edition, 2012 of Dicey, Morris and Collins on The Conflict of Laws at paras 12 060 and 12 069, where they say this: 12 060. Each lis between a plaintiff and a defendant has to be considered individually to determine which court was seised of it first in time, and article 27 applied accordingly. 12 069. Where a claim form which has been issued and served is amended by the addition of an additional claim, or by the introduction of a claim or counterclaim against another party, the material question is whether the date of seisin in respect of the additional claim is the date on which the amended claim form is reissued (which may, depending on the circumstances, be only after obtaining the permission of the court), or the date of the original issue. As it is difficult to see how a court can be said to be seised of a claim which has not been made and does not appear in the claim form, it cannot be correct that as long as a claim form has been issued and served, the court already has temporal priority over any issue which may later be added by amendment. It would follow from a conclusion that the court is not seised of the new claim until the amended claim form is reissued that the defendant may be able to pre empt the amendment by commencing an action of his own in another Member State. The court seised with such pre emptive proceedings will obviously be regarded as being seised later than the court before which the original action was brought, but institution of the later action may serve to prevent the proposed, and now duplicative, amendment of the original action; and there is no basis in the Regulation for refusing to give effect to a use of the rules which might be characterised as sharp practice. Finally, the respondents rely upon Fentiman on International Commercial Litigation, 2010, at para 11.27: Principle suggests that an amended claim arising from the same facts as the original claim might be consolidated with the original claim for the purposes of Article 30 but not where the facts arose subsequently. In the latter case it does no violence to the expressions 'actions' or 'proceedings' to differentiate the claims. While these expressions of view undoubtedly provide strong support for the respondents submissions, some of them seem to me to be expressed in a somewhat tentative way and I am not sure that the textbook writers grapple with the points made by the appellants on the language of the Regulation. However that may be, as indicated earlier, I am of the opinion that this issue is by no means acte clair and, if the appellants maintain their claim or claims in England for a declaration that the Greek claims fall within the terms of the release in the settlement agreements or that under the agreements the tort claims have been settled, I would refer an appropriate question to the CJEU before forming a concluded view with regard to the applicability to that claim or claims. If they abandon them, I would hold that the respondents are not entitled to a stay under Article 27, refuse them a mandatory stay in respect of all the claims and allow the appellants appeal. Article 28 The question whether those claims which are not within Article 27 should be stayed depends upon whether they should be stayed under Article 28. As stated above, in the exercise of his discretion the judge refused the respondents application for a stay under Article 28. The appellants say that he was right to do so. The respondents case is that the English court was second seised for the purpose of Article 28 and that a stay should be granted as a matter of discretion. Seisin under Article 28 It is plain from the express terms of Article 28(1) that the discretion in Article 28 is limited to any court other than the court first seised. It follows that, if the English court was first seised, it has no discretion to stay. Article 28 moreover applies to related actions pending in the courts of different member states and, by Article 28(3), actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. It is not in dispute in these appeals that the various proceedings are related proceedings for the purposes of Article 28 and I would in any event so hold. The questions remain whether the actions are pending, whether the English court is the court first seised and, if it is not, how the discretion should be exercised. In Stribog the Court of Appeal considered the correct approach to Article 28. It held that two questions arise, namely (1) whether the two sets of proceedings are related, taking account of any amendments which have been made at the time of the enquiry and (2) which set of proceedings were commenced first? Rix LJ expressed the position clearly at paras 119 and 120. He explained that it is only when there are related and pending actions in separate member states that Article 28 comes into issue. The question whether they are related is, as he put it, the Article 28(3) question. He then said: 119. The question of when seisin occurs and thus which of the courts is the court first seised is the article 30 question. FKIs submission in effect seeks to roll the two questions together and ask: which of the two courts is the first to be seised of an action which at the time of its seisin was a related action? This is the concept of the first related action, a concept found in neither article 28 nor article 30. Stribog on the other hand asks: once you have found two related and pending actions and seek to stay one of them, invoking article 28, which of the two courts was the first to achieve seisin of one or other of those actions? 120. In my judgment, the latter question is the correct one, and is to be preferred to the former . See also per Mummery LJ at paras 40 to 44, where he stressed in particular that the question is whether the court concerned is seised of an action and not of a particular issue in an action. He also stressed that the time at which the comparison between the two actions is made is the time of the hearing of the application for the stay. Wilson LJ noted at paras 132 134 that Mummery and Rix LJJ asked the relevant questions in a slightly different order: Mummery LJ asked which court was first seised in a pending action before asking whether the actions were related, whereas Rix LJ preferred to ask them in the reverse order. Wilson LJ said that he did not see why the order matters but that Rix LJ seemed to have the terminology of Article 28 on his side. I agree. The question whether the actions are pending is closely related to the question whether the English court remains first seised. The respondents say that there was no action pending in England when the Greece 1 proceedings were commenced. In the alternative they say that, if the original action is still alive, the English court is not first seised because the claims now brought are entirely new claims, which they say should be equated with new proceedings. I will consider these points in turn. On the first point, the appellants say, by contrast, that the 2006 proceedings are still on foot, and thus pending, having been stayed but not finally concluded. I would accept the appellants submissions. The settlement agreements were in this respect in identical terms. It was a term of them that Starlight would obtain a stay by way of Tomlin Orders. The orders were both in the same terms, which are standard in such cases, and (as quoted in para 7 above) provided that save for the purposes of carrying into effect the terms agreed all further proceedings shall be stayed. It appears to me that, on the true construction of those orders, the actions remained unstayed for the purposes of carrying into effect the terms agreed and were otherwise stayed. As I see it, in so far as the actions remained unstayed, it follows that the court remained seised of them, presumably at least until there was no longer any need for the terms agreed to be carried out. It is plain from the language of Article 28(1) that the court first seised means the court first seised of the action, which must mean first seised of the proceedings, not of particular claims or causes of action within the proceedings. It seems to me to follow that, in so far as the appellants are seeking to enforce the provisions of the settlement agreements, as they are, the English court remains first seised. I arrive at this conclusion by a construction of Article 28(1) and of the Tomlin Order. The appellants were able to pursue these claims without issuing further proceedings. In this regard I would accept the analysis of the judge at paras 24 to 29. I would adopt the analysis of Sir Andrew Morritt V C in Bargain Pages Ltd v Midland Independent Newspapers Ltd [2003] EWHC 1887 (Ch) and I would not follow the reasoning of the Court of Appeal in Hollingsworth v Humphrey, (1987) CAT 1244. What then of the parts of the actions which are stayed under the Tomlin Orders? These would include the claims for breach of the exclusive jurisdiction clauses in the policies of insurance, which do not depend upon the terms of the settlement agreements. The appellants rely upon principles developed by the English courts as a matter of English, not European, law. However, this is in my opinion a permissible approach. Article 30 of the Regulation provides for the circumstances in which a court is deemed to be seised. I recognise of course that the concept of seisin is an autonomous European law device but Article 30 does not make express provision for the circumstances in which it ceases to be seised. In these circumstances, it seems to me to be appropriate for national courts to have regard both to the nature of seisin in European law and to their own procedural rules in deciding whether their courts are no longer seised of a particular set of proceedings. The appellants rely upon the decision of the Court of Appeal in Rofa Sport Management AG v DHLK International (UK) Ltd [1989] 1 WLR 902, where the Court of Appeal held that a stay of proceedings is not equivalent to a dismissal or discontinuance and therefore that an action in which all further proceedings have been stayed, even if by consent of all parties after a settlement, remains in being. See in particular per Neill LJ at 909H to 910D and 911A C. He concluded that, for the sake of clarity and certainty, the word stay in an order should not be treated as a possible equivalent of a dismissal or discontinuance. Although the action cannot continue without an order of the court, nor can it, he said, be regarded as dead in the same way as an action which has been dismissed or discontinued by order. I agree. The reasoning in Rofa supports the conclusion that in circumstances in which the 2006 proceedings have been stayed and not dismissed or discontinued the court remains seised of them. It is not and could not be disputed that the court was seised of the proceedings in accordance with Article 30 when the claim form in the 2006 proceedings was issued. It is not suggested that the appellants failed to take any of the steps referred to in Article 30(1) or (2) which would have nullified that effect. The question is whether anything happened subsequently from which it can be inferred that the court was no longer seised. I would answer that question in the negative. Although Rofa was not a decision on the construction of the Regulation, the correct approach is to consider whether anything occurred which could lead to the conclusion that the approach adopted there should not be applied to the stay incorporated in the Tomlin Orders and, if not, whether there is anything which leads to the conclusion that the court is not still seised of the proceedings. I would answer both those questions in the negative. Although it is true that the CMI settlement agreements contained a provision that, on payment of the settlement sum, the parties would file a consent order dismissing the proceedings, no such consent order was made or filed. The LMI settlement agreement does not contain any such provision. In all these circumstances, I can see no sensible basis upon which it can be said that the English court is no longer seised of the proceedings. There remain significant disputes arising out of the settlement agreements and the insurances. The second point taken on behalf of the respondents under this head is that, even if the original action is still alive, the claims now brought are new claims, which should be equated with, or treated as, new proceedings. They rely upon this dictum of Rix LJ in Stribog at para 129: Seventhly, there is nothing in the ECJ or English jurisprudence to support the judges approach in this case. It is possible that the introduction of entirely new causes of action or parties is to be recognised as the bringing of entirely new proceedings, so that the timing of seisin (the article 30 question) has to be looked at from that point of view, as occurs for the purposes of article 27. Even so, it is not clear to me that in this connection article 27 and article 28 work in the same way: for article 27 is worded in terms of the bringing of actions with the same parties and the same cause of action (Where proceedings are brought in the courts) whereas article 28 is worded in terms of the pendency of related actions (Where related actions are pending in the court) (emphasis added). That emphasises that the article 28 question is asked with relation to pending actions, and not, as the article 27 question is asked, with relation to the bringing of actions. In any event, the judge is in my respectful judgment mistaken to think that any amendment is analogous to the bringing of new causes of action or the addition or substitution of new parties. For my part, I would not accept that approach as applied to Article 28. In para 68 above I referred to the statement of Rix LJ at para 84 of Stribog. In para 63 of his judgment in the instant case Longmore LJ quoted para 84, where Rix LJ said that, where proceedings are amended to add new claims, the court is only seised of the relevant proceedings so far as the new claims are concerned at the time of the amendment. Immediately after the quote, Longmore LJ correctly pointed out that those observations were made in relation to Article 27 and not Article 28. He then quoted the second sentence from the above quotation from para 129 of Rix LJs judgment. Longmore LJ then asked whether this tentative expression of view in relation to "the introduction of entirely new causes of action" being tantamount to "the bringing of entirely new proceedings" means, for the purpose of this case, that the Greek courts are to be regarded as first seised of the relevant related action? He said at para 64 that, in his opinion it did not. He gave two reasons. He said that in the first place Rix LJ had already quoted the passage from the judgment of Saville LJ in The Happy Fellow which I set out in para 66 above. At para 65 Longmore LJ said that, in the second place, Rix LJ provided his tentative response to his tentative view in the remainder of paragraph 129 which he then quoted. That response is to my mind telling. Longmore LJ then expressed his conclusion at para 66. He expressed doubt about Rix LJs distinction between entirely new causes of action as opposed to partially new causes of action. However that may be, his conclusion seems to me to be contained in the last two sentences of para 66: As Saville LJ said in The Happy Fellow it is a misreading of Article 28 to ask which court is first seised of issues; it must likewise be wrong in an Article 28 context to ask which court is first seised of causes of action. That is Article 27 territory because, for the purpose of Article 28, one has to ask which court is first seised of an action, not a cause of action and, still less, an issue. On that basis Longmore LJ concluded at para 67 that, if the original English action and the subsequent Greek actions are related, as he concluded they are, it was the English court that was the court first seised. I agree. First, the contrary view seems to me to be inconsistent with the two stage approach to Article 28 adopted in Stribog. As Longmore LJ observed at para 66, in the context of Article 28 it is wrong in principle to ask which court is first seised of a cause of action, because Article 28 is concerned with related actions as a whole. Secondly, I would accept the appellants submission that on the facts of this case the claims now brought are not (as Rix LJ put it) entirely new. On the contrary, applying the broad and common sense approach favoured by Lord Saville in Sarrio, the claims now brought by the appellants are unquestionably related to the original action within the meaning of Article 28. I would only add in conclusion that it seems to me that it would be very odd indeed if a court which is seised of proceedings and stays those proceedings by way of a Tomlin order on the express terms that it retains jurisdiction to take further steps by way of implementation or policing of the order were prevented from exercising that jurisdiction, either by lifting the stay or otherwise, on the ground that it was no longer seised of the proceedings. It seems to me to be at least arguable that those steps should properly be treated as part of the existing proceedings. They might perhaps be treated as part of the same procedural unit as discussed by the CJEU in Purrucker v Vallz Prez (No 2) (Case C 296/10) [2011] Fam 312 at para 80. The case was on very different facts but was concerned with two paragraphs in a regulation which were identical to Articles 27 and 30 of the Regulation. In any event to treat the enforcement action as something entirely new seems to me to be wrong. It is never easy to decide what is an entirely new claim, what is a new claim and what is an expansion of an old claim. These claims are not new or entirely new because they are brought by way of enforcement of the outcome of the original dispute, in the same way as execution on a money judgment. In these circumstances it makes sense to hold that these claims, which largely arise out of the settlement agreements, arise out of the attempts made by the respondents to avoid the effect of those agreements and, in particular, the exclusive jurisdiction agreements. This solution would, as I see it, be consistent with the overall policy of the Regulation to avoid a multiplicity of proceedings. However, I can see that there is scope for argument under this head and, if the issue of first seised were critical to the decision, it might be appropriate to refer an appropriate question to the CJEU. I therefore turn to the issue of discretion on the assumption that the English court is second seised for the purposes of Article 28. Discretion On that assumption, the question arises whether the action or actions should be stayed as a matter of discretion. The judge held that no such stay should be granted. Given that the shape of the case has changed considerably since the matter was before the judge, it appears to me that this Court should consider for itself whether to grant a stay. I have reached the clear conclusion that it should not. I have reached that conclusion essentially for the reasons advanced on behalf of the appellants. They may be summarised in this way. In Owens Bank Ltd v Bracco (Case C 129/92) [1994] QB 509, at paras 74 79, Advocate General Lenz identified a number of factors which he thought were relevant to the exercise of the discretion. They can I think briefly be summarised in this way. The circumstances of each case are of particular importance but the aim of Article 28 is to avoid parallel proceedings and conflicting decisions. In a case of doubt it would be appropriate to grant a stay. Indeed, he appears to have approved the proposition that there is a strong presumption in favour of a stay. However, he identified three particular factors as being of importance: (1) the extent of the relatedness between the actions and the risk of mutually irreconcilable decisions; (2) the stage reached in each set of proceedings; and (3) the proximity of the courts to the subject matter of the case. In conclusion the Advocate General said at para 79 that it goes without saying that in the exercise of the discretion regard may be had to the question of which court is in the best position to decide a given question. On the facts here those questions can be considered together. As I see it, the issues are not dissimilar from those considered by Cooke J in Primacom at para 65, where he said this: Even if I had found that these two sets of proceedings and the German proceedings were related within the meaning of article 28, 'the strong presumption' which 'lies in favour of the applicant' on an application for a stay would be overridden here by virtue of the terms of the SSFA. Although the ECJ decision in Gasser means that a stay is mandatory where article 27 applies, there is no reason why weight should be given to that decision in the context of article 28, where a discretion is given to the court, the jurisdiction of which has been agreed by the parties as exclusive. It is nothing to the point that an English court could not have issued an anti suit injunction to prevent the German proceedings (as per C 159/02 Turner v Grovit [[2005] 1 AC 101]). The injustice of giving precedence to proceedings brought in breach of an exclusive jurisdiction clause where the parties have agreed that England is the appropriate forum is self evident. To breach the clause and to gain the benefit of priority for the German courts by such breach offends justice, where the court has a discretionary decision to make. In my opinion, similar considerations apply here. Although the true construction of the settlement agreements and the question whether Starlight and OME are in breach of them is ultimately a matter for the court which finally determines the summary judgment application or for the court at trial, there is a strong argument (to put it no higher) that the Greek proceedings have been brought by Starlight and OME in breach of the settlement agreements, which are subject to the exclusive jurisdiction of the English courts and/or in breach of the exclusive jurisdiction clauses in the insurance contracts. I would reject the submission that those considerations are impermissible in the light of the decision in Gasser. It was there held that, if the criteria for ordering a mandatory stay under Article 27 are satisfied, then the court second seised must stay its proceedings even if the court second seised has jurisdiction under an exclusive jurisdiction clause falling within Article 23. That conclusion was reached on the basis that, under Article 27, where there are two sets of proceedings which involve the same cause of action and the same parties, the court second seised is obliged to order a stay. The Regulation only permits one set of proceedings to continue. The position is quite different under Article 28, which clearly contemplates that where there are two related sets of proceedings they may proceed in parallel. That conclusion follows from the proposition that the grant of a stay is discretionary and not mandatory. In these circumstances, I can see no reason why, in exercising that discretion under Article 28, the court second seised should not take into account the fact that the parties had previously agreed (or arguably agreed) an exclusive jurisdiction clause in favour of that court. On the contrary, depending upon the circumstances of the particular case, that seems to me to be likely to be a powerful factor in support of refusal of a stay. After all, Recital 14 expressly provides: The autonomy of the parties to a contract, other than an insurance, consumer or employment contract, where only limited autonomy to determine the courts having jurisdiction is allowed, must be respected subject to the exclusive grounds of jurisdiction laid down in this Regulation. There is a close relationship between the claims in England and the subject matter of the claims in Greece. The natural court to consider the issues raised by the CMI and the LMI is the High Court in England because they raise contractual questions governed by English law and because it is at least arguable that the parties have agreed that they should be decided by the High Court, where the proceedings are more advanced than in Greece. After all, the judge granted summary judgment as long ago as December 2011. The court in Greece will then have the benefit of the decision of the court which, in the Advocate Generals language, is in the best position to decide these issues. Once there is a final judgment of the English courts, it will be recognisable in Greece, as elsewhere in the EU and will assist the Greek court. In this way, the principles of mutual trust upon which the Regulation is founded will be respected and there will be no risk of irreconcilable judgments. In these circumstances I would uphold the decision of the judge in refusing a stay under Article 28. There is no need for a reference to the CJEU because the question I would have referred does not arise given my conclusion on the exercise of discretion. It was at one time suggested that there is a referable question as to whether Article 28 gives the court second seised a choice between staying the proceedings under Article 28(1) and declining jurisdiction under Article 28(2). However, that suggestion was abandoned before the hearing. I would in any event have rejected it as unarguable. There is no support whatever for it in the language of Article 28 and none of the sources referred to supports the conclusion. The discretion is to stay or not to stay under Article 28(1) and to decline or not to decline jurisdiction under Article 28(2). The Court may thus both refuse to stay and refuse to decline jurisdiction. As the Advocate General explained in Bracco, all depends upon the circumstances. Too late? The remaining question is whether the Court of Appeal was wrong to reject submissions made on behalf of the appellants that it was too late for the respondents to rely upon Article 27. This is another part of the case where the facts seem to me to be startling. The appeal on this point is brought by the LMI and not the CMI but it is I think accepted that, if the appeal succeeds, the CMI will be able to take advantage of it. The most important point raised by this part of the appeal is whether the courts had a discretion to hold that the LMI should not be permitted to rely upon various procedural acts and omissions on the part of the respondents in response to their attempt at a late stage to rely upon Article 27 of the Regulation or whether, once the point was brought to its attention, the Court of Appeal was bound to consider Article 27 (as quoted at para 24 above) because it expressly provides that, where the conditions are satisfied any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established. I have reached the conclusion that the answer is that the appellants were entitled to rely upon the acts or omissions of the respondents and that, having regard to what had happened before Judge Mackie QC and the judge, the Court of Appeal was not bound to take the point of its own motion. Moreover, subject to a possible reference, I would hold that the Court of Appeal should have considered the acts or omissions of the respondents and have held that it was too late for the respondents to rely upon Article 27. The question of the scope of the Court of Appeals duty to take the point of its own motion in circumstances of this kind is however an important point on the construction of Article 27 and, if it were necessary for the determination of the appeal, I would refer it to the CJEU. However, if the LMI abandon their claim or claims for a declaration of non liability a reference will not be necessary for the determination of the appeal. If they do not, my present view is that it will. The relevant chronology, which I take from the Statement of Facts and Issues, is briefly as follows. I will omit references to the CMI proceedings, in which the applications were heard at the same time as those in the LMI proceedings. By application notice dated 3 August 2011, the LMI applied for wide ranging relief against Starlight to enforce the LMI settlement agreement. By application notice dated 18 August 2011 the LMI sought permission to join OME and to serve OME out of the jurisdiction. As explained earlier, the LMI commenced 2011 Folio 702 against Starlight and OME in order to enforce the LMI settlement agreement. They also commenced 2011 Folio 1043 only against the co assureds, which was an action founded solely on the exclusive jurisdiction clause in the policies. On 20 September 2011 the LMI obtained permission from Judge Mackie QC to issue a Part 20 claim against OME in 2006 Folio 815 and, lest it be needed, to serve that Part 20 claim form and the claim forms in 2011 Folios 702 and 1043 out of the jurisdiction and to serve them on Lax & Co in London. The applications were supported by a witness statement by their solicitor, Mr Zavos, in which he referred both to possible stays under Article 27 and Article 28 giving reasons why stays should not be granted. The orders gave notice to each of Starlight, OME and the co assureds that: You may apply within seven days after the date of service of this Order on you to have the Order set aside or varied. This time limit does not apply to an application to dispute the jurisdiction of the Court in respect of which the procedure in CPR Part 11 as modified by CPR Part 58 applies No such application was made. Starlight did not serve evidence within the time provided in the CPR. However, on 4 November 2011 they served evidence which included an express request by Mr Crampton of Lax & Co that the relief sought by the appellants on the merits be denied, alternatively that the matter be referred to a full trial, with provision for disclosure and exchange of witness and expert evidence. On 7 November Starlight, OME and the co assureds each filed a defence on the merits in the relevant action, having first obtained an extension of time for doing so. Each of the defences included a paragraph which stated: The claims in the Greek Proceedings fall outside the jurisdiction clause in the policy and the jurisdiction clause in the Settlement Agreement. It is respectfully denied therefore that the High Court of Justice of England and Wales has jurisdiction to determine the claims in the Greek Proceedings The grounds on which Starlight, OME and the co assureds opposed the appellants claims and applications for summary relief, were in summary that the claims brought in the Greek proceedings (1) did not fall within the scope of the releases contained in the LMI settlement agreement or the CMI settlement agreement; (2) did not fall within the scope of the indemnities contained in the settlement agreements; and (3) did not fall within the scope of the jurisdiction clauses contained in the settlement agreements or in the policies. Following service of the defences, the LMI applied for summary judgment in all the actions and all the applications were fixed to be heard on 28 and 29 November at the same time as the application for summary relief against Starlight in the 2006 proceedings. In their skeleton argument prepared for those hearings, which were served on 23 November 2011, the LMI included the following: 71. There has been no application for a mandatory stay under Article 27 of the Judgments Regulation in respect of the [LMIs] claims to enforce the jurisdiction clause in the contract of insurance, and to enforce the terms of the [LMI] Settlement Agreement. This is (no doubt) because the claims are different claims from the claims advanced by the Assureds in Greece. On 25 November 2011, Starlight, OME, and the co assureds, through their former counsel, James Drake QC and Emma Hilliard, provided their skeleton argument to the court, which expressly disavowed any application under Article 27, in these terms: 69. It is well established that in order for Article 27 to operate there must, when comparing the two sets of proceedings in issue, be three identities: of parties, of cause, and of objet: see generally Briggs & Rees, Civil Jurisdiction and Judgments (5th ed 2009) at paras 2 227 to 2 231. 70. Starlight does not here contend that there is here an identity of cause and objet between the Greek proceedings and the Insurers applications. Although designed to preclude in so far as possible, and from the outset a clash of verdicts, the operation of Article 27 (as distinct from Article 28) is highly restricted in its actual operation. Comparison must be made between the claims made in the two actions, regardless of possible defences, to see whether they proceed on essentially the same facts and under the same rule of law. In the footnotes they referred to the cases I have discussed earlier, including Gubisch, Gantner and The Tatry. It is thus plain that before the matter came before the judge the respondents had made a clear and reasoned decision not to rely upon Article 27. Moreover, there is no reason to think that the judge did not consider the points they made and accept them. They relied only on Article 28. They did so pursuant to an application made by application notice dated 24 November 2011. However that application was out of time. So, by further application notices in each action dated 28 November 2011, the respondents applied for permission to make the Article 28 application out of time, and for relief from sanctions pursuant to CPR Part 3. The sanction referred to was that imposed by CPR Part 11, which provides that a defendant who files an acknowledgment of service and fails to apply to the court within the time allowed under the CPR for an order declaring that it has no jurisdiction or should not exercise any jurisdiction which it may have, is to be treated as having accepted that the court has jurisdiction to try the claim: CPR rule 11(5). As stated in para 19 above, the judge dismissed the stay application under Article 28 and held that the appellants were entitled to summary judgment. He held that (1) each of the claims made by Starlight, OME, and the co assureds against the appellants in Greece is in breach of the exclusive English jurisdiction agreement in the policies; (2) each of the claims made by Starlight and OME against the appellants in Greece is in breach of the jurisdiction agreements in the settlement agreements which provide for exclusive English jurisdiction; (3) each of the claims made by Starlight and OME against the appellants in Greece is in breach of the terms of the settlement agreements; (4) each of Starlight, OME and the co assureds is liable in damages to the insurers for breach of contract and under Section 50 of the Senior Courts Act 1981; and (5) each of Starlight and OME is bound to indemnify and hold the insurers harmless against each of the claims in the Greek proceedings pursuant to the indemnities in the settlement agreements. The judge handed down his judgment on 19 December 2011 and fixed 2 February 2012 for the hearing of consequential applications. In the meantime, on 7 December 2011 Thomas Cooper had replaced Lax & Co as the respondents solicitors. On 24 January 2012 draft grounds of appeal were served which included for the first time reliance on Article 27. They were considered in a somewhat amended form by the judge. The judge granted permission to appeal on a number of grounds including the Article 27 point. As to that he said that he would not have given permission on that point alone, as he put it, not least because the Article 27 case could become the subject of an independent application at first instance at any time hereafter. He recognised that this would have the effect of turning the Court of Appeal into a first instance court but concluded that it could be argued without the need for further evidence and without a great addition of time. In the Court of Appeal the appellants relied upon the provisions of CPR Part 11, but the Court of Appeal held that it did not apply because applications under Articles 27 and 28 are not challenges to the jurisdiction. It further held that it was bound to take the Article 27 point of its own motion. The LMI say that the Court of Appeal was wrong on both points. CPR Part 11 provides, so far as relevant as follows: (1) A defendant who wishes to (a) dispute the court's jurisdiction to try the claim; or (b) argue that the court should not exercise its jurisdiction, may apply to the court for an order declaring that it has no such jurisdiction or; should not exercise any jurisdiction which it may have. (2) A defendant who wishes to make such an application must first file an acknowledgment of service in accordance with Part 10. (3) A defendant who files an acknowledgment of service does not, by doing so, lose any right that he may have to dispute the courts jurisdiction. (4) An application under this rule must (a) be made within 14 days after filing an acknowledgment of service; and (b) be supported by evidence. (5) If the defendant (a) files an acknowledgment of service; and (b) does not make such an application within the period specified in paragraph (4), he is to be treated as having accepted that the court has jurisdiction to try the claim. (6) An order containing a declaration that the court has no jurisdiction or will not exercise its jurisdiction may also make further provision including (a) setting aside the claim form; (b) setting aside service of the claim form; (c) discharging any order made before the claim was commenced or before the claim form was served; and (d) staying the proceedings. In an action in the Commercial Court such as this CPR 11(4) is varied by CPR 58.7(2) so that the application under CPR 11(1) must be made within 28 days after filing an acknowledgment of service and not 14 days. As I understand it acknowledgments of service were filed in each case. The position under CPR Part 11 is different from the position under the former Rules of the Supreme Court, under which the equivalent rule, namely RSC Order 12 rule 8(1), did not include an application for a stay. By contrast CPR 11(1)(b) applies to an application for an order that the court should not exercise its jurisdiction. An application for a stay is precisely that. An application for a stay under Article 27 is thus an application within CPR 11(1)(b). The applicant must file an acknowledgment of service and must make an application within 28 days. The respondents did not do that. Nor did they seek an extension of time to so do within the CPR. It is arguable that the effect of CPR 11(5) is that their failure to do so means that they are treated as accepting that the court both has jurisdiction and that it is free to exercise it. The difficulty is that the wording of paragraph (5) may only relate to the existence of the jurisdiction rather than the exercise of it. This point was left open in Texan Management Ltd v Pacific Electric Wire & Cable Company Ltd [2009] UKPC 46 at paras 68 and 69. However that may be, the LMI rely upon the voluntary submission to the jurisdiction evidenced by the acknowledgment of service and the service of a defence. They also rely upon the clear and unequivocal statement of the respondents position in their skeleton argument before the judge. It is plain from the terms of the concession quoted at para 106 above that serious thought had been given to the question both of whether to make the concession and of the basis on which it was to be made. In these circumstances, unless there is some rule of European law to the contrary, it appears to me that the Court of Appeal should have considered whether, in the exercise of their discretion to permit argument on a new point, they should exercise that discretion in favour of the respondents or not. Moreover, it appears to me that, given the clear basis on which the concession was made and, given that the judgment had proceeded on that basis, the Court of Appeal should have held that it had a discretion under CPR rule 11(1) to permit an application under the rule to be made out of time but should have refused to exercise it. However it is said that on the true construction of Article 27, the court, including on these facts the Court of Appeal, has a duty to consider the application of Article 27 of its own motion whenever the point is taken. This strikes me as extremely improbable. I would accept the submissions of the LMI in this respect. The CJEU has recognised the importance of national rules of procedure. Thus, for example, in Shevill v Presse Alliance SA (Case C 69/93) [1995] 2 AC 18 the CJEU said: 35. the object of the [Brussels] Convention is not to unify the rules of substantive law and of procedure of the different contracting states, but to determine which court has jurisdiction in disputes relating to civil and commercial matters in relations between the contracting states and to facilitate the enforcement of judgments: see Kongress Agentur Hagen G.m.b.H vs Zeehaghe B.V. (Case C 365/88) [1990] E.C.R. 1 1845, 1865, para. 17. 36. Moreover, the court has consistently held that, as regards procedural rules, reference must be made to the national rules applicable by the national court, provided that the application of those rules does not impair the effectiveness of the Convention: paragraphs 19 and 20 of [Kongress Agentur Hagen G.m.b.H. vs Zeehaghe B.V. (Case C 365/88) [1990] E.C.R. 1 1845]." I would accept the LMIs submission that Article 27 is part of European law and overrides national law which is incompatible with it. It does not however follow from this proposition that English procedural rules were overridden. A national procedural rule must not impair the effectiveness of Article 27. It must not render the exercise of rights conferred by EU law impossible or excessively difficult: Amministrazione delle Finanze dello Stato v SpA San Giorgio (Case 199/82) [1983] ECR 3595, [1985] 2 CMLR 658. This is the principle of effectiveness, which involves considering whether the rule can operate consistently with Article 27, or whether it is incompatible with it. The procedural rule should not be less favourable than those governing similar domestic actions, which is the principle of equivalence: see eg Interfact Ltd v Liverpool City Council [2011] QB 744, Kapferer v Schlank and Schlick GmbH (Case C 234/04) [2006] ECR I 2585 at paras 19 to 22, Kbler v Austria (Case C 224/01) [2004] QB 848; and Eco Swiss China Time Ltd v Benetton International NV (Case C 126/97) [1999] ECR I 3055. I refer only to Interfact, where the Court of Appeal refused to exercise its discretion to allow cases to be reopened under CPR 52.17, so as to give a remedy for infringement of a provision of European law. Lord Judge CJ, delivering the judgment of the Court of Appeal, said : 41 In general, EU law does not require national courts to disapply their own procedural rules in order to secure the vindication of EU rights. In Kapferer v Schlank & Schick GmbH the Austrian Supreme Court was seised of an appeal in which the respondent had failed to lodge within the time stipulated a respondent's notice taking a point on jurisdiction under the Brussels Convention. The court referred to the Court of Justice the questions whether it was, nevertheless, bound to take the point of EU law of its own motion and whether EU law required a national court to review and set aside a final judicial decision in circumstances where it later became apparent that the decision of the court was in breach of EU law. The Court of Justice held that a national court is not so bound 44 . [Kapferer] establishes as a matter of general principle that EU law does not require a national court to reopen a final judicial decision, even if failure to do so would make it impossible to remedy an infringement of a provision of EU law: see the Kapferer case, at para 21; Amministrazione dell'Economia e delle Finanze and Agenzia delle Entrate v Fallimento Olimpiclub Srl (Case C 2/08) [2009] ECR I 7501, para 23; Asturcom Telecommunicaciones SL v Rodrguez Nogueira (Case C 40/08) [2010] 1 CMLR 865 para 37. 49. The Court of Justice has upheld national time limits and limitation periods on grounds of legal certainty and the need to ensure finality in decision making, even though the effect has been to preclude enforcement of an EU law right: see, for example, Palmisani v Istituto Nazionale della Previdenza Sociale (INPS) (Case C 261/95) [1997] ECR I 4025; Fantask A/S v Industriministeriet (Ehrvervsministeriet) (Case C 188/95) [1997] ECR 1 6783. Finally, I would accept these submissions made by the LMI. Under English law a final judgment on the merits should not be set aside without very solid grounds: Brown v Dean [1910] AC 373 at 374, per Lord Loreburn. Interest republicae ut sit finis litium. This is part of the common tradition of the legal systems of the Member States: Rewe Zentralfinanz eG and Rewe Zentral AG v Landwirtschaftskammer fr das Saarland (Case C 33/76) [1976] E.C.R. 1989. As quoted above, in Interfact the Court of Appeal rejected the argument that, where an appellate court has a discretion to exercise under national procedural law to allow a final judgment to be challenged on appeal, it must exercise that discretion so as to remedy the infringement of EU law. In my judgment, there is no sensible basis upon which it can be said that the time limit under CPR 11(4), which can in an appropriate case be extended under CPR 3.1(2)(a), is contrary to EU law. The time limit satisfies the principle of equivalence because it is the same rule that applies in all cases. It fulfils a legitimate aim, namely making sure that points going to whether the proceedings are to be tried on their substantive merits in England are taken promptly and without unnecessary costs. It satisfies the principle of legal certainty because parties need to know where they stand. The absence of a time limit would allow a litigant to take the point years afterwards. Moreover, the time limit does not render the right to apply for a stay under Article 27 (or Article 28) impossible or excessively difficult to exercise. It allows sufficient time for the point to be raised, especially given the express rule permitting an extension of time in appropriate cases. As to the expression of its own motion in Article 27, there are a number of different parts of the Regulation that have a similar provision. On the facts here the potential for a stay under Article 27 was before the courts on at least two occasions. The position was explained to Judge Mackie QC on the without notice application referred to above. There is no reason to think that he did not give consideration to the position. More importantly perhaps the position was explained to the judge in the skeleton arguments to which I have referred. He was given both reasons and authority on the question whether a stay should be granted under Article 27. It seems to me that the judge was entitled to accept those submissions, which were made on the respondents behalf by experienced counsel and solicitors. For these reasons I would hold that the Court of Appeal should have refused to allow the respondents to rely upon Article 27 in the Court of Appeal. That said, I would accept that the meaning and effect of the duty to consider Article 27 of its own motion are matters of some potential importance and I have (somewhat reluctantly) reached the conclusion that they are not acte clair. I would therefore refer an appropriate question to the CJEU if it were necessary in order to resolve the appeal. If the appellants abandon the claims to the declarations referred to in paras 58 and 59 above, such a reference will not be necessary because, for the reasons given above, I would allow the appeals under Article 27 in their entirety. It seems to me that rather different considerations apply to Article 28 and that the Court of Appeal were entitled to consider Article 28 as part of the appeal from the decision of the judge who had considered it in detail. CONCLUSIONS For these reasons I would invite the CMI and the LMI to consider whether they wish to pursue their claims for declarations (referred to in paras 58 and 59 above) that the Greek claims fall within the terms of the release in the settlement agreements or that under the agreements the tort claims have been settled. As Lord Neuberger observes, those are the claims described in para 18(a)(1)(i), 18(a)(2)(i) and 18(b)(i) above. They should indicate their position within 14 days of this judgment being handed down. If they persist in their claims, some limited questions should be referred to the CJEU as described above. The decision whether to stay those claims would then await the result of the reference, although I would allow the appeal under Article 27 in respect of the other claims. If they abandon them, I would allow all the appeals of both the CMI and the LMI under Article 27. I would in any event dismiss the respondents cross appeal under Article 28 and I would hold that their application for a stay under Article 28 should be refused as a matter of discretion. The parties should make written submissions on the form of order and costs within 21 days of the handing down of this judgment. Finally, I would like to thank all counsel and solicitors for their assistance in this unusual and in some respects difficult case. LORD NEUBERGER Subject to one point, I entirely agree with Lord Clarkes reasoning and conclusions. The one point concerns the issue discussed in paras 44 46 and 58 59 of Lord Clarkes judgment and in Lord Mances judgment. That issue is whether (i) LMIs claim in England for a declaration that the Greek claims have been settled, and (ii) CMIs claim in England for a declaration that the Greek claims were compromised (the English declaration claims, described in para 18(a)(1)(i), 18(a)(2)(i) and 18(b)(i) of Lord Clarkes judgment) should be stayed under Article 27. In my view, if that issue remains live, it should be referred to the CJEU, as I do not regard it as acte clair. I see the force of Lord Clarkes view that the English declaration claims do not have le mme objet et la mme cause, if one gives that expression a very narrow effect. I also accept that, particularly in the light of the existence of Article 28, there is good reason to give Article 27 a relatively narrow meaning, as Rix J pointed out in Glencore International AG v Shell International Trading and Shipping Co Ltd [1999] 2 Lloyds Rep 692, 697. I also accept that the decisions of the CJEU cited by Lord Clarke at paras 26 28 of his judgment support the contention that Article 27 has a relatively narrow ambit of application. However, it is also important to appreciate that the fundamental purpose of Article 27, as explained by the CJEU, is to ensure that judgments obtained in one member state are enforceable in other member states, and that the consequence of this is that one should avoid mutually inconsistent judgments. The purpose of Article 27 is to help achieve that end. It seems to me that, if the Greek court were to give Starlight and OME judgment for a particular sum in respect of its Greek claims, and the English court were to give judgment in favour of LMI and CMI in the form of a declaration that those very claims have been settled or compromised, the two judgments would be incompatible as a matter of principle and logic. It is not possible for a court to award a claimant damages in respect of a claim which has been compromised with the defendant. To put the point another way, to say that a defendant currently owes a claimant damages in respect of a claim which the defendant has settled or compromised with the claimant involves an illogicality. Accordingly, it seems to me that there is a real case for saying that the English declaration claims should be stayed. The difference between the English declaration claims and CMIs and LMIs claims in England for an indemnity and damages for breach of the settlement agreements (the English indemnity and damages claims, as described in paras 18(a)(1)(iii), (v) and (vi), 18(a)(2)(iii) and (iv) and 18(b)(ii), (iii) and (iv) of Lord Clarkes judgment) may appear to be relatively small, but I believe that there is a crucial distinction, as a result of which it is acte clair that the English damages and indemnity claims do not fall foul of Article 27. The crucial difference is that, if those claims were successful, they could not lead to inconsistent judgments in England and Greece. I accept that, if they were successful, the English indemnity and damages claims could be fairly said to neutralise, at any rate in commercial terms, any benefit to Starlight and OME of a judgment in the Greek claims. However, crucially in my view, success for LMI and CMI in the English indemnity and damages claims would not be logically inconsistent in any way with success for Starlight in the Greek claims. It is not inconsistent (although it is commercially pointless) to say that a defendant is liable to pay a claimant a sum by way of damages, while the claimant is bound to indemnify the defendant in respect of the whole of that sum (or is bound to pay an equivalent sum to the defendant). Indeed, the indemnity is not merely logically consistent with the liability: it is positively meaningless without the liability for damages, and the liability for damages, though rendered nugatory by the indemnity, is not logically inconsistent with the indemnity. LORD MANCE General I am in substantial but not complete agreement with the reasoning and conclusions reached in the course of the judgment prepared by Lord Clarke, although, ultimately, as will appear, we agree on the proper disposition of these appeals. The differences between Lord Clarke and myself relate to the significance and operation of article 27 of the Council Regulation (EC) No 44/2001 (the Brussels Regulation) with regard to the respondents Greek claims. I have no difficulty in agreeing with Lord Clarkes conclusions regarding the English claims made by CMI and LMI for damages for (i) breach of the exclusive jurisdiction clauses in the Settlement Agreements and insurance policies and (ii) indemnity under clauses 3 and 4 of the respective Settlement Agreements. Such claims do not assert that there is no tort liability because of the Settlement Agreements. They assert (i) that the respondents are claiming in the wrong jurisdiction and (ii) that the respondents have agreed to indemnify them in respect of any tort claims (valid or not) by the respondents themselves as well as by others arising from the loss of the vessel. However, I do not accept the reasoning by which Lord Clarke reaches his conclusions with regard to these claims for damages and the further release claims (as Lord Clarke conveniently calls them) which he addresses in paras 40 to 59 of his judgment. This difference becomes important in relation to the first head of the release claims, as I shall show. One strand of Lord Clarkes reasoning is that the English claims based on the Settlement Agreements cannot be the mirror image of the Greek tort claims, because they involve contract and tort claims and cannot constitute the same cause of action: para 34, third sentence, para 41, second and third sentences and para 43, second and last sentences. Another strand is that it is relevant or conclusive that the English and Greek claims do not interfere with each other, and, in particular, that the Greek claims do not impugn the settlement agreements: para 35, first and second sentences and para 37, in its entirety. Neither of these strands of reasoning is in my opinion sustainable, for reasons which I will explain. The release claims The release claims need a little analysis. There are three heads. The first head is summarised by the respondents themselves and by Lord Clarke (para 18(a)) as involving claims for declarations that the Greek claims fall within the terms of the release. But this head is in fact pleaded by LMI as a claim for a declaration that the Greek claims have been settled (application notice, para (1) 1 and 3), while CMI plead that the Greek claims were compromised (particulars of additional claim, para 10) and follow this with a claim for a declaration that the Greek claims fall within clause 2 of the CMI Settlement Agreement (particulars of additional claim, para 27(a)). These are clear statements (right or wrong as they may prove to be) that the Greek claims have been settled or compromised within the terms of the Settlement Agreements. The second and third heads are claims for a declaration that the bringing of the Greek claims was a breach of the release in each of the Settlement Agreements and for damages for such breach. They must stand or fall together. They raise different considerations from the first head. The first head of release claim The English claims that the Greek claims have been settled or were compromised are in my opinion mirror images of the Greek tort claims. The English pleas mean, and can only mean that the English claimants are not liable for the Greek tort claims. The legal effect of these English statements is (under English eyes and, I am confident, European law) that the Greek claims are no more. If an English court were to give a judgment to that effect, and there was no prior Greek judgment or other reason for non recognition, the Greek court ought under the Brussels Regulation to accept it. It cannot make any difference to the application of article 27 that the reason for non liability is a contractual settlement agreement. The only point of enforcing the contract is to show that there are no valid Greek tort claims. The Greek claims aim to enforce tort liabilities. The first head of the English claims aims to establish that there are no such valid tort liabilities, because they have been settled. The Greek and English claims cannot stand together. The concepts used in article 27 (such as cause of action or the concept of same object which one must read into the English text) are autonomous European concepts: Gubisch v Palumbo Case 144/86, [11] and The Tatry Case C 406/92, [47]. In the latter case, the European Court of Justice said that the cause of action comprises the facts and the rule of law relied on as the basis of the action and that the object of the action for the purposes of article [27] means the end the action has in view [39] [41]. An analysis of the cases helps to understand what was meant. Gubisch v Palumbo happened to concern a situation where the mirror image claims were in a general sense contractual. The German claim was for the price of machinery delivered. The later Italian claim by the buyer was, firstly, that there was no liability because he had revoked his offer before it had reached the seller for acceptance strictly, this was not a contractual claim, but a claim that there was no contract and, secondly, that, if there was a contract, his consent was vitiated and the contract should be set aside for mistake or on the ground of the sellers fraud, or, thirdly, that any contract had been discharged on account of the sellers late delivery. Both the question referred and the Court of Justices summary of the facts embraced all three aspects of the Italian claim: see e.g. judgment [2] and [4]. The subsequent reasoning and the answer given refer to mirror image claims, one seeking enforcement, the other seeking rescission or discharge, of a contract: see [13] and [15] and the Courts answer. The Court said [17] that it must be held that the two actions have the same subject matter, for that concept cannot be restricted so as to mean two claims which are entirely identical. The absence of express reference at these points to the first Italian claim (that no contract had ever been concluded) cannot mean that the Court was drawing any distinction between that claim and the other two. On the contrary, the inference is that it saw it as posing no different issue. It could not have made any difference to the Court of Justices conclusions if, instead of or in addition to some or all of the pleas actually made in the Italian proceedings, the Italian claimants had alleged that the contract had been rescinded or discharged under some separate subsequent agreement, whether, for example, by novation or by some compromise relating to the parties past dealings or outstanding issues. Nor, in a situation in which concurrent contract and tort claims are possible (see e.g. Henderson v Merrett Syndicates Ltd [1994] UKHL 5; [1995] 2 AC 145), could it be crucial to the application of article 27 whether the foreign claim was being pursued in contract or tort, when the later English claim asserted a settlement agreement wide enough to cover both. Lord Clarke cites at para 28(iii) a useful encapsulation by Cooke J in JP Morgan Europe Ltd v Primacom AG [2005] 2 Lloyds Rep 665, [42], of the meaning of the expression legal rule or rule of law which the Court of Justice used in The Tatry Case C 406/92, [39]. Cooke J suggested that, in investigating cause, it was necessary, after looking at the basic facts, to look at the basic claimed rights and obligations of the parties. Here, the basic claimed rights and obligations of the parties are, in Greece, that the English claimants are liable in tort, and, in England, under the first head which asserts that the Greek claims have been settled, that there is no or no further liability for the Greek claims. The way in which article 27 was applied in The Tatry is also of interest. Having said that the cause of action comprises the facts and the rule of law relied on as the basis of the action [39], the Court of Justice went on: 40 Consequently, an action for a declaration of non liability, such as that brought in the main proceedings in this case by the shipowners, and another action, such as that brought subsequently by the cargo owners on the basis of shipping contracts which are separate but in identical terms, concerning the same cargo transported in bulk and damaged in the same circumstances, have the same cause of action. Here, the English claim that the Greek claims fall within the release and have been settled or compromised concerns, and seeks to negative, the same tort claims as the Greek actions seek to enforce. It can make no difference that the Greek claimants have not sought, pre emptively, to refer to, address or impugn in their Greek claims a possible defence (the Settlement Agreements) that might be raised in the Greek proceedings. One would not expect them to do so, any more than the German claimants in Gubisch v Palumbo addressed or would be expected to address every or any of the multiple arguments that the Italian claimants later deployed. The fact that the English claims do not seek directly to interfere with the Greek claims is also irrelevant. It would anyway be impermissible to claim in England an injunction restraining the Greek proceedings, but, quite apart from that, article 27 and the principle in Gubisch v Palumbo do not depend upon one set of proceedings seeking directly to prevent another. They derive from the principle that Member States must recognise each others judgments, and the aim of avoiding inconsistent judgments. As to the same object, the end which the Greek and English proceedings have in view is the same in each case, to decide the issue of liability for the torts alleged in Greece. That this is what is meant by the same object is clear from both Gubisch v Palumbo and The Tatry. The matter is directly addressed in the latter case in paras 42 to 45: 42 The question accordingly arises whether two actions have the same object when the first seeks a declaration that the plaintiff is not liable for damage as claimed by the defendants, while the second, commenced subsequently by those defendants, seeks on the contrary to have the plaintiff in the first action held liable for causing loss and ordered to pay damages. 43 As to liability, the second action has the same object as the first, since the issue of liability is central to both actions. The fact that the plaintiff's pleadings are couched in negative terms in the first action whereas in the second action they are couched in positive terms by the defendant, who has become plaintiff, does not make the object of the dispute different. 44 As to damages, the pleas in the second action are the natural consequence of those relating to the finding of liability and thus do not alter the principal object of the action. Furthermore, the fact that a party seeks a declaration that he is not liable for loss implies that he disputes any obligation to pay damages. 45 In those circumstances, the answer to the fifth question is that, on a proper construction of Article 21 of the Convention, an action seeking to have the defendant held liable for causing loss and ordered to pay damages has the same cause of action and the same object as earlier proceedings brought by that defendant seeking a declaration that he is not liable for that loss. The reference in [44] to a partys claim for a declaration of non liability implying that it disputes any obligation to pay damages is equally applicable to the present English claims that the Greek tort claims fall within the release or have been settled or compromised. The English claims imply that the Greek claims are disputed. In short, the issue of liability is central to both the Greek and the English proceedings here, as it was to the Dutch and English proceedings in The Tatry. Not merely the same cause of action but also the same object is involved in the present case, as it was in The Tatry. The two sets of proceedings would, if pursued to judgment, lead to judgments which were legally and directly incompatible. It is therefore necessary under article 27 to consider whether it is the Greek or the English courts which fall in this connection to be regarded as first seised. The second and third heads of the release claims The second and third heads are more elusive. Claims for a declaration that the bringing of the Greek claims was a breach, and for damages for the breach, of the release in the Settlement Agreements may on one view be seen as little different from the claims made under the first head. But I have come to the conclusion that this would be wrong. The second and third heads postulate, and for present purposes at least we must accept, that the releases contain some positive continuing promise which the respondents by their Greek claims are now breaching. The terms of the releases were in each case (clause 2 in the case of CMI, clause 3 in the case of LMI) that the respondents would accept underwriters due proportion of the relevant payment in full and final settlement of all and any claims it may have under Policy no. against the Underwriters in relation to the loss of Alexandros T. One must make the assumption, for present purposes, that the Greek tort claims fall within this agreement. The difficulty is that the agreement was performed, in the sense that there was not merely an accord, but an accord and satisfaction. All policy claims were thus not just agreed to be settled, but they actually were settled, and, if and to the extent that that is the nature of the second and third heads of English release claim, they would not in reality differ from the first head. The question therefore arises, what if any outstanding promise could there be left to perform which the second and third heads claim to enforce? I have come to the conclusion that the acceptance of the sums paid in full and final settlement involves, certainly very arguably, a continuing outstanding promise not further to pursue claims of the nature identified in clauses 2 and 3 respectively. Even after the settlement, the pursuit of such claims could cause CMI and LMI loss. Most obviously, such loss could consist in the costs of defending the Greek claims. If they let the Greek proceedings go undefended, it could, subject to issues arising from the potential recognition of any Greek judgment under the Brussels Regulation, include the amount of any judgment awarded against them in the Greek proceedings. Likewise potentially, though subject to additional questions arising from any potential issue estoppel or application of the rule in Henderson v Henderson (1843) 3 Hare 100, even if they unsuccessfully defended the Greek claims. The consequences Accordingly, the second and third heads of release claims, analysed as I have analysed them, are outside the scope of article 27. As regards the first head, the remaining issue is whether the Greek or the English courts fall for the relevant purpose to be regarded as first seised. In so far as the first head of release claims was added into the pre existing English proceedings by an amendment made after the Greek proceedings were begun, is it to be viewed discretely as a new claim of which the English court is second seised? Or does it fall to be viewed as part, by amendment, of a single set of English proceedings commenced well before any Greek proceedings? I agree with Lord Clarke at para 60 that a court is only seised of claims by or against new parties from the date that those parties are added to the proceedings. In relation to the 2006 proceedings, the English court was only seised of claims against OME once OME was joined to the proceedings on 20 September 2011 and, as against OME therefore, the English courts were only seised of the first head of release claims made by CMI and LMI in 2011. Since the first head of release claims is in my opinion the mirror image of the Greek tort claims, article 27 must, on that basis, apply to preclude the pursuit of the first head of release claims as against OME in England. The respondents submit that article 27 also applies to preclude the pursuit in the English proceedings of the first head of claim against Starlight, which was party to the English proceedings from their outset. The Court of Appeal accepted this submission. CMI and LMI challenge it. Lord Clarke has in his paras 61 to 71 set out and discussed the respective submissions. To my mind, the sense of the Regulation as well as the case law and the academic guidance all point in one direction. The chronological priority contemplated by the Regulation cannot be gained, or subverted, by the addition by amendment of a new claim in proceedings otherwise second brought (any more than it can be affected by the addition of new claimants or defendants, as Lord Clarke accepts: para 60). To the authorities under the current Regulation to which Lord Clarke refers, I would only add that similar thinking is to be found under the predecessor provisions of Article 21 and 22 of the Brussels Convention in the decisions at both levels in Grupo Torras SA v Shekh Fahad Al Sabah [1995] 1 Lloyds Rep 374, 418 419 (Mance J) and [1996] 1 Lloyds Rep 7, 24 (CA). Conclusion It follows that the conclusions I would reach, were all the issues to be finally decided now, would be that: The first head of English release claims would be precluded under i) article 27, having regard to what I conclude are in this respect the prior Greek claims. ii) All the remaining heads are outside the scope of article 27 and are permissible. It is however necessary to consider whether these conclusions are founded on principles of European law which are so clear that no reference to the Court of Justice is required. A reference to the Court of Justice In relation to the conclusion expressed in para 161ii, we are all in agreement in our conclusions. Any differences in reasoning regarding article 27 are irrelevant, and no reference is necessary. As to para 161i, Lord Clarke would reach the opposite conclusion to that which I have expressed and he considers in the light of my judgment that a reference is called for, if the English appellants persist in their first head of release claims. With the latter view I agree. The differences between Lord Clarkes and my reasoning are not, I believe, simple differences regarding the application to facts of clear principles of European law. I might by myself have thought that all the relevant principles of European law were clear, but I certainly do not dissent from the proposition that the differences, being material to our respective conclusions, require a reference. If the appellants wish to persist in, rather than abandon, the first head of release claims, there should accordingly be a reference as Lord Clarke suggests. Ultimately, therefore, although by different reasoning, Lord Clarke and I arrive at the same conclusions regarding the appropriate disposition of these appeals.
+On 6 August 2003 a young man of 17 and a young girl of 13 had sexual intercourse. Afterwards the young girl told her mother that this had occurred but she suggested that she had not been a willing participant. Understandably, her mother went to the police and the young man was arrested. Later her daughter retracted her account of not having consented to sexual relations. The young man was therefore charged with a less serious offence than that which he might have faced. It was, nonetheless, a serious charge. He was charged with having had unlawful carnal knowledge of a girl under the age of 14 years contrary to section 4 of the Criminal Law Amendment Acts (Northern Ireland) 1885 1923. The young man pleaded guilty to that charge at Belfast Crown Court on 22 June 2004. That plea had been entered on the basis that the offence created by section 4 was one in which reasonable belief that the girl was over the age of 14 was not available to him as a defence. The defendant was sentenced to three years detention in a Young Offenders Centre. The sentence was suspended for two years. Later, having received different legal advice from that which had prompted his plea of guilty, the young man applied to the Court of Appeal in Northern Ireland for leave to appeal against his conviction. The issue before the Court of Appeal was whether section 4 of the 1885 Act created an offence in which proof that the defendant did not honestly believe that the girl was over the age of 14 was not required. That is also the issue with which this court has had to deal. The legislative provisions Traditionally, sexual offences (other than forced intercourse) against girls and young women have been dealt with in legislation according to age bands, with, in general, more grave offences reserved for and heavier penalties imposed for crimes involving younger females. A clearly discernible historical trend of increasing the age of the victim at which liability for more serious offences is incurred, while reducing the sentence to be imposed, can be detected. Thus, section 20 of the Offences against the Person (Ireland) Act 1829 provided that any person who had unlawful carnal knowledge of a girl under the age of ten years was guilty of a felony, punishable by death. By contrast, the same section provided that unlawful carnal knowledge of a girl between ten and 12 years was a misdemeanour punishable by a term of imprisonment at the discretion of the court. Section 50 of the Offences against the Person Act 1861 reduced the sentence to be imposed for the felony of unlawful carnal knowledge of a girl under the age of ten to, at the discretion of the court, penal servitude for life or for a term of not less than three years or imprisonment for a term not exceeding two years with or without hard labour. For unlawful carnal knowledge of a girl between the ages of ten and 12, a defendant was guilty of a misdemeanour under section 51 of the same Act and liable to be sentenced to penal servitude for three years or to be imprisoned for up to two years with or without hard labour. Section 3 of the Offences against the Person Act 1875 made it a felony to unlawfully and carnally know and abuse any girl under the age of 12 years. Section 4(3) of the Criminal Law Amendment Act (Northern Ireland) 1923 provided that the Criminal Law Amendment Acts (Northern Ireland) 1885 1912 and the Criminal Law Amendment Act (Northern Ireland) 1923 should, to the extent to which they applied to Northern Ireland, be cited together as the Criminal Law Amendment Acts (Northern Ireland) 1885 1923. Section 2 of the 1885 1923 Acts provided for a procuration offence: Any person who . procures or attempts to procure any girl or woman under 21 years of age to have unlawful carnal connexion, either within or without the Queen's dominions, with any other person or persons . shall be guilty of a misdemeanour Section 4, as amended, and in so far as is relevant to the present appeal, provided that Any person who unlawfully and carnally knows any girl under the age of 14 years shall be guilty of felony, and being convicted thereof shall be liable to be imprisoned for life or to be fined or both. (As originally enacted, section 4 had stipulated an age of 13 years. This was increased to 14 by the Children and Young Persons Act (Northern Ireland) 1950). As also originally enacted, section 5 of the 1885 Act provided for an offence of unlawful carnal knowledge of a girl between 13 and 15. The age limit was increased by section 13 of the 1950 Act so that in its amended form it provided as follows: Any person who . unlawfully and carnally knows or attempts to have unlawful carnal knowledge of any girl under the age of 17 years; shall be guilty of a misdemeanor offence of permitting defilement on premises: Section 6, as amended by section 13 of the 1950 Act, provided for an Any person who, being the owner or occupier of any premises, or having, or acting or assisting in, the management or control thereof induces or knowingly suffers any girl to resort to or be in or upon such premises for the purpose of being unlawfully and carnally known by any man, whether such carnal knowledge is intended to be with any particular man or generally, shall . if such girl is under the age of 17 years be guilty of a misdemeanour Section 7 provided for an offence of abduction: Any person who with intent that any unmarried girl under the age of 18 years should be unlawfully and carnally known by any man, whether such carnal knowledge is intended to be with any particular man, or generally takes or causes to be taken such girl out of the possession and against the will of her father or mother, or any other person having the lawful care or charge of her, shall be guilty of a misdemeanour, and being convicted thereof shall be liable at the discretion of the court to be imprisoned for any term not exceeding two years or to be fined or both. Provided that it shall be a sufficient defence to any charge under this section if it shall be made to appear to the court or jury that the person so charged had reasonable cause to believe that the girl was of or above the age of 18 years. Provisos of a similar nature to that contained in the latter part of section 7 were included in sections 5 and 6 of the 1885 Act as originally enacted. These were removed by section 2 of the 1923 Act, as amended by section 13 of the 1950 Act: Reasonable cause to believe that a girl was of or above the age of 17 years shall not be a defence to a charge under sub section (1) of section five or under section six of the Criminal Law Amendment Act 1885 In August 2003, therefore, the Criminal Law Amendment Acts (Northern Ireland) 1885 1923 included five offences in which age was an essential component of the actus reus, of which two (sections 2 and 4) were silent as to the effect, if any, of reasonable belief as to the age of the girl; two (sections 5 and 6) were subject to an express exclusion of a defence of reasonable belief as to age; and one (section 7) was subject to a defence of reasonable belief as to age. Thus, from 1885 until 1923, unlawful carnal knowledge of a girl of 13 years or more was not an offence under section 4. During the same period such an offence was committed under section 5 of the 1885 Act if the girl was between the ages of 13 and 15 but a defence of reasonable belief that the girl was 16 years or more was available. From 1923 until 1950 unlawful carnal knowledge of a girl of 13 or more continued not to be an offence under section 4. During that time, however, unlawful carnal knowledge of a girl between 13 and 15 years did not require proof under section 5 that the defendant did not believe that the girl was over the age of 16. From 1950 onwards sexual intercourse with a girl under the age of 14 became an offence under section 4. The appellants arguments The appellant argued that the approach to the interpretation of section 4 of the 1885 1923 Acts must be informed by a fundamental common law principle. This was that there should be a mental element, commonly referred to as mens rea, for criminal liability unless a clear intention was evinced by the words of a statute that a particular criminal offence should be one of strict liability. The presumption that mens rea was required could only be displaced, it was suggested, where it could be shown that this was the unmistakable intention of Parliament. Such an intention was less readily found to exist where the offence was a serious one. In this regard, reliance was placed on the judgment in R v Muhamad [2003] QB 1031 where, at para 19, Dyson LJ said: The offences where no mental element is specified, for the most part, attract considerably lower maximum sentences than those where a mental element is specified. Since section 4 was silent on the question of whether proof of mens rea was required, the appellant submitted that the offence specified in the provision could only be regarded as not requiring such proof if that had to be unavoidably and necessarily implied. The suggestion that a particular provision imposed strict liability had to be considered, the appellant argued, in its statutory and social contexts. The Criminal Law Amendment Acts (Northern Ireland) 1885 1923 fell to be interpreted as they stood at the time of the appellant's offence: that is, with an express provision making clear that no defence of reasonable belief applied to sections 5 and 6, but remaining silent as to the mens rea of an offence contrary to section 4. The legislative history of the relevant provisions, although not irrelevant, was, the appellant argued, merely one factor to be taken into account. In this regard, reference was made to the speech of Lord Steyn in R v K [2002] 1 AC 462, para 30 where he said that it was unhelpful to inquire into the history of subjective views held by individual legislators and that the always speaking nature of a statute dealing with sexual offences meant that a particular provision had to be interpreted in the world as it exists today, and in the light of the legal system as it exists today. The statutory context of section 4 therefore suggested that the presumption that mens rea was required had not been displaced. The appellant argued further that, if an implication of strict liability was to be considered as compellingly clear, it must arise from a coherent and consistent legislative scheme. The Acts of 1885 1923 did not fit that description. The express provision of a defence of reasonable belief to an offence under section 7, when considered alongside the explicit exclusion of such a defence to offences under sections 5 and 6, and silence on the issue under section 4, meant that the legislation contained signposts which pointed in various directions. It was impossible to detect a convincingly obvious implication. As to the social context of the offence under section 4, the appellant again referred to the particular strength of the presumption where the offence was serious or, as described by Lord Scarman in Gammon (Hong Kong) v Attorney General of Hong Kong [1985] AC 1, 14, truly criminal. The offence under section 4 was unquestionably serious and carried a maximum penalty of life imprisonment. As Lord Bingham said in Sheldrake v Director of Public Prosecutions [2005] 1 AC 264, para 6, The more serious the crime, and the more severe the potential consequences of conviction, the less readily will it be displaced. The appellant accepted that section 4 dealt with an issue of social concern but pointed out that Lord Scarman in Gammon (Hong Kong) v Attorney General of Hong Kong had observed that the presumption of mens rea should stand unless it could be shown that the creation of strict liability would be effective to promote the objects of the statute. The objects of the statute in this context were considered to be the encouraging of greater vigilance to prevent the commission of the prohibited act. To the extent that strict liability might be said to promote the objects of the statute by encouraging greater vigilance against sexual intercourse with girls under the age of 17, it was submitted that this was sufficiently achieved in Northern Ireland by the strict liability imposed under section 5. Finally, in a written submission provided on his behalf after the hearing of the appeal before this court, it was pointed out that the appellant could not have been convicted of the section 4 offence in 1885 (the time of the original enactment) since the offence at that time related to girls under the age of 13. Nor could he have been convicted of such an offence until 1950. An analysis of whether the common law presumption was displaced had to be conducted against the background that no consistent policy approach had been adopted to the question of whether unlawful carnal knowledge of a girl under 14 years should be a strict liability offence. The case for the respondent The proviso introduced by sections 5 and 6 of the 1885 Act introduced for the first time, the respondent explained, a defence of reasonable belief as to the age of the person against whom an offence under these sections was charged. The background against which the defence had been made available was that R v Prince (1875) LR 2 CCR 154 had held that reasonable grounds for believing that the girl involved was over the age of consent did not constitute a defence under section 51 of the Offences against the Person Act 1861. But when Parliament came to abrogate that rule in 1885, it did so (by virtue of section 5 of the 1885 Act) only in relation to girls between the ages of 13 and 16. It did not do so in relation to girls under the age of 13. The decision not to provide for a similar defence under section 4 of the 1885 Act could not have been other than deliberate, it was argued. This was not the only distinction between sections 4 and 5, however. A limitation period of three months on the prosecution of offences under section 5 was also provided for but there was no corresponding provision in section 4. (This limitation period was subsequently increased to 12 months but it was expressly recommended that no such limitation should be introduced for an offence of unlawful sexual intercourse with a girl under the age of 13 because of the gravity of that particular offence in this regard, see R v J [2005] 1 AC 562, para 10). Section 4 of the 1885 Act also made specific provision for a lesser sentence in respect of an attempt. And, as originally enacted, it also provided for a less severe sentence with respect to young offenders under 16. Neither of these different sentencing options was provided for by section 5(1), however. In England and Wales maintenance of the distinction between, on the one hand section 4 and, on the other, sections 5 and 6 of the 1885 Act, could be seen, the respondent argued, in the amendments introduced by section 2 of the Criminal Law Amendment Act 1922. It appears that the government had intended to remove altogether the defence of reasonable cause to believe that the girl was over the age of 16 years but, by way of compromise, introduced what has become known as the young mans defence. By virtue of section 2 of the 1922 Act a man of 23 years or less could avail of the defence (on the first occasion that he was charged with an offence under sections 5 or 6 of the 1885 Act) that he had reasonable cause to believe that the girl was over the age of 16 years. No such defence was provided for in relation to offences under section 4. In 1923 the Northern Ireland Parliament, in one of its first items of legislation, achieved, according to the respondent, what Parliament in Westminster had failed to bring about in 1922, namely, the complete abolition of the defence of reasonable belief on the part of the defendant that the girl was above the age of consent. To have abolished that defence in relation to sections 5 and 6 while leaving open the question whether such a defence might be available in respect of the more serious offence under section 4 was inconceivable, the respondent claimed. It was therefore argued that it has always been undeniably clear that an offence under section 4 should be one in which proof of mens rea as to the age of the victim was not required. Discussion The constitutional principle that mens rea is presumed to be required in order to establish criminal liability is a strong one. It is not to be displaced in the absence of clear statutory language or unmistakably necessary implication. And true it is, as the appellant has argued, that the legislative history of an enactment may not always provide the framework for deciding whether the clearly identifiable conditions in which an implication must be made are present. It is also undeniable that where the statutory offence is grave or truly criminal and carries a heavy penalty or a substantial social stigma, the case is enhanced against implying that mens rea of any ingredient of the offence is not needed. The strength of the constitutional principle in favour of a presumption that criminal liability requires proof of mens rea finds eloquent expression in what Lord Nicholls, in B (A Minor) v Director of Public Prosecutions [2000] 2 AC 428, 460, referred to as the magisterial statement of Lord Reid in Sweet v Parsley [1970] AC 132, 148 149: there has for centuries been a presumption that Parliament did not intend to make criminals of persons who were in no way blameworthy in what they did. That means that whenever a section is silent as to mens rea there is a presumption that, in order to give effect to the will of Parliament, we must read in words appropriate to require mens rea . it is firmly established by a host of authorities that mens rea is an essential ingredient of every offence unless some reason can be found for holding that that is not necessary where he said: In B (A Minor) Lord Nicholls reinforced that essential message at p 460G the starting point for a court is the established common law presumption that a mental element, traditionally labelled mens rea, is an essential ingredient unless Parliament has indicated a contrary intention either expressly or by necessary implication. The common law presumes that, unless Parliament has indicated otherwise, the appropriate mental element is an unexpressed ingredient of every statutory offence. One must begin, therefore, with this strong presumption firmly at centre stage. And its ready displacement should not be countenanced, as has, perhaps, happened in the past. In Smith and Hogans Criminal Law, 13th ed (2011), para 7.2 the authors deprecated the tendency of some judges to declaim that the presumption was well embedded only to willingly find that it was easily rebutted. Lord Bingham made clear in R v K [2002] 1 AC 462, para 18 that description of an offence such as that prescribed by section 4 as an absolute offence or an offence of strict liability is a misnomer. There must always be deliberation on the part of the defendant in committing the acts which constitute the factual underpinning of the offence. The real and proper question is whether it must be proved that there was a lack of reasonable belief, on the part of the perpetrator of the acts, that the girl was above the prescribed age. In R v K at para 17 Lord Bingham referred with approval to Lord Steyns quotation in B (A Minor) at p 470F of Professor Sir Rupert Crosss statement that the presumption that mens rea was required in the case of all statutory crimes was a constitutional principle not easily displaced by a statutory text. These sturdy assertions provide the setting for the inquiry whether mens rea in relation to the girls age had to be proved in order to found liability under section 4. That inquiry must start, I believe, with a clear understanding of what the legal position was at the time that the relevant provisions were enacted. It is true that the subjective intention of individual legislators will not always provide an incontrovertible guide to the meaning of the legislation, as Lord Steyn said in R v K. But one must at least begin with an examination of what the legislative intention was before considering whether modification of that intention is justified by later amendments or contemporary social contexts. In my view, there can really be no doubt that section 4 in its original form was intended to impose criminal liability for carnal knowledge of a female under the age of 13 without proof that the perpetrator knew or had reason to believe that she was below that age. Two considerations make that conclusion inevitable. Firstly, the decision in R v Prince had confirmed that proof of knowledge or lack of reasonable belief in the age of the victim was not required. Coming as it did merely ten years before the 1885 Act, that decision formed the crucial backdrop to the enactment of section 4. It is inconceivable that, had it been intended that such proof was required, section 4 would have remained silent on the issue. Secondly and relatedly, the juxtaposition of sections 5 and 6 (in which a dispensing proviso was contained) with section 4 makes it impossible to conclude that the absence of such a proviso in section 4 signified anything other than a clear intention that a defence of reasonable belief in the girls age was not to be available. This is particularly so because the 1885 Act introduced for the first time such a defence in relation to offences of the type provided for in sections 5 and 6. It seems to me unquestionable that the decision not to extend the defence to offences under section 4 was deliberate and that it clearly signified that the legislature intended that no such defence would be available in relation to offences under that section. That being so, the next question is whether the amendment in the 1923 Act made any difference to the availability of the defence under section 4. The appellant contended that the textual amendment of the 1885 Act prompted consideration within a new context of the question whether the presumption that mens rea is required had been displaced. A change to the statutory framework, the appellant argued, required examination of that question from an entirely new perspective one in which, in contrast to that which had hitherto obtained, the defence of reasonable belief no longer applied to sections 5 and 6 (as a consequence of explicit provision to that effect) but the question of whether it applied to offences under section 4 was open because of the absence of any reference to it in that section. It would be a curious, indeed anomalous, outcome of the removal of the defence from sections 5 and 6 that it should be implied into section 4 to which it had not previously applied. At a technical or theoretical level, it can be argued that such a result is feasible because, as the appellant has submitted, the 1885 1923 Acts are to be construed as a whole in their amended form. Bennion on Statutory Interpretation, 5th ed (2008) describes the effect of textual amendment of a statute at p 290 as follows: . under modern practice the intention of Parliament when effecting textual amendment of an Act is usually to produce a revised text of the Act which is thereafter to be construed as a whole. Any repealed provisions are to be treated as never having been there, so far as concerns the application of the amended Act for the future. (original emphasis) The appellant has pointed out that in B (A Minor), in deciding whether the presumption was rebutted, both Lord Nicholls and Lord Steyn had taken account of the amendment of the applicable maximum penalty from two to ten years imprisonment. And in R v Kumar [2005] 1 WLR 1352, paras 11 13, 28, the Court of Appeal construed section 12 of the Sexual Offences Act 1956 in its present form within an amended statutory framework that included the Sexual Offences Act 1967 and amendments to section 12 in 1994 and 2000, by virtue of which homosexual acts between consenting males of a prescribed age were decriminalised. It was suggested therefore that a new approach to the interpretation of section 4 is now warranted. I cannot accept that argument. In the first place, while the amended legislation is to be construed as a whole in its revised form, it does not follow that its antecedent history be left entirely out of account. More pertinently, the relevant amendment of the 1885 Act removed a defence which had previously been available for offences under sections 5 and 6 when none had existed for offences under section 4. To suggest that the removal of the defence under sections 5 and 6 would have the effect of introducing it under section 4 by implication takes contrivance too far. I am satisfied that in its statutory context section 4 must be interpreted as not requiring proof that the defendant did not know or reasonably believe that the girl was aged 14 or over. The appellants argument that the Acts of 1885 1923 did not form a coherent and consistent legislative scheme must likewise be rejected. The fact that the legislation contained signposts which pointed in various directions does not render it incoherent. It is entirely logical (and in keeping with the historical trend described earlier) that a defence of reasonable belief should be available for the less serious offences prescribed by sections 5 and 6, but that it should not exist for the more grave offence under section 4. For essentially the same reasons, I would reject the appellants argument that there was no consistent policy approach to the question of whether unlawful carnal knowledge of a girl under 14 years should be a strict liability offence. On the contrary, the policy approach of protecting younger females by ensuring that a defence of reasonable belief should not be available has been unswerving. The fact that the age was increased from 13 to 14 does not make the policy inconsistent. It merely represents the evolution of changing views as to when the policy should take effect. Finally, there is nothing in the contemporary social context which militates against the denial of the defence of reasonable belief as to age for section 4 offences. This issue was dealt with authoritatively in R v G (Secretary of State for the Home Department intervening) [2009] AC 92. In that case the appellant had pleaded guilty to an offence of rape of a child under the age of 13, contrary to section 5 of the Sexual Offences Act 2003. The prosecution had accepted the appellants claim that the girl had consented to sexual intercourse and had told him that she was 15 years old. The appellant himself was 15 at the time of the offence and the girl was aged 12. At para 3 Lord Hoffmann said: The mental element of the offence under section 5, as the language and structure of the section makes clear, is that penetration must be intentional but there is no requirement that the accused must have known that the other person was under 13. The policy of the legislation is to protect children. If you have sex with someone who is on any view a child or young person, you take your chance on exactly how old they are. To that extent the offence is one of strict liability and it is no defence that the accused believed the other person to be 13 or over. Precisely the same policy considerations underpin section 4 of the 1885 1923 Acts. Young girls must be protected and, as part of that protection, it should not be a defence that the person accused believed the girl to be above the prescribed age. As Lady Hale said in para 46 of G, When the child is under 13 [the accused] takes the risk that she may be younger than he thinks she is. The object is to make him take responsibility for what he chooses to do If you have sexual intercourse with someone who is clearly a child or young person, you do so at your peril. I would dismiss the appeal.
+This appeal concerns whether certain rules of the payment card schemes operated by Visa and Mastercard have the effect of restricting competition, in breach of article 101(1) of the Treaty on the Functioning of the European Union (TFEU), and equivalent national legislation. The rules in question provide for fees which are known as multilateral interchange fees or MIFs. Visa and Mastercard deny that there has been any restriction of competition, and contend that, in any event, the rules in question are exempt from the prohibition in article 101(1) because they satisfy the requirements of article 101(3) TFEU. The outline facts These are helpfully set out in the parties statement of facts and issues, as summarised below. The appellants, Visa and Mastercard, operate payment card schemes. They facilitate electronic funds transfers throughout the world, most commonly through branded credit and debit cards. The respondents, Asda Stores Ltd (Asda), Argos Ltd and others (Argos) and WM Morrison Supermarkets plc (Morrisons) (together AAM) and Sainsburys Supermarkets Ltd (Sainsburys), are retailers. The respondents accept payments from customers by way of debit and credit cards, including Visa and Mastercard branded cards. Visa and Mastercard each operate open four party payment card schemes (the Visa scheme and the Mastercard scheme), under which: Issuers (who are generally banks and other financial institutions) issue (i) debit and/or credit cards to their cardholder customers; and (ii) Acquirers (also generally banks or other financial institutions) provide payment services to merchants. These are the four parties to which the term open four party payment card scheme refers. In addition, the scheme operator (Visa or Mastercard in these cases) sets the rules of the scheme and allows institutions to join the scheme as issuers and/or acquirers. Visa and Mastercard do not themselves issue cards or sign up merchants to accept payment transactions. Instead, they accept as licensees all eligible financial institutions, these licensees being licensed to act, in specified territories, as issuers or acquirers or both. The operation of the Visa and Mastercard schemes can be represented by the following diagram: Issuers and acquirers join the Visa and/or Mastercard schemes, and In summary, the Visa and Mastercard schemes operate as follows: (i) agree to abide by the rules of the schemes. (ii) A cardholder contracts with an issuer, which agrees to provide the cardholder with a Visa or Mastercard debit or credit card, and agrees the terms on which they may use the card to buy goods or services from merchants. (iii) Those terms may include a fee payable by the cardholder to the issuer for the use of the card, the interest rate applicable to the provision of credit, and incentives or rewards payable by the issuer to the cardholder for holding or using the card (such as airmiles, cashback on transactions, or travel insurance). (iv) Merchants who wish to accept payment cards under the scheme contract with an acquirer, which agrees to provide services to the merchant enabling the acceptance of the cards, in consideration of a fee, known as the merchant service charge (the MSC). The acquirer receives payment from the issuer to settle a transaction entered into between cardholder and merchant, and passes the payment on to the merchant, less the MSC. (v) The MSC is negotiated between the acquirer and the merchant. Typically, it is set at a level that reflects the size and bargaining power of the merchant, the level of the acquirers costs (including scheme fees payable to Visa and Mastercard, and any interchange fees payable by the acquirer to issuers), and the acquirers margin. (vi) The scheme rules require that, whenever a cardholder uses a payment card to make a purchase from a merchant, the cardholders issuer must make a payment to the merchants acquirer to settle the transaction. (vii) The Visa and Mastercard scheme rules make provision for the terms on which issuers and acquirers (who are members of the scheme) are to deal with each other, in the absence of any different bilateral agreement made between them. These terms include issuers and acquirers settling transactions at the face value of the transaction (settlement at par or, as it is sometimes referred to, prohibition on ex post pricing) and also provide for the payment of an interchange fee on each transaction. (viii) Under both the Visa and Mastercard schemes, the default interchange fee (ie the MIF) which is payable by the acquirer to the issuer on each transaction is expressed either as a percentage of the value of the transaction, or as a flat figure in pence for each transaction. Different MIFs apply to different types of transaction (such as contactless payments, or payments made where the card is not present, including internet payments). Different MIFs also apply to transactions depending on whether the issuer and acquirer are based in the same state/region or different states/regions. (ix) Under the Visa and Mastercard schemes, issuers and acquirers are not required to contract on the basis of the MIF. Under the rules, they are free to enter into bilateral agreements with different terms. In practice, however, issuers and acquirers do contract on the basis of the MIF, as both trial judges below found. (a) Popplewell J stated in Asda Stores Ltd v Mastercard Inc [2017] EWHC 93 (Comm); [2017] 4 CMLR 32, para 9 in relation to the Mastercard scheme: Interchange fees can in theory be agreed bilaterally between issuers and acquirers. In practice this is not how the interchange fee is determined. Under the Scheme Rules (Rule 8.3), MasterCard sets the interchange fees which are to apply compulsorily in default of bilateral agreements. These are the multilateral interchange fees or MIFs. In practice there are no material bilateral agreements, and so the MIF always applies. This is not surprising: in a putative bilateral negotiation between an issuer and an acquirer the issuer has no incentive to accept less than the default MIF and the acquirer no incentive to offer more. (b) Phillips J stated in Sainsburys Supermarkets Ltd v Visa Europe Services LLC [2017] EWHC 3047 (Comm); [2018] 2 All ER 611, para 102 in relation to the Visa scheme: Although a MIF is, in theory, only a default provision applying in the absence of agreement, it was common ground that no bilateral agreements as to Interchange Fees are in fact made in the UK market. The reason for that result is also common ground and is obvious: Issuers have no need or incentive to agree a lower fee than the MIF and Acquirers have no need or incentive to agree to a higher fee. Both sides of the negotiation have the certainty that transactions will, in the absence of agreement, proceed on the basis of settlement at par plus an Interchange Fee set at the level of the MIF, so neither has a reason to depart from that position and certainly no incentive to incur the significant costs of entering negotiations with multiple counterparties in the (probably forlorn) hope of persuading one or more of them to agree a position which deviated from the default. As all Acquirers are in the same position, Merchants have no ability to negotiate with them as to the MIF element of the MSC, which is passed on in full. Witnesses called by each of the Merchants (12 in total) gave evidence that their respective Acquirers refused to negotiate the MIF element of their charge, treating it as a pass through cost set by the Scheme. (x) For most of the claim period, the MIF typically accounted for some 90% of the MSC. Acquirers pass on all of the MIF, and the scheme fee, to merchants through the MSC, with negotiation between acquirers and merchants in respect of the MSC being limited to the level of the acquirers margin. In the present proceedings, the MIFs at issue flow from the acquirer to the issuer. In other words, they involve a deduction from the payment that the issuer makes to the acquirer to settle the transaction. This is sometimes referred to as a positive MIF. However, this is not universally the case for schemes of this kind. In principle, interchange fees could flow in the opposite direction (ie be added to the payment made by the issuer to the acquirer). There are some four party payment card schemes which operate on that basis. This is sometimes referred to as a negative MIF. Other schemes operate on the basis that, in the absence of a bilateral agreement between the issuer and acquirer, the issuer must settle the transaction at par without the deduction of an interchange fee. It was common ground that a rule specifying the terms on which the transaction is to be settled between issuer and acquirer, at least in default of bilateral agreement, is necessary in order for a four party payment card scheme to operate. It was also common ground that a rule providing for positive MIFs is not necessary for the operation of a four party payment card scheme. Visa and Mastercard do not receive any part of the MIF or the acquiring bank fee. Their remuneration comes from scheme fees paid by issuers and acquirers. The lawfulness of those scheme fees is not the subject of these proceedings. Four party payment card schemes, such as the Visa and Mastercard schemes, operate in what is described by economists as a two sided market: (i) On one side of the market, issuers compete with each other for the business of customers to whom they will issue cards (the issuing market). (ii) On the other side of the market, acquirers compete with each other for the business of merchants to whom they seek to offer acquiring services (the acquiring market). These proceedings concern the effect of MIFs on competition in the acquiring market. Four party payment card schemes are not the only type of payment card scheme. There are also three party payment card schemes, including those operated in the UK by American Express and Diners Club. In the original form of that type of scheme, the scheme operator (ie American Express or Diners Club) acts as both acquirer and issuer and clears payments itself. One of the scheme rules that both the Visa and Mastercard schemes also operate is an Honour All Cards Rule (HACR). This requires a merchant, having agreed with an acquirer to accept Visa or Mastercard branded payment cards, to accept all such cards, regardless of which issuer issued the cards. Merchants can choose to accept only certain categories of card (for example, only debit cards), in which case they would be obliged to accept all Visa or Mastercard branded cards in that category. The lawfulness of the HACR is not in dispute in these proceedings. The legal framework Articles 101(1) and 101(3) TFEU provide as follows: Article 101(1) The following shall be prohibited as incompatible with the internal market: 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 internal market, and in particular those which: limit or control production, markets, technical (a) directly or indirectly fix purchase or selling prices or any other trading conditions; (b) development, or investment; share markets or sources of supply; (c) (d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts. Article 101(3) The provisions of paragraph 1 may, however, be declared inapplicable in the case of: any agreement or category of agreements between undertakings, associations of undertakings, practices, any decision or category of decisions by any concerted practice or category of concerted which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while impose on allowing consumers a fair share of the resulting benefit, and which does not: (a) the undertakings concerned restrictions which are not indispensable to the attainment of these objectives; afford such undertakings the possibility of (b) eliminating competition in respect of a substantial part of the products in question. Section 2 of the Competition Act 1998 (the 1998 Act) makes the same provision as article 101(1) in relation to agreements which may affect trade within the UK, and which prevent, restrict or distort competition within the UK. Section 2 is the counterpart of article 101(1) and section 9 is the counterpart of article 101(3). Section 60 of the 1998 Act sets out principles to be applied when determining questions under sections 2 and 9. It provides as follows: Principles to be applied in determining questions (1) The purpose of this section is to ensure that so far as is possible (having regard to any relevant differences between the provisions concerned), questions arising under this Part in relation to competition within the United Kingdom are dealt with in a manner which is consistent with the treatment of corresponding questions arising in [EU] law in relation to competition within the [European Union]. (2) At any time when the court determines a question arising under this Part, it must act (so far as is compatible with the provisions of this Part and whether or not it would otherwise be required to do so) with a view to securing that there is no inconsistency between the principles applied, and decision reached, by (a) the court in determining that question; and (b) the principles laid down by the Treaty and the European Court, and any relevant decision of that Court, as applicable at that time in determining any corresponding question arising in [EU] law. (3) The court must, in addition, have regard to any relevant decision or statement of the Commission. The regulatory history Both the Visa and the Mastercard schemes have been subject to scrutiny by national and European competition authorities and regulators over many years, including in relation to MIFs. The Court of Appeal included a summary of the regulatory background in its judgment: [2018] EWCA Civ 1536; [2019] Bus LR 198; [2019] 1 All ER 903, paras 12 36. Of particular relevance to the appeal is the European Commission (the Commission) decision of 19 December 2007 that the Mastercard MIFs applicable within the European Economic Area (EEA MIFs) had, since 22 May 1992, been in breach of article 101(1), and Mastercard had not proved to the requisite standard that any of the first three article 101(3) exemption criteria were met: Decision C (2007) 6474 in Cases COMP/34.579 MasterCard, COMP/36.518 EuroCommerce, and COMP/38.580 Commercial Cards (the Mastercard Commission Decision). Mastercard applied to the Court of Justice of the European Union (the CJEU) for the annulment of the Mastercard Commission Decision. On 24 May 2012, the General Court gave judgment dismissing Mastercards application: MasterCard Inc v European Commission (Case T 111/08) [2012] 5 CMLR 5 (Mastercard GC). Mastercard appealed the General Courts decision to the Court of Justice. On 11 September 2014, the Court of Justice gave judgment dismissing Mastercards appeal: MasterCard Inc v European Commission (Case C 382/12 P) [2014] 5 CMLR 23 (Mastercard CJ). The trial proceedings The appeal relates to three sets of proceedings: the Mastercard Sainsburys proceedings, the AAM proceedings and the Visa Sainsburys proceedings. In the Mastercard Sainsburys proceedings, Sainsburys issued a claim against Mastercard in the Chancery Division for damages for infringement of article 101(1) TFEU and section 2 of the 1998 Act, in respect of the Mastercard MIFs applicable to domestic transactions in the United Kingdom (UK MIFs) for the period 19 December 2006 onwards. The claim was transferred to the Competition Appeal Tribunal (the CAT) on 1 December 2015. A liability and quantum trial was heard in the CAT over 23 days in January to March 2016. Judgment was given on 14 July 2016, with the CAT finding that, from 2006 to 2015, the Mastercard UK MIFs restricted competition by effect: Sainsburys Supermarkets Ltd v MasterCard Inc [2016] CAT 11; [2016] Comp AR 33. Damages of around 68.5m were awarded to Sainsburys (and subsequently adjusted to take into account the impact of corporation tax). In the AAM proceedings, Asda and Morrisons issued like claims for damages against Mastercard, ultimately limited to the Mastercard UK MIFs since 23 May 2006 and the Mastercard EEA MIFs since 23 May 2007. Argos also issued a claim limited to the Mastercard UK MIFs since 5 October 2006, the Mastercard EEA MIFs from 5 October 2007, and Mastercards Irish domestic MIFs (Irish MIFs) from 5 October 2006 to 5 January 2007 and from 20 January 2009 onwards. The parties various claims were combined. A liability trial took place before Popplewell J in the Commercial Court in June to July, and September to October 2016. On 30 January 2017, Popplewell J dismissed the claims: Asda Stores Ltd v MasterCard Inc [2017] EWHC 93 (Comm); [2017] 4 CMLR 32. He found that, subject to what came to be called for shorthand the death spiral argument, Mastercards UK and Irish MIFs restricted competition in the acquiring market contrary to article 101(1), but that the effect of that argument was that they did not infringe that provision. He also held that Mastercards UK, Irish and EEA MIFs were exempt under article 101(3) in any event. In the Visa Sainsburys proceedings, Sainsburys issued like claims for damages against Visa in respect of the Visa UK MIFs since 18 December 2007. Sainsburys claim was heard by Phillips J in the Commercial Court in a 39 day trial of liability issues in the period 14 November 2016 to 1 March 2017. On 30 November 2017, Phillips J dismissed Sainsburys claim against Visa: Sainsburys Supermarkets Ltd v Visa Europe Services LLC [2017] EWHC 3047 (Comm); [2018] 2 All ER 611. Phillips J found that the Visa UK MIFs did not restrict competition in the acquiring market and the claim was dismissed (the Visa restriction judgment). On 23 February 2018, Phillips J gave a further judgment, at the request of the parties, although it was strictly obiter. He found that if, contrary to his conclusion in the Visa restriction judgment, the Visa UK MIFs did restrict competition, they were not exempt, at any level, under article 101(3) because Visa had not established to the requisite standard that the Visa UK MIFs caused any benefits to consumers: Sainsburys Supermarkets Ltd v Visa Europe Services LLC [2018] EWHC 355 (Comm); [2018] 4 CMLR 24 (the Visa exemption judgment). The judgments below and their essential reasoning are summarised by the Court of Appeal at paras 37 57 of its judgment. The Court of Appeal decision The Court of Appeal directed that the appeals in the Mastercard Sainsburys proceedings, the AAM proceedings and the Visa Sainsburys proceedings be heard together. There was a ten day hearing between 16 and 27 April 2018. Judgment was handed down on 4 July 2018, overturning all four of the judgments given below. As regards Popplewell Js judgment in the AAM proceedings, the Court of Appeal endorsed his view that Mastercards default MIFs involved a distortion of competition contrary to article 101(1), but disapproved his reasoning on the death spiral argument, with the result that the Mastercard default MIFs were found to infringe article 101(1). The Court of Appeal also overruled the judge in relation to his conclusion on Mastercards claim of exemption under article 101(3). It held that Mastercard had not advanced evidence at trial which was capable of substantiating its claim for exemption under that provision; therefore, the judge should have concluded that Mastercards claim for exemption failed. Despite this ruling regarding article 101(3) in the AAM proceedings, the Court of Appeal remitted the issues arising under article 101(3) in all three sets of proceedings to the CAT, for reconsideration together on the basis of the existing evidence which had been adduced in all three sets of proceedings. On 29 November 2018 Visa and Mastercard were given permission to appeal against the Court of Appeal decision on all grounds. On 6 November 2019 AAM were given permission to cross appeal against the order for remittal made by the Court of Appeal. The issues The issues which arise on the appeal are as follows: (i) Did the Court of Appeal err in law in finding that there was a restriction of competition in the acquiring market contrary to article 101(1) TFEU and equivalent national legislation? (the restriction issue) (ii) Did the Court of Appeal find, and if so did it err in law in finding, that Visa and Mastercard were required to satisfy a more onerous evidential standard than that normally applicable in civil litigation, in order to establish that their MIFs were exempt from the prohibition on restrictive agreements pursuant to article 101(3) TFEU, because of the economic benefits to which they contributed? (the standard of proof issue) (iii) Did the Court of Appeal err in law in finding that in order to show that consumers receive a fair share of the benefits generated by the MIFs, for the purpose of satisfying the test for exemption under article 101(3) TFEU, Visa was required to prove that the benefits provided to merchants alone as a result of the MIFs outweighed the costs arising from the MIFs, without taking any account of the benefits received by cardholders as a result of the MIFs? (the fair share issue) (iv) Did the Court of Appeal find, and if so did it err in law in finding, that a defendant has to prove the exact amount of loss mitigated in order to reduce damages? (the broad axe issue) If it arises, the issue on the cross appeal is whether the Court of Appeal erred in remitting the AAM proceedings for reconsideration in relation to exemption under article 101(3) (the remission issue). Issue (i) The restriction issue In the CAT proceedings, the CAT decided two issues which are no longer in dispute, namely that: (i) the MIF did not amount to a restriction of competition by object; and (ii) the restriction issue fell to be considered against a counterfactual in which the transactions would be settled at par by default, which was equivalent to a default MIF of zero. It is also not in dispute that the setting of the UK MIF was pursuant to an agreement between undertakings within the meaning of article 101(1) (see para 95 of the CAT judgment, para 34 of Popplewell Js judgment and para 5 of the Visa restriction judgment). The CAT considered that bilateral MIF agreements would be made in the counterfactual and made detailed findings on this basis. Both Popplewell J and Phillips J disagreed with this conclusion. As Phillips J stated at paras 126 129 of the Visa restriction judgment: 126. despite the fact that MIFs have provided a default level of Interchange Fee for many years bilateral agreements are unknown in the UK market. That demonstrates the very considerable strength of the market forces which keep the Interchange Fee at the level of the default: no party has persuaded another to move away from the default and no party has volunteered to do so for some perceived benefit. 129. In my judgment it would require clear evidence to support a finding that [bilateral agreements] would emerge in a default settlement counterfactual when they do not arise in the actual default Scheme it is clear that there is no such evidence in these proceedings. On the contrary, the evidence was unanimous and unequivocal to the opposite effect It is now common ground that Popplewell J and Phillips J were correct so to It follows that the findings made by the CAT on the counterfactual on the basis of bilateral agreements being made are not relevant to the appeal. In the AAM proceedings, Popplewell J would have found that the Mastercard MIFs were a restriction on competition were it not for the death spiral argument. That argument was not supported on appeal. The reason that he would otherwise have found that there was a restriction is summarised at para 156 of Popplewell Js judgment: 156. They [the MIFs] imposed a floor below which the MSC could not fall, because acquirers had to pay at least that much to issuers and had to recoup it from the merchants, which in turn led to higher prices charged by acquirers to merchants through the MSC than if the MIF were lower or zero. Such a floor restricts competition because it interferes with the ability of acquirers to compete for merchants business by offering MSCs below such floor. It is no different in kind from a collective agreement by manufacturers to maintain inflated wholesale prices, which prevents wholesalers competing on the retail market below those prices. Phillips J disagreed with this reasoning and conclusion. His main reason for doing so is set out at para 156 of the Visa restriction judgment: 156. the situation is exactly the same at any lower level of MIF, including a zero MIF or its equivalent, a no MIF/default SAP [settlement at par] counterfactual. At that lower level, the default settlement rule still provides a default level of Interchange Fee, and therefore (because of the lack of competitive pressure to depart from that default) both a floor and a ceiling for that fee. The only difference is the level. Popplewell J rejected that argument in the Asda Judgment, stating at para 160 that in a no MIF counterfactual the alleged vice is not the same as the actual: there is no floor. However, a zero MIF or no MIF/default SAP counterfactual most certainly does give rise to a floor, both in economic terms and as a matter of logic, particularly in the context of a two sided market: it prevents the possibility of market forces driving the MIF to a negative level (equivalent to a premium on settling the transaction price). As I have mentioned above, that is not merely a theoretical possibility, as all the expert economists recognised . The Court of Appeal held that it was bound to follow the decision in Mastercard CJ that the MIFs in issue restricted competition within the meaning of article 101(1). It stated that this was not a decision from which the Court either can or should depart. Its reasoning is summarised at paras 185 186 of the judgment: 185. Our conclusions on the primary article 101(1) issue can be summarised quite shortly. The correct counterfactual for schemes like the MasterCard and Visa schemes before us was identified by the [Court of Justices] decision. It was no default MIF and a prohibition on ex post pricing (or a settlement at par rule). The relevant counterfactual has to be likely and realistic in the actual context (see the O2 Germany GmbH & Co OHG case [2006] ECR II 1231, paras 68 71 [O2 Germany v Commission (Case T 328/03)] and the [Court of Justices] decision, para 169), but for schemes of this kind, the [Court of Justice] has decided that that test is satisfied. 186. The [Court of Justices] decision also made clear at para 195 that MasterCards MIFs, which resulted in higher prices, limited the pressure which merchants could exert on acquiring banks, resulting in a reduction in competition between acquirers as regards the amount of the merchants service charge. This is not a decision from which this court either can or should depart. It answers the schemes argument that, whether as a matter of evidence or not, the competitive process will not differ in the counterfactual. The default MIFs may be a transparent common cost, which is passed on by acquirers to merchants, and which does not figure in the negotiations between them, but it does not follow that acquirers none the less compete as strongly for merchants business in relation to the acquirers margin and the additional services they offer, as they would in the absence of the default MIFs. It follows that there are essentially two issues which arise: (i) whether, as the Court of Appeal held, the court is bound by the Mastercard CJ decision on the restriction issue; and (ii) if not, whether that decision ought to be followed. This requires a detailed consideration of what was decided by the Commission, the General Court and the Court of Justice, and of their reasoning. Is the court bound by Mastercard CJ? The Mastercard Commission Decision The decision is summarised at paras 396 405 of the Court of Appeal judgment. The restriction of competition identified by the decision is summarised in the Executive Summary, point 2, as follows: The MIF in MasterCards scheme restricts competition between acquiring banks by inflating the base on which acquiring banks set charges to merchants and thereby setting a floor under the merchant fee. In the absence of the multilateral interchange fee the merchant fees set by acquiring banks would be lower. This reflects the finding made at recital 410: MasterCards MIF constitutes a restriction of price competition in the acquiring markets. In the absence of a bilateral agreement, the multilateral default rule fixes the level of the interchange fee rate for all acquiring banks alike, thereby inflating the base on which acquiring banks set charges to merchants. Prices set by acquiring banks would be lower in the absence of this rule and in the presence of a rule that prohibits ex post pricing. The MasterCard MIF therefore creates an artificial cost base that is common for all acquirers and the merchant fee will typically reflect the costs of the MIF. This leads to a restriction of price competition between acquiring banks to the detriment of merchants (and subsequent purchasers). This is further explained at recital 448 as follows: The decisive question is whether in the absence of the MIF the prices acquirers charge to merchants at large would be lower. This is the case, because the price each individual bank could charge to merchants would be fully determined by competition rather than to a large extent by a collective decision among (or on behalf of) the banks. At recitals 455 to 460 the Commission addressed the argument of Mastercard and Visa (who had been allowed to participate in the proceedings) that the MIF was not a restriction because its effect would be like an excise tax. This argument is recorded at recital 219 in the following terms: At the oral hearing Visas expert also argued that it was hard to imagine how a multilaterally set interchange fee could possibly restrict competition between acquiring banks. Competition among acquirers could not be stronger with at par clearing than with a MIF, just as it would be hard to assume that breweries would compete more keenly if one scraps excise taxes. This is essentially the same argument as that advanced successfully by Visa before Phillips J and again on this appeal. In summary, in a counterfactual with settlement at par (equivalent to a zero rated MIF) there is no process of competition as to that default term of settlement, just as there would not be if there was a MIF, a common and transparent cost which is also a default term of settlement, not a price or charge. In both the factual scenario and the counterfactual, competition is limited to the acquirers individual marginal cost and mark up. There is accordingly no difference in the competitive process and no restriction on competition (the zero MIF argument). The Commission rejected this argument for the following reasons: 455. MasterCard puts forward that the interchange fee does not favour a particular acquirer or type of acquirer over other acquirers/types of acquirers. The interchange fee is a common identical cost, borne by all acquirers, that does not influence price competition between acquirers in terms of determining the level of MSCs. Visas expert raised a similar argument at the oral hearing by comparing the MIF to an excise tax. 457. even if one were to qualify a MIF as a kind of excise tax this is no reason why the MIF should fall outside article 81(1) of the Treaty [now article 101(1) TFEU]. The collective act of competing undertakings to raise charges for consumers is subject to the prohibition of article 81(1) of the Treaty. 458. If the concept of a restriction of competition within the meaning of article 81(1) of the Treaty had to be interpreted as MasterCard suggests, then article 81(1) of the Treaty would be entirely deprived of its effet utile. The MasterCard MIF not only creates an (artificial) common cost for acquirers and thereby sets a floor for the fees each acquirer charges to merchants. Acquirers also know precisely that all of their competitors pay the very same fees. The price floor and the transparency of it to all suppliers involved (that is to say the knowledge of each acquirer about the commonality of the MIF for all other acquirers in the MasterCard scheme) eliminate an element of uncertainty. 459. In the absence of MasterCards MIF, the prices acquirers charge to merchants would not take into account the artificial cost base of the MIF and would only be set taking into account the acquirers individual marginal cost and his mark up. 460. Statements of retailers demonstrate that they would be in a position to exert that pressure if acquirers were not able to refer to interchange fee as the starting point (that is to say, as the floor) for negotiating the MSC. This is because without a default that fixes an interchange fee rate in the absence of a bilateral agreement, merchants could shop around to contract with the acquirer who incurs the lowest interchange costs.517 Acquirers who bilaterally agree to pay relatively high interchange fees to issuers would ultimately not remain competitive, as other acquirers could undercut their merchant fees by refusing to enter into bilateral agreements with issuers or by agreeing on relatively lower interchange fees. The uncertainty of each individual acquirer about the level of interchange fees which competitors bilaterally agree to pay to issuers would exercise a constraint on acquirers. In the long run this process can be expected to lead to the establishment of inter bank claims and debts at the face value of the payment that is without deducting any interchange fees. A multilateral rule that by default sets a certain interchange fee rate in the absence of bilateral negotiations prevents this competitive process. In the absence of such a rule (and in the presence of a prohibition of ex post pricing) acquiring banks would eventually end up setting their MSCs merely by taking into account their own marginal cost plus a certain mark up. Footnote 517 to para 460 provides as follows: Note that in the Commissions view in the absence of a default MIF banks may or may not enter into bilateral agreements on interchange fees. The existence of such bilaterally agreed interchange fees is no pre requisite for the viability of the MasterCard payment card scheme. In the absence of a default MIF prices are established on both sides of the MasterCard scheme as set out in section 7.3.4.1, ie: each bank determines its service levels and prices in a manner that maximises its individual profits. Mastercard GC Mastercard applied to the CJEU for annulment of the Commissions decision. Its application was determined by the General Court. The General Courts decision is summarised at paras 406 411 of the Court of Appeal judgment. On the restriction issue the General Court summarised the Commissions reasoning and conclusion as follows: 28. According to the Commission, the members of the MasterCard payment organisation collectively exert market power vis vis merchants and their customers. Thus, the MIF had the effect of inflating the base of the MSC, while the latter could be lower if there were no MIF and if there were a prohibition of unilateral pricing a posteriori of transactions by the issuing banks (prohibition of ex post pricing). It follows from this that the MIF examined by the Commission in the contested decision led to a restriction of price competition between acquiring banks to the detriment of merchants and their customers (recitals 410, 411 and 522 to the contested decision). The General Court addressed the complaints made relating to the assessment of competition in the absence of the MIF at paras 129 167. At para 140 it made the following general observation about the purpose of article 101(1)(a): 140. it is helpful to point out that article 81(1)(a) EC [now article 101(1)(a) TFEU] expressly provides that measures which directly or indirectly fix purchase or selling prices constitute restrictions of competition, and that, according to the case law, the purpose of article 81(1)(a) EC is to prohibit undertakings from distorting the normal formation of prices on the markets (ICI v Commission (Case T 13/89) [1992] ECR II 1021, para 311). At para 142 the General Court set out the complaint made based on the zero MIF argument: 142. the applicants submit, in essence, that the fact that the MIF had an impact on the level of the MSC does not affect competition between acquirers, because the MIF applies in the same way to all acquirers and operates as a cost that is common to all of them. Thus, the prohibition of ex post pricing would effectively impose a MIF set at zero which, from a competitive aspect, would be equivalent to and just as transparent as the current MIF, the only difference being the level at which it is set. The General Court rejected this argument and set out its conclusion at para 143 as follows: 143. This line of argument cannot be accepted. Since it is acknowledged that the MIF sets a floor for the MSC and in so far as the Commission was legitimately entitled to find that a MasterCard system operating without a MIF would remain economically viable, it necessarily follows that the MIF has effects restrictive of competition. By comparison with an acquiring market operating without them, the MIF limits the pressure which merchants can exert on acquiring banks when negotiating the MSC by reducing the possibility of prices dropping below a certain threshold. Mastercard CJ Mastercard appealed against the General Courts decision to the Court of Justice. The Advocate General recommended that the appeal be dismissed. He summarised the Commissions reasoning and conclusion as follows: AG6 In the decision at issue, the Commission considered that the decisions setting the MIF, which it characterised as decisions of an association of undertakings within the meaning of article 81(1) EC, restrict competition between acquiring banks and thereby infringe that article and article 53 of the EEA Agreement, in that they amount in fact to setting a minimum price for the MSC AG54 In the present case, the Commission examined the competitive process that would have developed on the acquiring market in the absence of the MIF at recitals 458 to 460 to the decision at issue and concluded that, in the absence of the MIF and with a prohibition on ex post pricing, the prices charged to merchants by acquirers would only be set taking into account the acquirers individual marginal cost and his mark up. The Court of Justices decision is summarised at paras 412 417 of the Court of Appeal judgment. The Court of Justice explained and affirmed the General Courts conclusion at para 143 of its judgment in the following terms: 193. In particular, while the General Court clearly explained in para 143 of the judgment under appeal that the MIF had restrictive effects in that they: [limit] the pressure which merchants can exert on acquiring banks when negotiating the MSC by reducing the possibility of prices dropping below a certain threshold, in contrast with an acquiring market operating without them, the General Court did not merely presume that the MIF set a floor for the MSC but, on the contrary, proceeded to carry out a detailed examination in paras 157 to 165 of the judgment under appeal in order to determine whether that was in fact the case. The Court of Justice endorsed the General Courts rejection of the zero MIF argument in the following terms: 195. the appellants cannot criticise the General Court for having failed to explain how the hypothesis applied had less restrictive effects on competition than the MIF, given that the only difference between the two situations lies in the pricing level of the MIF. As the Commission rightly points out, the judgment under appeal is not based on the premiss that high prices in themselves constitute an infringement of article 81(1) EC. On the contrary, as is apparent from the very wording of para 143 of the judgment under appeal, high prices merely arise as the result of the MIF which limit the pressure which merchants could exert on acquiring banks, with a resulting reduction in competition between acquirers as regards the amount of the MSC. Visa and Mastercards arguments Ms Dinah Rose QC for Visa (whose argument is adopted and supported by Mr Mark Hoskins QC for Mastercard) submits that the Court of Appeal was wrong to conclude that it was bound by Mastercard CJ. The decisions of the Court of Justice and the General Court depended on the factual basis of the Mastercard Commission Decision. Crucial to that factual basis was the Commissions determination on the evidence before it that the competitive pressure which could be brought to bear on acquirers by merchants is greater in the counterfactual because of the possibility of bilateral negotiations of interchange fees and the uncertainty that that would create. Ms Rose relies in particular on para 460 of the Mastercard Commission Decision which describes how, if there were no default MIF, merchants could shop around to contract with the acquirer who incurs the lowest interchange costs and how the uncertainty of each individual acquirer about the level of interchange fees which competitors bilaterally agree to pay to issuers would exercise a constraint on acquirers. This is the pressure which merchants would be able to exert in the counterfactual, as borne out by statements of retailers. This is to be contrasted with the evidence before and the findings made by Phillips J in the Visa restriction judgment. He found that there would be no bilateral agreements in the counterfactual (para 129) and no resulting competition (para 151). It followed that there would be no competitive pressure as found by the Commission. Ms Rose submits that this is the pressure referred to in para 143 of Mastercard GC and para 195 of Mastercard CJ. In para 195 the Court of Justice was making it clear that the Commissions finding of infringement had been upheld by the General Court because of the Commissions findings that MIFs limit this pressure which merchants could otherwise exert on acquirers, thereby reducing competition between acquirers. Mastercard CJ is accordingly factually distinguishable. It turned on the factual assessment made by the Commission which was different to that made by Phillips J. Although Popplewell J did not make the same findings as Phillips J, he also found that there would be no bilateral agreements in the counterfactual, which is a critical difference in the factual assessment. It is well established that a court is not bound by factual assessments made by the Commission Crehan v Inntrepreneur Pub Co (CPC) (Office of Fair Trading intervening) [2007] 1 AC 333; [2006] UKHL 38. The Court of Appeal was therefore wrong to conclude that it was bound by Mastercard CJ. In our judgment Visa and Mastercards arguments involve a misinterpretation of the Mastercard Commission Decision, Mastercard GC and Mastercard CJ. In relation to the Mastercard Commission Decision, in the section of the decision relied upon by Visa and Mastercard, recital 459, read in the context of recitals 457 and 458, is as important as recital 460. Recital 459 bears repetition; it states: In the absence of MasterCards MIF, the prices acquirers charge to merchants would not take into account the artificial cost base of the MIF and would only be set taking into account the acquirers individual marginal cost and his mark up. The Commission was here focusing on the process by which merchants bargain with acquirers over the MSC. It was contrasting the position where that charge is negotiated by reference to a minimum price floor set by the MIF and one where it is negotiated by reference only to the acquirers individual marginal cost and his mark up ie between a situation in which the charge is only partly determined by competition and one in which it is fully determined by competition. In the latter situation the merchants have the ability to force down the charge to the acquirers individual marginal cost and his mark up and to negotiate on that basis. This is the pressure which is referred to in recital 460 of the decision. This is made clear by the reference in the first sentence of recital 460 to that pressure ie the pressure referred to in recital 459. It is correct that the Commission went on in recital 460 to describe the competitive process involved if there were bilateral negotiations over interchange fees, but the ultimate point it was here making is that that process would be transient and that acquiring banks would eventually end up setting their MSCs merely by taking into account their own marginal cost plus a certain mark up. The transient nature of such a competitive process shows that the existence of such a process cannot have been integral to the Commissions decision that there was a restriction on competition. This is further borne out by footnote 517 in which the Commission stated that in the counterfactual banks may or may not enter into bilateral agreements on interchange fees, thereby making it clear that such agreements were not essential to its reasoning. Mastercard GC is properly to be interpreted in a similar way. In para 143 the General Court rejected the zero MIF argument and held that since the MIF sets a minimum price floor for the MSC (which is not determined by competition) it necessarily follows that the MIF has effects restrictive of competition. This is the context in which the pressure referred to in the next sentence falls to be considered. The consequence of the minimum price floor set by the MIF is that such pressure is limited to only part of the MSC ie that relating to the acquirers individual marginal cost and mark up (in the present case about 10% of the MSC). A similar analysis applies to Mastercard CJ. The pressure which the Court of Justice referred to at para 195 is the same as that referred to in para 143 of Mastercard GC, which the Court of Justice was endorsing. Accordingly, we do not consider that Mastercard CJ can be factually distinguished in the manner suggested by Visa and Mastercard. Visa and Mastercard further contend that the recent decision of the Court of Justice in Gazdasgi Versenyhivatal v Budapest Bank Nyrt (Case C 228/18) EU:C:2020:265 (Budapest Bank) established that the question whether MIFs that set a floor under the MSC restrict competition has not been settled by Mastercard CJ, but must be determined by a national court by carrying out an in depth evidential examination of its effects, and that this was contrary to the judgment of the Court of Appeal. The Court of Justices decision in Budapest Bank was pronounced after the conclusion of the hearing of this appeal but the parties were allowed to make written submissions as to its significance. The Advocate Generals opinion had already been referred to in argument. Budapest Bank concerned an agreement made by banks that participated in both the Visa and Mastercard schemes in Hungary, by which they agreed on a uniform MIF that was applicable to both schemes. It was argued by the parties in the national proceedings that the agreement had the effect of preventing the fees from escalating upwards. The issue in the proceedings was whether the agreement had the object of restricting competition. It did not concern whether it had the effect of so doing. The Hungarian Supreme Court referred four questions to the CJEU for a preliminary ruling. The second question concerned whether the MIF agreement had the object of restricting competition. The Court of Justice ruled that it would only do so if the agreement in the light of its wording, its objectives and its context, can be regarded as posing a sufficient degree of harm to competition to be classified thus, a matter which is for the referring court to determine. In so ruling the Court of Justice rejected the Commissions argument that, in reliance on Mastercard CJ, the MIF agreement necessarily had the object of restricting competition. Particular reliance is placed by Visa and Mastercard on paras 78 79 of the judgment which state: 78. Second, as regards the acquiring market in Hungary, even assuming that the MIF Agreement had inter alia as its objective the fixing of a minimum threshold applicable to the service charges, the Court has not been provided with sufficient information to establish that that agreement posed a sufficient degree of harm to competition on that market for a restriction of competition by object to be found to exist. It is, however, for the referring court to carry out the necessary verifications in that respect. In particular, in the present instance, subject to those 79. verifications, it is not possible to conclude on the basis of the information produced for this purpose that sufficiently general and consistent experience exists for the view to be taken that the harmfulness of an agreement such as that at issue in the main proceedings to competition justifies dispensing with any examination of the specific effects of that agreement on competition. The information relied on by the Competition Authority, the Hungarian Government and the Commission in that connection, that is to say, primarily, that authoritys decision making practice and the case law of the Courts of the European Union, specifically demonstrates, as things currently stand, the need to conduct an in depth examination of the effects of such an agreement in order to ascertain whether it actually had the effect of introducing a minimum threshold applicable to the service charges and whether, having regard to the situation which would have prevailed if that agreement had not existed, the agreement was restrictive of competition by virtue of its effects. Visa and Mastercard contend that this shows that MIFs do not necessarily affect competition and that whether or not they do so is to be determined by the national court carrying out an in depth examination of its effects on competition in the actual and counterfactual markets. It is surprising that so much reliance should now be placed by Visa and Mastercard on Budapest Bank. At the hearing it was recognised by Visa that it raised a different question. As stated at para 116 of Visas written case: That case concerned the question whether an agreement between a number of Hungarian banks introducing a uniform MIF for both Visa and Mastercard credit card transactions in Hungary should be characterised as having the object of restricting competition. It was therefore quite a different question from that which the CJEU had considered in Mastercard CJEU, in that it concerned alleged infringements by object rather than effect, and a single agreement covering both Visa and Mastercard, rather than one schemes rules applicable only to its own system. In our judgment the case can clearly be distinguished in that: (i) it concerned restriction by object rather than effect; (ii) it involved a different type of MIF agreement and, in particular, one which was said to prevent escalating interchange fees; and (iii) it involved a different counterfactual, namely one where each scheme had its own MIF rather than there being no MIF. The fact that the Commission sought to rely on Mastercard CJ in argument does not affect these important distinctions, all the more so given that the Commissions attempt to read across from an effect case to an object case was rejected by the Court of Justice. In any event, in the present case there has been an examination by all courts of the effects of the MIF on competition in the actual and counterfactual markets, including whether it operates as a price floor. The issue is whether the effects as found are materially the same so that the same legal conclusion is to be drawn as in Mastercard CJ. For all these reasons, in our judgment Budapest Bank does not support Visa and Mastercards case on the restriction issue. Still less, as is boldly submitted, is it determinative in their favour. Whether Mastercard CJ is binding depends upon whether the findings upon which that decision is based are materially distinguishable from those made or accepted in the present appeals. We have rejected Visa and Mastercards arguments that it can be distinguished in the manner suggested by them and that their case is made out or supported by Budapest Bank. In our judgment, the essential factual basis upon which the Court of Justice held that there was a restriction on competition is mirrored in these appeals. Those facts include that: (i) the MIF is determined by a collective agreement between undertakings; (ii) it has the effect of setting a minimum price floor for the MSC; (iii) the non negotiable MIF element of the MSC is set by collective agreement rather than by competition; (iv) the counterfactual is no default MIF with settlement at par (that is, a prohibition on ex post pricing); (v) in the counterfactual there would ultimately be no bilaterally agreed interchange fees; and (vi) in the counterfactual the whole of the MSC would be determined by competition and the MSC would be lower. For all these reasons we conclude that Mastercard CJ is binding and that the Court of Appeal was correct so to hold. Should the court follow Mastercard CJ? In the light of our conclusion that this Court is bound by Mastercard CJ this further issue does not arise. Given the importance of the issues raised and the detailed arguments presented, we shall nevertheless briefly address it. Under article 101(1) an agreement between undertakings which has the effect of directly or indirectly fixing purchase or selling prices is a restriction of competition under article 101(1)(a). It is well established that the prohibition of price fixing under article 101(1) also extends to the fixing of part of the price Krupp Thyssen Stainless GmbH v Commission of the European Communities (Joined Cases T 45/98 and T 47/98) [2001] ECR II 3757; [2002] 4 CMLR 15, paras 156 157. The relevant selling price in the present appeals is the MSC. On the facts as found, the effect of the collective agreement to set the MIF is to fix a minimum price floor for the MSC. In the words of Mr Dryden, AAMs expert economist, it sets a reservation price. That minimum price is non negotiable. It is immunised from competitive bargaining. Acquirers have no incentive to compete over that part of the price. It is a known common cost which acquirers know they can pass on in full and do so. Merchants have no ability to negotiate it down. Whilst it is correct that higher prices resulting from a MIF do not in themselves mean there is a restriction on competition, it is different where such higher prices result from a collective agreement and are non negotiable. Whilst it is also correct that settlement at par sets a floor, it is a floor which reflects the value of the transaction. Unlike the MIF, it involves no charge resulting from a collective agreement, still less a positive financial charge. There is a clear contrast in terms of competition between the real world in which the MIF sets a minimum or reservation price for the MSC and the counterfactual world in which there is no MIF but settlement at par. In the former a significant portion of the MSC is immunised from competitive bargaining between acquirers and merchants owing to the collective agreement made. In the latter the whole of the MSC is open to competitive bargaining. In other words, instead of the MSC being to a large extent determined by a collective agreement it is fully determined by competition and is significantly lower. For all these reasons, which are essentially the same as those given by the Commission, the General Court, the Court of Justice, Popplewell J and the Court of Appeal, even if we were not bound by Mastercard CJ, we would follow it and conclude that there was in the present cases a restriction on competition. Conclusion on the restriction issue For these reasons we dismiss the appeal on issue (i). Issue (ii) The standard of proof issue This ground of appeal is advanced jointly by Visa and Mastercard. They submit that the Court of Appeal erred in law insofar as it concluded that, in relation to article 101(3) TFEU: (i) there is a specific requirement for robust and cogent evidence, which is a more onerous standard than that under the normal domestic civil standard of proof on the balance of probabilities; and (ii) there is a legal requirement that matters required to be considered have to be proved by facts and empirical data. We are concerned here with circumstances in which a party in breach of article 101(1) seeks exemption by satisfying the requirements of article 101(3). The following four conditions must be satisfied. First, the anti competitive conduct must contribute to improving the production or distribution of goods or to promoting technical or economic progress. Secondly, consumers must be allowed a fair share of the resulting benefit. Thirdly, it must not impose on the participating undertakings any restrictions which are not indispensable to the attainment of these objectives. Fourthly, it must not afford them the possibility of eliminating competition in respect of a substantial part of the products in question. (See, for example, GlaxoSmithKline Services Unlimited v Commission of the European Communities (Case T 168/01) [2006] ECR II 2969; [2006] 5 CMLR 29 (GlaxoSmithKline), para 234.) It is common ground between the parties that if the restriction on competition established under article 101(1) is to be justified, the burden of satisfying the four conditions set out in article 101(3) lies on the defendant. Visa and Mastercard describe the present issue as relating to the standard of proof. Visa and Mastercard maintain that in the first instance proceedings in the Commercial Court the judges adopted diverging views as to the standard of proof and the nature of the evidence required to satisfy that standard. In the AAM proceedings, Popplewell J followed the orthodox common law approach that the standard of proof is the balance of probabilities and that there is no additional requirement as to the evidence which is capable of satisfying that standard. In the context of exemption the requirement for substantiation is no more than a requirement for evidence, and the suggestion that it needs to be empirical and convincing means no more than that it must be based on evidence, not speculation, and be sufficient to convince the court to the requisite standard of proof which is the balance of probabilities. If the epithet robust is intended to add more and connote an enhanced standard of proof, it is difficult to discern any legal basis for such an approach, (at para 305) In the Visa exemption judgment, Phillips J referred to the agreement between the parties that it was for Visa to establish on the balance of probabilities that its UK MIFs at a particular level are or were exempt. He went on to address the relationship of that standard of proof with the requirement under EU law (citing the Mastercard Commission Decision at para 690) that the claim that a restrictive agreement creates efficiencies must be founded on detailed, robust and compelling analysis and that assumptions and deductions be based on empirical data and facts. In my judgment the distinction being drawn is between: (a) real links to real efficiencies, capable of being observed and demonstrated on the facts by evidence (in other words, requiring empirical data); and (b) theoretical or logically assumed links and efficiencies based on broad economic or logical analysis, opinion or anecdotal evidence, perhaps sound in theory but possibly failing to take into account one or more of the many factors which arise in highly complex interactions in the real economy. I see no difficulty in this court determining whether the former has been proved on the balance of probabilities. That test is capable of accommodating varying requirements as to what is expected to meet the standard: contract terms must be certain, allegations of fraud must be distinctly proved and it is often said that cogent evidence is required to rebut certain presumptions. In the case of article 101(3), it is recognised that robust analysis and cogent evidence will be required to establish, on the balance of probabilities, that a restrictive agreement in fact and in the real world (as opposed to in theory) gives rise to pro competitive effects. (at para 24) Phillips J went on to state (at para 25) that in his view this analysis did not differ significantly from that of Popplewell J. The Court of Appeal began its consideration of the conditions for exemption under article 101(3) with the following uncontroversial statement: 77. Pursuant to article 2 of the Modernisation Regulation [Council Regulation (EC) No 1/2003 on the implementation of Treaty competition rules (OJ 2003 L1, p 1)] the burden of proving that these cumulative conditions are satisfied is upon the schemes. Recital 5 to the [Modernisation] Regulation makes it clear, however, that the standard of proof is for the national law, so that the usual civil standard of the balance of probabilities applies. It then adopted para 24 of the Visa exemption judgment of Phillips J and continued: 80. We agree with Phillips J (at para 25 of that judgment), that this analysis does not differ significantly from that of Popplewell J at para 305 of his judgment, but to the extent that there are any differences, we prefer the analysis of Phillips J. In so far as Ms Dinah Rose QC, leading counsel for Visa, sought to argue that Phillips J adopted too prescriptive an approach and that any evidence should suffice provided it meets the civil standard of proof, we do not accept that argument. We consider that Phillips J was right that regard should be had to the requirement of the Commission and the CJEU for cogent and convincing arguments and evidence (see GlaxoSmithKline Services Unlimited v Commission of the European Communities (Case T 168/01) EU:T:2006:265, [2006] ECR II 2969; [2006] 5 CMLR 1623 para 235, which was applied and followed in the General Courts decision in MasterCard at para 196). 81. Although the standard of proof is a matter of English law, the nature of the evidence which will satisfy that standard must be informed by European Union law and Commission decisional practice since, ultimately, whether a party is entitled to exemption involves the application of a European treaty. Furthermore, in that context, it is important to maintain a consistency of approach across member states as to the requirements of article 101(3). Other passages in the judgment of the Court of Appeal (paras 85, 86 and 249) demonstrate that it considered that EU law requires cogent factual and empirical evidence to satisfy article 101(3). In particular, the Court of Appeal (at paras 84 and 85) derived from the Commission Guidelines on the application of what is now article 101(3) TFEU (2004/C 101/8) (the Guidelines) and the EU jurisprudence on article 101(3), first, a need for the relevant benefits to be causally linked to the relevant restriction and, secondly, for that causal link to be established by facts and evidence supported by empirical analysis and data and not just economic theory. It added (at para 86): Thirdly, as para 54 of the Guidelines makes clear, the causal link must be sufficiently direct to be capable of proof and an indirect effect will not generally be sufficient, precisely because cogent evidence of the link based on empirical analysis and data and not merely economic theory is required. It is convenient to observe at this point that, contrary to the submission of Mastercard, the Court of Appeal did not conclude that only facts and empirical data but not economic theory may be relied upon in this regard. The Court of Appeal made clear that its objection was to reliance solely on economic theory and that, in its view, a claim under article 101(3) must be based on empirical data and fact and not economic theory alone (paras 85 and 86). Visa and Mastercard complain that the Court of Appeal wrongly adopted an unduly onerous standard of proof. They take as their starting point Council Regulation (EC) No 1/2003 on the implementation of Treaty competition rules (the Modernisation Regulation). The major change effected by the Modernisation Regulation was that whereas previously the grant of exemption from the prohibition on agreements which restrict competition had been the exclusive function of the European Commission, the Modernisation Regulation introduced a directly applicable exception system in which the competition authorities and courts of the member states have the power to apply the exemption provisions under what is now article 101(3). The previous system of notification to the Commission for exemptions was abolished and the widespread involvement of national courts and authorities in exempting restrictive agreements was clearly contemplated. It is in this context that recital 5 of the Preamble states: In order to ensure an effective enforcement of the Community competition rules and at the same time the respect of fundamental rights of defence, this Regulation should regulate the burden of proof under articles 81 and 82 [now articles 101 and 102] of the Treaty. It should be for the party or the authority alleging an infringement of article 81(1) and article 82 of the Treaty to prove the existence thereof to the required legal standard. It should be for the undertaking or association of undertakings invoking the benefit of a defence against a finding of an infringement to demonstrate to the required legal standard that the conditions for applying such defence are satisfied. This Regulation affects neither national rules on the standard of proof nor obligations of competition authorities and courts of the member states to ascertain the relevant facts of a case, provided that such rules and obligations are compatible with general principles of Community law. Similarly, article 2 which bears the heading Burden of proof provides: In any national or Community proceedings for the application of articles 81 and 82 of the Treaty, the burden of proving an infringement of article 81(1) or of article 82 of the Treaty shall rest on the party or the authority alleging the infringement. The undertaking or association of undertakings claiming the benefit of article 81(3) of the Treaty shall bear the burden of proving that the conditions of that paragraph are fulfilled. There is, accordingly, a clear allocation of the burden of proof, while questions as to the standard of proof are left to the law of the member state concerned, provided that the national rules are compatible with general principles of EU law. Visa and Mastercard submit, therefore, that EU law expressly reserves the question of the standard of proof to national law, subject to the principles of effectiveness and equivalence. In this regard, Visa and Mastercard rely further on the following passage in the decision of the Court of Justice in Eturas UAB v Lietuvos Respublikos konkurencijos taryba (Case C 74/14) [2016] 4 CMLR 19, paras 30 32: 30. Although article 2 of Regulation No 1/2003 expressly governs the allocation of the burden of proof, that regulation does not contain any provisions on more specific procedural aspects. Thus, in particular, that regulation does not contain any provision in relation to the principles governing the assessment of evidence and the standard of proof in national proceedings for the application of article 101 TFEU. 31. That conclusion is confirmed by recital 5 of Regulation No 1/2003, which expressly states that the regulation does not affect national rules on the standard of proof. 32. According to settled case law, in the absence of EU rules on the matter, it is for the national legal order of each member state to establish them in accordance with the principle of procedural autonomy, provided, however, that those rules are not less favourable than those governing similar domestic situations (principle of equivalence) and that they do not make it excessively difficult or impossible in practice to exercise the rights conferred by EU law (principle of effectiveness) This passage, however, is not as helpful to Visa and Mastercard as might at first appear. The issue in that case, which was a reference from the Supreme Administrative Court of Lithuania in proceedings where an anti competitive concerted practice was alleged, was whether certain evidence was sufficient proof of a fact which, if established, would trigger a presumption of liability under article 101(1). The passage in the judgment of the Court of Justice at paras 30 32, cited above, was concerned with the specific question whether the dispatch of a message through an electronic system may constitute sufficient evidence to establish that the operators which used the system were aware, or ought to have been aware, of the content of that message. Unsurprisingly, the Court of Justice held that, in accordance with the principle of procedural autonomy, the standard of proof in relation to establishing that fact was a matter for the national legal order of the member state concerned. The Court of Justice went on, however, (at para 33) to distinguish the presumption arising under article 101(1) of a causal connection between a concertation and the market conduct of the undertakings participating in the practice. That presumption, it emphasised, followed from article 101(1) and consequently formed an integral part of the EU law which the national court was required to apply. The Court of Justice then went on (at paras 46 49) to address in detail the nature of the evidence that would be sufficient to rebut the presumption. In our view, the fact that the Court of Justice in Eturas addressed, as a question of EU law, what evidence was capable of rebutting the presumption of participation in a concerted practice provides the key to resolving the present issue. In that case Advocate General Szpunar observed (at AG100), with regard to rebuttable presumptions in competition law: Insofar as such presumptions stem from article 101(1) TFEU, as interpreted by the court, and consequently form an integral part of applicable EU law, they do not fall within the scope of the principle of the autonomy of national procedural law and are therefore binding on national authorities when they apply EU competition rules. As Mr Nicholas Khan QC, on behalf of the Commission, put it in his oral submissions, Eturas illustrates how the nature of the evidence by which a finding of infringement can be secured or rebutted may be a question of EU law. In the same way, the nature of the evidence by which an undertaking may establish that a restriction on competition is exempted by virtue of article 101(3) may also be a question of EU law. In the present case, the essential complaint made by Visa and Mastercard under this ground of appeal does not relate to the standard of proof but to the nature of the evidence required to meet the standard of proof in this context. More specifically, it relates to the type of evidence needed to establish that the benefits from the MIF rules under consideration outweigh the detriments to merchants and are indispensable for achieving those benefits. The Court of Appeal recognised this distinction at paras 77 to 81 of its judgment, where it expressly accepted that the applicable standard of proof was the usual civil standard of the balance of probabilities but observed that the nature of the evidence which will satisfy that standard must be informed by EU law and Commission decisional practice. While the Modernisation Regulation recognises the autonomy of member states in determining the legal test for the standard of proof under article 101(3), it does not recognise any autonomy in the member states to determine the nature of the evidence required to satisfy that standard. The outcome on this issue, therefore, does not depend on Visa and Mastercard upholding national procedural rules about the standard of proof but on whether EU law imposes requirements as to what type of evidence is capable of discharging that burden. It is clear, in our view, that article 101(3) does impose requirements as to the nature of the evidence which is capable of discharging the burden on an undertaking to establish an exemption under that provision. Section 60 of the 1998 Act imports these requirements into domestic competition law. Article 101(3) is founded on the notion that notwithstanding the existence of a restriction on competition and its likely negative effect on competition and consumers, efficiencies and benefits arising from the conduct which gave rise to the restriction may, nevertheless, justify exemption from the prohibition in article 101(1). This is an inherently empirical proposition and necessarily requires the authority or court addressing the issue to carry out a balancing exercise a complex assessment (GlaxoSmithKline, Court of First Instance, at paras 241, 304 and 307) involving weighing the pro competitive effect against the anti competitive effect of the conduct in question. Cogent empirical evidence is necessary in order to carry out the required evaluation of the claimed efficiencies and benefits. To the extent that objective efficiencies caused by a restriction cannot be established empirically, they cannot be balanced with the restrictive effects. As a result, although the standard of proof is a matter of domestic law, the nature of the evidence which will satisfy that standard must take account of the substantive requirements of article 101(3). This view is confirmed by the practice of the Commission and the judgments of the EU courts. The Guidelines were issued in 2004, in part to assist national courts and authorities in member states in undertaking what was for them the new role of applying article 101(3). The Guidelines are not binding but they are based on the experience and expertise of the Commission which had previously had sole responsibility for carrying out the balancing test and granting exemptions, and they provide an analytical framework for the application of article 101(3). In particular, they address (at paras 50 and 51) what is involved in identifying and evaluating the causal link between a restriction of competition and the creation of an efficiency and they cast light on this balancing exercise. 50. The purpose of the first condition of [article 101(3)] is to define the types of efficiency gains that can be taken into account and be subject to the further tests of the second and third conditions of [article 101(3)]. The aim of the analysis is to ascertain what are the objective benefits created by the agreement and what is the economic importance of such efficiencies. Given that for [article 101(3)] to apply the pro competitive effects flowing from the agreement must outweigh its anti competitive effects, it is necessary to verify what is the link between the agreement and the claimed efficiencies and what is the value of these efficiencies. 51. All efficiency claims must therefore be substantiated so that the following can be verified: (a) The nature of the claimed efficiencies; (b) The link between the agreement and the efficiencies; (c) The likelihood and magnitude of each claimed efficiency; and (d) How and when each claimed efficiency would be achieved. (Original emphasis) This procedure requires the party seeking exemption to identify, substantiate and evaluate the claimed efficiencies and to verify their causal link with the anti competitive conduct as a pre condition to the balancing process which could not otherwise take place. There is a requirement for detailed, empirical evidence and analysis in order that this evaluative exercise can be carried out. In its judgment in GlaxoSmithKline (which was upheld by the Court of Justice, Third Chamber, GlaxoSmithKline Services Unlimited v Commission of the European Communities (Joined Cases C 501/06 P, C 513/06 P, C 515/06 P and C 519/06 P) [2009] ECR I 9291; [2010] 4 CMLR 2), the Court of First Instance (Fourth Chamber, Extended Composition) observed (at para 235) that a person seeking to rely on what is now article 101(3) must demonstrate that its conditions are satisfied, by means of convincing arguments and evidence. Referring to the reviewing jurisdiction of the Court of First Instance it noted (at para 242) that it is for the court to establish not only whether the evidence relied on is factually accurate, reliable and consistent, but also whether it contains all the information which must be taken into account for the purpose of assessing a complex situation and whether it is capable of substantiating the conclusions drawn from it. With regard to the first condition it observed (at para 248): It is therefore for the Commission, in the first place, to examine whether the factual arguments and the evidence submitted to it show, in a convincing manner, that the agreement in question must enable appreciable objective advantages to be obtained (See also paras 249, 263, 304, 307) We are unable to accept the submission on behalf of Visa, that in GlaxoSmithKline the evidential basis for the application for article 101(3) which was accepted by the Court of First Instance was almost entirely theoretical and based on economic studies. Having referred (at para 235) to the need for convincing arguments and evidence to demonstrate that the conditions of article 101(3) were satisfied, the General Court referred (at para 256) to the items of economic or econometric evidence submitted by GSK during the administrative procedure. The description of that material at paras 258 and 259 shows that it essentially comprised empirical evidence. The General Court observed (at para 263) that the factual arguments and the supporting evidence submitted by GSK appeared to be relevant, reliable and credible, having regard to their content which was corroborated in a number of significant aspects by documents originating with the Commission. This approach was followed in the Mastercard Commission Decision. There, the Commission stated (at recital 671): Given that for [article 101(3)] of the Treaty to apply the pro competitive effects flowing from the agreement must outweigh anti competitive effects, it is necessary to verify what the link between the agreement and the claimed efficiencies and what the value of these efficiencies are. The Commission did not dispute that payment card schemes such as Mastercards may represent, as such, economic and technical progress. However, it considered that the decisive question was whether the Mastercard MIF specifically contributed to that progress (at recital 679). In addressing Mastercards balancing of demand arguments the Commission referred to the assumption underlying the Mastercard MIF that there was a perceived imbalance between the issuing and the acquiring business in the scheme. The Commission observed (at recital 686): Also, an imbalance between issuing and acquiring cannot be assumed on the basis of cost considerations only but has to comprise an analysis of revenues as well. A cost imbalance is as such no sufficient evidence to explain why MasterCards MIF is always paid by the acquirer to the issuer, irrespective of the concrete market situation. If receipts (interests, money exchange fees, penalty fees, etc) or other monetary benefits (resulting from cost savings such as reduction of staff, paperwork etc) from payment card issuing provide sufficient commercial incentives for banks to invest in incremental card issuing, a transfer from acquiring to issuing may be superfluous and even counterproductive as the revenue transfer dampens card acceptance due to the increase of costs on the merchants side. Robust empirical evidence is therefore required to establish the necessity for and the direction of a fallback interchange fee. (Original emphasis) (See also recital 720) Similarly, in a section of the decision headed Need for empirical evidence No excessive burden of proof on MasterCard, the Commission explained (at recital 694) that Mastercard erred in its assertion that the Commission imposed an excessively high burden of proof on Mastercard if it required Mastercard to demonstrate empirically a causal link between the MIF and the actual effects on system output as well as the objective efficiencies that could result from increased system output. It continued (at recital 695): It is on the undertakings in the first place to present to the Commission the evidence intended to establish that the agreement in question fulfils the conditions laid down by [article 101(3)] of the Treaty. In the context of the first condition it has to be ascertained that the restrictive effects are offset by efficiencies. In this context the undertakings concerned must demonstrate whether a MIF generates the positive effects which the underlying model claims to achieve, here: an increase of system output and possible related efficiencies. To the extent that objective efficiencies cannot be established empirically, they cannot be balanced with the restrictive effects. Some form of convincing empirical evidence on the actual effect of a MIF on the market is therefore required. A footnote to the third sentence of recital 695 (footnote 840) reads: Again, it should be noted that an increase in system output does not constitute an objective efficiency if the benefits of increased card usage only accrue to banks, while customers and merchants are worse off due to higher retail prices and increased merchant fees. Hence, evoking the maximisation of system output also requires a convincing analysis that consumers benefit from this. On behalf of Visa and Mastercard it is submitted that these passages must be read in the context that the Commission was responding to the very different evidence put forward by Mastercard in that case, namely the Baxter framework, a different, older and less sophisticated economic theory which had been superseded by the work of Rochet and Tirole (discussed further in para 132 below). However, the Commissions statements at recitals 686 and 695 are general statements made before consideration of the Baxter framework which is introduced at recital 703. It is immediately preceded by the statement (at recital 702) that notwithstanding the lack of evidence to bolster Mastercards efficiency claim, the Commission has also assessed the theoretic underpinnings of Mastercards MIF. Similarly, the schemes are not assisted by their reliance on the following passage at recital 731 of the Mastercard Commission Decision which, they maintain, describes the Commissions approach: Contrary to MasterCards perception the Commissions position is not that only the level of a MIF is a decisive criterion for assessing whether that MIF fulfils the first condition of [article 101(3)] of the Treaty. Rather, the existence of objective appreciable efficiencies is assessed in relation to the MIF as such, the effects it produces on the market and the manner in which it is set. In particular, the Commission verifies on the basis of the evidence submitted whether the model underlying a MIF is based on realistic assumptions (which is not the case here), whether the methodology used to implement that model in practice is objective and reasonable (which is not the case for the two methodologies used by MasterCard) and whether the MIF indeed has the positive effect on the market to the benefit of both customer groups which the model claims. The Commission was not subscribing here to the view that convincing proof of efficiencies can be provided by economic modelling and assumptions alone. On the contrary, the Commission made abundantly clear the need for empirical evidence in the immediately preceding recital: There is no presumption that MIFs in general enhance the efficiency of card schemes just as there is no presumption that they do not fulfil the conditions of [article 101(3)] of the Treaty and are therefore illegal. A MIF may be used by banks to achieve efficiencies as well as to extract rents. The Commissions conclusion on the efficiencies of a MIF will depend on the concrete evidence brought forward by the parties. (recital 730) and the immediately following recital: Any claim that a MIF creates efficiencies within the meaning of [article 101(3)] of the Treaty must therefore be founded on a detailed, robust and compelling analysis that relies in its assumptions and deductions on empirical data and facts. MasterCard has not provided such analysis and empirical evidence, (recital 732) The appeal against the Commission decision was dismissed by the General Court in Mastercard GC. In those proceedings, Mastercard had complained that an excessively high burden of proof had been imposed on the applicants in relation to the conditions of what is now article 101(3) TFEU, whereas the Commission had been required to analyse the arguments and the evidence adduced by reference to the balance of probabilities alone (paras 194, 195 and 237). In rejecting this submission, the General Court observed (at para 196) that a person who relies on [article 101(3)] must demonstrate that those conditions are satisfied, by means of convincing arguments and evidence. At a later point in the judgment the General Court observed: 232. So far as concerns the allegation relating to the lack of data capable of meeting the standard of economic proof demanded by the Commission, even if that were established, it does not mean that the burden of proof is eased, or even reversed, as the applicants seem to suggest. It must be observed that such a difficulty might be regarded as having resulted from the arguments developed by the applicants during the administrative procedure. 233. Thus, inasmuch as it is not possible to establish precisely the extent of the advantages that can be deemed to justify some financial compensation from merchants for the costs incurred by issuing banks, it is reasonable to conclude that it was for the applicants in order to prove that the MIF satisfied the first condition laid down in [article 101(3), TFEU] to identify the services provided by the banks issuing debit, charge or credit cards capable of constituting objective advantages for merchants. It was also for them to establish that there was a sufficiently clear correlation between the costs involved in the provision of those services and the level of the MIF. As regards the last point, it must be noted that those costs cannot be determined without taking into account other revenues obtained by issuing banks on the provision of those services or by including costs which are not directly linked to them. This is entirely consistent with and supports our view that, in identifying what evidence may be required to discharge the burden on an undertaking claiming exemption under article 101(3), the Commission and the EU courts are not adjusting the standard of proof. The decision of the General Court in Mastercard GC was upheld by the Court of Justice in Mastercard CJ. Before the Court of Justice, a plea contending that the General Court had failed to apply the correct standard of proof, ie the balance of probabilities, was held inadmissible. (See Advocate General Mengozzi at paras 136 149, Mastercard CJ at paras 209 219.) It is noteworthy that both the General Court and the Court of Justice placed reliance on the authority of GlaxoSmithKline. The Court of Justice stated: 235. Next, the court notes that the examination of an agreement for the purposes of determining whether it contributes to the improvement of the production or distribution of goods or to the promotion of technical or economic progress, and whether that agreement generates appreciable objective advantages, must be undertaken in the light of the factual arguments and evidence provided by the undertakings (see to that effect, in connection with a request for exemption under article 81(3) EC, judgment in GlaxoSmithKline Services Unlimited v Commission of the European Communities (C 501/06 P, C 513/06 P, C 515/06 P and C 519/06 P) EU:C:2009:610, para 102). 236. Such an examination may require the nature and specific features of the sector concerned by the agreement in question to be taken into account if its nature and those specific features are decisive for the outcome of the analysis (see judgment in GlaxoSmithKline Services, EU:C:2009:610, para 103). In their written cases, Visa and Mastercard submit that there is no EU law that concerns the nature of the evidence required before national courts in order to satisfy the four conditions under article 101(3). In their submission, the EU has, by legislation, expressly deferred procedural autonomy to member states, not just in respect of the legal test for the standard of proof, but also in relation to the nature of evidence required to satisfy that domestic standard, subject only to the EU principles of equivalence and effectiveness. In our view, this submission is contradicted by authority and is simply wrong. While EU law has deferred to the law of member states in respect of the standard of proof under article 101(3), subject to the principles of equivalence and effectiveness, it clearly maintains its own requirements as to the type of evidence which may be capable of discharging the appropriate standard of proof. Moreover, those requirements cannot vary depending on whether EU competition law is being applied by EU courts or authorities or the courts or authorities of member states. As the Court of Appeal observed in the present case (at para 81), it is important to maintain a consistency of approach across member states as to the requirements of article 101(3). It should be noted, in this regard, that the Modernisation Regulation emphasises the importance of the effective and uniform application of competition law within the EU. (See recitals 1, 14, 17, 19, 21 and 22 and article 16.) In the same way, national courts are required by section 60(2) of the 1998 Act to ensure consistency in the application of article 101 with that of the General Court and the Court of Justice. In our view, EU law clearly requires an undertaking seeking exemption under article 101(3) to produce cogent empirical evidence in support of that claim. Visa submits that, while in some cases it may be difficult to prove that a causal link is real without specific empirical evidence and data, it will depend on the particular circumstances of the case. In the present case, Visa submits, a judge would be entitled to conclude that nothing more is required than the expert evidence of economists to prove that an issuing bank which receives a payment on each card transaction undertaken by its customers will probably invest more to encourage its customers to engage in a greater number of such card transactions than it would do if it did not receive any such payments. This submission, however, grossly underestimates the complexity and subtlety of the balancing exercise required under article 101(3). In particular, as the AAM parties point out, an assessment of any benefits accruing to consumers and merchants from MIFs will depend on a range of factors including issuer pass through (the extent to which issuing banks decide to recycle MIF revenues into promotional behaviour) and always card transactions (the extent to which cardholders alter their behaviour in the light of any incentives provided). Thus, in the present case the Court of Appeal correctly concluded (at para 88) that establishing the requisite causal link involves two critical stages: first that the default MIFs in each case incentivise the issuers to take steps they would not otherwise have taken, and secondly that the steps taken did indeed increase card usage or increase the efficiencies of transactions which would have been card transactions anyway. (See also the judgment of Popplewell J at para 310 and the Visa exemption judgment of Phillips J at para 37.) Such factors must necessarily be taken into account in assessing whether appreciable objective advantages for consumers arise from the restriction in question so as to compensate for its competitive disadvantages. This process necessarily requires empirical evidence. A further demonstration of the need for empirical evidence is provided by the General Court in Mastercard GC (at para 233) where it calls, inter alia, for a comparison between the cost of providing services from which merchants are said to benefit as a result of the MIF and the level of the MIF itself: Thus, inasmuch as it is not possible to establish precisely the extent of the advantages that can be deemed to justify some financial compensation from merchants for the costs incurred by issuing banks, it is reasonable to conclude that it was for the applicants in order to prove that the MIF satisfied the first condition laid down in [article 101(3)] to identify the services provided by the banks issuing debit, charge or credit cards capable of constituting objective advantages for merchants. It was also for them to establish that there was a sufficiently clear correlation between the costs involved in the provision of those services and the level of the MIF. As regards the last point, it must be noted that those costs cannot be determined without taking into account other revenues obtained by issuing banks on the provision of those services or by including costs which are not directly linked to them. Visa complains that the approach adopted by the Court of Appeal in this case is inconsistent with the object and purpose of the relevant legislation in that article 101 and the Chapter I prohibition under the 1998 Act apply to agreements between undertakings, or decisions of associations of undertakings, from the date that they are made and before they have been implemented and had any effect at all. As a result, it is submitted, the prohibition applies before empirical, real world evidence of the type demanded by the Court of Appeal can be available. Undertakings, it is said, must be able to make a realistic assessment, at the time of making their agreement, as to whether article 101(3) is satisfied or not and that can only be done with the best evidence that is reasonably available at the time. In our view, there is nothing in the Court of Appeals approach which is inconsistent with the object and purpose of the legislation. Indeed, the answers advanced by the AAM parties are, in our view, compelling. First, the Guidelines state (at para 58) that, in cases where an agreement has yet to be fully implemented, the parties must substantiate any projections as to the date from which the efficiencies will become operational so as to have a significant positive impact in the market. (See also the General Court in GlaxoSmithKline at para 249.) Secondly, it is not the case that where, as in the present case, there is experience of restrictive measures over many years, the courts must disregard the evidence then available to them in assessing the issue of exemption. Thus, in Krka Tovarna Zdravil d d v European Commission (Case T 684/14) [2019] 4 CMLR 14, the General Court (Ninth Chamber) observed (at para 360), with regard to the assessment of distortion of competition under article 101(1) by comparison with the situation which would have existed but for the agreement: It appears paradoxical where the clauses of an agreement have been implemented and their impact on competition can be measured by taking into account the relevant factual developments, including those subsequent to the conclusion of the agreement, which took place before the Commission issued its decision to allow the Commission to demonstrate merely the anticompetitive effects that such clauses are likely to have and, to that end, to make the comparison without taking those developments into account. Finally, in this regard, it is necessary to say something about the reliance placed by Visa and Mastercard on the merchant indifference test (MIT). The MIT, which is also known as the tourist test, is an economic methodology developed by Professors Rochet and Tirole, initially in a paper published in 2008. It embodies the notion that there is a level of MIF which, when included in the MSCs paid by merchants, equalises the cost to merchants of accepting a scheme card with the cost of their accepting other methods of payment such as cash. If the MIT is set at that level, a merchant would be indifferent as to whether a one off customer (such as a tourist) chooses to pay with cash or card, so long as he does not choose to shop elsewhere. If, however, it is set at a higher level, while a merchant could in principle be better off by refusing to accept scheme cards because other forms of payment would be cheaper, in reality, if he did so, he would probably lose sales to rivals who did accept them (the business stealing effect). There are must take cards that merchants cannot turn down. The MIT seeks to put an upper limit on MIFs so that the schemes are not able to exploit their market power over merchants in this way (Rochet and Tirole, Must Take Cards: Merchant Discounts and Avoided Costs, (2011) Journal of the European Economic Association 9(3): 462 at 463). Visa and Mastercard rely on the MIT in two ways. First, they submit that in the EU Interchange Fee Regulation 2015 (Regulation (EU) 2015/751 of the European Parliament and of the Council on Interchange Fees for Card based Payment Transactions (OJ 2015 L123, p 1)) (the IFR) the EU legislature has endorsed the MIT test as meeting the requirements of article 101(3). This is not correct. While the Commission and the European Parliament accepted the MIT for the purpose of setting a cap under the Regulation, the Commission has consistently maintained that adoption of the MIT alone will not lead to automatic exemption. This is reflected in recital 10 of the IFR: In addition to a consistent application of the competition rules to interchange fees, regulating such fees would improve the functioning of the internal market and contribute to reducing transaction costs for consumers. and in recital 14: The application of this Regulation should be without prejudice to the application of Union and national competition rules. It should not prevent member states from maintaining or introducing lower caps or measures of equivalent object or effect through national legislation. In enacting the IFR, the Commission and the European Parliament were concerned with regulation and were not specifically addressing issues of EU competition law. Secondly, Visa and Mastercard submit that the Commission has repeatedly taken into account a variety of forms of available evidence, including economic theory and in particular the MIT, when examining MIFs. In this regard, they rely in particular on a number of commitment decisions made under article 9 of the Modernisation Regulation. It is undoubtedly correct that the Commission has in these decisions had regard to the MIT as a proxy or a benchmark. However, it is important to bear in mind that these decisions are not instances of the application of article 101(3) but pragmatic means employed by the Commission to compromise outstanding investigations in return for commitments. As Mr Khan explained on behalf of the Commission, whereas an infringement decision adopted pursuant to article 7 of the Modernisation Regulation would have to include an assessment of any claim by the addressee that the agreement in issue qualified for an article 101(3) exemption, a commitment decision pursuant to article 9 does not include such an assessment. The essence of a commitment decision is that the Commission does not take a position on the existence of an infringement of article 101(1) TFEU, the approach being based on procedural economy. Moreover, the Commission has made clear that a MIF which satisfies the MIT will not automatically be considered compliant with what is now article 101(3). Thus, in its Memorandum of 1 April 2009 (Memo/09/143), at the time of accepting undertakings from Mastercard, it accepted that the MIT provides a reasonable benchmark for assessing a MIF level that generates benefits to merchants and final consumers. However, it went on to point out that the general applicability of the test for the purposes of what is now article 101(3) depends on the specifics of the markets at hand. Having listed some cautionary examples, it emphasised that where a MIF is restrictive, the parties to the agreement must demonstrate that the conditions under article 101(3) are met. It continued: In this respect, there is a need to ascertain that the concrete model underlying a MIF is based on realistic assumptions, that the model is plausibly implemented through an objectively verifiable methodology and that the MIF indeed yields the objective efficiencies on the market which are claimed by the parties. The methodology underlying a MIF should be transparent to the final users of a scheme. However, if a card scheme wishes to pre determine the fees merchants pay through a MIF, it must be aware that the burden of proof to demonstrate the fulfilment of the four conditions under [article 101(3)] lies upon the scheme and its members. (at pp 6 7) There is a further and more fundamental reason why the MIT does not assist Visa and Mastercard on the present issue. It is not designed as a substitute for the balancing test as a means of establishing efficiencies and benefits under article 101(3). It is, rather, designed to meet the specific concern that merchants may be vulnerable because they are typically in a poor position to resist consumers who want them to accept cards in exchange for goods or services. As a result, the MIT seeks to ensure that the collective interchange fees do not rise above a level at which payment by card is more expensive for merchants than other methods of payment. In a situation where a MIF satisfies the MIT and where the issuing bank recycles all of its MIF income to cardholders, there should be no net detriment to cardholders and merchants considered together. If, on the other hand, as in the present case, the issuer pass through is less than 100% (ie the issuer retains a part of the MIF), there is likely to be a net loss to cardholders and merchants considered together. A net benefit could still arise in these circumstances, however, if the MIF revenue passed to cardholders caused them to make greater use of their cards, so that merchants were relieved of a sufficiently large number of transactions using a more expensive form of payment, with the result that the loss to cardholders and merchants considered together from reduced issuer pass through was outweighed. Whether this in fact occurs will depend on the extent of issuer pass through, the extent of always card transactions and the difference in cost for merchants between accepting a scheme card and an alternative form of payment. As Mr Jon Turner QC put it on behalf of the AAM parties, the theory of the MIT does not even purport to avoid the need to address such issues, which would be essential if an appropriate balancing exercise under article 101(3) were to be carried out. These are highly relevant matters that can be brought into account only on the basis of empirical evidence. In the present case, the Commission intervened before the Court of Appeal and explained why Visa and Mastercard were wrong to suggest that the MIT had been treated by it as an appropriate basis for assessing the issue of exemption. We agree with the conclusion of the Court of Appeal (at para 109), accepting the submissions of the Commission, that the Commission regards the MIT as a useful starting point but not as a substitute for the facts of the case. It is not a silver bullet for Visa and Mastercard. In order to obtain exemption, they still have to back up any reliance on the MIT as a benchmark with robust analysis and cogent empirical evidence. Conclusion on the standard of proof issue For these reasons we dismiss the appeal on issue (ii). Issue (iii) The fair share issue The third issue in the appeal is raised by Visa. It concerns the interpretation of article 101(3) TFEU, under which an agreement, decision or concerted practice which is restrictive of competition is exempted from the prohibition imposed by article 101(1) provided it satisfies certain conditions. The terms of article 101(3) have been set out at para 19 above. As described at para 107 above, four conditions must be met before an exemption can be granted. It is the second of those conditions which is here in issue, namely that consumers must receive a fair share of the benefits resulting from the restriction of competition. The context in which that condition has to be considered in the present case includes the fact, explained in paras 15 16 above, that the Visa and Mastercard schemes operate in a two sided market. On one side of the market, issuers compete with each other for the business of customers to whom they will issue cards (the issuing market). The cardholders are the consumers in the issuing market. On the other side of the market, acquirers compete with each other for the business of merchants to whom they seek to offer acquiring services (the acquiring market). Merchants are the consumers in the acquiring market. As has been explained, MIFs restrict competition in the acquiring market. They do not restrict competition in the issuing market. The judgments at first instance At first instance, Phillips J concluded in the Visa restriction judgment (wrongly, as we have held) that the MIFs did not infringe article 101(1), but went on in the Visa exemption judgment to consider whether, if that was incorrect, the MIFs would have qualified for exemption under article 101(3). He concluded that they would not. That was because, in his opinion, they did not meet the first condition for exemption under article 101(3): it had not been proved that they produced any benefits. He nonetheless went on to consider the second condition at paras 53 64 of the Visa exemption judgment. He accepted Visas argument, based on its analysis of the judgment in Mastercard CJ, particularly at paras 240 243 and 247, that for the purpose of deciding whether consumers received a fair share of the resulting benefits, it was necessary in the context of a two sided market to consider the position of consumers in both markets as a whole. Benefits accruing to cardholders as a result of MIFs could therefore be taken into account in determining whether the benefits at least equalled the disadvantages. He considered that there must, however, be at least some objective advantages for merchants, even if they were less than the burden they suffered. On that interpretation, the second condition could be satisfied even if merchants were worse off as a result of MIFs, provided they received some objective advantages, and the benefits to cardholders and merchants, considered in aggregate, outweighed the disadvantages. However, given his finding that no benefits were generated by MIFs, it followed that that requirement was not met. Phillips Js analysis differed in important respects from that adopted by Popplewell J in the AAM proceedings. Like Phillips J, he considered that the MIFs were not prohibited by article 101(1), but went on to consider whether, if that was incorrect, they would qualify for exemption under article 101(3). He concluded that they would, applying what we have held to be an incorrect approach to the standard of proof. In relation to the first condition, he accepted at para 278 that, in a two sided market such as the Mastercard scheme, the relevant consumers included cardholders as well as merchants, and that the relevant benefits were not, therefore, confined to those arising on the acquiring market. When it came to the second condition, however, since merchants were the consumers who were adversely affected by the restriction of competition caused by MIFs, he concluded at paras 280 287 that the fair share requirement would not be met unless, as a minimum, they obtained benefits from MIFs which matched the anti competitive disadvantages which MIFs imposed on them. In addition, he considered that the MIFs must not generate unduly high profits for issuers: para 287. On the facts, he concluded at para 409 that those requirements were met, again applying a standard of proof which we have held to be mistaken. In the CAT proceedings, it was found on the evidence that Mastercards MIFs infringed article 101(1) and did not result in any benefits. Accordingly, the first condition under article 101(3) was not met, and the question whether consumers received a fair share of any benefits did not arise. The judgment of the Court of Appeal Before the Court of Appeal, Sainsburys challenged Phillips Js interpretation of the second condition, while Visa maintained that it was correct. Popplewell Js analysis was not challenged. The court carefully considered the relevant sections of Mastercard GC and Mastercard CJ at paras 96 104 of its judgment. It interpreted paras 240 243 and 247 of Mastercard CJ, in particular, as meaning that in applying both the first and the second conditions in a situation where the restriction affects two markets, if the restriction causes disadvantages overall to the consumers in the market under consideration (here the merchants in the acquiring market), those disadvantages cannot be compensated by advantages to consumers in the other market (here the cardholders in the issuing market), unless the two groups of consumers are substantially the same; which is not the position in this case. In the Court of Appeals view, the consumers in the relevant market, here the merchants, would only receive a fair share of the benefits if the advantages to them caused by the restriction outweighed the disadvantages, so that they were no worse off. The Court of Appeal therefore concluded that Popplewell Js analysis of the law was correct, and Phillips Js was wrong. The parties arguments on the present appeal In its appeal to this court, Visa challenges the decision of the Court of Appeal and argues that Phillips Js analysis of the second condition was correct. As will be explained in greater detail, it maintains, in particular, that the issue was considered and decided, in the manner for which it contends, in Mastercard CJ, particularly at paras 241 and 247. All parties agree that the question as to how the second condition should be applied in the context of two sided markets is a question of EU law, which has to be answered by considering the relevant jurisprudence of the CJEU. The Mastercard Commission Decision It is best to begin by considering the Mastercard Commission Decision, which was the subject matter of the judgments of the General Court and the Court of Justice in Mastercard GC and Mastercard CJ respectively. The Commission concluded at recital 733 that the Mastercard MIFs did not meet the first condition of article 81(3) of the EC Treaty (now article 101(3) TFEU). When it went on to consider the second condition, it stated at recitals 740 to 742: 740. There is no reason to assume from the outset that an interchange fee paid by acquirers to issuers increases the utility of the payment card system to [both] groups of consumers alike. The Commission does not dispute that merchants may benefit through enhanced network effects from the issuing side, but this does not necessarily offset their losses which result from paying inflated merchant fees. In setting a MIF the member banks of a card scheme must guarantee a fair share of the benefits to [all] customers, not only to those that are on the side of the scheme which receives the MIF. In a scheme where the MIF is paid by the acquirer to the issuer, the efficiencies must in particular counterbalance the restrictive effects to the detriment of merchants (and subsequent purchasers). MasterCard has not submitted evidence in this respect. 741. The Commission has therefore reviewed the methodologies which MasterCard uses as starting point for setting the level of the Intra EEA fallback interchange fees. It can be left open in this case whether cardholders sufficiently benefit from MasterCards MIF. The Commissions concerns under the second condition of article 81(3) of the Treaty in this decision relate to the customer group which bears the cost of the MIF, that is the merchants. 742. While merchants may benefit through enhanced network effects from the issuing side, this does not necessarily offset their losses which result from paying inflated merchant fees. (Emphasis added) The Commission concluded at recital 743 that without further evidence which Mastercard failed to submit it cannot safely be assumed that Mastercard is creating objective efficiencies that benefit all customers, including those that bear the cost of its MIF (merchants and subsequent purchasers) (emphasis in original). It is apparent from the foregoing, and perhaps especially from the passages which we have italicised in recitals 740 and 742, that the Commission proceeded on the basis that, in order for the second condition to be satisfied, it was necessary that the consumers who suffered the losses resulting from the restrictive agreement that is to say, the merchants must have those losses offset or counterbalanced by benefits enjoyed by themselves. The Guidelines That approach was consistent with the Guidelines. Under the heading of General principles, they state at para 43: [T]he condition that consumers (55) must receive a fair share of the benefits implies in general that efficiencies generated by the restrictive agreement within a relevant market must be sufficient to outweigh the anti competitive effects produced by the agreement within that same relevant market (56). Negative effects on consumers in one geographic market or product market cannot normally be balanced against and compensated by positive effects for consumers in another unrelated geographic market or product market. However, where two markets are related, efficiencies achieved on separate markets can be taken into account provided that the group of consumers affected by the restriction and benefiting from the efficiency gains are substantially the same (57). (Emphasis added) That analysis also underpins the discussion of the second condition in paras 85 86 of the Guidelines. The case law on which para 43 is based is cited in the footnotes. Footnote 56 refers to the judgment of the Court of First Instance in Shaw v Commission of the European Communities (Case T 131/99) [2002] ECR II 2023, para 163, where the court observed that the assessment of countervailing benefits under article 81(3) EC had to be made within the same analytical framework as that used for assessing the restrictive effects. Footnote 57 refers to the judgment of the Court of First Instance in Compagnie Gnrale Maritime v Commission of the European Communities (Case T 86/95) [2002] ECR II 1011. The case concerned a price fixing agreement relating to inland transport services provided to shippers by maritime carriers as part of intermodal transport. The alleged benefits relied on by the parties to the agreement related to maritime transport services provided to shippers by the same companies. The court stated at para 343: For the purposes of examining the merits of the Commissions findings as to the various requirements of article 85(3) of the [EEC] Treaty and article 5 of Regulation 1017/68 [which applied competition rules to the transport sector], regard should naturally be had to the advantages arising from the agreement in question, not only for the relevant market, namely that for inland transport services provided as part of intermodal transport, but also, in appropriate cases, for every other market on which the agreement in question might have beneficial effects, and even, in a more general sense, for any service the quality or efficiency of which might be improved by the existence of that agreement. Both article 5 of Regulation 1017/68 and article 85(3) of the Treaty envisage exemption in favour of, amongst others, agreements which contribute to promoting technical or economic progress, without requiring a specific link with the relevant market. That passage is expressed in wide terms. However, the last sentence is plainly concerned with the first condition of article 85(3) EEC (equivalent to article 81(3) EC and article 101(3) TFEU), and the passage as a whole responds to a criticism of the Commissions approach to the first condition: see para 305 of the judgment. In addition, on the facts of the case, the consumers in both markets were substantially the same. In those circumstances, it would be unsurprising if the benefits accruing to the same consumers in both markets were aggregated for the purpose of assessing compliance with article 85(3). The Court of First Instance subsequently made a similar observation in GlaxoSmithKline at para 248, again in the context of a challenge to the Commissions application of the first condition. The Guidelines are not legally authoritative, but they form an important element of the decentralised system for the enforcement of competition law established by the Modernisation Regulation. National authorities and courts are expected to take due account of them in accordance with their duty of sincere cooperation: see the Opinion of Advocate General Kokott in Expedia Inc v Autorit de la concurrence (Case C 226/11) EU:C:2012:544, points 37 38. Mastercard GC When the Mastercard Commission Decision was challenged before the General Court, it was argued, in relation to the first condition in article 81(3) EC, that the Commission had failed to take into account the positive effects of the MIFs on the issuing market. In response, the General Court stated at paras 228 229: 228. [I]t is indeed settled case law that the appreciable objective advantages to which the first condition of article 81(3) EC relates may arise not only for the relevant market but also for every other market on which the agreement in question might have beneficial effects, and even, in a more general sense, for any service the quality or efficiency of which might be improved by the existence of that agreement (Compagnie Gnrale Maritime v Commission of the European Communities (T 86/95) [2002] ECR II 1011 at para 343, and GlaxoSmithKlineServices (T 168/01) [2006] ECR II 2969 at para 248). However, as merchants constitute one of the two groups of users affected by payment cards, the very existence of the second condition of article 81(3) EC necessarily means that the existence of appreciable objective advantages attributable to the MIF must also be established in regard to them. 229. Therefore, in the absence of such proof, the applicants criticism that insufficient account was taken of the advantages of the MIF for cardholders is, in all events, ineffective. It appears from the last sentence of para 228 that the General Court considered that it was essential, in order to satisfy the second condition of article 81(3), to prove that merchants benefited from appreciable objective advantages which were attributable specifically to the MIFs. The court seemingly inferred that the advantages with which the first condition was concerned must, therefore, include appreciable objective advantages for merchants. In the absence of proof of such advantages, the criticism that the Commission had taken insufficient account of the advantages for cardholders went nowhere, as the court indicated at para 229. The General Court went on to state at para 233 that it was for the applicants (Mastercard and other financial institutions), in order to prove that the MIF satisfied the first condition, to identify the services which were capable of constituting objective advantages for merchants, and that there was a clear correlation between the costs involved in the provision of those services and the level of the MIF. Since that had not been done, it followed that the challenge to the Commissions reasoning in relation to the first condition must be rejected: para 236. Since the first condition was not satisfied, there was no need to examine the other aspects of the Commissions analysis: ibid. Mastercard CJ On further appeal to the Court of Justice, it was argued that the General Court had erred in focusing on the benefits to merchants, despite recognising in para 228 that advantages could be taken into account for any market that benefited from the existence of the agreement in question. The General Court had thus wrongly ignored, it was argued, the significant advantages which the Mastercard system and the MIF were said to bring about for cardholders. That argument, so far as it bore on the second condition, was considered in the Opinion of Advocate General Mengozzi. He identified the question of law arising from the argument in relation to the second condition: AG154. The point of law underlying that complaint is therefore whether, in order for the exemption provided for in article 81(3) EC to be applicable in such a context, it is necessary that the fair share of the profit resulting from the advantages arising from the agreement, as provided for in article 81(3) EC, be reserved for the direct consumers of the services provided on the market on which the restrictive effects for competition are produced in this case, in particular, merchants or whether it can be considered that the restrictive effects harming those consumers may be compensated by the advantages produced for consumers of the services provided on a related market, namely, in this case, cardholders. The Advocate Generals answer to that question was that the restrictive effects harming merchants could not be compensated by the advantages produced for cardholders: in order to satisfy the second condition, merchants themselves must receive a fair share of the benefits resulting from the restrictive agreement. He began his reasoning on this point by making some general points about the second condition: AG155. It should be borne in mind, as a preliminary point, that the second condition in article 81(3) EC requires that, in order for a restrictive agreement to benefit from the exemption provided for in that provision, consumers must be allowed a fair share of the resulting benefits. AG156. In that regard, it should be observed, first, that the consumers referred to in that provision must be considered to be the direct or indirect consumers of the goods or services covered by the agreement. Secondly, it is apparent from consistent case law that, in order for an agreement restrictive of competition to be capable of being exempted under article 81(3) EC, the appreciable objective advantages created by that agreement must be of such a character as to compensate for the disadvantages which they cause for competition. It may be inferred from that case law that, in order for a restrictive agreement to be able to benefit from the exemption, the advantages resulting from that agreement must ensure that consumers are compensated in full for the actual or probable adverse effects that they must bear owing to the restriction of competition resulting from the agreement. In other words, the benefits arising from the restrictive agreement must counterbalance its negative effects. (Emphasis added) It followed from the points which we have italicised that, in order for the second condition to be satisfied, the disadvantages suffered by consumers in the market where competition was restricted must be counterbalanced by advantages benefiting the same consumers, as the Advocate General went on to explain: AG157. To my mind, however, that compensation must apply to consumers who are directly or indirectly affected by the agreement. It is the consumers that suffer the harm caused by the restrictive effects of the agreement at issue that must, in principle, be allowed, as compensation for that harm, the fair share of the benefit resulting from the agreement referred to in article 81(3) EC. Furthermore, as the Advocate General explained, the contrary view would result in competition authorities favouring one category of consumers at the expense of others, something which was no part of the function of competition law: AG158. In fact, if it were possible to take into consideration the advantages resulting from an agreement for one category of consumers of certain services in order to counterbalance the negative effects on another category of consumers of other services on a different market, that would amount to allowing the former category of consumers to be favoured to the detriment of the latter category. However, distributive logic of that type seem[s] to me, in principle, to have no connection with the practical scope of competition law. Competition law is intended to protect the structure of the market, and thus competition, in the interest of competitors and, ultimately, consumers in general. Conversely, it is not intended to favour one category of consumers to the detriment of a different category. (Emphasis in original) In its judgment, the Court of Justice noted at para 208 that the General Court had rejected the submission that the Commission had erred in applying the first condition of article 81(3) EC, rendering further analysis unnecessary. The Court of Justice then focused in its own judgment on the first condition rather than the second. It characterised the challenge to the reasoning of the General Court at para 228 as raising in essence the question as to which markets may be regarded as generating the objective advantages that may be taken into account for the purposes of the analysis of the first condition. In the course of its discussion of whether the first condition was met, the court explained at para 234 that the improvement, within the meaning of the first condition laid down in article 81(3) EC must in particular display appreciable objective advantages of such a character as to compensate for the disadvantages which that agreement entails for competition. It added at para 237 that, in the case of a two sided system such as the Mastercard scheme, in order to assess whether the first condition was met, it was necessary to take into account, where appropriate, all the objective advantages flowing from the restrictive measure in both markets, and to assess whether the advantages were of such a character as to compensate for the disadvantages which the measure entailed for competition. The court then stated at paras 240 and 241: 240. In particular, as regards the argument that the General Court did not take into account the advantages flowing from the MIF for cardholders, it must be held that the General Court was, in principle, required, when examining the first condition laid down in article 81(3) EC, to take into account all the objective advantages flowing from the MIF, not only on the relevant market, namely the acquiring market, but also on the separate but connected issuing market. 241. It follows from this that, should the General Court have found that there were appreciable objective advantages flowing from the MIF for merchants, even if those advantages did not in themselves prove sufficient to compensate for the restrictive effects identified pursuant to article 81(1) EC, all the advantages on both consumer markets in the MasterCard scheme, including therefore on the cardholders market, could, if necessary, have justified the MIF if, taken together, those advantages were of such a character as to compensate for the restrictive effects of those fees. In the present appeal, Visa relies on para 241, which it describes as crucial to its argument. That paragraph is, however, concerned with the first condition of article 81(3), not the second. It is also qualified by the proviso contained in its final words: if, taken together, those advantages were of such a character as to compensate for the restrictive effect of those fees. That proviso was not satisfied in the case before the Court of Justice, as it explained in para 242: However, as is recalled in para 234 of the present judgment, examination of the first condition laid down in article 81(3) EC raises the question whether the advantages derived from the measure at issue are of such a character as to compensate for the disadvantages resulting therefrom. Thus, where, as in the present case, restrictive effects have been found on only one market of a two sided system, the advantages flowing from the restrictive measure on a separate but connected market also associated with that system cannot, in themselves, be of such a character as to compensate for the disadvantages resulting from that measure in the absence of any proof of the existence of appreciable objective advantages attributable to that measure in the relevant market, in particular, as is apparent from paras 21 and 168 to 180 of the judgment under appeal, where the consumers on those markets are not substantially the same. (Emphasis added) The passage which we have italicised makes it clear that in a situation where the disadvantages resulting from a restriction of competition are felt on only one side of a two sided market which is the position in this case then the advantages on the other market cannot be taken into account for the purposes of the first condition of article 81(3) EC (or article 101(3) TFEU), in the absence of particular circumstances justifying such a course (as where the consumers in both markets are substantially the same), unless it has been proved that the restrictive measure also causes appreciable objective advantages in the market where the restrictive effects are felt. Since no such advantages had been proved in the case before the court, it followed that the first condition was not satisfied. That was confirmed by the court in para 243: In the present case, and without any distortion having been claimed in that regard, the General Court concluded in para 226 of the judgment under appeal that there was no proof of the existence of objective advantages flowing from the MIF and enjoyed by merchants. In those circumstances, it was not necessary to examine the advantages flowing from the MIF for cardholders, since they cannot, by themselves, be of such a character as to compensate for the disadvantages resulting from those fees. The General Court was therefore fully entitled to find, in para 229 of the judgment under appeal, that the [appellants] criticism that insufficient account was taken of the advantages of the MIF for cardholders is, in all events, ineffective. The court went on to state in para 247, in the other passage relied on by Visa in the present appeal: As regards the appellants argument that the General Court did not explain why the first two conditions in article 81(3) EC could not be satisfied on the basis only of the advantages the MIF produce for cardholders, it is sufficient to refer to paras 240 to 245 of the present judgment. Visa submits that, in that paragraph, the court clarified that the analysis in paras 241 243 of its judgment, which had been expressed by reference to the first condition, also applied to the second. In our opinion, there is no warrant for that interpretation of para 247. The court had previously explained in paras 240 245 why the challenge to the General Courts conclusion in respect of the first condition was rejected. The court had not said anything about the second condition. The way in which the fair share requirement should be applied in a situation where the restrictive effects were felt on only one side of a two sided market had not received any consideration. All that the court said in substance, in para 247, was that it had already explained, in its discussion of the first condition, why the first two conditions could not be satisfied on the basis only of the advantages which the MIF produced for cardholders. As the court had already noted at para 208, where it cited para 236 of the judgment of the General Court, where the first condition was not satisfied, there was no need to examine the other aspects of article 81(3). If Visas argument were correct, the Court of Justice would effectively have treated the first and second conditions of article 81(3) as interchangeable: both could be satisfied by the same aggregation of the benefits on both sides of a two sided market, and the second condition would add nothing to the first. They are, however, essentially different. The second condition adds a distinct requirement of fairness to the considerations of economic efficiency with which the first condition is primarily concerned. Consideration of aggregate efficiency gains across different markets may well be relevant to the first condition, in situations where restrictive measures have effects in more than one market, but they cannot ordinarily be determinative of the question, under the second condition, whether a fair share of those gains has accrued to the consumers affected by the restriction of competition. Conclusions on the fair share issue It follows that the Court of Appeal arrived at the correct decision on this point, albeit by reasoning which was not precisely the same as that set out above. We therefore dismiss the appeal on issue (iii). Having reached that clear conclusion, it is unnecessary, and would be inappropriate, for this court to make a reference to the CJEU merely for the purpose of obtaining its clarification of the effect of the second condition in article 101(3) TFEU. It may, however, be helpful if, in addition to rejecting Visas argument, we provide some positive guidance, based upon our own understanding of the EU materials, while recognising that it lacks the authority accorded by EU law to a judgment of the CJEU. The second condition in article 101(3) arises only if the first condition is satisfied. In order to meet the requirements of the first condition, in a situation where there is a two sided market and the restrictive effects of the measure in question are experienced by consumers in only one of those markets, and where the consumers in both markets are not substantially the same, it has to be proved (1) that the measure causes appreciable objective advantages for consumers in the market where the restrictive effects are felt, and (2) that the objective advantages caused by the measure for consumers in both markets, taken together, compensate for the disadvantages which the measure entails for competition: see paras 240 242 of Mastercard CJ. If the first condition is satisfied, and the second condition then has to be considered, the best available guidance from the CJEU as to how it should be applied in the context of a two sided market is the Opinion of Advocate General Mengozzi in Mastercard CJ, the matter not having been considered by the Court of Justice in its judgment in that case, or by the General Court in Mastercard GC. The Advocate Generals reasoning in point 156 of his Opinion can be summarised in the following propositions: (1) The consumers referred to in the second condition are the direct or indirect consumers of the goods or services covered by the measure: here, the merchants. (2) Those consumers must be compensated in full for the adverse effects that they bear owing to the restriction of competition resulting from the measure. That reasoning is consistent with the Guidelines. It also reflects the language of the second condition. The merchants are the consumers of the services which are subject to the restriction of competition, and are therefore the consumers which the second condition is presumably intended to protect. If the merchants are not fully compensated for the harm inflicted on them by the restrictive measure, it is difficult to see how they can be said to receive a fair share of the resultant benefits. As the Advocate General indicated at point 158 of his Opinion, it is not the purpose of competition law to permit anti competitive practices to harm consumers in one market for the sake of providing benefits to those in another. Issue (iv) The broad axe issue This issue is concerned with the degree of precision that is required in the quantification of mitigation of loss where a defendant to a claim for damages arising out of a breach of competition law asserts that the claimant has mitigated its loss through the passing on of all or part of an overcharge to its customers. Mastercard raises this issue, which relates to a passage in the judgment of the Court of Appeal (para 331) in which the court rejected the submission that the broad axe principle of establishing recoverable loss applies to the burden on Mastercard to establish the fact and amount of pass on by Sainsburys (emphasis added). The court continued: The broad axe principle is applicable where the claimant has suffered loss as a result of the defendants culpable conduct but there is a lack of evidence as to the amount of such loss. There is no scope for the application of any such principle where the burden lies on the defendant to establish a pass on of the unlawful overcharge in order to reduce the amount recoverable by the claimant. The broad axe issue which is said to arise out of this statement is: Did the Court of Appeal find, and if so, did it err in law in finding, that a defendant has to prove the exact amount of loss mitigated in order to reduce damages?. The Court of Appeals statement is part of its discussion of a ground of appeal based on the assertion that the CAT had been inconsistent in rejecting Mastercards case that the merchants had mitigated their loss by pass on while making an allowance, when awarding compound interest, for pass on, which it estimated at 50% of the claimed loss (paras 320 342). Mastercard has not renewed that submission in these appeals, but, as we explain below, the debate around this issue widened in the course of the hearing. The Court of Appeals statement, which is the subject matter of this issue, must not be read in isolation. In the following paragraph (para 332) the court stated: On the other hand, we accept Mr Hoskinss submission that in each case it is a matter for the judge to decide whether, on the evidence before her or him, the defendant can show that there is a sufficiently close causal connection between an overcharge and an increase in the direct purchasers price. We see no reason why that increase should not be established by a combination of empirical fact and economic opinion evidence. It is not appropriate for us on these appeals to be more specific as to the nature and type of evidence capable of satisfying a trial judge that there is a sufficiently close causal connection. It is therefore clear that the Court of Appeal was not excluding any form of evidence as relevant to the establishment of pass on, but was drawing a distinction between the degree of precision in quantification required of the defendant pleading pass on in mitigation of loss and that which was required of the victim of the wrong in establishing its claim. The questions which arise are whether there is a requirement in European law or otherwise a basis in principle for that distinction. Mastercards stance at the hearing before this court was that it has to prove that the merchants passed on some of the overcharge to their customers but that having done so, the quantification of the extent of the pass on did not have to be precise where such precision could not reasonably be achieved. The court, having regard to all of the evidence, could and should estimate the extent of the pass on in order to give adequate compensation to the claimant and avoid over compensation. Mastercard accepts that at the trial before the CAT of Sainsburys claim against it, which covered quantification as well as liability (see para 28 above), it had not succeeded in proving that the overcharge had caused Sainsburys to raise the prices which it charged its customers. The matter is closed in that dispute but it remains a live issue in relation to other claims. The scope of the issue expanded as a result of exchanges with the bench during the hearing of the appeal. On the invitation of the court, Mastercard and Visa made further written submissions on the burden of proof. They argue that the legal burden lies on the claimant to prove its loss in the form of lost profits, that no question of mitigation of loss arises, and that there is no burden on the defendants in relation to the quantification of the merchants claims resulting from the pass on of the overcharge. AAM and Sainsburys have lodged written submissions in reply. In addressing the issue and these submissions, we examine, first, the requirements of EU law in relation to the claims for damages which the merchants advance; secondly, (in order to determine whether there is a question of mitigation of loss) whether the merchants are entitled in law to use the overcharge which is included in the MSC as the prima facie measure of their losses; thirdly, the burden of proof in the assessment of the damages due to the claimants; and, fourthly, the question of the degree of precision required in establishing the likely extent of any pass on. The requirements of EU law The claims of the merchants in these appeals are for damages for loss caused to them by the tortious acts of the operators of the payment card schemes in breach of their statutory obligations under the 1998 Act. It is not in dispute, as we discuss below, that the fundamental principle underlying the merchants claims is that the damages to which they are entitled are compensatory; the merchants are entitled to be placed, so far as money can achieve that, in the position which they would have been in but for the tortious acts which have caused them loss. Most of the case law of the CJEU, to which both the CAT and the Court of Appeal have referred, concerns claims for restitution arising from illegally levied taxes and similar charges such as occurred in the classic case of Amministrazione delle Finanze dello Stato v San Giorgio SpA (Case 199/82) [1983] ECR 3595. In those cases, the CJEU recognised the right of the defendant to meet the claim for restitution with the defence of pass on so that the claimant would not be unjustly enriched. The CJEU analysed the defence as an exception to the principle that taxes incompatible with EU law must be reimbursed: Socit Comateb v Directeur Gnrale des Douanes et Droits Indirects (Joined Cases C 192/95 to C 218/95) [1997] ECR I 165; [1997] STC 1006, para 21. The CJEU has limited the scope of that defence; it requires that the defence be interpreted strictly because it operates as a restriction upon the EU right to repayment of the unlawfully levied taxes. There can be no presumption that the unlawful charges have been passed on. Whether there has been a pass on is a question of fact to be established on evidence adduced before the national court: Socit Comateb (above) para 25; Webers Wine World Handels GmbH v Abgabenberufungskommission Wien (Case C 147/01) [2005] All ER (EC) 224; [2003] ECR I 11365; [2004] 1 CMLR 7, paras 93 97. The direct pass on of a wrongly levied tax is the sole exception to the right of reimbursement: Lady & Kid A/S v Skatteministeriet (Case C 398/09) [2012] All ER (EC) 410; [2011] ECR I 7375; [2012] 1 CMLR 14, paras 20 and 26. In that case, the Court of Justice rejected an argument that the taxpayer would be unjustly enriched by repayment of an unlawful levy because the taxpayer would have benefited from the concomitant abolition of other levies charged on a different basis. The benefit of the saving arising from the abolition of the other levies could not be regarded as unjust enrichment in EU law and could not be set off against the burden of the unlawful levy: para 26. No challenge is or can be made in relation to those judgments. But these appeals are not concerned with the EU rules on the reimbursement of unlawfully levied charges. They are concerned with claims for damages for losses incurred as a result of breaches of competition law. It is necessary to consider what EU law requires in relation to such claims. The CJEU recognises that the ability of persons, who have suffered loss by the anti competitive practices of others, to obtain damages in the courts of member states by the application of the rules of national law makes an important contribution to the maintenance of effective competition in the EU: Courage Ltd v Crehan (Case C 453/99) [2002] QB 507, paras 26 27. In para 29 of that judgment the Court of Justice sets out the essential requirements which are to govern actions in national courts for damages for breach of EU competition law. It states: [I]n the absence of Community rules governing the matter, it is for the domestic legal system of each member state to designate the courts and tribunals having jurisdiction and to lay down the detailed procedural rules governing actions for safeguarding rights which individuals derive directly from Community law, provided that such rules are not less favourable than those governing similar domestic actions (principle of equivalence) and that they do not render practically impossible or excessively difficult the exercise of law (principle of rights conferred by Community effectiveness): see Palmisani v Istituto Nazionale della Previdenza Sociale (Case C 261/95) [1997] ECR I 4025, 4046, para 27. In para 30 of its judgment, the Court of Justice confirmed that Community law does not prevent national courts from taking steps to ensure that the protection of rights guaranteed by EU law does not entail the unjust enrichment of those who enjoy them. It refers in support of this principle to, among others, Hans Just I/S v Danish Ministry for Fiscal Affairs (Case 68/79) [1980] ECR 501, 523, para 26. Hans Just is a case about the unlawful imposition of excise levies on imports, and in para 26 of that case the Court of Justice stated: There is nothing therefore, from the point of view of Community law, to prevent national courts from taking account in accordance with their national law of the fact that it has been possible for charges unduly levied to be incorporated in the prices of the undertaking liable for the charge and to be passed on to the purchasers. In our view the reference in Courage Ltd to that paragraph in the Hans Just judgment is a recognition of the possibility and relevance of pass on. It is not an oblique incorporation of any other rules concerning the right of a taxpayer to obtain restitution of taxes levied in breach of EU law, which is a claim with a different legal basis. In relation to claims under national law for damages for breach of the statutory rules of competition law, the requirements of EU law are that a member state can lay down procedural rules governing actions which safeguard such rights derived from EU law, provided that the rules comply with the principle of equivalence and the principle of effectiveness: Courage Ltd (above) paras 29 30. We are not concerned on these appeals with the principle of equivalence. The only constraint on national law at the relevant time therefore was the principle of effectiveness which requires that the rules of domestic law do not make it practically impossible or excessively difficult to exercise rights guaranteed by EU law. The court must therefore give effect to the rules of English law governing claims for damages for breach of statutory duty unless those rules were to conflict with the principle of effectiveness. It is therefore a question of fact in each case, which the national court must resolve on the evidence adduced before it, whether an overcharge resulting from a breach of competition law has caused the claimant to suffer loss or whether all or part of the overcharge has been passed on by the claimant to its customers or otherwise mitigated. The principle of effectiveness applies to the procedural and evidential rules by which the court determines whether and to what extent the claimant has suffered loss. On 9 March 2017, the United Kingdom implemented Parliament and Council Directive 2014/104/EU of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the member states and of the European Union (OJ 2014 L349, p 1) (the Damages Directive) by bringing into effect Schedule 8A to the 1998 Act (as inserted by Schedule 1 to the Claims in respect of Loss or Damage arising from Competition Infringements (Competition Act 1998 and Other Enactments (Amendment)) Regulations 2017 (SI 2017/385)), which in paragraph 11(2) imposes on the defendant the burden of proving that the claimant has passed on an overcharge resulting from an infringement of competition law, and the extent to which the claimant did so. But we are not concerned with this provision because the substantive provisions of the Damages Directive are not retrospective and the other provisions do not apply to cases of which a court was seised before 26 December 2014: article 22. The merchants in these appeals each issued their claims before that date. The Damages Directive does not govern these claims. Nonetheless, the Damages Directive casts some light on the pre existing requirements of EU law, as recital 12 states that it reaffirms the acquis communautaire as to the right to compensation for harm caused by breach of EU competition law. We return to this when we discuss the degree of precision required of the defendant. Further, the Damages Directive has taken EU competition law in a radically different direction from the federal law of the United States in its approach to pass on. It leaves it to the English courts to apply the normal rules of English law on mitigation of damages, including the effect of pass on. The nature of the claims The merchants claims are for the added costs which they have incurred as a result of the MSC, which the acquiring banks have charged them, being larger than it would have been if there had been no breach of competition law. Sainsburys claims damages measured by the difference between the sums which it paid the acquirers through the MSC and the sums which it would have paid if the acquirers market had not been distorted by the MIF. Similarly, AAMs principal pleaded case is that they are entitled to recover the basic amounts by which they have been unlawfully overcharged with an alternative case that in so far as the unlawful overcharges have been passed on in their selling prices to their customers, they have suffered a loss of profit on the sales of the goods concerned through a reduced volume of sales. In each case the merchants primary claim of damages is for the pecuniary loss which has resulted directly from the breach of competition law by the operators of the schemes. That direct loss is prima facie measured by the extent of the overcharge in the MSC. It is trite law that, as a general principle, the damages to be awarded for loss caused by tort are compensatory. The claimant is entitled to be placed in the position it would have been in if the tort had not been committed. A classic statement of this principle is that of Lord Blackburn in Livingstone v Rawyards Coal Co (1880) 5 App Cas 25, 39; (1880) 7 R (HL) 1, 7: I do not think there is any difference of opinion as to its being a general rule that, where any injury is to be compensated by damages, in settling the sum of money to be given for reparation of damages you should as nearly as possible get at that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation. See also Watson, Laidlaw, & Co Ltd v Pott, Cassels & Williamson 1914 SC (HL) 18, 29 per Lord Shaw of Dunfermline, who spoke of the principle of restoration; One Step (Support) Ltd v Morris Garner [2018] UKSC 20; [2019] AC 649, paras 25 27 per Lord Reed. In the United States, concerns about the complexity, uncertainty and cost of calculating the existence and effects of pass on in federal anti trust litigation have caused the US Supreme Court to exclude a defence of pass on under federal law and to allow the claimant to use the amount of the overcharge as the basis of its claim in a treble damage suit: Hanover Shoe Inc v United Shoe Machinery Corpn 392 US 481 (1968), 491 494 per White J. By contrast, in the United Kingdom there is, as is well known, no entitlement to treble damages. Nor is there any exclusion of pass on as an element in the calculation of damages and the normal rule of compensatory damages applies to claims for damages for breach of statutory duty: Devenish Nutrition Ltd v Sanofi Aventis SA [2008] EWCA Civ 1086; [2009] Ch 390, 477, para 147 per Longmore LJ, pp 478 479, para 151 per Tuckey LJ; Emerald Supplies Ltd v British Airways plc [2009] EWHC 741 (Ch); [2010] Ch 48, paras 36 and 37 per Sir Andrew Morritt C; W H Newson Holding Ltd v IMI plc [2013] EWCA Civ 1377; [2014] Bus LR 156, para 40 per Arden LJ. In this respect, English law and Scots law are consistent with EU law which now requires member states to ensure that there is a pass on defence: articles 12(2) and 13 and recital 39 of the Damages Directive. In the legal systems of the United Kingdom pass on is an element in the quantification of damages rather than a defence in a strict sense. But so long as the UKs competition rules remain aligned to those of the EU, the pass on of an overcharge remains a relevant factor in the assessment of damages. There are sound reasons for taking account of pass on in the calculation of damages for breach of competition law. Not only is it required by the compensatory principle but also there are cases where there is a need to avoid double recovery through claims in respect of the same overcharge by a direct purchaser and by subsequent purchasers in a chain, to whom an overcharge has been passed on in whole or in part. The question then arises as to whether the merchants are entitled to claim as the prima facie measure of their loss the overcharge in the MSC which results from the MIF. The merchants say that they are so entitled because they have had to pay out more than they would have but for the anti competitive practices of the schemes and so have suffered pecuniary loss. On the other hand, Visa in its supplementary written submissions submits that their claims are for pure economic loss and must be claims for the loss of the profit which they would have enjoyed but for the alleged wrongful act of the defendants. We are satisfied that the merchants are correct in their submissions that they are entitled to plead as the prima facie measure of their loss the pecuniary loss measured by the overcharge in the MSC and that they do not have to plead and prove a consequential loss of profit. There are many circumstances, which are not confined to damage to property, in which the law allows the recovery of damages without regard to the claimants profitability. If a claimant suffers damage to property, such as a vehicle or a ship, as a result of the tortious actions of a defendant, it can claim as damages the diminution in value of the damaged property, usually measured by the cost of repairing the property, and consequential loss, such as the loss of use of the property while it was being repaired, without having to show that that expenditure diminished its overall profitability. See, for example, Coles v Hetherton [2013] EWCA Civ 1704; [2015] 1 WLR 160; The London Corpn [1935] P 70; The World Beauty [1970] P 144. In a claim for contractual damages resulting from the failure of a supplier to deliver goods to a purchaser, the prima facie measure of damages is the difference between the market value of those goods and the contract price which the purchaser would have had to pay: Garnac Grain Co Inc v H M F Faure & Fairclough Ltd [1968] AC 1130, 1140 per Lord Pearson. Where charterers of a vessel redelivered the vessel two years before the contractual date on which the charterparty ended, the court accepted the owners claim for loss of profits from that charterparty during the remaining two years of the charterparty without having regard to the overall profitability of the claimant: Fulton Shipping Inc of Panama v Globalia Business Travel SAU (formerly Travelplan SAU) of Spain [2017] UKSC 43; [2017] 1 WLR 2581. The effect of the breach on the overall profitability of the claimant in each case was not the relevant measure of damages. Similarly, if a claimant incurs expenditure in replacing items which a supplier had failed to deliver, it is entitled to damages without having to show that the breach of contract adversely affected its overall profitability. An illustration of this is the judgment of Leggatt J in Thai Airways International Public Co Ltd v KI Holdings Co Ltd [2015] EWHC 1250 (Comm); [2016] 1 All ER (Comm) 675. The case concerned a claim for damages resulting from the defendants (Koitos) breach of contract through the late delivery and failure to deliver aircraft seats to Thai Airways for use in new aircraft which they had purchased. Thai Airways, facing a shortage of aircraft to perform its planned services, leased three aircraft on short term operating leases to cover the gap in capacity and ordered replacement seats for its new aircraft from another supplier. It claimed as damages the costs which it incurred in mitigating its loss and its principal claim was for the cost of leasing the replacement aircraft. Leggatt J held that Thai Airways was entitled to recover among other things, the costs of leasing the replacement aircraft for two years. Thai Airways did not attempt to base its claim on an estimate of a net loss of profits measured by the differential between what its overall profits would have been if Koito had performed its contractual obligations and the profits which Thai Airways actually made during the period of the leases of the replacement aircraft. Having regard to the complexity of the arrangements by which the airline sought to maximise the efficiency of the use of its aircraft, that calculation would have been extremely complex. In the present appeals, the merchants by paying the overcharge in the MSC to the acquirers have lost funds which they could have used for several purposes. As sophisticated retailers, which obtain their supplies from many suppliers and sell a wide range of goods to many customers, they can respond to the imposition of a cost in a number of ways, as the CAT pointed out in paras 434 and 455 of its judgment. There are four principal options: (i) a merchant can do nothing in response to the increased cost and thereby suffer a corresponding reduction of profits or an enhanced loss; or (ii) the merchant can respond by reducing discretionary expenditure on its business such as by reducing its marketing and advertising budget or restricting its capital expenditure; or (iii) the merchant can seek to reduce its costs by negotiation with its many suppliers; or (iv) the merchant can pass on the costs by increasing the prices which it charges its customers. Which option or combination of options a merchant will adopt will depend on the markets in which it operates and its response may be influenced by whether the cost was one to which it alone was subjected or was one which was shared by its competitors. If the merchant were to adopt only option (i) or (ii) or a combination of them, its loss would be measured by the funds which it paid out on the overcharge because it would have been deprived of those funds for use in its business. Option (iii) might reduce the merchants loss. Option (iv) also would reduce the merchants loss except to the extent that it had a volume effect, if higher prices were to reduce the volume of its sales and thereby have an effect on the merchants profits. In our view the merchants are entitled to claim the overcharge on the MSC as the prima facie measure of their loss. But if there is evidence that they have adopted either option (iii) or (iv) or a combination of both to any extent, the compensatory principle mandates the court to take account of their effect and there will be a question of mitigation of loss, to which we now turn. Mitigation and the burden of proof Visa and Mastercard submit that the burden is on a claimant to prove its loss taking account of any pass on. Visa presents the merchants claims as claims for loss of profits. On this presentation, the claim for the overcharge incorporated in the MSC is a poor surrogate for loss of profits and must be reduced by any pass on if it is to comply with the compensatory principle. Sainsburys and AAM on the other hand submit that, as they have stated a prima facie case of their loss, it falls to the defendants to assert and prove that the merchants have mitigated their loss by passing on the relevant costs in the prices which they charged their customers. There are two reasons why the merchants are correct in their submission that they do not have the legal burden of proving their loss of overall profits caused by the overcharge. First, if the law were to require a claimant, which is a complex trading entity, to prove the effect on its overall profits of a particular overcharge, the claimant might face an insurmountable burden in establishing its claim. Were there to be such a domestic rule, it would very probably offend the principle of effectiveness. It is the duty of the court to give full effect to the provisions of article 101 by enabling the claimant to obtain damages for the loss which has been caused by anti competitive conduct. Secondly, an exclusive focus on the claimants profits would result in it being undercompensated if the overcharge had caused it to forgo discretionary expenditure to develop its business which did not promptly enhance its profits (ie option (ii) in para 205 above). We are also satisfied that the merchants are correct in their assertion that there is a legal burden on the defendants to plead and prove that the merchants have mitigated their loss. See for example, The World Beauty, 154 per Lord Denning MR; OMV Petrom SA v Glencore International AG [2016] EWCA Civ 778; [2016] 2 Lloyds Rep 432, para 47 per Christopher Clarke LJ. The statement of the Court of Appeal in para 324 of its judgment in the present case is an accurate statement of English law: Whether or not the unlawful charge has been passed on is a question of fact, the burden of proving which lies on the defendant who asserts it. But in the context of these appeals, as we discuss below, the significance of the legal burden should not be overstated. In some cases of mitigation, the court is concerned with additional benefits which a claimant has gained from the mitigation action which it has taken. In such a case, it is for the defendant to show that the benefits should be set off against the prima facie claim of loss. For example, in Thai Airways (above) it fell to Koito to prove that the net benefits that the airline received as a result of leasing the replacement aircraft during the relevant period offset the losses which it suffered from the delayed entry into service of the aircraft for which Koito failed to supply the seats. Such cases raise delicate questions as to whether a benefit is sufficiently causally connected with the breach of contract or (in tort) the wrong or whether the benefit was the result of an independent commercial decision by the claimant. In Fulton Shipping at para 30, Lord Clarke of Stone cum Ebony explained that there must be a sufficiently close link between the benefit and the loss caused by the wrongdoer: The relevant link is causation. The benefit to be brought into account must have been caused either by the breach of the charterparty or by a successful act of mitigation. In that case, by selling the vessel after the charterparty had been prematurely terminated the owners avoided a substantial capital loss occasioned by the collapse in the market for such vessels following the financial crisis in 2008. While the premature termination of the charterparty in Fulton Shipping was the occasion for the owners decision to sell the vessel, the court held that that decision was not necessitated by the termination but was a commercial decision of the owners at their own risk. In other cases, the court may be concerned with a failure of a claimant to act reasonably in its response to its loss. As Leggatt J stated in Thai Airways at para 33, quoting from an article by A Dyson and A Kramer, There is No Breach Date Rule: Mitigation, Difference in Value and Date of Assessment (2014) 130 LQR 259, 263: damages are assessed as if the claimant acted reasonably, if in fact it did not act reasonably. Thus, for example in Golden Strait Corpn v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] UKHL 12; [2007] 2 AC 353, Lord Bingham of Cornhill stated (at para 10): An injured party such as the owners may not, generally speaking, recover damages against a repudiator such as the charterers for loss which he could reasonably have avoided by taking reasonable commercial steps to mitigate his loss. Thus where, as here, there is an available market for the chartering of vessels, the injured partys loss will be calculated on the assumption that he has, on or within a reasonable time of accepting the repudiation, taken reasonable commercial steps to obtain alternative employment for the vessel for the best consideration reasonably obtainable. We are not concerned in these appeals with additional benefits resulting from a victims response to a wrong which was an independent commercial decision or with any allegation of a failure to take reasonable commercial steps in response to a loss. The issue of mitigation which arises is whether in fact the merchants have avoided all or part of their losses. In the classic case of British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673, at 689 Viscount Haldane described the principle that the claimant cannot recover for avoided loss in these terms: [W]hen in the course of his business [the claimant] has taken action arising out of the transaction, which action has diminished his loss, the effect in actual diminution of the loss he has suffered may be taken into account (Emphasis added) Here also a question of legal or proximate causation arises as the underlined words show. But the question of legal causation is straightforward in the context of a retail business in which the merchant seeks to recover its costs in its annual or other regular budgeting. The relevant question is a factual question: has the claimant in the course of its business recovered from others the costs of the MSC, including the overcharge contained therein? The merchants, having acted reasonably, are entitled to recover their factual loss. If the court were to conclude on the evidence that the merchant had by reducing the cost of its supplies or by the pass on of the cost to its customers (options (iii) and (iv) in para 205 above) transferred all or part of its loss to others, its true loss would not be the prima facie measure of the overcharge but a lesser sum. The legal burden lies on the operators of the schemes to establish that the merchants have recovered the costs incurred in the MSC. But once the defendants have raised the issue of mitigation, in the form of pass on, there is a heavy evidential burden on the merchants to provide evidence as to how they have dealt with the recovery of their costs in their business. Most of the relevant information about what a merchant actually has done to cover its costs, including the cost of the MSC, will be exclusively in the hands of the merchant itself. The merchant must therefore produce that evidence in order to forestall adverse inferences being taken against it by the court which seeks to apply the compensatory principle. The degree of precision required in establishing the extent of pass on of an overcharge The court in applying the compensatory principle is charged with avoiding under compensation and also over compensation. Justice is not achieved if a claimant receives less or more than its actual loss. But in applying the principle the court must also have regard to another principle, enshrined in the overriding objective of the Civil Procedure Rules, that legal disputes should be dealt with at a proportionate cost. The court and the parties may have to forgo precision, even where it is possible, if the cost of achieving that precision is disproportionate, and rely on estimates. The common law takes a pragmatic view of the degree of certainty with which damages must be pleaded and proved: Devenish Nutrition Ltd v Sanofi Aventis SA [2007] EWHC 2394 (Ch); [2009] Ch 390, 408, para 30 per Lewison J. In Livingstone v Rawyards Coal Co (above) Lord Blackburn in speaking of getting as nearly as possible to the sum which would restore the claimant, recognised that the courts task in achieving reparation is not always precise. Similarly, Lord Shaw in Watson Laidlaw & Co Ltd (above, at 29 to 30) spoke of restoration by way of compensation being accomplished to a large extent by the exercise of a sound imagination and the practice of the broad axe and of the attempt of justice to get back to the status quo ante in fact, or to reach imaginatively, by the process of compensation, a result in which the same principle is followed. When the court deals with claims for personal injury, loss of life or loss of reputation, it has to put a monetary value on things that cannot be valued precisely. But the task of valuing claims for purely monetary losses may also lack precision if the compensatory principle is to be honoured, particularly when one is dealing with complex trading entities such as the merchants in these appeals. We see this for example in AAMs alternative case which seeks to assess the loss of profit caused by the volume effect where the overcharge was passed on to their customers in the form of higher prices. Such a claim is likely to depend in considerable measure on economic opinion evidence and involve imprecise estimates. We see no reason in principle why, in assessing compensatory damages, there should be a requirement of greater precision in the quantification of the amount of an overcharge which has been passed on to suppliers or customers because there is a legal burden on the defendants in relation to mitigation of loss. The contrary view appears to have been based on an application of (a) the CJEU jurisprudence relating to a defence to claims for restitution, that there should be an identifiable increase in a retail price directly attributable to the unlawful charge and (b) the requirement, discussed in Fulton Shipping, of a close causative link between a wrong and a benefit which the victim obtains as a consequence of the wrong: see the judgment of the Court of Appeal at paras 327 330, 337 340. As we have said, the relevant requirement of EU law is the principle of effectiveness. The assessment of damages based on the compensatory principle does not offend the principle of effectiveness provided that the court does not require unreasonable precision from the claimant. On the contrary, the Damages Directive is based on the compensatory principle. The European Commission has issued Guidelines for national courts on how to estimate the share of overcharge which was passed on to the indirect purchaser (2019/C 267/07) (the 2019 Guidelines) in accordance with a power conferred by article 16 of the Damages Directive. The 2019 Guidelines make clear (para 12) that the compensatory principle underlies the entire Damages Directive and must be understood as requiring that a person entitled to claim compensation for the harm suffered must be placed in the position in which that person would have been had the infringement not been committed. It goes on to state that pass on may be invoked by an infringer as a shield against a claim for damages and by an indirect purchaser as a sword to support the argument that it has suffered harm (paras 18 19). Article 12.1 of the Damages Directive requires member states to ensure not only that both direct and indirect purchasers who have suffered harm should be able to claim full compensation but also that compensation exceeding the harm caused by the infringement of competition law is avoided. Article 12.5 states: Member states shall ensure that the national courts have the power to estimate, in accordance with national procedures, the share of any overcharge that was passed on. Similarly, in article 17.1 the Damages Directive states: Member states shall ensure that neither the burden nor the standard of proof required for the quantification of harm renders the exercise of the right to damages practically impossible or excessively difficult. Member states shall ensure that the national courts are empowered, in accordance with national procedures, to estimate the amount of harm if it is established that a claimant suffered harm but it is practically impossible or excessively difficult precisely to quantify the harm suffered on the basis of the evidence available. In discussing those articles of the Damages Directive, the 2019 Guidelines (section 2.3, paras 30 35) recognise that the national courts in addressing the issue of pass on will have to resort to estimates. In para 33 the 2019 Guidelines state that the principles of equivalence and effectiveness mean, as regards the power to estimate, that national courts cannot reject submissions on passing on merely because a party is unable to precisely quantify the passing on effects. The power to estimate requires national courts to, firstly, base their assessment on the information reasonably available and, secondly, strive for an approximation of the amount or share of passing on which is plausible (para 34). The 2019 Guidelines note that several member states already have rules which correspond to the power to estimate which the Damages Directive envisages and (in footnote 39) refer to Lord Shaws statement in Watson, Laidlaw & Co Ltd (above) that harm may be quantified by the exercise of a sound imagination and the practice of the broad axe, and to the application of that statement by the Court of Appeal in Devenish Nutrition Ltd (above), para 110. As the regime is based in the compensatory principle and envisages claims by direct and indirect purchasers in a chain of supply it is logical that the power to estimate the effects of passing on applies equally when pass on is used as a sword by a claimant or as a shield by a defendant. The loss caused by the overcharge included in the MSC was an increased cost which the merchants would in all probability not address as an individual cost but would take into account along with a multiplicity of other costs when developing their annual budgets. The extent to which a merchant utilised each of the four options, which the CAT identified and we described in para 205 above, can only be a matter of estimation. In accordance with the compensatory principle and the principle of proportionality, the law does not require unreasonable precision in the proof of the amount of the prima facie loss which the merchants have passed on to suppliers and customers. Conclusion on the broad axe issue In conclusion, we do not interpret the Court of Appeal as having held that the defendants had to prove the exact amount of the loss mitigated. But in so far as the Court of Appeal has required a greater degree of precision in the quantification of pass on from the defendant than from a claimant, the Court erred. For these reasons, the appeal succeeds on issue (iv). Issue (v) The remission issue: AAMs cross appeal The cross appeal is only relevant to the AAM proceedings. By our judgment on this appeal, we have upheld the conclusion of the Court of Appeal that the default MIFs infringed article 101(1). Therefore, it is necessary to consider Mastercards claim in the AAM proceedings that the default MIFs should be treated as exempt under article 101(3). This was an issue which was fully canvassed at trial before Popplewell J. The judge correctly held that in order to qualify for exemption under article 101(3) an anti competitive restriction must meet a number of cumulative conditions. It is the first and second conditions which are relevant for present purposes, namely that any given default MIF must: (i) contribute to improving the production or distribution of goods or to promoting technical or economic progress and (ii) allow consumers a fair share of the relevant benefits. At trial, Mastercard had a full opportunity to present any evidence it wished in support of its case that the default MIFs at issue should be treated as exempt pursuant to article 101(3). Popplewell J considered that Mastercard had established its case that the default MIFs were exempt. A critical part of his reasoning was that part of the MIFs paid to issuers had been passed through to their cardholder customers in the form of incentives to encourage use of scheme credit or debit cards to purchase more goods from merchants, thereby providing (so Mastercard asserted) increased benefits for the merchants issuer pass through. The Court of Appeal considered this aspect of Popplewell Js judgment at paras 211 271. It held that there were a number of flaws in the judges analysis. It noted that there was a critical gap in the evidence put forward by Mastercard: it did not provide evidence from issuers regarding the extent to which there was pass through of the MIFs to cardholders, and had not attempted to obtain such evidence (paras 242 244). It was therefore impossible to tell to what extent (if at all) the cost to merchants of having to pay a default MIF in relation to each card transaction might be outweighed by countervailing benefits to them from use of MIF income to incentivise increased card use. The judge had failed to carry out this balancing exercise (paras 246 248). As the Court of Appeal noted at para 245, all that could be said was that the expert witnesses on each side agreed, purely on the basis of economic theory, that pass through could incentivise card use; but there was no empirical, factual evidence on the point as would have been necessary to show that pass through did in fact occur, the extent of it and whether incentives to cardholders would in fact have resulted in more use of scheme cards (as opposed to cardholders simply using their scheme cards all the time in any event, without being influenced by incentives, so that the merchants bore the cost of the MIFs without any corresponding benefit: the always card transactions point described at paras 250 251). Since Mastercard could not establish by evidence the extent of pass through, it could not show the extent to which MIF revenue was used to incentivise card usage, nor whether and to what extent it did in fact stimulate additional card usage; and this was fatal to Mastercards case for exemption (paras 252 254). Accordingly, the Court of Appeal held (at para 255) that the judge should have concluded, by reference to this always cards point, that Mastercard could not establish, even on the basis of economic theory, that the extent of pass through was such that the advantages thereby conferred outweighed the disadvantages to the relevant consumers [the merchants]; and it further held (ibid) that the various materials relied on by Mastercard did not satisfy the requirement for cogent factual or empirical evidence of pass through. The court then proceeded to make further explicit rulings in paras 257 259 as follows: 257. The judge should have concluded that, in the absence of any evidence as to the actual extent of the pass through, Mastercard had failed to establish by robust analysis and cogent evidence, or otherwise, a sufficient causal link between the default MIFs and any net benefits, so that their claim for exemption under article 101(3) failed. 258. [T]he judge should have concluded, on the basis of the evidence before him, that the first condition of article 101(3), the benefits requirement, was not satisfied so that Mastercard had not established entitlement to an exemption under article 101(3). 259. [Further, in relation to the second condition for an exemption under article 101(3), the fair share requirement, on the evidence advanced at trial by Mastercard] had the judge carried out the necessary balancing exercise, he would inevitably have concluded that Mastercard could not satisfy the second condition either. As regards the evidential standard to be applied, this court has confirmed that as a matter of EU law, cogent empirical evidence is required to show that the claim for exemption is made out. In the light of this, the Court of Appeals conclusions in the AAM proceedings, as set out above, cannot be faulted. AAM should have succeeded on its claim under article 101(1). So far as concerns Mastercards defence based on article 101(3), there had been a full trial on this issue and on the evidence adduced at trial the judge should have dismissed it, as the Court of Appeal rightly held. Despite reaching this conclusion in the passages referred to above, the Court of Appeal made an order remitting the AAM proceedings to the CAT, alongside the two other sets of proceedings, for reconsideration of whether Mastercards case under article 101(3) in the AAM proceedings should have succeeded in whole or in part. According to the order, it is not open to any party to advance a new case or to adduce any fresh evidence on the remittals for reconsideration of Mastercards and Visas cases in each set of proceedings for exemption under article 101(3), but the parties to each of the proceedings may rely on evidence from the other two proceedings if and only to the extent that it is relevant to the case on exemption advanced in the proceedings in question. On any view, we consider that it would be impossible to justify an order in this form unless all the parties affected consented to it, since it would mean that a partys case could be determined by reference to evidence in other proceedings which it had not had a fair opportunity to controvert or subject to criticism or cross examination. Such consent was not obtained before the Court of Appeal made its order. Upon enquiry at the hearing in this court, it was only the parties in the Mastercard Sainsburys and Visa Sainsburys proceedings who said they were content with this order. AAM did not. However, the point taken by AAM in their cross appeal is a still more fundamental one. They say that, having rightly decided that the trial judge should have dismissed Mastercards article 101(3) defence and given judgment for AAM on its claim under article 101(1), it was not open to the Court of Appeal to order that the article 101(3) issue should be remitted for reconsideration and hence permit it to be re opened by Mastercard. This offends against the principle of finality in litigation. The Court of Appeals reasoning on this point is at para 366: We take the view that, despite what we have said above, it is not certain that, had Popplewell J had the benefit of this judgment and thus been fully aware of the need for empirical data and facts in order to prove an exemption, MasterCards case on article 101(3) would have failed in its entirety. It is possible, bearing in mind the acceptance by Sainsburys and the CAT in the other two cases that there was a lawful level of MIF, that the judge would have found that there was some exemptible level of MIF, albeit a lower one than he in fact found. Altogether removing the article 101(3) issue from reconsideration could therefore result in an unjustified windfall for the AAM parties. It seems far more just to us that the issue should be reconsidered in all three cases, based on the same principles, by the same tribunal. There is no real injustice to the AAM parties in the course we propose, since the windfall to which we have referred would have arisen from the procedural mishap caused by the separation of three cases raising almost identical issues. If the CAT is now able to reach a consistent conclusion in all three cases on the exemption and quantum issues, that will produce a fair and just outcome for all the parties. It would be a triumph of form over substance if we were to hold that we were unable to reach a just solution simply as a result of a procedural accident. In our judgment, this reasoning cannot be supported. We accept the submission of Mr Jon Turner QC for AAM that the Court of Appeal has erred in principle by allowing Mastercard to re open the article 101(3) issue on which, as the Court of Appeal held, it had lost after a full and fair trial of the issue. This offends against the strong principle of public policy and justice that there should be finality in litigation, which the Court of Appeal did not take properly into account. The court was wrong to characterise victory for AAM as an unjustified windfall or the product of a procedural mishap or accident. It was wrong to say that re opening the article 101(3) issue involved no real injustice for AAM. Under the Civil Procedure Rules (CPR), litigation is to be conducted in accordance with the overriding objective set out in CPR Part 1, that is in a manner enabling the court to deal with cases justly and at proportionate cost. CPR rule 52.20(2) provides that on an appeal, the appellate court has power, among other things, to (a) affirm, set aside or vary any order or judgment made or given by the lower court; (b) refer any claim or issue for determination by the lower court; or (c) order a new trial or hearing. By virtue of CPR rule 1.2(b) the procedural rules in the CPR are to be interpreted so as to give effect to the overriding objective; and by virtue of CPR rule 1.2(a) any power conferred on a court by the CPR is to be exercised so as to give effect to it. The higher courts have in a number of respects laid down important and binding principles regarding what justice requires in the context of litigation, and these inform the proper approach to the interpretation and application of the overriding objective. One such principle which is well established is that there should be finality in litigation. This is a general principle of justice which finds expression in several ways, which tend to be grouped under the portmanteau term res judicata: see Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46; [2014] AC 160, paras 17 26 per Lord Sumption. When a legal claim has finally been determined in litigation, a cause of action estoppel arises and it cannot be reopened. A binding issue estoppel may arise in respect of a matter, other than a legal claim, which is directly the subject of determination in proceedings. Further, parties are generally required to bring forward their whole case in one action, and attempts to revisit matters that have already been the subject of a determination (even if not formally a matter of cause of action estoppel or the subject of an issue estoppel) are liable to be barred as an abuse of process: Henderson v Henderson (1843) 3 Hare 100, 114 116 per Wigram V C; Johnson v Gore Wood & Co [2002] 2 AC 1, 31 per Lord Bingham of Cornhill and 58 59 per Lord Millett; Virgin Atlantic (above). Under this rule, first explored in Henderson v Henderson, a party is precluded from raising in subsequent proceedings matters which were not, but could and should have been raised in the earlier ones (Virgin Atlantic, para 17). As Sir Thomas Bingham MR (as he then was) explained in Barrow v Bankside Members Agency Ltd [1996] 1 WLR 257, 260: The rule in Henderson v Henderson requires the parties, when a matter becomes the subject of litigation between them in a court of competent jurisdiction, to bring their whole case before the court so that all aspects of it may be finally decided once and for all. In the absence of special circumstances, the parties cannot return to the court to advance arguments, claims or defences which they could have put forward for decision on the first occasion but failed to raise. The rule is not based on the doctrine of res judicata in a narrow sense, nor even on any strict doctrine of issue or cause of action estoppel. It is a rule of public policy based on the desirability, in the general interest as well as that of the parties themselves, that litigation should not drag on forever and that a defendant should not be oppressed by successive suits when one would do. That is the abuse at which the rule is directed. This is a rule based on what is required to do justice between the parties as well as on wider public policy considerations. It is a rule which is firmly underwritten by and inherent in the overriding objective. In our view, the order made by the Court of Appeal to remit the article 101(3) issue in the AAM proceedings for reconsideration by the CAT is contrary to the principle of finality in litigation as it finds expression in the rule in Henderson v Henderson. The trial before Popplewell J was a final trial between AAM and Mastercard of the issues between them under article 101(1) and 101(3) so far as affected Mastercards liability to AAM. In preparing for the trial, Mastercard was aware of the significance of the issue of pass through, not least because attention had been called to that issue in the Mastercard Commission Decision (as noted in para 243 in the judgment of the Court of Appeal). In any event, the issue of pass through was central to the way in which Mastercard sought to justify its claim for exemption under article 101(3). It had a full and fair opportunity to adduce any evidence it wished in respect of that claim. Yet, as the Court of Appeal found (at para 244), it did not attempt to obtain factual, empirical evidence on that issue, choosing instead to support its claim of exemption under article 101(3) by reference to economic theory. As explained above, on the evidence adduced at trial, the Court of Appeal rightly found that the judge should have upheld AAMs claim of infringement of article 101(1) and in the course of doing so should have dismissed Mastercards defence based on article 101(3). We agree with Mr Turners submission that in circumstances where: (i) in a final trial between private litigants to determine their rights and obligations inter se each side has had a fair opportunity to bring forward all the evidence that it wants to bring forward in support of its case, and (ii) where the appellate court has concluded that, on the basis of that evidence, one party ought to have won, the court should dispose of the matter by awarding a final remedy that reflects that outcome. This is necessary to do justice to the parties (so that the party that has won in a fair and it might be added, very expensive contest is not deprived of the fruits of its victory), to achieve finality, and to avoid the court enlarging the dispute outside the way in which the parties have chosen to frame it. In the adversarial system of litigation in this country, the task of the courts is to do justice between the parties in relation to the way in which they have framed and prosecuted their respective cases, rather than to carry out some wider inquisitorial function as a searcher after truth. In Al Medenni v Mars UK Ltd [2005] EWCA Civ 1041, Dyson LJ observed (at para 21): It is fundamental to our adversarial system of justice that the parties should clearly identify the issues that arise in the litigation, so that each has the opportunity of responding to the points made by the other. The function of the judge is to adjudicate on those issues alone. As Lord Wilberforce stated in Air Canada v Secretary of State for Trade [1983] 2 AC 394, 438: In a contest purely between one litigant and another the task of the court is to do, and be seen to be doing, justice between the parties There is no higher or additional duty to ascertain some independent truth. It often happens, from the imperfection of evidence, or the withholding of it, sometimes by the party in whose favour it would tell if presented, that an adjudication has to be made which is not, and is known not to be, the whole truth of the matter: yet if the decision has been in accordance with the available evidence and with the law, justice will have been fairly done. In our view, and with respect to them, the Court of Appeal lost sight of these principles when it made an order which would permit Mastercard to reopen its case under article 101(3) and rely upon evidence (adduced in other proceedings, but new in the AAM proceedings) which was not adduced at the trial of that issue. The matter may further be tested in various ways. Suppose Popplewell J had determined the issues before him as the Court of Appeal held they should have been determined by him (ie on the basis that Mastercards defence under article 101(3) failed) and there had been no need for an appeal. He would have made a final order in AAMs favour in 2017 giving judgment for them on their article 101(1) claim (necessarily thereby rejecting the article 101(3) defence), and that order would have constituted a cause of action estoppel in their favour. There could have been no question of Mastercard seeking to reopen that order by seeking to litigate again on the same issues, by relying on new evidence as adduced in other proceedings. It is difficult to see how it could be right for the Court of Appeal to produce a different outcome by reason of the adventitious circumstance that AAM had to go through the process of appeal to arrive at the result it was entitled to have achieved at first instance. Alternatively, one could analyse the outcome which would have been arrived at in relation to the article 101(3) defence as a matter of issue estoppel, and the same point could be made. Or again, one could analyse the position by reference to the rule in Henderson v Henderson and say that it would have been an abuse of process for Mastercard to have sought to re open the article 101(3) issue by reference to new evidence, the substance of which it had had the opportunity to adduce previously at trial before Popplewell J. Since it would have been unjust to allow an application by Mastercard to do that, it is difficult to see how it could be compatible with justice for the Court of Appeal to produce that same outcome by its exercise of discretion on its own initiative under CPR rule 52.20(2). On the contrary, in our view it was contrary to justice and to the overriding objective for the Court of Appeal to make the order it did in the AAM proceedings. It was also contrary to CPR rule 52.20(2) itself, on its proper construction, since under CPR rule 1.2(b) that provision falls to be interpreted in a way which is in conformity with the overriding objective. This is sufficient to justify allowing AAMs cross appeal. However, we also consider the comments made by the Court of Appeal at para 366 (above) to be misplaced. If it is decided by the CAT after the further hearing in the Mastercard Sainsburys proceedings and the Visa Sainsburys proceedings that, on the evidence and concessions made by Sainsburys in those proceedings (concessions with which AAM do not agree and which they consider to be baseless and wrongly made), there was some level of MIFs which would have been exempt under article 101(3), with the result that Sainsburys claims for damages for breach of article 101(1) would be reduced, that would in no way show that there was an unjustified windfall for AAM arising out of a final order in their favour in the AAM proceedings. As the Court of Appeal rightly held, after the fair trial which took place, the judge should have found that AAM succeeded in its claim. That result is not a windfall, nor is it unjustified. It is the just outcome of the contest fought by the parties in those proceedings. It would have made no difference if the fact that there was a separate trial of the AAM proceedings could be described as the result of a procedural mishap or accident, or if with hindsight it might have been thought better for all three sets of proceedings to be tried together. The fact would still remain that, as events transpired, Mastercard had lost to AAM at trial after a fair hearing on the issues between them. However, in any event, in our view it is not correct to characterise the way in which the AAM proceedings were dealt with separately from the other proceedings and went forward to be dealt with at a separate trial as being the result of a procedural mishap or accident. There are many sets of interchange damages claims pending against Mastercard and Visa (and other card system operators) in the court system, and it would be wholly impracticable for them all to be tried together at the same time. In a sensible and responsible way, Visa, Mastercard, Sainsburys and AAM debated at various stages whether the proceedings involving them could be case managed or heard together, and on each occasion the judgment was made that there were good reasons why they should not be. The fact that there have been three separate trials in the three sets of proceedings is not the result of any procedural accident, but rather of deliberate and informed choices made by the parties, courts and the CAT as to how these complex claims should be determined within the court system. It may also be observed that, contrary to what the Court of Appeal seems to have thought it would achieve by ordering a combined hearing in the CAT in the three sets of proceedings at issue in this appeal, that combined hearing will not produce a single, comprehensive determination of liability in relation to the other interchange fee damages claims. Those other claims will have to be determined in each case on the basis of the pleadings and the evidence adduced in that case. Conclusion on AAMs cross appeal For the reasons given above, AAMs cross appeal is allowed. The order made by the Court of Appeal will be varied, to substitute an order declaring that the relevant MIFs charged to AAM in the relevant period were contrary to article 101(1) (and the equivalent provisions of UK and Irish competition law); and that Mastercard has failed to discharge the burden on it of demonstrating that a MIF set at any positive level would have met the test for exemption under article 101(3) (and the equivalent provisions of UK and Irish law). If not settled, the AAM proceedings should then proceed to a trial on the issue of quantum of damages.
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